Trichet lashes out political meddling in Poland's central bank

Paris- European Central Bank Jean-Claude Trichet warned the Polish government Thursday about threats posed to the independence of the country's national central bank. He described political moves in Poland, which have compromised the Warsaw-based central bank such as increased changes in the regulation of the nation's financial sector, as "not in line with the rules of the European Union."

Trichet was speaking in Paris following a meeting of the ECB's 18-head rate-setting council.

In his comments to reporters, Trichet praised the economic transformation that has taken place in the ten largely Central and Eastern European nations which joined the European Union in May 2004.

But he went on to reiterate that the bank would not agree to water down the strict criteria for new EU states wanting to join the euro.

He stressed that "respecting the criteria" was the key to any of the EU newcomers gearing up to adopt the common currency.

As a result of the tough stance taken by both the ECB and the European Commission only one of the new EU states, Slovenia will be joining the euro in January next year.

With an inflation rate running at just over the tight 2.6 per cent reference rate for euro candidate states, Lithuania missed out on being the second of the new EU members to join the common currency in January.

Trichet's comments on Poland also echo concerns made by other leading ECB figures about political meddling in the National Bank of Poland and back up the worries expressed by the head of Poland's central bank Leszek Balcerowicz.

Poland's constitutional court recently headed off moves by the nation's ruling conservative government to set up a special parliamentary committee to investigate the central bank's role in the privatizations that have taken since the end of communism in 1989.

Trichet told his press conference in Paris that he was "very heartened" by the court's move and that others had recognized "the abnormality" of the political sentiment in Poland towards the nation's central bank.

More recently, however, Poland has faced a fresh bout of political instability caused by the break-up of the current ruling coalition.

The attempt to piece together a new coalition for the nation could end up resulting in early elections being called in the country instead of the ballot which is scheduled for 2009.
Source:rawstory.com