Billionaire Czech Finance Minister Spurns President’s Euro PlanLenka Ponikelska
A plan by Czech President Milos Zeman to only name new central bankers who favor joining the euro is unacceptable, Finance Minister Andrej Babis said.
The country of 10.5 million people shouldn’t consider membership in the Europe’s common currency until it solves the Greece crisis, Babis told Hospodarske Noviny newspaper on Thursday. The responsibility of deciding about membership lies with the government, he said.
Zeman, who has sole right to name members to the central bank’s seven-member policy board, said Wednesday he wouldn’t name future rate setters who oppose adopting the euro. He also said he’d favor members who won’t engage in “unnecessary experiments” with the economy, a reference to his opposition to the regulator’s policy of capping gains in the koruna.
“The central bank is an independent institution and such a condition for joining the bank board isn’t acceptable,” Hospodarske Noviny quoted Babis as saying on Thursday. “Now isn’t the time to join the euro zone. It must first resolve the Greece problem.”
The debate on the central bank’s independence and the use of an unconventional policy tools has already divided officials. In January, Prime Minister Bohuslav Sobotka opposed Zeman’s calls to end currency interventions by saying the central bank has the authority to act.
The koruna slid 0.5 percent to 27.4 against the euro at 11:57 a.m. in Prague. It gained as much as 1.2 percent on Wednesday following Zeman’s comments.
The currency regime, in which the bank has pledged to prevent “excessive” gains beyond 27 a euro, became the primary policy tool after policy makers cut the benchmark interest rate to what they calls a “technical zero” of 0.05 percent in 2012. The central bank won’t scrap its limit before the second half of 2016, it said after its Feb. 5 policy meeting.
Zeman will chose a replacement for central bank Governor Miroslav Singer when his term ends in July next year. The president will choose another three board members before his own term ends in 2018. That means his appointees to the policy making body, who include former Prime Minister Jiri Rusnok, will have a majority on the bank’s board.
Babis, who is the sole owner of chemical and food producer Agrofert Holding AS, is the leader of the ANO party, which rules in a coalition led by the Czech Social Democrats.