Hungary’s new central bank act has led to outcry from the IMF, the European Central Bank, the European Commission and the National Bank of Hungary itself.
The act, rightly, is perceived as part of a broader power grab by prime minister Viktor Orbán from any institution or individual that serves as a check on government policy. It is also the latest in a series of attempts to undermine the current governor, András Simor.
However, some of the measures that the act proposes already apply to many of the major central banks.
It is not so much a case of what the act says, then. More what it signifies.
That highlights just how flimsy and susceptible to politicians’ whims central bank independence actually is. Read more
How revolutionary are times at the European Central Bank? Mario Draghi, president, produced a surprise on Tuesday by handing Peter Praet, his Belgian colleague on the ECB’s six-man executive board, the powerful economics portfolio. The assumption, at least in Berlin, was that it would go to Germany’s Jörg Asmussen, on the spurious grounds that the position has been held by a German since the ECB was created in 1998. But don’t expect the change to produce radical changes in the bank’s thinking. Read more
UPDATE: 14.43 The Swiss National Bank has now published its code of conduct on insider trading for members of its governing board. Money Supply 1 SNB secrecy 0.
The Swiss National Bank’s chairman Philipp Hildebrand has found himself caught up in an insider trading scandal involving his wife’s decision to swap dollars for francs weeks before the central bank introduced its euro cap in early September. A small amount of dollars were also bought through his daughter’s account.
A central bank investigation has cleared the Hildebrands of any wrongdoing. And that the purchases have attracted so much attention no doubt owes much to the political heat the central bank has found itself under in recent years.
The purchases, revealed through private information passed to politician and frequent SNB critic Christoph Blocher, have also damaged Switzerland’s prized reputation for banking secrecy. Doing its part to repair the country’s reputation for opacity, the SNB has refused to release its policy to prevent insider trading by its employees.
But regardless of Mr Hildebrand’s innocence, as a public institution, the Swiss central bank’s stance is misguided. Read more