ECB Appointee's Smooth Approval Contrasts With Woes in East Euro - EcoFinBiz Blog

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ECB Appointee's Smooth Approval Contrasts With Woes in East Euro

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(Bloomberg) -- Slovak lawmakers approved Finance Minister Peter Kazimir to lead the country’s central bank and help set euro-area monetary policy in a smooth handover that contrasts with the woes afflicting other eastern European members of the bloc.

The appointment of Kazimir, a seasoned European Union politician, gives Slovakia a prominent voice at the European Central Bank. He’ll replace Governor Jozef Makuch, who said last month he’ll retire in March with about two years left in his term.

Meanwhile, Slovenia has struggled for months to find a replacement for Bostjan Jazbec after he stepped down in May, and Latvia’s governor is barred from attending meetings while he fights bribery charges. Estonia has been hit by a money-laundering scandal, though its central-bank governor, Ardo Hansson, has remained largely unscathed.

One of the toughest critics of Greece during that country’s bailout talks, Kazimir is a rare advocate of closer economic integration in the EU in the bloc’s former communist east. His voice has stood out in a region where Poland, Hungary and the Czech Republic are resisting their obligations to join the currency club while poorer members Romania, Bulgaria and Croatia are mulling how and when to get in.

“The worst is over for Europe,” Kazimir said during a hearing in Slovakia’s parliament before the confirmation vote Thursday. “Now we all need to complete rebuilding its financial architecture.”

Kazimir was a vocal fiscal hawk when the EU was negotiating Greece’s bailout package, supporting Germany’s demand that aid be accompanied by austerity. More recently, he endorsed the EU’s position in its clash with the Italian government over its fiscal plans. The backing from parliament must now be endorsed by President Andrej Kiska.

Finance minister since 2012, Kazimir was instrumental in reducing Slovakia’s fiscal deficit and prepared the country’s first-ever balanced budget for next year. Along with supporting closer integration within Europe’s common-currency area, he has also backed plans to form a robust banking union.

As the governor of Slovakia’s monetary authority, he’ll join a trend of politicians taking seats at the ECB. They include former Spanish Economy Minister Luis de Guindos, who was appointed vice president this year, while ex-European Commissioner Olli Rehn is in charge of Finland’s monetary authority. Governing Council member Yannis Stournaras led Greece’s Finance Ministry until mid-2014.

That tendency isn’t universally welcome at the ECB, especially with a raft of top posts -- including the presidency -- changing hands in 2019. When officials chose their bank-supervision head last month, they did so with an eye on the implications for who would win the next Executive Board seat.

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“This trend is revealing, for those who had forgotten, how much central banking is in fact a political thing,” said Stanislas Jourdan, the director of Positive Money Europe, an advocacy group calling for more transparency and accountability in economic policy. “Especially at times when the theoretical monetary-policy framework is being questioned so much both by populists and by academics themselves.”

--With assistance from Alessandro Speciale and Piotr Skolimowski.

To contact the reporters on this story: Radoslav Tomek in Bratislava at rtomek@bloomberg.net;Peter Laca in Prague at placa@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net, Michael Winfrey, Andrew Langley

©2018 Bloomberg L.P.

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