20 February 2001

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Argentine central bank chief dismisses scandal

Argentina's central bank chief refused calls to resign on Feb 18, 2001, dismissing allegations he failed to police money-laundering in a scandal that has threatened to destabilize Latin America's third largest economy.

Pedro Pou wrote in leading daily, Clarin, that his critics had confused money-laundering with tax evasion, a longtime drag on the economy that he said was the responsibility of tax authorities to curb. [18-February-2001]

Bush adviser-Sept G7 FX intervention mistake-paper

Lawrence Lindsey, the top economic adviser to U.S. President George Bush, was quoted on Feb 17 as saying intervention by G7 central banks last September to support the euro had been a mistake. The International Herald Tribune also quoted Lindsey as telling the newspaper in a telephone interview that U.S. Treasury Secretary Paul O'Neill shared his view that interventions should only be used in extreme cases. [17-February-2001]

BoE's George says may have to pen inflation letter

Bank of England Governor Sir Edward George said on Feb 17, 2001 it was possible inflation in Britain would stray a full point away from its target, meaning he would have to write to the government explaining why. UK inflation currently stands at its lowest level since records began in 1976.

"If you look at the forecast of inflation in the inflation report, there is a chance that we will have to write a letter," George told reporters, echoing similar comments by his deputy, Mervyn King, last week. [17-February-2001]

Dissent erupts between government, Bank of Japan

Simmering differences between the government and the Bank of Japan over how to revive the economy burst into the on Feb 16, 2001 on the eve of a high-profile meeting of finance ministers and central bankers of the world's seven richest nations. Finance Minister Kiichi Miyazawa said members of the Group of Seven (G7) were concerned about deflation in Japan.

"They do not expect Japan to become an engine of world growth, but they do hope Japan can achieve positive growth," he said. But Bank of Japan Governor Masaru Hayami downplayed the risk of falling prices, saying he saw no chance Japan's economy would slip into a deflationary spiral and that the bank had done all that was needed to put a floor under it. [16-February-2001]

Interview: BoE 's MPC member Sushil Wadhwani

Sushil Wadhwani, an "external" member of the monetary policy committee of the Bank of England, explains why he is a "productivity optimist". Over the last decade, forecasters have systematically underestimated GDP growth in the UK and simultaneously overestimated inflation. He also suggests ways in which the Bank of England's current published forecasts could be made "more informative". By Executive Editor Neil Courtis.

http://www.centralbanking.co.uk/publications/journals/cbj.htm

Interview: ECB's Otmar Issing

The chief economist and executive board member of the European Central Bank gives an inside view on the ECB’s thinking: Why has the ECB recently started publishing macroeconomic projections rather than forecasts, and what do these projections mean for policymakers and the markets? Interview by Stephen F. Frowen for Central Banking Journal.[16-February-2001]
http://www.centralbanking.co.uk/publications/journals/cbj.htm

Chad 's economy minister dies in plane crash

Chad's minister for economic development died in a plane crash as he returned from a board meeting of the regional central bank in Congo Republic, government sources said on Feb 15, 2001. In addition to the minister, Ahmat Lamine Ali, a senior government official and the pilot were killed in the accident on the evening of Feb 14, the sources added. A flight attendant survived with unspecified injuries. [15-February-2001]

IMF 's Koehler sees Europe 2001 growth exceeding US

International Monetary Fund Managing Director Horst Koehler said on Feb 15 he saw European GDP growth in 2001 of some three percent against two percent expected for the United States. In a wide-ranging conversation with Italian business daily Il Sole 24 Ore, he predicted the euro would appreciate against the dollar. "I think that in terms of purchasing power the euro is undervalued against the dollar but this is not very worrying and isn't something that now needs action," he said in the interview ahead of a Group of Seven meeting of finance ministers and central bank governors in Palermo, Sicily, on Feb 17, 2001. [15-February-2001]

Defiant Rafael Buenaventura says he will not quit

Philippine Central Bank Governor Rafael Buenaventura said he would not resign following accusations that he had alerted deposed president Joseph Estrada to withdraw the latter's secret account with deposits worth $2.9m (P143.76million) a day before the closure of Urban Bank in April 2000. The Central Bank also instructed Urban Bank to issue three manager's cheques amounting to $100,000 (P5million) each on April 24, 2000, a day before the bank closed, Congressmen Joker Arroyo and Oskar Moreno revealed earlier. The sum represented the Central Bank's provident fund.[3-February-2001]

BIS urges vigilance on asset bubbles

It's time for central bankers to get tough on bubbles, according to a top official at the Bank for International Settlements. Overly high stock and property prices should prompt central bankers to take interest rate action in the same way rising wage levels do, although most don't recognize these factors as forms of inflation, BIS General Manager Andrew Crockett said on Feb 13, 2001. In other words, it's not enough for U.S. Federal Reserve Board Chairman Alan Greenspan to mention "irrational exuberance." He should fight it by raising higher interest rates. [13-February-2001]

US plan to widen euro debt holding is logical-ECB

The European Central Bank said on Feb 9, 2001 plans by the U.S. monetary authorities to widen their holdings of government securities in the euro zone to include countries other than Germany were a logical step following the arrival of the euro. "This is a natural consequence of the introduction of the euro," said an ECB spokesman. "The U.S. authorities informed the ECB in advance of this development". [ 9-February-2001]

Russia Duma ratifies single currency with Belarus

The Russia State Duma budget committee on Feb 9, 2001 decided to recommend that the lower house of parliament ratify the agreement between Russia and Belarus on the introduction of a single currency and on setting up a single monetary emissions center for their union. Under the agreement, the Russian ruble would be used as the common currency as of January 1, 2005. On January 1, 2008, "a single currency will be introduced for the union based on an agreement between the Russian Federation and the Republic of Belarus". [ 9-February-2001]

Ex-head Bulgarian cbanker charged with fraud

Stoyan Shoukerov, former head of the Foreign Exchange Operations Department of the National Bank of Bulgaria (BNB), has been charged with abuse of office in connection with the refinancing of commercial banks with 49 million dollars, the Special Investigations Service said on Feb 9, 2001. "I am responsible for the refinancing and if I did anything wrong, I must account for it," Shoukerov said. [ 9-February-2001]

Buba's Stark says ECB should meet less often

The European Central Bank should hold council meetings once a month rather than every two weeks, Bundesbank Vice President Juergen Stark said in remarks published on Feb 8, 2001. Stark, who is not a member of the ECB's council and has no say in ECB policy-making, told Boersen-Zeitung newspaper in an interview that the ECB was the world's only major central bank to meet every 14 days. "The ECB would be well advised if it does not meet every 14 days in future but only once a month," Stark was reported as saying in the interview due to be published on Feb 9. It could hold telephone conferences in between, he said. [8-February-2001]

ECB slams banks over cross-border payment charges

The European Central Bank on Feb. 8, 2001 accused commercial banks of persistently overcharging retail customers for cross-border payments and said it may have to step in unless fees are cut substantially this year.

The ECB said in its February report that banks urgently need to increase their efforts to improve the transfer of money by 2002, when the introduction of euro notes and coins will transform the euro zone into a domestic payment area. [8-February-2001]

Reserves plan bad for euro system - Austria c.bank

The Austrian National Bank warned on Feb. 6, 2001, that the finance minister's efforts to get the government's hands on central bank currency reserves could undermine the credibility of the euro system. "The Austrian National Bank believes that resorting to currency reserves is not an appropriate instrument for resolving short-term budget problems," a bank statement said. Finance Minister Karl-Heinz Grasser suggested on Feb. 5 that up to $6.8 billion worth of the central bank's currency reserves were no longer needed following the introduction of the euro and could be used to repay debt or boost public spending. [6-February-2001]

Radek Urban leaving Czech National Bank

Radek Urban has left the Czech National Bank where he was executive director of the financial markets department. On March 1 he will joining the asset management department of Ceska Sporitelna in Prague. Mr Urban has played a key role in developing the Czech financial markets. [2-February-2001]

Duisenberg slams plan to curb Buba oversight role

European Central Bank President Wim Duisenberg on Feb. 1, 2001, attacked German government plans to strip the Bundesbank of its banking watchdog duties, saying the move may make it harder to supervise the financial system. In unusually strong tones even by the outspoken Dutchman's standards, Duisenberg said that part of the plan unveiled by the German finance ministry was of the "greatest possible concern to all central banks including the European Central Bank". [1-February-2001]

Banco de Mexico might halt forex reserves buildup

A Banco de Mexico official said on Jan. 31, 2001, the central bank was weighing the cost of continuing to accumulate foreign exchange reserves and was considering halting its monthly auction of dollar options. "We've got to seriously consider if we want to continue to accumulate international reserves and if we want to continue with the (dollar option) auction," a senior central bank official said. The monthly option auction is a mechanism used to build reserves that have steadily piled up since being drained ahead of the December 1994 peso crash. The central bank has been selling $250 million a month in dollar options. [ 31-January-2001]

New Egypt forex peg only valid as short-term fix

Egypt's introduction of a "managed peg" for pound-dollar rates may restore exchange rate stability in the short term but will be unsustainable and counterproductive in the long term, analysts said on Jan. 29, 2001. Under the new system the central bank will set a central exchange rate with dealers allowed to quote rates one percent above or below it. The central rate will be calculated by means of a weighted average of all transactions over the preceding three weeks. The first such rate, at 3.85 pounds to the dollar, comes into effect on Jan. 30. [29-January-2001]

Tonga shuffles cabinet, names new finance minister

The governor of the National Reserve Bank of Tonga has been appointed finance minister of the tiny South Pacific island nation. Siosiua 'Utoikamanu replaced Tutoatasi Fakafanua in the finance portfolio in a wider shake-up of Tonga's 11 member all-male cabinet, announced by Prime Minister Prince 'Ulukalala Lavaka Ata. 'Utoikamanu will appoint his replacement as governor of the central bank. [29-January-2001]

Mauritanian govt reshuffled, new cbank governor

The Mauritanian president decreed a partial government reshuffle on Jan. 28, 2001, in which the central bank governor, Mohfoudh Ould Mohamed Ali, was appointed finance minister. According to Mauritanian TV on the night of Jan. 28, the new central bank governor is Sidi El Mokhtar Ould Naji, who had been the director of banking supervision. [28-January-2001]

Dutch cbank scores high in research

The 12 central banks which make up the European central banking system should compete more among themselves. And improvement of each bank's research team will increase the influence of the president of the relevant bank, according to Sylvester Eijffinger, professor of European financial economy at Tilburg university. Eijffinger claims the average European central bank researcher produces less than one publication every 10 years.

Researchers at the US Federal Reserve system produce far more, he said. The research departments at the central bank of Finland and the Netherlands (DNB) scored the highest among the 12 central banks, Eijffinger said. [27-January-2001]
 
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