News This Issue:

• Crockett's Move
• Central Bank Wise Men Head For Buenos Aires
• Balcerowicz Under Fire
• Anti-Central Bank Central Banker Promoted
• Thus Spake Milton Friedman
• King Billy At The Bank
• Central Bank Of The UK
• Heinrich To Head Bis Mexico Office
• Former Governor In Jail In Uganda
• Jordan To Go

Crockett's Move
Andrew Crockett triggered a feeding frenzy by the financial media when he announced his intention to stand down next March from his role as general manager of the Bank for International Settlements. In the job since 1994, his stepping down will coincide with his sixtieth birthday; more significantly, it also leaves the way open for him to succeed Sir Eddie George when his term as governor of the Bank of England ends in June (the markets expect the decision to be announced by the government before the end of this year). The financial media has delighted in the opportunity to speculate as to Crockett's reasons for giving up the job some nine months before his term ends. As might be expected, Crockett is keeping mum: "I have no plans as to what I will do and I don't intend to make any plans until I have left here. That's all I am going to say."

All manner of theories have been put forward, although few omit to claim that Crockett's motives are opaque: he is quite clearly gunning for Eddie George's job, says the press. Well, that's as may be, but what are his chances? The Cantor Index has cut Crockett's odds from 12-1 to 8-1, and then a few hours later to 5-1, and they currently stand at 3-1 - he had started the race as a rank outsider at 25-1. Mervyn King is still said to be the favourite, favoured because of the continuity of policy his tenure would offer, while Howard Davies, who was previously tipped to come second, now seems to be languishing in the rear. According to the FT, "Whitehall rumours have suggested Sir Howard is out of the running." Opinions are increasingly being voiced that if there is to be a euro referendum, Crockett, who is very much pro-Europe, would be the best man to have in the position with all the international contacts and experience he has amassed while at the BIS. The choice will be made by the Chancellor, which means in effect by Ed Balls, his economic advisor and former FT journalist.

Central Bank Wise Men Head For Buenos Aires
The comprehensive failure of the IMF and the Argentine government to see eye to eye and agree on terms over which a critical new loan can be disbursed, and more generally to come up with a practicable solution to the crisis, has prompted the decision to appoint a handful of trouble-shooting central banking luminaries to save the day. Among their number is counted Andrew Crockett, as well as former central bank governors John Crow from Canada, Hans Tietmeyer from Germany and Luis Angel Rojo from Spain. The one name that one would expect to find on this list is that of Paul Volcker who has recently been a natural member of all these squads. The IMF says they are to visit the erstwhile austral superpower from July 22 to 24.

While some have remarked on the IMF's seeming inability to resolve the situation by itself forcing it to resort to outside help - far from usual IMF practice - Managing Director Horst Koehler explains that he sees the panel "as advising the Argentine government and ourselves on aspects crucial to the design of a monetary framework." Key aims will be to restrain inflation and ensure the central bank's independence: "These are critical components of a strong and comprehensive stabilization program for Argentina," says Koehler.

Balcerowicz Under Fire
The latest indignity directed at Poland's beleaguered central bank chief, Leszek Balcerowicz, is the use of his image as a target at a local shooting range. While gun-toting Poles take pot shots at the central banker, the owner of the range has pleaded guilty to charges of "insult and contempt", and if convicted faces a possible two-year jail term. But this probably provoked little more than a raised eyebrow from Balcerowicz who is perpetually besieged by fierce remonstrations from his unappreciative countrymen.

Despite his sterling efforts to keep Poland on the rails that will bring the nation closer to European integration, recently a radical farmer's trade union has filed a draft resolution in the lower house of parliament for his dismissal, and it is expected that this will be widely backed.

They accuse Balcerowicz of sabotaging the Polish economy, aggravating matters by doggedly following a monetary policy that is too restrictive. They allege that he cares more about international financial institutions and foreign investors than Poland's economy - another drearily familiar refrain from the critics of central bankers. This is much in line with the government's own view, which has recently removed Balcerowicz's bodyguards, signalling its mounting disregard for his person. In the face of such denigration, some have, perhaps wishfully, averred that Balcerowicz wants to resign, although he has brushed aside such claims as nothing more than rumours.

Anti-Central Bank Central Banker Promoted
A peculiar choice has been made to replace Roumen Avramov on the Bulgarian National Bank's board of governors. The government has chosen the outspoken Professor Nikolay Nenovsky to take his place, who was head of the Monetary and Financial Analysis department until March 2002; but he is also a sworn enemy to the very concept of a central bank. Far from seeing central banks as the lubricant that allows for the smoother running of the wheels of the financial markets, he subscribes to what some would call a hard-line "market fundamentalist" view that central banks are quite superfluous inventions. He believes that the financial system would function best with only private credit institutions.

In his book, "The Free Money", he expounds his firmly held belief that the central bank's monopoly is artificially imposed and is an obstruction to free competition. But sooner or later he will have his way, he says, as e-money will eventually supplant old-fashioned banknotes and coins, thus rendering central banks redundant. Inconsistently, he is also a great enthusiast for the euro, which he thinks would work wonders for Bulgaria's financial stability, and an immeasurably more desirable option than the current currency board arrangement. He was one of the group that declared in 1999 that Bulgaria should introduce the euro, much to the chagrin of the bank's governor, Svetoslav Gavriisky. The fact that the euro is issued by a body called the European Central Bank does not seem to bother him.

Thus Spake Milton Friedman
Ninety at the end of this month, Milton Friedman has recently declared that the euro will be lucky to make it to a sixth of his age. He gives the Eurosystem at the very most fifteen years before it goes to wrack and ruin because of irreconcilable cultural and economic differences between member states. Friedman says that different languages and cultures between the states will bring about its demise, as well as divergent reactions to external economic shocks. The mighty monetary mystic told the German magazine, Capital: "That's why the monetary policy of the European Central Bank, while suitable for Ireland, is completely inappropriate for Germany."

Central Bank Of The UK
While the Bank has been busy playing up the significance of the Dutch connection, it is facing trouble again up North. The Scots have been complaining again about the Bank's name. Doesn't Scotland get a mention? And what about Wales and Northern Ireland, for that matter? Labour MP Jim Sheridan has expressed his discontent at the state of affairs by proposing a motion requesting that the House of Commons should consider "the unifying and long-term benefits of changing the name to the UK Central Bank", and he has support from 28 other MPs including both Welsh and Ulster Unionists. Sheridan says: "The Bank of England touches our lives throughout the United Kingdom and, as such, it should be reflected by its name." The Bank counters that it does indeed regularly describe itself as the central bank of the UK, but the fact is, it is bound by its charter of 1694 - which was, ironically, set in motion by a Scotsman, William Paterson.

Heinrich To Head Bis Mexico Office
Negotiations with the Mexican authorities complete, the Bank for International Settlements' Representative Office for the Americas will open (a year later than planned, but who is counting) with full fanfare in November 2002. This is only the second international outpost of the bank (after Hong Kong) and, to mark the occasion, a BIS board meeting of central bank governors will be held in Mexico City.

Chief representative at the new office will be Gregor Heinrich, formerly the BIS's payment system expert. Temporarily housed at the CEMLA - the Centro de Estudios Monetarios Latinoamericanos - the fledgling bureau has just secured office space of its own. Heinrich is joined by Angus Butler, who will be spreading the word about the BIS banking department, and an (as yet unrecruited) senior economist. Mexico City represents something of a return to his roots for Mr Heinrich, who was born in Argentina, and schooled in Brazil, Portugal, Turkey and Germany. Taking an international perspective, the new office fills a time zone gap for the BIS. With Switzerland, Hong Kong and Mexico it can now truly be said that the sun never sets on the BIS.

Jordan To Go
A gracious farewell to Jerry Jordan, the Cleveland Fed's president, who is retiring at the beginning of next year. Jordan was one of the most influential and long lasting of the monetarists who infiltrated central banks in many countries in the 1980s. Jordan said that he had "truly enjoyed the opportunity to serve as a policymaker and to work with esteemed colleagues". At 60, he is ready to leave his central banking career and instead spend more time with his family. David Hoag, chairman of the bank's board of directors, wished him well, saying he would miss Jordan's "extensive knowledge" and his "collegial manner". He has commissioned Robert Mahoney, deputy of chairman of the bank, to seek a replacement.

Though many will be queuing to step up, it won't be easy to replace someone whose career spans a broad spectrum of jobs in government, (including sitting on President Reagan's Council of Economic Advisors), academia, commercial banking, as well as a stint at the St Louis Fed.