News This Issue:

• A MYSTERIOUS KIDNAPPING
• SABIRIN TRIAL DRAGS ON
• BANK INDONESIA TOP BRASS TO GET THE AXE
• DAGGERS DRAWN IN POLAND
• ECB SUCCESSION SAGA - CONTINUED…
• NEXT UP AT THE BANK OF KOREA?
• HAPPY BIRTHDAY!
• Pakistan GOVERNOR IN GOOD HEALTH
• BOTSWANA'S EMINENT CENTRAL BANKER
• ANOTHER CENTRAL BANK?

 QUOTE OF THE WEEK:

• In a meeting with Treasury Select Committee, Sir Edward George

A MYSTERIOUS KIDNAPPING
There has been a great deal of confusion over events surrounding the kidnapping of Lizardo Sosa, the governor of the central bank of Guatemala. On Monday 25 February, Sosa was enjoying his customary morning jog when he was grabbed by a gang of masked villains. But it is still unclear who exactly his kidnappers were, or what they wanted. Contradictory and obfuscatory official information - including assertions that in fact Sosa was only off sick - gave conspiracy theorists a first-rate opportunity to sow doubt in people's minds. Was there a cover up? Did the kidnappers have political motivations? Perhaps it was an act of vengeance for actions Sosa has recently taken? Or was the incident designed to lay their hands on market-sensitive information? It might just have been an attempt to destabilise the current administration.

Who knows? Mr Sosa certainly doesn't. He has spoken out to the press, but maintains an air of bafflement which is in keeping with the whole episode: "About the motive of the action, I wouldn't be so bold to say...I haven't received death threats at the bank. There have been measures taken that have affected certain people, but they have been measures approved by the monetary board according to law. I don't know whether to say if it was politically motivated or a common crime."

But puzzlingly, the abductors' demands were apparently quite modest: although they must have felt obliged to demand a nominal sum, Mr Sosa assures us that "it was much less than was mentioned in the media", although he did get some help from "friends from the private sector" to come up with the required amount. Equally fortunately for Sosa, they sound like fairly reasonable captors. Although they held him in a small, dark room they didn't ask him anything and he wasn't tortured or mistreated in any way. He said: "They gave me food...They gave me medicine that I always take...and they called me 'Mr Lizardo.'" So what was it all about?

SABIRIN TRIAL DRAGS ON
Sjahril Sabirin, the governor of Bank Indonesia, is on trial for charges of abuse of power, and is still awaiting the verdict which was due to be announced on March 6. He will have been dismayed to discover that the agony of suspense was to be prolonged since the announcement was adjourned for another week: the presiding judge was "not ready to make a decision" because he had a "headache and a cough".

Sabirin has the full support of the central bank; a spokesman tells me that all the staff "strongly believe our governor has done nothing wrong". The bank maintains that all along his case has been dominated by unsavoury political motives aimed at cramping the central bank's independence, originating in the wishes of the previous government to foist a rather more compliant leader onto the bank. You can find out more about the case on the bank's website: http://www.bi.go.id/bank_indonesia_english/special/gbicase/

ECB SUCCESSION SAGA - CONTINUED…
Fresh developments in the ECB succession rumpus have brought to light that there is a hopeful in Belgium for the top job in the shape of the country's finance minister, Didier Reynders. He has been quoted as saying: "I have never said I would not be interested in the presidency of the ECB, but not (just as) a member of the board." But he clarified: "If France maintains Jean-Claude Trichet's candidacy for the presidency, we will support it. But it would not be normal for Belgium not to be represented on the board."

The Belgians are evidently eager to be a part of the decision-making process: they have formally proposed that Paul de Grauwe, the well known economist, should be considered a runner for the number two spot soon to be vacated by Noyer. This puts a spanner in the works for Greece, since central bank governor Lucas Papademos has recently been rumoured to be the frontrunner for the position. But the two have very different backgrounds. Papademos is a seasoned central banker, described by Rodrigo Rato, Spain's finance minister, as "a person of recognised standing". De Grauwe on the other hand is not practiced in the dark art, although he is a professor of economics and a member of the Belgian parliament.

So are we to assume that Papademos will win the day? Despite the competition, that seems to be what people are saying. This may come as a belated surprise to even Papademos himself. He has admitted that before he was initiated into the ways of central banking, he wasn't sure it would really be for him: "When I joined the central bank in 1985, I wasn't quite sure that central banking would become the central element in my career...Gradually, it became more obvious that I was attracted by the ability to be involved in formulating and implementing monetary policy." And he has had some success in fulfilling his desires. When not formulating monetary policy, he professes to enjoy listening to music, taking long walks in winter in the hills outside Athens and going swimming in summer.

He will have been helped by the unwillingness of others to participate in the competition. The Portuguese central bank governor, Vitor Constancio has withdrawn from the contest on account of his reluctance to deracinate: "I am not a candidate because I do not want to leave the country." He added that he was not aware of any other Portuguese contenders. His opposite number in Austria, Klaus Liebscher, has also displayed little enthusiasm for the post, citing "private reasons" for wanting to stay in Vienna, and it has since been announced that Austria will not put a candidate forward for the vice-presidency.

NEXT UP AT THE BANK OF KOREA ?
The term of the current governor of the Bank of Korea, Chon Chol-hwan, is due to expire at the end of this month, on March 31. Several names have been put forward as suggestions for who might take his place, with Professor Chung Woon-chan of Seoul National University leading the ratings to succeed him. Others include Ryu Shi-yol, president of the Korean Federation of Banks, as well as the current governor Chon himself, and his deputy, Park Cheul.

According to the Korea Herald, the results of a recent survey showed that 44% were in favour of a civilian financial export taking charge of the central bank, while 28% preferred a candidate from the central bank itself. Oddly, only 60% of central bankers thought that a central banker should take the job.

Also, an overwhelming majority of 92% believed that the governor should remain in office for a full four-year term and that there should be no political interference, something of a problem in Korea. It is usually the case that a new president (the next elections are scheduled for December this year) replaces the central bank head regardless of whether or not the term of office has expired.

HAPPY BIRTHDAY !
A toast to Alan Greenspan who reached the venerable age of 76 on March 6, though he cannot boast to be the oldest central bank governor until Japan's Hayami steps down. But his seniority seems by no means to have dampened his zeal for the job: he continues to confound those sceptics who think he will not last out his term. There was renewed speculation that he might choose to announce his resignation on his birthday, as people thought he might want to "quit while he was ahead".

There is no shortage of suggestions as to who might replace him. Central bankers include Greenspan's own vice-chairman, Roger Ferguson and William McDonough, president of the New York Fed; others are former Treasury Secretary Robert Rubin, former Stanford Professor John Taylor, who now heads the monetary division at the US Treasury, Lawrence Lindsey, chief economic adviser to the White House, and Professor Martin Feldstein, who served in the White House under Reagan.