News This Issue:

• Argentina's Central Bank Sheds Senior Staff - And Governor?
• Doubts Over Taylor's Rule
• Ingnominious Incident At The Dallas Fed
• Papademos Poll
• More Euros For The Euro
• Job Up For Grabs
• Fresh Blood
• Troubled Turkmenistan
• "Bizarre" Praise

Argentina's Central Bank Sheds Senior Staff - And Governor?
Rumours are circulating furiously around Buenos Aires that the head of Argentina's central bank Mario Blejer's resignation is imminent. Although Blejer - who has contributed to the Central Banking journal in the past - has only been in the job since this January, one could hardly blame him, as tensions are rising high in frantic efforts to resolve the pitiful state of the nation's finances. Talking to the local media, Blejer clarified that he had not in fact resigned yet (at the time this email was sent out), but cast serious doubt on the prospect of his remaining much longer in the present circumstances, especially if the economy ministry refuses to force holders of frozen term deposits to swap them for bonds. He obviously does not want to be around when the economy is set upon by the hyperinflation that he says is inevitable if politicians do not follow his advice, which at the moment they do not seem to be willing to do.

Already this week, two of the bank's seven directors have resigned for "personal reasons": Amalia Martínez and Roberto Reyna. The bank has denied rumours that two more directors, Felipe Murolo and Aldo Pignanelli, have tendered their resignation. Martinez, who is in charge of the bank's rapidly dwindling reserves (which now stand at US$10.8 billion, roughly two-thirds the level they were at in January), will stay until the end of this month. But although she only handed in her resignation recently, she has been eager to leave the bank for months, "fed up of going from crisis to crisis" according to one source. Now that she has been made a tempting offer to work in the private sector, she has decided not to turn it down. Reyna on the other hand is just going to go on holiday for a while "to ease the stress".

This shedding of senior staff comes as no surprise, considering how awful working conditions at the bank have become. Hate mail is now the norm, and the public has recently made a habit of going into the bank and haranguing senior members. Aldo Pignanelli, the vice-president, has had the front of his house defaced with offensive graffiti. Blejer has complained of a constant stream of insulting emails. A director's monthly pay is roughly 5,000 pesos, in return for which they must work gruelling hours, regularly sitting through 10-hour long meetings to make decisions for which they may be tried in court in a few years time if they make the slightest slip up. Former governors Pou and Maccarone are currently under trial for actions they took will in office. Putting former governors on trial is an old tradition in Argentina. Old-timers will recall the trial of Martinez de Hoz in the 1980s.

Central bank staff are also severely frustrated because they are frequently bypassed in negotiations between the government's economic team and commercial banks who are desperately seeking a feasible way of lifting banking restrictions. The central bank predicts grave consequences if it continues to be ignored. It says it will not be long before the peso reaches a value of 5 pesos to the dollar, while monthly inflation is certain to hit double digits, and 40% of banks will close. For its part, the economy ministry alleges that there is a "conspiracy" amongst the central bank's directorate to ensure that their current plans fail.

Doubts Over Taylor's Rule
John Taylor, under-secretary for international affairs at the Treasury and monetary-policy prophet, has been seen as a possible successor to Alan Greenspan as chairman at the Fed. His performance so far, however, has removed the lustre from his exemplary credentials. In policy terms he has been accused of sitting tight, merely biding his time for the call to move the short distance across town to the Fed. Rudiger Dornbusch, a professor of economics at MIT, thinks he has been "doing nothing". Dornbusch says that when a decision has been required he has appeared indecisive or-to Dornbusch's dismay-too thoughtful.

It has not gone unnoticed that there is a stark contrast between Taylor's reluctance to act over the crisis in Argentina and the hefty Latin American bailouts orchestrated by his predecessors David Mulford and Larry Summers. This lack of international bluster appears to have deflated those in the upper echelons of the Treasury used to a more proactive role. Moreover, with his aloof stance on international matters Taylor has conceded policy ground and initiative to the Treasury's bitter rival, the State department. The result has been an internal memorandum complaining of a drop in staff morale, complaints of indecision and the departure of high-level advisers from the Treasury. Taylor may be following the Bush administration's line on scaling down official sector involvement, but he is not scoring many points for man-management.

Also, Taylor has hardly made himself popular at the IMF. His dismissal of former colleague Anne Krueger's approach to sovereign debt workouts drew strong criticism from various commentators. The retraction of this position a week later by Taylor's deputy, Randall Quarles, represented something of an embarrassing climb down for the Treasury.

Giving mixed signals and displaying a lack of enthusiasm for regulation do not in themselves rule out anybody from becoming chairman of the Fed. But Taylor currently does not exhibit the quality essential for the top job at the Fed: that of inspiring confidence.

Ingnominious Incident At The Dallas Fed
At least his chances would seem to better than those of the Dallas Fed governor Bob McTeer. A recent gathering hosted by McTeer of top tier Fed officials from the Dallas and San Francisco districts, although intended to be a sedate and gratifying affair, degenerated into ignominy. And this did not escape the notice of those in Washington. McTeer made the mistake of, perhaps unknowingly, inviting to address the central bankers a politically very incorrect speaker, Harry Stein, author of "How I joined the Vast Right Wing Conspiracy (and Found Inner Peace)", but his talk turned out to be extremely embarrassing.

At least one board member from the San Francisco district stormed out in disgust, and the president of the San Franciso Fed, Robert Parry, issued a statement describing the speech as "offensive and inappropriate". McTeer was quick to make amends, but word had already got around. Predictably, McTeer said that he regretted the incident, although he unwisely maintained that Stein was not "out of line". Others were less accommodating, not sharing his appreciation for Stein's sense of humour. This extreme right-winger described the Democrats as "morally corrupt to the core", multiculturalism as responsible for "debasing standards", feminism had "poisoned culture", and the prevailing liberal attitude to homosexuality was "tragic". One San Francisco Fed director who was not there said that many of his colleagues were uncomfortable with what was said: "I understand it got fairly quiet in there".

But the episode may be forgotten by the time Greenspan's job is finally up for grabs. Greenspan may be around for longer than we think. Parry for one has been trying to get this message across: "I don't think we should think too hard at this point about life after Greenspan at the Fed because he could be around for quite a while."

More Euros For The Euro
When deciding to whom they could present the international Charlemagne prize for contributions to European unity this year, the prize-givers were stumped. They could not think of a single living body worthy of such an honour. In the past they have made do with various heads of state - from Winston Churchill to Bill Clinton. But this year no one really fit the bill - so, they must have thought, how about doing something crazy like giving the prize back to itself? The 5,000 euro prize money was, hilariously, awarded to the euro. For cover, the prize-givers blustered something about the euro bringing its people closer together, in an effort to appear sufficiently concerned with European matters.

Or was it just an elaborate practical joke on Wim Duisenberg, president of the ECB? He obligingly accepted to receive the prize on the euro's behalf, but he must have felt a little redundant, if not rather dizzy in the face of the metaphysical implications of being handed both the prize and its recipient simultaneously. What's more, he must have been startled to discover that the prize-givers were so brazenly perpetrating such an inflationary act. What he did with the prize money it may be impious to ask, but it is not inconceivable that he considered putting it in the shredder.

Job Up For Grabs
How do you persuade people to apply for one of the best jobs a country has to offer? Prospective candidates to succeed Don Brash as governor of the Reserve Bank of New Zealand are dropping out at an alarming rate. Former deputy governor Murray Sherwin says he is happy running the Ministry of Agriculture and Forestry, which after all he only joined last November. Also, one strong contestant, former Deutsche Bank head in New Zealand John MacFarlane, seems not to be interested, as is the case with one of the bank's non-executive directors Arthur Grimes, although he has only been at the bank since March.

Those who do wish to partake have until 20 June to decide according to an advert the bank has put in the press this week, although apparently no one of any stature has so far put himself forward. Adverts will be placed in New Zealand, Australia, the United Kingdom, and the United States for the job which pays just under $500,000 a year. The bank has also appointed headhunter Signium International to comb the world for a new governor.

So let's hope the job attracts some competition; Newsmakers will be happy to forward any applications from readers to the appropriate quarters. The advertisement consists mainly of a job description. Amongst other things, "the governor must be a person of the highest integrity and credibility. Intellectual ability, appropriate academic qualifications and business experience are also key requisites." It is also emphasised that they are looking for someone with "the ability to withstand criticism, strength of character and personal courage." Needless to say, the governor must also show "a strong commitment to price stability, a strong understanding of monetary policy, display political awareness, have an understanding of public policy decision making regimes and the New Zealand economy."

Fresh Blood
The Reserve Bank of New Zealand has been garlanded with another senior member: Hugh Fletcher, former head of Fletcher Challenge, was appointed non-executive director this week, although he too has already denied any interest in the post of governor. Finance minister Michael Cullen said Fletcher's "considerable business experience would be an asset to the board", and he replaces IT entrepreneur Sir Gil Simpson whose term expires on June 8. Fletcher also headed an inquiry into telecommunications that recommended tighter regulation of the sector, with most of his ideas taken up by the government. He has brought to the bank his own opinions and is known for criticising Brash's tight approach to monetary policy.

Another development is that Rod Carr has been confirmed by the government - on the recommendation of the bank's board - as acting governor for up to six months until late November, if a permanent appointment is not made before then. This move was no surprise and people inside the bank think the government may delay an appointment until after the coming general election.

Troubled Turkmenistan
An entire stratum of Turkmen potentates has been purged, ostensibly in an attempt to extinguish endemic corruption and incompetence. Amongst those to feel the wrath of President Nyyazow was the now former central bank head, Seyitbay Gandymow, appointed in May 1999. In a meeting of the council of ministers - of which Gandymow was also deputy chairman until his dismissal - which was broadcast on national television, the president chided him for taking liberties while in office and failing to fulfil the tasks he was appointed, including monitoring the finances of various state ministries. The president declared himself puzzled that so many so close to Gandymow had landed such lucrative jobs - including his three sons.

Charges of embezzlement and buying up land were also stacked against him. Gandymow protests his innocence. And some questioned whether his dismissal was linked to his friendship with, among others, the former central bank chief and former deputy prime minister, Hudayberdi Orazow, who has now joined the opposition.

Gandymow's successor has already been nominated, although confusingly they share the same last name but are not related! Ymamdurdy Muhammedowic Gandymow was appointed as the new central bank governor on 6 May. A callow 34, that makes him one of the youngest of all central bank governors, only a few months older than the most precocious of all governors, Irakli Managadze from nearby Georgia. This follows a trend in ex-Soviet and Eastern European countries to appoint much younger staff to senior positions than the more developed countries. The average age for governors in this is region is 49, while in the G7 governors are appointed at considerably more advanced ages, the average being 66. Before beginning his banking career, Gandymov was senior lecturer in accounting and finance at the Turkmen agriculture institute. He joined Dayhanbank [Peasant's bank] in 1996 as a senior economist; in 1998 he became acting head of the governing board of Dayhanbank, the state commercial bank. In April this year, the president appointed him as the first deputy minister of agriculture.

"Bizarre " Praise
Surely Alan Greenspan deserves our compassion. Imagine an incessant, almost indecent barrage of praise shovelled on your good name. Greenspan finds it all a bit OTT. Michael Moskow, president of the Federal Reserve Bank of Chicago, doing little more than following convention, offered the usual laudatory preamble to a keynote speech Greenspan was to make at the Chicago Fed's bank structure conference. He unleashed the usual litany of Greenspan's accomplishments on his listeners: his early facility with the saxophone, his exceptional achievements in the private sector, his subsequent elevation to god-like status at the Fed. He had even come to the Chicago Fed's conference every year since he became Fed chairman.

Greenspan sardonically responded that this was only because he was curious to hear his counterpart's "increasingly bizarre" introductions. Moskow, unabashed, suggested that he should "wait until next year".