• New generation at the top
• Another row looming on ECB board appointments?
• Issing - rules are rules
• See the future ECB head office
• Former Bank of Canada governor dies aged 83
• Macfarlane's amex bill goes public
• Chaos as coins consumed by children
• Gerashchenko's appeal fails
• IMF backs up Fazio's claim
• Eggschange rate policy?
• New York Fed names Christine Cumming first VP
• Sweden's central bank gets a chief press officer
• Speculation on Barker's replacement at BoE

NEW GENERATION AT THE TOP

Findings in the new edition of Central Banking Publications' Central Bank Directory have shown that 2003 has been a year of much change at the top level of central banking. In the group of ten nations alone there have been five new governors: Jean-Claude Trichet at the European Central Bank, Toshihiko Fukui at the Bank of Japan, Mervyn King at the Bank of England, Christian Noyer at the Banque de France and Lars Heikensten at Sweden's Riksbank. This means just under 50% of G10 nations saw governor change in the last year. There was a change of governor also in the two countries with the world's biggest populations. Zhou Xiaochuan took over as governor of the People's Bank of China and Dr Yaga Reddy as governor of the Reserve Bank of India. Thirty-two new governors are listed in the 2004 Directory, meaning nearly 20% of all central banks saw change the top.

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ANOTHER ROW LOOMING ON ECB BOARD APPOINTMENTS?

A debate has started in Europe about who will eventually succeed Otmar Issing in the key role as head of research and economics at the ECB when his term expires in 2006. Might it be another German national? Of course, the last thing the ECB needs at this stage is a further dispute among the countries about senior appointments to the ECB - least of all if the battle lines are drawn up on nationalistic lines. But this does now seem possible.

The ECB needs to avoid another quarrel on the subject of the nationalities of executive board members. Its credibility has in the past been damaged by such disputes as they have repeatedly threatened to drag the institution into the political arena when it wanted to present itself as a smoothly running, independent, supranational institution.

The immediate issue is to find a replacement for Spain's Eugenio Domingo Solans, another of the six members of the European Central Bank (ECB) executive board, whose term of office ends on June 1. Belgium and Ireland have both already presented candidates to succeed him - the much respected former academic Peter Praet from Belgium and Michael Tutty, former career civil servant and vice president of the European Investment Bank. Belgium and Portugal are two countries that have not yet had one of their nationals on the ECB Board (the others being Ireland and Luxembourg); Belgium has already been rebuffed when it put forward Paul de Grauwe as a candidate for the board last year. But if Spain also proposes and this is accepted, this could set a precedent for a German to replace Issing. The fact that the other big vacancy coming up before that is for the Italian, Tomasso Padoa-Schioppa (whose term expires in 2005) adds to the room for power-play by finance ministers, who will make the final recommendation to heads of state.

It is another test for the ECB, and inevitably the big countries have the clout to get their way if they so wish. The key is how Germany, France and Italy vote. Actually, it would probably make sense for either Germany or Italy to have a national at the top table. Otherwise, all the other slots (other than the president Trichet) could after 2006 be held by nationals from the so-called second tier countries. This is clearly the view in Berlin. A senior German government official said that the make-up of the ECB's six-member executive should reflect the eurozone's largest economies. "It makes sense that a healthy majority of eurozone gross domestic product is represented in the European Central Bank's executive board and it is against this background that personnel decisions should be taken," the official, who declined to be identified, told Reuters.

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ISSING - RULES ARE RULES

Otmar Issing, chief economist and executive board member at the ECB has said there is no need for the UK to join the euro area soon: "No problem at all would be caused for the euro or the ECB if some countries stay out for a long period". But he was adamant that the UK as well as Denmark and Sweden would have to observe two years in ERM II before adopting the euro, insisting that rules are rules and new members should adhere to the same regulations as existing members already have:

"It is right that all new members should have to follow the same rules as existing members have done."

The same goes for the stability and growth pact, which many people have consigned to history. Not at all. The rules of the stability and growth pact also must be observed in future. He was "very disappointed" that Germany should have been one of the countries flouting the rules; the bad example of this breaking of the rules for smaller countries set to join the EU in May was, he said, "not only unfair but unacceptable". The comments were made in a wide-ranging interview published last week in the February 2004 issue of Central Banking.

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SEE THE FUTURE ECB HEAD OFFICE

Forget to enter your designs for the new European Central Bank (ECB) premises competition? Sadly it is too late now, but from 21 February for three weeks there will be the opportunity to see the work of the eighty architects selected to draw up designs for the new building in the first phase of the competition, of which twelve were selected to go through to the second round.

From these twelve, a jury has selected three winners. First prize was awarded to Coop Himmelb(l)au of Vienna. Second place went to ASP Schweger Assoziierte of Berlin and joint third to 54f Architekten of Darmstadt (Germany) and T.R.Hamzah & Yeang of Selangor (Malaysia). In the revision phase that follows the Governing Council of the ECB will invite one or more of the prizewinners to review their design proposals and the final design will then be decided on by the ECB and the City of Frankfurt.

The new premises will be built on the site of the Grossmarkthalle (wholesale market), an area of 120,000m² on the river in the eastern part of Franfurt-am-Main.

Entry is free so start booking your tickets to for a glance at what the ECB could look like! There are guided tours on Saturday and Sunday.

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FORMER BANK OF CANADA GOVERNOR DIES AGED 83

Gerald Bouey, former governor of the Bank of Canada from 1973 to 1987, died on 6 February in Ottawa at the age of 83. David Dodge, current central bank governor said "I and many Canadians will remember Gerry as a consummate governor, a man of enormous intellect and integrity, who worked tirelessly to ensure the bank achieved the highest standards of public policy." Bouey, a career central banker, is remembered for raising interest rates to record levels (21% at one point) in an effort to eliminate the inflationary expectations rife among businessmen and consumers. Though unpopular at the time, Buoey's achievements in an exceptionally troubled period have since been lauded.

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MACFARLANE'S AMEX BILL GOES PUBLIC

Australia's newspapers went into overdrive this week after one was able to obtain RBA governor Ian Macfarlane's American Express statements under a "Freedom of Information request". The bank was forced to defend Macfarlane's $249,000 credit card bill, which is funded by the Aussie tax payer. The Amex bills were obtained by Australia's Daily Telegraph which reported that, shock, horror, "Macfarlane spends on travel and hotels, sometimes taking wife Barbara with him". But the Reserve Bank of Australia said 90 per cent of the expenses were for travel to official events and others were for corporate entertainment.

"He has to do these trips because he's the governor of the Reserve Bank of Australia," a bank spokesman said. "There are no personal items. It's a massive misrepresentation of the truth which is entirely that these are all official expenses." The statements didn't reveal anything particularly exciting in Macfarlane's spending, with unspecified "books and stationery", "sporting goods", and visits to plush restaurants the highlights. Some items on the statements were deleted by the Reserve Bank, the report said, citing "unreasonable disclosure" of Mr Macfarlane's personal affairs.

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CHAOS AS COINS CONSUMED BY CHILDREN

The State Bank of Vietnam's recent issue of three new coins turned to disaster when children started eating them after mistaking them for sweets. Since three coins were made available in mid-December after a two-decade absence, doctors have treated at least 17 children for swallowing them. Six children aged between two and 10 were treated in the central province of Quang Nam over the recent Lunar New Year holidays after swallowing coins.

The new coins were intended to promote the use of vending machines and other conveniences in Vietnam but have proved to be a headache for the central bank. But the launch of the country's new money has faced other glitches. Polymer-based, counterfeit proof banknotes that were also introduced last month were hit by rumours that the bills would be withdrawn because they had no year of issue printed on them. Jewellery shops have complained that their counting machines couldn't read the new notes.

This all resulted in the central bank issuing a stern warning in defence of its much maligned new notes. "Any individual who refuses to circulate the bank notes issued by the State Bank of Vietnam will be named as a lawbreaker and will face tough punishments," deputy governor Nguyen Thi Kim Phung said last month.

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GERASHCHENKO'S APPEAL FAILS

Russia's Supreme Court rejected an appeal from former central bank chairman Viktor Gerashchenko on Friday 6 February over refusal by the Central Electoral Commission (CEC) to register him a candidate in the upcoming presidential election. Gerashchenko was refused registration by the CEC on 22 January by a majority vote, on the ground that he was nominated not by the whole Rodina bloc, but by one of its parties, namely the Party of Russian Regions. Claiming the move was illegal, Gerashchenko cited legislation stating that the parties who won the Duma election have the right to nominate their candidates to the post of Russian president without collecting the necessary two million support signatures.

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IMF BACKS UP FAZIO'S CLAIM

When Antonio Fazio, governor of the Banca D'Italia, claimed in his testimony to parliament over the role of the bank in the Parmalat affair that an IMF report had commended the supervisory role of the bank, general suspicion was raised when Tom Dawson, the Fund's chief communications officer, could not immediately recall such a report. Since then Mr Dawson has been happy to report that he has located the quote in a draft prepared last November entitled "Detailed Assessment of Compliance with the Basel Core Principles for Effective Banking Supervision for Italy". The document was, he said, in the process of being finalised.

EGGSCHANGE RATE POLICY?

Managing reserves may be considered a fairly serious task for a serious institution, but it seems the Old Lady is showing her fun-loving grandma side in the latest line up of its museum events. Not only will a costumed Kenneth Grahame, secretary of the bank form 1898 to 1908, be reading extracts from his famous book "The Wind in the Willows", the Easter bunny himself will be distributing eggs in a "chocolate eggstavaganza". A bounty of fauna seems to be the theme from the very place where characters Ratty, Mole and Toad of Toad Hall could have been inspired!

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NEW YORK FED NAMES CHRISTINE CUMMING FIRST VP

The Federal Reserve Bank of New York named Christine Cumming, a 24-year veteran of the Bank, as its new first vice president on Monday (9 Feb). Timothy Geithner said that her fine judgement and intellectual contribution to the bank is impressive. Ms. Cumming, 51, has served for the past four years as executive vice president and director of research, and as a member of the bank's management committee. Ms. Cumming is the bank's ninth first vice president, following Jamie B. Stewart, Jr. who resigned on January 30. The first vice president is the second ranking officer in the bank, and serves as its chief operating officer, as well as an alternate voting member of the Federal Open Market Committee. As director of research, Ms. Cumming was responsible for the Research and Market Analysis Group, which provides analysis relating to the bank's responsibilities for monetary policy, banking supervision, payments systems, and financial market issues. Ms. Cumming joined the bank in the International Research Department, and focused on international economics and capital markets while a research economist. Subsequently, she joined the Bank Supervision Group, where over time she was responsible for both bank examinations and policy analysis areas, with a special emphasis on risk management and capital markets issues. Ms. Cumming also was active in the work of the Basel Committee, including co-chairing its Risk Management Group from 1997 to 1999. Ms. Cumming holds both a B.S. and a Ph.D. in Economics from the University of Minnesota. She is a resident of Brooklyn, New York.

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SWEDEN'S CENTRAL BANK GETS A CHIEF PRESS OFFICER

The Sveriges Riksbank has appointed a former journalist for a new job at the world's oldest central bank. Jörgen Eklund will become the chief press officer as the Bank's external communications "have increased in scope" the Riksbank said. At a meeting the Executive Board of the Riksbank appointed Jörgen Eklund chief press officer. This is a new post and entails an extension of the Communications Department's press service. The reason for the new post is that the Riksbank's external communications have increased in scope. Mr Eklund has worked as advisor to the governors of the Riksbank since 2000. Prior to that, he worked as a journalist at Finanstidningen newspaper and on the Ekot radio programme. Mr Eklund will take up his new post on 1 April 2004. The press service will then consist of a chief press officer and a press officer.

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SPECULATION ON BARKER'S REPLACEMENT AT BOE

Kate Barker's term on the Bank of England's Monetary Policy Committee is due to end in May. While she could be reappointed, a few names have been aired as potential successors.

The FT named John Muellbauer of Nuffield College Oxford, a specialist in housing economics as a potential replacement for Barker, given the importance of the housing market. But David Miles, a former City economist and now an academic, who is reviewing the mortgage market for the Treasury, also has strong backing they say. Geoffrey Dicks of Royal Bank of Scotland is a favourite for others. While the bank economist with probably the highest reputation in the Treasury is David Walton of Goldman Sachs, some reports said.

Gavyn Davies, who recently resigned as chairman of the BBC following publication of the Hutton Report, is also tipped by the FT saying he is not only experienced at the highest levels of government and the financial markets, but also admired by Gordon Brown.

It seems Britain has not run out of suitably qualified candidates for its monetary policy committee just yet.

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