• Sibos at Sydney
• Godeffroy squares up to Francotte
• Sepa event
• Phelps backs discretion
• Chicago still leads Nobel roll call
• Baie dankie Tito!
• Buiter's blasts
• Paramonova out
• Tarisa becomes Thai governor
• Carstens leaves Fund
• Issing for Goldmans
• Hausler for Lazards
• Academic for top Polish job?
• Balcerowicz up in arms
• Fukui donates gains to charity
• Developing countries "losing $100 billion a year"
• Kozlov's murder
• Melikyan succeeds
• Russia ups euro reserves
• Chairing the FOMC "like herding cats"
• Juncker gives in
• That's rich
• Lister resigns
• Omi to confront BoJ?
• Cole succeeds veteran Spillenkothen
• Sanctions against Iran would "hurt others more"
• New head for central bank of Peru
• Kosovo gains central banking authority
• Ben must "try harder"

Sibos at Sydney
The Bank of England's Steve Barton raised eyebrows at this year's SIBOS when he floated the idea of the Bank giving up running Britain's real-time gross settlement system (RTGS). "In most cases central banks are the operators of the RTGS, but we are happy to review this," he said when discussing renewal of the system. This "may lead to a different proposal in the future." Viewed as systemically important, RTGS systems process a country's large-value payments and are typically the preserve of the central bank, which more often than not owns, runs and oversees it.

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Godeffroy squares up to Francotte

Much of the chatter among delegates surrounded the controversy raised by the ECB's proposal for the eurosystem to run a single settlement-only platform for euro securities. This is controversial as settlement is one of the services already provided by privately run or user-owned central securities depositories (CSD). The problem is that despite some consolidation and work to harmonise rules, the sector remains fragmented along national lines. For Jean-Michel Godeffroy, the ECB's director-general of payment systems and market infrastructure, the new proposal called Target2securities is the only way to achieve three objectives: "to maximise the benefits of European integration; to maximise settlement efficiency (with cash and securities settled on the same platform); and to maximise central bank control over accounts opened by banks."

Godeffroy was a "special guest" at a panel on securities market reform which also featured Pierre Francotte, chief executive of Euroclear, Europe's largest settlement provider, and the organisation with most to lose from the proposal. This provided excellent theatre for all concerned. The appearance of civility was maintained - there were no fisticuffs or anything. But the body language of folded arms spoke volumes. Francotte commented icily that it was up to the ECB to demonstrate the business case for T2S. The ECB's proposal leaves out custody and notary functions which traditionally have been combined with settlement in a CSD, Francotte argued. Far from simplifying the process, the ECB's proposal would add another layer to the process, as it did not collapse the existing platforms into one. "Is it going to be more efficient? That is the question," - clearly a rhetorical question as far as he was concerned. Passionately, he called for a "dispassionate debate" on the subject after a thorough consultation with the market in early 2007.

Godeffroy said he would not use the word "threat", but acknowledged that if the proposal is implemented CSDs "will require fewer people to handle their activities." He added "there was a lot of experience in CSDs that we would like to benefit from." The general impression one had was that the central bank may have launched the initiative without realising the extent of the work involved. But Godeffroy would not countenance any turning back or wavering: "Central banks are not good at everything," he said, "but if there is one thing they are good at it's building market infrastructure."

Phelps backs discretion

Edmund Phelps, awarded the Nobel Prize for economics earlier this month, thinks that policymakers should make sure that they are not so open with the public that their ability to make decisions is constrained. "I'm a little bit distrustful of the idea of fixed, transparent interest-rate rules," Phelps said in an interview with Bloomberg.

"The central bank had better leave itself open for using its intuition and responding to events in an ad hoc way when new challenges, when new situations, present themselves." ``There are going to be times when transparency has got to take a back seat to practicality,'' Phelps told the newswire. Phelps said on 9 October that the ``usual formulations of inflation targeting'' may be ``unrealistic.'' ``They tend to assume the policy maker knows all sorts of things he couldn't possibly know,'' Phelps said.

Chicago still leads Nobel roll call

Phelps, 73, is a professor at Columbia University in New York, bringing its clutch of economics Nobel laureates to four, with Robert Mundell, Joseph Stiglitz and the late William Vickrey (a perennial favourite for the prize, the great trade theorist Jagdish Bhagwati is also on the faculty but has not won the big one yet). Including those who shared prizes with others in the same year, that makes Columbia level-pegging with Harvard and Cambridge, UK, but still lagging behind the University of Chicago, whose roll call of nine features Milton Friedman, Ronald Coase, Theodore Schultz, George Stigler, Merton Miller, Gary Becker, Robert Fogel, Robert Lucas and James Heckman.

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Baie dankie Tito!

Tito Mboweni, the governor of South Africa's central bank, made clear his frustration at the central bank's inability to retain young black staff. Discussing the Reserve Bank's track record in black economic empowerment (BEE), Mboweni explained that he had "sought to recruit many competent black people, and no sooner have we recruited and trained them than they leave." For Mboweni, some however had shown commitment: "I get so upset . . . I am stopping this recruitment of black people. I am okay with my Afrikaners. They stay and do the work, and become experts," Mboweni said.

The problem for the central bank is that commercial banks in South Africa, still predominantly owned and managed by the Afrikaner and English-speaking white minority, are also under stringent BEE requirements, either explicitly or through implicit governmental pressure. It should come as no surprise that a well-trained, black economist, statistician or trader is an attractive proposition for the country's commercial banks, who can offer salaries well above that the Reserve Bank has on offer.

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Paramonova out

Tatyana Paramonova, one of the best-known of Russia's central bankers, is not be considered for reappointment as a managing board member. The State Duma, Russia's lower house of parliament, extended the term of five members of the central bank's board on Wednesday - their tenures had expired on 27 September - but chairman Ihnatiev did not put Paramonova up for reappointment: "I think Tatyana Paramonova is a highly qualified, experienced and industrious person, but she has not been good at tackling issues lately, as decisions have been implemented slowly and ineffectively," Sergei Ignatyev said. "I decided not to submit her candidacy for reappointment to the managing board," he added.

He said that Paramonova had experienced certain "problems" with the introduction of the real-time gross settlement system (RTGS) and the transition of the banking sector to International Financial Reporting Standards.

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Tarisa becomes Thai governor

Tarisa Watanagase, Bank of Thailand deputy governor, is to take over as governor, the first female governor in the bank's 64-year history. Atchana Waiquamdee, 55, BoT assistant governor has been promoted to deputy governor, replacing Ms Tarisa, Deputy Transport Minister Sansern Wongcha-umister said on Tuesday. Ms Tarisa, 57, has been working for the central bank since 1975 as an economist. She held the post of deputy governor since 1992.

The Bank of Thailand credits Tarisa with spearheading ``a modernisation program, putting in place a large-value fund transfer system with real-time-gross-settlement capability, the first in South-East Asia.'' The bank also attributes the introduction of an electronic fund transfer system for small payments and an electronic check clearing system to Tarisa. The appointment came after previous governor Pridiyathorn Devakula became the deputy prime minister and finance minister under the interim government led by Prime Minister Surayud Chulanont.

Carstens leaves Fund

Agustín Carstens has quit as deputy managing director of the International Monetary Fund in order to join Mexico's President-elect Felipe Calderon's transition team. Carstens is considered a likely choice as Mexican president-elect Felipe Calderon's treasury secretary. He will join Calderon's transition team as economic coordinator.

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Issing for Goldmans
Otmar Issing, former chief economist of the European Central Bank, is to join Goldman Sachs in January 2007 in a "loose advisory position", which would in no way relate to the investment bank's operations. The ECB's code of conduct forbids top bank officials from taking up new positions within the first 12 months after quitting the central bank that might lead to a conflict of interest.

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Hausler for Lazards
Paris Investment bank Lazard Ltd. has appointed Gerd Hausler, a former International Monetary Fund executive, as a managing director. Hausler, who will be based in Paris and Frankfurt, will also become a vice-chairman of Lazard International and a member of Lazard's Germany Advisory Board, the bank said in a statement.

He will work on Lazard's corporate relationships in Germany and the rest of Europe and with financial institutions across the world. Hausler "brings a wealth of unique experience and relationships in both the public and private sectors, which positions him to make a significant contribution to our global business," Bruce Wasserstein, the chief executive, said.

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Academic for top Polish job?

Poland's prime minister, Jaroslaw Kaczynski, who has engaged in a long-running bruising battle with the current central bank leadership, seems set to appoint professor Urszula Grzelonska of the Warsaw School of Economics (SGH) as president of the central bank according to local news reports in succession to Leszek Balcerowicz.

"Unlike the current head of the central bank, this person has always been right in her analyses," said the PM in an interview for the Nasz Dziennik daily. In August, Kaczynski said that Grzelonska's judgements have been more accurate than those of Balcerowicz, the Polish News Bulletin said. It quoted Grzelonska as denying having been offered the job, but saying she would consider it if offered.

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Balcerowicz up in arms

Leszek Balcerowicz, who has been president of the central bank since 2001, says that the bank is suffering the most extreme attacks on its independence since communism fell in 1989. Challenges to it have grown more aggressive since the nationalist, conservative Law and Justice party took power last year. "The recent attacks were the most extreme in the last 16 years," Balcerowicz told The Associated Press last month. But, he added, "we have been successful in defending the independence of the central bank so far." In September, he defied the government by refusing to testify before the panel. Poland's supreme court then ruled that the commission violated the constitution.

The governing party also shifted supervision of the banking and financial sectors to one big commission, a move the European Central Bank has warned threatens the independence of the banking authorities. Balcerowicz insists the bank's independence is necessary to maintain the stability of the Polish currency, the zloty, which he calls one of the "great achievements" of free-market Poland. "I was not defending my modest person," he said. "I was defending something fundamental -- the independence of institutions." Balcerowicz plans to retire from policymaking after his six-year term ends in January.

Reflecting on his accomplishments in guiding Poland's transition to a free market economy -- initially during two stints as finance minister, then as central bank governor -- he said the country has "achieved a lot" but is still pushing to draw level with western Europe. "With certain policies, we would catch up in less than 20 years, with bad policies it would take longer," he said.

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Developing countries "losing $100 billion a year"

"Returns on reserves invested in normal central bank portfolio are likely to be close to zero in real terms for most developing countries," according to Larry Summers, a Treasury Secretary under president Bill Clinton. This is partly because some held far more reserves than they should and partly because of the unadventurous composition of reserves. China, Russia, Saudi Arabia and India top the list with what he referred to as excess reserves, amounting to a combined $1.3 trillion: "Investing for the long term in foreign assets that carry a risk premium and protect against inflation beats holding only short-term financial instruments," he said. If a country is able to deploy 10% of GDP in a way that produces an extra 5% return, that is half a percent of GDP a year in free returns. "This implies that 5% forgone returns costs developing countries $100 billion or about 1% of GDP each year," Summers added.

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Kozlov's murder

The killers of Russia's central bank first deputy chairman Andrei Kozlov may have been hired on the cheap and had no idea who they were being paid to kill. Suspects would be identified only after executives from banks closed by Kozlov were questioned. The source said several of the executives had moved or fled the country. Kozlov was shot on Sept. 13 outside the Spartak sports complex, where he had taken part in a friendly football match with other bankers. Kommersant, citing unidentified investigators working on the case, reported that the "unreliable" weapons used by Kozlov's attackers -- an air pistol converted to fire standard bullets and a "makeshift contraption" -- indicated that the killing was carried out by amateurs. Investigators do not have a clear physical description of the attackers, who might have since been killed by those behind Kozlov's murder.

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Melikyan succeeds

A new official has been appointed to run the Russian central bank's Banking Supervision Committee, following Koslov's murder. Gennady Melikyan, 58, is a deputy chairman of the central bank, and holds a seat on the board of directors. He was formerly Russia's minister of labour, and was a deputy chairman of the country's state-run savings bank, Sberbank, until 2003.

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Russia ups euro reserves

The trend to substitute euros for dollars in central bank reserves is gradually gaining pace. Russia's central bank has cut the dollars in its reserves to 50%, with 40% in the euro and the rest in the dear old pound sterling. The shift follows talk from Gulf nations that they would look to diversify reserves out of US dollars.

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Chairing the FOMC "like herding cats"

According to veteran Fed watcher John Berry, who now has a perch at Bloombergs, Ben Bernanke may want the FOMC to adopt a formal inflation goal and publish more frequent economic forecasts, but will have a hard time getting the committee to agree on what the forecast is. The FOMC has 19 participants, 12 of whom vote on policy decisions taken at a given meeting. Getting the 19 individuals to agree on a forecast would be "like herding cats."

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Juncker gives in

Eurozone finance ministers and the European Central Bank should end their public spat, according to Luxembourg's Prime Minister Jean-Claude Juncker. "This Trichet-Juncker thing must be brought to an end," he told the newspaper, after a meeting of eurozone finance ministers in Helsinki. "I have asked ministers not to be too outspoken on monetary policy. I am a great defender of the independence of the central bank." "Both of us have said there is an excellent relationship and that cooperation will be intensified," in remarks that were interpreted as throwing in the towel.

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That's rich

Fed governors have grown steadily richer in the last year as President George Bush's appointments have reshaped the board of governors, research by the Financial Markets Center shows. The Senate's July confirmation of Columbia University economics professor Frederic Mishkin in addition to the 2006 appointments of Estee Lauder heir Kevin Warsh and economist Randall Kroszner have pushed the combined low-end values of assets held by Fed governors from $18 million in 2005 to $83.8 million in 2006, according a report released by the economic education institute Financial Markets Center.

The combined high-end value of assets increased from $45.6 million in 2005 to $163.1 million, the report stated. said Tom Schlesinger, executive director of the Financial Markets Center.

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Lister resigns

The Bermuda Monetary Authority's chairwoman and chief executive, Cheryl-Ann Lister, has announced that she is stepping down from both posts, saying that a change in the law splitting the two positions made it an opportune time to resign. Mrs Lister has been chairwoman since 1999 and will step down at December 31 2006. Mrs Lister is the wife of Terry Lister, who resigned last month from his Cabinet post. The BMA Board has begun the process of selecting a successor as chief executive.

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Cole succeeds veteran Spillenkothen

Roger T. Cole is the Federal Reserve Board's new director of the division of banking supervision and regulation in Washington. The division develops regulatory policy and oversees the supervision of state member banks, bank and financial holding companies and their non-bank subsidiaries, and US branches and agencies of foreign banking organizations. Cole joined the Board's staff in 1979 as a senior financial analyst. He was appointed to the Board's official staff in 1988 and promoted to associate director in 1997 and senior associate director in 2001.

Before joining the Board, Cole was a financial analyst at the Federal Reserve Bank of Boston and worked at the Wyatt Company. The director represents the Board on domestic interagency policy and coordination committees, including the Federal Financial Institutions Examination Council's Supervision Task Force, and on the Basel Committee on Banking Supervision. Cole succeeds Rich Spillenkothen, who retired in June after 30 years of service at the Board, including nearly fifteen years as director of the division.

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Kosovo gains central banking authority

The head of the UN Interim Administration Mission in Kosovo (UNMIK), Joachim Ruecker, signed an agreement on Wednesday 20 September by which the Banking and Payment Authority of Kosova becomes the Central Banking Authority of Kosova. This was announced during the regular UNMIK press conference. The new regulation aims to increase the authority of the BPK institution.

With the transformation of the BPK, the new board is expected to consist of seven members, five of which will be locals and two internationals, KosovaLive said. One member of this board will be from the International Monetary Fund, one from UNMIK Pillar IV, and the other five local members will be from the Ministry of Economy and Finances or from the government, it said.

Ben must "try harder"

According to a study published by stockbroker ICAP Australia, incoming the Reserve Bank of Australia's governor Glenn Stevens is easier to understand than Ben Bernanke, his US peer, but both lose out to Mervyn King of the Bank of England. Ben Bernanke's speeches require listeners to hold at least a bachelors degree with honours, said Michael Thomas, ICAP Australia's head of economics. By contrast, high-school leavers could understand the speeches of Glenn Stevens, and "on a good day, King could hold court at his local primary school,'' Thomas said.

The study of recent speeches by central bankers used the Flesch-Kincaid test, which measures syllables per word and words per sentence, to assess how clearly a person speaks, and the education level a listener would need to understand the speaker. Former Fed chairman Alan Greenspan was famous for his sometimes obscure language.

As Thomas put it, "in his heyday, Greenspan could make a grocery list indecipherable.'' However, Greenspan outperformed Bernanke in the Flesch-Kincaid test, while both lagged behind Australia's Stevens and the outgoing Ian Macfarlane. "The Reserve Bank's dynamic duo comfortably outpoint the Fed's top two,'' Sydney-based Thomas said in a report quoted by Bloomberg News. "And Ben Bernanke, who is a big advocate of central bank transparency, clearly needs to try harder.''