/ world today news/ Since last summer, the series of unprofessional actions of the banking regulator have repeatedly provoked disputes regarding the termination of the mandate of the current governor of the BNB.
At the beginning of April this year the prime minister expressed hope that the issue will be resolved in the next month. His statement shows that the election of a new governor, as well as a deputy governor for “Banking Supervision”, is probably already on the agenda of the governing coalition. Is it easy to find a solution to this issue, or can it create tension, such as the changes in the National Security Service and the Ministry of the Interior caused?
The comments are mixed. For some, the choice will not be difficult because any new central bank governor will do better than the current one. Not for any other reason, but because it is difficult to find a more unsuccessful hit than Ivan Iskrov.
I do not share this opinion. Not because the actions of today’s governor deserve admiration, but because of the heavy legacy he leaves behind. It boils down to several major problems that the new governor cannot afford to ignore: First, a failure of oversight. Let’s remember that after the introduction of the Monetary Board, supervision remained the primary responsibility of the BNB. Second – inadequate information policy and immature behavior of representatives of the central bank in public and economic life. The contradictory and mutually exclusive statements raised a barrage of questions. To them, central bankers habitually responded with arrogant behavior, insolence and cynicism. Thirdly, the lobbyist legislative and regulatory policy turned the BNB Board into a department of the Association of Banks in Bulgaria. For years, the regulator has indulged market-contradictory whims against privileges and asylum commitments after the end of the mandate. Fourth – the vicious practices listed so far led to a collapse of confidence in the BNB. It is not only about trust in the country, but also about the lack of it internationally, which already directly affects the investment and business prospects of the state.
The new manager will have to deal with all this. The decision turns out to be not such an easy task.
By law, the governor and deputy governors are elected by the National Assembly. I.e. there is no direct election by the sovereign. This will be Boyko Borisov’s second attempt at a personnel decision at the BNB. At the first, the prime minister showed inconsistency – there were threats of dismissal, a theatrical resignation, re-election. In fact, Iskrov’s resignations, semi-resignations and backroom deals are the stuff of an entire comedy series. After the fact, Borissov sought justification for his actions in the advice received from the European Commission. He was deceived, someone advised him so, etc. “Second double fault in his service game” cannot now be transferred to the responsibilities of another person.
What factors will determine the Prime Minister’s behavior in this election? Most likely, the answer lies in what goals Borisov will set for himself. Imitation of change and maintenance of the status quo or sensible reforms? This will be clear from the procedure – whether the election will be “behind closed doors” or whether there will be a public discussion of the relevant nominations. If the governing coalition allows itself to launch a candidate without him having presented a specific program (as happened with the election of Iskrov in 2009 – note) and without competing nominations, this will be a clear sign of continued stagnation. Reformist sentiments will prevail if a debate is organized and the public is offered visions to overcome the accumulated negatives. The persistently imposed wrong policy, which logically led to the severe problems indicated, at first sight provides the inevitable answer. However, this policy is customized with specific contractors whose influence is not weak. They can only exist in today’s conditions and see their chance of survival in maintaining their dividend-bearing flawed model. Therefore, many observers suspect that attempts at behind-the-scenes influence will not be isolated and harmless. The question is to what extent the rulers can emancipate themselves from them.
Of course, in the financial sphere, reasonable and balanced behavior, the lack of which we experience painfully, is a mandatory condition. In this sense, a procedure with an open debate and competition of ideas, which, in parallel with the urgent legislative changes, guarantee the banking system a solid, sustainable and predictable environment, could only be beneficial for the country. It will show the long-awaited maturity of our political morals and grounds for optimism. At the same time, it will be a clear indicator of differentiation from the semi-professional and non-EU legislation vicious practices to which today’s Battenberg bosses show a persistent attachment. A balanced program with precisely timed initiatives will make the management in the banking system stand on a secure foundation and focus their efforts on making adequate management decisions. This will send clear signals to businesses in the country and international partners.
Bankers are by nature conservative, skeptical, difficult to trust. It is interesting that even some of them, connected in unenviable dependencies, declared themselves at least in words for changes. Three months ago, a group of non-governmental organizations launched the candidacy of Dr. Lubomir Hristov for governor of the BNB – a man with a consistent position on reforms and a vision for their concrete implementation. The very announcement of the candidacy caused an impressive reaction in the media. A number of financiers and public figures spoke in support of the nomination. There were probably some dissenting voices as well. It is significant that they stayed behind the scenes.
In this sense, the lack of reaction from the authorities is disconcerting. The nomination of Dr. Hristov has been announced and they should determine their attitude towards it. Their behavior will show to what extent they make their management decisions openly or remain dependent on backroom deals.
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Georgi Atanasov, analyst from the Bulgarian Financial Forum.
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