CEE central banks under siege
Will Romania go the way of Hungary when it comes to the independence of its monetary authority?
Turkey’s president took advantage of a trip to London in May to respond to investor concerns about his country’s collapsing currency by promising to wrest control of monetary policy from the central bank.
While deplorable, this is hardly surprising. Recep Tayyip Erdogan has repeatedly demonstrated his determination to get his hands on every lever of power in Turkey. It was never likely that the central bank would escape unscathed, particularly given Erdogan’s apparently unshakable belief that raising interest rates boosts inflation.
What is perhaps surprising is to find similar concerns over central bank independence being raised in a country much closer to the heart of Europe.
For most of Romania’s post-communist history, its central bank has been one of the country’s most respected institutions – and with good reason. Under the steady stewardship of long-serving governor Mugur Isarescu, it has been an anchor of stability during the slow and often painful transition to capitalism and EU membership. Recently, however, the National Bank of Romania (BNR) has come under increasing attack by politicians from the ruling Social Democratic Party (PSD).
Since the start of this year the party’s powerful leader, Liviu Dragnea, has accused the central bank of trying to strangle growth, conspiring with opposition politicians to discredit the government and spreading “fake news” about the economy.