Father of the Board wants Iskrov to head of BNB

The new Bulgarian government should not change anything with the Central Bank, says Steve Hank, the father of our currency board, which is a key factor for financial stability in Bulgaria over the past 12 years.

If the BNB governor Ivan Iskrov is legally re-elected by buzz triple coalition, the future prime minister should accept this. Even for re-election of Iskrov to use a loophole in the law, I would recommend keeping the status quo. BNB worked very well and take the right decisions. This must be preserved, this is Hank said in a telephone conversation with a reporter at work.

According to the Law for BNB, the central bank governor is elected by the National Assembly. He is 6-year term and is a member of the 7-member board of the bank. The law does not explicitly says when choosing a new manager. But members of the Governing Council states that this is not earlier than 3 months and no later than 2 months before the expiry of their term.

Iskrov took office on October 9, 2003 its mandate expires on October 9, 2009 This means that the choice of new manager had to happen between July 9 and August 9 this year.

The grounds that the deadlines are, and that guidance is not sure whether the elections on July 5 will be a new parliamentary majority and government, the triple coalition to succeed Iskrov May 28 item on 6 years before he was elected months after the expiry of his mandate Svetoslav Gavriyski predecessor. This is not a problem because by law any member of the Board perform its duties until the election of a replacement, whether deadlines are met or not.

If you still have doubts about the legality of re-election of Iskrov I Borisov advised to talk with him. And to say that the Emblem will be challenged his second term on one condition – Iskrov to commit to make cuts in personnel BNB. But if there is no strong argument against Iskrov, best Borisov and his party do not change anything with the Central Bank, said Hank.

Professor of Applied Economics from Johns Hopkins University in Baltimore has always claimed that the state of the BNB is unnecessarily padded. According to him in a currency board the central bank loses many of the features of classical Central Bank and it needed no more than 30-35 employees.

BNB work in about 1000 people. This year for their support – salaries, bonuses and additional financial incentives – are allocated 19 million euro, or 23 percent of the budget of the bank. Hank believes that number can be reduced to 100-150 people.

Borisov intention of ministers to reduce unnecessary administration and is a step in the right direction. The question is whether his government will succeed actually to make these redundancies, he added the world expert on currency boards.

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Finance