Shuvalov: gov't representatives at Central Bank to have narrow scope for action
MOSCOW. Feb 28 (Interfax) - The possible inclusion of government representatives on the Central Bank of Russia's board of directors would not affect the bank's independence in setting fiscal policy because the government representatives would only join the discussion on a narrow set of issues.
"This [proposal] does not have anything to do with reserves or Central Bank fiscal policy. On the contrary, a large number of powers currently in the hands of the executive authorities are being transferred to the Central Bank," First Deputy Prime Minister Igor Shuvalov told journalists on Thursday.
"Only three powers are being discussed, under which the board may under a special, open procedure, defined in advance, have a discussion," Shuvalov said.
"That will substantially strengthen the unified regulator. It will separate the functions from the government, but give the Finance Ministry and the Economic Development Ministry the ability to keep an eye on it," Shuvalov said.
"Right now [the government] has significantly more powers on the financial market. We are transferring everything to the Central Bank, and there are only three issues, especially where it concerns the investment declarations of the pension funds, very sensitive issues, which are also going to the Central Bank, but in order that members of the government, the financial-economic block, have the opportunity to discuss this with the Central Bank," he said.
"The alternative is to give nothing to the Central Bank and simply have the government make the decision. It should be defined. That is better. But as to the independence of the Central Bank, this is unrelated," he said.
"We have special responsibility: reserves, pension accumulations. If you invest them, you should keep in mind this, that, a third thing. And then the board of directors says: 'No, we are taking this decision.' Let there be a discussion about how to do that, so that this is connected with the government, but within the competence of the unified regulator," Shuvalov said.
"The discussion on the board is not about issues that are within the bank's powers right now, but those important powers currently in the hands of the government, where the government makes the decision. What should be done now that the mega-regulator is being formed? And one of the proposals was: not to leave it with the government but transfer it to the Central Bank board. But since the Economic Development and Finance ministries are already present on the board in a non-voting capacity, so that it was written into the law, the procedures under which they will operate, and only in relation to the three powers can they and must they lay out the position to the board so that the board is obligated to examine it, for example, once or twice. That is, they will not have the deciding vote, but they should have responsibility. That is all the discussion is about," he said.
The possible inclusion of government representatives on the board of directors of the Central Bank in connection with the transfer of government functions as part of the merger with the Federal Financial Markets Service was examined at a recent meeting chaired by Shuvalov.
The idea has a host of opponents, not least at the Central Bank, a source familiar with the situation told Interfax.
The Central Bank board currently has 11 members; all are high-ranking Central Bank officials.
The protocol of the February 19 meeting with Shuvalov instructs the Finance Ministry to draft statutes concerning the merger of the FFMS into the Central Bank that provide for "the ability to implement special competence by government representatives in Central Bank management bodies in taking decisions on issues related to the powers being transferred."
