Rusnok reportedly set to be confirmed as head of Czech National Bank on May 25

By bne IntelliNews May 10, 2016

President Milos Zeman will appoint Jiri Rusnok as the new governor at the Czech National Bank (CNB) on May 25, local media reported on May 10.

A spokesman at Prague Castle confirmed that the president will appoint the new head, as well as two new board members, on that date. A board member since mentor Zeman appointed him in early 2014, Rusnok has long been the clear favourite to replace Governor Miroslav Singer, whose remit ends in July. Unnamed sources told Hospodarske Noviny that the appointment will be made as assumed.

Zeman has long railed against the CNB's cap on the koruna to CZK27, and has claimed it is part of a plot by the monetary policy board built by his predecessor and virulent eurosceptic Vladimir Klaus. However, Rusnok has quickly come to support the currency intervention, which is credited with boosting the economy since it was introduced in late 2013. He has also said he rejects a move to negative rates, which the central bank has discussed in recent months as it bids to stave off a drop into deflation.

An economist and former centre-left politician who has served as both finance minister and minister of industry and trade, Rusnok also led a caretaker government and held senior positions at ING bank before Zeman appointed him to the CNB board. Less certain is whom the president will choose to fill two seats on the CNB board that will come available.

Zeman would prefer to nominate Jaroslav Ungerman, an economist with the CMKOS labour union, to the board. However, he may acquiesce to Rusnok, who wants his current advisor, former chief economist at ING Vojtech Benda, to be named to one of the two seats, Hospodarske Noviny reports.

Powerful Finance Minister Andrej Babis is pushing for his own economic advisor, Ales Michl, to join the board. While the reports say neither Zeman nor Rusnok support that candidate, there could yet be wheeling and dealing behind the scenes. Another possibility is that the Czech president could appoint the oldest serving board member, Kamil Janacek, 72, to a second six-year term.

The CNB board consists of the governor, two vice-governors and four other board members. All board members are appointed by the president for a maximum of two six-year terms. The two vice-governors are Mojmir Hampl and Vladimir Tomsik. Apart from Rusnok and Janacek, the two other members are Lubomir Lizal and Pavel Rezabek.

The power to appoint rate setters is perhaps the president's most pertinent formal power. He will have the chance to appoint another two board members in 2017, before his own term ends the following year.

Zeman has long sought to expand the powers of his role, which in formal terms is largely ceremonial. He has raised no little controversy by pushing on foreign policy in favour of the likes of Russia and China and leading anti-migrant rhetoric. His meddling in domestic politics is another feature, with Prime Minister Bohuslav Sobotka a bitter enemy. Recent reports have suggested the president and Babis - leader of junior coalition partner Ano - could team up in a bid to topple the PM.

 

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