Backstage at the BIS: the latest chatter.
Noyer, of course, is the Governor of the Bank of France and a long-time European strategist who was key in helping in the formation of monetary union. His name comes up for one reason: Nicolas Sarkozy, France's conservative presidential candidate. In June Sarkozy shocked the European central banking community with a blistering attack on the European Central Bank, blaming it for all of the continent's economic ills. Worse, Sarkozy, who had been pro-Europe, has now surrounded himself with all of France's anti-EMU crowd from years past. That leaves Noyer in an awkward position. BIS insiders wonder whether Noyer, normally more hawkish than the norm, will continue in this vein. Knowing that the French political sentiment toward the ECB appears to be changing, "Christian really has his hands full," an admirer lamented.
BIS insiders mention a second name--Mario Draghi, the Governor of the Bank of Italy, a respected former Italian Treasury official and Goldman Sachs adviser. The surprise here is how quickly Draghi has transformed himself from a bureaucrat involved in international affairs to a first-class central banker, with not only a European view but a global view. "He is far more independent than expected," a colleague said, calling his contributions at the ECB "already outstanding."
The name Mervyn King arises lot another reason. King, of course, is the Governor of the Bank of England and, above all, is considered a first-class intellectual force. He runs the monetary committee of the Bank almost like the economics department of a major university. King enjoys the intellectual confidence to allow others to freely challenge his opinions.
That's the good news. The bad news is that the Bank of England chief has in the past year given signs that he's losing interest in things. He often fails to appear at important meetings or, if he is present, often leaves conspicuously early. He turns down clear opportunities to build the prestige of the Bank. He shows little interest in the Bank being a factor in financial regulation issues in London. Unlike most central bank heads, King appears to not mind being outvoted by his colleagues. "No one questions Mervyn's intellectual ability," a BIS observer said. "The question is whether he finds the job stimulating enough any longer."
Finally, international observers were surprised when Jurgen Stark, who replaced Otmar Issing at the European Central Bank, essentially retained Issing's portfolio as head of economic research. The former Bundesbank vice president is a highly respected, long-time player in the international arena, but most observers had expected the economics department to be divided among various board members. That failed to happen for one reason--Jean-Claude Trichet. The ECB president at the last minute intervened in favor of Stark.
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|Title Annotation:||OFF THE NEWS; Bank for International Settlements|
|Publication:||The International Economy|
|Date:||Jun 22, 2006|
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