THERE seems to be no end in sight to the ongoing row between the government and the Governor of the Central Bank. Although finance minister Harris Georgiades has stopped applying public pressure for the lifting of capital controls DISY has taken over this responsibility drafting a bill that is designed to limit the powers given to the Governor by the bank resolution law that was passed in March.
The bill, discussed at the House finance committee on Monday, would make the finance minister a co-Resolution Authority, a responsibility which according to the law belonged exclusively to the Central Bank. The motives behind the move are obvious – neither DISY nor the other parties which support the bill have much confidence in the Governor of the Central Bank who, as the Resolution Authority, has absolute power in over the Bank of Cyprus.
The Governor not only has the final say over everything that is decided he also issues direct orders to senior management.
But how wise would it be to pass the bill and give the same powers to the finance minister? Would this make the running of the Bank of Cyprus any more rational? On the contrary, it would make the running of the bank impossible, as there would be big clashes, when minister and governor disagree over a decision.
Who would have the final say in such a case and how long would the bank have to wait before a decision on a matter over which there was disagreement between the two, was taken?
Practically speaking, the finance minister has enough things on his plate without also having to worry about running the Bank of Cyprus. After all, the bank has an administrator, whom the resolution law gives sweeping powers to, a board of directors and a new CEO.
Perhaps the real concern of DISY and the government are the capital controls. Minister Georgiades has been applying pressure for their lifting for some time now but the governor has refused to budge.
On this, he has the support of the troika, which has become involved, from afar, in the row over the bill. In a letter presented to the House committee its representative noted that it “is fundamental that if Cyprus is to introduce laws that are explicitly contradictory to the MoU, they are introduced after appropriate consultation and with consent of the troika.”
This should have put an end to DISY’s plans, which is just as well, because the lifting of capital control does not seem a very clever idea in current conditions and neither does having a twin Resolution Authority.