Posted by: Dirk | September 16, 2015

France wants a former banker as president of the central bank…

… and economists are up in arms, the Financial Times reports:

Thomas Piketty and 100 other French academics have warned that the appointment of former BNP Paribas banker François Villeroy de Galhau as governor of France’s central bank would raise “grave conflicts of interest.”

Mr Villeroy de Galhau’s 12-year stint at France’s largest listed banking group makes him unfit to fulfil his oversight duties, they wrote in an op-ed published on Tuesday in daily newspaper, Le Monde.

Central bank independence is a topic that comes to mind. Usually, independence from politics is the issue of debate. Now, however, it seems that independence from banks is more of an issue. I agree with my French colleagues. It seems that bankers have captured some central banks, which are supposed to regulate them. In the fight between democracy and capitalism, this is one of the crucial battlefields. Central banks have enormous powers and very good access to information. Having a former banker at the helm of the public institution (which central banks are, however they are set up) might be detrimental to the public goals that a central bank is set to follow. Nothing personal, but conflict of interest is something which should be taken into account. That Mr Villeroy de Galhau sells all his stocks and options doesn’t change a thing if he afterwards returns to the private banking sector.

 


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