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Poland's Belka says central bank independence not under threat - radio
October 31, 2015 / 12:21 PM / 2 years ago

Poland's Belka says central bank independence not under threat - radio

WARSAW (Reuters) - The Polish central bank’s independence is not under threat, governor Marek Belka said, amid concerns about the policies of the Law and Justice (PiS) party which scored a stunning election victory on Sunday.

Poland's President Andrzej Duda casts his ballot at a polling station in Krakow, Poland October 25, 2015. REUTERS/Agencja Gazeta/Krzysztof Karolczyk

Parliament, where PiS will have a majority, will appoint six out of 10 rate-setters early in 2016 and PiS-backed president, Andrzej Duda, will appoint two more around the same time. Duda will also nominate a central bank head by June 2016.

PiS has said it wants the central bank to pump 350 billion zlotys (59 billion pounds) into the economy over six years to support economic growth, a plan that rattled financial markets in election week and drove the zloty to a nine-month low against the euro.

Earlier this month, one of the party’s lawmakers also said PiS would take into account candidates’ propensity to ease monetary policy when deciding on the new central bankers. This drew a strong protest from three current rate-setters.

Asked by private radio station RMF in an interview aired on Saturday if the central bank’s independence was being threatened by anyone or anything, Belka said: “I don’t think it is under threat.”

Belka said while the constitution forbade the central bank from financing state spending directly, it could provide liquidity to lenders.

“This is being done in a number of European countries, for example in Hungary, or in Great Britain, in the case when banks are lacking liquidity, which is in turn the basis for giving out loans, and they are the engine of economic growth,” Belka said.

“When banks are lacking such liquidity, it is fairly obvious that the central bank should deliver this liquidity.”

Commenting on PiS plans to introduce new bank levies, which would target either lenders’ assets or financial transactions, Belka said he was not concerned by the idea of taxing banks in itself.

“I‘m aware that taxing banks is not an exotic thing, and it’s not the case that I think that it’s some sort of, I don’t know, sacrilege.”

“I will, however, draw attention to the consequences of taxing banks, and point out that there are better and worse ways of taxing banks. But taxing banks in itself does not cause some great concern for me.”

Reporting by Wiktor Szary; Editing by Toby Chopra

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