POLAND: New central bank chief opposes euro target date

Poland should not set a target date for adopting the euro, new central bank governor Slawomir Skrzypek said on Thursday (January 11, 2007). Skrzypek, whose appointment was confirmed by parliament on Wednesday (January 10), also said he would not make political appointments at the bank and denied he was considering freeing part of Poland's forex reserves. Skrzypek told reporters that there was no sense in giving the euro an entry target date, adding that the central bank should do more research on the single currency's costs and benefits. Poland agreed to adopt the euro when it joined the European Union in 2004. But its ruling conservatives have resisted setting a target date, despite assurances in the past from the bank that the single currency would benefit the economy. Skrzypek also denied a report in Polish media that he had told a junior coalition party that he could consider freeing part of the bank's currency reserves. The party was quoted as saying the reserves could be used to help economic growth. Economists said Skrzypek's comments on reserves and the bank's independence were positive for markets but that they did not dispel worries about his plans for the bank. Skrzypek replaced veteran central bank chief Leszek Balcerowicz, a respected economist and advocate of swift euro adoption. Skrzypek, who has only a master's degree in economics and very little experience in banking, is a close ally of the country's ruling twin Kaczynski brothers. Some market economists said he lacked credibility. "I have been given a great responsibility by becoming the CEO of the Polish Central Bank. This responsibility is even more significant due to the unjust criticism I have received during my candidature. By my actions I shall vindicate myself of these criticisms," said Skrzypek after his appointment. Worries over Skrzypek and a souring global emerging markets mood weighed on Polish assets this week. "When it comes to his general influence on the financial markets, his first public statements may cause uncertainty on the markets," said Bank Przemyslowo Handlowy (BPH) Chief Economist Reyszard Petru. The zloty rebounded on Thursday (January 11), trading 0.2 percent stronger on the day, but was still down by more than 1.0 percent since Skrzypek's nomination on January 3. Bond yields fell 2-5 basis points, but were still 4-10 points higher than before his nomination.

ITN Source | January 12, 2007

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