MNI: Belgium Triggers Independence Concerns For ECB

This week’s temporary extension of the term of National Bank of Belgium Governor Pierre Wunsch is only likely to delay his formal reappointment, sources familiar with the ongoing discussions told MNI, warning that the government’s internal haggling over Wunsch’s position posed difficulties for the European Central Bank after the BNB’s governing body slammed the move as “suboptimal having regard to the principle of central bank independence”.

The decision only to extend Wunsch’s term rather than grant him a new one comes as Belgium’s governing coalition tussles over key public appointments, and one source told MNI the situation needs to be sorted out by the next ECB meeting on Jan 25. “Informal contacts” between the ECB and the Belgian government might be initiated to encourage a quick resolution, the source said, noting that the episode did little for Belgium’s image just as it assumed the European Union’s rotating presidency.

"BELGIAN DISEASE"

But while it would be unusual for Wunsch to participate in his current capacity of temporary appointee at the Jan 25 Governing Council, it would not be without precedent. The Bank of Finland’s Toumas Valimaki has stepped in for Governor Olli Rehn while he takes a leave of absence, voting in the last four Governing Council meetings.

Wunsch’s position has become subject to “the Belgian system of political bargaining for senior positions in the public sector, one of the Belgium diseases,” the source said, noting that Flemish social democrats seemed to be using the central bank position as a bargaining chip as they push for a senior position at the ministry of finance.