The Time Of Governors

During the first half of this year the profits from financial transactions (including disparities in the exchange rates) exceeded all profits generated by the economy by 55 per cent, while, on the other hand, the expenditures for financial transactions (also including disparities) reached 75 per cent of all expenditures by the economy. Therefore, the final balances of companies mostly depend on the ability of financial directors to buy money cheaply, and then sell it at the highest possible price. Production has thus been put on a back burner.

Given the circumstances, the pressure on the Governor of the National Bank is greater than that on any of the Prime Ministers. The Governor is also much more important that any Prime Minister. Let's remind ourselves why was the election of the Federal Government delayed last February.

The post of the then Governor Vuk Ognjanovic was disputable. After toppling of Yugoslav President Dobrica Cosic, Borislav Atanackovic was mysteriously appointed new Governor. The Yugoslav Parliament had not received the resignation of the previous governor, nor had it relieved him of duty before appointing Atanackovic. Now we have received the resignation of this Governor, and we will not know the name of a new candidate all until the Federal Parliament convenes again.

However, a much more serious process is taking place in the shadow of changing of Governors. NBJ is obliged to byannually submit a report on its credit and monetary policy (which it defines independently, according to the law) and its results to the Federal Parliament. It's the end of October, and the federal MP's have still not seen anything which might resemble a report.

This, also, is logical and could have been predicted. When the members of the Council of NBJ are elected by violating the Law on NBJ, when the President of the credit and monetary Board of the Federal Parliament's Chamber of Citizens is a member of this Council along with the directors of banks and companies which use credits from the primary issue, could one expect anything different?

Last year the World Bank published the results of a thorough research into the position of central banks and the link between their independence and inflation rates. Of 71 countries, NBJ was third but last according to its formal and legal independence. Only Morocco and Poland had a worse legal solution. Another research about real independence of national banks in 21 countries in the period from 1980 to 1989 was conducted. The then Yugoslavia was the last but one on the list. Only Ethiopia was worse.

As it could have been assumed, the central bank which is really most independent is the German Central Bank (Bundesbank). If the position of the highest ranking independent bank is marked with 100, and the lowest ranking with 0, it follows that the Bundesbank has the index 100 and NBJ 17. That's what it used to be like. The position of NBJ is now even worse. If we apply the same method and evaluate the real position of NBJ, we shall conclude that its index of independence is even lower, not even reaching 15 points.

Therefore, NBJ was more independent in the times of official communism than it's now!