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UPDATE 2-Russia says central bank independence not at risk
February 26, 2013 / 9:41 AM / in 5 years

UPDATE 2-Russia says central bank independence not at risk

MOSCOW, Feb 26 (Reuters) - The Russian government said on Tuesday it was seeking greater representation on the central bank’s board under reforms to unify financial market oversight, but said it posed no threat to the bank’s independence.

Speaking to Reuters after reports that the government was seeking extra seats at the central bank, Deputy Finance Minister Alexei Moiseev said:

“Nobody intends to violate the constitutional principle of the central bank’s independence in its conduct of monetary policy. This is the position of absolutely every participant in the discussion process.”

Moiseev was commenting on an earlier report on the Interfax news wire which, citing an unnamed source, said the government was seeking the extra seats.

He noted that the Russia’s finance and economy ministers already sit on the Bank of Russia’s board, but do not have a vote on matters of monetary policy.

Interfax said the proposal for more representation was being considered under reforms to unify financial regulation being overseen by First Deputy Prime Minister Igor Shuvalov, although “there are a lot of opponents”.

“Bearing in mind that government functions are being transferred to the central bank, there is an idea to introduce to the board of the central bank one or more government representatives to exercise oversight,” the source added.

The shakeup comes at a time of growing concern over the central bank’s independence, following complaints by the Kremlin that high interest rates are choking off economic growth in Russia.

Central bank Chairman Sergei Ignatyev, who favours a tight rein on monetary policy, retires in June and speculation is mounting that President Vladimir Putin will nominate a successor more in tune with his desire to boost flagging economic growth.

Political influence over central banks is spreading across ex-communist eastern Europe as leaders resort to pro-growth policies to shake off the after-effects of the 2008-09 slump.

Hungarian Prime Minister Viktor Orban has led the way by filling his country’s central bank with appointees favouring his economic policies, a move that critics say is undermining independence.

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