April 20, 2017 / 1:51 PM / in 9 months

Slovenian government seeks some supervision of central bank

LJUBLJANA (Reuters) - Slovenia moved to put its independent central bank under some, limited supervision on Thursday, responding to accusations that the bank had demanded too much state capital for domestic banks to ward off a potential debt crisis four years ago.

The government approved changes to proposed legislation that would authorize the Court of Audit, a state body that supervises public spending in the country, to have some oversight of the Bank of Slovenia’s business activities.

Tilen Bozic, state secretary at the ministry of finance, said the bank would remain independent but the Court of Audit would now be able to review decisions that lead to spending of public funds.

The changes to the law, which are expected to be passed by parliament in the coming months, would also enable the Court of Audit to review the central bank’s decisions over the past 10 years.

But the court will not be able to review monetary policy and those activities of the Bank of Slovenia which are part of the activities of the European system of central banks, Bozic said. Slovenia has been a member of the euro zone since 2007.

The government moved to increase supervision of the bank after policymakers came under fire from a number of local analysts, politicians and media about the money it required for domestic banks in 2013.

In that year the government had to pour more than 3 billion euros into local banks to prevent them from collapsing under a large amount of bad loans. That enabled Slovenia to narrowly avoid an international bailout.

The central bank claims all procedures of the 2013 bank overhaul were in line with legislation, including the decision to annul shares and subordinated bonds in troubled banks.

It gave no immediate comment regarding the proposed legal changes.

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