Mugur Isarescu: Romanian central bank governor for 28 plus years!

National Bank of Romania is quite an old central bank and was found in 1880.

Its current Governor- Mugur Isarescu- has been at the helm for 28 years. He has been the Governor since Sep-1990 and will soon be completing 29 years in Sep-2019. The length of his tenure comes really close to the longest tenure of Mr Erik Hoffmeyer, who was Governor of Danmarks Nationalbank (Denmark central bank) for 30 years . Sir Dwight Verner Governor of Eastern Carribean Central Bank’s tenure at 26 years (1989 to 2015) remains at third position.

Apparently Isarescu is not keen to continue given pressure from who else the Government!:

It’s nearing time for Mugur Isarescu to decide whether he’ll prolong his more than quarter-century tenure as the longest-serving central bank boss in the world right now.

The 69-year-old governor of the National Bank of Romania has lived through everything from hyperinflation and his country being on the brink of bankruptcy to the global financial crisis of 2008. What he does when his current term ends in October could owe a lot to the perilous state of central-bank independence in the age of populism.

Romania, a country of 20 million people, is providing the latest headache for European Union officials already struggling to cope with threats to democratic standards elsewhere in the bloc’s ex-communist east. Hungary and Poland already have interest-rate-setting panels stacked with government allies. Isarescu may be more inclined to leave if there’s a similar threat to Romania’s board, where all members are up for reappointment or replacement.

“If the current leadership is replaced by poorly qualified political loyalists, then yields for Romanian bonds will likely increase and the leu will probably come under renewed pressure,” said Blaise Antin, the Los Angeles-based head of emerging-market sovereign research at TCW Group Inc., a longtime holder of Romanian government debt. “I fear that if it’s not Isarescu, it will be someone less credible and less influential.”
Interesting to see how Central Bank boards are being dragged in discussion in so many places.
Another point of contention is governments’s proposed “greed tax” on banking!

Isarescu also has international clout. He’s collaborated with counterparts from Alan Greenspan to Mario Draghi during his tenure, received 17 honorary university degrees and is a member of the Bilderberg Group, an exclusive global policy club.

But Isarescu’s authority has been challenged. He’s complained that the government failed to consult him on everything from tax cuts to the surprise imposition of a “greed tax” on banks — the first measure stoking inflation and the second triggering the biggest stock selloff in a decade.

While in previous years, a gentleman’s agreement between the main parties in parliament allowed the central bank to maintain a diverse and balanced line-up on its board, the opposition says that this time round, the ruling Social Democrats want full control. The party says it will address the central bank after this month’s European Parliament elections.

Just like Italy, the political parties are eyeing the central bank gold:

Romania’s ruling Social Democratic Party chief, Liviu Dragnea, has submitted a bill to parliament asking the Central Bank to repatriate store 95 per cent of its gold reserves, much of which are held in London.

The move widens the rift between the Social Democrat-led government and the Central Bank over economic policies, raising concerns that the ruling party is pushing to control an institution that has criticised its governance.

Dragnea and Senator Serban Nicolae who co-signed the bill, complain that Romania has been storing its gold in the Bank of England, but that Bucharest has not got any interest from this, and has also been paying storage fees.

“Nothing in Romania’s economic situation justifies keeping such an amount of gold abroad and paying the implicit costs, which are not negligible, while this reserve can be kept and supplemented in storage facilities in the country,” the documents submitted with the bill say.

Romania has about 104 tons of gold reserves stored in three countries – the UK, Romania and Switzerland.

 

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