Kaczynki’s Law and Justice Party are undermining the Polish central bank’s independence, paving the way to populist left wing policy
As Henryk Kowalczyk, a committed Kaczynki follower and MP said in October, the ruling party would need a period of monetary easing to implement its promises in social policy by increased public expenditure.
When in December, the party’s wish-list for future members of the council of monetary policy was published, Poland was surprised to learn of the lax criteria for appointing politically willing candidates from academia.
The Senate has since elected three candidates out of the eight to be replaced. Some of the newly-elected can be distinguished from the exiting members not so much by increased qualifications, as by pure political activism.
Such is the case of Marek Chrzanowski, a 34-year old junior professor of Warsaw School of Economics who serves in the advisory council of Poland’s President Duda as coordinator of economic policy.
The election process remains incomplete and the disclosure of so called "independent candidates" to be appointed by the parliament or the Polish President by 19 February leaves a substantial element of suspense. However, the recruitment of central bank staff from opportunistic academics illustrates a fundamental problem.
Is Narodowy Bank Polski (NBP) institutionally strong enough to resist the takeover by party politicians and their academic "allies"?
As a matter of EU law, NBP should be independent from governmental instructions. Article 131 TFEU clearly rules that all EU member states have to implement that independence in the statutes ruling the central bank.
However, NBP is a distinctive institutional animal which does not fully conform with the EU standards. Article nine of NBP laws rules that its president is appointed and is dismissed by the Sejm chamber of the Parliament at the request of the President of the Republic.
Apart from this striking dependence on Parliamentary majorities, the NBP’s president can conduct the safekeeping of monetary values only with the approval of the competent minister (Art. 11 5.)
Furthermore to that coordination with governmental power NBP shall "collaborate with competent State bodies with regard to developing and implementing the state economic policy". The NBP is required to "submit monetary policy guidelines… to the State bodies" and collaborate with the Minister of Finance in developing financial plans for the state (Art.21).
The NBP President or other representatives can thus be required to submit information to the two chambers of Parliament (Art. 22).
The TFEU clearly forbids parliamentary appointments of central banking staff and central banks' accountability towards national parliaments.
The radical substitution of the members of the council for monetary policy that is currently under way, illustrates the reasons.
Monetary policy needs long term constancy instead of democratic volatility. It needs people of sound and robust expertise instead of party politicians or academic opportunists.