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The National Bank of Belgium has temporarily extended the term of its president, Pierre Wunsch, pending a decision by the federal government to reappoint him to a second five-year term.
Wunsch’s first term expired on January 1, without his reappointment being formally approved by the ruling coalition. The bank’s Regents Council met on Tuesday to try to find a solution to the temporary legal annulment.
“As a public institution, the president plays an important role in the smooth running of the bank,” the bank said, adding that Wunsch would continue in his role “on an interim basis” until the government makes a formal decision.
The head of Belgium’s central bank is automatically a member of the board of the European Central Bank (where Wunsch has emerged as one of the board’s more hawkish figures) and the board of the Bank for International Settlements.
Wansch told the Financial Times last month that investors were “too optimistic” that the ECB would start cutting interest rates in March, especially as rising wages in the euro zone continue to put pressure on prices. . “We’re moving in the right direction on inflation,” he said. “We’re much more optimistic than we were a few months ago, but we still need some good news on wages.”
Last week, Belgian Prime Minister Alexander de Croo and Finance Minister Vincent van Peteghem sent a letter to the National Banking Council stating that the federal government had decided to extend Mr. Bunsch’s term as an “exceptional” term due to the “principle of continuity” until the end of his term. requested that it be extended for a short period of time. He had made a decision on his reappointment and promised to do so “soon,” according to a letter seen by the FT.
Belgium’s central bank said the decision was “highly unusual and, taking into account the principle of central bank independence, this interim solution is not optimal” and urged the government to take a decision “as soon as possible”. I asked for it.
A decision on Wünsch’s reappointment is expected to be taken in the coming days and weeks and before the ECB’s executive board meeting later this month, Belgian finance ministry officials said.
Additional reporting by Martin Arnold in Frankfurt