ECB Takes ’Dim View’ of President Anastasiades Pressure on Cyprus Governor

European Central Bank President Mario Draghi said he disapproves of any attempt to put pressure on the governor of the Central Bank of Cyprus.

“We would have a dim view of any attempt to constrain or threaten or to undermine the independence of the central bank,” Draghi said at a press conference today in Washington.

Since Cyprus became the fifth euro-area country to receive an international rescue in March this year, a war of words between Cypriot President Nicos Anastasiades and central bank governor Panicos Demetriades has escalated. The president said last month he may ask the country’s supreme court to remove the governor from his post for not doing a good enough job.

“I have to say that I’m examining and documenting all the things that make up his shortcomings or lack of adequacy in the execution of his responsibilities,” Anastasiades said in an interview on Mega TV on Sept. 18.

On Sept. 24, European Union Economic and Monetary Affairs Commissioner Olli Rehn wrote to Cypriot Finance Minister Haris Georgiades, saying statements against Demetriades may breach EU law.

“Public announcements of this nature risk being seen as an attempt to influence the central bank and the governor in relation to the performance of their tasks,” the letter, provided to Bloomberg News, said. “This practice could be seen to breach the prohibition on seeking to influence the members of decision-making bodies as laid down in Article 130 of the Treaty.”

Central Banks

The EU’s primary legal document outlaws government interference in central bank affairs. On Oct. 9 the ECB criticized the repeal of legislation previously adopted by Hungary’s financial supervisor on the grounds that it affects central bank independence.

Bloomberg