Rusnok says his CNB likely to signal end of currency interventions

Former PM Jiří Rusnok has been setting out his vision for the role of governor of the Czech National Bank, which he will fill from the start of July. In an extensive interview for Czech Television, the economist said the central bank would likely announce when it was ending currency interventions and that the time was not yet right for euro adoption.

Jiří Rusnok, photo: Filip Jandourek

Jiří Rusnok has served as minister of industry and trade and minister of finance and in June 2013 was appointed caretaker prime minister by President Miloš Zeman.

Now the 55-year-old economist is preparing to take the reins at the Czech National Bank when he becomes its governor on July 1.

In an interview on Czech Television on Sunday, Mr. Rusnok spoke at length about his vision for the new role.

One major issue facing him will be currency interventions, which the central bank has been carrying out since November 2013. If the Czech Republic does not cease keeping the crown artificially weak, it could face deflation.

Mr. Rusnok said the CNB was unlikely to end currency interventions completely without warning.

“I think that’s very unlikely. In most cases such actions impact your credibility in the future – if you say something that isn’t true once, it doesn’t create a good impression regarding future decisions. If at all possible, I’d prefer it to be predictable, for us to say, yes, on such a date we will cease intervening. But we reserve the right to intervene in the case of extreme volatility.”

Photo: adamr / FreeDigitalPhotos.net

Another big question for the incoming central banker is adoption of the euro, which the Czech Republic is committed to doing as an EU member, though no deadline exists.

Mr. Rusnok told Czech Television that euro adoption is still an issue for politicians – and if it does not happen soon Czechs have no cause for concern.

“In view of the profile of the Czech economy, I think that we generally belong in the long-term and strategically to the Eurozone. Or at least to a group linked in terms of currency to the German economy. But the time is not ripe, in particular mentally or politically. And if we follow reasonable currency and fiscal policies we can live decently with our own currency. We’re an example of that.”

Jiří Rusnok did say, however, that his CNB board would be less sceptical about the common European currency than the existing one.