Populist-backed Austrian central banker prepares for office
Austria’s incoming central bank governor has said he will not bow to the demands of the populist party that nominated him, but called for a broader range of voices to be heard in Europe’s political and economic discussions.
Robert Holzmann was nominated in January by the Freedom Party, the rightwing Austrian party that was at the time a junior partner in the country’s coalition government. The party has been highly critical of Brussels, notably on immigration policy but also on the euro, with some members calling for a currency split between a “hard north” and a “soft south”.
The 70-year-old professor, who has worked at the World Bank and in Asia for the IMF, will succeed Ewald Nowotny as Austrian central bank governor and a member of the European Central Bank’s governing council in September.
In his first interview since his appointment was approved by Austrian president Alexander Van der Bellen, Mr Holzmann defended critics of the European political and economic system but rebuffed the suggestion that he had been chosen to reflect Freedom Party views.
“I was appointed for six years and unless I do something which was of a criminal flavour, nobody can tell me what to say [about ECB policy],” he told the FT.
Although he does not think “that there is any relevant percentage of individuals [in Austria] that would want to switch to an independent currency”, Mr Holzmann defended critics of the European economic and political system.
“One should not take critical questions towards European institutions as a threat to Europe; one shouldn’t be afraid of critical questions with regards to politics,” he said.
His appointment comes amid signs of heightened tensions between monetary guardians and lawmakers.
Both the ECB and the US Federal Reserve have found their right to set monetary policy independent of political pressure attacked by critics on the right and left extremes of the political spectrum. US president Donald Trump has repeatedly hit out at the Fed and the ECB for their failure to set policies that he views as in America’s interest.
The Austrian government’s decision to tap Mr Holzmann for the job came as a surprise to some policymakers who had expected the position to go to Andreas Ittner, the vice governor of the National Bank of Austria. Observers say the Social Democrats and the centre-right would have nominated a candidate with more expertise in monetary policy.
Mr Holzmann spent his career working on pensions and economic development and is not a monetary economist, although he has written about weaknesses in the currency union’s architecture.
The governor said that he came into contact with the Freedom Party when he was invited to give its officials a lecture on the euro.
While he has informally advised senior members of the Austrian right in the past, he is not viewed in Vienna as a party apparatchik and has sought to distance himself from them since his appointment.
“I was nominated by the party, but I have never been a member of the party and I don’t take instructions from the party,” he said. “I would have accepted the job if it was the Socialist Party or Conservative Party that had nominated me.”
And he insisted that despite the nature of his appointment he was “a very strong supporter of independent central banks . . . because it has led to a sea change in economic outcomes”.
“Whoever has been exposed, even as an observer, to hyperinflation, knows how it not only distorts the economy but also exerts social pain,” Mr Holzmann said, adding that he was an “independent-minded economist” who would make decisions “without any reference” to political ties and would defend the euro, which he described as “ingrained” in the European system.
The ECB’s approach to the eurozone crisis — in which Mario Draghi pledged to do “whatever it takes” to defend the euro — was “perfect”, Mr Holzmann said, because it closed one of the biggest gaps in the bloc’s structure.
His first ECB meeting will take place on September 12, when the central bank is expected to unveil a fresh round of stimulus. He would like to see a reassessment of the central bank’s focus on inflation to consider a broader range of targets, and more critical thinking about the ECB’s policies in the research the institution sponsors.
“I want to open the discourse to people from the outside,” he said, calling for “more consistency checks between the macroeconomic assessments and policy proposals and the microeconomic situation, be it at the level of inflation, labour market, any kind of economic phenomena”.
Policy discussions must be rooted in the real economy, he argued: “If I hear policy proposals, I want to relate them to discussions I have with heads of enterprises, banks, also trades unionists, to understand where they’re coming from.”