Trichet opposes Romanian Finance proposal. Central Bank cannot be forced to donate 25% of their income for Budget recovery

The European Central Bank (ECB) rejected, as expected, the proposal coming from the Romanian Finance Ministry addressing the 25% cut in salary for the Central Bank employees. The Finance Ministry’s request sparkled discussions in the Romanian Central Bank (BNR), where employees were expecting to be forced „to donate: 25% of their incomes to hell the recovery of the state Budget. „On June 18 2010, the ECB received from the Romanian Public Finance Ministry a request to issue a note addressing a law regarding certain necessary measures for the budget balance. The ECB was not consulted and, on June 9 2010, the ECB sent a letter to the Romanian Government, drawing attention on the duty to consult the ECB”, the European Central Bank document shows.

In regards to the changes and measures of enforcement adopts later for this law, it is compulsory to respect the duty of consulting the ECB. This is extremely important bearing in mind that article 17, paragraph 2 of the law seems to indicate the chance for later legislative measures to affect the BNR staff, the document mentions. „The Law entails a cut in BNR staff salaries, although the Romanian state is not BNR’s formal employer. According to the BNR status, the BNR staff salaries are paid from the central bank’s own resources”, the ECB officials write.

Additionally, the law entails the direct transfer to the state budget of salary „donations”. The ECB stresses that any operation between a national central bank (NCB) and the national authorities of an EU member state needs to respect the central bank’s independence principle and the interdiction of monetary finance entailed by article 1233. Plus, no NCB should be in the situation of not being in control or of having limited control over its staff. Neither a state of a EU member state should not be able to influence a NCB politics on human resources, which is an important feature of independence. Romanian authorities are compelled to insure the fact that any change that any legislative change addressing BNR staff’s salaries is decided with BNR and considering its position.

The interdiction of monetary finance is essential to insure reaching the main target of the monetary policy. From an accountancy point of view, a cut in BNR salaries leads to lower operational costs for BNR and a potential increase in the bank’s financial resources. Still, if this money is sent to the state budget, the Romanian state’s funds are raised on BNR’s account. Any such transfer from BNR to the state budget can be considered a kind of monetary finance, which is clearly illegal, the ECB document shows.