Final Word from Tuesday, February 25, 2003

Politicians are putting much of the blame for the failure on Fri. of Union banka on the Czech National Bank. Finance Minister Bohuslav Sobotka told F1 radio last night that the CNB could have acted quicker in dealing with UB, but his main criticism was more serious. He questioned the CNB's decision last Oct. to approve the entry of Invesmart into UB and indicated that he might support changes on the Bank Board if a satisfactory explanation isn't given. He stressed that the CR's public debt is spiraling out of control, in part because of theKč 500bn pumped into cleaning up failed banks. The CNB has been one of the main critics of the cabinet's public-finance reform. Sobotka now seems to be gently paying the CNB back for this: If the CNB had done a better job of regulating banks, he's saying, we wouldn't have such budget-reform problems today.


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