EU voices fears over banking watchdog

The EU's top financial regulator, Charles McCreevy, wrote to Poland's Finance Ministry last week to express his concern that Poland's newly created financial watchdog could fall victim to political meddling, as most of its board members can be removed at any time.

The government argues that the Financial Supervision Commission (KNF) is needed to save on costs and improve supervision. Finance Ministry spokeswoman Dominika Tuzinek-Szynkowska insists that "the regulator is independent and not under government influence."

The KNF, which was created in August this year, has the responsibilities of the Securities and Exchange Commission and a pension and insurance regulator. Its chairman also heads the banking supervisory body.

McCreevy, the European Commissioner for the Internal Market and Services, said the KNF may not be able to operate independently, which could jeopardize market stability. "In particular, I am concerned about the new appointment and dismissal procedure for the members of the Financial Supervisory Commission, which risks undue political control over supervisory operations," the letter read. He asked for assurances from Finance Minister Zyta Gilowska that the regulator would remain free from interference.

Prime Minister Jarosław Kaczyński said he was astonished by the letter, and added that Gilowska would write a reply. The Kaczyńskis have clashed over banking regulation with both the EU and Poland's central bank several times. The central bank has said the Kaczyńskis have a vendetta against its outgoing head, Leszek Balcerowicz. (Reuters)