Austria's ECB Stance Must Change, Freedom Party Appointee Says

(Bloomberg) -- Austria’s designated next central bank governor Robert Holzmann should argue for a tighter monetary policy in the European Central Bank’s policy-making body, according to the country’s new central bank vice president.

Barbara Kolm, an economist appointed to the institution’s non-policy oversight body by the nationalist Freedom Party, told Austrian daily newspaper Die Presse in an interview that she’s “hoping very much” Holzmann’s position will depart from that of incumbent Ewald Nowotny. Nowotny’s term ends in August 2019.

“Holzmann has a lot of international competence, and he knows: monetary policy can’t be just printing money,” Kolm was quoted as saying. She also reiterated her criticism of Europe’s common currency and the ECB’s monetary policy, and while she’s supposed to defer to the governor on monetary matters, she added that “I always commented as an economist and I won’t be gagged.”

Kolm’s remarks come a week after a clash between Nowotny and Finance Minister Hartwig Loeger in which Nowotny warned that the government’s plans to revamp banking supervision shouldn’t infringe on central-bank independence. Loeger said on Monday that independence was beyond doubt.

Kolm, president of the Hayek Institut -- a conservative economic think tank, also said that the central bank needs “massive reforms” and that she plans to “break up structures” at the institution. “The central bank is 200 years old and needs an overhaul,” she said.

To contact the reporter on this story: Boris Groendahl in Vienna at bgroendahl@bloomberg.net

To contact the editors responsible for this story: Vidya Root at vroot@bloomberg.net, Jana Randow, Paul Gordon

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