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Austria’s New Governor Is Picking Fights at Home and Abroad

Austria’s New Governor Is Picking Fights at Home and Abroad

(Bloomberg) -- Two weeks after Robert Holzmann declared the European Central Bank’s latest round monetary easing a mistake, Austria’s new central bank governor got into the second public fight in his four weeks in office -- this time back home.

Holzmann on Friday fired the Austrian central bank’s personnel chief with immediate effect and ordered the institution’s security service to escort her off the premises, according to Austrian media reports. He also suggested early retirement to a department head and proposed that the central bank’s spokesman may want to relocate to Innsbruck, according to the reports.

The actions prompted the central bank’s general council -- a supervisory body with no role in monetary policy -- to take the unusual step of ordering a probe by external auditors. The result of the inquiry will be “promptly” presented to the general council, led by President Harald Mahrer, the central bank said in the statement on Monday.

“As an institution, the central bank thrives on the trust in the bank and into its top management,” Mahrer told Austrian public broadcaster ORF in an television interview. “Hence we’ll reinstate this trust as soon as possible, and I will make sure of that as the president.”

A spokesman for Holzmann said the dismissal was necessary and had to be done swiftly, declining to elaborate. He said he expects a result of the probe within a week.

Political Turmoil

Austria’s recent political turmoil adds to the complexity of the current situation at the central bank. The appointment of the four-member board was made earlier this year by conservative Chancellor Sebastian Kurz and his nationalist junior government partner. While a repetition of that coalition is unlikely -- the Freedom Party suffered severe losses in Sunday’s election -- the central bank board has five-year terms that just started.

According to local media, Holzmann and another director appointed by the Freedom Party made the controversial personnel decisions without consulting with the other two directors -- appointees of Kurz’s People’s Party -- or with Mahrer, another Kurz confidant.

Austria’s New Governor Is Picking Fights at Home and Abroad

Holzmann, 70, spent most of his career at international organizations, where he specialized in labor markets, pensions or social security systems. His term at the central bank started Sept. 1, just days before the ECB’s decision to restart quantitative easing caused dissent from officials at the core of the euro area, including Germany, France and the Netherlands.

Holzmann was among the most outspoken critics, telling Bloomberg a day after the decision that it had “crossed his mind” that the monetary push was a mistake.

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

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, Zoe Schneeweiss, Brian Swint

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