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Yes, the gentleman referred to above is the Governor of our Central Bank, but No, the testimony I refer to is not related in anyway to that normally given in a court of law. Then what is Alternattiva Demokratika up to might you be guessing? US political credos and economic management are not often applauded by AD, but exceptions do exists and one such exception is the subject of this article - the public status and appeal of the US Federal Reserve, and how and whether we should emulate it.
The Fed, as Americans call it, is the equivalent of our (and most of EU country’s) Central Bank, and it is run by a Chairman called Alan Greenspan. The septuagenarian is somewhat of a folk hero in the US, unique in his experience of having run the Fed since 1987, serving four presidents and surviving two major economic recessions.
Whilst I will refrain from commenting on how successful his leadership has been towards the economic development in the US of A and the world, I can unreservedly applaud his distinctive ability in having remained largely apolitical operating in a country that is, in many ways, more politicised than our Malta.
Mr Greenspan’s success lies in his ability to have risen above party politics and in having spoken his mind, despite the many influences that may have come from the Oval office – remember his “irrational exuberance” comment during the tech-boom of the mid-nineties?
One can certainly argue that the Chairman has had a Republican twist to his tale, but ironically his most successful period was serving under President Clinton, a man, whose economic frequency, he could rarely claim to have been in perfect synch with.
Whilst Alan Greenspan is given total autonomy in the sphere of monetary policy, this power comes with tremendous responsibility and accountability. In fact, the Chairman is regularly called to give testimony before both the US Senate and House of Representatives on a vast array of economic issues, most important of which is testimony on the state of the US economy. Such events (often screened live on CNN) are eagerly awaited by politicians, economists, bankers, fund managers and business leaders not just in the US, but around the world.
Mr Greenspan’s testimony is backed by thorough research carried out by the Federal Reserve and blended by the economic insight of a man who in matters economic (at least those pertaining to the US), has seen it all! What I find special in these events is the detached manner (as little political bias as is humanly possible) in which such testimony is given and the opportunity of the committee members receiving such testimony to ‘grill’ the chairman. This is truly an example of public service accountability we can, at least until now, only dream of.
The Central Bank of Malta is also given significant autonomy and responsibility in the setting of monetary policy; however Mr. Bonello is not afforded the kind of public status and related accountability that his counterpart in the USA enjoys. This is truly a pity, because as a result our country does not benefit to the full from Mr Bonello’s mind. For those of you who do not know, Governor Bonello (maybe the media should start referring to him as such) possesses a CV that is the envy of every aspiring economists whilst having professional integrity and specialist abilities that are unquestionable. Furthermore he now holds a seat on the board of the European Central Bank - a role that I am sure he will make us all proud of. Like Mr Greenspan, Governor Bonello is a man of few words, but when he speaks there are many who want to listen and even more who ought to. In the recent past, he did not fear to pass comment about the state of our economy even when he knew this would most certainly provoke some political backlash.
We all remember him coining the expression that ‘we were all living beyond our means’ – and how right he was!
Indeed, I am of the opinion that this country needs to hear more from Michael Bonello about the state of our economy, and less from our Finance Minister (also doubling-up as Prime Minister).
Whilst it is laudable that our PM/FM is sticking to his once-a-month briefing of the press, I am somewhat skeptical of his ability to convince the population on matters economic. The reason for my skepticism is rather obvious – Dr Gonzi, the politician, is trained to use appropriate wording to dampen the effect of any bad news he feels the political need to deliver, and to adopt adequate rhetoric to embellish/overstate every minor economic success his ministry dares lay claim to. Consequently, the credibility of Dr. Gonzi’s economic pronouncements, (immediately rubbished by every MLP die-hard) is quickly run through the economic gauntlet of the Alfred Mifsuds of this land.
Malta needs a regular and more reliable view on the state of the country’ finances – an opinion that we can at least rely on, if not agree with. Without the availability of such an opinion, every economic operator in Malta is left guessing what “the state we are in” is. This guessing-game is in effect a state-facilitated catalyst to sustaining the economic uncertainty that we have been facing for too long.
Solution?
A once-a-month testimony from Governor Bonello (televised please) on the state of our economy will ensure that we get a clearer, unbiased and more informed opinion on the state of our economy. I suggest that Parliament appoints a joint economic affairs committee that should be convened once-a-month to hear testimony from Governor Bonello on the state of the economy that many of us are rightfully so worried about.
Yes Governor, we think you owe it to the Maltese – please testify!
Edward Fenech is AD spokesman on finance, industry and tourism. He can be contacted at eddie@cafmalta.com
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