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KOMPLIKOVAN PRESEK FINANSIJSKIH I BANKARSKIH REFORMI

Jedan od oblika saradnje između Udruženja banaka Srbije i Međunarodnog bankarskog saveta bankarskih asocijacija zemalja ZND, Centralne i Istočne Evrope je i stalna međusobna razmena informacija i aktuelnosti o bankarskom sektoru i finansijskoj edukaciji.

Ovom prilikom gospodin I. Borisov, predstavnik ove asocijacije u Pragu, poslao nam je predavanje predsednika Češke Republike Vaclava Klausa na međunarodnoj konferenciji u Pragu.

U svom referatu izneo je dvadesetogodišnje rezultate finansijske i bankarske reforme zemlje. Složena, aktuelna i zanimljiva tema koju je predsednik Klaus obradio jednostavnim, konciznim i duhovitim jezikom.

Vaclav KlausPredsednik Češke Republike

predavanja

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COMPLICATED CROSS-SECTION

OF FINANCIAL AND BANKING

REFORMS

One form of cooperation between the Association of Serbian Banks and the International Coordinating Council of Banking Associations in the CIS, Central and Eastern Europe is the constant mutual exchange of information and news on banking sector and financial education.

On this occasion, Mr I. Borisov, representative of this institution in Prague, sent us the speech of Vaclav Klaus, President of the Czech Republic, delivered at an international conference in Prague.

In his address, he presented the results of the twenty-year long financial and banking reform of the country. A complex, current and interesting topic, which President Klaus presented in a simple, concise and wi�y language.

Vaclav KlausPresident of the Czech Republic

lectures

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Specifičnost tranzicije u našoj zemlji predstavlja relativno niska inflacija, koju je omogućila oprezna makroekonomska

politika na početku reformi. To nam je omogućilo da sprečimo pojavu visoke inflacije ili čak i hiperinflacije. To se sada potcenjuje, a i u to vreme se nije dovoljno cenilo. Nismo koristili inflaciju kao metod sanacije bankarskog sektora na račun štednje stanovništva i time se razlikujemo od ostalih zemalja u tranziciji.

Formiranje bankarskog sektora

Bilo bi nepravedno da ne istaknemo važnost reforme bankarskog sistema, koja je započela još u vreme perestrojke, to jest pre novembra 1989. godine.

Polaznu pretpostavku za početak postupka tranzicije predstavljala je podela monobanke (Državne banke) na Centralnu i Komercijalnu banku. Zaključili smo da će baš taj proces poremetiti logiku funkcionisanja bivšeg ekonomskog sistema komunizma.

Za “zaboravne” želeo bih da napomenem da su zakonske osnove tih promena bile pripremljene u drugoj polovini 1989. godine. Nacrt tog zakona je 11. decembra 1989. godine (to je bio moj prvi radni dan kao Ministra finansija) ležao na mom stolu.

Već 13. decembra, t.j. posle dva dana taj zakon i zakon o državnom budžetu izneo sam na diskusiju na bivšem Federalnom sobranju.

U prvim redovima su još sedeli vodeći aktivisti bivšeg režima, koji su pasivno dizali ruke i glasali “za” bilo koju odluku. Prvi

put u životu sam bio u parlamentu, koji je o dnevnom redu raspravljao od jutra do noći, pri čemu sam samo ja komentarisao zakon. To je bilo interesantno iskustvo.

Tako je od 1. januara 1990. godine počela da radi Centralna banka (ČNB - Češka Narodna Banka), a istovremeno je formirana Komercijalna i Investiciona banka. To je bio najvažniji preduslov daljih reformi

Do danas se u bankarskom sektoru nije desilo ništa revolucionarno.

Umesto pripremljenog državnog budžeta, tog dana sam predložio privremenu odluku o budžetu, uz obećanje da ću u roku od tri meseca predložiti državni budžet. One, kojima se čini (što je delimično tačno), da je oporezivanje preduzetništva preveliko, moram da podsetim da sam tada u skladu sa preliminarnom ocenom predložio da se stopa poreza na dobit smanji sa 75% na 65%.

Kokoška i jaje su se istovremeno pojavili

Da bih tačno opisao tadašnju situaciju bilo bi dobro da se podsetimo šta smo tada mislili, i kako smo u to vreme shvatali proces tranzicije. Nabrojaću najvažnije elemente:1. Znali smo da formiranje novog bankarskog

sektora nije jednokratni akt, već da se radi o procesu. Novi bankarski i finansijski sektori se nisu mogli formirati po principu “ključ u

ruke”.2. Znali smo da bankarski sektor predstavlja organski deo privrede, to jest da nije izolovana i izdvojena oaza.

Vaclav Klaus: “Tekuća finansijska i ekonomska kriza pokazuje da se bez obzira na našu složenu i komplikovanu istoriju naš bankarski i finansijski sistem nalazi na čvrstim temeljima. A to nije malo.”

Vaclav Klaus: “The current financial and economic crisis shows that, despite its complex and complicated history, our banking and financial system has solid foundations. And that is not a trifle.”

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What is specific for the transition in our country is the relatively low inflation rate, made possible

by the prudent macro-economic policy at the beginning of reforms. This enabled us to prevent the occurrence of high inflation or even hyperinflation. This is underestimated now, and back then it was not valued enough either. We did not use inflation as a method to rehabilitate the banking sector at the expense of retail savings, and this is what differentiates us from the other countries in transition.

Establishment of the Banking Sector

It would be unfair not to highlight the importance of the banking sector reform, launched back in the time of perestroika, i.e. before November 1989.

The starting assumption for the commencement of the transition procedure was the division of the mono-bank (State Bank) into the Central and Commercial Bank. We concluded that this very process will be the one to disturb the logic of functioning of the former economic communist system.

For those of you who are “forgetful”, I would like to mention that the legal bases of those changes were prepared in the second half of 1989. On December 11th 1989 (it was my first working day as a Minister of Finance), the dra� of this law lay on my desk.

Already on December 13th, i.e. two days a�er, I brought that law and the law on state budget up for discussion at the former Federal Assembly session.

The leading activists of the former regime were still si�ing in the first rows, raising their hands passively, voting “for” any decision. For the first time in my life, I was in the Parliament, where the agenda was discussed day and night, and I was the only one commenting on the Law. It was a rather interesting experience.

Then, on January 1st, 1990, the Central Bank (Czech National Bank - CNB) started operating, and the Commercial and Investment Banks were formed at the same time. That was the most significant precondition of further reforms.

Until the present day, nothing revolutionary has happened in the banking sector.

Instead of the prepared state budget, on that day I proposed a temporary decision on budget, promising that within three months I will propose the state budget. I have to remind those of you who think that the taxes for entrepreneurs are too high (which is partially true) that back then, in line with the preliminary evaluation, I proposed the profit tax rate to be reduced from 75% to 65%.

Chicken and Egg Appeared Simultaneously

In order for me to correctly describe the situation at that time, it would be recommendable to remember what our thoughts about the process of transition were, and how we understood it back then. I will list the most important elements:1. We knew that the establishment of the new

banking system was not a one-off act, but that it required a process. New banking and financial sectors could not be formed on a turnkey basis.

2. We knew that a banking sector is an integral part of economy, i.e. it is not an isolated and separate haven.

3. We knew that an extremely delicate part of the radical transformation is the fact that the banking sector “breathes” together with the economy, hence the measures directed at cleansing the banking sector cannot be the priority.

4. We were absolutely positive about the accepted order in solving problems, the order of steps to be taken during the transformation process. We knew that it was impossible to first define the laws and necessary institutions, and only a�er all that let the market “function”. Besides, we knew that the reverse order is not possible either. Starting from the famous question about what is older, chicken or egg, we decided to simultaneously deal with both the chicken and the egg.

5. As for the monetary policy, we chose monetary approach.

6. Taking into consideration the European tradition, we decided to rely on universal banks (meaning that we did not choose the American, but German banking system).

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3. Znali smo da izuzetno osetljiv deo radikalne transformacije predstavlja činjenica da bankarski sektor “diše” zajedno sa privredom, te da ne mogu da imaju prioritet mere usmerene na čišćenje bankarskog sektora.

4. Bili smo apsolutno sigurni u prihvaćeni redosled rešavanja problema, u redosled koraka tokom procesa transformacije. Znali smo da se ne mogu prvo utvrditi zakoni ili potrebne institucije, te da tek posle svega toga možemo dozvoliti tržištu da “radi”. Osim toga, znali smo da se ne može ići ni obrnutim putem. Polazeći od poznatog pitanja šta je starije, kokoška ili jaje, rešili smo da se istovremeno pozabavimo i kokoškom i jajetom.

5. Što se tiče novčane politike, odabrali smo monetarni pristup.

6. Uzimajući u obzir evropsku tradiciju, rešili smo da se oslonimo na univerzalne banke (to znači da nismo odabrali američki, već nemački bankarski sistem).

7. Verovali smo u pozitivno delovanje otvorenog pristupa bankarskom tržištu, i zbog toga nismo izvršili nasilnu, vrtoglavu, inženjerski ambicioznu demonopolizaciju naših postojećih banaka. Nadali smo se da će konkurencija dovesti do pojave novih bankarskih subjekata na težištu.

8. Međutim, moramo da kažemo, da smo potcenili važnost i posledice eksplozivnog rasta svetskog tržišta kapitala, investicionih banaka i raznih investicionih fondova, kao i njihov brzi ulazak na naše tržište.

Nova devizna politika

Imali smo dosta jasnu predstavu o novčano-kreditnoj politici i o njenim osnovnim parametrima. Radi se o:• Utvrđivanju fiksnog deviznog kursa kao

sidra u privredi koja se brzo menja;• Potrebi brzog obezbeđenja interne i eksterne

konvertibilnosti krune;• Liberalizaciji tekućeg računa platnog

balansa;• Daljoj liberalizaciji i deregulaciji cena;• Značajnom smanjivanju subvencija

privredi.Nismo imali unapred definisano mišljenje

o potrebnoj krutosti ili fleksibilnosti novčano-kreditne politike. Na početku smo želeli veću krutost (da bismo sprečili hiperinflaciju). Na drugoj etapi, kada više nije postojala potreba da se ekonomski rast i privreda koče preteranom krutošću novčane politike, kada je opasnost od visoke inflacije prošla, preferirali smo veću fleksibilnost.

Po ovom pitanju mišljenje vlade i privrednika se nije baš uvek poklapalo sa mišljenjem Centralne banke. Najveće razlike su postojale tokom 1997. i 1998. godine.

Nismo se slagali sa ciljevima Češke narodne banke u oblasti regulisanja ubrzane implementacije standarda razvijenih zemalja. Naglo pooštravanje standarda u oblasti regulative moglo je da dovede do ogromnih gubitaka u bankarskoj sferi. Od samog početka smo smatrali da odlučujući značaj za funkcionisanje bankarskog sistema ima formiranje i funkcionisanje Konsolidovane banke.

Bili smo kritički raspoloženi prema sveobuhvatnom i skupom obnavljanju bankarskog sektora, koje je započela vlada Zemana. To je bila ogromna avantura.

Transformacija nije dozvolila da se privatizacija banaka obavi na prvoj etapi, a kada je to postalo moguće, oko 1995. godine, zakon o privatizaciji banaka nije prošao na skupštini. To je bila odluka Zemana i ČSSD.

Dva principijelna rešenja

Kada je to bilo potrebno, nismo bili sigurni u ispravnost rešavanje dva osnovna pitanja.

Prvo pitanje se odnosilo na liberalizaciju računa kretanja kapitala platnog bilansa. Pozitivno rešavanje ovog pitanja bilo je vezano za rešavanje drugog problema. Želeli smo da budemo prva zemlja sa privredom u tranziciji koja bi bila primljena u OESR. To se desilo 1995. godine. Uslov za ulazak Češke u ovu organizaciju bila je liberalizacija računa kretanja kapitala. I danas nisam siguran šta bi se desilo da smo to uradili na vreme - devizna kriza bi možda izgledala drugačije.

Drugu odluku je predstavljalo odustajanje od politike fiksnog deviznog kursa. Poslednjih dana decembra 1990. godine bojao sam se prihvatanja te politike, jer sam želeo da se prvo

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7. We believed in the positive influence of an open approach to the banking market, hence we did not conduct an aggressive, rapid, ambitiously engineered demonopolization of our existing banks. We hoped that the competition would cause the appearance of new banking subjects in the market.

8. However, we have to say that we underestimated the importance and consequences of the booming growth of the global capital market, investment banks and various investment funds, as well as their swi� entry into our market.

New Foreign Exchange Policy

We had a pre�y clear notion about the credit-monetary policy and its basic parameters. They were as follows:• Determining the fixed

FX rate as an anchor in the swi�-changing economy;

• Necessity of rapid implementation of internal and external convertibility of crown;

• Liberalization of the balance of payment current account;

• F u r t h e r liberalization and deregulation of prices;

• Considerable reduction of subsidies to the economic sector.We did not have a pre-defined opinion on

the necessary strictness or flexibility of the credit-monetary policy. At the beginning we aimed for more strictness (in order to prevent hyperinflation). In the second stage, when there was no need for economic growth and economy to be hindered by the excessive rigidity of monetary policy, and when the danger of high inflation passed, we preferred higher flexibility.

The opinion of the Government and businesspeople on this issue did not always match with the opinion of the Central Bank. The differences were most prominent during 1997 and 1998.

We did not agree with the objectives of the Czech National Bank in the field of regulating the accelerated implementation of the developed countries’ standards. The sudden implementation of stricter standards in the field of regulation might have caused enormous losses in the banking sphere. From the very beginning we believed that the formation and functioning of the Consolidated Bank bears the decisive importance for the functioning of the entire banking system.

We expressed our dissatisfaction with the comprehensive and expensive renewal of the banking sector, launched by the Zeman’s Government. It was a huge adventure.

Transformation did not allow for the privatization of banks to be conducted in the first stage, and when that became feasible,

around 1995, the law on

privatization of banks was rejected by the Assembly. It was a decision of Zeman and CSDP (Czech Social Democratic Party).

Two Essential Solutions

When it was most needed, we were uncertain about the suitability of the solutions to two essential issues.

The first issue was about the liberalization of the balance of payment capital account. The positive conclusion of this issue was related to the solving of the other issue. We wanted to be the first country whose economy is in transition to be admi�ed to OECD (Organization for Economic Cooperation and Development). That happened in 1995. The precondition for Czech

Međunarodna konferencija je održana na Ekonomskom univerzitetu u PraguThe international conference was held at the University of Economics, Prague

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završi liberalizacija cena i spoljne trgovine, posle čega smo nekoliko puta uzaludno pokušavali da nateramo Češku narodnu banku da liberalizuje devizni kurs. U svakom slučaju, to je sada istorija.

Najspornija pitanja

Treba se setiti najvažnijih sporova prethodnog perioda. Prve godine najveći spor je predstavljao neophodan nivo devalvacije kursa. Izbor nivoa devalvacije 29. decembra 1990. godine i fatalni spor sa MMF-om, koji je nastao zbog toga, za mene je nesumnjivo bila najteža politička odluka u mom životu.

Visinu devalvacije smo morali da smanjimo zbog naših levih kritičara i svih koji još uvek idealizuju kvalitete koji su nasleđeni od komunističke privrede. Za razliku od mene, MMF je manje verovao našoj privredi i tražio je veću devalvaciju krune.

Sada sam zadovoljan što tada nisam popustio i što sam prihvatio onu devalvaciju, koja je deviznom kursu omogućila da ostane nepromenjen više od šest godina. To je bio apsolutno rekordan rezultat, koji nije ostvarila nijedna zemlja sa privredom u tranziciji.

Ni onda, a ni sada nisam priznavao pojam “bankarski socijalizam” kao osnovnu karakteristiku bankarskog sektora 90. godina. To je samo politička etiketa koja nema nikakve veze sa analitičkom analizom naših realija.

Niko nikada nije diktirao odluke o odobravanju kredita - to je čista fantastika. Loši krediti su delimično predstavljali nasleđe komunizma, a delimično neizbežan rezultat jedinstvene i skupe operacije transformacije.

Naša privreda u to vreme nije bila u idealnom stanju, tako da se pomoću formula iz udžbenika nije moglo odrediti kada i kako treba odobravati bankarske kredite. Banke su nesumnjivo pravile greške, ali to se ne može porediti

sa greškama koje su američke banke napravile poslednjih godina.

Deviznu krizu u 1997. godini izazvala je apsolutna nekorektna intervencija Centralne Banke sredinom 1996. godine. Pri tome masovna pojava problematičnih kredita ne predstavlja uzroke krize. Pre će biti da je povećanje tih kredita predstavljalo posledicu te krize.

Osim toga, nismo na isti način tumačili nezavisnost Centralne Banke. Ne postoji nikakva sumnja da Centralna Banka mora da ima pravo da kategorički odbije da finansira budžetski deficit štampanjem novca, ali ipak ne postoji apsolutna nezavisnost centralne banke kada se radi o definisanju ciljeva novčano-kreditne politike (naprimer, u odnosu na tempo dezinflacije). To je bilo posebno aktuelno u najosetljivijem periodu transformacije, ali sada ima manji značaj.

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Republic being admi�ed to this organization was the liberalization of the capital account. To this day I do not know for sure what would have happened if we had done this in time - the FX crisis might have looked different.

The second decision was about abandoning the fixed FX rate policy. In the last days of December 1990 I was afraid to adopt this policy, because I wanted the liberalization of prices and foreign trade to be completed first, a�er which, on several occasions, we tried to force the Czech National Bank to liberalize the FX rate, all in vain. Anyway, it is all history now.

Most Controversial Issues

Let us recall the most important disputes in the past period. In the first year the biggest dispute was about the required level of FX rate devaluation. The selection of the devaluation

level on December 29th 1990, and the resulting fatal dispute with IMF, are, undoubtedly, the toughest political decision in my life.

We had to lower the level of devaluation because of our le�-wing critics and all those people still idealizing the qualities inherited from the communist economy. Unlike me, IMF had less faith in our economy and asked for higher devaluation of the crown.

Today I am pleased for not having given in back then, and for having adopted the level of devaluation which enabled the FX rate to remain unchanged for more than six years. That was an absolute record, which no country with economy in transition had ever managed to achieve.

Neither then nor now do I accept the notion of “banking socialism” as a basic characteristic of the 1990s banking sector. That is just a political label which has nothing to do with

the analytical examination of the reality.

No one has ever dictated the decisions on extending loans - that is sheer fiction. Bad loans were partly the legacy of communism, and partly the inevitable result of the unique and expensive transformation operation.

Our economy at that time was not in ideal shape, so that we could not use the course-book formulae to determine when and how to extend bank loans. Banks undeniably made mistakes, but that cannot be compared with the mistakes of the US banks in the last years.

The 1997 FX crisis was caused by the absolute, unwarranted intervention of the Central Bank in the mid 1996. In addition, the mass occurrence of non-performing loans is not the cause of the crisis. More likely, the increase in these loans came as a result of that crisis.

Also, we did not interpret the independence of the Central Bank in the same way. There is no doubt that the Central Bank must have the right to categorically refuse to finance the budgetary deficit by

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Mnogi od nas se nisu slagali sa je�inom prodajom naših banaka stranim bankama i sa namernim uništavanjem bankarskih ustanova sa domaćim kapitalom. U tom smislu su strani lobisti i savetnici u Češkoj postigli neverovatan uspeh.

Podela krune je bila uspešna

Uspešno je prošla operacija obnavljanja novčanih tokova prvih meseci 1993. godine, kada je ukinuta jedinstvena valuta koje se tokom mnogih decenija koristila u Čehoslovačkoj. To je bio očigledan dokaz da očuvanje jedinstvene valute nije pitanje političke volje i želje, već da pre predstavlja pitanje usklađenosti ili neuskađenosti ekonomskih pokazatelja Češke Republike i Slovačke.

To je bila dobra lekcija za vođenje diskusija o mogućem ulasku naše zemlje u drugi devizni savez, ovaj put u okviru velikog ekonomskog kompleksa koji se zove evropska valutna zona.

Uticaj tekuće ekonomske i finansijske krize na države Centralne i Istočne Evrope koje su uvele evro i koje su se raznim mehanizmima čvrsto vezale za evro otreznilo je one koji su uvođenje evra smatrali skoro neutralnom i bezbolnom operacijom. Bezbolno je samo administrativno i tehničko uvođenje evra, a ne i ekonomske posledice koje iz toga proističu.

Na kraju mogu da kažem samo jedno: “Tekuća finansijska i ekonomska kriza pokazuje da se bez obzira na našu složenu i komplikovanu istoriju naš bankarski i finansijski sistem nalazi na čvrstim temeljima. A to nije malo”.

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issuing money, but still there is no absolute independence of the central bank when it comes to defining the goals of the credit-monetary policy (for instance, in relation to the pace of disinflation). This was particularly current in the most sensitive period of transformation, but now it bears less importance.

Many of us disagreed with the cheap sale of our banks to foreign banks, and with the intentional ruining of banking institutions with domestic equity. In this sense, foreign lobbyists and advisors in Czech Republic achieved an amazing success.

Separation of the Crown was Successful

The operation of cash flows renewal in the first months of 1993 was successful, and it was then that the common currency, used for many decades in Czechoslovakia, was abolished. This was an obvious proof that the preservation of the common currency was not a ma�er of political

will and desire, but, more likely, a ma�er of coordination or non-coordination of economic indicators in the Czech Republic and Slovakia.

It was a useful lesson for having discussions on the potential admission of our country by another FX alliance, this time within the large economic complex called the European Currency Zone.

The influence of the current economic and financial crisis on the Central and Eastern European countries which introduced Euro, and used various mechanisms to grow strong ties with Euro, brought all those who considered the introduction of Euro an almost neutral and painless operation to their senses. Only the administrative and technical introduction of Euro is painless, but not the economic consequences incurred by it.

Finally, I can say just one thing: “The current financial and economic crisis shows that, despite its complex and complicated history, our banking and financial system has solid foundations. And that is not a trifle.”