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. Last Updated: 07/27/2016

Paramonova Plans to Work and Wait

One day after her second rejection by the State Duma as permanent head of the Central Bank, Tatyana Paramonova on Thursday said she would remain in her acting post for the time being, as speculation swirled about possible successors and markets took stock of the situation.


With the parliament due to recess Friday, President Boris Yeltsin is hardly expected to send up a nominee for confirmation before it reconvenes in October.


Under Russian law he can recommend Paramonova -- first rejected in April -- one more time.


"I don't know what decision the president will take," Paramonova told a meeting of journalists, "but I can say that I am remaining at work with the Central Bank for the moment," Reuters reported.


Paramonova, whose tight monetary policies and stern regulation have won her many fans among economic reformers but made enemies in the Duma and the banking industry, gave no hint whether she expected Yeltsin to resubmit her name to the Duma for a full three-year term.


"It will be decided by the president. Whatever will be, will be," she said.


Maxim Elik, an economics expert at the President's Analytical Center, suggested that Yeltsin had already made his choice -- and that he would stick with the incumbent.


"The president has decided for a third time to name Paramonova as a candidate," Elik said, citing government sources he would not name. "She has already worked 20 years in the Central Bank, and from the point of view of economic and financial stabilization she is the optimum figure."


"There is no thought of naming a new candidate because there is so little time before elections to the Duma" in December, Elik said.


Miljenko Horvat, president of Citibank Russia, said the Duma's vote Wednesday was unfortunate because it prolonged the uncertainty surrounding the post.


Paramonova has held the job on an acting basis since Viktor Gerashchenko was dismissed following the ruble's crash last October.


"I think the lack of approval is unfortunate because it simply introduces more uncertainty in the general situation, which is not particularly positive," he said.


"It would have been a good sign to the market for her to be confirmed," said one Western economist who asked not to be named.


The volume of trade dropped sharply on the Moscow Interbank Currency Exchange on Thursday.


Initial supply for dollars was $18.57 million and demand was $13.95 million, with only 21 banks taking part in the auction, Interfax reported.


From $100 million to $200 million is traded on typical days, while Wednesday's volume was $88 million.


Meanwhile, the first name on many bankers' lips Thursday for possible new candidates was Yakov Dubinetsky, chairman of the board of Promstroibank, the former state industrial construction bank.


"I think Dubinetsky will be proposed," said Boris Sergeyev, director of research at Tokobank. "Before anyone, the president will recommend him."


Sergeyev praised and buried Paramonova, whose introduction of stiffer reserve requirements this spring drew particular ire from commercial banks.


"She's a magnificent accountant, but that is not enough for the Central Bank," he said. "She's got to be political and have a political line."


Dubinetsky also received the stamp of approval from the weighty Association of Russian Banks -- a strong foe of Paramonova. And one source close to the government, who declined to be identified, also mentioned his name.


"Our candidate is Dubinetsky," said Vyacheslav Zakharov, executive vice president of the banking association. "We consider him the most appropriate candidate."


Promstroibank's history with the state -- it registered as a joint-stock company in 1991 -- is likely fueling speculation over Dubinetsky's candidacy.


"Promstroibank is as close to a state bank as you can get," Citibank's Horvat said. "It's a reason to expect it's going to be someone close to the government who will be appointed."


But Elik said Dubinetsky's position would be a step in the wrong direction for the independence of the Central Bank.


"Dubinetsky has a definite circle of relations with commercial banks," he said. "There is some danger that the politics of the Central Bank will become a little one-sided."


Other serious possibilities for the post are Alexander Livshits, Yeltsin's top economics adviser, and Igor Moskovsky, head of the presidential administration's budget department, bankers said.


Sergeyev said other candidates tossed about included Vladimir Vinogradov, president of Inkombank, and Yury Anamoryov, chief of Aerobank, a Paris-based bank with Russian capital.


"I don't think he wants it," Sergeyev said of Anamoryov. "Paris is better than Moscow."


Dmitry Tulin also has been mentioned, but is considered unlikely because he recently accepted the position as Russia's representative to the International Monetary Fund in Washington.