Bulgarian NGOs criticise central bank amendments on bank runs – report
Several representatives of prominent Bulgarian think-tanks have criticised the amendments put forth by the country’s central bank, proposing to criminalise the offense of spreading misleading information about financial institutions, as creating the premises for censorship of the media, Bulgarian daily Sega reported on July 2.
Earlier this week, the Bulgarian National Bank (BNB) tabled amendments envisioning an effective prison sentence of two to five years for anyone who “spreads misleading or false information or other reports about a bank or financial institution that may lead to creation of public panic.” In cases where such activity has resulted in “significant damage” or yielded “significant profits”, the proposed jail time is five to 10 years, accompanied by a fine of 5000 to 10 000 leva.
However, the amendment does not define what represents “misleading or false information”. Currently, the central bank has the power to impose administrative fines in such instances.
BNB said that the amendments were made necessary by the “dissemination in recent days of misleading reports and malicious rumours regarding Bulgarian banks”, referring to the bank runs on the Corporate Commercial Bank (put under BNB’s special supervision on June 20) and the First Investment Bank (which said that it resumed normal operations on June 30 after suspending customer operations over the weekend to replenish its liquidity).
The head of Parliament’s budget affairs committee, Yordan Tsonev, said on July 1 that the amendment had the support of Bulgaria’s parliamentary-represented parties, saying that “such matters are punishable in Europe and the US.”
Sega argued the opposite, saying that the EU and the US asked banks to “expose their real situation to the public and no media suffered for criticism of the monetary-crediting system because the public interest was paramount.”
The newspaper quotes Georgi Stoev, an economist with the Industry Watch think-tank, saying that the proposal “shows BNB’s powerlessness to inspire respect and instill order in the system”.
Other analysts quoted by Sega were equally scathing, with Hristo Ivanov, programme director at the Bulgarian Institute for Legal Initiatives, quoted as saying that the Penal Code has sufficient provisions to deal with the situation, but the issue was “the absence of working institutions”.
Public policy think-tank Risk Monitor’s director Stefan Dimitrov described the proposal as ludicrous, showcasing the central bank governor Ivan Iskrov’s “weak competence with regards to managing such massive psychological crisis that the world witnesses all the time and reacts to in well-established fashion.”
Lawyer Alexander Kashumov, lead counsel for the Access to Information Programme, cautioned that the amendments could have the opposite effect – creating the risk of “management in the dark and an additional corridor for corruption”.
The head of Bulgaria’s media regulator, the Council on Electronic Media, Georgi Lozanov weighed in as well, saying that “it is the sources of information that have to be punished, no those who broadcast it.”
(Bulgarian National Bank. Photo: Clive Leviev-Sawyer)