The President of the European Central Bank was in Strasbourg last Monday to address the European Parliament’ plenary assembly. Once again Mario Draghi was asked to give his views on the possibility for helicopter money.
Last Monday February 1st, the European Parliament’s plenary Assembly was set to debate its Annual Report on the activities of the ECB for 2014 (see the draft report here).
The session sparked a variety of views on the ECB’s QE programme. A conservative MEP from Poland asked Mario Draghi to share his views on ‘helicopter money’ (see the video below):
Mr Draghi, I have one question. At one of our earlier meetings during the monetary dialogue meetings at the ECON Committee, you said that you would consider ‘helicopter money’: that is, the direct emission of cash money to market participants. I would like to ask you: what is your current thinking on this, on the legal grounds, and on the consequences – both bad and good – of this measure in the event that we introduce it?
‘Helicopter money’ describes central banks distributing newly created money via a citizens’ dividend. It is a proposal that falls under the broader term ‘QE for People’.
MEP Rosati was directly referring to a question addressed by MEP Paul Tang (S&D) who asked a similar question to Mario Draghi in September 2015. At the time Draghi said “we will certainly consider these ideas that are being discussed”.
Rosati, who is Professor of Economics and former member of the Central Bank of Poland’s monetary policy committee (1998-2004) declared on facebook: “I see strong arguments in favor [of helicopter money], but before final decision is taken I would like to see a serious analysis of this potential measure.”
Since the plenary session does not include a Q&A with the President of the ECB, Mario Draghi could afford not to answer the question. He also alluded to the fact that some questions raised by MEPs – and possibly the one about helicopter money – were beyond the ECB’s own area of decision-making competence: “some of the statements or questions were inherently political, and so the best equipped to answer are the national governments and the national parliaments, and perhaps your own Parliament.” he said.
The Annual Report of the European Parliament on the ECB will be voted in plenary on February 24th. The current draft version of the document raises some concerns over the ECB’s QE programme. The report “notes the positive yet modest impact of the QE programme on money and credit dynamics, with loans to enterprises still weak but benefiting from a gradual easing of credit standards”, while concluding that programme “could be more effective”, especially for SMEs.
You can watch Dariusz Rosati’s intervention here: