The evasiveness and lack of substance of the ECB’s annual report reveals room for improvement in the dialogue between the ECB and the European Parliament.

On Monday April 9, 2018, the European Central Bank released its annual report for 2017. The document mainly reflects the broad evolution of the ECB’s monetary policy, the Eurozone economy and organisational changes within the ECB.

However, the most important part of this report is in the (very discrete) annexes. Since 2016, and following a repeated push by MEPs, the ECB also provides a document entitled “Feedback on the input provided by the European Parliament”. In this document, the European Central bank responds directly to the European Parliament’s own annual report on the ECB – the one we were so enthusiastic about back in February.

This document is key because it enables a two-way conversation between the European Central Bank and the European Parliament, thus making sure (in theory) that the Parliament’s criticism, concerns and suggestions are not just messages in bottles.

Though few in number, there are some welcome sections of the report. The ECB takes on board the Parliament’s suggestion to study further the possibility to introduce a public digital currency in the Eurozone. However, there is no detail on which fields exactly it intends to carry out further research. In our view, one priority would be to examine whether the current legal framework would be favorable to implementing a “digital euro” or whether amendments to existing legislations would be required.

The ECB also reports briefly on the expected establishment of a whistleblowing policy and other improvements in terms of dialogue with staff, in order to address the ongoing issues of incredibly high burnout levels among staff and other problems with working conditions. Again, and has pointed out by IPSO (the ECB’s staff union) the ECB remains very evasive and does not report on the specific measures that are being taken.

On the negative side, the ECB disappointingly refuses to take any further steps towards improving the level of transparency on the corporate sector purchase programme (CSPP). Raising the transparency of the CSPP is a long-standing demand from Positive Money Europe. Following a push by a large number of MEPs, the ECB announced some improvements in 2017 but the ECB does not yet disclose the company-by-company volumes of its asset purchases.

The ECB also declined key suggestions aiming to improve its Ethics standards. First, it dismisses the Parliament’s recommendation that the ECB’s Ethics committee should not be chaired by the former President of the ECB (currently Mr Trichet). In a report published last year, Transparency International EU expressed concerns that a former ECB President may not be “as impartial as it should be” to chair the committee. Second, the ECB dismisses concerns around the participation of current ECB President Mario Draghi in the “Group of Thirty” (without naming it). The ECB’s stubborn approach on this issue goes against the opinion of the European Ombudsman.

Surprisingly, the ECB’s annual report does not mention any work on sustainable finance, which is nevertheless a growing topic of interest in the EU after the Commission announced an ambitious (yet insufficient) action plan on the matter. Such neglection confirms our suspicion that the ECB is dragging its feet on the sustainable finance agenda.

Last but not least, the ECB dodges the European Parliament’s call for improving the accountability of the European Central Bank. In February, the Parliament had made a clear appeal that “the Monetary Dialogue [the quarterly hearings with the ECB President] could be further improved, including by revamping it in order to strengthen the focus, interactivity and relevance of the exchange of views with the ECB President.” However, instead of expressing any opinion on the matter, the ECB simply stresses that “the [Parliament’s] resolution welcomes the current practices” thus the ECB is subtly indicating self-satisfaction and unwillingness to engage with proposals to improve the inter-institutional arrangements between the ECB and the European Parliament.

All in all, the ECB declines nearly all of the Parliament’s meaningful suggestions. And when the ECB does agree, it does not commit to any specific action. What’s more, the ECB also omits to touch upon some other issues such as the appointment process to the ECB board and displays contempt towards the need to improve its accountability towards Parliament.

Roberto Gualtieri (chair of ECON) and Vitor Constancio (ECB’s Vice-President) at the European Parliament (April 9, 2018)

Improving dialogue between the ECB and European Parliament

Ironically, the lack of substance and evasiveness of the ECB’s document rather points out the opposite conclusion than that reached by the institution itself: there is much room for improvement in how the ECB’s accountability is currently exercised.

While the public hearing with the Vice-President following the publication of the annual report is very useful, perhaps an even more fruitful process would be to organise a working meeting between the Parliament’s ECON Committee and ECB representatives where all issues of concern could be discussed in further detail. Allowing live exchanges (on camera, if needed) between the ECB and MEPs would more likely result in finding out workable solutions for both parties than the current game of questions & answers. There are practical issues with the current process as well: because MEPs only receive the documents few hours in advance, they cannot properly prepare for the hearing with the ECB’s vice-president and pin him down on the various issues of the annual report. Including the feedback to the Parliament’s resolution directly into the report itself (instead of the annexes) would not hurt no one either.

Positive Money Europe wants to ensure that the European Central Bank has full legitimacy to act in running monetary policy. Today, this legitimacy is being questioned because the ECB lacks processes for proper accountability and because its theoretical “independence” too often means “isolation” in practice. The ECB’s annual report and the ECB’s feedback to the European Parliament should serve as the basis for a more meaningful engagement between the ECB and the EU institutions. Such dialogue would help ensure that the ECB policies are adequately aligned with and supporting of the EU’s values and objectives.

Pictures credits: European Parliament


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