ECB needs greater democratic oversight, TI says

The European Central Bank needs greater oversight and more accountability, as it has strayed into the realm of political decision-making but without the necessary scrutiny, global watchdog Transparency International said in a report on Tuesday (28 March).

As independence limits the ECB’s accountability to the public, the bank should compensate by increasing its transparency, publishing more of its decisions and opinions, strengthening integrity rules and becoming more open about the political choices it faces, the watchdog group said.

TI singled out the ECB’s role in the Greek bailout, noting that it made political choices instead of merely carrying out technical tasks, putting a strain on the framework which partially exempts it from democratic accountability.

“The ECB’s discretionary powers allowed it to put pressure on Greek banks while negotiating bailout reforms with the Greek government as part of the Troika of international creditors,” TI said in a statement.

“Similar dynamics could play out in the upcoming negotiations with Greece, and with the current recapitalisation of Italian lender Monte dei Paschi di Siena, which threaten the euro zone’s current fragile stability,” it added.

‘Open the ECB’s Black Box’ say Varoufakis and De Masi

The Greek economy is still in crisis, contracting 1.2% in the quarter. The figures, published by the Greek statistics agency, Elstat, show it was the worst quarter since the summer of 2015, when the European Central Bank closed the Greek banks.

While the ECB has made progress in transparency with the publication of board member diaries and policy meeting minutes, the ECB’s conflict of interest management is flawed and whistleblowing policies are outdated.

“The ECB faces a significant decline in public trust, which alongside its expanded responsibilities put considerable strain on its accountability,” TI said.

The ECB, which gave TI access to senior staff, acknowledged the report and said it had already taken some of the recommended steps.

“Some recommendations in the TI-EU report fall outside the ECB’s mandate or are not foreseen in the Treaty,” the ECB said.

“Some other points have already been implemented, such as publishing decisions, opinions and recommendations as well as providing information on meetings with industry representatives.”

Piketty outlines eurozone assembly proposal to 'democratise' single currency

As Benoît Hamon’s advisor for European budgetary issues, Thomas Piketty hopes to construct a “democratic decision-making mechanism” within the eurozone, he told France Inter on Sunday (12 February). Euractiv’s partner Ouest-France reports.

The study makes 18 specific recommendations as to how the ECB can improve its governance. Key recommendations are:

  • The ECB should seek an agreement with the Eurogroup and the European Parliament outlining political approval procedures for measures which are necessary but go beyond the mandate of the Bank, e.g. ECB letters with specific recommendations to governments.
  • The ECB should make it a rule to publish its decisions, recommendations and opinions.
  • The ECB should report to the European Parliament on any positions it takes in meetings of international regulatory bodies, such as the Basel Committee.
  • The ECB should overhaul and publish its whistleblowing policy to ensure that individuals feel safe in coming forward and reporting potential cases of corruption at the Bank.

Jean-Claude Juncker and Mario Draghi – the Presidents of the European Commission and the European Central Bank (ECB) – led the so-called Five Presidents’ report, which was also co-signed by the presidents of the Eurogroup, Parliament and Council.

The report offered a detailed roadmap “to ensure the smooth functioning of the Economic and Monetary Union (EMU)”, as requested by the heads of state and government in October 2014.

EU's 'Five Presidents' lay out eurozone vision, with timetable

As Greece threatens new shocks for the eurozone, Commission President Jean-Claude Juncker and top EU officials have laid out a vision for the currency involving tighter control from Brussels.

But diverging views between Germany and France, combined with Berlin’s hesitation to complete the Banking Union have killed attempts progress on what was initially billed a key priority for Juncker's political term. Moreover, the Greek debt saga has left little appetite among European capitals to reopen the discussion and mutualise risks.

Against this backdrop, Juncker and Draghi opted for watering down the ambition of the report and focus on completing the Banking Union first and delay other initiatives.

Meanwhile, EU leaders decided to kick the can down the road and postpone discussions on EMU deepening until after the French and German elections.

Juncker and Draghi fail to win support for eurozone reform

The piecemeal approach orchestrated by Jean-Claude Juncker and Mario Draghi to address the root causes of the euro zone debt crisis and complete the Economic and Monetary Union (EMU) has not yielded any positive results so far, EURACTIV.com has learned.

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