European Union: Bolder and more accountable ECB needed to fight Eurozone crisis
Thai News Service
The European Central Bank should do more to ensure that its cheap loans to banks were being passed on to the real economy and the ECB itself must become more transparent and accountable in line with its growing role in the Eurozone crisis says a resolution adopted by MEPs on Wednesday. On Tuesday MEPs discussed the work of the ECB with its President Mario Draghi.
The resolution, Parliament's annual evaluation of the ECB's activities, addresses both the ECB's monetary policy responses to the Eurozone crisis and its more political activities. It argues that the ECB should do more to promote growth and jobs.
For example, the resolution calls on the ECB to take measures like those designed by the Bank of England to ensure that cheap central bank loans to banks are passed on to the real economy.
The resolution also outlines a future banking union and the ECB's role in it. Finally, it raises concerns about the limited democratic accountability and transparency of an ECB which has grown more politically prominent due to the Eurozone crisis.
After vote, rapporteur Marisa Matias (GUE/NGL, PT) felt that the resolution no longer reflected the same level of criticism of the ECB as her earlier draft and therefore dissociated herself from the final text.
On Tuesday during the debate, Ms Matias raised the issue of how to change the ECB's job description. “The ECB's mandate must be revised and expanded so that it can help the economy and jobs”, she said. This was a key element dropped from the final text.
A majority of MEPs taking the floor urged Mr Draghi to move away from what they saw as an austerity-based focus, arguing that this would not deliver growth and was even proving counterproductive as jobs and growth figures fall further in various countries. They also urged the ECB to take action to help SMEs more directly and the real economy more widely. Various centre-right MEPs, by contrast, urged the ECB to stay its current course.
Mr Draghi replied that the ECB would remain “firmly committed to its price stability mandate”. He added that the ECB alone could not resolve the crisis – EU member states needed to do their work, too.
On EU banking union, Mr Draghi stressed the need to conclude talks as soon as possible, echoing the EP and Commission's intention to have legislative proposals on for single bank crisis resolution framework tabled by the summer.
ECB: MEPs say growth is not part of ECB's remit
18 April 2013
The majority of those on the right at the European Parliament are refusing any amendment to the European treaty that would grant the ECB powers to relaunch growth.
MEPs substantially amended the draft report on the ECB's activities for 2011 drafted by Marisa Matias (GUE/NGL, Portugal). They believe that a revision of the treaty that affects the remit of the ECB should exclusively focus on new powers the Frankfurt-based bank is currently acquiring in the area of banking supervision. The draft text did not rule out a more wide-ranging revision of the treaty allowing, for example, the ECB to work more to develop growth in the eurozone. During the debate on Tuesday, the chairman of the ECB, Mario Draghi, said that he was sticking to the current mandate.
Another amendment submitted by Ildiko Gall-Pelcz (EPP, Hungary) includes “the ECB's aim to get member states to ensure the viability of their public finances and proceed to structural reforms”. It removes the passage in the draft report welcoming the ECB's action to “combat excessive lending costs confronting eurozone member states”.
The paragraph in the initial draft calling for information on the substantial “benefits” that the ECB has achieved by buying up €210 billion of the sovereign debt of eurozone countries in difficulty as part of its “SMP” programme was also whittled down (see EUROPE 10793). The amendment passed now only points out that the ECB is little disposed to disclosing more information in this connection.
Denouncing the amendments made by the EPP Group, which cross “several of (its) red lines”, Matias decided to withdraw her name from the report. In a press release she declared: “The debate on the ECB divides us because it is our lives we're talking about… The choice we have to make is simple: do we want an ECB at the service of the economy and society or at the service of financial speculation? The amendments adopted today made clear the path chosen by the majority of MEPs”.
The text maintains some of Matias' initial ideas. The EP supports the introduction of conditionality when granting unlimited liquidity to banking establishments (LTRO operations), particularly with regard to ensuring that this liquidity is not used to buy up public debt but to help finance European SMEs. Ramon Tremosa i Balcells (ALDE, Spain) said: “We don't have a monetary union also if SMEs in some member states have to close because they pay between 4% and 8% more for a loan than similar SMEs in other parts of the euro zone. This difference has become structural”.