The President of the European Central Bank (ECB), Christine Lagarde, recalled on Thursday 6 February the importance for the monetary institute to communicate its mission and its action to the financial markets, but also to the general public, who are often unaware of the fundamentals of monetary policy in the eurozone.
"Carefully calibrated communication - think of forward guidance - has itself become a tool of central bank policy", said Mrs Lagarde during a monetary dialogue with the European Parliament's Committee on Economic and Monetary Affairs (ECON). Nevertheless, "even though many Europeans have heard of the ECB, very few have a deep understanding of what we do. (...) We need to improve this", she said.
Several MEPs, such as Jörg Meuthen (Identity and Democracy, Germany) and Dirk Jan Eppink (ECR, the Netherlands), pointed out that the ECB was unpopular in their countries due to a policy of very low rates that hampered savings, with Mr Meuthen referring to the "120 billion euros stolen" from taxpayers.
The monetary policy strategy review exercise that the Frankfurt Institute initiated in January (see EUROPE 12410/1) will therefore aim to listen as much as to explain, Mrs Lagarde promised.
A consumer survey was developed to ask consumers about inflation, housing, savings and the labour market. A series of exchange events will take place in the Member States, the first of which is scheduled for the end of March in Brussels.
Other topics to be addressed in the assessment include the integration of climate issues into the ECB's monetary policy and investments, and the inclusion of house prices in the calculation of inflation. The same goes for the impact of very low rates on banks' profitability and the increased risks they take, said Ms Lagarde in reply to a question from Markus Ferber (EPP, Germany).
Asked by Luis Garicano (Renew Europe, Spain) about the propensity of the regulatory supervisory framework to keep failing banks alive for too long, Mrs Lagarde admitted that the regulatory framework "could be improved", notably to reduce the scope for interpretation and discretionary options available to national supervisors. Targeted level of harmonisation of solvency regime should also remain on the table, she added.
With regard to the completion of banking union in the euro area, Mrs Lagarde maintained the ECB's line, which advocates, after a transitional phase, the establishment of a European Deposit Insurance Scheme (EDIS) whose "goal should be a fully fledged EDIS that provides full coverage for both liquidity needs and losses".
Greece. In response to a question from Dimitris Papadimoulis (GUE/NGL, Greece), Mrs Lagarde said that if the situation in Greece continued to improve, Greek bonds would become eligible for the massive ‘quantitative easing’ operation that the ECB had launched last autumn until inflation in the euro area returned to a path in line with its mission, i.e. a level close to, but below, 2%.
"I wish we could do it", she said.
Travelling to Athens on Thursday, Economics Commissioner Paolo Gentiloni said it was "legitimate to open the debate" on the appropriate level of primary budget surplus (excluding debt servicing) that Greece must respect, currently set at 3.5% of GDP until 2022, given the renewed health of the Greek economy.
Any reduction in the target will only take place if the report on the Greek economy, expected at the end of February by the Eurogroup, is favourable, he qualified. (Original version in French by Mathieu Bion)