On Wednesday 12 February MEPs will adopt the draft ‘Mavrides’ report, which calls on the European Central Bank (ECB) to involve it closely in the process of evaluating the monetary policy strategy that the Frankfurt Institute will be conducting throughout 2020 (see EUROPE 12410/1).
MEPs believe that it is “timely and justified” to revise the ECB’s monetary policy framework to “give it the tools necessary to achieve its primary objective of price stability while supporting the general policies of the Union”.
One of the questions to be answered in this evaluation is how the ECB can integrate climate issues into the determination of its monetary and investment policy.
The draft report submitted by the European Parliament’s Committee on Economic and Monetary Affairs (ECON) calls on the ECB to study the impact on climate change of its massive repurchase of private and public securities (‘asset purchase programme’ or APP). It notes that “62.1% of the ECB’s purchases of corporate bonds concern sectors responsible for 58.5% of the euro area’s greenhouse gas emissions”.
Faced with an economic situation characterised by very low interest rates, MEPs echoed the statements by ECB President Christine Lagarde that monetary policy alone cannot ensure sustainable growth and price stability and must be backed by a supportive budgetary policy and the implementation of structural reforms.
Moreover, MEPs take a balanced position on the appropriateness of low or negative rates. These, they say, increase economic dynamism and lower unemployment and the cost of credit, which benefits consumers, businesses, workers and borrowers. But they also note that low rates can have a negative impact on pension and insurance systems, as they result in low returns and difficulties for individual savers.
Ms Lagarde, who describes herself as “an owl” in a Governing Council sometimes described as a den of hawks and doves, should also work to reduce the “fractures” in the Governing Council of the institution, which appeared in broad daylight last autumn when the Monetary Institute decided to relaunch the APP programme (see EUROPE 12326/1).
Finally, Parliament calls for transparency measures on the part of the ECB, including: – the mandatory publication of declarations of interest of members of the Governing Council; – the mandatory appointment of independent members from among the members of the Audit Committee and the Ethics Committee; – the establishment of transparency rules and the setting of limits for meetings with interest groups.
See the draft report: http://bit.ly/2tJq4bx (Original version in French by Mathieu Bion)