Strasbourg, 26/10/2006 (Agence Europe) - On Thursday, the European Parliament took stock of the activities of the European Central Bank (ECB) in 2005, adopting the report by Pervenche Berès (PES, France) by 157 votes to 49, with 84 abstentions. While praising the aim of price stability pursued by the Frankfort-based bank, Parliament called on it analyse with caution the conditions in which it pursued its monetary policy. ECB President Jean-Claude Trichet welcomed these remarks, while nonetheless affirming that the current set-up and practices allowed sufficient dialogue. The plenary session gave strong backing to the compromise agreed on in the economic and monetary affairs committee (see EUROPE 9284), picking up only some elements. MEPs re-stated their call for the publication of summary minutes of the Governing Council meetings on rate setting, but also wanted to know if decisions were taken unanimously or not. As previously, they called for greater diversity in the selection of members of the Executive Board, and also for a larger role for Parliament in the nomination procedure (Parliament, they said, should be authorised to endorse the Council's choice of candidate). Emphasising risks for the rate of exchange of the euro of rapid adjustments in international disequilibria, they invited the Eurogroup, ECB and Council to step up coordination of their action in exchange rate policy, instead of each fully exercising its individual powers.
“As you know, relations between the ECB and the EP go beyond specific obligations established in the Treaty,” said Mr Trichet immediately in the debate which preceded the vote. With there being three opportunities for the ECB, the Commissioner and the Eurogroup President to meet every month (at the Eurogroup and the two monthly meetings of the Governing Council), “it seems to me that we have the best organised contacts in the world,” he said. “To hear you sometimes, I have the impression that you do not take this sufficiently into account,” he added, regretting the criticism on the transparency of monetary communication.
As the only post, along with the Presidency of the World Bank, to which one can be appointed without competition, membership of the ECB Governing Council would gain legitimacy if there were a number of candidates from a variety of backgrounds considered by the Council, said Ms Berès. She went on, “neither should nationality have any role to play and candidates for the post should continue to be judged according to the strict criteria of the Treaty, as well as on qualifications”. It was essential that the ECB's independence was guaranteed and MEPs “do not want any politicisation of the ECB,” however, said German MEP Kurt Joachim Lauk, speaking for the EPP-ED. This independence should be plain in the work of the ECB, as well in the votes and selection procedure for members of the Board, specified his colleague Alexander Radwan. “When one is independent, more active concertation is possible, with the Eurogroup, for example,” deemed Robert Goebbels (PES, Luxemburg). While “price stability is and must remain the priority for the ECB”, “greater transparency” was also needed, agreed Jules Maaten (ALS_DE, Netherlands), and he wanted “to know the arguments for and against the decisions (on rates) and to know if they were unanimous, for better market orientation”. He added, “A better choice from among several candidates seems to us to be an infinitely better system”. Mr Trichet kicked that one into touch. “The appointment of members of the Board is a matter which, in my opinion, would be better directed at the Council, which is responsible for that kind of thing,” he said, opining that “The bank has to let the Parliament and the Council discuss, on condition that the total independence of the ECB and its non-politicisation can be guaranteed”.
Hedge funds “represent, all the same, a risk to financial stability because they are becoming more and more present in the financial system, but they have yet to show what they can do,” Mr Trichet had previously admitted. His intention to conduct deeper analyses in this area satisfied Ieke Van den Burg (PES, Netherlands). “We intend to do so and it is possible that we will conclude that the current framework, which is based essentially on the vigilance of the financial institutions, has to be strengthened,” Mr Trichet felt. In his opinion, any developments had to be subject to international agreement, particularly within the framework of the trans-Atlantic dialogue.
In 2005, the strengthening of growth and the risks to price stability (annual inflation rose to 2.2%, compared with 2.1% in 2004) showed that monetary policy review was “useful”, said Mr Trichet, and it had to remain to be so, at least in the short term. At the current time, “if our hypotheses and scenarios are confirmed, some financial arrangements will have to be withdrawn, and the Executive Board will keep a very close eye on this situation,” Mr Trichet said once again. “Remember the interest levels in your countries before the euro,” he retorted to those who were scathing of the “too orthodox” monetary policy. The Governing Council will decide on Thursday about interest levels in the euro zone. According to most market players, they should remain unchanged. (ab)