Will the new European Central Bank be properly accountable and responsive to the concerns of the man in the street? With a single currency fast approaching, MEPs this month sought to reassure Europe's citizens that the Frankfurt-based European Central Bank (ECB) would win the confidence of the general public.
MEPs are preparing public hearings to quiz candidates for the key appointments to the board of the new European Central Bank.
Christa Randzio-Plath (D, PES) outlined ways in which she saw the democratic accountability of the Central Bank developing. While there was no question of challenging the independence of the Bank, Mrs Randzio-Plath explained that the bank should not be considered in isolation. The point of democratic accountability through the European Parliament was to establish a dialogue so that the Bank could explain the background to policy making. This would be in the interest of the Central Bank itself, and would contribute towards enhancing its credibility, especially at a time when public opinion was, to say the least, hesitant about how the new structure would work.
Hearings
Hearings will be held next month on the appointments of key officials, and Mrs Plath said that while the Treaty did not specify that parliamentary approval was a condition, she trusted that the member states would not appoint the Governor and other key officials if they were not approved by the European Parliament. National parliaments would continue to play an important role in monitoring the policies of the national central banks, which would continue to be responsible for the implementation of monetary policy in their respective member states.
The success of the new venture would depend on the quality of the analysis made by the Central Bank, explained Fernand Herman (B, EPP). Essential to this process was continued dialogue and transparency with the general public through the European Parliament. This process had already started with the appearance of the president of the European Monetary Institute, Mr Lamfalussy, before Parliament's Economic Committee. Addressing the concerns of citizens, Alan Donnelly (UK, PES) said it was up to the new bank to establish credibility and the confidence of the public. By allowing MEPs to question bank officials at length in committee, it would be possible to understand the reasoning behind decisions taken, for example on interest rates.
Different cultures
There was broad consensus on the need to respect the bank's independence, albeit within the confines of public accountability. Commissioner Yves-Thibault de Silguy recognised the importance of democratic accountability for "one of the greatest projects in Europe since the last war." It was therefore vital for success that the venture be underpinned by public confidence. This was where democratic safeguards would come in. There are two different cultural attitudes to the question, the "Nordic" approach which emphasised the complete independence of the bank, and the French view, which has been interpreted as trying to influence policy making.
He said there was broad consensus in the Council that the bank's independence would never be challenged, and this too was the position of France. Its essential role was to use monetary policy to create price stability. This did not mean that it was responsible for all economic policy making.
The ECB should not be an ivory tower. He reassured MEPs that it was understood that too hard a monetary policy could lead to increased unemployment, and that public deficits had never created productive jobs. The bank would be producing an annual report to Parliament and would be engaging in close dialogue with MEPs. The publication of the bank's minutes would also contribute to transparency. Another means of enhancing accountability, he said, would be for the President of the Central Bank to be invited by Parliament to contribute to the annual debate on economic policy making.
Special session
The next step on the road to EMU will see discussions later in the month on the convergence criteria, both in national Parliaments and in the European Parliament. MEPs will be holding a special plenary session in Brussels at the end of the month, to discuss convergence. This will be followed by an unprecedented committee meeting and plenary session on Saturday May 2nd, at which UK Chancellor Gordon Brown will report on the recommendations of Finance Ministers, meeting the day before, on which countries will be eligible to take part in the new currency at its launch on January 1st 1999.
In the afternoon, a special Council Summit will take place in Brussels. EU leaders will approve the list of countries recommended for membership, and then decide the fixed parity rates between national currencies and the euro, before the financial markets reopen on the Monday. The show will remain in Brussels for another week, as MEPs hold hearings on May 7th to 8th to consider prospective candidates for the Presidency and Board of the European Central Bank. These will be confirmed by a full vote in plenary in Strasbourg on May 13th 1998.