Shock, Horror: ECB Not as “Independent” as it Claims – Report

Transparency International whacks at a central bank.

The European Central Bank has found itself in the rare position of having to defend itself in the public arena following the release of a scathing report on its perceived lack of political independence. The report, published by anti-corruption watchdog Transparency International, argues that the institution has accrued new power and influence in the wake of the financial crisis but its code of conduct has not kept up with that newfound clout.

It even suggests that the ECB should withdraw from the Eurozone’s Troika of creditors, precisely at a time that calls are rising for the creation of a European Monetary Fund.

“The extraordinary measures taken by the ECB since 2008 have tested the ECB’s mandate (to ensure price stability) to breaking point,” Transparency International EU said. “The ECB’s accountability framework is not appropriate for the far-reaching political decisions taken by the Governing Council.”

The Berlin-based NGO has proposed a range of measures to improve the central bank’s transparency and accountability. They include better management of conflicts of interest, clearer rules on the cooling-off period before former officials accept private-sector jobs; and much higher levels of transparency on the ECB’s meetings with lobbyists. The report also recommends that the central bank should consult the European Parliament and Eurozone finance ministers regarding any crisis measures that go beyond its original low-inflation mandate.

The ECB does not entirely agree. Too much transparency could impinge on its much-cherished political “independence,” it warns

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