The
European Central Bank (ECB) has been slammed in a new report for a "a
lack of political leadership," little "democratic oversight
and accountability" leading to a "marked decline in public
trust" at a time when the eurozone is facing crisis.
According to
Transparency International EU — in its report, Two sides of the
same coin? Independence and accountability at the EC — a "lack
of political leadership and decisive reform" has led the ECB
to stray into the area of political decision-making, without
appropriate democratic scrutiny.
"This
has been accompanied by a marked decline in public trust at a time
when the ECB has been granted extensive new powers to supervise major
European banks," the report says.
The report
comes at turbulent time for the Eurozone countries, with Greece
struggling to meet the terms of its third bailout, amid calls to
leave the Eurozone, and Italy, Spain and Portugal all failing to
remain within strict debt and deficit targets.
"While
the ECB has saved the single currency more than once, the absence of
a Eurozone finance ministry as counterpart to the ECB means that the
Bank has had to stretch its mandate to breaking point," said
Leo Hoffmann-Axthelm, Research and Advocacy Coordinator at
Transparency International EU.
"If
the euro is to survive the next crisis, then EU member states need to
stop hiding behind the technocrats at the ECB, overcome political
inertia and get serious about reforming the eurozone," said
Hoffmann-Axthelm.
Greek
Secrecy
The report
found that preserving the ECB's independence limits its
accountability to citizens, and recommends that the bank should
compensate this by increasing its transparency. The ECB should take
immediate steps, such as automatically publishing its decisions and
opinions and being more open about the political choices it faces,
rather than insisting its decisions are purely technical.
At the
height of the Greece crisis in 2015, the ECB repeatedly limited the
ceiling on Emergency Liquidity Assistance for the country's banks
without publicly announcing it. The ECB's discretionary powers
allowed it to put pressure on Greek banks while negotiating bailout
reforms with the Greek government as part of the Troika of
international creditors.
Similar
dynamics could play out in the upcoming negotiations with Greece, and
with the current recapitalization of Italian bank Monte dei Paschi di
Siena, which threatens the Eurozone's current fragile stability,
according to the group.
"Clearly
decisions which affect the fate of whole economies should have some
kind of democratic oversight. The ECB should not be in a position to
pull the plug on a country's euro membership, a decision ultimately
down to democratically elected politicians", said
Hoffmann-Axthelm.
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