Resolution on democratic accountability in the third phase of EMU

Official Journal C 138 , 04/05/1998 P. 0177


Resolution on democratic accountability in the third phase of EMU

The European Parliament,

- having regard to Articles 106 to 109l of the EC Treaty,

- having regard to Articles 15 and 50 of the Statute of the European System of Central Banks and of the European Central Bank (ECB) (hereafter referred to as the Statute of the ESCB),

- having regard to Rule 148 of its Rules of Procedure,

- having regard to the report of the Committee on Economic and Monetary Affairs and Industrial Policy and the opinion of the Committee on Institutional Affairs (A4-0110/98),

A. whereas the EC Treaty establishes the political, institutional, functional, financial and staffing independence of the future ECB and whereas this independence can only be altered by means of a unanimous decision of the Member States,

B. whereas, within a democracy, the starting point has to be that policy decisions should be transparent and accountable; whereas, within the limits necessary in order to ensure a high level of growth and employment, this principle should apply to the conduct of monetary policy by the ECB,

C. whereas the independence of the future ECB will only meet with public acceptance if the ECB enjoys a high degree of legitimacy; whereas the only way to ensure this is full accountability of the ECB for its actions,

D. whereas it is essential for the ECB to establish its credibility in relation to financial markets and other economic and social actors; whereas a high degree of transparency in monetary policy decision-making will be the best way of underpinning this credibility,

E. whereas coordination of monetary and economic policy is essential to the smooth functioning of EMU,

F. whereas the objective of price stability implies that the future ECB should act against inflationary as well as deflationary pressures which seem durable,

1. Welcomes the fact that, under Article 105 of the EC Treaty, the primary objective of the ECB is to maintain price stability, and considers that the best guarantee of this is an independent ECB;

2. Recalls Article 105(1) of the EC Treaty which recognizes the capacity of monetary policy to support the general economic policies of the Community and to contribute to the achievement of the objectives of the Community as laid down in Articles 2 and 3a of the EC Treaty, without prejudice to the objective of price stability;

3. Notes that central bank monetary policy decisions influence real economic variables such as investment, employment and growth;

4. Points to the fact that the independence of the future ECB will go further than that of any other central bank, and that this unprecedentedly high degree of independence will call for a correspondingly high level of democratic accountability, as real independence requires legitimacy and transparency in order to be credible and lastingly accepted;

5. Stresses that, as the future ESCB and the ECB will conduct a single monetary policy for all the Member States taking part in European monetary union, democratic accountability must similarly be exercised at the European level; points out that, as the only directly elected institution at this level, the European Parliament is a particularly appropriate institution to hold the ECB to account;

6. Points to the existing undertakings entered into and honoured by the European Monetary Institute (EMI) towards Parliament with regard to the regular provision of information and the frequency of meetings within its Subcommittee on Monetary Affairs;

7. Calls therefore for the organisation of a dialogue between the European Parliament and the future ECB on monetary and economic affairs, the framework for which dialogue should be confirmed through a mutual agreement;

8. Recognizes the fact that the EC Treaty does not give a precise definition of price stability, nor does it specify by whom this concept is to be defined or by whom the price stability target is to be set, so that it is therefore clear that these tasks will now fall to the future ECB according to Article 12 of its Statute; emphasises that this fact increases the need for democratic accountability and calls on the future ECB clearly to announce its definition of price stability and to report annually on its price stability target to the European Parliament;

9. Calls on the future ECB also to make clear the definitions and its use of operational targets to reach the price stability target; underlines the need to guarantee the transparency of major decisions concerning monetary policy, as well as their background, in order to prevent a deficiency of information and misleading market expectations, and thereby contribute to containing speculation and misinterpretation;

10. States its intention to evaluate the ECB's performance with reference to a range of values for the rate of growth of consumer prices below as well as above the target set by the ECB;

11. Gives notice of its intention, in addition to the presentation of the ECB Annual Report foreseen in Article 109b(3) of the EC Treaty, to convene quarterly meetings on recent monetary and economic developments with the President and/or other members of the Executive Board;

12. Gives notice, too, of its intention to invite the ECB President to take part in the general debate on monetary and economic developments over the previous and the current year, on the basis of the Annual Report of the ECB and the Annual Economic Report produced by the Commission;

13. Urges the future ECB to include in its annual report:

- a description and evaluation of recent inflation trends and an explanation of past monetary policy decisions in the light of these trends and how they comply with the price stability target set, its inflation forecasts and comparisons of these with the price stability target set, as well as the forecasts for real GDP growth upon which its target is based;

- information concerning the use of intermediate monetary targets;

- a description of how monetary policy can support the general economic policies in the Community, as well as an appraisal of the extent to which monetary policy has in fact supported these general economic policies, without prejudice to maintaining price stability in accordance with Article 105 of the EC Treaty;

14. Considers it worthwhile that the quarterly reports referred to in Article 15.1 of the Statute of the ESCB should report on the monetary policy of both the previous and the current quarter, as well as on the activities of the ESCB;

15. Calls, in addition to the provisions in Article 10.4 of the Statute of the ESCB, for the minutes of the ECB Governing Council meetings to be published in the form of summaries including the decisions taken and the reasoning behind them at the latest by the day after its next meeting, these summaries also to explain how the decisions are linked to and affect other policies; calls also for full, detailed minutes to be published at the latest five years after the meeting;

16. Calls on the governments of the Member States not to appoint candidates that do not have the approval of the European Parliament; calls, in the light of this experience, for legal consolidation of this practice at a later stage;

17. Urges an examination of the need for a set of rules for the coordination of economic policy in Europe, possibly in the form of an interinstitutional agreement between the European Parliament, the Commission and the Council, including the procedure of the Annual Economic Report, the broad economic guidelines and the excessive deficit procedure; given that the Luxembourg European Council made headway with the notion of more concerted coordination of national economic policies, and more particularly employment policies, considers that Parliament should also be able to be consulted on these issues beyond what is already laid down in Articles 109q and 109s of the EC Treaty, and that an undertaking to consult also on these matters should be negotiated with the other institutions concerned;

18. Instructs its President to forward this resolution to the Commission, the Council and the European Monetary Institute.