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14th Aug 2022

Varoufakis back in push for ECB transparency

  • Yanis Varoufakis, when still a minister of finance in 2015. (Photo: ec.europa.eu)

Former Greek finance minister Yanis Varoufakis has joined forces with the German left-wing MEP Fabio De Masi in a bid to clarify whether the European Central Bank (ECB) had a legal right to limit the liquidity of Greece’s banks in 2015.

The duo told journalists in Brussels on Wednesday (8 March) that they were collecting signatures for a petition to ECB president Mario Draghi, asking him to disclose two legal opinions commissioned by the bank.

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  • A bank in Athens during capital controls in July 2015 (Photo: Eric Maurice)

The first study was ordered in February, before the ECB decided to limit the access of Greek banks to ECB funding and opted instead to open access to the emergency liquidity assistance (ELA) - a fund with more restrictive access conditions.

The decision was taken a few days after the radical left-wing Syriza party came to power, with Varoufakis as finance minister.

The second study, in June 2015, was about the ECB's decision to freeze the amount of money available through the ELA after the Greek government's decision to hold a referendum on the bailout conditions required by the country's creditors.

The measure was taken over concerns that Greek banks would become insolvent because of the deadlock in bailout talks. It also put more pressure on the Greek government to accept the lenders' conditions.

To avoid a bank run, where large numbers of people withdraw money from their deposit accounts at the same time, the government introduced capital controls. This meant that Greek people were only able to withdraw a maximum of €60 per day.

The measure prevented a capital run, but also put pressure on Athens to agree to creditors' terms for a third bailout.

Varoufakis, who was finance minister at the time, said this was a breach of the independence of the bank.

"The ECB has the capacity to close down all the banks of a member state. At the same time, it has a charter which grants it - supposedly - complete independence from politics. And yet, there is no central bank, at least in the West, which has less independence of the political process," Varoufakis said.

He said Draghi was "completely reliant" on the decisions of an "informal group of finance ministers", referring to the fact that the Eurogroup, which gathers the finance ministers of the 19 eurozone countries, isn't enshrined in EU treaties.

"It is apparent that Draghi didn't feel that he was on solid legal ground when proceeding with the closing of Greek banks," Varoufakis said.

When a Greek journalist noted that Varoufakis had himself signed the legal act that imposed capital controls, Varoufakis replied: "I signed the death certificate, I did not commit the murder."

"On 21 June, the ECB made a decision which ensured that the following Monday morning banks would run out of cash, in other words that they would close. It was a decision by our government that because banks would anyway close as a result of the ECB decision, they would not open to avoid civic unrest and putting bank clerks in harm's way," he added.

He then called the journalist's question a “campaign of misinformation” that blamed the victim, instead of coming to terms with "what really matters" - the question of the ECB's independence.

Professional privilege

Fabio De Masi already asked Draghi for the opinions in September 2015. But the ECB chief, in a letter made public by the MEP, said the bank does not plan to publish the legal opinions because this would "undermine the ECB’s ability to obtain uncensored, objective and comprehensive legal advice, which is essential for well-informed and comprehensive deliberations of its decision-making bodies".

"Legal opinions provided by external lawyers and related legal advice are protected by legal professional privilege (the so-called ‘attorney-client privilege’) in accordance with European Union case law," Draghi said.

"Those opinions were drafted in full independence, on the understanding that they can only be disclosed by the addressee and only shared with people who need to know in order to take reasoned decisions on the issues at stake," he added.

The campaigners are now collecting signatures for a freedom of information request. They said they will go to court if the ECB fails to fulfil their demands.

Around 25,000 people have already signed the petition, which was launched last month.

Supporters include French socialist presidential candidate, Benoit Hamon; German veteran social democrat, Gesine Schwan; and the co-chair of German left-wing party Die Linke, Katja Kipping.

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