Thursday

27th Apr 2017

Opinion

Audit the ECB

  • The Leergeld.eu initiative, led by MEP Sander Loones, aims to educate people about money, especially in relation to the ECB's policies and impact. (Photo: ECB)

A week into Donald Trump’s presidential term and there is much talk in the media about the wall he wants to build with Mexico and tax reforms. But also in the media is an indication that Congress will look into reforming the US central bank, the Federal Reserve (Fed). The same should be debated here in Europe, on the role of the European Central Bank (ECB).

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” This statement by American industrialist Henry Ford certainly touches a nerve.

Educating people about money

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

The lack of information needs to be rectified, which is why a new EU-wide initiative called “Leergeld.eu” has been set up.

Leergeld.eu is an initiative by the European Conservatives and Reformists (ECR) group in the European Parliament, led by MEP Sander Loones, aiming to educate people about money, especially in relation to the ECB's policies and impact.

This type of debate has been raging for some time already in the US. There as well, the bank bailouts after the financial crisis of 2008 generated a lot of discontent, with Ron Paul’s presidential campaigns further fanning the flames. The monetary experiments of the past few years are drawing evermore criticism, and calls to revamp the Fed’s status and manner of working are growing louder.

An “Audit the Fed” bill was submitted in Washington DC some time ago, but to date this draft law has had insufficient political support and been consistently opposed by the former and current Fed chairpersons, Ben Bernanke and Janet Yellen.

Under the current American president, however, there is some favourable interest in the proposed bill.

Risks turn into disadvantages

In Europe, there are also enough reasons to subject the European Central Bank to an in-depth review. It has been two years since Mario Draghi first announced that the ECB would in effect start printing more money. There is growing criticism of this approach, especially as the negative side-effects of this ultra easy monetary policy are becoming more tangible.

Non-existent returns on savings accounts are the most visible drawback of the ECB’s policy, but there’s a lot more. One bubble after another are forming, for example in government bonds.

Due to the ECB's promise to buy large amounts of bonds, it has dragged private investors into a debt quagmire. Additionally, the ECB already holds 33 percent of the debt issued by certain countries, for example Portugal.

Compounding on this issue is the risk of an overvalued housing market, with the European Systemic Risk Board (ESRB) already issuing warnings about a real estate bubble in Belgium, the Netherlands and Finland, among others.

Young members of the middle class are having to take on huge amounts of debt in order to buy a house while people at the end of their careers are no longer certain about the kind of pension they can expect to receive.

In the Netherlands, for example, the various pension funds have had to reduce pay-outs on several occasions. Other problems, which are just as serious, are lurking beneath the surface.

In fact, it would appear that after the dotcom bubble at the end of the 1990s, or the various housing bubbles in the 2000s, the central bankers have made the problem worse. The upshot is that the public have managed to endure the disadvantages of the ECB policy, but not enjoying the oft-promised advantages.

No momentum for reform has come about, and the ultra easy monetary policy has not created any sustained growth that was intended.

Monetary mandarins

Ordinary people are basically unable to understand all this information. Even experts and specialised journalists are at a loss.

Because the traditional economic thought patterns have been jettisoned, they have no choice but to try and decipher what our monetary mandarins actually think by studying their choice of vocabulary, facial expressions and, in some cases, even the colour of their tie.

We all deserve better, and it is only normal that we know what is happening with our money. There must be greater transparency in the decision-making process of the European Central Bank, and it must be clear what effect monetary policy is having on banks, pension funds and the economy.

A strong signal to Frankfurt is needed.

Enough playing with our money. Enough hiding in the monetary darkness. Audit the ECB and let’s get our money flowing again.

Sander Loones is a member of the European Conservatives and Reformists group and vice-president of the economic and monetary affairs committee in the European Parliament. He leads the Leergeld.eu initiative.

'Be patient,' ECB chief tells Germany

European Central Bank president Mario Draghi keeps interest rates low and answers German criticism by saying they were in everyone's interest.

ECB reshapes its bond-buying scheme

The eurozone bank will prolong its quantitative easing scheme after March but will buy €60 billion of public and corporate bonds each month instead of €80 billion.

Investigation

ECB in ‘bail-out’ of scandal-tainted VW

The ECB has started to “bail out” Germany’s Volkswagen Group by buying its corporate bonds, but other EU-linked banks continue to shun the scandal-tainted firm.

ECB should give money directly to citizens

Instead of injecting billions into financial markets with no significant effect on growth and unemployment, the bank could stimulate the economy by distributing new money into Europeans' bank accounts

Brexit is about Europe's future as well

Europe must learn the lessons of TTIP and ensure that the negotiations transparently address the broad interests of European citizens, including on climate change and the environment.

Column / Brexit Briefing

May's drive for one-party Brexit state

Snap election will kill off attempts to reopen debate on second referendum and inflict further damaged on confused opposition.

Stakeholders' Highlights

  1. UNICEFRace Against Time to Save Millions of Lives in Yemen
  2. Nordic Council of MinistersDeveloping Independent Russian-Language Media in the Baltic Countries
  3. Swedish EnterprisesReform of the European Electricity Market: Lessons from the Nordics, Brussels 2 May
  4. Malta EU 2017Green Light Given for New EU Regulation to Bolster External Border Checks
  5. Counter BalanceCall for EU Commission to Withdraw Support of Trans-Adriatic Pipeline
  6. ACCAEconomic Confidence at Highest Since 2015
  7. European Federation of Allergy and Airways60%-90% of Your Life Is Spent Indoors. How Does Poor Indoor Air Quality Affect You?
  8. European Gaming and Betting AssociationCJEU Confirms Obligation for a Transparent Licensing Process
  9. Nordic Council of MinistersNordic Region and the US: A Time of Warlike Rhetoric and Militarisation?
  10. European Free AllianceEFA MEPs Vote in Favor of European Parliament's Brexit Mandate
  11. Mission of China to the EUXinhua Insight: China to Open up Like Never Before
  12. World VisionViolence Becomes New Normal for Syrian Children

Latest News

  1. EU agency stuck with London rent bill
  2. EU anti-fraud office ditches Martin Schulz probe
  3. Commission launches bid to make Europe social
  4. MEPs act to strip Le Pen of immunity in fake jobs case
  5. EU starts legal action against Hungary
  6. Brexit is about Europe's future as well
  7. Power struggle in Greenland: Three reasons why the EU should care
  8. Nordic and Baltic countries step up digitalisation efforts

Stakeholders' Highlights

  1. International Partnership for Human RightsTime to Turn the Tide and End Repression of Central Asia's Civil Society
  2. European Free AllianceAutonomia to Normalnosc - Poland Urged to Re-Grant Autonomy to Silesia
  3. UNICEFHitting Rock Bottom - How 2016 Became the Worst Year for #ChildrenofSyria
  4. Malta EU 2017Green Light Given for New EU Regulation to Bolster External Border Checks
  5. ACCAG20 Citizens Want 'Big Picture' Tax Policymaking, According to Global Survey
  6. Belgrade Security ForumCall for Papers: European Union as a Global Crisis Manager - Deadline 30 April
  7. European Gaming & Betting Association60 Years Rome Treaty – 60 Years Building an Internal Market
  8. Malta EU 2017New EU Rules to Prevent Terrorism and Give More Rights to Victims Approved
  9. European Jewish Congress"Extremists Still Have Ability and Motivation to Murder in Europe" Says EJC President
  10. European Gaming & Betting AssociationAudiovisual Media Services Directive to Exclude Minors from Gambling Ads
  11. ILGA-EuropeTime for a Reality Check on International Day for the Elimination of Racial Discrimination
  12. UNICEFHuman Cost to Refugee and Migrant Children Mounts Up One Year After EU-Turkey Deal