Monday

28th Sep 2020

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

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

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.

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

'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

Now's the time to give QMV a chance in EU foreign policy

The loudest applause from MEPs during Ursula von der Leyen's State of the Union speech came for her call to move to Qualified Majority Voting (QMV) in foreign policy - at least on human rights and sanctions implementation.

How EU can help end Uighur forced labour

A recent report noted apparel and footwear as the leading exports from the Uighur region - with a combined value of $6.3bn [€5.3bn] representing over 35 percent of total exports.

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic Council meets Belarusian opposition leader Svetlana Tichanovskaja
  2. Nordic Council of MinistersNordic Region to invest DKK 250 million in green digitalised business sector
  3. UNESDAReducing packaging waste – a huge opportunity for circularity
  4. Nordic Council of MinistersCOVID-19 halts the 72nd Session of the Nordic Council in Iceland
  5. Nordic Council of MinistersCivil society a key player in integration
  6. UNESDANext generation Europe should be green and circular

Latest News

  1. Caucasus warfare prompts EU alarm
  2. Summit reloaded and last Brexit round This WEEK
  3. EU denies 'clandestine' mission on Venezuela election date
  4. Between the lines, Europe's new Moria unfolds
  5. Now's the time to give QMV a chance in EU foreign policy
  6. European hiccups on the way to West Africa
  7. Berlin repeats support for EU human rights sanctions
  8. China's carbon pledge at UN sends 'clear message' to US

Stakeholders' Highlights

  1. Nordic Council of MinistersNEW REPORT: Eight in ten people are concerned about climate change
  2. UNESDAHow reducing sugar and calories in soft drinks makes the healthier choice the easy choice
  3. Nordic Council of MinistersGreen energy to power Nordic start after Covid-19
  4. European Sustainable Energy WeekThis year’s EU Sustainable Energy Week (EUSEW) will be held digitally!
  5. Nordic Council of MinistersNordic states are fighting to protect gender equality during corona crisis
  6. UNESDACircularity works, let’s all give it a chance

Join EUobserver

Support quality EU news

Join us