The Diary Affair Of The European Central Bank
Even if the presence of diaries has been declining over years, most of the people will remember growing up with these little personal books, full of thoughts, experiences and memories. Well, unlike diary books of your childhood, the European Central Bank, or just ECB, keeps diaries in order to record important meetings, speeches etc. Nonetheless, both versions often have something in common: sensible information. In the case where a diary, containing such information, is being publicized, a diarist often has to face serious issues. However, if one belongs to an institution called ECB, worries are somehow totally displaced.
The foundation of the European Central Bank has its roots back in the year 1998. It is the monetary policy instrument for the European Union following its determination of maintaining price stability within the Eurozone. However, compared to other central banks, the ECB’s single objective has never been defined in statutory law. Similarly to this, let’s call it unconventionality, the principle of never disclosing market sensitive information, might not have been taken as serious as it should have been.
Under the EU freedom of information rules, the ECB have been asked to hand over diaries of its executive board to the Financial Times, disclosing sensitive information about board members attending meetings with companies of the private sector in the week before monetary policy meetings. Contrary to the Bank of England, which strictly prohibits its members of the rate-setting committee to talk to externals in the week before policy decisions, some members of ECB’s executive boards had a quite different perception about that. In fact, Benoît Cœuré and Yves Mersch, two executive board members, as well as Vítor Constâncio, the ECB’s vice-president, and Peter Praet, his chief economist, are all accused of participating in meetings just days before major monetary policy conferences. There are records in the diaries showing that these individuals have met with major banks, asset managers and hedge funds, including well-known names such as BlackRock, UBS, BNP Paribas and PIMCO.
Despite being associated with these inconsistencies, none of the mentioned parties have been willing to comment on this matter. Unintelligibly, if outsiders shall believe that public sensitive information has not been disclosed during these meetings. The integrity of the ECB is definitely in question. Instead of completely clarifying what happened, the behavior of the ECB creates even more doubts and is not at all in accordance with its aspiration of being a transparent organization. Thus, statements made by an ECB spokesman, such as ”In any case, no market-sensitive information is disclosed by the ECB in any non-public forum” are hard to believe for outsiders.
It is also not the first time that a central bank deals with such allegations. Back in 2010, the release of William C. Dudley’s daily schedules triggers off an akin discussion regarding suspicious meetings with many hedge funds and private equity firms. Mr Dudley, the 10th President of the Federal Reserve Bank of New York, even held “off the record” speeches according to the documents being released.
After this incident, private meetings in the week before policy meetings belong to the past, a “quiet period” for this week has been imposed by the ECB. Furthermore, diaries of the executive board of the ECB will be published three months after policy meetings to grant further insight in the activities of the executive board. Considering these endeavors of the ECB as an act of discretion or just as the most uncomplicated approach to get away with it totally depends on one’s blind confidence. On April 21, three months after the ECB’s last monetary policy meeting, the next set of diaries will hopefully positively enlighten us.
Sources:
http://dealbook.nytimes.com/2010/12/30/who-talked-to-new-york-fed-chief/?_r=0
- Business attire, a thing of the past? - June 13, 2017
- Where do you see yourself in 5 years? - May 29, 2017
- A Cashless Society - May 15, 2017
Amazing article. Keep up the good work.
Never have I ever read such a detailed article!
It is very rare to find such a well written article on the internet.
Decent arguments. Although relatively short, all the information is detailed and comprehensive. Great setup for future academic research.
Now I’m even more curious about April 21. Great article!