The SSM Regulation also establishes the format for confidential oral discussions to ensure full confidentiality of exchanges with the European Parliament where needed. These channels allow comprehensive and thorough interaction between the ECB and the European Parliament on supervisory issues and thus a high degree of accountability.
To assess the evolution of accountability practices, it is necessary to go beyond the indexes economists use to measure the degree of central bank independence and accountability. The indexes tend not to evolve significantly over time, [ 37 ] giving rise to the impression that changes in the frameworks do not adequately match changing accountability demands Chart 3.
However, this mismatch can largely be explained by the de jure nature of such indexes; they are estimated on the basis of legal provisions designed to ensure that the central bank remains accountable for accountability indexes and to shield it from political pressures for independence indexes. As pointed out in the literature, however, it is important to look at de facto accountability, which depends not only on the legal provisions, but also on the intensity of interactions between the parliament and the central bank.
Notes: The higher the value, the higher the degree of accountability and independence respectively. The index used to calculate accountability was computed as an average of five different indexes of accountability developed in the literature and updated in by De Grauwe and Gros. The independence index was calculated as an average of the updates by Dincer and Eichengreen in , Bodea and Hicks in and Garriga in , who found no change in the index for the four central banks since the s.
These three works updated the independence indexes using the methodology developed by Cukierman, Webb and Neyapti in See Dincer N. Building on Treaty provisions, the ECB reacted to the challenges of the crisis by enhancing its accountability practices in terms of frequency, format and content, as well as in terms of interactions with other stakeholders.
The legal framework was flexible enough to accommodate the increased need for the ECB to explain and justify its policies before the European Parliament. The frequency of the exchanges between the ECB and the European Parliament increased substantially during the crisis, as regular hearings before the European Parliament were complemented by additional ad hoc hearings.
Building on Article 3 TFEU, ECB representatives were invited to numerous additional exchanges during the crisis 18 exchanges between and Furthermore, there were three additional ECON hearings with ECB representatives on matters related to EU financial assistance programmes, [ 40 ] one exchange of views on the crisis in general, [ 41 ] two on economic governance, four on payment and settlement system issues, and one on statistical issues.
Furthermore, the number of written questions addressed to the ECB from MEPs has increased substantially over the past two legislative terms. Chart 4 shows that the crisis was a prominent determinant of this upward trend, leading to a substantial increase in written questions between the 6th and 7th parliamentary terms, and a particularly sharp rise in the 8th term. In the 7th parliamentary term, MEPs sent more than twice as many written questions than their peers had done in the 6th term written questions against While only 11 written questions were sent to the ECB in , in the number reached Finally, it should be noted that a large number of the written questions since the beginning of the 8th parliamentary term were sent by smaller political groups, which partly compensates for the limited number of oral questions they can ask during the regular hearings.
Note: The shaded areas represent written questions on supervisory matters. The difference is even starker when comparing the number of amendments prior to the sovereign debt crisis of with the number tabled during and after it. The sum of all the amendments tabled to the own-initiative reports from to is lower than the sum of the amendments tabled to the reports for and alone against In response to an explicit request from the European Parliament, [ 48 ] the ECB has started to make public its feedback on such resolutions.
This practice provides an additional channel — beyond the requirements of the Treaty — for the European Parliament to hold the ECB accountable. For instance, in the feedback on the input provided by the European Parliament as part of its resolution on the ECB Annual Report for , [ 49 ] the ECB announced that the concerns expressed by the European Parliament in relation to transparency in the development of ECB regulations on European statistics had been addressed.
It stated that the Governing Council had approved new principles, taking into account the transparency practices of the European Parliament, the Council and the Commission. As a result, the European Parliament is now informed of and invited to participate in public consultations on ECB regulations concerning European statistics.
The intensification of the interactions between the ECB and the European Parliament has been accompanied by a change in the content of the exchanges. Looking at the evolution of topics over time, it can be observed that MEPs have focused their questions on issues that are topical at the time of the regular hearings.
The opportunity to discuss topical issues is certainly an important factor when determining the effectiveness of an accountability tool. Text analysis techniques provide additional insights on the evolution of the content and tone of ECON hearings over time.
On the basis of the ECON hearing transcripts, it is possible to identify the words used most frequently during these exchanges between and and their evolution. At the same time, the focus of attention evolved with the crisis. Understandably, the crisis itself became a prominent topic of the Monetary Dialogue, especially at the peak of the crisis in the euro area Chart B. Notes: The word cloud displays the most frequently used words the larger the size of the word, the more frequent its occurrence , setting a minimum threshold of at least 50 occurrences in the text.
The text was first cleaned of commonly used words, punctuation and numbers. When did the crisis enter the ECB-European Parliament dialogue and how did it affect discussions on price stability? Notes: The terms related to price stability matched with the text of the hearings are: price s , inflate, inflation, inflationary, HICP, CPI, deflation, deflator, deflationary, deflate, hyperinflation, hyperinflationary. The terms related to crises are: crisis, crises, recession s , recessionary, bust s , stagnate, stagnation s , stagnating, bubble s , crash es , slump s , downturn s , default s , defaulting, turmoil s.
Another interesting related aspect concerns the tone of the Monetary Dialogue, which appears to have evolved over the past years. A number of commentators have argued that the rise of populism in the aftermath of the crisis put the independence of central banks at risk. Text analysis allows this gap to be filled and provides empirical evidence. Following the literature on sentiment analysis applied to texts, [ 54 ] it is possible to calculate the degree of positive and negative sentiment populating the Monetary Dialogue, to proxy the negative tone used during hearings both by the ECB and by MEPs, and thus to measure how the tone of the parliamentary debates has changed over time see Chart C.
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This feature requires cookies. Your cookie preference has expired We are always working to improve this website for our users. This feature requires cookies. Accountability Taking on supervisory tasks is a significant new responsibility for the ECB, and comes with appropriate accountability requirements. Written questions Members of the European Parliament and the Eurogroup can address written questions to the Chair of the Supervisory Board.
However, independence, accountability and transparency are not enough if they are not flanked by a robust integrity system. Or as Mario Draghi put it in an address to staff: a stronger business culture has to be complemented by a stronger ethical culture. An enhanced ECB Ethics Framework applicable to all staff members became effective in January , and a dedicated Compliance and Governance Office was established to implement this new framework, among other tasks.
Mandatory ethics training for all staff members should further enhance our strong ethical culture. Moreover, a high-level Ethics Committee has been established to advise Governing Council, Executive Board and Supervisory Board members on conduct matters.
All our staff members — including Executive Board members — need to provide a list of their bank accounts and powers of attorney conferred on them by third parties, to facilitate regular compliance checks of their private financial transactions by our external auditor. While we are convinced of the robustness of our Ethics Framework, such frameworks must, of course, be regularly reviewed against international best practice. The review of our whistleblowing regime is just one example in that regard.
Let me conclude. While we certainly have to strive constantly for improvements, I believe one has to admit that the ECB has made tremendous efforts and indeed made significant progress in strengthening its accountability, boosting its transparency and further enhancing its integrity mechanisms and good governance.
This study, containing interviews of ECB senior managers and the report by Transparency International, is indeed a good example of how the ECB engages in a balanced dialogue with diverse representatives. As mentioned earlier, we are convinced that independence requires accountability, and that accountability requires transparency. Integrity is a foundation of any good administration. We are always working to improve this website for our users. To do this, we use the anonymous data provided by cookies.
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