A Challenge of Trust: Can Distrust Kill the Euro?

Abstract

The purpose of the paper is to determine the dynamics of trust in the ECB in the most recent period, to compare the findings with a previous study of Farvaque et al. (2010) and to explore the question of importance of citizen's trust in public institution for the economic performance of the country. This paper is dedicated to the study of the determinants of trust in the European Central Bank. The study attempts to give an answer to a question posed in introduction: can distrust kill the euro? After the world economic crisis the trust in the ECB began to deteriorate. Citizen's trust in public institutions plays an important role for the economic performance of the country. Methology. We rely on the micro data from the European Commission's Eurobarometer survey. This paper contributes empirically to the existing literature dedicated to the issue of trust in public institutions. The responses in 15 EU-member countries were taken into account. The present work uses the model of Farvaque et al. (2010) extending the time frame considered previously, giving a broader picture on this issue using the most recent data. Results. In accordance with our findings, the population that support the ECB is approximately equal to the population that does not trust in the community bank, with a mean value of 0,51. Even if there are still more supporters of the ECB, this data should provide an alarm for the European institutional framework, in consideration that in 1999 (in accordance with Farvaque et al. (2010)) the mean value was 0,67. Practical implications. According to our findings, still people with higher level of education, people with a higher social status, people with center or right-wing political orientation, people with optimistic expectations on the economic situation have more trust in the ECB. However, we have found that women have become more supportive about the ECB than men in contrast with the findings of Farvaque et al. (2010). Value/originality. A matter of trust in public institutions represents a great interest for economic research. In the background of the global financial crisis, the trust in central banks has become extremely popular nowadays. Particularly, trust in the European Central Bank in the aftermath of the world economic crisis, concentrating on the period of 2012-2014, is examined.