Does politics drive conflict in central banks’ committees? Lifting the veil on the European Central Bank consensus

Abstract

This study investigates whether and to what extent political factors drive disagreement within the allegedly consensual monetary committee of the European Central Bank. Absent voting data, the article assesses disagreement based on the semantic distance between the policy positions publicly articulated by the European Central Bank President and the central banks of Eurozone member states. The empirical analysis shows that the disagreement articulated by national central bankers is affected by the ideological inclinations of the governments of the countries they represent. Our findings thus suggest that central bankers’ position-taking is shaped not only by economic conditions but also by domestic political considerations. This result challenges the European Central Bank’s projected image of itself as an institution whose members are impermeable to domestic political pressures as a way to defend the independence of the institution to which they belong.

Whose speeches impact European markets: ECB's or the national central banks'?

“…Moschella and Diodati (2020) write ‘The dimensions that structure political conflict in the EP and the EU Council might also influence political conflict in the Eurosystem via the channels that link domestic governments and parties to central banks’. The monetary policy council of ECB constitutes 25 members, 19 of which are the governors of central banks of participating nations who are in turn accountable to the government and/or national legislature.…”

“…3 They find that unlike policy outputs from other policymaking systems, ECB communications (due to its information processing capacities) evolve in a more proportional manner. Moschella and Diodati (2020) study the impact of political factors in disagreement within the monetary policy committee of ECB and find that the ideological inclinations of the member nations do impact policy decisions.…”

Etică bancară. Codul de conduită al înalților funcționari ai Băncii Centrale Europene

“…Încercările de standardizare a conduitei bancare au apărut în 2001, odată cu propunerea Primului cod de conduită -Codul specific de conduită pentru membrii Consiliului guvernatorilor, revizuit în 2006, au continuat cu un Cod suplimentar de criterii etice pentru membrii Comitetului executiv în 2006, revizuit în 2019, și cu un Cod de conduită pentru membrii Consiliului de supraveghere în 2014 (Cod, 2019;Moschella, & Diodati, 2020).…”

All Along the Watch Tower: The European Central Bank and Legitimation Strategies in Times of Crisis

“…It handles monetary policy and acts as the central bank for the 20 member states that have implemented the euro as their currency; it supervises the European banking sector; and it is involved in solving economic crises in order to preserve financial stability, for example, by being a member of the so‐called Troika along with the International Monetary Fund (IMF) and the European Commission (Hartmann and Smets, 2018). The ECB ideally makes monetary decisions based on the economic perspective of the Eurozone and free from political influence and pressures (Moschella and Diodati, 2020). The ECB is therefore a supranational EU central bank institution with authority in its own right to make decisions over sovereign states.…”

“…Questions about the ECB's legitimation strategies do not stop because its mandate relies on the Treaty of the EU. Over the years, the bank has experienced a lack of trust towards it, which earlier academic literature has concluded to be due to public opinion, lack of public knowledge and confusing decision‐making (Baerg et al, 2021; Moschella and Diodati, 2020). The deficit in transparency in comparison even to other European institutions and the sometimes problematic legitimacy in the ECB have been a major focus of the public and academic literature since the criticism of it and its policies during the Eurozone crisis (Chang, 2019; Schmidt, 2021; Scicluna, 2018; Tesche, 2019).…”