EU Economic Governance and Globalization

EU Economic Governance and Globalization

Edited by Miriam L. Campanella and Sylvester Eijffinger

It is through a gradual evolution, rather than by grand design, that the somewhat fragmented economic policies of the EU now appear to be heading towards a rather more robust and coherent economic governance. EU Economic Governance and Globalization considers the following crucial question as the EU enters its final stage of institution-building; will the economic institutions of the EU push ahead to reform its rigid national economies and open them up to globalization and international competition?

Chapter 6: Does the monetary dialogue with the European Parliament influence the European Central Bank?

Sylvester C.W. Eijffinger and Edin Mujagic

Subjects: economics and finance, political economy, politics and public policy, political economy


6. Does the monetary dialogue with the European Parliament influence the European Central Bank? Sylvester C.W. Eijffinger and Edin Mujagic INTRODUCTION Starting from 1 January 1999, the European Central Bank (ECB) took over the conduct of monetary policy in the Euro area. Its founding fathers have given it a high degree of independence owing to the well-known fact that an independent central bank has many advantages, such as avoiding the time-inconsistency problem (Kydland and Prescott, 1977). It has been suggested by some that the ECB is probably the most independent central bank in the world. Although independent, a central bank must give account for its actions. In the Euro area, the ECB is held accountable by the European Parliament. In this chapter we take a closer look at the most important part of the relation between the ECB and the European Parliament, namely the quarterly monetary dialogues between the Committee on Economic and Monetary Affairs (ECON) and the ECB. This monetary dialogue is based on Article 113 (3) of the Treaty on European Union, which states that ‘The President of the ECB and the other members of the Executive Board may, at the request of the European Parliament or on their own initiative, be heard by the competent committees of the European Parliament.’ The ECON and the ECB agreed, on the basis of this article, that the President of the ECB would appear every quarter before the ECON to discuss monetary policy and the activities of the...

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