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