ECB’s strategy endorsed by EU’s grand coalition, under fire from the other groups

The resolution on the European Central Bank Annual Report for 2013 was adopted with a majority of 461 Parliamentarians voting in favour, 172 against and 65 abstaining (click here to see how each MEP voted).

The annual report describes the activities of the European System of Central Banks (ESCB) and reports on the Eurosystem’s monetary policy of the previous year. The report is presented to the European Parliament, the Council of the European Union, the European Commission and the European Council.[1]

In 2013, the Annual Report’s monetary policy aim was to reduce the level of stress in financial markets within the euro area and to restore investor’s confidence in the single currency. At the Committee stage the report was welcomed in general, but the Economic and Monetary Affairs Committee remained concerned by the fact that economic activity continues to be sluggish and with high unemployment rates in many euro-area Member States reaching levels that threaten the stability of the Eurozone.

The strategy of the ECB was approved by a grand centrist coalition made up of the Christian Democrats (EPP), the Socialists (S&D) and the ALDE group.  The EPP group stood firm behind the report, but at the same time stressed the need to look at how the funding provided by the ECB is actually used by the borrowers.[2] The group also pointed out the limits and the objectives of the ECB policy, as an essential issue for the European Parliament.

ALDE group welcomed the ECB’s commitment to buy European Investment Bank (EIB) bonds in the coming programme of bond purchases.2 The group stated that EIB bonds based on those projects should be prioritised. On the other hand, ALDE group expressed concerns over claims in the financial markets that some parties do not want to sell their government bonds to the ECB, due to possible losses in the transaction, as most bonds are yielding much less nowadays than the moment when they were bought.

The Socialists in general supported the actions of the ECB, but also criticized the delay of the report and the ECB’s failure to focus on what happened in 2014.[3] The group said that it is high time the EU had more investments and the ECB will have to find more ambitious and innovative solutions to save the Eurozone.

Other political groups didn’t show such support towards the report. Right leaning ECR group expressed discontent with the ECB’s interest to ensure profits as a lender of the Member States of the EU and said the European Central Bank to become a state within a state.2 The group also pointed out accusations against the ECB’s coercive policy towards the European people and their governments, in the name of rescuing the euro.

Eurosceptic EFDD group also expressed strong criticism, stating that the operations of the ECB have been a failure, that they will not contribute to economic recovery, but only to protect the interests of the banks.[4] The group was of the opinion that the banking system, as it is structured, is the reason behind the current crisis and the only way out is to shift to a real and clear separation bank.

The criticism towards the report was shared by the left-wing Greens/EFA group. The representative of the group stated that the European Central Bank has frequently overstepped its role by actually stepping into political territory, especially in times when the ECB has been advocating and sometimes intimidating governments into taking structural reforms which were politically oriented.[5] Far-left GUE/NGL group agreed with the negative side and stated that the ECB often goes beyond its mandate and after lowering rates to minimum level, the ECB has gone from the system of long-term funding provider to increasing maturity of three to four years.5

 

[1] https://www.ecb.europa.eu/pub/annual/html/index.en.html

[2] http://www.europarl.europa.eu/sides/getDoc.do?type=CRE&reference=20150225&secondRef=ITEM-015&language=EN&ring=A8-2015-0011

[3] http://www.socialistsanddemocrats.eu/newsroom/more-investment-vital-european-economic-recovery-say-sd-euro-mps

[4] http://www.europarl.europa.eu/sides/getVod.do?mode=unit&language=EN&vodDateId=20150225-19:12:00-581#

[5] http://www.europarl.europa.eu/sides/getDoc.do?type=CRE&reference=20150225&secondRef=ITEM-015&language=EN&ring=A8-2015-0011