It is a strange spectacle: For some time the members of the Council of the European Central Bank (ECB) argue semi-public about its future course. Front of the camera they are holding back with verbal shin kicks. But in the background to let them know very well who is on which side.
The conflict gnaws on the credibility of the central bank. In the media, the balance of power within the ECB be calculated. Has ECB chief Mario Draghi still a majority? And if not, then what?
In the case concerns the question whether the ECB should buy debt of euro countries on a large scale by the market. Draghi has fueled expectations that the Governing Council so decides at its meeting on 22 January. But there are several members who are against it. Not only Bundesbank chief Jens Weidmann and some faithful, but now apparently also half of the Executive Board, the highest governing body of the Bank
The problem is not only in the different interests of the Euro-Member States and the personalities of the Governing Council members, but especially in the decision-making structures of the ECB. At the central bank can be seen, which runs structurally wrong in Europe. Now the euro-zone is still growing: On Thursday occurs Lithuania as 19th member state at. This makes the constellation not simpler.
Draghi sets the Governing Council again under pressure. Through an open stipulations he creates facts. So it was with Draghi’s announcement in the summer of 2012, the ECB will do what is always necessary to hold the euro-zone. So it is now at the next stage of monetary expansion, with the ECB president hopes to ward off deflation and stagnation period.
While I think the economic arguments for threadbare, Draghi makes political calculation is quite understandable. The formal position of the ECB President is rather weak. So he tried to generate decisions by taking a detour through the public and the financial markets. This in turn creates resistance in the Governing Council.
For most banks, it is this: A strong center is grouped around the money governor. These external experts come (like the Bank of England) and representatives from the regions of the currency area (as in the American Fed). But always the bosses and their management team have the majority. In the fed, the Board Chair for Women Janet Yellen has seven voting rights; five others share the twelve regional Federal Reserve sub-organizations that change according to a rotation method. According sovereign act Fed chairman. In the ECB for the representatives of the national central bank have the majority vote
mind not much will change on January 1, when the ECB introduces a typical European rotationally molded. The problem of the unclear division of power is detected, But far from being solved. Draghi and the ECB’s Executive Board Frankfurt, in a sense, the Executive Board of the Euro-Bank, constantly remain entitled to vote and come together on six votes. The heads of the 19 national central banks share in future 15 votes. A travel-to-Jerusalem-game begins, which in turn opens up a lot of room for speculation. For example:
- Bundesbank chief Weidmann may not vote 2015, the monetary policy meetings in May and October. Draghi will then just make the critical decisions to Vote?
- The central bank governors of the small euro countries must expose more frequently; Vitas Vasiliauskas, the New from Lithuania, may not vote equal March to May. His Estonian colleague Ardo Hansson has had repeatedly hinted that he does not think much of massive government bond purchases – but calculated on 22 January, he is not there. Does this affect the decision-making in the Governing Council?
Sure, Draghi’s management style and the different interests of the Member States contribute to the polarization at. But all this would be less come to light, the rules were different.
Ultimately applies to monetary policy as for other areas of economic policy: The euro will only work in the long run if Europeans overcome national thinking and national structures. And that also means that national central banks. In the US there are 12 regional Federal Reserve districts, but 50 states. The Federal Republic had to the D-Mark times only nine regional central banks, but 16 states. In the euro zone, it may well make sense to merge central banks: the Baltic States and Finland, for example. Germany, Benelux and Austria have similar business cycles and economic structures – why not a common central bank
Significantly central bank mergers are not even seriously discussed?. Why? Because we are a long way from being able to feel as euro-zone citizens. But if it is unable to overcome these differences – mentally and institutionally – then the monetary union as a whole is not maintainable over time.
The most important economic events in the coming week
Monday
ATHENS – on a knife edge – The third round of voting for the election of a new president by the Greek parliament. The failure of the government candidate again, are new elections – with an uncertain outcome for Greece further fiscal stance.
ROM – Dolce Christmas – New figures for mood among Italian consumers in December
Tuesday
FRANKFURT – money growth – The ECB indicates how much the money supply (M3) has grown in the Euro-zone for November – an important indicator for monetary policy.
NEW YORK mood Test – New figures for the mood of the American consumer in December
Wednesday
BEIJING – Growing – What is the mood in China’s business? New figures from the Purchasing Managers’ Index.
Thursday
VILNIUS – And then there were 19′s – Lithuania is a member of the Euro-zone.
RIGA / BERLIN / ANKARA – Rotation – Latvia takes over at regular intervals over the EU Presidency, Germany G7 presidency, Turkey G20 presidency.
Friday
BERLIN / LONDON / WASHINGTON – Manager Surveys – New findings from the purchasing managers’ surveys from Germany, Great Britain and the United States
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