Thread by @SebDiessner

We hear more and more that one way to defuse the #Karlsruhe–#Luxembourg–#Frankfurt conflict is to travel via #Berlin:

Let @bundesbank be more *accountable* to @Bundestag
(reuters.com/article/us-ecb…)

Here's a few things we know about the promises and pitfalls of that strategy

1/n

https://twitter.com/lucasguttenberg/status/1258329445284433920

The ECB has a Monetary Dialogue with @EP_Economics in #Brussels & it answers written questions by MEPs

Many see the Dialogue as a talking shop, but it does offer a template

I've been cautiously optimistic about it in the last crisis(as have MEPs)...

https://twitter.com/SvenHilgers/status/1258438945492414464

2/n

...but there's no denying that @ecb accountability could and should be strengthened

For one, it hinges on the focus and specialization of the parliamentarians who hold the central bank to account, and on the willingness of central bankers to engage in meaningful exchange

3/n

Detailed proposals for how to improve central bank accountability in general and the Monetary Dialogue in particular are laid down in recent reports by @BJMbraun & @leo_axt for @TI_EU + @stanjourdan &myself for @PositiveMoneyEU
positivemoney.eu/wp-content/upl…
transparency.eu/wp-content/upl…

4/n

What's important to note is that more *substantive* forms of accountability (i.e. those that go beyond mere *answerability* by the central bank and that enable parliaments to reward or punish central bankers) inevitably raise questions about central bank independence

5/n

This might condemn central bank accountability in the Eurozone to "proceduralism", as @MaricutAkbik @ana_bobic & Mark Dawson put it (onlinelibrary.wiley.com/doi/full/10.11…)

But independence and accountability can really only be "two sides of the same coin" to a certain (& limited) extent

6/n

In the current case: it's impractical for @ecb to visit national parliaments (although it did so ad hoc, see @tobias_tesche tandfonline.com/doi/abs/10.108…)

Yet there's a case to be made that national CBs be heard by national parliaments (for a discussion: onlinelibrary.wiley.com/doi/full/10.11…)

7/n

What's crucial here is that national central bank accountability should not lead to a re-nationalisation of Eurozone monetary policy, as @lucasguttenberg rightly notes, and as has long been feared by defenders of the ECB's limited accountability (eg. onlinelibrary.wiley.com/doi/abs/10.111…)

8/n

Worst case: national CB governors go to ECB governing council meetings with "mandates" from national parliaments, "tying their hands" to national interests

We know this dynamic from the Eurogroup. And we know the outcome.

It's here that CB independence can be most valuable

9/n

But it's equally implausible to assume that we can avoid (national) political dynamics in the ECB governing council altogether(see eg. this great piece by @ManuMoschella &Nicola Diodati journals.sagepub.com/doi/abs/10.117…)

As ever, it's the dose that makes the poison then

Conclusion:

10/n

We badly need careful reflection about the role of NCBs

NCBs are staffed with skilled personnel, collect&analyze data, maintain payment systems, execute policy

Are they translators of governing council positions or loudspeakers for national ones?
(

https://twitter.com/SebDiessner/status/1190196048519671808

)

11/n

Also: most agree that *transparency* is a prerequisite for accountability(which @BVerfG calls for as well)

But @EUCourtPress implies that a degree of *opaqueness* is what renders PSPP compliant with Art.123, as it ensures uncertainty over which bonds are purchased and when

12/n

Few easy answers, much need for caution

Takeaway: ECB accountability should be performed (and reinforced) at European level. NCB accountability should be furthered at national level with above caveats in mind

Looking forward to an honest debate about CB oversight in EMU🧐

/end