Have a say in monetary policy

The ECB is opening a “Citizens’ Dialogue” for its strategic realignment. Everyone should be able to contribute their opinion by email. Will this democratize the central bank?

Christine Lagarde has already embarked on a new path in communication.

“We want your input” – “You have the floor”: With headlines like this, the European Central Bank has now opened a process in which the citizens of the euro countries are to be involved in the review of the central bank’s strategy. “We want to listen and be open to the opinions, expectations and concerns of the citizens,” said ECB President Christine Lagarde in a video at the beginning.

The central bankers have set up a special website on the Internet where everyone can find out more about the process and submit their opinion using a form. An unusual approach: there has not been so much public participation in the central bank in recent years.

This is obviously part of the new style that new ECB President Christine Lagarde has brought with her as the successor to Mario Draghi. The central bank had to “listen more”, she had declared and was clearly supported in this approach by Bundesbank President Jens Weidmann.

America as a model

The large amounts of data from the many e-mails from citizens now come together in a project office at the ECB. There you can see the challenges mainly in the complexity of the project. In the monetary union, unlike in the United States, there are, after all, many different individual states with different languages, cultures and different debates – including the ECB and what is not going well there.

All of this should now be brought together and somehow taken into account. At the end of the day, the proposals will be used to compile a report that will be incorporated into the work of the Governing Council to reorient the strategy. As a second element, events under the title “The ECB is listening” are planned in the 19 member states, which are organized by the respective national central banks. They should be based on the model of the American central bank under the title “Fed lists”. In America, too, it is not the case that citizens have a say in decisions at these events, but they can make suggestions. In the United States, this type of approach appears to have worked well.

In Europe, the start is to be an event on March 26th in Brussels. The Bundesbank is to organize such an event for Germany, but did not give the exact date on Monday. However: Not all people can simply come to these citizens’ events and express their criticism of the ECB’s monetary policy through banners and chants, for example. Rather, the guests are selected through associations and other organizations.

Representatives of employers and trade unions, consumer protection organizations and regional institutions, but also associations such as Transparency International, should be there. In Germany there is also a conference “The ECB and Its Watchers”, which will take place on March 24th in Frankfurt, and which will also involve scientists, economists and lawyers in the process.

The conference is organized by the Frankfurt economics professor Volker Wieland, who is also a member of the Economic Advisory Council. There, topics can be brought into the process that are more of a concern to the professional world; Recently, for example, the question of whether the central bank should pursue a “point target” for inflation or rather an “inflation band” that gives it a little more leeway and follows from the knowledge that the central bank is not quite inflationary anyway was discussed can control exactly.