EN Official Journal of the European Union CE 294/49

Wednesday 9 July 2008

Report on the ECB annual report for 2007

P6_TA(2008)0357

European Parliament resolution of 9 July 2008 on the ECB annual report for 2007 (2008/2107(INI))

2009/C 294 E/11

The European Parliament,

having regard to the Annual Report 2007 of the European Central Bank (ECB),

having regard to Article 113 of the EC Treaty,

having regard to Article 15 on the Protocol of the Statute of the European System of Central Banks and of the European Central Bank, annexed to the Treaty,

having regard to its resolution of 2 April 1998 on democratic accountability in the third phase of EMU (1),

having regard to its resolution of 20 February 2008 on the Integrated Guidelines for Growth and Jobs (Part: broad guidelines for the economic policies of the Member States and the Community): Launching the new cycle (2008-2010) (2),

having regard to the Commission Communication on EMU@10: successes and challenges after 10 years of Economic and Monetary Union (COM(2008)0238),

having regard to the ECB's Financial Stability Review in December 2007 and its report on Financial Integration in Europe of April 2008,

having regard to the Commission's spring economic forecast 2008-2009,

having regard to Rule 45 of its Rules of Procedure,

having regard to the report of the Committee on Economic and Monetary Affairs (A6-0241/2008),

A. whereas in 2007 the GDP of the euro area grew by 2,6 % (compared to 2,7 % in 2006) despite heightened uncertainty stemming from the financial turmoil in the second half of the year,

B. whereas the inflation rate was 2,1 % compared to 2,2 % in 2006, despite an economic environment characterised by significant upward price pressures,

C. whereas the ECB continued to adjust interest rates in 2007, to 4,0 % in June 2007 from 3,5 % in December 2006, and maintained that level during the second semester,

D. whereas statements made by the International Monetary Fund (IMF) and the Organisation for Economic Cooperation and Development call for a very cautious approach to the raising of interest rates in the euro area,

E. whereas in 2007 the exchange rate of the euro appreciated by 6,3 % in nominal effective terms, and appreciation was particularly pronounced in relation to the US dollar (11,8 %),

F. whereas financial turmoil and large global imbalances represent a risk for worldwide economic growth and exchange rate developments,

G. whereas it is expected that inflation will rise to between 2,0 % and 3,0 % in 2008 in the euro area, largely reflecting the current trend of increased commodity prices, before falling to a more moderate range of between 1,2 % and 2,4 % in 2009,

H. Whereas the main objective of the ECB and of the European System of Central Banks (ESCB) is to maintain price stability while supporting the general economic policies of the Community, as defined in Article 105 of the EC Treaty; acknowledging the full independence of the ECB and the ESCB in this context.

I. whereas the ECB has the dilemma of having to meet the challenges of rising inflation and the first signs of an economic slowdown due to the financial turmoil of recent months,

J. whereas Parliament wishes to help strengthen the role and international authority of the ECB and the euro area on the international stage,

ECB today

1. Welcomes the fact that ten years after the launch of economic and monetary union (EMU), both the ECB and the euro are well-respected and generally accepted within the global economy and notes that the euro has become a currency of global standing that almost equals that of the US dollar;

2. Recalls that the EC Treaty explicitly distinguishes between the ECB's goals of price stability on the one hand and support for general economic policies on the other, and that, therefore, those two goals cannot simply be treated as substitutable; acknowledges the full independence of the ECB in its fulfilment of this double mandate, and welcomes the fact that by means of the Treaty of Lisbon, the ECB should become an EU institution with legal personality and a clearly established independent political and financial status; believes that recognition of the ECB as an EU institution increases the responsibility of Parliament, and, in particular, its committee with responsibility for economic and monetary affairs, as an institution to which the ECB is accountable for its decisions on monetary policy;

3. Welcomes Cyprus and Malta to the EMU and takes note of their successful entry;

Financial stability

4. Recognises the excellent work of the ECB in managing the financial turmoil triggered by the US sub-prime mortgage crisis, in particular the operation launched on 9 August 2007, which provided liquidity in the amount of EUR 95 billion to the markets as a fixed-rate tender at 4,00 %, following the same procedure as normal ECB market operations; notes that the operation, together with fine-tuning operations and the abundant weekly refinancing operations that followed, succeeded in stabilising the very short-term interest rates; considers this, once again, to show the value of a common monetary policy as provided for by the ECB, stabilising the economy in periods of instability;

5. Shares the views of the ECB that the growing complexity of financial instruments and the opacity of exposures of financial institutions can give rise to increased uncertainty regarding the degree of risk involved, the ultimate bearer of the risk, and the extent of potential losses;

6. Emphasises the need to set up an EU framework for financial supervision, stresses that although the EC Treaty does not entrust the ECB with any direct responsibility related to the prudential supervision of credit institutions and the stability of the financial system, there is a need closely to involve the ECB in supervision;

7. Believes that the ECB has been strengthened by its successful handling of the current financial crisis; welcomes the ECB's enhanced credibility and international recognition; calls on the Euro Group to follow the ECB's example and to enhance its expertise and coordination in matters relating to the regulation and supervision of financial markets;

8. Highlights the increased need for cooperation between central banks and supervisory authorities, in order to uphold stability in the financial markets, in particular taking into account the increasingly integrated financial systems; asks the ECB to continue to push for improved integration and communication on an intra-EU level as well as in its relationship with other central banks and relevant institutions, in particular as regards the relationship with the Bank of England, since London is the most important financial centre within the European Union; calls on the ECB to play an active role in the various forums discussing changes in supervision, such as the Lamfalussy follow-up;

9. Recognises that major central banks such as the ECB and the US Federal Reserve warned against underestimating the risks to the economy before either the IT-bubble burst in 2000/2001 or the sub-prime crisis in 2007; notes that the financial markets failed effectively to respond to those warnings; asks the ECB, therefore, to analyse that response and suggest how to improve the correlation between such forward-looking warnings and market reactions; calls on the ECB, in the light of recent financial turmoil, to analyse and evaluate the aftermath of the financial crisis and examine whether it has sufficient instruments for handling a cross-border European financial crisis, and which powers it needs in order to improve macro-prudential supervision in the euro area;

Economic and monetary development

10. Notes the ongoing discussion on how to define price stability, in regard to which some argue in favour of a direct inflationary targeting; believes, however, that a two-pillar system based on M3 is the most suitable way of measuring price stability; calls on the ECB to take measures for a continuous improvement of that system; recognises the added value of the additional information and early warning of inflationary risk and the operational discretion that such a system provides;

11. Highlights that the risks of asymmetric economic developments within the euro area could increase with enlarged membership as the differences in size and maturity of members' economies grow; calls on the ECB to pay particular attention to this situation and tackle those risks at an early stage as well as communicate them to the Member States;

12. Calls on all Member States participating in the euro area, the Member States that have opted out, as well as the Member States applying to join, to take note of those challenges and therefore fully respect the criteria of the Stability and the Growth Pact and fulfil the Maastricht criteria, as appropriate, as this, together with fiscal consolidation and wage policy in line with developments as regards growth and productivity, provides the strongest protection against challenges presented by asymmetric developments;

13. Emphasises that against the background of the recent correction of growth expectation, any further raising of interest rates should be undertaken with caution in order not to endanger economic growth; points out that, in order to support the economic recovery, Member States must implement both the necessary structural reforms and investment activities;

14. Expects the Council to treat all euro area applicant Member States equally and fully respect the assessment and recommendations of the ECB concerning their readiness for joining the euro area;

15. Takes note of the appreciation of the euro especially with respect to the US dollar; underlines the goal of price stability, but recognises that strong and rapid changes in the euro exchange rate should not impede the ECB's ability to manage its monetary policy, confronted by a source of inflation, or, alternatively, difficult growth perspectives for the export-dependent countries; asks the ECB to monitor this development and to take action if deemed necessary and invites the Euro Group, the Commission and the ECB to step up coordination of their action in the sphere of exchange rate policy;

16. Recognises the increasing upward pressure on inflation to which food and energy prices contribute in particular; calls on the ECB to strengthen its dialogue with national central banks on the issue to promote a strong focus on price stability globally;

Governance and effective decision making

17. Recalls the ongoing call for more transparency in the ECB which would result in increased credibility and predictability and appreciates the improvements in this area that have already been implemented; recognises, in this respect, the difficulties relating to the publication of the minutes of the ECB Governing Council's meetings, as differences in individual positions could be interpreted as representing national interests, leading to pressure from Member State governments on Governing Council members; asks the ECB to provide Parliament and the public with an annual summary of measures taken to improve its performance in line with this resolution;

18. Considers that the monetary policy dialogue between Parliament and the ECB has been a success, and one which should be built on further; emphasises that the ex-post accountability of the ECB is of primordial importance for confidence, and hence stability, on the financial markets; considers that it is important for the unity of the ECB's Executive Board and Governing Council to continue to be confident in their public presentation; supports a targeted information policy on the part of the ECB towards Parliament, the Council, the Commission and the Euro Group; is disappointed by the low level of commitment that the ECB has demonstrated in its response to Parliament's resolution of 12 July 2007 on the ECB annual report for 2006 (3); strongly stresses that the call for improvements to the ECB's communication policy must be seen only in the context of the simultaneous preservation of the independence of the ECB and its bodies;

19. Calls on the ECB, in its statements following decisions taken by its Governing Council, to elaborate clearly about whether, in the course of discussions, a consensus was reached easily or if divergent views persisted, since this would provide markets with more information without hampering the common European perspective for the decision of the ECB's Governing Council;

20. Calls on the ECB to present its ideas for reforming the structure of the Governing Council, as the number of governors is expected to exceed 15 from 1 January 2009; notes that with the increasing number of euro area countries reforms will become even more necessary; supports the ECB's earlier suggestion that the economic weight of participating Member States should be treated as the most significant factor for the rotating voting rights, and that the number of decision makers should be kept low in order to ensure efficiency;

21. Considers that the independence of the ECB, including the procedure for appointing the members of its Executive Board, has proved its worth; stresses that Article 112(2)(b) of the EC Treaty provides for the members of the Executive Board to be appointed from among persons of recognised standing and professional experience in monetary or banking matters, and emphasises that their nationality should be irrelevant and that they will continue to be judged by the strict criteria set out in the EC Treaty, such as that of their qualifications; considers that ex-ante democratic accountability and transparency would improve if the Council evaluated several potential candidates and if the candidate proposed by the Council were then subject to a vote of approval by Parliament;

22. Believes that given the ECB's future status under the Treaty of Lisbon, Parliament's role in appointing members of the Executive Board should be enhanced; stresses its willingness, together with the other institutions, to explore possible improvements of the appointment procedure before the next renewal of the Executive Board in 2010;

23. Recognises the increasing role of the Euro Group and its President for setting a major part of the economic agenda within the European Union, in particular the more formal structure and central role in coordinating the economic policy within the Euro Group, as set out in Article 136 of the EC Treaty, as amended by the Treaty of Lisbon, also for Member States not participating in the euro area; supports a strengthening of the development of the euro area speaking with one voice in international forums as provided for in Article 138 of the EC Treaty, as amended by the Treaty of Lisbon, and by the President of the Euro Group;

24. Welcomes the cooperation between the ECB, the Commission and the financial services industry in the successful launch of the Single Euro Payment Area (SEPA) and the Short-Term European Paper (STEP) initiatives; considers these to be positive contributions from the financial services industry for driving forward financial integration in the European Union;

25. Welcomes the start of Target 2 operations and the finalised migration activities to the single shared platform; considers that the use of the single shared platform is an important step in the direction of financial integration and reduction of clearing and settlement costs; believes that it is urgent that the ECB now proposes a governance structure for Target 2 securities (T2S);

External dimension of the euro

26. Notes a steady rise in the status of the euro as an international currency; points out that the European Union's representation concerning economic and monetary affairs in international forums poorly reflects the true economic weight of the euro area and that this may be seen as an obstacle for an increased influence in international financial affairs; calls, therefore, for concrete steps to be taken towards a unified euro area representation within international financial institutions such as the IMF;

27. Encourages the ECB to continue moving towards strengthening its coordinating role in international financial contexts; believes that an internationally stronger status for the euro will lead to benefits for the euro area which will encourage Member States currently not participating, to seek full membership;

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28. Instructs its President to forward this resolution to the Council, the Commission, the Euro Group, and the European Central Bank.

(1) OJ C 138, 4.5.1998, p. 177.

(2) Text adopted, P6_TA(2008)0058.

(3) Texts adopted, P6_TA(2007)0349.