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Although the European Central Bank acts independently of national and Community institutions when taking its monetary policy decisions, it is still democratically accountable and is required by the EC Treaty to report to the European Parliament and the Council of Ministers. The ECB President appears before the full Parliament once a year and before the EP Monetary Affairs Committee several times a year. Parliament also has a consultative role in the appointment of new members of the ECB Executive Board.
The ECB is run by two main bodies, the Governing Council and the Executive Board, both chaired by the President of the ECB (see box). The ECB President must, under Article 113 of the EC Treaty, present the Bank's annual report to Parliament's plenary, usually in July, when MEPs have the chance to express their views on the ECB's monetary policy. The debate is wound up with a parliamentary resolution, which has so far always strongly backed the independence of the Bank and its monetary policy. Parliament has also endorsed the ECB's calls to the Member States to press ahead with structural economic reforms. However, MEPs have been more critical of the Bank's information policy and have frequently called for it to be more transparent. The Bank has accepted some of Parliament's proposals, such as the publication of econometric models, although it is still resisting other suggestions. One long-standing demand of Parliament is for publication of summary minutes of each Governing Council meeting, including the positions of both approving and dissenting parties. Parliament has also called for decisions to be taken by vote instead of by consensus, to speed up the Bank's response to economic developments.
Another part of the democratic supervision of the ECB has been the regular "monetary dialogue" between Parliament's Economic and Monetary Affairs Committee and the President or Vice-President of the Bank. Under the Treaty, members of the Executive Board "may" appear before EP committees and the first ECB President, Wim Duisenberg, agreed to come before the Economic and Monetary Affairs Committee four times a year. The new President, Jean-Claude Trichet, has promised to continue this tradition. MEPs across the political spectrum have taken very seriously this opportunity to question the President on the ECB's role, quizzing him about inflation targets, the economic situation, interest rate policy, structural reforms, the Stability Pact and many other matters. A verbatim report of these meetings is published on the internet.
ECB statute and appointment of Board members
Consultation of Parliament is also required before any changes can be made to the statute of the Central Bank. In March 2003, MEPs criticised a proposal to reform voting procedures in the ECB Governing Council which was designed to enable the Council to function better if the eurozone expands. Parliament wanted to keep the rule of unrestricted voting rights for all governors of national central banks in the eurozone, who together with the Executive Board would decide on medium-term policy decisions. Finance ministers nevertheless went ahead and agreed on a new system by which the right to vote would rotate among eurozone countries, so that not all the governors would vote every time.
Parliament must also be consulted on the appointment of all members of the ECB Executive Board, including the President, who was in fact replaced during the current parliament when MEPs approved the nomination of Jean-Claude Trichet as head of the Bank for an eight-year term. Mr Trichet has been President since 1 November 2003, when Mr Duisenberg stepped down. In Parliament's current term of office MEPs have also approved the appointments of the new Vice-President of the ECB, Lucas Papademos, in 2002, and of another member of the Executive Board, Gertrude Tumpel-Gugerell, in 2003. Before Parliament's plenary votes on their appointment, candidates must respond to a written questionnaire compiled by the Economic and Monetary Affairs Committee. They also have to attend a hearing at the European Parliament organised by the committee, where Members can assess the candidate's competence for the job and their willingness to cooperate with Parliament. Although in these cases Parliament's opinions are not legally binding, it would be politically unwise of EU governments to appoint a member of the Board who had been rejected by the full Parliament.
The ECB's governing bodies
The ECB has two governing bodies. The Governing Council, consisting of the Executive Board plus the central bank governors of the eurozone countries, decides the overall monetary policy of the eurozone and sets interest rates. The Executive Board, whose six members are appointed by the Heads of State or Government of the eurozone countries, implements monetary policy on the basis of the Governing Council's guidelines.
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