Bundesbank’s Stark defends ECB transparency and policy

Willem Buiter of the European Bank for Reconstruction&Development and Bundesbank deputy governor Jürgen Stark clashed over the transparency and goals of the European Central Bank this morning at Euromoney's Euro Capital Markets Forum in Amsterdam.

  • 30 Mar 2001
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Stark was speaking on the ECB's track record and its relationship with other European institutions. The ECB, he said, had come in for criticism from academia and the Anglo-American press for its lack of transparency.

He countered that argument by saying that perfect transparency is impossible and that the ECB tries to avoid giving out too much information, which might lead to confusion.

He added that the introductory remarks given by the president of the ECB at press conferences after governing council meetings should be regarded as a fair and accurate summary of the proceedings.

But Buiter, a former external member of the Bank of England's monetary policy committee and chief economist at the EBRD, came close to accusing Stark of sophistry, claiming that "what [Stark] says is a non-sequitur". He argued that although it is true that "perfect" transparency is impossible, it does not mean that the ECB's transparency procedures are adequate.

Buiter added that the ECB president's opening remarks were "pre-cooked by the executive before the meeting" - a claim denied by Stark.

Buiter went on to say that the two pillars of ECB operational policy that Stark had discussed - price stability based on M3 money supply growth and price stability defined as inflation of 2% or less in the medium term - were unclear. Price stability, said Buiter, is not an operational concept, adding that the continued preeminence of the monetary pillar is simply "nostalgie de la Bundesbank".

In his speech, Stark had attacked attempted political interference in the operation of the ECB. The creation of the central bank was "an attempt to 'depoliticise' monetary policy," said Stark, "to put it in the hands of experts". Any attempts to involve Euroland governments or other bodies in monetary policy should be avoided.

"Instead," said Stark, "the politicians of the euro area should endeavour to continue their good approaches to the further deregulation and liberalisation of markets, for instance the energy market."

However, Buiter argued that "Dr Stark confuses independence with lack of co-ordination and co-operation", saying that the ECB expected politicians to stay out of monetary policy while itself offering advice on areas that were not in its sphere of responsibility.

  • 30 Mar 2001

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