ECB Mersch: Independence No Conflict With Accountability

By Jack Duffy

     PARIS (MNI) - European Central Bank Executive Board member Yves Mersch said

Monday that the ECB should be held to account for its actions, but questioning

its independence is not the right approach. 

     "It is entirely legitimate that we are held to account," Mersch said in

Frankfurt in a speech focusing on legal issues rather than monetary policy. "We

need to be able to show that we continue to act in accordance with our mandate."

     But Mersch said reopening a debate on central bank independence was not the

right way to increase accountability or transparency. 

     "We know the economic argument - empirical evidence shows that political

influence is more likely to lead to short-termism and make the central bank less

effective in preserving price stability," he said.

     Mersch said the ECB had increased its interactions with the European

Parliament to explain its actions and raised the level of transparency by

providing accounts of its monetary policy meetings. 

     He said increased transparency has had to be balanced by the "the need to

maintain the frank and dynamic exchanges" and warned that it comes with a cost. 

     "There is a caveat: the growing importance of forward guidance has

increased the risk of self-censorship in the official discussions," he said. 

--MNI Paris Bureau; tel: +33 1-42-71-55-41; email: jack.duffy@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: M$X$$$,M$$EC$]