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MNI: ECB Taking Risks With Framework Review-Papadia, Demertzis

(MNI) Brussels

Announcing conclusions of the ECB's framework review ahead of time is not a good idea, two former central bank officials say.

Plans to announce proposed changes to the European Central Bank’s operational framework long before their likely implementation are risky and unnecessary, the ECB’s former Head of Markets Francesco Papadia and former Dutch National Bank official Maria Demertzis told MNI.

With the ECB now set to announce the results of its operational framework review on March 13, it risks exposing its conclusions to scrutiny, prompting “a revision of the review, with a reputation loss for the ECB.” Alternatively, it could decide to play it safe and present only “vague conclusions, just to be adaptable to different future developments,” but this would be of limited utility, Papadia and Demertziz, now colleagues at Brussels think tank Bruegel, said in a joint email.

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Plans to announce proposed changes to the European Central Bank’s operational framework long before their likely implementation are risky and unnecessary, the ECB’s former Head of Markets Francesco Papadia and former Dutch National Bank official Maria Demertzis told MNI.

With the ECB now set to announce the results of its operational framework review on March 13, it risks exposing its conclusions to scrutiny, prompting “a revision of the review, with a reputation loss for the ECB.” Alternatively, it could decide to play it safe and present only “vague conclusions, just to be adaptable to different future developments,” but this would be of limited utility, Papadia and Demertziz, now colleagues at Brussels think tank Bruegel, said in a joint email.

Keep reading...Show less