Dáil Éireann debate -
Thursday, 13 Feb 1997

Vol. 474 No. 8

Written Answers. - European Central Bank.

Seamus Brennan

Question:

16 Mr. S. Brennan asked the Minister for Finance if he has satisfied himself that the proposed European Central Bank is sufficiently accountable to participating member states, considering the potential vulnerability of Ireland as a regional economy to systematic shocks and the impact of such shocks on national living standards and employment. [25232/96]

Minister for Finance (Mr. Quinn)

The Treaty on European Union sets out the detailed legal framework within which the European Central Bank (ECB) will operate. In particular, the Treaty provides that the primary objective of the ECB shall be to maintain price stability. Without prejudice to this objective, the Treaty requires the ECB to support the general economic policies in the Community with a view to contributing to the achievement of the objectives of the Community: briefly, these are to promote sustainable and non-inflationary growth, a high level of employment and social protection, and economic and social cohesion and solidarity among the member states.

The Treaty also provides that when carrying out its tasks, the ECB shall neither seek nor take instructions from Community institutions, from member states' governments or from any other body. The purpose of this provision is to ensure that the ECB is independent in pursuit of its objective of price stability.

The Treaty includes provision for democratic accountability of the ECB. The president of the ECB must present to the European Parliament an annual report on the activities of the ECB and of the European system of Central Banks. The report must cover the monetary policy of both the current and the previous year. The European Parliament is empowered to debate this report. In addition, the president of the ECB and the other members of its executive board may, either at the request of the European Parliament or on their own initiative, be called in front of relevant committees of the European Parliament.

Furthermore, the president for the time being of the Council of Ministers and a member of the European Commission may participate at meetings of the governing council of the ECB, though they will not have the right to vote. The president of the council may also submit a motion for deliberation to the governing council. Finally, there will also be a role for the President of the ECB in relation to meetings of the Council of Ministers, in that he or she will be invited to participate in such meetings when the Council is discussing matters relating to the ECB's tasks and objectives.

A single currency requires a single monetary policy across the area of the currency, and it is generally accepted that the best contribution which monetary policy can make to maximising sustainable economic and employment growth is to deliver price stability. It is clearly desirable that the body charged with doing so should be independent of outside influence in the discharge of its duties. I am satisfied in this context that the provisions of the Treaty represent a reasonable balance between ensuring the democratic accountability of the ECB on the one hand and providing it with the necessary independence on the other.