For the last three years, discussion of EMU has largely been confined
to two subjects how narrowly will the Maastricht criteria be
interpreted, and which countries will therefore be deemed eligible for
the first wave of EMU? Now that we know the answer to these questions,
public attention will rapidly switch to the question of how EMU will
actually operate after it begins.
Concern centres on three issues: how easily will initial economic
uncertainties about the operation of EMU be resolved; how will the new
monetary policy interact with national fiscal policies that have
undergone no parallel change; and how can the European Central Bank be
made adequately accountable without jeopardising the independence that
is seen as the cornerstone of its ability to deliver low inflation?
Despite short-term fascination with the issue of which countries
would initially make the EMU grade, the Centre for Economic Policy
Research has for some time been interested in trying to help address the
longer-term issues cited above. CEPR , in association with two leading
banks, takes pleasure in announcing the launch of a new initiative: Monitoring
the European Central Bank (MECB). The ECB will be a
formidable powerhouse that needs public scrutiny. Both European and
national Parliaments need an objective lens through which to focus
interpretation of the ECB’s actions. CEPR has recognized the need for
a regular examination of ECB polices from a pan-European perspective,
laying out the menu of choices that the ECB faces, thereby informing and
promoting public debate and hence accountability. This examination must
begin this year in order to offer a rigorous assessment of the initial
options faced by the ECB on day one. A high-level team, writing the
regular MECB reports, will provide this scrutiny. The team will
discuss their analysis with the European Parliament and disseminate
their conclusions to the broader public and the media.
CEPR is the pan-European research network. It
has a record of applying outstanding economic research in a timely
manner to key economic questions. MECB will be written by a team
of distinguished academic economists known internationally for their
work on macroeconomics and monetary policy
Richard Portes, President, CEPR, said "independent analysis of
European Central Bank policies is essential for ECB accountability, and
consequently CEPR is drawing on the leading macroeconomists in Europe to
produce such an analysis".
Amongst the fundamental issues that the team will address are:
- How quickly will pan-European indicators supplant national
indicators?
- How long will differences in national transmission mechanisms
persist?
- Will the ECB adopt inflation or monetary targets?
- How differently should the ECB behave from the Federal Reserve in
the US?
- How will the mix of monetary and fiscal policy be determined
within EMU?
- What should be the balance between macroeconomic prudence and
microeconomic effectiveness of banking supervision?
The MECB Steering Committee comprises David Begg (Birkbeck College,
University of London and CEPR), Paul de Grauwe (Katholieke Universiteit
Leuven and CEPR), Francesco Giavazzi (Università Bocconi, Milan and
CEPR), Harald Uhlig (Tilburg University and CEPR) and Charles Wyplosz
(Graduate Institute of International Studies and CEPR). Their track
record of influencing policy decisions includes:
- CEPR’s 1990 and 1991 Monitoring
European Integration Reports which correctly predicted the
1992-93 ERM crises despite widespread optimism at the time about the
road to EMU
- The recent CEPR Report, EMU:
Getting the End-game Right whose proposals of how and when
to set the conversion rates for the currencies entering Euro were
hailed as the most credible solution by the Luxembourg Presidency
team and subsequently adopted by ECOFIN
- A new assessment of Options for the Future Exchange Rate Policy
of the EMU (commissioned from CEPR by DG II of the European
Commission) that has already been widely cited in the financial
press
All of the authors have acted as advisors to national
governments as well as the European Commission.
The group will produce two Reports each year:
- an assessment of the key issues facing European monetary policy
- a detailed commentary on the ECB’s own annual report
- The first MECB Report
will be published two months before the ECB’s own report. It will
include a detailed analysis of ECB actions and will alert the public
to the main issues raised by the policies pursued by the ECB during
the previous year.
Notes for Editors:
For further information about CEPR, please contact
Rita Gilbert, External Relations Manager, Tel: 44 20 7878 2917 or email:
rgilbert@cepr.org either before
May 1 or after May 5.
CEPR is a network of over 450 Research Fellows based
throughout Europe, who collaborate through the Centre in research and
its dissemination. CEPR helps its Research Fellows to develop projects,
obtain their funding, administer them and disseminate their results. The
Centre’s research ranges from open economy macroeconomics to trade
policy, from the economic transformation of Central and Eastern Europe
to regionalism in the world economy. CEPR takes no institutional policy
positions