Citizens' recommendations for the ECB
- #1 Include housing prices in the inflation index
- #2 Decrease or stop quantitative easing
- #3 ECB should “green” its quantitative easing programme
- #4 Promote fair and sustainable lending by banks
- #5 Support green investment by public banks via quantitative easing
- #6 The European Central Bank could distribute money directly to people
- #7 Introduce a digital euro and allow every citizen to hold central bank money
- #8 Change European Union Treaties to allow for direct financing of government spending
- #9 Restrict money creation by banks
- #10 Review EU fiscal rules to increase public spending
- #11 Create a permanent eurozone federal budget to coordinate fiscal policy and stimulate the economy
- #12 Forgive Covid-19-related debt of people and businesses
- #13 Increasing diversity in the ECB’s executive Board
- #14 Consultations with citizens
- #15 Periodic democratic review of the ECB mandate
- #16 The European Central Bank should communicate in a more accessible way to ordinary citizens
#11 Create a permanent eurozone federal budget to coordinate fiscal policy and stimulate the economy
While monetary policy is decided by the European Central Bank (ECB), budgetary decisions (or fiscal policies) are decided in a decentralized way by each individual finance ministries across 19 eurozone countries. This results in a lack of coordination between the ECB’s monetary policy and the Member State’s national fiscal policy, which makes it more difficult to react to economic shocks, and leaves the most vulnerable Member States on their own.
Since the Covid-19 crisis, EU Member States have agreed to set up a dedicated budget to help the recovery — the so-called “Next Generation EU fund”. However, many argue that the fund is too small, and that it will take months to implement it. Moreover, the fund is supposed to be a one-time emergency measure.
To better fight future crises, a permanent budget for the eurozone could be set up. This budget would allow the eurozone to react more swiftly to economic downturns, by increasing public spending to fight unemployment and poverty, or spur long-term investment in public infrastructure.
This eurozone budget could be funded by borrowing on financial markets, which would be paid off by collecting taxes or other own resources. There are many proposals for European-level sources of income, including a tax on big corporations, a carbon tax, a financial transaction tax, or even centralizing central banks profits.
Such a eurozone budget, and the money used, could be decided by the European Commision, under the oversight of democratically representative EU institutions like the European Parliament.
- It would improve the response to economic shocks through more coordination and solidarity.
- It would reduce the pressure on the ECB, as it would no longer be the "only player in town".
- It would ensure better and more democratic governance of the eurozone.
- The eurozone should not create further transfers between Member States, as some countries feel they are already paying too much for European integration.
- A eurozone budget would mean European-level taxes on people and businesses on top of national taxes.