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
#13 Increasing diversity in the ECB’s executive Board
The European Central Bank’s Governing Council is the main decision-making body of the European Central Bank (ECB). By defining the ECB’s monetary policy, it makes crucial decisions which affect everyone in the Eurozone.
The Eurozone is composed of 19 countries. These countries span from the most western part of Ireland all the way to the Russian border in the East, and from the most Nordic point of Finland by the Barent Sea to the most southern tip of Spain only 14.5km away from Africa. It is an extremely diverse geographical area in terms of culture, languages and traditions. It’s populated by people of different gender, race and economic backgrounds who work, live and study there.
In contrast, the ECB’s Governing Council is composed of 25 members, including the 19 governors of the eurozone’s national central banks, and 6 members of the Executive Board. The latter manages the ECB on a daily basis. Of the 25 current members, only two are women. All current members are white, they are generally over 50 years old, and most often they are highly educated and worked in the financial sector before. Since 2013, the ECB has made progress to increase gender diversity among the ECB’s employees, but diversity beyond gender and at the top level is still far from being achieved.
Diversity of gender, race and background could help reduce the risk of “groupthink”, where no group member dares to second-guess the group’s proposed solution. It would mean diversity of ideas and ultimately of policies, which in turn would lead to a real debate and improvements on how the eurozone economy is managed.
The lack of diversity in the ECB’s Governing Council is often attributed to a flaw in the design of the appointment processes. Today, most often, central bank governors are appointed by finance ministers. As has been demanded by the European Parliament, a key improvement would include setting a balanced shortlist of several candidates before proposing one as governor of the ECB or a national central bank. Making such a shortlist obligatory would force decision-makers to think of diversity criteria in the appointment process. The European or national parliaments should also be given a veto power so they are able to reject candidates in case they have objections to the proposed person, on diversity or ethical grounds.
What do you think? Should diversity criteria be equally important than education, skills and experience in financial affairs when appointing central bank leaders? Do you think seeing people from different walks of lives in the ECB would increase the trust of citizens in this institution? Who should choose who gets to sit on the ECB’s governing council?
- Citizens would be better represented — the ECB Governing Council would reflect how Europe actually is.
- Having more diversity means having more ideas and interests represented. People with different life experiences can contribute different points of view when making decisions.
- Having more diversity means being able to develop and apply a greater range of policies.
- Trust towards the ECB would increase if people can relate to its decision makers.
- It could be cumbersome to find candidates of different gender, race and background who also have the skills required for the job.
- While the ECB can push for more diversity, in society as a whole, diverse representation is still far from being achieved.
- Changes in appointment rules of the ECB may require amending article 283 of the Treaty on the Functioning of the European Union.
- The appointment process for national central banks are currently set by national laws, and would be difficult to harmonize at EU level.