Proposals

#14 Consultations with citizens

The European Central Bank (ECB) is an independent institution, whose actions are scrutinised by the European Parliament – the only democratically elected body of the European Union. As a result, the ECB is indirectly answerable to European citizens. But this oversight is only loose, and many feel completely detached from the ECB and its policies.

This is a problem for the ECB itself. If citizens lack knowledge about key financial concepts and misunderstand the role of the ECB , this will likely undermine the ECB’s policy effectiveness, as people may adopt different consumption behaviors than the ones the ECB wants to incentivise. 

Since recently, efforts have been made to improve the central bank’s communication. For example, the ECB recently held an online event with civil society organisations to listen to their concerns. Despite having taken place online due to Covid-19 restrictions, the event allowed civil society to question the bank’s actions. This could become a regular process in the ECB’s annual cycle.

The ECB also invited ordinary citizens to submit their ideas and comments in an online consultation made available on its website. It has also produced explanatory materials on its website and regularly speaks to universities and even schools. Moreover, national central banks in the eurozone often organise face-to-face events and conferences with citizens across member states.

Despite these efforts, it’s fair to say that they are not enough. In most cases, central banks choose the audiences they want to speak to, which means that only a certain proportion of the population's concerns and perceptions are heard. 

One idea would be for central banks to organise citizens’ assemblies or citizens panels, where central banks invite randomly selected citizens to interact and express their preferences on key issues related to the ECB. As is already organised in countries like France and Ireland, citizens taking part in these panels would have the possibility to interact directly with experts beforehand to learn and understand how monetary policy works.

➕ Pros

• It’s important to hear as many voices as possible. Monetary policies affect different social groups in different ways, as is often seen when observing the gap between the real inflation rate and the perceived inflation rate by ordinary citizens.
• Direct consultations with citizens will give the ECB a larger pool of ideas from which to choose its next policy tools.
• The ECB will have a better understanding how its policies are perceived among normal people, and can adjust its communication accordingly.
• Citizens will feel closer to the ECB, which will stimulate trust.
• Citizens who experience first-hand the financial crisis, and businesses that constitute the real economy can have a say in decisions affecting them.

➖ Cons

• Public consultation with citizens in all 19 eurozone countries would be difficult to conduct from a logistical point of view (i.e. due to language barriers).
• It is not the role of the ECB to improve the financial literacy of eurozone citizens.
• The ECB engaging directly with citizens would bypass the important role of national governments and central banks who are the primary points of contact for citizens.
• Engaging directly with citizens might endanger the independence of the ECB as an institution, as powerful lobbyists might aim to influence the responses of people.