Tribune. The European Central Bank (ECB) is now faced with a paradox. On the one hand, it has not really achieved its main objective of price stability, since inflation has been well below its target of 2% over the past ten years. On the other hand, despite this failure, the ECB is now considering doing more than simply ensuring price stability in the euro area.
Christine Lagarde thus raised the hope that the ECB would put in place concrete measures against climate change during the evaluation of the central bank’s strategy that she launched upon her arrival.
In theory, the European treaties already require the ECB to achieve other objectives than its main mandate of price stability. Article 127 of the Treaty on the Functioning of the European Union (TFEU) thus stipulates that, without prejudice to the objective of price stability, the ECB ” provides support for general economic policies in the Union, with a view to contributing to the achievement of the Union’s objectives, as defined in Article 3 of the Treaty on European Union (TEU) “.
Adapt over time to new challenges
This provision is often mentioned by all those who wish to push the ECB to act in one direction or another. So unions generally want the ECB to try harder to reach full employment, while NGOs ask the ECB to do more to tackle climate change or inequality.
Indeed, the scope of the objectives mentioned in Article 3 of the Treaty on European Union (TEU) – ranging from security, equity and economic growth to environmental protection, innovation and many other laudable EU goals – opens the door to an endless number of possible goals for the ECB.
In theory, this flexibility could prove beneficial, allowing the ECB to adapt over time to the new challenges facing Europeans. But in the end, this vagueness leads the ECB rather to inaction. Indeed, by removing the ambiguity and explicitly favoring a particular secondary objective, the ECB would run the risk of being perceived as making political decisions, and prefers to stay away from such decisions as much as possible.
The ECB is in fact suffering from a “Democratic authorization deficit”
The neglect of its secondary objectives is therefore understandable, since it is considered that this mandate does not contain indications on how these secondary objectives should be classified and achieved.
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