The European Central Bank (ECB) has been at the center of a fiery debate about the right fiscal policy amid the current debt crisis. Board meeting minutes have, until now, been kept under wraps - but that may change.
According to a report carried by the German newspaper Süddeutsche Zeitung, the president of the Central European Bank (ECB), Mario Draghi, is considering immediately publishing the minutes of the board's monthly meetings. That's long been the case with other central banks, such as the Federal Reserve in the US or the Bank of England. But the ECB has made a habit out of keeping its minutes under wraps - for a full 30 years.
The reasoning lies in the specific nature of the ECB. "Debates within the ECB tend to be more difficult, as differing national interests are invariably voiced," said Thomas Hartmann-Wendels, director of the Institute for Banking at Cologne University. "In a central bank that represents only one state, that's typically not the case."
Fears of being pilloried
When the ECB was founded back in 1998, a 30-year term was placed on keeping the minutes secret. This was done to encourage council members to act as unbiased Europeans, rather than representatives of individual nation-states. Keeping the minutes under wraps for so long was meant as a protective measure for council members.
"It was a way of making sure that council members would not be pilloried for their voting behavior in their own countries when acting in the interest of all Europe, and not necessarily in the interest of an individual state," said Commerzbank Chief Economist Rolf Krämer.
But this argument is no longer tenable, Krämer maintains. He said the central bank has changed, and that setting interest rates is not its only task any more. Its de facto job consists more of financing sovereign spending in the bloc's peripheral states.
"That's why the national central banks increasingly have their own axe to grind in the ECB Council," Krämer argued. "But if that's the case, the general public has the right to know who votes for what, and for which reason."
The opposition of Jens Weidmann, President of German Bundesbank, to bond-buying was already obvious, even without publishing any ECB minutes
Hindering public debate?
Hartmann-Wendels believes that publishing the minutes of the monthly meetings could be detrimental to the lively debates that take place within the ECB. After all, he says, nobody wants to shake up financial markets through pronounced criticism. "The upshot would be that open and free discussions would be a thing of the past, as the council members would have to tread very carefully," Hartmann-Wendels asserted. He doubted whether such an atmosphere would be conducive to sound decision-making.
In its most recent debate, the ECB weighed the pros and cons of relaunching its controversial bond-buying program to bring down borrowing costs in highly indebted nations. ECB Chief Mario Draghi only announced after the session tthat here had been one vote against the decision to do just that. He didn't drop any names, although it was clear to most that German Bundesbank President Jens Weidmann was the odd man out.
Hartmann-Wendels considers the plan to publish the minutes as an attempt to gag Weidmann. "I think the council wants to silence him with such a measure, or at least make him express his opposition in a somewhat diluted fashion," he maintained.
Freedom of information
Commerzbank's Rolf Krämer disagreed. "Weidmann wouldn't be silenced at all, and everyone could read in the minutes what central bank is pushing which line of argument," Krämer sayid.
Krämer points out that it was the Bundesbank itself which had voiced its opposition to the bond-buying scheme, in a press release after the decisive ECB council meeting. "Professional observers know pretty well what's going on within the ECB anyway."
And then there's the people's right to information, Krämer said, as an argument for the ECB to consider publishing its monthly minutes.
There has been no official confirmation yet as to whether the minutes will be published or not. An ECB spokesperson said only that such a decision would have to be made through a simple majority of the bank's council.