What do politicians think of the ECB? Based on an elite survey of the Members of the European Parliament, this column gauges elected policymakers’ attitudes towards the mandate and policy conduct of the ECB. The political orientation of politicians largely drives attitudes towards the central bank’s mandate and its policy conduct, but less so on its independence. Moreover, the information set to which politicians are exposed significantly shapes their views.
The delegation of policy authority from politicians to independent technocratic institutions is a widely diffused form of governance across countries and policy sectors (Jordana et al. 2018, Jordana et al. 2011). The depoliticisation of policymaking is usually justified in light of the credibility benefits and informational advantages that derive from delegating policy choices from elected policymakers to independent agencies.
Although the benefits of delegation are amply recognised, it is also important to notice that this type of governance poses serious challenges to democratic politics. In particular, moving decisions away from the purview of democratically elected policymakers raises the question of the legitimacy basis upon which decisions are taken and of the accountability of unelected technocrats (Roberts 2011, Tucker 2018). From this perspective, technocracy can even be regarded as a threat to democracy (Bickerton and Accetti 2021, Caramani 2017). Moreover, central banks’ recent actions have revived the debate about the relationship between accountability, transparency and trust (Van der Crujsen et al. 2023, Ferrara et al. 2021, Reichlin et al. 2021, van der Cruijsen and Samarina 2021, Fraccaroli et al. 2018).
Given the widespread diffusion of technocratic institutions and politicians’ reliance on experts in crucial decision-making moments, like those associated with the COVID-19 pandemic (Forster and Heinzel 2021, Jennings et al. 2021) or economic crises (Alexiadou and Gunaydin 2019, Wratil and Pastorella 2018), significant attention has been recently devoted to exploring public preferences towards technocracy. That is, in recent years, several studies have shed light on citizens’ attitudes towards experts’ involvement in political decision-making processes (Beiser-McGrath et al. 2022, Bertsou and Caramani 2020, Lavezzolo et al. 2022).
In contrast to the attention devoted to investigating citizens’ attitudes towards technocracy, politicians’ attitudes have received less systematic attention. Yet, this gap is problematic because, in representative democracies, politicians are the transmission belt between the public and technocratic agencies, as they hold the key to delegation and can ultimately revise delegation contracts while in office.
Politicians’ attitudes toward the ECB: Experimental evidence
In a recent paper (Ferrara et al. 2024), we fill the gap in the literature on technocracy and democracy by investigating politicians’ attitudes towards a distinct set of technocratic institutions: central banks. The focus on central banks is important for two major reasons. First, central banks are one of the most widespread type of independent agency across countries. According to the IMF, over 126 countries across the world have created independent central banks whose tasks include the pursuit of price stability. Second, central banks and their decisions have recently become increasingly politicised and scrutinised (Bressanelli et al. 2020, Koop and Scotto de Vettimo 2023, Moschella et al. 2020).
Recent historical records and the challenges ahead for central banks call for greater and more systematic investigations into the relationship between central banks and elected politicians. To shed light on this relationship, we examine what drives politicians’ attitudes towards central banks’ policy conduct and their mandate. We employ novel data from an elite survey of the Members of the European Parliament to gauge politicians’ attitudes towards one of the two major central banks around the world, namely the ECB.
The focus on ECB is particularly important in light of the recent changes to the ECB mandate. Indeed, in the wake of both the 2008 global financial crisis and the COVID-19 pandemic, the ECB has increased its responsibility to maintain financial stability and has taken unprecedented decisions to support economic activity, and even integrate climate change into its actions (Moschella 2024). In doing so, the ECB has significantly stretched its policy remit and stepped into decisions with visible redistributive effects. Such a deviation from standard technocratic decision-making (Tortola 2020) has translated into widespread criticism from politicians across the political spectrum (Bressanelli et al. 2020, Moschella et al. 2020). ECB actions to curb inflation following the post-COVID-19 recovery and the energy crisis triggered by Russia’s invasion of Ukraine (Quaglia and Verdun 2023) are likely to exacerbate these criticisms.
Starting from the institutional setting, our findings show that the political dimensions that usually characterise political conflicts within the European Parliament are particularly powerful in explaining politicians’ attitudes towards the ECB mandate (Figure 1). Both the left/right and the pro/anti-European dimensions help explain politicians’ views on the weight the ECB should assign to its primary objective of price stability as compared to its secondary mandate to support the ‘general economic policies’ of the EU.
Figure 1 Estimates of the correlation between political orientations of Members of the European Parliament and their attitudes towards the ECB institutional mandate
In particular, right-wing politicians have more favourable attitudes towards a narrowly focused mandate on price stability. Yet, it is interesting to note that the attitudes of the Members of the European Parliament are not as static as ideological orientations would lead us to expect. The information set to which politicians are exposed significantly shapes their attitudes both towards the ECB’s mandate and its policy conduct, irrespective of their ideological orientations.
Two major findings emerge from the two experiments that we run in our survey. In our first experiment, we show that local macroeconomic conditions are associated with how Members of the European Parliament evaluate the institutional role of the ECB within the euro area architecture. In particular, the more negative the labour market conditions are, the higher the weight politicians attach to the ECB’s pursuit of low unemployment relative to the price stability objective (Figure 2).
Figure 2 Treatment effect on attitudes of Members of the European Parliament towards the ECB mandate
Regarding the ECB policy choices, our second experiment provides evidence that politicians’ attitudes towards the ECB’s policy conduct are also shaped by the communication delivered by the ECB (Figure 3). In particular, both political approval of and trust in the ECB are negatively affected by the ‘hawkish’ message that the central bank provides in support of its policy choices. The framing of the ECB’s communication influences politicians’ attitudes towards the policy conduct of the institution. However, this information does not significantly affect politicians’ attitudes towards the supranational nature and independence of the monetary policy architecture of the European Monetary Union.
Figure 3 Treatment effects on attitudes of Members of the European Parliament towards ECB policy conduct
These provide important insights into the ability of politicians to assess the ECB’s policy actions and keep it accountable, as well as on the ability of the ECB to conduct monetary policy in a multi-national setting. In particular, our findings convey a reassuring message for the democratic accountability of the ECB: politicians do not blindly follow through with pre-set ideological orientations but reassess their evaluations of the ECB’s mandate based on the information set they possess at each point in time. As for the conduct of monetary policy, our findings suggest that the information provided by the ECB to policymakers is crucial to building trust in and support for the ECB’s activity.
Source : VOXeu
