European Parliament report includes proposals from QE for People campaign

The European Parliament passed a preliminary version of its annual report on the European Central Bank, which includes a number of criticisms and proposals that the QE for People campaign has been making.

On Tuesday 21 November the Economic and Monetary affairs committee of the European Parliament passed its annual report on the European Central Bank’s monetary policy. This non-legislative report is a core instrument for the Parliament to exercise its scrutiny of the ECB. The report’s final adoption will take place in Strasbourg at a plenary session scheduled mid-January, after an exchange with the ECB President Mario Draghi.

The amended report produced by Spanish MEP Jonas Fernandez makes a number of points that we support.

QE is fuelling inequality

First, the report clearly acknowledges the ineffectiveness of the ECB’s policies when it states ‘the current inefficiencies of the monetary policy’ require further examination to develop better policies for the future. The report also correctly notes ‘that persistent inequality in the EU may harm a sound and inclusive economic development.’ As we have argued, this calls for more radical measures by the ECB, such as Citizens’ Dividends where the ECB could inject a quarter as much money as under quantitative easing (QE) and distribute €1,000 to all adult citizens in the eurozone.

ECB’s Corporate QE requires greater transparency

The report is justifiably critical of the ECB’s Corporate Sector Purchase Programme (CSPP) citing the scheme as ‘directly benefiting larger corporations,’ as we have argued all along. QE for People has previously worked with MEPs on the CSPP’s lack of transparency. It is very encouraging that MEPs keep demanding more efforts by the ECB in the report.

ECB is bound by the Paris Agreement

The report states that ‘theECB as an EU institution is bound by the Paris agreement’ which chimes with our demands to the ECB to take further action against climate change, as other central banks have done.

ECB should consider digital currencies

Interestingly, the report also touches on digital currencies, a topic that is subject to greater public debate. The report calls on the EU Commission and the ECB to study the potential of digital cash, or ‘central bank digital currency.’

ECB must be held more accountable

Finally, the report rightly suggests that the ECB must be held more accountable to the EU Parliament. For example, the “monetary dialogue” hearings could be improved to allow more fruitful exchanges with the ECB President. The report also suggests that the EU Parliament could have a stronger voice in the appointment process of ECB board members if “a balanced shortlist of candidates” would be submitted to the EU Parliament for consideration.

The European Parliament could push the ECB further

Whilst we support the report overall, we believe the European Parliament could be making explicit suggestions to the ECB, such as:
Redesigning the Corporate Sector Purchase Programme to better support investments in the real economy and to be aligned with the EU’s ratification of the Paris agreement
Designing new policy instruments aimed at channeling money directly into the real economy such as direct transfers to households
Closer cooperation between the ECB and European Investment Bank to make QE support investments
More transparency and inclusion of civil society within the ECB’s contact groups

Head of QE for People campaign Stan Jourdan says:

“We want to congratulate MEPs for coming up with such a forward-looking report, which will pave the way for innovative thinking in the ECB’s monetary policy and its institutional setup. It shows that the public debate surrounding the ECB is finally making its way into the institutions.”

The QE for People campaign calls for a large majority to stand behind the report when voting takes place in January, to ensure those words can be pushed forward into action both by the ECB and by Parliament in its role of scrutinizer.

Eurodividend project by UBIE

Europe needs bolder and stronger instruments to counter the forces of disintegration. The Eurodividend – a partial basic income paid to all Europeans – could become the policy instrument that safeguards the EU and especially the Eurozone from asymmetric economic shocks and reconciles citizens with the idea of European integration.

Today, the risk of poverty and social exclusion levels in the EU and in particular the precarity of young people, child poverty and in-work poverty are extremely worrying. Unemployment levels remain very high and particularly affect young people whereas the technological and digital revolution is affecting employment in various aspects, through the replacement of a great amount of jobs, the reorganisation of the workplace and the increase of the gap between productivity gains and income earned by workers. Finally, in the Eurozone, the introduction of the euro has produced increasing economic divergence between deficit and surplus countries as well as important social imbalances in terms of public investment in education, healthcare, or social security.

Many citizens who feel let down by mainstream policies with such disastrous results turn towards populist, nationalist parties that promise relief at the cost of European solidarity. All this threatens the European project, the viability of the monetary union and, most importantly, it affects directly the life of millions of Europeans who struggle to live a decent life.
For all these reasons, UBIE considers that a modest income floor in the form of a European partial basic income granted unconditionally to all EU citizens and legal long-term residents would provide a smart way to tackle the three social priorities mentioned:

  • reduce poverty and income inequalities by guaranteeing basic income security,
  • provide a complementary replacement income to that of national welfare programmes for unemployed people, and
  • reduce excessive economic and social imbalances between Eurozone countries thanks to its automatic stabilizing effect.

Such a Eurodividend would be distributed to all adult residents of the EU member states on an individual basis and without means testing or work requirements.
A Eurodividend is not meant to replace national minimum income schemes. Instead, it provides a cushion over which EU member states are able to pursue their own welfare arrangements to ensure a decent life for all their citizens. The introduction of a Eurodividend aims at the development of a fair, stable and efficient European social model.

Indeed, the Eurodividend would provide a fair redistributive mechanism to ensure that all Europeans equally benefit from the wealth generated by European integration:

  • It would considerably improve the condition of the worst-off European citizens, who would access a complementary European unconditional income without any administrative obstacles or risk of social stigma, ameliorating as a result the EU’s objective of poverty alleviation and reduction of social exclusion.
  • It would provide a mechanism of solidarity in the form of transnational fiscal transfers necessary for the Eurozone to absorb asymmetric economic shocks and reduce the pressures exerted on European welfare states due to economic and social imbalances.
  • An added benefit could also be a significant reduction of the push factors for migration within the EU, avoiding thus the negative effect of “brain drains” in certain countries.
  • Last but not least, this would certainly have a beneficial effect on the EU’s legitimacy and popular support as it would develop help develop the tangible image of a “caring union”.

The funding of a Eurodividend could be based on a combination of the following levies: a European VAT, a European corporate income tax, a European carbon tax, a European financial transaction tax, a European tax on luxury goods, a reallocation of (part of) European funds such as the European Social Fund or the budget devoted to the Common Agricultural Policy for example, or an increase of member states’ contributions to the EU budget.

What matters is that its funding depend on the EU’s own resources to establish a clear link between EU’s budget and its benefits for European citizens.

UBIE has recently argued in favour of the Eurodividend in its contribution to the public consultation organised by the European Commission on the European pillar of social rights. It is committed to further investigate the idea and will now organise expert workshops to elaborate on macro-economic effects, administrative capacities and funding opportunities. Last but not least, UBIE intends to push the idea forward within European cenacles but also in wider public debates in order to develop a more social Europe, following a ‘bottom-up’ approach aiming at a thicker transnational civil society.Europe needs bolder and stronger instruments to counter the forces of disintegration. The Eurodividend – a partial basic income paid to all Europeans – could become the policy instrument that safeguards the EU and especially the Eurozone from asymmetric economic shocks and reconciles citizens with the idea of European integration.

Source: https://ubie.org/project/eurodividend/

Can the ECB create money for a universal basic income?

Funding basic income through taxation is costly. At the same time, low consumer demand is a major worry. The European Central Bank could kill two birds with one stone by giving money directly to citizens.

Finnish social welfare agency KELA’s basic income experiment has got plenty of attention in Finland and elsewhere. This is not surprising: in recent years various proposals for a basic income have been submitted by a growing number of scientists, politicians and non-governmental organizations in several countries. Continue reading “Can the ECB create money for a universal basic income?”

Eurodividend: A partial basic income paid to all Europeans

Europe is in deep trouble – economically, socially, and politically. We need new, bolder and stronger instruments to counter the forces of disintegration. A partial basic income paid to all Europeans – a Eurodividend – could become the policy instrument that safeguards the EU and especially the Eurozone from asymetric economic shocks and reconciles citizens with the idea of European integration.

Today, the risk of poverty and social exclusion levels in the EU and in particular the precarity of young people, child poverty and in-work poverty are extremely worrying whilst the prospects of the EU’s 2020 poverty target (i.e. to lift 20 million people out of poverty by 2020) look rather dim. Moreover, unemployment levels remain very high and particularly affect young people whereas the technological and digital revolution is affecting employment in various aspects, through the replacement of a great amount of jobs, the reorganisation of the workplace and the increase of the gap between productivity gains and income earned by workers. Finally, in the Eurozone, the introduction of the euro has produced increasing economic divergence between deficit and surplus countries (in terms of GDP per capita, labour productivity or unemployment levels among others) as well as important social imbalances in terms of public investment in education, healthcare, or social security. Continue reading “Eurodividend: A partial basic income paid to all Europeans”

ECB should design, decide and implement the helicopter money programme

Instead of injecting the equivalent of €2.2 trillion into financial markets, the ECB could have injected a quarter as much money and distributed €1,000 to all adult citizens in the eurozone.

The European Conservatives and Reformists (ECR) group in the European Parliament recently launched “Leer Geld”, an initiative led by MEP Sander Loones, to raise awareness about the effects of the monetary policy conducted by the European Central Bank (ECB).
The initiative is to be welcomed: monetary policy is too often overlooked by civil society, yet its impact on our lives has never been greater. Under its “quantitative easing” programme (QE), the ECB has been buying large quantities of government bonds since 2015. Surely injecting the equivalent of 20 percent of GDP into the eurozone finance sector cannot be without consequences. Continue reading “ECB should design, decide and implement the helicopter money programme”

ECB confirms ‘Helicopter Money’ is Legally Feasible under Conditions

Mario Draghi first discussed the notion of ‘helicopter money’ in March 2016, saying “it is an interesting concept.” Since then however, the head of the European Central Bank repeatedly stated that the idea that central banks could distribute money directly to citizens, was fraught with accounting-wise, technical and legal complexity.” However the ECB had declined at several occasion to specify in detail which were the foreseen legal obstacles.

In a letter dated 29 November to Spanish MEP Jonas Fernandez, the ECB finally provides clarifications. And our interpretation of the letter lead to the conclusion that those legal issues are very weak and solvable.

The QE for People campaign praises the ECB for finally providing this legal clarification. “By providing a detailed answer on this point, the ECB acknowledges its understanding of our proposal, which many economists say could bring significant benefits to the economy” said Stan Jourdan, QE for People campaign coordinator.

Helicopter money must be designed as monetary policy

Continue reading “ECB confirms ‘Helicopter Money’ is Legally Feasible under Conditions”