For a Central Bank serving the citizen

 7500 euros: this is the amount that every citizen of the euro area would have received if the European Central Bank (ECB) had distributed directly to the population the 2.6 trillion euros it has preferred to inject into the financial markets since Four years.

This shocking figure, revealed by the NGO Positive Money Europe, poses a simple and radical question: would not monetary policy be more effective if the newly created money was directly paid to European households?

By pouring trillions of euros into the financial system since 2015, the ECB has certainly helped to stem the euro crisis. The other side of the coin is that all this extra money has irrigated the real economy only in a small proportion. This explains why the ECB is failing to achieve its primary objective of aiming for an annual inflation rate of close to 2%.

Where did the money go then? It basically went to inflate the prices of all kinds of financial assets. So much so that the monetary policy of the ECB has led to an increase in inequalities between citizens: it is mainly the rich who have benefited from rising stock prices and real estate prices, while low incomes have budget restrictions imposed by European governments. Thus, the argument of the ECB that low rates also benefit young people wishing to acquire a first home is illusory since the rate cut is offset by an increase in property prices. Admittedly, credit rates are lower, but you have to go into debt twice more and for longer …

the President-designate of the ECB

By taking office at the head of the ECB on November 1, Christine Lagarde will have to remedy this negative social report. Interviewed by MEPs at the beginning of September, she remained vague about this: although she did not explicitly mention the idea of ​​freeing money for European households, Mario Draghi’s successor did not rule out the possibility of using new unconventional tools in the future.

But the fight against inequalities is far from the only challenge that awaits it.

With regard to the climate issue, the Frankfurt institution also has a very bad newsletter. In this area, its software remained stuck in the 1950s. Quick updates will be necessary to Ms. Lagarde to green monetary policy.

A single figure makes it possible to measure the extent of the problem: more than 60% of the securities bought by the ECB have financed companies working in the most emitting sectors of greenhouse gases [1].

For example, multinationals such as Total, Daimler and BMW have benefited from the ECB’s private debt buyback policy. Conversely, the green economy sectors are under-represented.

It’s absurd. And it is especially irresponsible on the part of an institution as powerful as the European Central Bank.

During her hearing in Parliament, Christine Lagarde nonetheless made encouraging remarks about the climate issue.

On a personal level, she spoke in favor of mainstreaming the fight against climate change into the ECB’s mandate. It has also been open to reorienting the Bank’s balance sheet towards green assets, provided that a clear definition of what is sustainable is adopted at European level. Finally, she acknowledged that the ECB will have to gradually eliminate the financial securities of the polluting companies it holds on its balance sheet.

In order to engage the ECB in the fight against climate change, Lagarde will nevertheless have to obtain the consent of the 24 members of the institution’s board of governors, which is a challenge [2].

Alongside the social and environmental challenges, Christine Lagarde will face a third major challenge: to improve the democratic accountability of the institution.

In the aftermath of the eurozone crisis, the ECB has significantly expanded its functions and means of action. But these increased powers have not been accompanied by a strengthening of the rules on transparency, integrity and accountability of the Bank.

To remedy this, Ms. Lagarde will quickly adopt measures to prevent conflicts of interest that may affect members of the Executive Board, to make public meetings with lobbyists, or to publish its decisions and recommendations. Likewise, it will have to involve the European Parliament and civil society more closely in debates on the future revision of the monetary framework.

Only the future will tell if Mrs Lagarde will have been able to speak the truth in order to answer this triple challenge that awaits the ECB.


  • [1] BATTISTON, S., MONASTEROLO, I., March 22st, 2019, “How could the ECB’s monetary policy support the sustainable finance transition?”, Https://
  • [2] Some members of the Governing Council may find it difficult to depart from the “market neutrality” principle that the ECB has so far held: it forces the Bank to buy the financial assets that are proportionally, without favoring certain sectors at the expense of others. However, it is the most carbonaceous that dominate the economy.