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.

Can helicopter money kick start the Eurozone?

With Eurozone growth still sluggish, should the European Central Bank (ECB) consider a radical option – like helicopter money?

ING senior economist Teunis Brosens explains, in this eZonomics video, that the ECB has already employed quantitative easing[1] and lowered interest rates below zero. But how effective these measures will be is unclear, he says.

Continue reading “Can helicopter money kick start the Eurozone?”

What is helicopter money?

Helicopter money is a reference to an idea made popular by the American economist Milton Friedman in 1969.

In the now famous paper “The Optimum Quantity of Money”, Friedman included the following parable:

Let us suppose now that one day a helicopter flies over this community and drops an additional $1,000 in bills from the sky, which is, of course, hastily collected by members of the community. Let us suppose further that everyone is convinced that this is a unique event which will never be repeated.”

The basic principle is that if a central bank wants to raise inflation and output in an economy that is running substantially below potential, one of the most effective tools would be simply to give everyone direct money transfers. In theory, people would see this as a permanent one-off expansion of the amount of money in circulation and would then start to spend more freely, increasing broader economic activity and pushing inflation back up to the central bank’s target. Continue reading “What is helicopter money?”

Van Parijs: An unconditional basic income in Europe will help end the crisis

In an interview given after the conference on the “Unconditional Basic Income” (UBI) organised in the European Economic and Social Committee, Phillippe Van Parijs argued that the EU should put in place such a basic income for all of its citizens, to help it escape the crisis, and to show that it is a community that “cares” for all its members.

Philippe Van Parijs is a Belgian philosopher and professor at the Université Catholique de Louvain (UCL). He talked to EurActiv’s Tanja Milevska. Continue reading “Van Parijs: An unconditional basic income in Europe will help end the crisis”

The Euro Dividend by Philippe van Parijs

Criticizing is easy. Making proposals is harder. Here is one, simple and radical, yet — I shall argue — reasonable and urgent.

Euro-dividend is how I shall call it. It consists of paying a modest basic income to every legal resident of the European Union, or at least of the subset of member states that either have adopted the Euro or are committed to doing so soon. This income provides each resident with a universal and unconditional floor that can be supplemented at will by labour income, capital income and social benefits. Its level can vary from country to country to track the cost of living, and it can be lower for the young and higher for the elderly. It is to be financed by the Value Added Tax. To fund a Euro-dividend averaging 200 Euros per month for all EU residents, one needs to tax the EU’s harmonized VAT base at a rate of about 20%, which amounts to close to 10% of the EU’s GDP. Continue reading “The Euro Dividend by Philippe van Parijs”

No Eurozone without Euro-dividend

The four characteristics that make the difference between the euro zone and the dollar zone and a concrete proposal to save the euro.


The vulnerability of the European currency union is ultimately rooted in the extreme weakness of two major buffering mechanisms that have proved crucial to the sustainability of the currency union formed by the United States: inter-state mobility and inter-state solidarity. As little hope can reasonably be staked in increased mobility between member states of the European Union, it is of crucial importance to explore the way in which a far higher level of solidarity could be institutionalized between member states. After having considered and rejected a number of options, the paper ends up focusing on a universal euro-dividend paid to every resident of the European Union (or of the Eurozone) and funded exclusively or mainly by a Value Added Tax. Taking for illustrative purposes a monthly euro-dividend of 200 euros funded by a 20% EUwide VAT, it explores some of the key consequences of such a set up and the conditions of its political feasibility. Continue reading “No Eurozone without Euro-dividend”