A Non-Transparent European Central Bank? Who is to Blame?
38 Pages Posted: 28 May 2008
Date Written: April 1, 2003
Transparency of central banks - defined here as the degree of genuine understanding of the monetary policy process and policy decisions by the public - has become a major issue. The authors use the term disclosure whenever we refer to the activities of a central bank to enhance the publics understanding of its policies. The European Central Bank (ECB) ranks high on our proposed central bank disclosure indicator.
Nevertheless, there is quite some evidence suggesting that financial markets do not consider the ECB to be very transparent. The paper zooms in on two issues that may be relevant to understand this paradox: the monetary policy strategy of the ECB and the role of newspapers as intermediary between the central bank and the public. The authors conclude that the two-pillar strategy hinders transparency. Focusing on articles in the Financial Times and the Frankfurter Allgemeine Zeitung, the authors also find that newspaper reports on ECB policy decisions are sometimes biased.
Keywords: transparency, monetary policy, ECB, accountability, central bank, legal basis
JEL Classification: E58, K10
Suggested Citation: Suggested Citation