A resolution that misses the moment: our take on the EU Parliament's draft report on the ECB

Every year, one moment keeps us busy at Positive Money Europe: the European Parliament's resolution on the ECB annual report. It isn't legislation, but it matters. It's one of the few times the only directly elected EU institution gets to scrutinise a powerful, technocratic body like the European Central Bank (ECB) and say what it expects of it.

This year's draft, led by MEP Georgios Aftias from the centre-right European People's Party, has some good elements - but it feels detached from what many people across Europe are living through, and in many places are protesting about: a high cost of living that is driven largely by energy and fuel prices, and supply chains shaken by climate-related extreme events.

What the draft says, and what it leaves out

The text puts weight on the ECB’s mandate to maintain price stability - which is right and very relevant with inflation rising again. However, the ECB's secondary mandate is missing entirely. Beyond price stability, and without compromising it, the ECB is also required to support the EU's general economic policies, including sustainable development, full employment, social progress and the green transition.

The draft expresses concern about the cost of living for low-income households, as food and energy prices have climbed since the crisis in the Middle East. We share that concern, of course - but we are also concerned that the draft stops at just describing the problem. 

It mentions geopolitical uncertainty and energy security risks, but it doesn’t name what links them: Europe's dependence on imported fossil fuels. As long as Europe relies on fuels priced on global markets, wars and conflicts driven by decisions in other capitals will keep feeding straight into energy bills and supermarket prices. People have gone from one price shock to the next since 2022, and by now these shocks should be predictable - and a report on price stability should say so.

The draft also says little about what renewables could do to keep prices stable over the long term. Producing more energy at home makes prices less dependent on global fuel markets, so renewables are a price stability issue as well as a climate one. That is exactly the kind of long-term view we would expect in a report on the ECB's mandate.

Sadly, in this year’s resolution there is also a renewed mention of market neutrality - the idea that the ECB should mirror the existing composition of financial markets when buying assets or accepting collateral, rather than favouring certain sectors or activities. The draft insists the ECB respect it "in all of its monetary operations at all times". It is a principle the ECB itself has said isn't in the Treaties, and one it no longer follows in practice, as its climate factor on collateral shows. The ECB's own legal analysis is clear: an open market economy does not commit the ECB to an "absolute operational concept" of market neutrality. ECB Board member Isabel Schnabel has also addressed the question in a speech.

On a more positive note, the draft backs the digital euro as essential for Europe's monetary sovereignty, stresses that cash must stay, and welcomes Pontes, the Eurosystem's first step towards making central bank money fit for a tokenised future. We welcome all of this.

Where the report should go further

The good news is that the text can still be improved. 

Everything we're asking for starts from the same place: the energy shock. Inflation has been rising again in the euro area since April. Eurostat has since confirmed that it reached 3.8% in September, with energy prices up 18.8% on the year. As the ECB itself has acknowledged, this comes from Middle East-related shocks to oil, petroleum products and gas. Almost 60% of the EU's energy needs are met through imports of these fuels, so global price spikes land directly on European households and businesses. We saw the same thing in 2022. ECB Executive Board member Frank Elderson has warned that repeated energy shocks can turn temporary price rises into lasting ones. We think MEPs should say this clearly: imported fossil fuels are the main driver of current inflation and a structural threat to price stability.

Climate adds to the picture. The ECB expects food inflation to keep rising throughout 2027, partly because of this summer's heatwaves and the ongoing El Niño. Extreme weather is becoming more frequent, and research shows global warming could make El Niño more intense. Nature loss, such as soil depletion and water scarcity, still makes food production more fragile. A report about price stability should recognise that climate and nature-related risks are part of the story.

If fossil fuel dependence is the problem, renewables are part of the solution, and the evidence is there. 

Research commissioned by the European Parliament itself finds a strong link between how much a country relies on fossil fuels and how much its inflation rises when fuel prices spike. Our own analysis finds that renewables cut wholesale electricity prices in Europe by an average of 24.4% between 2023 and 2025, compared to a scenario without them.

This is where monetary policy comes in. Clean energy needs large upfront investment, so it is far more sensitive to interest rates than gas-fired generation, where fuel costs matter more. In our analysis, raising rates from 2% to 6% pushes up the cost of electricity from solar with battery storage by 33%, against just 3.7% for natural gas. Across-the-board rate hikes can therefore make the clean investments that would protect us from future shocks more expensive, and prolong our exposure to volatile fossil fuel markets. That is bad news for price stability in the long run. We would like the Parliament to ask the ECB to assess how its decisions affect energy resilience, and to look at tools like green refinancing operations - meaning targeted lending operations tied to banks' lending to renewables and green transition projects. These could protect energy transition investments from higher financing costs, and would serve both the ECB's primary and secondary mandates.

There are two other important points.

On the digital euro, years of delay are enough. The legislation should move forward quickly so Europeans can benefit from a public digital means of payment that complements cash and reduces dependence on private, non-European payment providers.

The draft rightly calls the digital euro essential for Europe's monetary sovereignty, and this is now even more urgent: to preserve the EU's strategic autonomy, and the financial autonomy of its institutions and citizens, in the face of sanctions imposed by foreign powers. The US sanctions against the International Criminal Court (ICC) show what is at stake: European banks, caught between Washington's penalties and their own clients, can end up putting foreign sanctions compliance ahead of EU rules and interests.

On ECB leadership, the draft is silent, despite important changes ahead. The terms of three of the ECB's six Executive Board members expire in 2027, opening the way for a significant reshaping of the institution's leadership. These appointments are decided by EU governments, with Parliament consulted but having no power to block a candidate. Its hearings are therefore among the few opportunities for public scrutiny of a selection process that remains largely behind closed doors. Parliament should use this moment to call for a more transparent and open process, and for a Board that better reflects Europe's diversity in gender, education and professional background. That would strengthen both the ECB's legitimacy and its accountability to the public.

What's next

This draft is a starting point, and there is still time to improve it. Positive Money Europe will continue to work with MEPs as the report moves through Parliament, and we hope the final resolution will reflect what people are facing today: energy-driven prices, a changing climate, and a central bank whose decisions affect some people and businesses far more than others.