EU Parliament’s Economic Committee adopts ECB Report – What’s in it and what’s next?

The European Parliament's Economic and Monetary Affairs Committee (ECON) today approved its annual report on the European Central Bank (ECB), following a vote that adopted the current text, including all compromise amendments. The text was approved with 26 votes in favour, 16 against, and 11 abstentions.

This report assesses the ECB’s actions and policies over the past year, providing recommendations on its future direction. It serves as a key tool for ensuring democratic accountability and guiding discussions on the ECB’s role in the EU economic and financial policies.

We welcome several positive and impactful elements included in the report. The text advances important areas, such as the democratic accountability of the ECB and the proportionality assessment of its monetary policy decisions, ensuring they are balanced and justified. It also acknowledges that inflation is partly driven by supply-side shocks and recognises the potential for climate change to trigger such shocks and contribute to price volatility.

The section addressing the digital euro – namely the ECB’s proposed central bank digital currency – reiterates the importance of ensuring it is free of charge for users, reinforcing its potential as an inclusive financial tool. Notably, the report incorporates a compromise on the ECB's secondary mandate, that is, its responsibility beyond price stability of supporting EU general economic objectives – an element that was absent from the original draft. Additionally, it raises concerns about the underrepresentation of women within the ECB's Governing Council, the highest decision-making body of the Central Bank, highlighting the need for greater diversity in economic and monetary policy-making.

However, the final text also includes aspects that diverge from the policy recommendations of recent annual reports, which had taken a more assertive stance on the ECB's role in the green transition. Our primary concern is that the report represents a step backward in this regard. Specifically, the inclusion of language advocating for respect for the principle of market neutrality could dilute the focus on the importance of the ECB's climate-related actions.

Market neutrality is the principle that the ECB should not favour one sector over another when conducting its monetary policy, such as purchasing financial assets. Ironically, in practice, the application of such a principle often ends up favouring fossil fuel and polluting activities rather than the innovative green solutions. Europe urgently needs to remain competitive on the global stage.

Today’s vote in the ECON Committee marks a significant step in the process.

The report will now proceed to a vote in the full European Parliament on February 10th.