Sylvester Eijffinger's picture
Affiliation: 
CentER, Tilburg University
Credentials: 
Professor of Financial Economics
President of Tilburg University Society

Voting history

The Future of Central Bank Independence

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Question 3: More generally, do you agree that it is desirable to maintain central bank independence? Again focus on the near future, say next 48 months.

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Answer:
Strongly agree
Confidence level:
Extremely confident
Comment:
The main threat to central bank independence is also associated with the set of unconventional monetary policies employed during the crisis and the large redistributive effects between savers in the North and borrowers in the South of the Eurozone thereby undermining both the credibility and independence of the ECB and the structural reforms needed in the South of the Eurozone.

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Question 2: Do you agree that the traditional argument that less central bank independence leads to higher inflation will (still) be relevant over the next 48 months in Western economies?

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Answer:
Agree
Confidence level:
Extremely confident
Comment:
Unconventional monetary policies have redistributive effects between the borrowers and savers (both private and public) while the arguments for central bank independence are based on the neutrality of monetary policy over the business cycle and the lack of large redistributive effects. The traditional arguments that less central bank independence leads to higher inflation assuming linearity and symmetry may be blurred by the unconventional monetary policies of central banks.

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Question 1: Do you agree that central bank independence in the Eurozone and the UK will decline over the next 48 months?

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Answer:
Strongly agree
Confidence level:
Extremely confident
Comment:
The unprecedented size of the central bank balance sheets in the Eurozone and the UK has far reaching implications for the financial dimension of central bank independence by the monetary financing of government debt undermining the credibility and independence of the central banks. The threat of fiscal dominance with monetary accommodation is particularly strong in developed countries (Eurozone and the UK) with high public debt levels (see: De Haan and Eijffinger, 2016).

German Council of Economic Experts' view of ECB policy

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Question 2: Do you agree that the ECB's monetary policy masks structural problems of member states?

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Answer:
Strongly agree
Confidence level:
Extremely confident
Comment:
The ECB's Monetary policy masks the structural problems in the Eurozone member states and creates a lack of confidence and trust which is extremely harmful for economic growth in the Eurozone. A very clear example is the structural reform agenda of the Italian prime minister Renzi which has not been implemented since almost two years with reference by Renzi to the Italian low capital market interest rates which make structural reforms in Italy less necessary.

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Question 1: Do you agree that exceptionally loose monetary policy by the European Central Bank is no longer appropriate?

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Answer:
Strongly Agree
Confidence level:
Extremely confident
Comment:
The exceptionally loose monetary policy by the ECB does not stimulate economic growth in the Eurozone and undermines financial stability by distortion of the market prices of government and corporate bonds, in particular in the peripherical countries of the Eurozone. Therefore, the non-performing loans of Italian and other banks will be rolled over and the necessary structural labour market and product market reforms in France, Italy and other eurocountries are not implemented.

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