ECB answers critics by clamping down on banker meetings

3 December 2015
192 Views

Top European Central Bank officials will not meet market players within a week of policy decisions, its president Mario Draghi said on Thursday, responding to criticism of closed-door meetings with hedge funds and banks.

The move represents an improvement in transparency for Europe’s arguably most powerful institution, which critics say is also one of the continent’s most opaque bodies.

It comes six months after a top ECB official revealed market-sensitive information at a closed-door hedge-fund dinner.

That prompted the central bank to scrap the distribution of speeches to journalists under embargo.

Criticism resurged, however, after officials’ diaries, published in response to a journalist’s freedom of information request, showed that hedge funds and banks regularly met policymakers, even shortly before key decisions.

On Thursday, Draghi sought to draw a line under the controversy. In a letter to European lawmakers, he said that such meetings with the six-person Executive Board, at the core of decision making, would no longer happen at sensitive times.

“There is a need to avoid public speculation or any misperceptions about meetings between members of the Executive Board and the media and market participants,” Draghi wrote to the member of the European Parliament.

“We have therefore decided … that the members of the Executive Board will refrain from meeting or talking to the media, market participants or other outside interests on monetary policy matters during the quiet period, i.e. in the seven-day period prior to monetary policy meetings.”

The move brings the ECB into line with other central banks, such as the Bank of England, and should help satisfy critics, including the European Union’s top watchdog.

Last week, European Ombudsman Emily O’Reilly had said she would appeal to Draghi to scrap such meetings ahead of setting policy – such as interest rates.

Others have also called for better accountability at the ECB, which sets the cost of eurozone borrowing, supervises banks and was part of the ‘troika’ involved in overhauling troubled eurozone states such as Greece.

In May, Benoit Coeure, an influential member of the ECB’s executive board, told an audience including hedge funds about plans to accelerate bond buying.

The euro fell when it was announced to the public the following day and some investors cried foul.

The ECB said the delayed publication of Coeure’s speech was accidental.

ECB diaries later revealed Coeure met BNP Paribas in September 2014 just hours before the bank cut its deposit rate – increasing its charge on banks for parking money at the ECB.

Those diaries also showed that hedge funds Moore Capital and Bridgewater Associates are among regular visitors to the central bank.

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