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Democratizing the ECB

Summary:
Recent tensions within the European Central Bank's Governing Council have underscored the need to manage disagreement better. The status quo, whereby the president presents a policy decision as a consensus, after which one or more Governing Council members may issue a dissenting statement, makes everyone look silly. AMSTERDAM – The European Central Bank is undergoing a changing of the guard: a new president, a new chief economist, and two new Executive Board members. And the ECB’s new leadership is facing a contentious year in 2020. Financial Markets’ Iran Delusion Wang Ying/Xinhua via Getty Images Trump’s Near Miss with

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Recent tensions within the European Central Bank's Governing Council have underscored the need to manage disagreement better. The status quo, whereby the president presents a policy decision as a consensus, after which one or more Governing Council members may issue a dissenting statement, makes everyone look silly.

AMSTERDAM – The European Central Bank is undergoing a changing of the guard: a new president, a new chief economist, and two new Executive Board members. And the ECB’s new leadership is facing a contentious year in 2020.

For starters, former ECB President Mario Draghi’s last policy meeting was marked by disputes over quantitative easing and the president’s role in decision-making, underscoring disagreement within the Governing Council (comprising the Executive Board and national central bank governors) about monetary strategy. Should the ECB retain its point target for inflation but make that target symmetrical, in contrast to the present “below but close to 2%”? Or should it abandon all hope of coming close to 2% and settle for 1.5%?

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Barry Eichengreen
Barry Eichengreen is Professor of Economics at the University of California, Berkeley; Pitt Professor of American History and Institutions at the University of Cambridge; and a former senior policy adviser at the International Monetary Fund.

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