Tuesday, August 23, 2005

"Secretive and sloppy"

This could apply to any and all of the EU institutions – and more besides – but in this case it describes the European Central Bank.

So says Prof Charles Goodhart, a former member of the Bank of England's monetary policy committee, as recorded by Ambrose Evans-Pritchard in today's Telegraph. To its sins, Goodhart adds "ineptitude", saying that the ECB's claim to manage inflation over the "medium term" was an empty mantra that let it dodge responsibility for failures.

This is in an open letter to ECB president Jean-Claude Trichet, published in the journal, Central Banking, where Goodhart slams the "conscious refusal" to be more precise. "Is the medium term two years, three years, five years, n years, or what? By refusing to define the term, you can never be accused of missing your target. [It] is just an exercise in obfuscation," he said.

He counselled Mr Trichet to have a good night's sleep before handling the press following key decisions - given past gaffes. "A meeting of the governing council is likely to be tense, often lengthy, and almost always extremely fatiguing. You will face the world's media at a time when you are worn out and stressed. I think it fair to claim that your predecessor suffered many of his most unhappy occasions at exactly such press conferences," he said.

Prof. Goodhart, emeritus professor at the London School of Economics, said the ECB should air its internal policy disputes by publishing the minutes rather than relying on secrecy to give a false sense of unity. "It is hardly desirable, nor does it lead ultimately to credibility, to suggest that consensus existed when, in practice, it did not," he said.

An ECB spokesman said secrecy was needed to shield the governors from national pressure. "Some could be in a hard position in their home countries if it was known how they argued at meetings," he said. Mr Trichet is expected to address the criticisms at a press conference on 1 September. One hopes he has had a good night's sleep.


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