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Eijffinger: does populism threaten the independence of the ECB?

Published: 19th June 2019 Last updated: 29th October 2019

Draghi en Eijffinger

This week, the annual ECB Forum was held in Sintra, Portugal, with all the leaders of the international banking world. Among them was Tilburg's professor of Financial Economics, Sylvester Eijffinger. Eijffinger asked the panel, including Mario Draghi, President of the ECB, whether the rise of populism in Europe poses a threat to the independence of the European Central Bank (ECB).

After all, when populists come to power, government policy may have too much influence on the national central banks policy, and, in turn, on ECB policy.

Draghi argues that discipline in monetary policy is the best strategy against populism. The ECB will also has to pursue a clear communication policy to its own target groups: national central banks, financial markets and policy makers/politicians. The latter will then have to explain the policy further to the wider public. Explain, for example, why 2% inflation is simply necessary for a stable currency.

Watch the full panel debate here (Eijffinger from 57:30 hrs.)