From climate change to equality, Lagarde turns ECB more political

Reuters ^ | October 26, 2020 | By Balazs Koranyi, Francesco Canepa, Frank Siebelt

[Oldeconomybuyer]

FRANKFURT - Since taking the helm a year ago, Christine Lagarde has turned the European Central Bank’s attention to social issues like climate change and inequality, broadening its horizons but also opening it to attacks that could test its independence.

Lagarde’s efforts to use the bank’s leverage to fight global warming, gender imbalance or income inequality may have been overshadowed by the coronavirus pandemic and the ensuing, deep recession.

But they could yet reshape the currency union’s most powerful institution and help redefine the role of central banking in an era where the threat of runaway inflation has faded into obscurity.

Unlike the Fed, which has a dual mandate of nurturing price stability and employment, the ECB must first keep prices stable, then support the “general economic policies” of the European Union.

In stark contrast to her predecessors - all men with degrees in economics and decades of central banking experience – the former politician Lagarde has demonstrated a willingness to use this leeway to promote the euro zone’s wider social good.

Her interpretation of the bank’s mandate is already irking some, however, particularly in Germany, who claim that the ECB is turning political by meddling in social policy without the authority or the right tools to do so.

Nevertheless, Lagarde says the ECB needs to move with the times.

“There are issues that actually impact the work that we have to do that is defined by the Treaty, which were not sufficiently considered at the time,” she said. “Climate change was not lingua franca in those days.”

[Oldeconomybuyer]

[granada]

She was supposed to kneel for BLM.

[nathanbedford]

“At the moment there are signs of an over-politicisation of monetary politics,” Heinemann said, adding that consideration for fair wealth distribution must be left to elected officials.

So the left wants unelected bureaucrats rather than elected representatives to decide social policy. Where have we heard that before?

So the left wants to seize upon "climate change" as a lever with which to move the world, the platform being what, social justice?

Kein Wunder the Germans want to protect their creditor position and the left wants to redistribute wealth and debt. The left would like a wiff of inflation to depreciate debt owed the Germans. The left would like an unelected super agency to further undermine nationalism.

Pandemics, climate, race, all is grist for their mill. The milled product? Fascism, elitism, socialism, pick one.

[nathanbedford]

It is interesting to consider this move toward governing by an unelected elite agency to be reflective of an upwelling of discontent among Europe's loser, debtor nations. That is to look at the development from the opposite perspective, not so much a leftist trying to impose doctrine on the unwashed but rather an attempt to save a fracturing union.

We should look at our own history as a model when sectional disputes over our central bank have led to the creation of one of our political parties and, like tariffs, contributed to a fracture among the states and the Civil War. Andrew Jackson made a political career out of the issue and, according to left-wing historians, overturned the established American political system in favor of a kind of populism.

His perspective was to organize the people against the bank. In Europe we see the bank attempting to organize, or at least effect policy, on behalf of what the bankers regard to be the people's interest.

I do not believe in unchecked populism but I am in favor of bottom up reform rather than top-down imposition.

[SamuraiScot]

Since taking the helm a year ago, Christine Lagarde has turned the European Central Bank’s attention to social issues like climate change and inequality. . .

Proving once again, I suppose, that the subject of economics bores women intolerably--even female economists--and makes them desperate to think about absolutely anything else.

Set Mme. Lagarde loose at Designer Shoe Warehouse with a latte and a credit card and lock the door for 12 hours. Sounds as if she'll forget all about the Central Bank, and the world will be a safer place.