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Who is responsible?

March 20, 2013 11:22 AM
By George Smid - Chair of Corby Liberal Democrats
Originally published by East Midlands Liberal Democrats
George Smid 2In an article published today Sharon Bowles MEP reported that "the EU Parliament and Council will in future be approving the Chair and Vice Chair[of European Central Bank, neither of whom will be able to take up their duties until the Parliament has exercised this right."

The involvement of the parliament in the European Central Bank must be welcomed as the first step in the right direction. Admittedly the involvement on its own does not mean anything - might be good, might be bad, might be neutral. But it does provide a platform for a 'political dimension' in discharging duties of a central bank.

This change in thinking is important and needed: one of the obvious impacts of the current Great Recession is the shift of responsibilities between 'public' and 'private'. It would appear that whilst the 'profits' are still deemed to be a 'private right' of an individual or corporation, the losses are firmly underwritten by the public. Worse, private profits are created on the bases of public underwriting.

The current crises in Cyprus illustrates this in almost black and white lines, the clarity further obvious that 'the private profit' and 'the public underwriting' are two separate entities: an EU taxpayer bearing the losses and the banks redistributing profits to their clients, most of them not paying any taxes in the EU. So if the speculation goes right the client is richer, if it goes wrong the taxpayer is poorer. Surely this cannot be the bases of a 'private enterprise'? Surely this shows that there must be a political dimension to central bank supervision?

The above quoted article also specifies that "the ECB has a duty of care to the Single Market". This should go further. The ECB should have a duty of supervision which would ensure that the public is not unknowingly underwriting private speculation and private enterprise which 'the state' [public] will have to bail out. And if 'the state' cannot, as Cyprus can't, the EU will. Such protection of people must be the true duty of care of the ECB "proper accountability". And protecting the public from speculators and 'rent seekers' (exploiters) must be the platform of the LibDems. Well done Sharon!