European Parliament Urges ECB to Address Geopolitical Impacts on Inflation and Monetary Policy
MEPs call for action on inflation, digital euro rollout, and the preparation of a Geopolitics plan for the European Central Bank.
On Wednesday, the European Parliament voted in favor of a resolution urging the European Central Bank (ECB) to take decisive measures in response to the persistent inflation affecting the Eurozone, which is increasingly linked to global conflicts.
The resolution passed with 378 votes in favor, 233 against, and 26 abstentions.
MEPs expressed concern over the 'historically and persistently' high levels of inflation that disproportionately impact vulnerable populations.
They criticized the ECB's earlier assumption that inflation would only be a temporary issue and called for improvements in economic forecasting models to better support policymaking.
Additionally, the resolution highlighted what MEPs termed a 'significant subsidy' to banks, attributing this to ECB policies that have resulted in considerable interest payments on bank deposits held at the central bank.
Parliament called for measures to address these financial dynamics.
In terms of the digital euro, MEPs emphasized the importance of public trust for its successful implementation.
They urged that the benefits of a digital euro should be presented to legislators, rather than being decided solely by the ECB's governing council.
Importantly, they underscored that the digital euro must coexist with physical cash to ensure that it remains accessible to all citizens, a sentiment echoed in the need for the ECB to consider potential impacts on financial stability and the structure of the financial sector.
For the first time, the European Parliament requested that the ECB draft a Geopolitics plan covering the years 2025 to 2030. This plan is intended to better understand how ongoing wars and global conflicts influence price stability across the Eurozone.
Additionally, MEPs called for the ECB to evaluate the effects of climate change on its mandate to maintain price stability.
The resolution reaffirmed that price stability remains the ECB's primary objective, with caution expressed regarding the potential over-extension of its mandate into secondary objectives, which could threaten its independence.
The plenary debate preceding the vote revealed divisions among MEPs regarding the neutrality of the ECB's policies and the emphasis on price stability.
Some members argued for a focus on the needs of ordinary citizens, while others contended that the ECB requires enhanced preparations to effectively manage geopolitical shocks in the current volatile climate.
In related developments, the European Parliament's Conference of Presidents reiterated its support for Ukraine as it marks three years since Russia's full-scale invasion.
This statement underscored the EU's commitment to provide political, military, economic, and humanitarian assistance to Ukraine while condemning Russia's actions as violations of international law.
This ongoing conflict is highlighted as a significant factor influencing regional stability and, by extension, economic conditions in the European Union.
The meeting between EU Foreign Policy Chief Kaja Kallas and Pope Francis also accentuates the diplomatic efforts aimed at achieving a sustainable peace in Ukraine.
Discussions focused on the need for a 'just and lasting peace' in the region.
Moreover, recent drone attacks reported in Kyiv and Sumy have further underscored the impact of ongoing military actions in Ukraine on the safety and stability of the region, highlighting the widespread repercussions of geopolitical conflicts on local economies and societies.
As these discussions unfold, the European Parliament faces the challenge of balancing economic policies while navigating the complexities of ongoing global conflicts that increasingly affect its member states and their economies.
The resolution passed with 378 votes in favor, 233 against, and 26 abstentions.
MEPs expressed concern over the 'historically and persistently' high levels of inflation that disproportionately impact vulnerable populations.
They criticized the ECB's earlier assumption that inflation would only be a temporary issue and called for improvements in economic forecasting models to better support policymaking.
Additionally, the resolution highlighted what MEPs termed a 'significant subsidy' to banks, attributing this to ECB policies that have resulted in considerable interest payments on bank deposits held at the central bank.
Parliament called for measures to address these financial dynamics.
In terms of the digital euro, MEPs emphasized the importance of public trust for its successful implementation.
They urged that the benefits of a digital euro should be presented to legislators, rather than being decided solely by the ECB's governing council.
Importantly, they underscored that the digital euro must coexist with physical cash to ensure that it remains accessible to all citizens, a sentiment echoed in the need for the ECB to consider potential impacts on financial stability and the structure of the financial sector.
For the first time, the European Parliament requested that the ECB draft a Geopolitics plan covering the years 2025 to 2030. This plan is intended to better understand how ongoing wars and global conflicts influence price stability across the Eurozone.
Additionally, MEPs called for the ECB to evaluate the effects of climate change on its mandate to maintain price stability.
The resolution reaffirmed that price stability remains the ECB's primary objective, with caution expressed regarding the potential over-extension of its mandate into secondary objectives, which could threaten its independence.
The plenary debate preceding the vote revealed divisions among MEPs regarding the neutrality of the ECB's policies and the emphasis on price stability.
Some members argued for a focus on the needs of ordinary citizens, while others contended that the ECB requires enhanced preparations to effectively manage geopolitical shocks in the current volatile climate.
In related developments, the European Parliament's Conference of Presidents reiterated its support for Ukraine as it marks three years since Russia's full-scale invasion.
This statement underscored the EU's commitment to provide political, military, economic, and humanitarian assistance to Ukraine while condemning Russia's actions as violations of international law.
This ongoing conflict is highlighted as a significant factor influencing regional stability and, by extension, economic conditions in the European Union.
The meeting between EU Foreign Policy Chief Kaja Kallas and Pope Francis also accentuates the diplomatic efforts aimed at achieving a sustainable peace in Ukraine.
Discussions focused on the need for a 'just and lasting peace' in the region.
Moreover, recent drone attacks reported in Kyiv and Sumy have further underscored the impact of ongoing military actions in Ukraine on the safety and stability of the region, highlighting the widespread repercussions of geopolitical conflicts on local economies and societies.
As these discussions unfold, the European Parliament faces the challenge of balancing economic policies while navigating the complexities of ongoing global conflicts that increasingly affect its member states and their economies.
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