http://www.ft.com/intl/cms/s/0/7a9d5d9a-8155-11e5-a01c-8650859a4767.html
Some
of the European Central Bank’s top decision-makers met bankers and
asset managers days before major policy decisions, and on one occasion
just hours before, copies of their diaries reveal.
The diaries, which cover meetings of the six members of the ECB’s executive board between August 2014 and August 2015, were given to the Financial Times under Freedom of Information rules and reveal engagements with the private sector, officials and the media.
The meetings offer a sharp contrast with the Bank of England, which
prohibits members of its rate-setting committee from talking to media
and “other outside interests” on monetary policy matters in the week
before a policy decision.
The remarks were not made publicly available until the following
morning, because of what the ECB described as an “internal procedural
error”.
ECB officials regularly talk to market participants. Like their counterparts at other central banks, they have a duty to explain their policies to markets, and believe that doing so can make their actions more effective. An ECB spokesman said it was also important for policymakers “to understand financial markets, since this is how monetary policy is transmitted into the real economy”.
Details of the meeting calendars of the European Central Bank’s six executive board members, including Mario Draghi, president.
Read more
There is no suggestion that either Mr Cœuré, who is the
executive board member responsible for markets, or Mr Mersch, Mr
Constâncio or Mr Praet broke ECB rules and discussed market-sensitive
information. One of Mr Cœuré’s engagements was an informal dinner held
with a long-term contact.
The ECB’s rules impose a “quiet period” that forbids decision-makers from speaking in public the week before scheduled policy meetings. The central bank also confirmed that officials never discuss market-sensitive information in private meetings.
“The quiet period refers to public communication ahead of monetary policy governing council meetings. The same underlying principles — guarding against signalling future monetary policy — are of course applied to bilateral meetings. In any case, no market-sensitive information is disclosed by the ECB in any non-public forum,” an ECB spokesperson said.
On the meetings that took place around the time of the Greek crisis, the spokesperson added: “The governing council teleconferences were ad hoc meetings dealing with the acute situation at the time in Greece. Again, the principle of never disclosing market-sensitive information applies.”
The code of conduct states that particular care should be taken in the three days immediately before the MPC announcements, when rate-setters are barred from talking to journalists or market participants.
The BoE does not disclose details of private meetings between MPC members and market participants or other outsiders. It does publish details of public events as well as gifts.
While the Bank falls within the remit of the UK Freedom of Information Act, certain functions including monetary policy or financial operations intended to support financial institutions to maintain stability are explicitly exempted.
The ECB complied with all the terms of the FT’s freedom of information request, except in relation to information it asserted should be withheld under confidentiality rules.
Additional reporting by Sam Fleming and Ferdinando Giugliano.
The diaries, which cover meetings of the six members of the ECB’s executive board between August 2014 and August 2015, were given to the Financial Times under Freedom of Information rules and reveal engagements with the private sector, officials and the media.
The
disclosure of the meetings comes at a time of heightened scrutiny of
the contacts between central bankers and the financial services
industry. Earlier this year, the ECB launched its own review of the
issue, setting out new principles for how its officials should interact with the private sector.
The diaries show two members of the ECB’s executive board, Benoît Cœuré and Yves Mersch, met people from UBS the day before a two-day policy meeting of the central bank’s rate-setting governing council on September 3 and 4 2014.
Mr Cœuré also met BNP Paribas on the morning of September 4, the day the ECB’s governing council surprised markets by cutting interest rates. It also announced
it would begin buying private sector assets to save the eurozone’s
economy from the threat of deflation. UBS and BNP Paribas declined to
comment.
Mr Cœuré met asset manager BlackRock the day before a policy meeting in
March this year, when the council unveiled the details of how it would
carry out its €1.1tn asset purchase, or quantitative easing, programme.
BlackRock declined to comment.
The ECB’s vice-president, Vítor Constâncio, and
its chief economist, Peter Praet, met Algebris, a hedge fund, at the
height of this summer’s Greek crisis, when the governing council was
holding daily conference calls on whether to continue sanctioning
emergency loans to keep Greece’s banks afloat.
Mr Constâncio and Mr Praet met Algebris on June 23. Mr Praet also met
BNP Paribas Fortis on June 22 and bond fund Pimco on June 25. Algebris
and Pimco declined to comment.
All members of the ECB’s executive board declined to comment.
Concerns were
raised earlier this year over the links between central bankers and the
private sector after an event at the Berkeley Hotel in London in May
when Mr Cœuré told an audience of hedge fund managers, academics and
finance officials that eurozone policymakers planned to front-load their
asset purchases in May and June.
ECB officials regularly talk to market participants. Like their counterparts at other central banks, they have a duty to explain their policies to markets, and believe that doing so can make their actions more effective. An ECB spokesman said it was also important for policymakers “to understand financial markets, since this is how monetary policy is transmitted into the real economy”.
On Friday, the central bank said it would begin to
publish the diaries of members of the executive board three months
later. Mr Cœuré also said in August that he had “absolutely nothing against” publishing diaries of meetings with external parties.
ECB meeting calendar
Read more
The ECB’s rules impose a “quiet period” that forbids decision-makers from speaking in public the week before scheduled policy meetings. The central bank also confirmed that officials never discuss market-sensitive information in private meetings.
“The quiet period refers to public communication ahead of monetary policy governing council meetings. The same underlying principles — guarding against signalling future monetary policy — are of course applied to bilateral meetings. In any case, no market-sensitive information is disclosed by the ECB in any non-public forum,” an ECB spokesperson said.
On the meetings that took place around the time of the Greek crisis, the spokesperson added: “The governing council teleconferences were ad hoc meetings dealing with the acute situation at the time in Greece. Again, the principle of never disclosing market-sensitive information applies.”
The ECB’s rules on quiet periods are echoed in
other jurisdictions. The US Federal Reserve observes a blackout period
over the seven days before its regular rate-setting meetings. The policy
requires Federal Open Market Committee participants to refrain from
expressing views about macroeconomic developments or monetary policy
issues in meetings or conversations with the public during that period.
The Bank of England’s code of conduct for
its Monetary Policy Committee prohibits talking to media or “other
outside interests” on monetary policy matters in the week before a
policy decision.
The so-called “purdah” starts with the pre-MPC meeting, which is
typically held on the Wednesday of the week before any decision is
taken, and ends at midnight on the Thursday of the policy announcement.The code of conduct states that particular care should be taken in the three days immediately before the MPC announcements, when rate-setters are barred from talking to journalists or market participants.
The BoE does not disclose details of private meetings between MPC members and market participants or other outsiders. It does publish details of public events as well as gifts.
While the Bank falls within the remit of the UK Freedom of Information Act, certain functions including monetary policy or financial operations intended to support financial institutions to maintain stability are explicitly exempted.
The ECB complied with all the terms of the FT’s freedom of information request, except in relation to information it asserted should be withheld under confidentiality rules.
Additional reporting by Sam Fleming and Ferdinando Giugliano.
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