Honest Money

On Thursday, ECB president Trichet spoke about the EU reform treaty, the Lisbon treaty, but didn’t mention what the treaty does to the ECB .

At the European Central Bank press conference on Thursday 05 November 2009 after the meeting of its governing council leaving interest rate unchanged at 1 percent, ECB president Jean-Claude Trichet was asked:
[Does] the ECB think it would be sensible to bring the EONIA rate back in line with the main policy rate before raising interest rates?

He replied
[It] is not our intention at all at the moment to change the way the market is functioning. We are satisfied with the present functioning of the market. The EONIA is close to the deposit rate because of the way we are handling liquidity. It is not our intention to change that in the next period of time (1)

Here’s what he means by
“We are satisfied with the present functioning of the market.”:

“I urge you to knock on our door before we come knocking on yours,’’ Preet Bharara, the US attorney in Manhattan, has said.
(U.S. Attorney’s Remarks on Insider Charges
November 05. 2009
http://www.scribd.com/doc/22177326/U-S-Attorney-s-Remarks-on-Insider-Charges

It is becoming clearer why, although he said on Thursday that the ECB was an institution of EUROPE, Trichet didn’t mention that the treaty of Lisbon makes an institution of the EUROPEAN UNION of the ECB.

If he were honest, he would resign, because Lisbon takes whatever independence he had away from him.

He said:
Let me only say that I am very happy that we have the Treaty of Lisbon, which is now ratified by all. Europe has demonstrated a capacity to surmount an immense difficulty in very demanding times, and this is very heartening from the perspective of ONE OF THE INSTITUTIONS OF EUROPE which has had to cope with an exceptionally demanding environment over the past two years. We are heartened by the fact that we have found an appropriate way to get out of this situation. (1, again)

Contrast this to Lorenzo Bini Smaghi, member of the governing council of the ECB, who said on 24 January 2008:
The TREATY OF LISBON strengthens the ECB’s position in several ways
[...] iv) the ECB is recognised as an INSTITUTION OF THE EUROPEAN UNION, joining the Council of the European Union, the European Commission and the European Parliament, even though it has legal personality. (2)

Trichet, on Thursday, didn’t say anything about the repeal of ECB independence, if any .
(How could the ECB at present be independent if the EU Commissioner of Economic and Monetary Affairs “from time to time” also participates in the fortnightly meetings of the ECB governing council which sets the general policies for the ECB?)

What’s left of the independence of the ECB?

What does legal personality mean from now on?

It seems that the work is cut out for the ECB”s legal service.

“We are satisfied with the present functioning of the market.”

Yes, go away. Let the market provide money.

Trichet added on Thursday:
We will strive to continue to be up to our responsibilities and we are happy that the functioning of Europe will be functioning of Europe will be improved in the European Parliament, in the European Commission and in the European Council (1, again)

He didn’t say anything about the ECB’s independence.

ECB president Trichet didn’t mention what the Lisbon treaty does to the ECB (‘s independence.)

ECB president Trichet should resign!

Ivo Cerckel
honestmoney@maktoob.com
http://twitter.com/ivocerckel/

NOTES

(1)
http://www.ecb.int/press/pressconf/2009/html/is091105.en.html

(2)
The economic governance of the European Union in the light of the Treaty of Lisbon: harmonisation or competition between countries?
Lorenzo Bini Smaghi, Member of the Executive Board of the ECB
Speech given at the conference on:
The European Central Bank: a new actor on the international scene,
Milan, 24 January 2008
http://www.ecb.int/press/key/date/2008/html/sp080124.en.html