In the pursuit of an inclusive and engaging workplace, the European Central Bank (ECB) emphasises respect, talent development, and diversity, as per its official website. However, recent remarks from ECB board member Frank Elderson and President Christine Lagarde have sparked concerns and raised questions about the bank’s commitment to diversity of opinion.
Elderson’s assertion that individuals opposing the ECB’s stance on climate policy have no place within the institution, along with the perplexing notion of ‘reprogramming’ dissenting voices, has triggered unease. Lagarde, when questioned in the European Parliament, supported Elderson’s remarks, indicating a departure from the purported commitment to diverse perspectives.
I won’t rehash the argument that the ECB should not interfere in climate policy; that’s a matter for elected politicians, not central bankers. Their primary responsibility is to ensure price stability, a task at which the ECB has struggled.
However, the incident is significant beyond this debate.
Every year, we train numerous students in various disciplines, fostering critical thinking and independence rather than blind adherence to authority. The exclusionary statements regarding job applicants who don’t align with Lagarde’s views on climate policy, and the concept of ‘reprogramming’ existing staff with differing opinions, contradict these principles. It is not only contemptuous of our education system but also against the grain of academic thinking. In short, it is discriminatory. If you express the view that climate policy is not a central bank’s concern when applying to the ECB, you may face rejection solely based on your opinion. The fact that two lawyers endorse such practices is baffling.
In my view, the ECB has deviated from the sensible monetary path, taking on characteristics reminiscent of a cult.
These incidents underscore my long-held thesis: the greatest threat to the survival of the euro and the currency union is not populists but the ECB itself. If the euro were to collapse or countries decide to exit the currency union, it would be due to the ECB’s policies, which, in my humble opinion, are perilous.
This trend aligns with Lagarde’s tenure, characterized by the politicisation of the central bank, delving into issues beyond monetary policy, such as climate and now, political matters.
Why is this problematic?
While Lagarde may hold certain views, a central bank is not meant to comment on leaders in power globally. Her specific role as ECB boss is to tackle inflation, an area where she has faltered from day one. Inflation has been consistently high since her tenure began, and her actions, in my view, have been insufficient. Furthermore, inflation is projected to remain elevated for years.
A glance at the ECB’s timeline suggests a departure from monetary matters. The focus on gender, climate, and green initiatives overshadows discussions on money growth and structural inflation, which seemingly appear only about every February 29.
Edin Mujagić, Chief Economist of OHV Asset Management and author of the book Turning Point 1971, contributes a monthly ECB Watch on European Central Bank monetary policy to Investment Officer.