The Irish-born official said this was necessary “in order to protect the bank and its President from any perception that the bank’s independence could be compromised.”
The European Ombudsman has also recommended that future presidents of the ECB do not become members of the G30.
The G30 is a Washington DC-based private group whose members consist of a number of central bank governors, private sector bankers and academics. Membership is by invitation only.
Among the members are representatives of banks supervised, directly or indirectly, by the ECB. The G30 holds two member-only plenary sessions each year.
O’Reilly said, “The ECB takes decisions that directly affect the lives of millions of citizens. In the aftermath of the financial crisis, and in consideration of the additional powers given to the ECB in recent years to supervise member state banks in the public interest, it is important to demonstrate to that public that there is a clear separation between the ECB as supervisor and the finance industry which is affected by its decisions.”
The Strasbourg-based Ombudsman also said that the ECB can legitimately continue to participate in certain public activities of the G30 but in the interests of maintaining the public’s trust in the bank she has outlined how this participation should be managed. This includes making public the agendas and summaries of the discussions in the meetings.
She said, “The ECB can of course interact with the G30, as it does with any other stakeholder, in order to improve policy-making by listening to a broad range of viewpoints. However, these interactions should be as transparent as possible and not based on membership, which, with that implied closer relationship, undermines the very positive transparency steps the ECB has made in recent years.”
The bank, she said, has failed to show how the public interest in stakeholder engagement could be damaged by the president of the ECB not being a member of the G30, as opposed to being a participant at some of its meetings, like, for example, Janet Yellen of the US Federal Reserve.
She added, “My recommendations would bring the relationship between the ECB and the G30 in alignment with certain of the Bank’s own governance rules and codes.”
More broadly, she has proposed that the bank further tighten its ethics rules so that members of the Executive Board are accompanied by an ECB staff member at all meetings. In addition, the ECB should adopt explicit ethics rules for
The case is the second time the Ombudsman has dealt with a complaint concerning the ECB’s involvement with the G30. The then Ombudsman found that the ECB’s involvement in the G30 was - broadly speaking - compatible with the independence, reputation and integrity of the ECB.
O’Reilly decided to open a new inquiry given the new and extensive supervisory powers of the bank and the public’s heightened awareness, following the financial crisis, of the importance of having high ethical and accountability standards in public institutions.
Her comments were endorsed by the Brussels-based Corporate Europe Observatory (CEO) which had lodged complaint with the Ombudsman regarding Draghi’s G30 membership.
In CEO’s view, the G30 bears “too great a resemblance to a lobby group”, representing vested interests, which renders Draghi’s membership “unacceptable.”
CEO’s monetary and financial policy researcher Kenneth Haar said, “The Ombudsman’s decision is timely and very positive. Draghi’s involvement with the G30 was ill-advised from the start. Since 2016, when the ECB’s mandate for banking supervision was extended, the close ties between the president and the bankers’ group has become absolutely unacceptable.
“Imbalanced policy consultation at the European Central Bank has made the institution vulnerable to the undue influence of financial industry interests, especially in the aftermath of the financial crisis. Especially groups like the G30 continue to be used by some of the biggest global banks to push their political agenda.
“Hopefully, the ECB will implement the ombudsman’s recommendations without hesitation. The next step will be to reform the advisory groups of the ECB, which our research has shown to be dominated by the financial industry.”