Committee president aims higher than the US Senate panel

Date: 02/04/1998

CHRISTA Randzio-Plath does not want to turn her committee into an imitation of the powerful US Senate banking committee.

That would not be ambitious enough. "When I went to the banking committee, I was shocked at how friendly their questioning was. They don't attack the Federal Reserve chairman at all," says the German Socialist MEP. "At the beginning of the meeting, everyone has five minutes to give speeches. It's ridiculous."

US banking committee meetings begin with statements, usually released on paper in advance, first from the chairman and then from ranking senators from each party.

Yet Randzio-Plath is certainly interested in pursuing the US Federal Reserve model of accountability to elected representatives, even though she does not think it is perfect. William Greider's award-winning Secrets of the Temple: How the Federal Reserve Runs the Country takes pride of place on her bookshelf.

The 57-year-old SPD spokeswoman on the single currency has been president of the European Parliament's monetary subcommittee since it was formed five years ago.

"I have been chairing this sub-committee since it was established," she says. "We have had very serious dialogue with the presidents of the European Monetary Institute and the national central bankers. We have proven how seriously we take our task as a partner in this monetary dialogue and how useful it is to have transparency of monetary decisions and the background to monetary decisions."

On the other side of the Atlantic, the US Congress has the right to amend the powers of the Federal Reserve and even sack the chairman of the board of governors. Although this sounds like a 'nuclear option' which would never be used, current incumbent Alan Greenspan was made well aware of the possibility that it might be in the last years of George Bush's administration when he failed to deliver the interest rate cuts the White House wanted.

"I would like to have the same powers as the banking committee," says Randzio-Plath. "But the European Central Bank is only obliged to support the general economic policies of the EU if price stability is not affected. The Fed, on the other hand, has always had the task of supporting employment and growth. Congress can change the laws of the central bank, but we can't because the ECB was established by treaty and not by law."

Unamended, a report prepared by Randzio-Plath and her staff would have obliged the ECB to publish minutes of its deliberations and voting records. Members of the ECB directorate would have been forced to come before the panel, which would have been turned into a full banking committee, and explain their voting behaviour.

But her plans to give the subcommittee more clout have been watered down after a rebellion led by Ingo Friedrich, an alternate panel member and also vice-president of the German Christian Social Union - the party of Finance Minister Theo Waigel.

Friedrich and his supporters managed to push through a series of amendments, which delayed the publishing of full minutes of the meetings for five years. Nevertheless, Randzio-Plath still wants to see early publication of summarised minutes and a guarantee from the new ECB president that he will attend meetings of the monetary subcommittee at least four times a year.

"I am not attacking the independence of the ECB," she says. "We are living in a democratic system and all I am asking for is dialogue between the bank and the Parliament."

Indeed, Randzio-Plath is convinced that this could only benefit the bank, if it wants to avoid turbulence in the financial markets. "If the markets are not informed or are misinformed, then there might be speculative reactions which would cause trouble for economies. It is my duty as a parliamentarian to do everything to make sure the monetary dialogue goes smoothly," she insists.

This should mean the conclusion of an agreement between the ECB and Parliament to spell out how this dialogue will work. "I want a specific agreement - a joint declaration - something which is formalised with the ECB," says Randzio-Plath.

When EMI president Wim Duisenberg appeared before her subcommittee last week, he stated that he wanted "regular dialogue in whatever form" with the Parliament, but declined to give further details.

Nevertheless, this promise brought a smile to the lips of Randzio-Plath and caused MEPs to bang their desks in approval.

Duisenberg and several of his colleagues have already stated for the record that they are opposed to the publication of minutes from their meetings. They say this would reinforce suspicions that national central bank governors are voting in the interests of their countries rather than for the whole euro-zone.

"It may be that the ECB has a better idea than mine," admits Randzio-Plath. "But look at the Federal Reserve. They have no problem with publishing minutes and even their voting records. So why should it be a problem for Europe's central bankers? I agree that there is a cultural difference and there will have to be a learning phase."

She does not agree that the committee needs to make radical changes to the way it carries out its hearings, including a redesign of the committee rooms or a change to the practice of bunching questions into twos or threes. "We cannot change the geography of the committee rooms," she says.

Major feature. Will the EP's Monetary Committee be an effective watchdog of the European Central Bank? Plus interview with its chairman Christa Randzio-Plath, MEP.