Central bankers under pressure from politicians who do not understand their role
Mario Draghi recently attacked the Trump administration for piling political pressure on the US Federal Reserve, however, the European Central Bank president should also have considered problems closer to home.
Mr Draghi has played down the issues on his own side of the Atlantic, joking that his central bank had an advantage as any advice he received from the region’s 19 governments was generally contradictory. But the eurozone is far from immune to attacks from Member States’ politicians.
Few have a better understanding of what it is like for a central bank governor to come under political strain than Panicos. He faced death threats and political attacks after European authorities imposed a haircut on some Cypriot depositors — and Russians who had parked their cash in Cyprus — as part of the island’s bailout programme.
Panicos said one solution would be for the ECB to set up representative offices in the capitals of each of the eurozone’s 19 member states.
Panicos commented: “The IMF has such offices, if the ECB had them too it would help them to be more aware of what the situation is like on the ground in places like Nicosia. It would also help the ECB by allowing them a way to explain what they do to local politicians, who often see the central bank as a distant institution in another land and don’t really understand what it can and can’t do.”
Read the full article in the Financial Times here.