With the omnipotence of the world's central banks suddenly all too evidently exposed as nothing more than 'Oz'-like smoke-and-mirrors, it is not just US politicians that are losing faith and calling for more oversight of the most-powerful unelected officials in the world. Handelsblatt reports today that Germany's federal auditor says The ECB lacks accountability in banking sector oversight and government will work to close that oversight gap.
Handelsblatt reports, citing a parliamentary report it obtained, that the European Court of Auditors is unable to perform an "extensive review" of the bank supervisory functions at ECB. Furthermore, the German Federal Court of Auditors says in a report submitted to the German parliament’s budget committeeGermany should explore all options for closing the oversight gap.
In its report, the federal auditor says bank oversight is an important public function that does not fall under the rubric of central bank independence, noting that national banking regulators like Germany’s used to be fully audited before the ECB took over the responsibility in 2015.
“The federal government should explore all options for closing this oversight gap,” the report said.
The ECB has argued that the European Court of Auditors only has the authority to review the central bank’s efficiency in terms of personnel and budgeting, not its decisions as Europe’s top banking supervisor. The European Court of Auditors has complained in the past that the ECB has used this argument to justify its refusal to turn over some documents for review.
That, according to the German agency, has left a gap in oversight that didn’t exist before 2015, since national regulators in the euro zone tended to be separate from their country’s central banks.
In a statement, the ECB said that it works closely with the European Court of Auditors and has made “a considerable number of documents and explanations available.”
While we fully understand the concerns at the lack of transparency and oversight of Europe's most powerful entity, it is comewhat ironic that it is the Germans complaining when they just used the "well, it's not us messing with the currency, the ECB is independent" argument to eschew Trump's currency war tweets.
We are sure Dragh is not too worried for now, but if this escalates, this is what we would expect him to look like...