Price stability, central bank independence and meaningful accountability must remain the pillars of Europe’s monetary framework, ECR Rapporteur Johan Van Overtveldt stressed ahead of Tuesday’s vote on the European Central Bank Annual Report.

Van Overtveldt warned that, despite recent stabilisation, inflation risks remain and vigilance is required, saying:

“In times of uncertainty, it is essential to return to the fundamental goals of monetary policy. In prosperous times, the central bank must ensure that money and credit grow at a pace consistent with the broad stability of the value of money. In challenging times, it must also ensure that liquidity is sufficient to absorb shocks and sustain confidence in the economy.”

He underlined that the ECB’s credibility depends on its independence from political pressure.

“To effectively preserve price stability, the ECB must maintain its political independence. In a fiat money world, the credibility of a central bank and the trust it garners from the public are crucial assets for fulfilling its mandate. History provides ample evidence that direct political intervention or interference with central bank independence invariably leads to inflation, financial instability and even nasty political turmoil”, Van Overtveldt said.

Van Overtveldt also pointed to growing financial stability risks, including developments outside the traditional banking system and in digital finance, saying:

“These challenges exacerbate the broader financial stability risks we encounter today. The ECB plays a crucial role in safeguarding financial stability through credit conditions, the Single Supervisory Mechanism, and in responding to potential future crises. However, an increasing share of financial activity occurs beyond its direct supervisory reach, particularly within the non-bank financial intermediation sector, whose growth rate is really impressive. Concurrently, closer scrutiny of the crypto-asset ecosystem, including stablecoins, is absolutely necessary.”

He concluded by reaffirming the central role of price stability and ECB independence.

On the digital euro, Van Overtveldt called for a cautious and balanced approach.

“I am absolutely convinced that the reasoning behind the digital euro, the problems behind the digital euro are real. The payment system is dominated by two companies and that leads to monopolistic elements that are, in the present geopolitical situation, quite dangerous. I am not convinced that the digital euro is the best answer. I am not saying that I am against, but I am still a little bit sceptical.”