ECB Said to Plan Fed-Style Rules in Shakeup After Coeure Speechby
Board members to tighten guidelines on public appearances
Procedures could be adopted by some national central banks
The European Central Bank plans to tighten rules on meetings by Executive Board members with investors and ensure the immediate release of the content of closed-door presentations, people familiar with the matter said.
In a shakeup of procedures, board officials would sign up to voluntary guidelines inspired by those used by the U.S. Federal Reserve, the people said, asking not to be named as a decision isn’t yet final. Policy makers who attend events sponsored by market participants would promise to only reiterate the central bank’s stance, the people said. An ECB spokeswoman declined to comment.
The revamp of the Frankfurt-based ECB’s practices is intended to repair the damage four months after the institution faced criticism for a speech by board member Benoit Coeure, in which market-sensitive information was released to investors at a restricted event. The changes are being closely watched by other central banks gauging how best to balance transparency with the need to get feedback from investors.
The draft guidelines have been sent to national central banks for review and the intention is to reach agreement before the end of the year, though content and timeframe could still change, the people said. While the rules are specifically written for Executive Board members, at least two national central banks are considering adopting them, according to the people.
The roots of the change lie in Coeure’s May 18 speech in London at a closed-door dinner, which was co-hosted by a research group financed by hedge fund Brevan Howard Asset Management. Coeure said the ECB would boost asset purchases ahead of the summer. Euro-area bonds rallied the following morning when the text was published on the central bank’s website.
The incident attracted the attention of the European Union ombudsman, who asked the ECB to explain what happened and what steps would be taken to prevent a repeat. ECB President Mario Draghi said in June that the release of the information was a “mistake” and the institution would review its policy on speaking engagements. Coeure said in August that he had personally decided he would no longer speak at events organized by banks.
The ECB’s ethics framework, which was updated in June, states that staff members shall “maintain caution in their relations with interest groups and the media,” including getting prior authorization if they wish to speak at external events or contribute to external publications. When expressing views on issues on which the ECB has not established a position, “members of staff shall explicitly state that their personal views do not necessarily reflect those of the ECB.”
The Fed tells its officials to “refrain from describing their personal views about monetary policy in any meeting or conversation with any individual, firm, or organization who could profit financially from acquiring that information unless those views have already been expressed in their public communications,” according to a document on the U.S. central bank’s website.
Even so, the Fed’s rules haven’t protected it from controversy. Medley Global Advisors published details of a September 2012 policy meeting one day before minutes of the session were released by the central bank. Fed Chair Janet Yellen said in May that the U.S. Department of Justice has joined an investigation into the leak. Political-intelligence firms such as Medley charge fees for exclusive information gleaned through access to government officials and influencers.