GERMANY 1 June 2008 European Central Bank marks 10th birthday. Pressure to reform

The 10th birthday of one of the world's most important central banks, the European Central Bank in Frankfurt, will be watched for announcements. The most anticipated one, particularly by France, is that a decision has been made on reform of the body responsible for monetary policy covering the Eurozone. To date, wrangling has prevented significant movement on the issue.

The ECB is the central bank for Europe's single currency, the euro. The ECB’s main task is to maintain the euro's purchasing power and thus price stability in the 13 countries that have introduced the euro since 1999. The present target is to keep inflation below, but close to 2 per cent. In addition, the ECB has to support the economic policies of the European Union's Maastricht Treaty. They are designed to encourage a high level of employment and sustainable and non-inflationary economic growth.

France has made repeated demands for increased political control of the bloc's interest-rate setting policy. French presidential candidate Nicolas Sarkozy has said that the euro should be "an instrument of economic policy serving growth and employment" while candidate Segolene Royal has called for the bank's statute to be expanded so that growth is a goal of price stability.

German Chancellor Angela Merkel is opposed to the French demands, and insists the ECB must me kept outside the political debate and allowed to keep its independence.

It has been noted that it will be difficult to change the EU's Maastricht provisions on the ECB, which puts price stability as the bank's main goal. Some analysts see the possibility that the issue could become entangled in efforts to resurrect the EU Constitution, with either Royal or Sarkorzy choosing to make changes to the ECB policy a condition for accepting a revised Constitution. French voters rejected the present version of the EU Consitution in May 2005.

The Jun 1 date will also be useful symbolically for a progress report on the new ECB headquarters project. The current ECB building in Downtown Frankfurt is only its temporary home. The ECB ran a large international architecture competition in 1999 for a new tower. Vienna based architects Coop Himmelbau won the competition. Apr/07

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