What changed

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

P10_TA(2025)0011

on European Central Bank – annual report 2024

(2024/2054(INI))

Committee on Economic and Monetary Affairs

PE765.056

European Parliament resolution of 11 February 2025 on European Central Bank – annual report 2024 (2024/2054(INI))

The European Parliament,

– having regard to the decisions taken by the ECB Governing Council of 25 January 2024, 7 March 2024, 11 April 2024, 6 June 2024, 18 July 2024, 12 September 2024, 17 October 2024 and 12 December 2024,

– having regard to Eurostat’s inflation estimate of 183 DecemberFebruary 2024,2025,

– having regard to the Commission’s Autumn 2024 Economic Forecast published on 26 November 2024,

– having regard to the World Economic Outlook of the International Monetary Fund (IMF) of OctoberJanuary 2024,2025,

– having regard to the monetary dialogues with the President of the ECB, Christine Lagarde, of 15 February 2024, 30 September 2024 and 4 December 2024,

– having regard to the report of the Committee on Economic and Monetary Affairs (A10-0003/2025),

A. whereas, according to Eurostat, harmonised index of consumer prices (HICP) inflation reached a level of 2.22,4 % in the euro area in NovemberDecember 2024;

B. whereas, according to the December 2024 Eurosystem staff macroeconomic projections for the euro area, HICP inflation is projected to decline to 2.12,1 % in 2025, 1.91,9 % in 2026, and to increase to 2.12,1 % in 2027; whereas inflation projections show substantial variance across the euro area;

C. whereas the ECB’s primary objective is to maintain price stability, which it has defined as a level of inflation of 2 % over the medium term;

7. Takes note of the disparities between Member States with regard to inflation levels above or below the ECB’s 2 % target; emphasises that inflation diminishes the purchasing power of fixed incomes, savings and pensions and that it distorts the signalling function of prices, that ensures an efficient allocation of resources, thereby having a negative impact on economic stability;

8. Stresses that inflation triggered a ‘cost of living crisis’ for EU citizens; emphasises therefore the imperative of reducing inflation to its target rate of 2 %; notes that high inflation levels disproportionally affect lower-income households that spend a higher proportion of their budget on necessities; stresses that bringing headline and core inflation back down to their target levels is therefore also important to maintaining social cohesion;

9. Regrets that core inflation still remains high in the euro area (2.7(2,7 % in NovemberDecember 2024), with only onethree euro area Member StateStates reporting core inflation rates below 2 % in NovemberDecember 2024; recalls that this situation generates economic uncertainty, discourages savings and increases citizens’ living costs, particularly affecting those on fixed and limited incomes;

10. Stresses that keeping interest rates too high could harm economic growth; calls on the ECB not to lower interest rates too quickly, given the risk that inflation levels could start increasing again while inflation is already above 2 %; highlights the key role that inflation expectations play and that excessive volatility in inflation rates might distort inflation expectations; invites the ECB to assess the impact of interest rate changes on different economic sectors, among them capital-intensive sectors;

Monetary policy

15. Strongly welcomes the fact that headline inflation has come down from its peak of 10.610,6 % in October 2022 to 2.22,4 % in NovemberDecember 2024;

16. Welcomes the decrease in core inflation from its peak of 7.67,6 % in March 2023 to 2.72,7 % in NovemberDecember 2024, but expresses its unease at its historically and persistently high level; notes with concern that high core inflation could translate into higher headline inflation numbers;

17. Notes that it has taken the ECB more than three years to achieve a level of inflation that is commensurate with its target level of 2 %; recalls in this regard the ECB’s incorrect assessment that inflation was expected to be only transitory;

21. Supports the ECB’s decision to scale back its asset purchase programmes, so as to balance market liquidity conditions and inflation levels, in view of the excess liquidity in the market and decreased levels of inflation; welcomes the fact that the asset portfolio under the ECB’s purchasing programmes has been on a downward trend since 2023;

22. Underlines that interest on commercial banks’ holdings of bank reserves resulted in the Eurosystem paying more than EUR 120 billion interest to credit institutions in 2023, amounting to at least 0.80,8 % of euro area GDP; considers this is a significant subsidy to the banking sector; asks the ECB to mitigate this issue;

23. Stresses that the ECB’s purchase programmes are unconventional policies applicable only during crisis periods that, if not carefully implemented, risk contravening the prohibition on monetary financing under Article 123(1) TFEU; invites the ECB to continue monitoring the gradual reduction of its balance sheet, to limit prolonged potential destabilising effects in the euro area, while monitoring the growth and competitiveness of the EU’s economy; invites the ECB to share insights on the impact of the purchasing programmes on the functioning of financial markets, including the impact on pension funds and pension insurance cooperation;

Digital euro

26. WelcomesNotes the ECB’s progress on the digital euro project and welcomes its ongoing dialogue with Parliament; underscores that theany digital euro should deliver clear added value to European citizens, including enhanced strategic autonomy in payments, a higher level of competition in the retail payment market, potential to foster innovation in payments and finance, improved financial inclusion and a reliable offline backup payment system; calls on the ECB to clearly communicatedemonstrate these benefits in order tobefore fosterthe publicEU trustco-legislators anddecide awareness;whether notesor thatnot theto EUintroduce co-legislatorsa willdigital needeuro tothat strikestrikes the right balance, among others, on holding limits, privacy concerns, competition with private payment solutions and usability in a business context;

27. Considers that the digital euro will only become a success story if it provides tangible added value for European citizens that they can understand; notes that currently many European citizens either have not heard about the digital euro project or remain sceptical; invites the ECB, together with relevant stakeholders, to launch a broad information campaign on the digital euro in order to allay citizens’ concerns;

27. Demands that any decision to issue the digital euro should not be taken exclusively by the Governing Council of the ECB; considers, instead, that the decision on whether or not to introduce a digital euro is ultimately a political decision that has to be taken by the EU co-legislators, given the profound potential impact of such a decision on a wide range of EU domains, including privacy, consumer protection, financial stability, financial policy and other areas that go beyond the strict remit of monetary policy;

28. Reiterates that the digital euro will serve as complement to physical cash, that it should not replace cash and that cash will remain widely available and accessible at all times in order to ensure a plurality of means of payment; welcomes, in that context, the proposal for a regulation on the use of euro cash as legal tender;

28. Considers that the digital euro will only become a success story if it provides tangible added value for European citizens that they can understand; notes that currently many European citizens either have not heard about the digital euro project or remain sceptical;

29. Stresses the need for a cost-based compensation model for the banking sector, which is tasked with the practical implementation of the digital euro project; recalls that the compensation model must guarantee a euro that is free of charge for its users;

29. Reiterates that cash should remain widely available and accessible at all times in order to ensure a plurality of means of payment; welcomes, in that context, the proposal for a regulation on the use of euro cash as legal tender;

30. Calls on the ECB to take due account of financial stability concerns and potential changes in the structure of the financial sector resulting from the introduction of the digital euro; recalls the importance of holding limits, in order not to create additional risks for banks’ balance sheets, especially during crises;

30. Stresses the need for a cost-based compensation model for the banking sector, which is tasked with the practical implementation of the digital euro project; recalls that the compensation model must guarantee a euro that is free of charge for its users;

31. Calls on the ECB to prioritise robust privacy safeguards, establishing them as a gold standard for privacy for central bank digital currency (CBDC), to secure public confidence and address citizens’ concerns regarding data protection and autonomy;

31. Calls on the ECB to take due account of financial stability concerns and potential changes in the structure of the financial sector resulting from the introduction of the digital euro; recalls the importance of holding limits, in order not to create additional risks for banks’ balance sheets, especially during crises;

32. Calls on the ECB to prioritise robust privacy safeguards, establishing them as a gold standard for privacy for central bank digital currency (CBDC), to secure public confidence and address citizens’ concerns regarding data protection and autonomy;

Secondary objectives

32.33. Stresses that the EU’s secondary objectives are indeterminate as currently specified by the Treaties; notes that the supportive nature of the ECB’s secondary objectives complements the primary mandate; according to the Treaties, the EU’s aim is to promote peace, its values and the well-being of its peoples, create balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment;

33.34. Recalls that without prejudice to the ECB’s primary mandate, the Treaties require it to support the general economic policies of the Union; calls on the ECB to adhere to its mandate when interpreting or acting upon its secondary objectives; stresses that overstepping this mandate touches on the independence of the ECB; considers that maintaining price stability and stable macroeconomic conditions is conducive to creating the right conditions for the implementation of the EU’s general economic policy objectives;

34.35. Stresses that the ECB’s secondary objectives are best achieved when operating in a stable macroeconomic environment based on predictable price levels that encourages investment; calls on the ECB to include a specific chapter in its annual report explaining how it has interpreted and implemented its secondary objectives;

35.36. Stresses that the ECB should prevent distortions in the signalling function of prices that ensures an efficient allocation of resources; invites the ECB to further assess to what extent climate change affects its ability to maintain price stability;

36.37. InsistsCalls thaton the ECB to respect the market neutrality approach in its monetary operations;operations, while noting that the ECB acknowledges that market neutrality is an operational tool, rather than a legal requirement;

37.38. Notes that the ECB’s actions to decarbonise its corporate bond holdings have not strictly followed a market neutral approach;

38.39. Invites the ECB to review its policies to ensure that these measures promote EU competitiveness whereas such actions should in no way jeopardise the primary objective of the ECB;

39.40. Calls on the ECB to use all its available tools to ensure that banks take all financial and external risks, including climate and geopolitical risks, seriously; welcomes the ECB’s activities to further enhance the Eurosystem’s risk assessment tools and capabilities in order to better include climate- and environment-related risks, particularly because climate change and extreme weather phenomena could lead to greater price volatility, especially in the agri-food sector; invites the ECB to continue its work on climate risk stress tests developed to assess the resilience of banks and corporations in the face of climate transition risk;

40.41. Notes the Climate and nature plan 2024-2025; invites the ECB to draft a Geopolitics plan 2025-2030 in order to better understand the implications of war and conflict on price stability and treat all potential sources of external shocks equally;

Other aspects

41.42. Underlines that a strengthened international role of the euro would lead to lower interest rates in the euro area, increased status for the EU on the international stage and enhanced macroeconomic stability; recalls that strengthening the international role of the euro would contribute to enhancing the EU’s strategic autonomy;

42.43. Calls on the ECB to look into strengthening the international role of the euro with a view to enhancing its attractiveness as a reserve currency and support market-driven shifts in this direction; notes that the completion of the economic and monetary union could foster the international role of the euro;

43.44. Notes the ECB’s support for the establishment of a fully fledged European deposit insurance scheme; acknowledges that risk-sharing and risk-reduction are interlinked;

44.45. Welcomes the attention that the ECB pays to the risks of cyberattacks; calls on the ECB to ensure the safety and security of the monetary system for its users, especially in the light of ongoing geopolitical developments;

45.46. Considers that financial stability is a prerequisite for effective monetary policy and a resilient financial system; welcomes the finalisation of the Basel III framework and its implementation from 1 January 2025, as it has the potential to strengthen the resilience of the banking sector in this regard; notes, however, the delays in implementation and lack of clarity with regard to implementation by a certain number of other jurisdictions, resulting in an uneven level playing field at the global level;

46.47. Acknowledges the ECB’s concern regarding the rise of the shadow banking sector and the risk it may pose to financial stability;

47.48. Encourages collaboration with the Member States and national central banks on financial literacy programmes to empower individuals and businesses to make informed financial decisions;

48.49. Regrets that only two members of the ECB’s Executive Board and Governing Council are women; reiterates that the nominations to the Executive Board should be gender-balanced, with shortlists submitted to Parliament; urges the euro area Member States to improve the principles of gender equality in their appointment procedures, so that both genders have equal opportunities to serve as governors of their respective national central banks;

49.50. Reiterates that ECB appointments should be based on objective merit and competence assessment processes;

50.51. Supports the aim of the ECB to increase female representation by encouraging women to advance in this field; therefore welcomes initiatives such as the ECB Women in Economics Scholarship;

51.52. Highlights that the latest Financial Stability Review released by the ECB in November 2024 raises concerns over the possibility of an AI-related asset price bubble given the concentration among a few large AI beneficiary firms;

52.53. Calls for the further enhancement of the ECB’s internal whistleblowing framework to bring it into line with the EU Whistleblower Directive;

53.54. Invites the ESCB to continue and strengthen its dialogues with national parliaments, which it believes would strengthen the legitimacy and policies of the ESCB;

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54.55. Instructs its President to forward this resolution to the Council, the Commission and the European Central Bank.

EXPLANATORY STATEMENT

Over the past four years, the European Union has grappled with exceptionally high levels of inflation. Rising energy prices have had a cascading effect on the economy, resulting in increased consumer prices. As the institution tasked with maintaining price stability in the euro area, the European Central Bank (ECB) bears the responsibility of addressing this issue and facilitating a swift return to stable prices. However, it took the central bank over three years to bring inflation back to normal levels. This in contrast to the United States, where the Federal Reserve managed to control inflation more promptly.

The recent decline in both the harmonised consumer price index (HICP) and core inflation is certainly encouraging. Nevertheless, it is important to note that the ECB's initial response was delayed and indecisive, allowing inflation to escalate more than necessary. Clearly, its models have underperformed in recent years and should be fundamentally reassessed and improved. With inflation levels now normalised, it is imperative for the ECB to reduce its purchasing programmes, which have effectively amounted to monetary financing through unconventional policies. While these programmes were legally permissible, the ECB should adhere to the spirit of the EU Treaty, which prohibits the monetary financing of European governments.

On a more fundamental level, the rapporteur underscores the significance of central bank independence. To prevent political interference in its mandate to achieve price stability, the central bank has been granted statutory independence. This autonomy allows the ECB to focus on its objectives without external pressures, which necessitates that it refrains from making political decisions. The rapporteur considers this principle vital for safeguarding the integrity of the common currency and its issuer. In practice, this applies to the ECB’s secondary objectives, which aim to support the broader goals of the European Union. It is essential that the ECB pursues these objectives without compromising its primary focus on price stability or succumbing to political motivations. The rapporteur considers that the ECB should therefore limit itself to fostering a stable macroeconomic environment characterised by low and predictable levels of inflation.

Additionally, the ECB is making progress on the digital euro. This initiative offers clear benefits, including enhanced strategic autonomy and improved financial inclusion. However, it is important to emphasise that the digital euro should complement, rather than replace, physical cash.

ANNEX: ENTITIES OR PERSONS FROM WHOM THE RAPPORTEUR HAS RECEIVED INPUT

Pursuant to Article 8 of Annex I to the Rules of Procedure, the rapporteur declares that she received input from the following entities or persons in the preparation of the report, prior to the adoption thereof in committee:

The list above is drawn up under the exclusive responsibility of the rapporteur.

Where natural persons are identified in the list by their name, by their function or by both, the rapporteur declares that she has submitted to the concerned natural persons the European Parliament's Data Protection Notice No 484 (https://www.europarl.europa.eu/data-protect/index.do), which sets out the conditions applicable to the processing of their personal data and the rights linked to that processing.

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