ECB’s Lagarde: Supranational Governance Needs Strengthening

4 December 2023

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank President Christine Lagarde on Monday said that the concept of supranational governance was confronting a lack of acceptance and should tackle the challenges facing it.

In a speech in Paris, the text of which was posted to the website of the ECB, Lagarde said that the ‘lack of legitimacy brings us to a turning point where we must either deepen supranational governance or accept its decline.’

‘And as international cooperation becomes stronger and more complex, supranational governance must also be strengthened to support it’, she said.

This could be achieved by focusing on people’s priorities, effectively responding to people’s concerns, and serving the public, she said.

The Treaty had provided the ECB with the necessary discretion to act in the pursuit of price stability.

‘This enabled us to use unconventional policy tools during the financial crisis, the recession and the pandemic to ensure that inflation remained in line with our target’, she said. ‘Managing these complex situations would have been difficult if we had strictly adhered to fixed rules or had been limited to using conventional tools.’

An example of this response was the creation of the pandemic emergency purchase programme (PEPP), she said, noting that ‘it was necessary to combat the deflation we could have seen if we had not acted.’