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This is a stunning story. The ECB is hiding the results of a study about the distribution of financial wealth in the eurozone until after the decision about an aid programme for Cyprus, Frankfurter Allgemeine reports this morning, quoting unnamed central bankers. The intention of the delay is to prevent the data being used to question the programme. The ECB has been running these polls since 2006. Some of the national central banks, including those of Italy, Austria, Luxembourg and Spain, have published their own national results, but others have not. The article says the data contain "politically explosive material". For example, Italy's financial wealth, at a median value of €164,000, lies above that of Austria, at €76,000. While the Bundesbank has not published the data, the German median value is thought to be in a similar range - in other words way below that of Italy. The political problem is that financially poorer countries are paying for wealthier countries. The two poorest in the eurozone - Estonia and Slovakia - are part of the group of creditors. (The German median wealth is likely to be shockingly low, because Germany has the lowest rate of property ownership in the EU, as a result of which wealth is highly concentrated.)

Steltzner puts the boot in

In a comment next to the article, Holger Steltzner, the paper's ultra-conservative economics editor, says the ECB is obviously afraid of a protest in the creditor countries since the data show that the poorer countries are bailing out the richer countries. The resolution policies of the euro crisis distribute wealth from those who follow the rules to those who break them. The deep reason why the ECB is withholding the data is because it has become a political actor. This damages the central bank's credibility. He is referring to an independent study by Credit Suisse, which shows that Belgians, Italian, Austrians and the French are richer than the Germans - in the case of the French, the gap is surprisingly large in favour of France, as a result of rising wages, he writes, which are now dogging the country's competitiveness.



I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Tue Mar 12th, 2013 at 07:41:38 AM EST
[ Parent ]
Now this was written 4 years ago: What's left of central bank independence? (Willem Buiter)
The regulation and supervision of financial institutions and markets is a deeply political activity. Property rights are being assigned, restricted, qualified or taken away.  Banks are stopped from doing things they want to do and forced to do things they do not want to do.  Barriers to entry and exit are created, lowered or removed.  Such activities don't fit the image of an independent, a-political central bank very well.

...

I have the opposite concern.  The ECB is so ludicrously over-independent, even for the performance of the traditional monetary policy tasks, that there is a real risk that, should it be granted a role in banking and financial supervision, it would be able to hide the (unavoidably political) supervisory decisions and actions behind the Treaty shield of monetary policy independence.  It is one thing to have monetary policy makers that are utterly unaccountable in any substantive sense (in the eyes of the ECB, accountability means `reporting obligations'!).  So have financial supervisors that cannot be held to account substantively - that cannot be fired for incompetence, for instance - would be intolerable.

...

So I conjecture that central banks are facing a choice: remain relevant to crisis prevention and resolution, but lose much of your independence, or remain independent and become irrelevant.



I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Tue Mar 12th, 2013 at 07:58:26 AM EST
[ Parent ]
"richer" and "poorer", above, refer narrowly to median asset ownership, and ignore income.

Migeru:

The German median wealth is likely to be shockingly low, because Germany has the lowest rate of property ownership in the EU, as a result of which wealth is highly concentrated

So if Germans see numbers which indicate that they are "poorer" than Italians, the risk is that they will start to ask questions about wealth inequality within Germany (perhaps they will also ask questions about the social engineering which has led to a low rate of home ownership?)

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Tue Mar 12th, 2013 at 08:34:06 AM EST
[ Parent ]
I'm also not sure whether the "wealth" is net of debt.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Tue Mar 12th, 2013 at 09:20:57 AM EST
[ Parent ]
In the Austrian report its net wealth.
by generic on Tue Mar 12th, 2013 at 09:49:33 AM EST
[ Parent ]
A question that also occurred to me.

Home ownership is fairly common in France, for instance, but outright ownership free of debt considerably less.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Mar 12th, 2013 at 11:59:56 AM EST
[ Parent ]
The ECB has been running these polls since 2006.
That's just pre-crisis. It would be interesting to look at the time series and the effect of austerity.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Tue Mar 12th, 2013 at 10:05:14 AM EST
[ Parent ]
The resolution policies of the euro crisis distribute wealth from those who follow the rules to those who break them.
But the distinction does not follow national borders.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Tue Mar 12th, 2013 at 10:34:37 AM EST
[ Parent ]
Migeru:
the French are richer than the Germans - in the case of the French, the gap is surprisingly large in favour of France, as a result of rising wages

What is he talking about, wealth or income?

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Mar 12th, 2013 at 12:02:32 PM EST
[ Parent ]
When have the propagandists and/or preachers ever cared about that? Remember "wealthy" Ireland? They consistently misuse the terms to make whatever point they're making today.
by Colman (colman at eurotrib.com) on Tue Mar 12th, 2013 at 12:09:31 PM EST
[ Parent ]

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