Welcome at ECBWATCH.COM

ECBWATCH is an independent, private, non-profit organization. Its aim is to provide analysis of the developments in the field of monetary policy in the euro area, foster a debate on this subject and thereby to improve understanding of the European Central Bank (ECB).

Team ECBWATCH:

Edin Mujagic studied macro and monetary economics at Tilburg University. He graduated in the summer of 2002, defending his thesis 'Monetary Dialogue between the European Parliament and the European Central Bank: Does it influence Frankfurt?'. He spent 4 months at the Economic Research Department of the Dutch Rabobank. In early 2003 Edin joined Interest & Currency Consultants as a research analyst. In autumn of 2004 the Dutch business and economics weekly FEM Business offered him position of economics editor. At the end of 2004 he founded ECBWATCH.

Since 2003 Edin is enrolled as a PhD candidate at Tilburg University. He conducts research on the relationship between the European Parliament and the European Central Bank under supervision of professor Sylvester Eijffinger.

Mission statement

By combining the analysis of the news, economic developments and academic research, ECBWATCH assesses the likely impact on the conduct of monetary policy of the ECB. In doing so, the organization focuses not only on the impact in the short term. Even more important is the question what different developments mean for underlying trends and the likely impact on monetary policy in the medium and long term. ECBWATCH also conducts research of its own. ECBWATCH is focused exclusively on the European Central Bank. Another aim is to foster a discussion on the issues of monetary policy in the euro area and accountability and transparency of the ECB. We publish our analysis in the form of various reports.

The idea to start such a forum emerged gradually during the years we spent at Tilburg University, The Netherlands. The field of monetary economics and, among others, the issues regarding the ECB attracted our attention from the start. We also noted that the understanding of the ECB was not optimal, not to say unacceptably low. Moreover, the possibilities of monetary policy are often exaggerated. There is only so much a central bank can do. Numerous discussions on these and related issues, that last to this day, have culminated in the creation of this forum. Here at ECB Watch we can summarize our position as follows:

• Central bank cannot influence economic growth in the long term. It should therefore not try to do so.
• Although in the short term some influence on real economic variables can exist, the price will be paid in the long term as in the long term only nominal variables will be affected.
  The rate of inflation will rise. Also, it is very well possible that instability will emerge due to overvaluation of various asset prices.
• Central bank should have one task only: to aim for and, once attained, to preserve price stability. In doing so, it should pay great attention to the growth of money supply.
• High growth of money supply will eventually lead to inflation, financial instability or both. ECBWATCH fully agrees with Milton Friedman’s statement that inflation is always and everywhere a monetary phenomenon.
• Central bank should be accountable to democratic institutions. As transparency enhances accountability, every central bank should aim to be optimally transparent. Too little transparency is unwelcome, but so is too much transparency. The same applies to accountability. Accountability must not lead to political influence on the conduct of monetary policy, either directly or indirectly.