The European Parliament has adopted its annual review of the European Central Bank’s (ECB) policies and issued recommendations for 2026. The decision came after a debate with ECB President Christine Lagarde.
The adopted report emphasizes that the independence of the ECB is crucial for maintaining price stability. Members of the European Parliament (MEPs) stated that the ECB must be able to make decisions without political interference, but also highlighted that central banks should remain accountable and not operate in isolation. The report expressed support for international solidarity among central banks, including with the US Federal Reserve.
On digital currencies, MEPs acknowledged ongoing work on introducing a digital euro, describing it as important for strengthening EU monetary sovereignty and supporting the single market. However, they stressed that cash should continue to play an important role. The report warned that relying solely on private or non-EU actors for digital payments could lead to exclusion of some users and merchants. MEPs called on the ECB to increase monitoring of crypto-assets.
Regarding inflation, the report was critical of how quickly price stability was restored during recent periods of high inflation. It encouraged the ECB to analyze what caused persistent inflation so lessons can be learned for future crises. MEPs voiced concern about rising living costs since the COVID-19 pandemic, noting that average meal prices are now a third higher than before and this particularly affects low-income households. The text cautioned against easing monetary policy too quickly and said any changes should focus on maintaining price stability.
The Parliament also raised concerns about unconventional measures such as asset purchase programs, saying these tools can distort market signals. The ECB was criticized for reducing its balance sheet too slowly since expanding it during past crises. MEPs noted that short-term lending schemes from the ECB have largely replaced private interbank lending since 2008.
Support was expressed for gradually ending government bond purchases by the ECB and reducing its direct involvement in buying securities. The report acknowledged that fiscal challenges faced by governments have made it harder for the ECB to focus solely on price stability.
During Monday’s debate, rapporteur Johan Van Overtveldt said: “The independence of the ECB is not a technical detail. History provides ample evidence that direct political intervention or interference with central bank independence invariably leads to inflation, financial instability and even nasty political turmoil. Reaffirming the ECB’s independence is even more important in the current global context. This threat to independence is especially pronounced in the US. Monetary and financial stability are like water and electricity. Their importance is only recognised when they are absent.”
Ms Lagarde added: “At a time when central bank independence is challenged in parts of the world, the European Parliament’s clear support of the principle sends an important signal to us. That independence ensures that we keep control of our monetary destiny. We also recognise however that the ECB’s independence goes hand in hand with accountability.”
The final vote saw 443 votes in favor, 71 against, and 117 abstentions.
