(Repeats Friday story without changes to text)
* Only two policymakers use wealth manager
* Most others pick funds, stocks
* ECB says rules are being reviewed
FRANKFURT, Oct 22 (Reuters) - The European Central Bank
should tighten the rules governing personal investments by its
policymakers if it wants to steer clear of controversies like
that embroiling the Federal Reserve, lawmakers, academics and
transparency activists say.
Their proposals include having the euro zone's rate-setters
only invest via wealth managers, publishing the time of any
personal trade, and barring them from touching securities that
directly benefit from the ECB's asset-purchase programs.
The Fed on Thursday banned individual stock purchases https://www.reuters.com/world/us/fed-ethics-office-cautioned-policymakers-last-year-about-personal-securities-2021-10-21
by its top officials and unveiled other restrictions after an
uproar over trades made in 2020, when the U.S. central bank
intervened to stop a collapse in financial markets as the
The ECB's own disclosures https://www.ecb.europa.eu/ecb/access_to_documents/document/declarations/shared/pdf/ecb.dr.dec210930_declarations_of_interest.en.pdf
for last year show 13 of the 25 members of the Governing
Council picked their own funds, stocks and bonds - in some cases
including government bonds the ECB is hoovering up under its
stimulus programs or shares in companies whose debt it buys.
Ten rate-setters had no or negligible investments while two
had an independent manager look after their wealth.
There has been no suggestion of wrongdoing by any of the
ECB's policymakers, whose decisions - such as setting interest
rates or buying trillions of euros worth of bonds - influence
But some lawmakers, academics and activists who spoke to
Reuters say the current rules do not protect policymakers or the
euro zone central bank from potential questions about conflicts
"There is a need for a thorough overhaul of the ECB's rules
when it comes to private financial transactions," said Kenneth
Haar, an analyst at Corporate Europe Observatory, a campaign
group which focuses on transparency.
He proposed making it compulsory for policymakers to use an
investment manager whom they can't influence, a recommendation
backed by European lawmaker Sven Giegold and campaigner Alessia
Del Vasto of Positive Money Europe.
An ECB spokesperson said the central bank had been reviewing
its ethics framework for some time, chiefly with the aim of
harmonizing rules across the different national authorities.
She declined to comment on any specific change before the
review is finalized later this year.
The ECB's Governing Council, which includes the six-member
Executive Board and the 19 governors of the euro zone's national
central banks, are bound by a Code of Conduct https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52019XB0308(01)&from=EN.
Approved in 2019, it says they should not use confidential
information for their benefit and recommends they "place their
investments under the control of one or more recognized
portfolio managers who have full discretion."
French central bank governor Francois Villeroy de Galhau and
Luxembourg's Gaston Reinesch already do so but most of their
colleagues make their own investments.
This is all allowed under ECB rules and each investment has
been approved by the Ethics Committee as required.
ECB rules bar staff from investing in financial corporations
but allow most other types of investments, with some checks.
By contrast, active trading by top Fed officials will now be
expressly prohibited, with purchases limited to investments like
mutual funds, and all transactions vetted in advance by the U.S.
central bank's ethics officer.
"The ECB should also clearly state that active investment is
prohibited," Del Vasto said.
FUNDS, STOCKS AND BONDS
A Reuters analysis of the ECB's disclosures show nine
members of the Governing Council owned units of investment
funds, which is permitted by staff rules.
Two owned government bonds, the main purchase of the ECB's
massive quantitative easing programs and an investment which
requires prior authorisation by the Ethics Committee.
Four invested in listed stocks, including some companies
whose bonds are part of the ECB's Corporate Sector Purchase
While this is in line with ECB rules, Corporate Europe
Observatory's Haar said it should be prohibited because "there
should be an arm's length between ECB officials and corporations
that could be covered by the CSPP."
Five policymakers owned stakes in privately held companies,
including some real estate firms. The rules allow policymakers
to buy shares and then report they have done so.
Unlike the Fed, the ECB does not publish the date of
policymakers' trades or their value, though these are vetted by
the Ethics Committee and, annually, by an outside firm.
"We need more transparency, at least the same level of
disclosure as the Fed," said Benjamin Braun, a senior researcher
at the Max Planck Institute for the Study of Societies and the
author of a 2017 report on ECB accountability and independence.
HOLDING PERIOD, CHECKS
The Fed will also now require policymakers to hold any
investment for at least a year - a rule Positive Money's Del
Vasto said the ECB should copy.
The ECB currently requires policymakers seek authorisation
to close a trade less than a month after opening it.
But the ECB documents do not point to major changes in
policymakers' holdings compared to their disclosures in 2019,
meaning they already tend to keep their investments for longer
than a year.
The Ethics Committee is appointed by the Governing Council
and currently includes two former members - Patrick Honohan and
Erkki Liikanen - and Virginia Canter, previously an ethics
adviser to U.S. presidents and the International Monetary Fund.
This isn't good enough for leftist Manon Aubry, who is among
European Parliament lawmakers backing the creation of an
independent body to check on ethical matters relating to top EU
The Greens' Giegold said the proposed changes would be steps
in the right direction but would not solve the underlying
conflict, namely that policymakers' wealth tends to be affected
by their decisions.
"There is a certain tension if rich people make policy,"
Giegold said. "But what's the alternative? That only poor people
can become policymakers or that they have to give everything to
charity? I don't think that would be a good solution."
(Additional reporting by Reinhard Becker; Editing by Catherine