Monetary Policy: Strategic Investments Belong to Politicians

An essay in Helsingin Sanomat argues against expanding the European Central Bank's mandate to include financing strategic investments at below-market rates. The author, Antti Ronkainen, suggests that while the premise of supporting investments in clean energy and security is valid, and that supply shocks and fossil fuel dependence contribute to inflation, the ECB is not the appropriate institution for this task.

Ronkainen contends that if interest rates are ineffective against supply shocks, fiscal policy and better coordination are needed. He criticizes the idea of giving more goals to an "ineffective" tool, stating that financing green investments is fiscal policy and public support for specific sectors. Existing political bodies, such as the European Investment Bank, the Commission, and member state budgets, are already equipped for this and operate under political guidance.

The essay highlights that channeling support through the ECB's balance sheet would make it less transparent. While Ronkainen acknowledges the risks of looser monetary policy and higher inflation associated with his proposal, he ultimately concludes that such significant decisions should not be left to technocrats in a democracy. However, he argues that his own suggestion of broader ECB authority would do precisely that, placing decisions about who receives cheaper money in the hands of central bank technocrats. True accountability, the author insists, belongs with politicians who answer to voters, and financing clean energy and security is too large a task for the central bank.