PARIS (MktNews) - There is no need to reform the Monetary Policy Council (MPC) of the Bank of France, which advises Governor Jean-Claude Trichet, according to Raymond Douyere, a former Socialist Party parliamentarian appointed to the nine-member MPC last year.
"Abolishing the MPC would raise questions about the concept of the decentralized eurozone central bank system," Douyere explained in an interview with Market News International.
Since the launch of European Monetary Union in 1999 with the European Central Bank governing council responsible for policy, MPC members no longer have direct influence on interest rates in France. Trichet continues to meet with the Council at least twice a month to discuss economic issues.
The ECB's decisions are in line with the majority view of the MPC, Douyere revealed, but declined to say whether Trichet's vote on the ECB reflects the view of Council or is at all influenced by it.
"So far, there has been no contradiction between the ECB's decisions and the MPC's majority opinion for each ECB's meeting," he said.
A public debate about the legitimacy of the MPC has been going on in France since the establishment of the ECB. The spokesman of the Finance Committee of the National Assembly, Socialist Didier Migaud, has argued for the abolishment of Council, a proposal rejected by Finance Minister Laurent Fabius.
Migaud took the initiative on his own, not on behalf of his party, Douyere said. "So far, there is no such plan."
German Finance Minister Hans Eichel has floated a controversial proposal to remove regional German central bank presidents from the Bundesbank's central council, a step opposed by political leaders at the state level.
"The Germans are moving closer to the French central bank model," Douyere commented.