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Philip Lane says his calls to top banks and bond investors did not ‘front run’ ECB decisions


Philip Lane. Photo: Bloomberg

Philip Lane. Photo: Bloomberg

Philip Lane. Photo: Bloomberg

European Central Bank Chief Economist Philip Lane has come under scrutiny for selectively briefing a group of large financial institutions in a series of private calls.

Mr Lane, a member of the ECB's influential Executive Board and the former governor of the Central Bank of Ireland, made dozens of these calls this year to the likes of Goldman Sachs, JP Morgan and Deutsche Bank, according to a report in the Wall Street Journal.

The news has raised concerns that Mr Lane is favouring big market participants by giving them privileged insight into the ECB's decision making during a time of unprecedented central bank intervention in financial markets.

Asked about the practice today during a virtual "fireside chat" during the Reuters Global Investment Summit, Mr Lane said his interactions with financial institutions were part of a "systemic, structured, planned, transparent" communications policy to guide ECB "watcher groups".

"It very much conforms with the key principles of how to interact with the market in relation to already published information," Mr Lane said. "It’s not to front-run future decisions. So, the timing, I think we thought a lot about it. It’s a structured, systematic approach where we rotate across different types of ECB watchers."

Mr Lane confirmed that he would be continuing the practice and would schedule calls for the afternoon following the ECB's critical monetary policy decision on December 10.

An ECB spokesperson told the Irish Independent that Executive Board members at the ECB regularly participated in similar bilateral calls. The spokesperson also confirmed that "in line with guiding principles, ECB staff members were also on the calls" with Mr Lane - something he reiterated in the Reuters interview.

Mr Lane's diary shows that he made 12 calls to major private market participants in September of this year alone, including calls to bond giant Pimco, hedge fund Citadel and the big US and European investment banks.

Peter Praet, Mr Lane's predecessor as chief economist and executive board member, also conducted private bilateral meetings with large financial institutions, although at a much lower frequency. In the last three months of Mr Praet's term from March-May 2019, he held 13 such briefings.

The ECB guidelines on such calls specify that they should not include market sensitive information but are a "two-way communication" to help "understand the dynamics of the economy, financial markets and the banking sector".

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