The European Central Bank (ECB) will this weekend gather in a countryside retreat near Frankfurt, Germany to finalise the biggest overhaul of its monetary policy in almost two decades.

The entire Governing Council of the ECB, comprising 23 men and two women will meet in person, the first time since the pandemic. At the centre of discussions will be the retooling of the bank for the 21st Century with a new inflation goal, better ways of measuring the economy and agreement on how to treat issues such as climate change and inequality.

The process of streamlining the ECB started 18 months ago but was derailed almost immediately by the coronavirus, which grounded discussions to a halt. However, this weekend, ECB President Christine Lagarde and her colleagues will try to settle the last remaining arguments in the biggest overhaul of the bank in 20 years.

Fresh new look on ECB this weekend

This weekend’s review of the ECB is allowing for a fresh look at profound economic trends within Europe while generating thousands of pages of insights to inform policy decisions in the post-pandemic world. The results of this weekend’s meeting will be placed before the annual ECB Forum on September 28-29.

ECB Chief Economist Philip Lane, speaking in a Bloomberg Television interview today (June 17) explained that the aim of the retreat is to be “relaxed and have a good conversation,” and that “over the summer we do have to move from analysing and discussing to kind of forming our collective view”.

Bloomberg reported that the idea of a review of the ECB was first publicly broached by Bank of Finland Governor Olli Rehn in late 2018 in what was widely seen as part of a pitch to succeed Mario Draghi as ECB president. Since the previous review in 2003, the euro area had grown from 12 members to 19, suffered two major crises and seen the world economy fundamentally change.

Inflation had languished below the ECB’s goal for years, threatening its credibility, and the vague target of “below, but close to, 2%” was part of the problem for some.

At the retreat two major issues will dominate the discourse. That of inflation goal and climate change.