How Independent Is The ECB?

As the European Union prepares to welcome up to twelve new members, debate is heating up among the leading candidate countries about whether or not speedy adoption of the euro will promote or impede rapid catch-up growth. But expanding the reach of monetary union raises two equally fundamental questions for current euro members: does formal political independence for the European Central Bank deliver truly independent judgements about policy? If not, will expansion aggravate the problem because the biases of ECB members will become even more divergent than they are today?

Each new entrant into Europe's monetary union adds one member to the ECB's Governing Council, the group that sets the euro area's monetary policy. With 18 members, the Governing Council is already larger than the governing bodies of the US Federal Reserve Board, the Bank of England, or the Bank of Japan. To reduce the risks of unwieldiness, the ECB needs to reform its Governing Council now.

While the Nice Treaty does not permit re-structuring the Governing Council, it does allow for change in the voting rule that the Council uses. A rule that requires a rotation of votes among Council members, or that groups them into voting blocs, could replace the current one-man-one-vote scheme.

To continue reading, please log in or enter your email address.

To continue reading, please log in or register now. After entering your email, you'll have access to two free articles every month. For unlimited access to Project Syndicate, subscribe now.


By proceeding, you are agreeing to our Terms and Conditions.

Log in;

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated cookie policy and privacy policy.