Instrumentalizing EMU’s democratic deficit: the ECB’s unconventional accountability measures during the eurozone crisis

ABSTRACT

This article shows that the quasi-fiscal nature of the ECB’s unconventional monetary policy measures and its troika membership created three mutually reinforcing threats to its political independence. First, it led to a rising level of public distrust in the ECB. Second, it triggered an elite dissensus on whether political independence of central banks was still the appropriate solution to the time inconsistency problem. Third, it created institutional overburdening with negative repercussions for the central bank’s output legitimacy. Faced with this diverse set of challenges in creditor and debtor countries, the ECB exploited EMU’s democratic deficit by relying on visits to national parliaments to preserve its independence.

KEYWORDS:

• European Central Bank
• accountability
• euro area
• central bank independence
• monetary policy
• national parliaments

Acknowledgments

The author would like to thank Philipp Genschel, Waltraud Schelkle, C. Randall Henning, Hjalte Lokdam, Sebastian Diessner and two anonymous reviewers for their helpful comments and suggestions.

Disclosure statement

No potential conflict of interest was reported by the author.