EMULEG: The Governance of Monetary Policy: The EMU’s Legitimacy Conundrum

by J. Mendes and A-L. Högenauer

The role of European Central Bank (ECB) in monetary policy and in European Union (EU) law and politics has changed fundamentally in the past decade.

Just as during the sovereign debt crisis, in 2020 it is again at the forefront of economic responses that are essential to preserve the Eurozone, and, many claim, the EU itself. While it has so far been successful, the evolution of the ECB remains deeply problematic, both in terms of legality and legitimacy. It faces a conundrum of independence and democracy that remains unsolved. EU legal and political science scholarship has hitherto avoided addressing the problems that the ECB’s redistributive policies pose to democratic legitimacy in the EU, not least because of how they fundamentally constrain Member States’ economic policies.

EMULEG proposes to re-define the institutional framework of the EMU. It analyses whether the ECB’s independence is too high in light of the increasing polarisation of opinions on its policies and the growing importance of its decisions, and whether there are better alternatives that allow for a rebalancing of independence and democratic legitimacy. For this purpose, we will compare the legal framework of the independence of the ECB to three other central banks, as well as the institutional reality of accountability towards political institutions and the public. The aim is to formulate advice on possible reforms including both changes to the ECB’s legal framework and the institutional practice of central bank accountability in the EU, to find a better balance between effective policies in the pursuance of collective goals and democratic legitimacy.

Prof. Dr. Joana MENDES