Underpinnings of the European System of Central Banks

Efforts concentrate on developing the institutional structure which will govern European monetary policy while securing a suitable level of independence. The strong emphasis on independence begs the question of the extent to which accountability can be safeguarded, which is of vital importance for the efficiency as well as acceptance of the Bank's monetary policy. If a high level of independence is secured, a new institution, which has not yet established a reputation as a credible actor in monetary policy, should aim at a high degree of transparency vis-à-vis the public as a useful tool to reduce uncertainties and build up a suitable track record. The ESCB has indicated its intention of taking steps in this direction which will go beyond what is customary in many of its member states. Nevertheless, it will not initially achieve the extraordinarily high level of transparency displayed by the Bank of England (which derives from entirely different prerequisites). Misunderstandings abound as to the institutional structures and responsibilities assigned to the future European monetary policy. Monetary policy has been defined as a responsibility to be assumed by the ESCB, which consists of the European Central Bank (ECB) and the national central banks. Decisions are made by the Governing Council of the ECB, which consists of the Executive Board and the 11 governors from the national central banks, who are, however, not acting as representatives of their respective national central banks. The ECB implements their decisions, drawing on the national central banks in doing so. Demands, frequently simplified, to increase centralisation of the ECB's monetary policy, i.e., to grant the Executive Board sole decision-making power for monetary policy, are opposed to the framework stipulated in the Maastricht Treaty and would actually require a fundamental change in the allocation of responsibilities.Zur Fundierung des Designs des Europäischen Zentralbanksystems; Schwerpunkt "Geldpolitik in der Europäischen Währungsunion"; Underpinnings of the European System of Central Banks