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Understanding Central Banks’ Role in Enlargement – Governance Issues

Author

Listed:
  • Isabella Lindner

    (Oesterreichische Nationalbank, European Affairs and International Financial Organizations Division)

  • Gabriela Mihailovici

    (Banca Nationala a Romaniei (NBR))

Abstract

The EU’s enlargement policy is enshrined in the Treaty on European Union, which lays down the requirements for the accession of any European state. It is against this background that Southeastern European (SEE) national central banks (NCBs) strive to prepare for the challenges of enlargement. This paper relies on the practical experience with three EU accession support projects of the European System of Central Banks (ESCB) to draw a general EU accession road map for applicant countries on which the accession framework for an NCB should be based. During preaccession, an NCB would be well advised to develop governance to improve its decisionmaking capacity. In this paper, we have defined three forms of governance: First, good governance to ensure the fulfillment of economic, legal and institutional requirements; second, external governance for an NCB to participate in accession coordination at the national and EU level; and third, internal governance comprising operational and institutional changes inside an NCB. If NCBs do not pursue a consistent path toward good governance, they might – in the medium to long run – be affected by risks of a strategic, economic, operational and institutional nature. Thus, successful acceding NCBs make EU accession a top priority of their strategy. An NCB’s policy of coordination should be the key policy for effective central bank governance. We therefore recommend that an NCB establish an EU coordination mechanism, an EU coordinator, coordination guidelines and an EU Scenario Process to continuously implement the changes necessary for successful ESCB/EU membership. This process will be more effective if NCBs cooperate in technical projects and draw on the experience of other NCBs.

Suggested Citation

  • Isabella Lindner & Gabriela Mihailovici, 2013. "Understanding Central Banks’ Role in Enlargement – Governance Issues," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 48-65.
  • Handle: RePEc:onb:oenbfi:y:2013:i:1:b:3
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    References listed on IDEAS

    as
    1. Sandra Dvorsky, 2009. "Central Banks in Transition: Legal and Institutional Challenges on the Way to EU Integration," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 5, pages 82-91.
    2. repec:onb:oenbfi:y:2009:i:0:b:11 is not listed on IDEAS
    3. Mr. Rabah Arezki & Mr. Marc G Quintyn & Mr. Frederik G Toscani, 2012. "Structural Reforms, IMF Programs and Capacity Building: An Empirical Investigation," IMF Working Papers 2012/232, International Monetary Fund.
    4. Ms. JoAnne Morris & Mr. Tonny Lybek, 2004. "Central Bank Governance: A Survey of Boards and Management," IMF Working Papers 2004/226, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Central bank; enlargement; governance; policy of coordination;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • K0 - Law and Economics - - General
    • Z18 - Other Special Topics - - Cultural Economics - - - Public Policy

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