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National central banks and the governance of the European system of central banks

In: The EU Reexamined

Author

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  • Martin Hellwig

Abstract

The chapter analyses the role of national central banks (NCBs) in the governance of the European System of Central Banks (ESCB). NCBs are the owners of the European Central Bank (ECB), and their governors dominate the ECB’s Governing Council, but in monetary policy operations, NCBs are subordinated to the ECB. The dominance of NCB governors has materially affected Governing Council decisions on relations between NCBs and the ECB, allowing the NCBs to maintain some of their erstwhile glory, sometimes in contradiction to the primary law. Examples involve the monetary funding of investments declared as nonmonetary, violations of Treaty provisions for the allocation of income from monetary policy operations, and accounting rules that obfuscate the boundary between ECB-subordinate and independent activities of NCBs. The net effect of these developments is to enlarge the domain of NCB activities.

Suggested Citation

  • Martin Hellwig, 2024. "National central banks and the governance of the European system of central banks," Chapters, in: Jörn A. Kämmerer & Hans-Bernd Schäfer & Kaushik Basu (ed.), The EU Reexamined, chapter 4, pages 43-79, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:22460_4
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    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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