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The legal framework for the European System of Central Banks

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  • Siekmann, Helmut

Abstract

The paper traces the developments from the formation of the European Economic and Monetary Union to this date. It discusses the fact that the primary mandate of the European System of Central Banks (ESCB) is confined to safeguarding price stability and does not include general economic policy. Finally, the paper contributes to the discussion on whether the primary law of the European Union would support a eurozone exit. The Treaty of Maastricht imposed the strict obligation on the European Union (EU) to establish an economic and monetary union, now Article 3(4) TEU. This economic and monetary union is, however, not designed as a separate entity but as an integral part of the EU. The single currency was to become the currency of the EU and to be the legal tender in all Member States unless an exemption was explicitly granted in the primary law of the EU, as in the case of the UK and Denmark. The newly admitted Member States are obliged to introduce the euro as their currency as soon as they fulfil the admission criteria. Technically, this has been achieved by transferring the exclusive competence for the monetary policy of the Member States whose currency is the euro on the EU, Article 3(1)(c) TFEU and by bestowing the euro with the quality of legal tender, the only legal tender in the EU, Article 128(1) sentence 3 TFEU.

Suggested Citation

  • Siekmann, Helmut, 2015. "The legal framework for the European System of Central Banks," SAFE White Paper Series 26, Leibniz Institute for Financial Research SAFE.
  • Handle: RePEc:zbw:safewh:26
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    References listed on IDEAS

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    1. Lastra, Rosa Maria, 2006. "Legal Foundations of International Monetary Stability," OUP Catalogue, Oxford University Press, number 9780199269341.
    2. Scott, Hal S, 1998. "When the Euro Falls Apart," International Finance, Wiley Blackwell, vol. 1(2), pages 207-228, December.
    3. Bitros, George C., 2013. "European Union failures in Greece and some possible explanations," MPRA Paper 45017, University Library of Munich, Germany.
    4. James, Harold, 2012. "Making the European Monetary Union," Economics Books, Harvard University Press, number 9780674066830, Spring.
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    1. Siekmann, Helmut, 2018. "Legal tender in the euro area," IMFS Working Paper Series 122, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).

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    Keywords

    economic and monetary union; euro; monetary policy; economic policy;
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