The Silent Empowerment of the ECB during the Euro Crisis

During the fundamental economic and political crisis in the Eurozone, the European Central Bank (ECB) was able to empower itself. Before the Euro crisis, the ECB had a total permanent staff of 1177. In 2015, this number had increased to 3096. The same is true for its budget which raised from 415 to 677 billion Euros from 2010 to 2015. Moreover, the ECB became the competence to supervise the effective functioning of the European banking system in 2014 (Single Supervisory Mechanism), which makes it possible for the central bank to supervise any bank in the Eurozone. Together, these increasing material resources and new competences empowered enormously the ECB. This paper argues that the empowerment of the ECB was a function of three causal mechanisms. First, preference heterogeneity within the collective principal (Euro member states) allowed the ECB to widen its power. Second, the delegation design which gives the ECB a high degree of independence and in which oversight mechanisms are rare, allied with the inexistence of credible sanction mechanisms, hindered effective control of the ECB. Third, the ECB was able to empower itself because it has a monopoly on the provision of the public good monetary stability in the Eurozone. This dependence of Euro Member States on the expertise of the ECB made the difference allowing the ECB to empower itself.