From Frankfurt with Legitimacy? Reassessing the Ecb's (fiduciary) Role during the Eurozone Crisis

This article shows that the conventional P-A framework falls short of capturing the dynamics behind the European Central Bank’s actions during the euro area crisis. The ECB is conceptualized instead as a trustee that is entrapped in a constant battle of ‘legitimacy politics’ (Alter 2006). It is argued that the German government in liaison with its Finance Ministry and the Bundesbank has taken on the role of shadow principal of the ECB by establishing itself as the dominant voice in the legitimacy politics discourse. As a consequence, the ECB had to engage in a fine balancing act between preserving the effectiveness of its (unconventional) monetary policies and pleasing its shadow principal. Threatened by the spectre of waning central bank independence it deployed various strategies to counter this trend and maintain its autonomy. Following Hawkins and Jacoby (2006), I demonstrate empirically that the ECB’s reaction function entailed (a) the interpretation and reinterpretation of rules, (b) buffering principal monitoring by using dualism and ceremonialism and (c) permeabilityto third parties. Based on these results I discuss whether the ECB is a conventional engine of European integration or rather should be conceptualized as an ‘engine of differentiated integration’. The article concludes with the finding that far from being a scrupulous competence-maximizer that endangers European democracy the ECB prudently fulfilled its fiduciary role – not more, not less.