Leadership By Default: The ECB and the Announcement of Outright Monetary Transactions

Starting from the striking effect of the ECB’s announcement of Outright Monetary Transactions (OMT), this paper analyses as to why the ECB emerged as a leader in Eurozone crisis management, and why it was successful in providing a response to the crisis. Based on a rational institutionalist approach to leadership, the paper argues that the ECB emerged as a leader because the benefits of preserving the common currency and thus its own existence outweighed the high costs of its politicization. The ECB’s leadership was successful because of its paramount power resources, the homogenous preferences of Eurozone member states, and the low institutional constraints. Against the backdrop of these favourable circumstances, the ECB influenced the outcomes of crisis management by combining two leadership strategies – the provision of common knowledge and unilateral action – which provided it with a first-mover advantage. The qualitative analysis draws on semi-structured élite interviews which were conducted at the ECB, the German Ministry of Finance, and the EU institutions in Brussels. As a result, the paper argues that the ECB has not acted as a strategic player, but rather as a ‘leader by default’. Instead of engaging in a competition about political influence, the ECB refrained from taking the lead as long as possible because it shied away from the high costs that were connected to it. Only once it became clear that it would not be possible to free-ride on the leadership of any other actor, the ECB finally stepped in and assumed leadership.