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The Institutional Design of EMU: A Democratic Deficit?

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  • Verdun, Amy

Abstract

The introduction of the euro is accompanied by an independent European Central Bank (ECB) which is solely responsible for monetary policy in the euro zone. No European institution will be introduced to flank the ECB. This particular institutional design is problematic. This article argues that Economic and Monetary Union (EMU) suffers moderately from a democratic deficit. However, the case of Germany illustrates that it is not the independence of the ECB that should be cause for concern, but the absence of specific domestic features and a government. It is unclear which political authority will be held responsible if EMU leads to an uneven distribution of costs and benefits across the euro zone. Economic literature suggests that under EMU distortions could well occur and that a different design could deal better with these imperfections. The historical process leading to EMU explains the reasons for its particular design. Although imperfect, EMU is an improvement over the pre-EMU status quo in which Germany de facto dominated monetary policy. Nevertheless, the design of EMU remains suboptimal.

Suggested Citation

  • Verdun, Amy, 1998. "The Institutional Design of EMU: A Democratic Deficit?," Journal of Public Policy, Cambridge University Press, vol. 18(2), pages 107-132, May.
  • Handle: RePEc:cup:jnlpup:v:18:y:1998:i:02:p:107-132_00
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    Cited by:

    1. Lindner, Vincent & Eckert, Sandra & Nölke, Andreas, 2022. "Political science research on the reasons for the (non) adoption and (non) implementation of EMU reform proposals: The state of the art," SAFE Working Paper Series 339, Leibniz Institute for Financial Research SAFE.
    2. Dermot Hodson, 2013. "The Eurozone in 2012: ‘Whatever It Takes to Preserve the Euro'?," Journal of Common Market Studies, Wiley Blackwell, vol. 51, pages 183-200, September.
    3. Trym Nohr Fjørtoft & Hallvard Sandven, 2023. "Symmetry in the Delegation of Power as a Legitimacy Criterion," Journal of Common Market Studies, Wiley Blackwell, vol. 61(4), pages 900-916, July.
    4. C. Randall Henning, 2006. "The External Policy of the Euro Area: Organizing for Foreign Exchange Intervention," Working Paper Series WP06-4, Peterson Institute for International Economics.
    5. William Roberts Clark & Matt Golder & Sona Nadenichek Golder, 2002. "Fiscal Policy and the Democratic Process in the European Union," European Union Politics, , vol. 3(2), pages 205-230, June.

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