The geography of the European Central Bank: form, functions and legitimacy

In their different ways, the European Central Bank (ECB) and the US Fed combine expertise with representation: key members of these institutions along with their staff are appointed on the basis of their expertise and professional qualifications whereas each organization is conceived, in part, so as to represent the constituent nation-states or regions that make up their currency zones. In this article, the tension between expertise and representation apparent in the constitution of each institution is explored with emphasis on the ways in which geography is represented in monetary policy decision-making. The formal representation of nation-states in the ECB, their voting rights, and the significance or otherwise of large Eurozone countries is also considered. Being an analytical assessment of the effectiveness of the ECB compared with the Fed, the effectiveness of each institution is assessed in the light of financial risk and uncertainty and the complex interplay between monetary policy-making and fiscal federalism. Implications are drawn as regards the management of the Euro crisis has been managed, and the ways in which the welfare of peripheral countries have been discounted.