Managing Europe’s Money: the Organization, Powers and Functions of the ECB

The aim of this chapter is to provide a brief overview of the organization — including voting procedures — powers and functions of the ECB and the organization of the ESCB. We also take the opportunity to explore some of the main issues of concern and debate regarding the operation of the ECB and its relationship with other institutions, although we discuss the larger issues of the bank’s independence and problematic legitimacy in the following chapter. Despite the ECB’s statutory independence, our ‘Leviathan’ must operate as part of a constantly developing and controversial EMU ‘regime’ that has a substantial impact on the bank’s activities. One issue of debate concerns the role of the ECB over prudential supervision. The ECB argues in favour of transferring control over prudential supervision to NCBs on the grounds that, as part of the Eurosystem, the NCBs are more likely to be effective supervisors of banks which operate in an EU-wide/international market. We also examine the developing and often unclear role of the ECB in the context of four levels of coordination. The first is within the Eurosystem and the respective roles of the ECB and NCBs in the management of Europe’s money. The second level is in relation to other EU institutions, notably in the context of the ‘soft’ macroeconomic policy co-ordination managed by the Council of Ministers (the Eurogroup) and the coordination with the Council on external monetary policy.