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EMU-enlargement and the Reshaping of Decision-making within the ECB Governing Council: A Voting-Power Analysis

Author

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  • Christian Fahrholz

    (Jean Monnet Centre of Excellence, Free University Berlin)

  • Philipp Mohl

    (Jean Monnet Centre of Excellence, Free University Berlin)

Abstract

The monetary policy of the European Central Bank (ECB) is the subject matter of this paper. We analyze the prospects for future price stability in an enlarged European Monetary and Economic Union (EMU). At the heart of this study are the potential e®ects of altering decision-making procedure within the Governing Council of the ECB on price stability in the eurozone. The authors compare the impact of three alternative reform scenarios of the ECB Governing Council with the help of a voting-power analysis. It is presumed that a considerable loss of current EMU-members’ influence power especially in favour of joining Central Eastern European Countries (CEECs) results in a loss of monetary credibility of the ECB: As transparency of the decision-making process within the ECB is lacking, markets may consider the ECB to be too much inclined to the economic performances of the CEECs. This has then a negative impact on the level of price stability in Europe. The voting-power analysis indicates which reform proposal is best with respect to a price-stability benchmark.

Suggested Citation

  • Christian Fahrholz & Philipp Mohl, 2004. "EMU-enlargement and the Reshaping of Decision-making within the ECB Governing Council: A Voting-Power Analysis," Eastward Enlargement of the Euro-zone Working Papers wp23, Free University Berlin, Jean Monnet Centre of Excellence, revised 01 Jun 2004.
    • Handle: RePEc:ezo:ezppap:wp23
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    Cited by:

    1. repec:bla:jcmkts:v:44:y:2006:i::p:865-897 is not listed on IDEAS
    2. Helge Berger, 2006. "Optimal central bank design: Benchmarks for the ECB," The Review of International Organizations, Springer, vol. 1(3), pages 207-235, September.
    3. Belke, Ansgar & von Schnurbein, Barbara, 2010. "European Monetary Policy and the ECB Rotation Model – Voting Power of the Core versus the Periphery," Ruhr Economic Papers 175, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    4. Ansgar Belke & Barbara Styczynska, 2006. "The Allocation of Power in the Enlarged ECB Governing Council: An Assessment of the ECB Rotation Model," Journal of Common Market Studies, Wiley Blackwell, vol. 44(5), pages 865-897, December.
    5. Ansgar Belke & Barbara Schnurbein, 2012. "European monetary policy and the ECB rotation model," Public Choice, Springer, vol. 151(1), pages 289-323, April.
    6. repec:bla:jcmkts:v:47:y:2009:i::p:25-53 is not listed on IDEAS
    7. Ansgar Belke & Barbara von Schnurbein, 2010. "European Monetary Policy and the ECB Rotation Model – Voting Power of the Core versus the Periphery," Ruhr Economic Papers 0175, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    8. Agnès Bénassy‐Quéré & Edouard Turkisch, 2009. "The ECB Governing Council in an Enlarged Euro Area," Journal of Common Market Studies, Wiley Blackwell, vol. 47(1), pages 25-53, January.
    9. Helge Berger, 2006. "Unfinished business? The ECB reform ahead of euro area enlargement," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 7(4), pages 35-41, December.
    10. repec:zbw:rwirep:0175 is not listed on IDEAS
    11. Ullrich, Katrin, 2004. "Decision-Making of the ECB: Reform and Voting Power," ZEW Discussion Papers 04-70, ZEW - Leibniz Centre for European Economic Research.

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