EU Referendum


Eurocrash: Lisbon treaty goes missing


16/08/2012



ECB 017-bap.jpg

Headlined in Handelsblatt (but nowhere else that I have seen), is a call for "radical restructuring" of the ECB.

The report starts by telling us that preservation of price stability is "the core mission of the European Central Bank (ECB)". But the debt crisis has changed its role, forcing the Bank to intervene massively to ensure the liquidity of the banking system and to cushion the costs of refinancing states.

The Bank, we are then told, could again be active, especially after president Mario Draghi had recently declared that he would do whatever it takes to defend the euro, which gives rise to the question of whether the tasks the ECB has taken over are still covered by its mandate.

According to Bundesbank chief Jens Weidmann, the ECB is being used for purposes which increasingly do not comply with its mandate, so much so that politicians of the CDU and FDP now hold that a fundamental reform of the Bank is necessary.

Within the report, though, multiple references are made to the "independent" role of the ECB, and concern is expressed that the proposed role of the Bank as a supervisory body would "undermine its independence".

However, in asserting this, commentators and critics seem to have forgotten that, under the Lisbon Treaty, the ECB lost its independence and became a fully-fledged institution of the European Union.

As such, under Article 13 of the consolidated treaty (p. 23), the Bank, along with the other institutions, is told that it: "shall aim to promote its (the Union's) values, advance its objectives, serve its interests, those of its citizens and those of the Member States, and ensure the consistency, effectiveness and continuity of its policies and actions".

While there are specific duties allocated to the ECB, they do not transcend these more general duties, which are so wide-ranging as to encompass virtually anything the "colleagues" might demand of it.

In that context, not only is the ECB very far from being independent, its mandate is far wider than is generally believed, covering anything that might serve the interests of the EU – however those might be defined.

One should also be aware that the president of the Bank, one Mario Draghi, is also duty bound to serve the interests of the Union, to which effect he is working with Barroso, Rompuy and Juncker, with a view to drawing up a treaty on fiscal union. Draghi, therefore, cannot be considered an independent voice, when his current priority is to develop a template for further integration.

The crucial thing to understand, therefore, is that the ECB is a political structure, set up to perform political tasks under the leadership of a man bound by political objectives. Its behaviour will not be the same as that which one could expect of an independent institution, charged exclusively with managing economic issues. To expect otherwise would be absurd.