Allocation of Power in the Enlarged ECB Governing Council

The enlargement of the EU has some consequences for the euro and the euro area institutions.

 

In my last log I noted that Sideek M. Seyad, Associate Professor of European Financial Law at the Stockholm University Faculty of Law, has published a two part paper on the “Legal Consequences of the EU Enlargement for the Euro”.

 

Today I want to inform you about a paper on “The Allocation of Power in the Enlarged ECB Governing Council: an Assessment of the ECB Rotation Model”, by Ansgar Belke (University of Hohenheim) and Barbara Styczynska (University of Fribourg) in the Journal of Common Market Studies (Volume 44, No. 5, pp. 865-97).

 

The Rotation Model is laid down in Article 10.2 ESCB Statutes, which was amended pursuant to Article 10.6 ESCB Statute. The latter, so called enabling clause was introduced by the Article 5 of the Nice Treaty.

 

The new voting system is a two-tier rotation model, whereby NCB governors are allocated to different groups, each group having a specific number of voting rights. In the transition phase – when the number of NCBs in the euro area is between 16 and 21 – two groups exist. As from the date on which the number of governors reaches 22, the voting rights will be allocated to three groups. As a consequence of the rotation scheme the voting frequency of the governors will vary considerably.

 

Belke/Styczynska conclude that one negative feature of the proposed voting reform is the sharp shift of the allocation of power during the early euro area accession phases. Furthermore, they conclude that especially the acceding countries lose influence on the voting result compared with the voting power under the status quo.

 

One benefit, however, so Belke/Styczynska conclude, is the higher degree of representation the reform would entail. A more important result, according to the authors, is that the voting power of the Executive Board would be considerably strengthened through the reform. Under the “quite realistic presumption that the Executive Board represents the interest of the euro area, this result tends to come as a benefit”.