The enlargement of the eurozone to 19 countries in 2015 has sparked a debate in Germany as to whether Europe's top economy will see its power curbed within the European Central Bank. The eurosceptic AfD party, but also leading right-wing politicians and economists are fanning fears that Europe's top economy could hold less sway on the ECB's decision-making governing council as more countries sign up to the euro.
And members of the conservative CDU and CSU parties are calling for a change to the rules so that the head of the German central bank will always have a vote in every ECB decision. The once mighty Bundesbank, reputed for its unflinching anti-inflationary stance, was the model on which the ECB is based. But as the eurozone crisis unfolded and deepened, the Bundesbank's imprint on the institution began to fade. This was not infrequently the source of acute tension: both Bundesbank chief Axel Weber and ECB chief economist Juergen Stark quit over the ECB's handling of the crisis.
Since the ECB took over the monetary policy reins for the euro area, the policy-setting governing council has had a one man-one vote system under which each of the six members of the ECB's executive board and each national central bank governor has one vote. But with the prospect of more and more countries signing up to the single currency, a new system was agreed back in 2003 whereby once membership exceeded 18 states, a system of rotating votes would be introduced to prevent the decision-making process from becoming too unwieldy.
With Lithuania becoming the euro area's 19th member from January 1, 2015, this new system will come into effect. From then on, the eurozone's five biggest economies - France, Germany, Italy, the Netherlands and Spain - will share four votes, and the other 14 member states will share 11 votes. That means that in one out of every five meetings, Germany, Europe's paymaster, will not have a vote in any ECB decisions. The head of the influential Ifo economic think-tank, Hans-Werner Sinn, has long argued that even the current one man-one vote system itself is untenable, since an economic powerhouse such as Germany has no more say than a tiny country such as Malta. The prospect of Germany losing its vote therefore has eurosceptics such as the AfD party up in arms. It demands that the Bundesbank be given a right of veto.
But leading members of the mainstream CDU and CSU parties have also chimed in. Markus Soeder of the Christian Socialist CSU warned that Germany could purposely be sidelined by timing particularly controversial decisions for those meetings when the Bundesbank would not vote. Ifo chief Sinn agreed. The new system "will reduce Germany's say even more within the ECB" and "make it easier to push through" contested measures such as the bond purchase programmes recently criticised by the German constitutional court, he argued.
Not surprisingly, the Bundesbank itself is staying out of the debate, refusing to comment on the matter publicly. As for the ECB, it points out that even if an individual governor will not actually have a vote, all central bank chiefs will continue to participate actively in the meetings and make their voice heard in every debate. And anyway, the ECB traditionally likes to reach its decisions by consensus, rather than putting them to the vote.
The German government, too, says officially that it has nothing against the new system. The finance ministry said it "is not in the German government's interests to change the rotation system or even start a debate about altering the ECB's statutes," which would in any case require a change in Europe's treaties. "The ECB is a European institution governed by European and not national interests," the ministry argued. Commerzbank's main ECB watcher, Michael Schubert, pointed out that the smaller countries "are at risk of losing more power" than the larger countries. Furthermore, the Bundesbank with its lone dissenting vote had not been able in the past to block a decision, so the new system "is unlikely to have any practical consequences," Schubert said.
Comments
Comments are closed.