BERLIN — Great crises often produce enduring images. For the Israeli-Palestinian conflict, this has often been a terrified child cowering behind protective parents; for 9/11 it was brave firemen rushing headlong into collapsing buildings. Last month saw what could become one of the lasting images of Europe’s unending crisis: the sight ofburning cars and buildings after riots outside the European Central Bank.
While such carnage seems — and indeed is — pointless, it makes sense at another level. While protesters in other countries stage rallies and speeches outside of their national parliaments, Europe’s central bank is increasingly its main seat of power. It was the bank, not Europe’s political institutions, that seemed to snuff out the existential threat to the eurozone with a mere sentence by its president in July 2012 —we will do whatever it takes to save the euro.
It was again the bank that offered hope to a stagnating eurozone economy in March this year by embarking on an extensive bond-buying program. In the face of national complacency and disagreement, this is the institution that is increasingly making Europe’s political and economic weather.
There is thus some irony in the fact that this body is also the most unaccountable of the EU’s institutions. While a lack of accountability has often been a complaint leveled at the EU, particularly from the recalcitrant U.K., the EU’s decision-making structure has been significantly democratized in the last decade. By contrast, the ECB is both unelected and highly independent. Its autonomy from political censure is greater even than analogous institutions in other countries. Unlike the U.S. Federal Reserve, Europe’s Parliament plays little role in selecting bank members; its deliberations and documents meanwhile are not publicly available.
“The ECB is both unelected and highly independent. Its autonomy from political censure is greater even than analogous institutions in other countries.”
While such secrecy and autonomy were well suited to an era when the bank merely set interest rates or printed notes, the current bank has greater political responsibilities. As part of the infamous “Troika” monitoring the debt of southern EU states, it played a significant role in the recent standoff between Germany and the newly elected Greek government over whether to re-negotiate Greece’s onerous “bailout” program. Its bond-buying program meanwhile — likely to significantly alter the debt burdens of struggling southern states — has significant distributive implications (and as such, has been heavily resisted by the German government). The bank has economic power, but also increasing political influence.