Nationality and the ECB's Executive Board

Publication: Policy Letter No. 12, 2012
Topic Area: Macro Finance
Authors: Laura Moretti
Date: Aug 2012
Keywords: European Monetary Union, institutional design
Abstract:

The exceptional circumstances in which the ECB has been operating in the past years are testing not only the currency union itself, but also its institutional design. While the Governing Council of the ECB was designed to mainly set interest rates optimally for the union as a whole, the recent crisis has expanded the tools of the ECB to include unconventional monetary policy actions that potentially increase the risk exposure of its balance sheet. Since each country would contribute to the losses according to its capital key, a different voting mechanism that takes into account the single country’s contribution to the ECB’s capital could be advisable.

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