‘We Serve the People of Europe’: Reimagining the ECB's Political Master in the Wake of its Emergency Politics

• Published date: 01 July 2020
• Author: Hjalte Lokdam
• Date: 01 July 2020
• DOI: http://doi.org/10.1111/jcms.13014

‘We Serve the People of Europe’: Reimagining the ECB’s

Political Master in the Wake of its Emergency Politics

HJALTE LOKDAM

London School of Economics and Political Science, London

Abstract

In the wake of the Euro crisis, the mission statement on the European Central Bank’s (ECB)

website was changed from ‘Our mission is to serve Europe’s citizens’to ‘Our mission is to serve

the people of Europe’. This article situates this discursive shift within a broader change of the

ECB’s self-presentation in public discourses and explores its meaning in terms of political theory

and public law. The article argues that the shift represents a response to the perceived necessity of

reimagining the ECB’s foundation of legitimate governmental authority following its exercise of

emergency powers during the Euro crisis. The discourse emphasizes an organic link between the

ECB and ‘the people of Europe’as a political subject able to authorize previously unauthorized

governmental practices such as the outright monetary transactions programme. It ref‌lects, further-

more, a new governing philosophy that stresses f‌lexibility and discretion rather than strict adher-

ence to rules in the ECB’s exercise of power.

Keywords: European Central Bank; Euro crisis; sovereignty; OMT; emergency politics

We serve the people of Europe by protecting the value of the euro and keeping prices

stable.

(ECB, n.d.)

Introduction

The European Central Bank (ECB) was central to the emergency politics of the Eurozone

crisis. As a result of the crisis, the ECB’s role in Eurozone governance has both widened

and deepened. Through its unconventional monetary policies and involvement in the

troika, the ECB pushed its legal mandate to the limit, if not beyond (Beukers, 2013; Braun,

2017). With the creation of the banking union its formal responsibilities were

expanded considerably beyond a narrow focus on price stability (De Rynck,2016; Howarth

and Quaglia, 2013; Lamandini et al., 2016; Papasavvas, 2015). In facilitating such changes

the ECB, its president Mario Draghi in particular, exercised charismatic leadership and

f‌illed a political vacuum at the heart of the Eurozone (Habermas, 2015; Torres, 2013;

This article develops an argument f‌irst outlined in my blog post, ‘Is the European Central Bank Becoming a Central Bank

for the People of Europe?’(Verfassungsblog,24 April 2016). Jonathan White and Michael Wilkinson encouraged me to

develop it further and for that I am grateful. Early versions were presented in 2017 at the European Central Banking

Workshop at the Institute for European Studies, University of British Columbia and at the European Union Studies

Association Conference in Miami. I would like to thank the participants in these events for valuable input, especially

Michele Chang, Sebastian Diessner, Sebastian Heidebrecht, Sven Hilgers, Signe Larsen and Daniel Schulz. I would also

like to thank the three anonymous reviewers whose comments, critiques and suggestions helped improve the quality of

the manuscript tremendously. Finally, I wouldlike to thank a number of current and former employees of the ECB for

productive discussions about some of the issues raised in this article.

JCMS 2020 Volume 58. Number 4. pp. 978–998DOI: 10.1111/jcms.13014

© 2020 University Association for Contemporary European Studies and John Wiley & Sons Ltd

Tortola and Pansardi, 2019; Verdun, 2017). In so doing, the ECB acted not merely on

the basis of its price stability mandate, but as if its mandate were to secure the

political stability and security of the Eurozone. The ECB, in other words, became a political

actor in a manner that far exceeded the traditional understanding of its monetary policy

mandate.

The ECB’s acts have raised concerns about the legal status of its powers as well as the

democratic legitimacy of their expanded reach (see e.g., Braun, 2017; Curtin, 2017; Gol-

doni, 2017). This concern has been explicitly recognized by the ECB. As Draghi (2013)

put it, greater ‘authority at the European level must be matched by greater democratic le-

gitimacy’(see also, e.g., Draghi, 2012, Fraccaroli et al., 2018; Mersch, 2017). Benoît

Cœuré (2013), member of the ECB’s executive board, has similarly suggested that dem-

ocratic processes at the European level must be strengthened in order to secure an anchor

for effective crisis measures now and in the future. In the wake of the crisis, he suggested,

‘a redef‌inition of the social contract in Europe is essential’.

This article examines the ECB’s attempts to grapple with the disjuncture between the

formal legal authorization of the ECB’s powers and the expanded range of those powers

in the wake of the Eurozone crisis. In doing so, it examines the political theory

undergirding the discourse employed by the ECB in order to make sense of and justify

its emergence as a powerful political actor on the European stage. The article shows that

in justifying its acts as more than unfounded transgressions of the European social con-

tract, the ECB invokes and appeals to the political will of the people of Europe.In

defending its acts as more than unfounded transgressions of the European social contract,

this article shows that the ECB invokes and appeals to the political will of the people of

Europe. The ECB thereby reimagines its foundation of authority as being based not so

much on the law of the treaties as on an organic political relationship with the people

of Europe as the subject of legitimation.

The signif‌icance of the shift from a legal to a political foundation of authority is poten-

tially expansive. In line with the general paradigm of liberal constitutionalism, a legal

foundation of authority is based on an explicit and positive expression of political will

in the past. This entails signif‌icant constraints on the ECB because it relies on a formal

enumeration and limitation of powers. A political foundation of authority, on the other

hand, is based on an organic relationship between rulers and ruled. It offers a considerably

wider degree of f‌lexibility and open-endedness in the exercise of governmental powers

because these powers are (informally) authorized in the present. In the case of the ECB,

this permits a more discretionary governing philosophy and the notion that acts of the

ECB are implicitly authorized, and thereby legitimate, unless political will is explicitly

and effectively expressed against them. An organic link between the ECB and the people

of Europe thus provides a justif‌ication for the ECB’s expanded mandate and role in

Eurozone governance in and following the Eurozone crisis.

The article proceeds in two main sections. The f‌irst section analyses the tensions be-

tween the ECB’s legal mandate and its Outright Monetary Transactions (OMT) pro-

gramme. Pref‌igured in Draghi’s (2012) famous ‘whatever it takes’speech, the OMT

programme was paradigmatic because it raised questions about the meaning and limits

of the ECB’s core monetary policy mandate. Although it was never actually activated,

the programme involved the purchase of potentially unlimited amounts of sovereign

bonds on secondary markets. Effectively, this allowed the ECB to act as a lender of last

‘We Serve the People of Europe’: Reimagining the ECB’s Political Master in the Wake of its Emergency Politics

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© 2020 University Association for Contemporary European Studies and John Wiley & Sons Ltd