The Legitimacy and Accountability of the ECB at the Age of Twenty

This chapter considers the accountability framework and practice of the European Central Bank (ECB) over its more than 20 years of existence and, relatedly, its degree of transparency. To this end, it employs a chronological and contextual analysis of the relevant legal and institutional arrangements, and draws on the concepts of input, throughput, and output legitimacy where appropriate. The principal-agent model is also used as a basic reference point in considering the past and present arrangements regarding the ECB. The discussion begins with the function and main characteristics of accountability, the accountability arrangements at the time of the ECB’s inception, and the subsequent practice. The focus then shifts to the evolution of the ECB’s tasks over the last 20 years. It is argued that the ECB’s accountability framework has not evolved sufficiently to match its expanded powers, thereby rendering it vulnerable to accusations regarding the degree of democratic legitimacy of its action. The chapter identifies the (remaining) gaps across its main fields of activity (monetary policy, financial assistance programmes, and banking supervision), also in light of the ECB’s role during the COVID-19 pandemic. Solutions are proposed, inter alia, in the form of greater involvement of directly or indirectly democratically legitimised Union institutions in the determination of monetary policy objectives. Also, the role of the ECB in tackling major societal challenges including environmental and social sustainability as a means to increase its output legitimacy is explored, but it is argued that it should not be considered a substitute for robust accountability arrangements.