Transparency in the ECB

This article was originally published on EUI Times here

DCurtin-300x300A recent arrival to the EUI and RSCAS as a Joint Chair Professor of European Union Law, Professor Deirdre Curtin works on the perennial dilemma of how to reconcile transparency with governing institutions’ operational need for confidentiality.

“My ongoing research relates to the relationship between national security and a fundamental right of privacy in the European and global context. The role of judges has become very important both at the national and the European level. But what does that mean in practice and what is the interaction with new data protection legislation and international agreements? It’s fascinating in a wider governance perspective.’’

Recently Curtin has focused on the operations of the European Central Bank (ECB). Few EU institutions have elicited such rancour from Europe’s citizens as the ECB. Its new 1.3 billion euro Frankfurt headquarters were the target of violent protests involving over 1000 people in March last year, while during the tense Greek debt negotiations in summer of the same year, former Greek finance minister Yanis Varoufakis accused the ECB of ‘liquidity asphyxiation’ over its refusal to provide short-term lending.

While ostensibly an apolitical body, it has in recent years become a highly politically potent symbol of the European Union’s apparent crisis of legitimacy. Inextricably associated with the austerity policies that followed bailouts for Europe’s struggling economies in Ireland, Spain, Portugal and Greece, the ECB’s role in European governance is often ambiguous.

As Curtin tells EUI Times, “It’s unheard of for central banks to have protestors burning cars outside their very visible new building. Its role in the Troika in particular has led to a lot of agitation.’’

She explains further, “I take a critical approach [to the ECB]. They keep a lot secret and they are relatively unchallenged. They have a lot of discretion.’’

For Curtin, the ECB is interesting because it is an institution which has evolved particularly rapidly. She elaborates. “The issue really is the way in which [the ECB] gets more power. It has grown over time. It was set up to do monetary policy only and it has subsequently acquired a significant banking supervisory role over a very large number of national banks (currently 129) .Even national central banks under its supervision appeal for improvements in the transparency of the ECB’s activities.”

For Curtin, one central problem with the ECB is the secrecy with which it conducts its operations. It is opaque both operationally and in terms of actual institutional complexity. She adds, “One of the issues with the financial crisis…was the refusal by the ECB to engage at the national level even after the necessity for confidentiality had gone, years later. The way the Troika came about and operated in practice was problematic from the perspective of democracy.’’

Curtin’s research therefore places her at the centre of animated debates on the future of the European project, and specifically the ECB and the scope of its powers. If the EU fails to be accountable to its citizens, addressing its crisis of legitimacy is impossible.

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