Technocratic Keynesianism:A paradigm shift without legislative change

status: Published onlin

Marginalism and scope in the early <i>Methodenstreit</i>

status: publishe

The Politics of the ECB’s market-based approach to government debt

The European Central Bank’s (ECB) market-based treatment of government debt was an important cause of the 2010–2012 eurozone crisis. This article analyses the political dynamics that govern the ECB’s approach to government debt from the earliest discussions on Economic and Monetary Union to the COVID-19 pandemic. The first part of the article traces the process of institutional transformation that led the ECB to introduce its strict market-based approach in 2005. I explain this development in terms of a strategy of depoliticization that brings the ECB to introduce a rigid and rule-based approach to designing its collateral framework. The article’s second part explains why the ECB stuck to the market-based approach in the eurozone crisis but not in the pandemic crisis. Although its ill-defined constitutional role led the ECB to disavow its agency earlier, in March 2020, it had become clear that this strategy had stopped working and it was quickly abandoned in the face of a new bond market panic

A risky bet: Climate change and the EU’s microprudential framework of banks

Banking regulation and supervision have a key role to play in realizing the EU’s climate change objectives. In this article, we analyse the EU-level initiatives currently underway to decarbonize the banking system, in particular with regard to the microprudential rulebook. We document how regulators work hard to fit climate policy into the existing objectives of the microprudential framework. We also assess whether these efforts are likely to be successful by sketching two ways forward, which involve their own distinct hazards. The first is a ‘Deferential Transition’, which sees policymakers rely on banks and external rating providers to develop adequate internal risk management procedures while taking a largely agnostic approach as to what methodologies are appropriate. If this is the way forward, we see a number of risks: banks have a clear incentive to downplay risk, while large financial institutions gain a significant advantage and the division of responsibility between banks and supervisors becomes blurred. We also outline the scenario of a ‘Guided Transition’, in which regulators provide fine-grained guidance on the future that banks should anticipate. Although we broadly think this approach is the more effective route to greening EU banking, we also see challenges of an entirely different sort: regulators will unavoidably face political choices and EU lawmakers will need to consider issues of legality, legitimacy, and accountability. In this regard, we argue, the EU faces a risky bet

New strategy, new accountability? The European Central Bank and the European Parliament after the strategy review

A striking asymmetry defines the European Central Bank (ECB)’s approach to democratic accountability. Although the post-2008 era saw the ECB move dramatically beyond the narrow role envisaged for it by the 1992 Maastricht Treaty, the central bank has continued to hew closely to its scarce accountability provisions.This article documents the much more complex and discretionary nature of today’s ECB policymaking by comparing the frameworks informing Governing Council deliberations according to the 1998, 2003 and 2021 strategies. It shows that the transformation of the ECB’s monetary policy strategy has not been matched with enhanced accountability arrangements between the ECB and the European Parliament. The article concludes with ambitious, but concrete policy proposals – both in substance and form – for new ways of informing the public about monetary policy, instruments to improve accountability and coordinating monetary policy with other European policymakers