The financial crisis followed by the debt crisis has led to a substantial change in the mandate of the European Central Bank (ECB) and to more political provisions. The ECB has acquired implicit mandates to safeguard the euro but also an economic policy which all go far beyond the original objective of price stability. The current ambiguity can not last and the enlargement of the mandate could be one of the great European debates of the early 2020s.
In the ECB’s report published on March 28, 2017 by the Anti-Corruption and Transparency Association named Transparency International, the question of the nature of the institution’s mandate – and its consequences for its liability – was clearly raised. “The extreme measures taken by the ECB since 2008,” the report reads, “pushed the ECB’s mandate to its breaking point, challenging the institution’s responsibility framework”. In the past 20 years, never has the mandate of the ECB seemed so obsolete.
The successful decade of the original mandate
This mandate was defined by Article 127 of the Maastricht Treaty of 1992 and makes the ECB the guardian of price stability in the euro zone. This stability, which was later defined by the Governing Council as “a year-on-year increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2%” is legally the sole responsibility of the ECB. Its former president until 2011, Jean-Claude Trichet, liked to repeat every once in a while, that he had “one needle to his compass”, which was price stability. His successor, Mario Draghi, does not cease to hammer the terms of the aforementioned contract.
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