The ECB is an institution of the European Union, but because of its independent status and its specific responsibilities, it occupies a special position within the institutional framework of the EU.
The Treaty on the Functioning of the European Union (TFEU) assigns a clear mandate to the ECB, the maintenance of price stability (monetary policy), as well as a number of other tasks (ECB tasks). To fulfil its mandate and tasks, the Treaty grants the ECB full independence from political interference (independence). The ECB´s independence and its exclusive competence to define and conduct monetary policy have implications for the nature of the ECB’s relations with other policy-making bodies, which cannot go beyond a non-binding dialogue.
In practice, the ECB maintains close relations with other EU and euro area bodies through a variety of avenues, both at policy and expert level. The regular dialogue between the ECB and other policy-makers and social partners provides an opportunity for the ECB to gain information and insights, explain its monetary policy decisions, and for the counterparts to improve their understanding of the ECB´s actions and how their own actions feed into the price formation process. Such interaction enhances the flow of information, promotes mutual understanding of each other’s policy views and allows for a dialogue on issues of common interest, in full respect of the respective responsibilities.
Beyond that, for those tasks where the ECB shares competences with other EU institutions or bodies (for instance in the field of statistics), the Treaty explicitly calls for cooperation between the ECB and the institutions or bodies concerned. The ECB is also involved in the legislative process (Art. 282.5 TFEU) by giving its opinion on draft EU and national legislation of relevance to the ESCB (ECB Opinions). Moreover, in specific cases, the ECB may propose EU legislation or act as EU legislator (ECB legal framework).
More information can be found in The ECB’s relations with European Union institutions and bodies: trends and prospects in the January 2010 issue of the Monthly Bulletin [en].
Relations with the European Council, EU Council, Eurogroup and preparatory Committees
Article 284 of the TFEU provides for the President of the ECB to attend the meetings of the EU Council (typically the Council of Economics and Finance Ministers of the EU Member States – ECOFIN) whenever matters relating to the objectives and tasks of the ESCB are discussed. The ECOFIN Council is the key forum for the coordination of Member States’ economic policies. In addition to its formal monthly meetings, the ECOFIN Council also meets on an informal basis every six months in an enlarged composition, including the Governors of the national central banks of the ESCB. The President and Vice-President of the ECB also attend these meetings, which offer an opportunity for frank and open discussion.
The ECB President is regularly invited to the meetings of the Eurogroup, the monthly informal meetings of euro area finance ministers, which are also attended by the Commissioner for Economic and Monetary Affairs, to discuss “questions related to the specific responsibilities they share with regard to the single currency.” (Art. 1 of the Protocol on the Eurogroup, annexed to the Lisbon Treaty).
The ECB’s relations of with other EU institutions have grown closer over time, and in particular since the economic and financial crisis. For instance, the ECB President attends meetings of the European Council, as well as meetings at the level of Heads of State or Government of the euro area, when relevant issues (such as the EU’s response to the economic and financial crisis) are being discussed.
As part of the overall efforts to strengthen the euro area dimension in economic policy coordination, the euro area leders have agreed to meet at least twice a year in the form of ‘Euro Summits’ to provide strategic orientations on the economic and fiscal policies in the euro area. Reflecting the core role of the Eurogroup, the Commission and the ECB in the daily management of the euro area, it was also agreed that there should be at least monthly meetings of the President of the Euro Summit, the President of the Commission, and the President of the Eurogroup in which the President of the ECB may participate. (The euro area dimension in economic policy coordination).
The ECB also attends the meetings of the bodies which prepare the above-mentioned meetings at policy level. In particular, the ECB is a statutory member of the Economic and Financial Committee (Art. 134.2 TFEU), which brings together senior representatives from EU finance ministries and central banks as well as from the Commission, and plays a pivotal role in preparing the meetings of the ECOFIN Council. The ECB also attends the meetings of the EFC in euro area composition, the so-called Eurogroup Working Group, which prepares the meeting of the Eurogroup. Moreover, the ECB participates in the meetings of the Economic Policy Committee (EPC), another consultative Union body, which contributes to the preparation of the work of the ECOFIN Council, in close cooperation with the EFC, and with a specific focus on structural policies.
Conversely, the Treaty provides for EU policy-makers to attend – without the right to vote – the meetings of the ECB’s Governing Council. According to Art. 284 TFEU, the President of the EU Council (as well as a member of the European Commission, see below) may attend the Governing Council meetings and may also submit motions for deliberation (in practice, the President of the Eurogroup attends in the place of the EU Council President).
Relations with the European Commission
The European Commission, as the guardian of the EU Treaties and initiator of EU legislation, is another key partner for the ECB. The dialogue between the Commission and the ECB is particularly important in view of the important role of the European Commission in the coordination of economic polices and the fact that the European Commission is entrusted with several specific tasks relating to EMU (such as the monitoring of budgetary developments and macroeconomic imbalances and related reporting to the EU Council, and the assessment of the state of convergence in the EU Member States with a derogation). Finally, the Commission is in charge of ensuring that the EU’s common rules are properly applied, and if necessary, seeks their enforcement via the European Court of Justice.
The Commissioner for Economic and Monetary Affairs and the Euro, who is also a Vice-President of the Commission, may attend the meetings of the ECB’s Governing Council but cannot vote. Further contacts take place in the context of the above mentioned meetings of EU and euro area bodies in which both the Commission and the ECB participate. The two institutions have also developed a close working relationship and a wide variety of regular and ad hoc contacts at the working level (e.g. in the field of statistics or payment systems).
Contacts with the European Parliament
In democratic societies, policy independence is accompanied by a reporting obligation. In keeping with this principle, the ECB has to demonstrate that it is acting within the limits and the powers conferred upon it by the Treaties. The European Parliament, which is directly elected by the people of Europe, plays a key role in holding the ECB to account. More detailed information about the discharge of the ECB’s accountability obligations can be found in a dedicated section on accountability.
Moreover, the European Parliament is involved in the appointment procedure for the members of the ECB’s Executive Board, by giving its opinion on the candidates recommended by the EU Council (Art. 283.2 TFEU).
Contacts with EU social partners
Beyond that, the ECB also maintains contacts with the EU social partners, in particular within the framework of the so-called Macroeconomic Dialogue which was established by the European Council in June 1999. This dialogue allows the ECB to explain its policy course and thereby contribute to the anchoring of inflation expectations, and gain first-hand information from social partners on issues of mutual interest.
The ECB´s role in the reformed financial supervisory architecture
The ECB has strongly supported efforts to establish a more coherent regulatory and supervisory framework across Member States, in particular via the creation of three European Supervisory Authorities (ESAs) and the European Systemic Risk Board (ESRB). Under the legislation adopted by the European Parliament and the EU Council, the ECB is entrusted with the task of providing a secretariat for the ESRB, and thus of offering analytical, administrative and logistical support to the ESRB.
For further information, please visit the ESRB website.
The ECB´s role in the crisis management framework
The ECB is involved in parts of the operations of the EFSM, EFSF and the future ESM, in areas such as debt sustainability analysis, the preparation of macroeconomic adjustment programmes for Member States requesting financial support, the monitoring of programme implementation, and as an agent for the secondary market activities of the EFSF (see EMU policy framework for more information).
The ECB’s financial management and integrity is subject to scrutiny. The Statute of the ESCB and of the ECB provides for two external control layers. On the one hand, an independent external auditor is appointed to audit the annual accounts of the ECB (Art. 27.1 of the ESCB Statute). On the other hand, the European Court of Auditors examines the operational efficiency of the management of the ECB (Article 27.2 of the ESCB Statute). In addition, the ECB falls within the scope of the EU anti-fraud scheme. See Corporate Governance.
Like all other EU institutions, the ECB is subject to the rulings of the European Court of Justice.