Epilogue: Where Do We Go from Here?

Summary

Things have not gone as planned. The EMU and the ECB as its guardian were assumed to guarantee stability and prosperity for the euro area, but the reality has been anything but. Consequently, the ECB is a very different creature today from what it started off as – or indeed what is should be on the basis of the European Macroeconomic Constitution. Most changes have taken place as reactions to new and unforeseen situations, and could be defended on economic grounds, if not always on the grounds that were presented by the ECB itself. Unsurprisingly, the ECB has described the measures it has adopted as successes, which follows a long history in central banking of claiming successes and never admitting mistakes. However, in order to sketch ways forward, it is first necessary look at where are now and what are the main constitutional problems at hand. A broad economic and constitutional assessment reveals two main interrelated imbalances. First, the increasingly discretionary reach of the ECB and its constitutional model of a narrow central bank, which also relates to the aim to control the ECB through constitutional objectives that are becoming increasingly vague. Second, the increasingly political scope of the whole European Macroeconomic Constitution on one hand and the reliance on the ECB as its main guardian on the other hand, has led to a serious overburdening of monetary policy.