Accountability in the Economic and Monetary Union: Foundations, Policy, and Governance

The initial impulse to write this book came from the previous financial crisis. As I was practising law in Athens, Greece, which was in many ways the epicentre of the crisis, I could notice that the way the law was interpreted and applied started to shift. Admittedly, there were worse things going on in my country of origin at the time. But this shift I found intellectually fascinating. Well-established concepts in public law, which were traditionally understood and applied in a certain way, were suddenly viewed under a different light. When I approached Professor Paul Craig to write a DPhil thesis on the topic, little did I know that he was already an expert on Economic and Monetary Union law and the crisis, with multiple papers published or in the pipeline (as is equally the case with virtually every other topic in public law and often beyond!). This may have led to an awkward first discussion. What initially was a more comparative public law-oriented thesis turned into a thesis which was more heavily focused on EU constitutional law. The substantive focus also shifted from “the constitutional implications of the Eurozone crisis” (as the initial title was) to a thesis more squarely focused on accountability in the Eurozone, examined in the light of the measures adopted in response to the crisis. The helpful comments by Professor Stephen Weatherill, Professor Sionaidh Douglas-Scott (formerly a member of our faculty) and Dr Alicia Hinarejos of Cambridge University in the interim and final examinations helped shape the book into what it came to be.

Following the financial and sovereign debt crisis that took the Eurozone by storm, the EU’s Economic and Monetary Union (EMU) has been under intense political scrutiny. National governments have to act within the legal constraints flowing from EU law when adopting the budget or framing economic policy more generally – especially if they are in receipt of financial assistance. These rules have flown under the radar of most ordinary citizens, not least because of their highly technical and sometimes intransparent nature. Common rules on banking supervision or the EU’s Stability and Growth Pact do not make for a nice coffee table read. Nevertheless, they can have massive implications for the economies of the Member States, financial institutions and, of course, citizens. Furthermore, the EU institutions, bodies and agencies acting in this area may –either formally or informally– adopt decisions that have redistributive effects in European societies and encroach on very sensitive areas of national policy. 

The following questions arise: how can we hold accountable those institutions that are exercising power at the national and EU level? What is the appropriate level, type and degree of accountability and transparency that should be involved in the development of the EU’s governance structures in the areas of fiscal and economic governance and the Banking Union? What is the role of parliaments and courts in holding those institutions accountable for the exercise of their duties? Is the revised EMU framework democratically legitimate? And as if these questions were not big enough already, how can we bridge the gap between the citizens –and the institutions that represent them– and those institutions that are making these important decisions in the field of economic and monetary policy?

This book principally examines the mechanisms for political and legal accountability in the EMU and the Banking Union. It examines the implications that the reforms of EU economic governance have had for the locus and strength of executive power in the Union, as well as the role of parliaments (and other political fora) and courts in holding the institutions acting in this area accountable for the exercise of their tasks. The below is only a high-level indication of the content covered in the book. Chapter 1 sets out the analytical framework employed in the book. Chapters 2 and 3 look at the emergence of a new constitutional and governance architecture, following the measures adopted in response to the crisis. Chapters 4 and 5 examine the impact that the reforms of EU economic governance have had on the horizontal and vertical distribution of power in the EU and the Member States, as well as the intra-institutional balance of power in the EU and the emerging patterns of geographical fragmentation. They further examine the appropriate level, type and degree of accountability and transparency that should be involved in the development of the EU’s governance structures in the areas of fiscal/economic governance and the Banking Union respectively. Chapters 6 and 7 look at judicial review of economic and monetary policy measures by the EU and national courts respectively. Chapter 8 sharply focuses on judicial review of the activities of the European Central Bank (ECB). Chapter 9 sets out several proposals regarding transparency, accountability, and legitimacy in the EMU.

This inquiry is rendered, in my opinion, all the more salient by the ongoing COVID-19 crisis, which has highlighted, among other things, the importance of economic policy coordination and underscored the need for a common European fiscal response. The EU or Euro area institutions and bodies have already taken several measures to address the said crisis. As they acquire more powers, the question of how to ensure their accountability becomes all the more pressing. Furthermore, the COVID-19 crisis has proved yet again that the expanded role of the all-powerful ECB is here to stay. This is yet another area with very limited accountability. It is hoped that the ongoing transformations will result in a Eurozone structure that is not only robust but also more democratic, accountable, and socially sustainable. This book is precisely devoted to making a small contribution towards that goal.