The Ecb's Powers and Institutional Role in the Financial Crisis

Abstract

In the Gauweiler decision the Court of Justice of the European Union has confirmed that the European Central Bank's (ECB) non-conventional measures fall within its monetary policy competence, fulfil the proportionality requirement and contain safeguards ensuring that the monetary financing prohibition is not infringed, fully legitimizing the ECB's crisis management measures. The ECB enjoys broad discretion: the existence of different opinions in these controversial questions does not put in doubt the legality of the decision taken after careful and accurate analyses by the Governing Council says the Court, supporting the ECB's search for new measures to tackle the still critical economic situation. Risk taking is an inherent part of monetary policy and it is for the ECB to assess how much risk can be accepted (and how best to share this risk within the Eurosystem). Finally, subjecting press releases to the Court of Justice's interpretation might impact on the scope of ECB press releases, balancing the two conflicting interests of increasing transparency and limiting liability.