The European Central Bank and Economic Integration

The euro lives on conditions which it cannot guarantee itself. This was already clear when the Economic and Monetary Union was established. Some predicted that monetary union would lead to political disunity. This was tested during the Great Financial Crisis showing that monetary union creates considerable political constraints. However, critics underestimated the existing constitutional framework and the political resolve to use the means within and outside the Treaties to overcome the Great Financial Crisis. This contribution explores the expansive force of monetary policy and how it collides with neighbouring policy areas, creating tensions for which the Treaties are ill equipped. The European Central Bank is at the centre of recent evolutions. Compared to the initial vision of a central bank which mainly pursues financial stability, the new ECB now also contributes to attaining budgetary stability and financial stability within the limits of the Treaties.