The European Central Bank as a New Federal Institution

The European Central Bank (ECB) had traditionally only the task of securing price stability. It was also to ensure that ‘without prejudice to the price stability objective’ it could support the general economic conditions of the EU. The financial and sovereign debt crisis has increased the differences between rich and poor as well as core and periphery. Unemployment increased dramatically in the periphery of the EU and economic activity declined severely in the GISPI countries (Greece, Italy, Spain, Portugal and Ireland). When the crisis of the periphery aggravated there was a need for immediate action. The ECB decided to step in with unconventional policies. This paper examines these policies, how we can understand where these policies came from and how effective they are. It will also tackle the critique by some lawyers (Joerges and others) who argue that the ECB acted in a way that was not in line with EU law and will offer an analysis of this claim. An alternative claim would be a neofunctional one, in that supranational institutions make steps needed to increase the welfare of the whole when integration is lacking.