Institutions, Politics and the Changing Role of the European Central Bank in the Multilevel Governance Framework of the European Union

In the recent somehow turbulent years, the European Central Bank (ECB) evolved to be among the most important actors in the European Union (EU). The expanded role of the central bank can be exemplified by three observations: the ECB is no longer only in charge of conducting monetary policy, but has become also the main supervisor of the European banking and the European financial system. The central bank started to use its monetary policy instruments very unconventionally and is using unconventional monetary instruments increasingly. The ECB participates in political expert committees, such as the so called Troika. However, these roles have not been delegated to the ECB by the Treaty, but developed over time in the political environment of the EU. Taking a political economic perspective, the paper identifies interests, institutions and ideas of actors in EU politics, namely national governments, the financial industry and European institutions. Thus, interests, institutions and ideas of the respective actors in EU politics provide for a comparative framework for analyzing the direction of the changing role of the ECB. To approach the causal mechanism of EU politics and central banking, the paper identifies three main channels of political influence: threats of lifting support of European central banking by national governments, decisions of institutional change at the European level and the appointment of central bankers and EU officials. Using process tracing and cases out of the three dimensions of the expanded role of the ECB, the paper identifies generalizable insights into the causal mechanisms of EU politics and the direction of the changing role and the monetary policy of the ECB.