The ECB: Output legitimacy and dominance as uneasy bedfellows

Based on the principle of functional differentiation the ECB has, since its inception, been in possession of exceptional executive powers, without a countervailing democratic power. Accountability was supposed to be ensured through the narrowest of mandates. Crisis policy and politics changed all that, bringing with it a domineering policy style characterized by informality, arbitrariness and the overstepping of bounds, while Covid-19 added another twist to the tale. The bank enjoyed fair weather output legitimacy in the years leading up to 2008. It then suffered from a three-fold legitimacy deficit (input, throughput and output, Schmidt 2020) during first phase of the Euro-crisis. It, finally, resurrected its legitimacy on the output side when credited with defusing the crisis through the “whatever it takes” moment of 2012. Yet, the paper argues, dominance in the form of informality, arbitrariness and boundary overstepping still persist and that dominance calls the ECB’s output legitimacy into question. Given the ECB is such a strong case of functional differentiation – or, in other words, of ‘form’ following ‘function’ in the design of an institution – problems of informality, arbritariness and boundary overstepping in the case of the ECB also have wider lessons for how executive dominance can follow from differentiation and segmentation in the EU’s political order.