National Stakes

ECB Voting System Bizarre and Pointless

The European Central Bank headquarters in Frankfurt. Source: DPA
The European Central Bank headquarters in Frankfurt.
  • Why it matters

    Why it matters

    A new rotation system to allocate voting rights in the ECB governing council, in place since the beginning of the year, has been sharply criticized by some in Germany for further depriving the country of its power within the body.

  • Facts

    Facts

    • Because of Lithuania’s accession to the euro zone at the beginning of this year, a rule enacted in 2003 has now come into effect.
    • The new rule means that Germany will lose its voting rights on the ECB’s governing council in May and October of 2015.
    • The number of members with voting rights on the ECB council is limited to 21.
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    Audio

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Jens Weidmann, the president of Germany’s central bank, the Bundesbank, might as well go on vacation in May and October, the months this year during which the Bundesbank will have no voice on the governing council of the European Central Bank.

When this new policy became public, many German columnists and economics professors were up in arms over what they characterized as a “regulatory lapse.” They decried it as a “violation of the established business insight that liability and responsibility should go hand in hand,” noting that the “underrepresentation of German interests in this body” would only be exacerbated.

The rotation system for the allocation of voting rights in the ECB governing council, in place since the beginning of the year, is undoubtedly a bizarre and pointless creation. But it doesn’t mean that legitimate German interests are being undermined.

These populist arguments distort our view of what is really needed, namely a drastic reduction in the size of the ECB council.

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