Contesting the European Central Bank in Banking Supervision: Accountability in Practice at the European Parliament

Abstract

The establishment of the Single Supervisory Mechanism (SSM) raised expectations regarding the ability of the European Parliament (EP) to hold the European Central Bank (ECB) accountable for its decisions. This article examines the accountability interactions between the two institutions in the first years of the functioning of the SSM (2013–18). The focus is on the extent to which the EP contests ECB supervisory decisions in practice through letters and public hearings. The analysis shows a frequently‐used infrastructure of political accountability that is however limited in ensuring the contestation of ECB conduct in banking supervision. The study identifies problems with the performance of the EP as an accountability forum and with the tight confidentiality rules of the SSM, which allow the ECB to silence contestation on many politically salient issues. The findings are based on an innovative analytical framework on the study of accountability interactions.

Q&A in legislative oversight: A framework for analysis

“…politicians kept a close eye on the ECB to check whether its supervision is actually improving the safety of the banking system. Third, banking supervision is a specialised field in which the ECB has significantly more expertise than the EP (asymmetric information); in addition, the ECB shares responsibilities for supervision with national competent authorities in the member states, creating problems of collective decision making (Maricut-Akbik, 2020). Unlike in other legislative oversight contexts, the main tool at the disposal of the EP to control the ECB is provided by questions for oral answer with debate (Rule 128 of the EP's Rules of Procedure for the 8th parliamentary term) and questions for written answer (Rules 131 and 131a).…”

“…The number of answers coded corresponds to the number of questions identified; when answers were absent, they were coded as non-replies (equivocation). The full analysis is more elaborate, including figures showing the frequency of questions over time, the political affiliation of MEPs asking questions, trends in topics and differences between oral and written questions (Maricut-Akbik, 2020). The findings presented here focus on the essence of the Q&A approach to legislative oversight, namely the categories of questions asked, and answers received in the period under investigation.…”

“…From the perspective of financial stability, liquidity problems at a bank can trigger bank runs and panic in the population, which is why the ECB argues that they should not be publicised prematurely (Gandrud & Hallerberg, 2018). Such confidentiality constraints are contested by MEPs and academics alike, who explain that it is impossible to assess the performance of the ECB as a bank supervisor in the absence of information about supervisory decisions (Amtenbrink & Markakis, 2019;Maricut-Akbik, 2020). Consequently, questions about information and justification of conduct are bound to focus on specific banks.…”

Procedural vs substantive accountability in EMU governance: between payoffs and trade-offs

“…The emphasis here is different because the ECB is a non-majoritarian institution whose need for independence from electoral competition has been one of the cornerstones of the EMU since its creation (Art 130 TFEU). The EP is thus often cited as an 'accountability forum' and not the principal of the ECB in monetary policy and banking supervision; consequently, the ECB 'owes' the EP transparency and justification of decisions but not obedience or even political responsiveness (Amtenbrink & van Duin, 2009;Collignon & Diessner, 2016;Maricut-Akbik, 2020;Markakis, 2020). Conversely, the importance of preventing abuses of power is much stronger in the area of legal accountability, i.e., judicial review of ECB decisions by national and EU courts (Dawson et al, 2019, pp.…”

“…Consequently, the focus on transparency limits the substantive contestation of the actual merit and distributive implications of ECB decisions. While accountability forums like the EP are thus permitted and even encouraged to ask questions of ECB officials, their ability to contest and seek to influence the direction of monetary and supervisory policy is minimal (Collignon & Diessner, 2016;Maricut-Akbik, 2020). Accountability in substance seems needed but also excluded a priori by EMU's institutional structure.…”