Do ECB Council Decisions Represent Always a Real Euro Consensus?

Abstract

Since January 1999, according to the law, the common monetary policy for all the Economic and Monetary Union (EMU) Member States should be decided by simple majority in the Governing Council (GC) of the European Central Bank (ECB), regarding the Euro area aggregate conditions. Notwithstanding, no formal vote has been taken until today and a consensus solution has been the officially announced practical rule, hiding different points of view fuelled by national divergences that might exist within Euro area. Assuming that EMU national central bankers take into account national perspectives from their home countries when they vote interest rate decisions in the GC, we try to find whether there have been favourable conditions for the emergence of voting coalitions among them. In order to accomplish that purpose, for every month since January 1999 until August 2003, we applied cluster analysis techniques to national stances before GC meetings, which we describe using three variables. We found high stability in the identified cluster structure, particularly since August 2001, favouring the emergence of alliances between national interests. In spite of that, it is likely that the strong strategic position enjoyed by the Executive Board of the ECB has been sufficient to a priori defeat any coalitions of opposing proposals on the monetary policy for the Euro-area, situation that will change with EMU enlargement.