The ECB’s quantitative easing programme as a constitutional game changer

Abstract

The European Central Bank started its quantitative easing programme in 2015 in order to support euro area financial conditions and ultimately increase inflation. The controversial Public Sector Purchase programme has resulted in central bank purchases of government bonds in the magnitude of €2.1 trillion and the Eurosystem (the European Central Bank and the national central banks) become the largest creditor to the euro area Member States. The constitutional framework of the European Central Bank did foresee such a programme, which also makes it potentially problematic for the European Central Bank’s accountability. The underlying source for constitutional concerns is the European Central Bank’s exceptional independence, which could be justified with a narrow central banking model, but becomes problematic when the European Central Bank’s influence on the society becomes more multifaceted, which blurs the borderlines between monetary policy and other economic policies. The specific constitutional concerns related to the Public Sector Purchase programme and accountability are highlighted by three claims: (a) With the Public Sector Purchase programme, the European Central Bank takes deeper inroads to the society than with traditional monetary policy; (b) Through the Public Sector Purchase programme, the European Central Bank became the largest creditor to Member States it was not allowed to finance; and (c) The Public Sector Purchase programme can lead to conflicts between the price stability objective and financial stability.