The Logic of Collective Responsibility in European Monetary Integration

Abstract

Although European Monetary Union led to the creation of one of the world's most independent central banks, politics has not been removed from monetary integration. The European Central Bank's primary claim to legitimacy rests with its ability to deliver low inflation and presumably higher growth. Its independence may be insufficient for this task, making its relationship with political institutions like the Euro-12 and European Parliament more important over time in order to augment its own credibility. This article argues that a model of collective responsibility is more appropriate than one of principle-agent theory to describe the development of European monetary relations between the various institutions as they will need to rely on one another if a coherent European monetary policy is to take shape.