When it was created in 1999, the ECB did not have any regulatory power over the EMU banking sector. Nearly 15 years later, it is expected to gain the final supervisory responsibility over the EMU financial institutions, while it already gained macroprudential supervisory responsibilities with the creation of the ESRB. The aim of this communication is to address the factors and the possible consequences of this delegation of supervisory competences to a supranational, highly independent body.
My starting point is to consider the ECB as a political agent, e.g. willing to extend its competences beyond its initial monetary responsibilities, which is sliding away from the control of its principals. Indeed, the central bankers implemented political strategies to gain these competences while the the principals “decided” to tie their hands in order to overcome their power struggles. I focus particularly on the ECB’s channels of influence such as the recognition of its expertise over financial issues, its moral authority over member-states, and its management of cognitive tensions due to the shift of central banking model (the moving away from the Bundesbank template). I rely on semi-structured interviews that I have conducted during my PhD thesis with high-level EMU officials involved in the delegation process to explore these issues
Then, the second part of this communication turns on the potential consequences of this delegation. I argue that the principals did not control the delegation process and they are thus very likely to face unintended consequences. Among them, there are risks of central bankers’ capture by financial institutions and “light-touch” regulation of the banking sector. Thus, I analyze and summarize the past positions and the perceptions of ECB agents towards banking regulation as well as their career trajectories between academics, private and public sectors.
