The document discusses two crises that challenged the legitimacy of the European Central Bank as a non-majoritarian institution: the global financial crisis and the sovereign debt crisis. During the financial crisis, the ECB's legitimacy declined despite successfully controlling inflation. The sovereign debt crisis further threatened the ECB's legitimacy by raising questions about its autonomy. The ECB responded by advocating for an economic government and new policy tools at the European level to maintain the integrity of the eurozone.

1. The ECB and the two crises:
How does the ECB deal with an
imported legitimacy attack?
Ivan Grigoryev

2. :: outline
1. ECB as a non-majoritarian institution:
where legitimacy comes from?
2. global financial crisis: preparing the strike
3. sovereign debt crisis and le gouvernement
économique revived
4. a double measure of luck for the ECB: some
scenarios

3. :1/4:
ECB as a non-majoritarian
institution: where does
legitimacy come from?

4. :1/4: where does legitimacy usually come from?
There are three sources of legitimacy:
(1) input legitimacy,
(2) procedural legitimacy,
(3) output legitimacy
(Thatcher and Stone Sweet: 18-19).
Normally (2) and (3) are used to evaluate
the institution performance and legitimise
it through (1).

5. :1/4: what are NMIs?
Non-majoritarian institutions are the “governmental
entities that
(a) possess and exercise some grant of specialised
public authority, separate from that of other
institutions, but
(b) are neither directly elected by the people, nor
directly managed by elected officials” (Thatcher and
Stone Sweet: 2).
So NMIs have no input legitimacy channel. How
are they legitimised?

6. :1/4: how are NMIs legitimised?
The 'eye of the beholder' problem
‘Output legitimacy’ is the current standard
justification for NMIs... The legitimacy of NMIs is
only at issue when agents are corrupted, or fail to
deliver adequate levels of promised benefits.
(Thatcher and Stone Sweet: 18)
But what is adequate is in the eye of the
beholder.

7. :1/4: does output work without input?
iPod theory:
you 'legitimise' your iPod at
the moment you take a
decision to buy it

8. :1/4: does output work without input?
Once the input is made,
the institution works itself.
It is protected from
interference so all you can
do is enjoy it.

9. :1/4: does output work without input?
Circumstances change, and
you are no longer happy
with the iPod. At this
moment its legitimacy is
low.
You would need a bottle
opener, but the input
channel is blocked.
You hate your iPod. But it's
not the iPod's fault.
That's 'the eye of beholder'
problem.

10. :1/4: is being illegitimate risky?
Yes, unless the NMI is
well protected from
political interference

11. :1/4: what is a legitimacy attack?
LA is a situation when
the NMI's autonomy is
questioned by the
people or by elected
politicians because of
decrease in legitimacy.

12. :1/4: what is a legitimacy attack?
I'm interested in looking
on how the ECB
responds to the
legitimacy attacks.
Let's pick the two that
occurred so far!

13. :2/4: Global financial crisis:
preparing the strike

14. :2/4: how legitimate is the ECB?
60
50
Distrust
40
Trust
30
20
aut99 aut00 aut01 aut02 aut03 aut04 aut05 aut06 aut07 aut08 aut09
It's not quite clear from the Eurobarometer graph what
effect the financial crisis had on the ECB legitimacy.

15. :2/4: how legitimate is the ECB?
Check out the huge leap in trust/distrust made in 2007-9.

16. :2/4: is it because of high inflation?
51 3,50%
50
3,00%
49
48 2,50%
47 2,00% Trust
46 inflation
1,50%
45 (one year
44 1,00% lag)
43
0,50%
42
41 0,00%
aut00 aut02 aut04 aut06 aut08
aut99 aut01 aut03 aut05 aut07 aut09

17. :2/4: is it because of high inflation?
No, it's not. Correlation between inflation and
trust in the ECB is 0,45, whereas normally it
should at least be negative.

18. :2/4: where's the reward?
The ECB has done a good job controlling the
inflation and driving the economy out of the
crisis (see G.Glöcker's presentation a fortnight
ago). But is has become less legitimate.

19. :2/4: where's the reward?
The reward is it's not yet smashed.
But this is due to the constitutional
protection.

20. :2/4: was the attack unaddressed?
legitimacy attack

21. :3/4: What happens to our iPod when
Greece comes in?

22. :3/4: So far Germans did not want the reform

23. :3/4: So far Germans did not want the reform

24. :3/4: So far Germans did not want the reform

25. :3/4: The same characters. Entries le g.é.
February 11th: Merkel says the EU
would need an economic government
=> the window of opportunity is open

26. :4/4:
What's on the ECB's mind?

27. :4/4: What's on the ECB's mind? (1)
(1) secure the right g.é. discourse
“Independence does not mean
loneliness. Having a counterpart
would be good.” (Glöcker)

28. :4/4: Which discourse is right?
“Competitiveness was largely overlooked. In some
countries the costs are persistently higher. They
never get lower, so the lag accumulates. That's why
the ECB would like to see some sort of a
competitiveness pillar on the economic side of the
EMU, some special tools to overcome the
competitiveness problem.” (Glöcker)

29. :4/4: New tools?
“The Commission... instrument would be
constituted by a system of coordinated bilateral
loans and would be compatible with the no bail-out
clause and with strict conditionality. The creation of
this instrument does not imply its immediate
activation. Our objective is an instrument designed
within the euro area, with conditions and
management established by the euro area and its
institutions... I do not want to speculate if there will
be a financial contribution from the IMF. What is
important is to agree on a Euro area instrument.”
(Barroso)

30. :4/4: New tools: the reply
“New institutions won't help if the existing ones are
ignored.” (Axel Weber)
“But then again, there is no need for something
new, for some new rules. There is a lot of rules in
Europe already, so instead of creating something
new they could just apply what already exists.”
(Gabriel Glöcker)

31. :4/4: What's on the ECB's mind? (2)
(2) secure the EMU integrity

32. :4/4: Who are the suspects?
(Jones: 1088)

33. :4/4: Survival of the fittest
"In the future we need an
entry in the treaty that would
make it possible, as a last
resort, to exclude a country
from the euro zone if the
conditions are not fulfilled
again and again over the long
term" (Angela Merkel, March
17th)

34. :: Conclusion

35. :: Bibliography
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