Abstract:  In May 2020, a ruling of the German Federal Constitutional Court (FCC) questioned the legality of the Bundesbank’s participation in the European Central Bank’s (ECB’s) Public Sector Purchase Programme. Applying elements of a principal-agent analysis, this article analyses how the FCC ruling presents us with a new understanding of the relationship between the ECB, other EU institutions and Eurozone member states. Existing principal-agent analyses of the ECB focus upon its relations with other EU-level institutions and point to the limited ex ante control mechanisms and efforts to reinforce ex post control mechanisms—notably European Parliament oversight. The FCC ruling and the ECB’s reaction demonstrate the relative importance of national level controls over the ECB agent. This article understands the role of private plaintiffs in Germany as a form of ‘fire alarm’ on ECB policymaking against the background of weak ex post controls at the EU-level.

Keywords:  accountability; Bundesbank; Bundestag; Court of Justice of the European Union; European Central Bank; European Parliament; German Federal Constitutional Court; monetary policy; ordo-liberalism; principal-agent analysis

Published:   27 May 2021

Issue:   Vol 9, No 2 (2021): Reforming the Institutions of Eurozone Governance