The European Central Bank

Abstract

This chapter suggests that the European Central Bank´s (ECB’s) changed role over the last 10 years can be conceptualized by three modes of crisis handling: Denial, Mission Creep, and Mission Leap. The ECB was never intended to be a lender of last resort, but with the financial crisis, this was precisely what eurozone financial institutions needed. As the crisis evolved, member states themselves needed a sovereign lender of last resort, something the ECB was explicitly designed not to be. TheECB has “muddled forward” to a position of considerable strength. In terms of outcomes, the monetary union is moving forward (Scenario 3thus, “muddling through” (Scenario 2) almost seems too weak a description of the constitutionally messy process that led the ECB through the crisis.