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Economic Interests and Public Support for the Euro
Unformatted Document Text:  17 How will the ECB integrate new members – whether the three remaining EU members not part of EMU or the new members from the east? All of these issues demand further clarity of EU institutions – clarity that can only come through institutional modification. Finally, the legitimacy problem has placed increased focus on the matters of accountability and transparency. Monetary policy decisions will affect Member States differently due to different national economic cycles (despite some convergence) and differently structured economies. Given the lack of financial transfer payments to compensate those parts of the eurozone suffering from asymmetrical shocks, limited labour mobility and the strong constraints placed on the use of national fiscal instruments, the ECB's response to these shocks will be of considerable importance. The risk remains strong that some Member States may come to feel disadvantaged by ECB monetary policy, that the legitimacy of the bank will then be called into question, and the pressure will increase on governments to speak out. Doubts about the ECB's legitimacy increase the need for Executive Board members to give frequent interviews, press conferences and speeches about goals and instruments. NCB governors need to do the same at the national level. Likewise, the decision to hold two Governing Council meetings a year in other Member States was designed to improve the visibility of the ECB. The ECB must also be careful in its public criticism of Member State economic policies, leaving this to the Commission and the Eurogroup. More generally, the maintenance of an effective and positive working relationship with the Eurogroup is vital to the ECB's public image.

Authors: Banducci, Susan., Karp, Jeffrey. and Loedel, Peter.
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17
How will the ECB integrate new members – whether the three remaining EU members
not part of EMU or the new members from the east? All of these issues demand further
clarity of EU institutions – clarity that can only come through institutional modification.
Finally, the legitimacy problem has placed increased focus on the matters of
accountability and transparency. Monetary policy decisions will affect Member
States differently due to different national economic cycles (despite some
convergence) and differently structured economies. Given the lack of financial
transfer payments to compensate those parts of the eurozone suffering from
asymmetrical shocks, limited labour mobility and the strong constraints placed on the
use of national fiscal instruments, the ECB's response to these shocks will be of
considerable importance. The risk remains strong that some Member States may
come to feel disadvantaged by ECB monetary policy, that the legitimacy of the bank
will then be called into question, and the pressure will increase on governments to
speak out. Doubts about the ECB's legitimacy increase the need for Executive Board
members to give frequent interviews, press conferences and speeches about goals and
instruments. NCB governors need to do the same at the national level. Likewise, the
decision to hold two Governing Council meetings a year in other Member States was
designed to improve the visibility of the ECB. The ECB must also be careful in its
public criticism of Member State economic policies, leaving this to the Commission
and the Eurogroup. More generally, the maintenance of an effective and positive
working relationship with the Eurogroup is vital to the ECB's public image.


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