ABSTRACT
The European Central Bank played a key role in the financial and euro crises, as well as in the management of the economic fallout from the COVID-19 pandemic. The central bank’s actions continue to be debated with the 2022 inflation problems and the energy crisis. The Bank has been criticised by some for doing “too little, too late”, and by others for acting unlawfully or unjustly when it did act. The argument put forward in this chapter is that the euro crisis was a differentiating shock for the Eurozone, which gave rise to dominance effects. Examining the ECB’s actions through the euro crisis and the pandemic, we argue that existing institutional biases, rooted in an idiosyncratic blend of functional, geographical, and hierarchical differentiation, opened the way to dominance when managing these crises. This dominance took the form of arbitrariness, exclusion (some Member States received help, not others) and illicit hierarchy. The more brutal effects of the illicit hierarchical power which the ECB exercised as an agent of austerity during the euro crisis are seemingly gone. Yet, Europe has no guarantee that this sort of behaviour cannot return. This is so because the ECB’s policies are characterised – and increasingly so – by discretion, not rules. Its policies are arbitrary and hierarchical in the sense that Member States do not know if or when the ECB will act as a lender of last resort for them.
