Ecb Institutional Design After Enlargement- Is a Reform Necessary?

Topics: European Union, Council of the European Union, Euro Pages: 24 (8736 words) Published: April 15, 2013
1 Introduction
Almost every day there can be found headlines in the newspapers or comments in the media concerning the EU and its enlargement to the east. Very often the effects on labour markets, migration or political issues like public safety are the centre of the debate. In this paper we will take a closer look at the effects of the enlargement on the ECB or, to be more precise, its institutional design.

Therefore it is necessary to understand the recent developments as well as the history of the European Union. Hardly any conclusions about how the institutional design of the ECB should or should not be affected by the enlargement process are possible without a good knowledge of the ESCB and the ECB. Chapter 2 will first address the history and the enlargement of the European Union in sections 2.1.1 and 2.1.2. The ECB will be the center of section 2.2. In chapter 3 the different aspects of enlargement on the institutional design will be considered in detail and different approaches of how it can be dealt with the relevant challenges of the enlargement will be discussed. Finally, in Chapter 4 the reader will be given a summary of the paper and some conclusions will be drawn. 2 European Union and the ECB: A brief overview

2.1 The European Union
The European Union (EU) is a unique organisation. Clearly, it is more than a confederation but its intention is not to replace the prevailing member states. In a Europe of different nationalities, languages and traditions the EU wants to assure a close cooperation of the individual countries in order to achieve common political goals like peace, security and democracy. The greater political and economic weight of the EU compared to its relatively small member countries makes it possible to reach goals which were out of reach for each country individually. But for the success of the Union also an economic cooperation is essential. Therefore the single european market was built and the Euro serves as the common currency in the Euro area. 2.1.1 History

Today more than 450 million people are part of the European Union and live together peacefully. But in the history of Europe there were several wars in which millions of people lost their lives. Germany and France, Europe´s biggest countries, were enemies in the three wars of the period 1870 to 1945. Having in mind the military conflicts of the past, European politicians were searching for ways to assure a lasting peace in Europe for the future. An economic and political integration of their countries seemed to be suitable to achieve this objective. That was the reason why in 1950 Robert Schuman, the French 2

Foreign Minister, made the proposal to integrate the coal and steel industries of Western Europe. The fact that Schuman picked coal and steel is not by chance. Military relevant resources should become instruments of reconciliation. So, in April 1951 the European Coal and Steel Community (ECSC) was established in Paris which had the power to decide about the coal and steel industry of the participating countries. The members of the ECSC were Germany, Belgium, Luxembourg, France, Italy and the Netherlands ("The six"). In addition to this first attempt to unite the countries economically the foundation of a European Defense Community should help the political integration along. But France did not ratify the relevant treaty in 1954 and so the foundation of such an organization failed. However, the success of the ECSC led to considerations of "The six" to integrate additional sectors of their economies. As a result, these countries signed the Treaties of Rome in 1957 thereby setting up the European Atomic Energy Community (EURATOM) as well as the European Economic Community (EEC). The EEC aimed at reducing trade barriers between the member countries and creating a common market. Another objective was a common agricultural policy because agricultural subsidies were a substantial part (almost 90%) of the EEC´s budget. Nevertheless,...
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