5.3.1 Accountability Mechanisms Applicable to the ECB

The question of the ECB’s accountability plays a primary role in the guarantee of high (or adequate) democratic accountability standards in the BU because, as noted, the ECB is in charge of banking supervision. Its Supervisory Board – which is an internal organ of the ECB created for the specific purpose of banking supervision by the SSM Regulation –Footnote ¹² is in charge of preparing supervisory decisions, which are later adopted by the Governing Council following a non-objection procedure. Its involvement is necessary because according to the Treaties, the Supervisory Board is not a decision-making organ of the ECB. As such, both the mechanisms in place to hold the ECB-SSM and the ECB to account are of importance when considering democratic accountability of and within the BU. However, because the role of the Governing Council is secondary to that of the Supervisory Board, the mechanisms in place vis-à-vis the latter will be examined first.

The accountability of the Supervisory Board is to be ensured following procedures defined in the SSM Regulation.Footnote ¹³ Its Article 20 is dedicated to ‘[a]ccountability and reporting’. According to this provision, the ECB is accountable to both the Council and the European Parliament (EP) for the implementation of this Regulation. To this end, it shall submit every year a ‘report on the execution of the tasks conferred on it by this Regulation, including information on the envisaged evolution of the structure and amount of the supervisory fees’ to the EP, the Council, the European Commission and the Eurogroup. That report shall be presented by the Chair of the Supervisory Board to the EP and to the Eurogroup in presence of those Member States that participate in the BU but do not belong to the euro area (they are also involved in the procedures mentioned subsequently where reference to the Eurogroup is made). This format of the Eurogroup is known as the ‘Eurogroup in BU format’. Both the Eurogroup and the EP also have the possibility (on an individual basis and independently from each other) to invite the Chair of the Supervisory Board to appear before them (or before the responsible committee in the case of the EP) to discuss the execution of its supervisory tasks. Oral or written questions may additionally be put to the ECB (i.e., the ECB-SSM) by both the Eurogroup and the EP.Footnote ¹⁴

Next to these procedures, the possibility exists that, upon initiative of the Supervisory Board’s Chair, confidential oral discussions behind closed doors be held with the Chair and the Vice-chairs of the responsible EP Committee, that is the Committee on Economic and Monetary Affairs (ECON Committee), where these ‘are required for the exercise of the European Parliament’s powers under the TFEU’. The details of these arrangements are to be defined in an interinstitutional agreement between the EP and the ECB, which was adopted in 2013.Footnote ¹⁵ Finally, a duty is set on the ECB to cooperate with the EP in its conduct of investigations. To this end,

The interinstitutional agreement details the content of the annual report, which the ECB has to submit to the EP. It also specifies that the Chair of the Supervisory Board shall be submitted at least to two ordinary hearings, although additional ad hoc exchanges of views may be organised too. Additionally, it specifies how confidential oral discussions have to take place in practical terms. Likewise, the modalities for the submission of written questions are specified, and the aim is that the ECB answers them within five weeks (as opposed to the six-week target set for the questions put to the ECB by MEPs on monetary policy issues as per the EP’s Rules of procedure). Specific provisions furthermore detail how information on the ECB’s tasks as a supervisor is to be made available. This includes, for example, access to the record of proceedings of the Supervisory Board by the ECON Committee or non-confidential information regarding a credit institution that has been wound up. The EP is to establish sufficient safeguards for the confidentiality of the ECB documents submitted to it to remain preserved.

As noted previously, also the EU executives (e.g. Commission, Council and Eurogroup) are addressees of the ECB-SSM’s annual report. What may, however, appear as more surprising is the fact that it is with the Eurogroup and not the Council with which the true relationship of accountability is established. Indeed, the annual report shall be presented to the Eurogroup, which may invite the Chair of the Supervisory Board to appear before it and submit both written and oral questions to the ECB-SSM. This state of fact is disturbing for several reasons. As recalled by the Court of Justice on several occasions,Footnote ¹⁶ the Eurogroup is not an institution of the Union but an informal group whose raison d’être is to allow for the coordination of euro area Member States’ policies. Neither the informal nature of the Eurogroup nor the purpose of its existence squares well with the role it is called to play in guaranteeing the ECB-SSM’s democratic accountability.

Moreover, according to Article 10 TEU, democratic accountability rests upon two pillars within the EU since the entry into force of the Lisbon Treaty: the EP and Member States government representatives participating in the Council. Considering all this, the ECB-SSM could rather have been held accountable by the Council. This would have made all the more sense as the Council (and formally at least, not the Eurogroup) is involved in the approval of (part of) the secondary legislation the ECB has to apply in its quality as banking supervisor. Additionally, the argument can be made that developments within the BU are of interest to all of the EU Member States, as is indeed confirmed by the fact that BU matters are, at least in some instances, discussed in Eurogroup meeting in inclusive format, that is with representatives from all EU27 Member States.Footnote ¹⁷ The Lisbon Treaty already opened the door to a ‘differentiated Council’, that is one within which on some occasions only euro area representatives may cast their vote, and thus the Council could have been used as an accountability forum. Admittedly, since the possibility formally exists that non-euro area (candidate) Member States may join the BU, an accountability forum that would only bring together BU representatives had to be set up, and only the Eurogroup (and not the Council) could easily be adapted for that purpose. But it remains the case that the solution found is largely unsatisfactory for the reasons outlined previously.

Next to these relationships of accountability with EU organs, ‘relationships with national parliaments’ are also foreseen in the SSM Regulation. Although formally, and according to the ECB itself, it is ‘primarily accountable to the EP’ and not to national parliaments, and although the question as to whether these relationships between the ECB-SSM and national parliaments serve the purpose of democratic accountability has been subject to debate,Footnote ¹⁸ there is little doubt that the powers with which parliaments have been entrusted vis-à-vis the ECB (written questions, reasoned observations on the annual report and exchange of views) resemble those that commonly exist between parliaments and any institution they hold accountable.

These relationships of accountability add to those that have existed between the EP (and the Council) and the ECB since the creation of the ECB. Indeed, the ECB’s (strong) independence is to be compensated by its relationship of accountability towards the EP (primarily). It must therefore address an annual report on ‘the activities of the ESCB [European System of Central Banks] and on the monetary policy of both the previous and the current year to the European Parliament, the Council and the Commission, and also to the European Council’.Footnote ¹⁹ This report shall be presented to the Council and to the EP, which ‘may hold a general debate on that basis’. Additionally, the possibility exists for the President of the ECB or the other members of the Executive Board to be heard before the ECON Committee on their own initiative, or on that of the ECON Committee. MEPs are also entitled to submit six questions for written answers to the EP.Footnote ²⁰ In the framework of monetary policy, although some exchanges were indeed organised in the past,Footnote ²¹ formally no relationship exists between the ECB and national parliaments, as may appear logical considering that monetary policy is a competence of the Union.Footnote ²²

The existence of a relationship of accountability between the ECB and the Council makes sense historically as, originally, the status of ‘Member State with a derogation’, that is that of Member State outside the euro area, was meant to remain temporary for all Member States bar Denmark and the United Kingdom which had obtained a permanent opt-out. Thus, correspondence largely existed between the geographical area within which the ECB’s monetary policy would take effect (at that point in time or eventually), and the Member States represented in the Council. However, already at the time when the Lisbon Treaty was drafted, it may be argued that this had become wishful thinking. This notwithstanding, Member States did not choose to change the identity of the forum in charge of holding the ECB accountable and instead the Council kept this prerogative, despite the fact that it is precisely that Treaty (i.e. the Lisbon Treaty) which formalised the existence of the Eurogroup. The choice in favour of the Eurogroup when the SSM was established could point to the willingness to further empower the Eurogroup, a forum which had already been significantly reinforced as a result of the euro area crisis. Furthermore, to state the obvious, a choice in favour of the Eurogroup is also to the benefit of the Member States, since the accountability and transparency standards it is submitted to are much less stringent than those applicable to the Council.Footnote ²³

5.3.2 Guaranteeing the SRB’s Accountability

The SRM was established a few years after the SSM, and the latter’s accountability mechanisms no doubt inspired those of the former. Indeed, the obligations set on the SRB by the SRM Regulation are similar to those set on the ECB-SSM by the SSM Regulation.Footnote ²⁴ However, considering that the SRM is an agency and not an EU institution like the ECB, it is accountable not only to the EP and the Member States – coming together in the Council and not in the Eurogroup but also to the Commission. The annual report is submitted to the EP, the national parliaments of participating Member States, the Council, the Commission and the European Court of Auditors. As a result of this, differently from what is the case within the SSM, the Eurogroup is not supposed to be involved in any way in this instance, which could be the case because the SRB is an EU-wide agency. The report is then presented to the EP and the Council. The EP may additionally invite the Chair of the SRB to a hearing, and a minimum of one hearing per year is set by the SRM Regulation. Written and oral questions may be submitted to the SRB by the Council and the EP, and the possibility to hold confidential oral discussions is also provided. Like it is the case between the ECB-SSM and the EP, an agreement that details the modalities of these discussions shall be concluded,Footnote ²⁵ and the SRB is set to cooperate in any investigation the EP may initiate.

Like the interinstitutional agreement between the ECB-SSM and the EP, the Agreement between the EP and the SRB details the content of the report that the SRB has to submit every year. The topics addressed in the ordinary public discussions are also defined, as is the possibility to organise ad hoc meetings and the practical modalities of the confidential oral discussions. A minimum of two ordinary hearings per year is set. The EP shall be kept duly informed as a ‘comprehensive and meaningful record of the proceedings’ of every executive or plenary meeting is to be submitted to it within the six weeks that follow said meeting. The rest of the provisions contained in the Agreement are similar to those included in the interinstitutional agreement between the ECB-SSM and the EP.

Likewise, the SRM Regulation establishes a direct relationship between the SRB and the national parliaments of the participating Member States. Their nature (i.e., whether they constitute a relationship of accountability) is also not specified, but as they are very similar to those established with the EP they may also be viewed as contributing to the SRB’s accountability credentials. The powers vested with national parliaments in this framework are indeed very similar to those attributed to them vis-à-vis the ECB. However, the SRB is set under stronger obligations towards them than the ECB is.Footnote ²⁶

5.3.3 The EBA’s Accountability Credentials

Guaranteeing democratic accountability within the BU demands that also the EBA be submitted to democratic control. This is the case because it prepares technical standards that are officially adopted by the European Commission at a later stage, and because it still fosters coordination among National Competent Authorities, including but not only in areas closely linked to banking supervision.

The accountability mechanisms applicable to the EBA were significantly enhanced when the European Supervisory Authorities (ESAs) Regulations were amended in 2019.Footnote ²⁷ In its original version, the ESAs Regulation only established that ‘[t]he Authorities referred to in points (a) to (d) of Article 2(2) [among which is the EBA] shall be accountable to the European Parliament and to the Council’. By contrast, it is now foreseen that the EBA be accountable to the EP and the Council but that it shall also cooperate with the EP in the event that the latter decides to conduct an investigation. Despite the EBA’s quality as an agency – and differently from the SRB – the EBA is not accountable to the Commission. Several reasons could account for this. Perhaps the most evident one is that this provision concerns not only the EBA (or the ESAs) but also the European Systemic Risk Board (ESRB), which is not an agency but an independent body chaired by the President of the ECB. The EBA’s prerogatives are also more circumscribed than those of the SRB. The Commission is called to formally adopt the normative acts, which the EBA prepares such that it already is in a position to exercise some form of control over its actions, although the procedures differ for non-normative acts.

The EBA’s ‘Board of Supervisors shall adopt an annual report on the activities of the Authority, including on the performance of the Chairperson’s duties, and shall, by 15 June each year, transmit that report to the European Parliament, to the Council, to the Commission, to the Court of Auditors and to the European Economic and Social Committee’. As such, the duty that is now set on the Board of Supervisors is similar to that which the ECB-SSM and especially the SRB have to fulfil. However, in this case, a precise date is set by which the EBA has to fulfil its obligation. The European Economic and Social Committee is, too, an addressee of the report.

Additionally, it is prescribed that the EBA’s Chairperson be heard by the EP – upon its request – at least once a year ‘on the performance’ of the EBA. The format of the hearing is quite precisely defined in the Regulation, as it calls for the Chairperson to make a statement and to answer the questions put to it by MEPs. The EP may ask the Chairperson to report on the activities of the EBA at least fifteen days before the hearing. Specific mention is also made to the possibility for the EP to request that the EBA reports on its participation in international forums, which is all the more welcome as those (which include, for instance, the Basel Committee on Banking SupervisionFootnote ²⁸) have assumed an ever larger role following the outbreak of the Great Financial Crisis.

Next to these procedures, the possibility also exists for the Council or the EP to put written questions to the EBA, which it shall answer within five weeks. As with the ECB-SSM and the SRB, confidential oral discussions may be organised since the EBA Regulation was amended.

5.3.4 The Commission

One last actor that arguably plays an important role in the BU is the European Commission. This is the case for numerous reasons, chief of which are the facts that it is involved in several of the procedures that exist (for instance, in banking resolution), that it has the last word on the standards developed by the EBA, and naturally also that it proposes the norms of secondary legislation that are of application within the BU.

In consequence, upholding suitable accountability standards within the BU demands that the Commission be submitted to sufficient controls. Put differently, in seeking to evaluate whether any accountability gap exists within the BU, one should also check whether the Commission’s actions in this domain are sufficiently scrutinised by the EP.

The EP has numerous means to hold the European Commission to account. Its strongest power lies in its possibility to remove its confidence in the Commission and thus force it to resign collectively.Footnote ²⁹ The EP and its members may also put some oral and written questions to the Commission or submit Commissioners to major interpellations,Footnote ³⁰ organise hearings to provide the Commission an opportunity to explain its decisions,Footnote ³¹ and create committees of inquiry.Footnote ³²

5.3.5 Conclusion

The preceding analysis has evidenced that mechanisms exist to guarantee the democratic accountability of BU institutions. An evolution towards an enhancement of these mechanisms may additionally be witnessed, both in terms of their nature and in terms of their very existence. Indeed, the accountability of the EBA was significantly reinforced following the reform performed in 2019. Also, the mechanisms in place towards both the ECB-SSM and the SRB are more stringent than those applicable to the ECB. Several reasons may account for this. First, the ECB benefits from a stronger degree of independence in the area of monetary policy than it does in the field of banking supervision.Footnote ³³ Second, accountability standards have evolved significantly over the past twenty years. For example, the EP is only consulted when the President of the ECB is appointed. In contrast, its consent is necessary for the chair of the Supervisory Board to be nominated,Footnote ³⁴ that is the EP’s role has become larger over time.

Accountability mechanisms, be they formalised or not, make it more likely that democratic accountability is upheld. However, the mere existence of those mechanisms does not suffice, as there is, for example, no guarantee that they are used by the actors to which they are available. The next sub-section therefore turns to the practice of accountability in the BU to date.

5.4.1 Practice of Accountability to Date

It must be said from the start that research reveals that the existing democratic accountability procedures have been used indeed: Parliamentary hearings and ad hoc exchanges of views have been organised, reports have been produced and parliamentary questions have been put to the ECB-SSM and to the SRB. However, differences in terms of frequency and fluctuations over time have existed. The following paragraphs first consider the ECB-SSM before turning to the SRB and to the EBA.

As regards parliamentary questions put by MEPs to the ECB-SSM, it must first be said that they were not very numerous in the first years of the functioning of the SSM, as is only logical. They peaked in 2017 and 2018 although they remained infrequent at approximately forty questions per year (by comparison, the number of questions put to the ECB as the European institution in charge of monetary policy was similar in 2017 but it rose to more than three times this amount in 2018).Footnote ³⁶ The number of questions has since been decreasing and there was only a dozen of them in 2021. Perhaps this could be explained by the varying levels of interest among participating MEPs, with notably one of the most active of them, Sven Giegold, having ceased to be an MEP. Also, the SSM no longer is a new instrument, thus MEPs’ interest could have faded with time, in particular seeing as no new banking crisis has emerged and the ECB thus seems to be fulfilling its tasks satisfactorily. It could be expected that MEPs’ interest would rise again if the ECB-SSM were to deal more closely with controversial issues such as climate change. Despite recommendations in favour of the creation of a space dedicated to questions posed by MEPs to the ECB-SSM (and the SRB),Footnote ³⁷ no such step has been taken by the EP to date, which is regrettable as it makes relevant information harder to find.

Also, some questions have been put by national members of parliaments, most often from the German Bundestag. It is perhaps unsurprising that the members of the Bundestag are those who have used this mechanism most, considering the fact that the creation of the BU had raised concerns that democratic accountability standards would be lowered as a consequence thereof. Indeed, the German NCA, the BaFin, is functionally placed below the responsibility of the ministry of finance, which may be held accountable for the actions of the NCA.Footnote ³⁸ More generally, and perhaps most importantly, a tradition exists for German MPs to ask written questions. In terms of their content, some of the questions are very specific and regard a specific credit institution, whilst others are much more general and address, for instance, non-performing loans, the implementation of the Basel standards or supervision in general. Such a mixed set of macro- and micro-topics seems to be healthy for the whole system of supervision.

Parliamentary hearings and ad hoc exchanges of views, as well as hearings before the Eurogroup, have taken place on a regular basis, and the annual reports were duly presented. Though some fluctuations over time may be observed in this regard as well – perhaps also due to the pandemic and the widespread ‘Zoom-fatigue’, it may generally be said that exchanges with MEPs have been more frequent than the minimum set by the SSM Regulation as they have often included a couple of ad hoc exchanges of views in addition to the standard bi-annual hearings.Footnote ³⁹ The topics covered during these exchanges were varied as they ranged, for example, from the consequences of the pandemic to climate risks and the finalisation of Basel III.

Confidential oral discussions have taken place before hearings of the Chair of the Supervisory Board by the ECON Committee, and they have been ‘reported to be much more confrontational than public hearings, with “tough” language that is often absent in public interactions between the two institutions’.Footnote ⁴⁰

Finally, the Chair of the Supervisory Board has regularly appeared before the Eurogroup, and these meetings have commonly been organised together with the Chair of the SRB (this is examined more in depth below). Fluctuations in their frequency have existed as well, with notably 2017 standing out as a year of particularly close exchanges, but this was also the year when the first resolution ever took place such that this is perhaps rather unsurprising. As these exchanges are not public, they are harder to assess. Nonetheless, the ECB had noted in the past that ‘[t]he topics of interest to the finance ministers overlapped to a large extent with those discussed in the European Parliament’Footnote ⁴¹ and the overall issues discussed may be found in the account of the main results of Eurogroup meetings since they exist. The topics covered have included, for example, broader issues such as non-performing loans and anti-money laundering.

If one considers the SRB, one may first regret that the part devoted to accountability in its annual reports remains particularly succinct. Also, it appears that its exchanges with the EP have been less frequent than those organised between the ECB-SSM and the EP as they have generally been limited to two exchanges per year in addition to the presentation of the annual reports. This could be explained by the fact that the SRM has only been activated on one occasion during the period considered here. On the other hand, the fact remains that the setting up of the SRM has raised questions indeed, in terms of its functioning and its financing but also in relation to questions related to the overall architecture of the BU and notably its missing pilar, the European Deposit Insurance Scheme, and the role the SRB could play therein. Therefore, more interest on the side of MEPs could have been reasonably expected.

MEPs have likewise devoted much less attention in their questions to the SRB than they have to the ECB-SSM. To date, they have addressed fifteen questions in total, of which seven were addressed by the same MEP (Sven Giegold).Footnote ⁴² These questions have sometimes consisted in requests for access to documents, or more general questions such as the architecture of the SRM in general, as well as questions on the Banco Popular case, for example.

Like was the case with the ECB-SSM as well, questions from national parliaments have not been numerous (ten in total) and only German MPs have asked questions to date. The identity of these MPs largely corresponds to those who raised questions to the ECB-SSM. Interestingly, although the answers to these questions are available on the SRB’s website, they are not translated into English but are, instead, only available in German. Whilst this is understandable as translation is demanding on resources, one may wonder whether this does not, in fact, diminish the SRB’s accountability potential vis-à-vis the larger public. Considering how few these questions are, it would be advisable for the SRB to make a courtesy translation available to all. As concerns the topics touched upon by these letters, they have regarded very factual issues, including the number of credit institutions whose resolution planning the SRB oversees, as well as questions related to specific credit institutions or related to findings of the European Court of Auditors.

The relationship between the SRB and the Eurogroup follows a similar pattern as the one between the ECB-SSM and the Eurogroup, not least because the Chair of the Supervisory Board and the Chair of the SRB commonly appear together before the Eurogroup. Issues addressed with the Chair of the SRB have included resolution planning, the built-up of the Single Resolution Fund or resolvability (continuity seems to exist in the topics discussed, which is only logical as the SRB’s main task in normal times is to prepare for potential resolution cases such that the issues that need addressing are rather recurrent as opposed to being individual events). It must be noted that although this practice of joint hearings with the Chair of the Supervisory Board and the Chair of the SRB makes perfect sense as they allow for a more comprehensive control by the EP of what is going on in the BU, it remains that it contradicts the content of the SRM Regulation, which foresees that the SRB – an EU-wide agency – be held to account by the Council. As noted above, it probably would have been best to entrust the Council with the task of controlling both the ECB-SSM and the SRB in the first place, also to guarantee higher transparency and thus higher accountability standards.

The relationship between the SRB and the Commission seems to unfold on a smooth basis, as the SRB noted, for instance, in its annual report for the year 2020 that it ‘continued to maintain its close cooperation with the relevant directorates-general of the Commission, in particular with the Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) and the Directorate-General for Competition (DG COMP) at all levels on various aspects, which are relevant to the SRB’s work and functions, and participated actively in the meetings of the Expert Group on Banking Payments and Insurance (EGBPI)’.Footnote ⁴³ Further details are not available.

Finally, one may regret that the information regarding the EBA’s accountability is not much detailed; its annual reports and its website indeed only contain scarce information on this topic, and it is not easy to find. The EBA fulfils its duty to present its annual report to the EP, and it entertains relationships with other EU institutions.Footnote ⁴⁴ Most of the correspondence publicly available is addressed to the European Commission, and it covers issues that go beyond banking supervision owing to the EBA’s broad mandate. This notwithstanding, some of the letters are indeed addressed to MEPs, but they remain scarce.Footnote ⁴⁵

5.4.2 Conclusion

The preceding analysis of the use of the existing accountability mechanisms to date reveals first that information on this issue is scattered around the various websites and uneasy to find. This is regrettable, and efforts should be made to improve this situation, as already proposed by René Smits.Footnote ⁴⁶

Second, it appears that, at the EU level, the existing procedures are being used indeed, as hearings and exchanges of views are organised, questions are posed, and reports are produced. The EP additionally produces annual reports on BU.Footnote ⁴⁷ Parliamentary questions are, though rather infrequent, and fluctuations have existed over time in the frequency of the oral exchanges held. It is interesting to note that despite its duty to hold the EBA accountable too, the EP only keeps regular records of practice of accountability towards the ECB-SSM and the SRB but not towards the EBA (or any of the European Supervisory Agencies).Footnote ⁴⁸ This is regrettable as the EBA and these agencies in general play an increasingly important role in financial supervision within the EU, and as the acts of soft law they adopt produce significant effects for banks and have been the object of litigation before the Court of Justice.Footnote ⁴⁹

In any event, shortcomings exist in the practice of accountability: despite the fact that external experts are regularly invited to produce briefings, the questions put by MEPs are not always sufficiently to the point.Footnote ⁵⁰ Most importantly, the same questions are not consistently picked up during debates.Footnote ⁵¹ Also, MEPs are not always clear about the appropriate forum or addressee for a specific issue. For instance, some of the questions put to the ECB were not addressed to it in the right setup, that is MEPs mixed up the setup designed for dialogue on monetary policy issues with the one reserved to banking supervision. Although this confusion could have been due to the very numerous forums in which MEPs have the opportunity to debate with the ECB, it could also be the case that they deliberately chose not to care for political reasons and simply use any channel they had at their disposal.

Beyond all this, it has been found that, in effect, MEPs only have had limited influence on the ECB-SSM’s policy, although this is because MEPs only rarely require such changes but rather use their interaction with the ECB to request information on policy views.Footnote ⁵² This could point to a usage of public hearings and questions primarily for communication purposes, as opposed to their being used for accountability purposes.Footnote ⁵³ Confidentiality in banking supervision is a further hindrance in MEPs’ quest for accountability,Footnote ⁵⁴ and reform proposals have been made to improve this situation.Footnote ⁵⁵

Finally, and although this issue is only subsidiary to the analysis conducted here, one may observe that very limited use has been made by national parliaments of the possibility they now have to directly interact with the ECB-SSM and the SRB. To assess whether this results in an accountability gap, research should determine whether this is compensated by adequate mechanisms of accountability towards NCAs and the use thereof by parliaments at the national level.

5.5.1 The EU’s Constitutional Framework Has Become Unfit for Purpose

The existing flaws are generally related to both the EU’s architecture and functioning, and specific to EMU. The shortcomings inherent to the EU’s architecture are twofold, and are caused by, on the one hand, the trend of agencification within the EU,Footnote ⁵⁶ and relatedly to the absence of specific and precise legal basis for EU agencies, which would allow a much necessary update and adjustment of the Meroni doctrine. On the other hand, they derive from the gap that has grown between the existing legal framework, and the degree and the variety of differentiation within today’s EU (where differentiated integration is understood in the largest possible sense). As noted above, the co-existence of the BU, the euro area and the EU27 and the corresponding institutional variations of the meetings of national ministers at the EU level certainly blur the boundaries between the various groups of Member States, and thus the accountability channels applicable to the various procedures. This then must bring back to a reflection on the question of (internal and external) differentiation and membership within the EU more generally.

Some of the existing shortcomings are, though, specific to the EMU and its sub-area the BU. Whereas differentiation is a feature commonly observed within the EU and not specific to the EMU, the EMU is arguably the most extreme example of differentiation in terms of its breadth and reach with, among others, the ECB conducting the euro area’s monetary policy, or the existence of an intergovernmental European Stability Mechanism as an emergency safety net reserved to euro area Member States but one that also serves as a backstop to the (EU) BU. Differentiation within the EMU is then also visible in terms of its institutional embedding with the Eurogroup as a quasi institution, the existence of Euro Summit, of specific voting rules in the Council, and the recurrent proposals in favour of a euro area parliament or at least a euro area sub-committee to the ECON Committee,Footnote ⁵⁷ to the point that the principle of institutional unity that used to be a requirement to any initiative of enhanced cooperation under Amsterdam could come under threat.Footnote ⁵⁸ As has been evidenced in this chapter, the mechanisms formally in place within the BU are oftentimes pragmatic solutions to the lack of suitability of the existing legal framework as is illustrated by the Eurogroup’s role in guaranteeing the ECB-SSM’s accountability. Practice shows a further adaptation of the established mechanisms as in the case of the Eurogroup, which also serves as accountability forum for the SRB. Both of these phenomena nonetheless only illustrate that the existing institutional framework is unfit for purpose, because it has not been adapted to match the evolutions that have happened in the breadth of the policies conducted at the EU level and to the form that these take, even if it must be admitted that the framework currently in place has proven to be sufficiently flexible for informal arrangements to be developed.

5.5.2 Flaws Inherent to the BU

Next to these shortcomings related to the EU’s institutional framework, there are also shortcomings that are specific to the BU, although they partially derive from the problems that exist within the EU’s constitutional structure generally.

The BU is in-between the EU27 and the euro area, and relies on both structures. From this derives inherent complexity that in turn makes guaranteeing democratic accountability particularly challenging. Accordingly, democratic accountability standards within the BU may not be assessed by only looking at the ECB-SSM and the SRB. As this chapter has posited, other actors including the Commission and the EBA play an important role as well, and their accountability credentials must, too, be taken into consideration.

Mark Bovens has defined accountability as ‘a relationship between an actor and a forum, in which the actor has an obligation to explain and to justify his or her conduct, the forum can pose questions and pass judgment, and the actor may face consequences’.Footnote ⁵⁹ When the last step is taken within the framework of the BU, that is when the forum that holds the agent to account is to take actions based on its assessment of how the principle has performed, it must hold not only the ECB-SSM or the SRB to account but also the Commission and the EBA because of their role as regulator. The ECB’s nature as an independent EU institution and as a central bank also acting as banking supervisor complicates matters further, as does the EBA’s and the SRB’s nature as independent agencies. As a result of the ECB’s numerous functions, accountability becomes more difficult to ensure because the same group of MEPs are called to regularly interact with the ECB in different capacities, thus demanding from them that they first identify in which forum they must ask which kinds of questions. In any event, however, as recently noted by the former Governor of England Paul Tucker, ‘[t]he European Parliament’s Econ committee is too big to conduct effective oversight of the ECB’s stewardship of the monetary regime’.Footnote ⁶⁰ The same could be said of the ECON Committee when it is called to hold the ECB-SSM to account although in that context, the possibility for smaller meetings to be organised in the form of confidential oral discussions may partially contribute to solve this problem. Be this as it may, even if Paul Tucker is certainly right in considering the EP ECON Committee to be too large an accountability forum, it is difficult to imagine which other format would have sufficient legitimacy based on its representativeness of the (large) euro area to play such a role. Furthermore, other practical problems outlined below may in fact be a bigger hindrance to effective accountability than the ECON Committee’s large size.

Beyond all this, because the EU does not have exclusive competence in the field of banking supervision and bank resolution, national authorities continue to play a large role. Additionally, harmonisation is only partial such that the applicable rules vary across the BU. EU organs, and primarily the ECB, have to apply national norms upon whose content and legality they have no control.Footnote ⁶¹

Finally, democratic accountability within the BU does not solely rest on EU institutions and bodies; national institutions, too, play a large role. This is the case because they approve national legislation as noted previously, because they remain competent in areas that are closely linked to BU matters (for instance: anti-money laundering) and because they are closely involved in the functioning and the operation of both the SSM and the SRM.

5.5.3 How to Bridge the Existing Gaps?

If all were best in the best of possible worlds, differentiation within the EU would vanish, that is the three currently co-existing categories of Member States, which the EU27, the euro area and the BU form would disappear. Thus, some of the regulatory gaps and of the institutional complexity would cease to exist.

Likewise, if Treaty change were a realistic option, a better design for EU agencies could be introduced, a proper legal basis for the BU could be created, including the formal acknowledgement of a third category of Member States next to the euro area and the EU27, that is that of BU Member States. A true discussion on whether the ECB should be the BU’s supervisor could be had, and the Chinese wall that separates its monetary policy from its banking supervision functions better designed.

However, unfortunately, none of these options seem to be realistic at this stage of European integration. Even the Conference on the future of Europe is unlikely to lead to the full opening of Pandora’s box, as it might do so but only in specific areas with a specific objective.Footnote ⁶² It is true that following Brexit the most adamant advocate of the interests of non-euro area Member States is gone, and no non-euro area Member State has as large a financial market as the UK used to have. Consequently, none of them has the UK’s leverage in EU27-negotiations. But a discussion on Treaty change would likely regard many areas other than the BU, and taking account of all the challenges they are already facing internally, including the economic recovery post-COVID, the threats to the rule of law and to EU values, or the ecological and digital transition, EU Member States may not want to take this path at this point in time. Neither would they realistically be in a position to find a compromise solution at this stage if one considers how long they have been unable to come to a compromise solution on the completion of the BU, for instance.

If Treaty change is not an option, what is, then? In addition to the solutions already included in the main sections of this chapter, one could consider additional avenues to improve the existing situation.

First, institutional engineering, that is the improvement of existing practice through the actions of the institutions involved themselves should continue to be exploited. Institutional engineering commonly takes the form of arrangements put in place by institutions on an informal basis or their promoting regulatory change. In a nutshell, it means that institutions use their margin of discretion and action to the largest extent possible. One form this could take would consist in the creation of a dedicated BU sub-committee of the ECON Committee, a possibility that was already considered for the euro area in 2013–2014.Footnote ⁶³ This would allow for some of the MEPs to become more specialised in BU matters, and they would not necessarily all have to stem from BU Member States.

Changes in secondary legislation (and in primary law where this is easily feasible) should also be considered with a view to upgrading the mechanisms in place, and to simplifying the existing architecture where possible.

Further harmonisation at the EU level should be pursued too, not only in terms of the norms applicable but also perhaps in terms of the minimum requirements set with respect to the features of the national institutions involved. At present, NCAs and NRAs are hosted by very different institutions that correspond to different national traditions and rules. Arguably, if for instance the applicable standards of independence were more strongly defined at the EU level, it would be easier to guarantee democratic accountability in this area, as the institutional setups would be less complex.Footnote ⁶⁴ It may thus only be hoped that the Court of Justice will be called to continue to perform its duty of clarification and definition of the tasks and responsibilities of the different institutions involved within the BU.

Lastly, it may also only be hoped for that MEPs and MPs will improve the use they make of the existing mechanisms. This would include, as mentioned, asking more informed questions, making more demands for policy changes where necessary, and ensuring better synergies between the mechanisms that exist in parallel. To this end, interparliamentary cooperation should also be fostered, for instance, the Interparliamentary Conference on Stability, Coordination and Governance could be better exploited: to date, it has only rarely addressed BU-related matters. But other mechanisms should be established too, in the form of interparliamentary committee meetings hosted by the EP, and on the initiative of the Presidency parliament and with the involvement of national parliaments only.

As reforms to improve and complete the BU are high on the EU’s agenda again,Footnote ⁶⁵ it is urgent that they be also accompanied by matching improvements of the democratic accountability mechanisms in place in the whole of the BU.

6.3.1 Political Accountability

The political accountability of the Eurogroup is described as ‘thin’.Footnote ²³ Craig comments that:

The latter case is exemplified by the Eurogroup’s actions during and in response to the COVID-19 crisis.Footnote ²⁵ Overall, ‘[t]here is little by way of formal accountability for the Eurogroup’s input into the Euro Summits, and equally little by way of accountability check as to how it implements Euro Summit policy, more especially when the conclusions from such Summits require interpretation and choice in the implementation.’Footnote ²⁶ This does not, however, preclude the possibility that the Eurogroup may be ‘held to account in the European Council for the more detailed policy initiatives that the Eurogroup embraces when fulfilling European Council policy recommendations’.Footnote ²⁷

This answers the question of whom account is to be (primarily) rendered to, but does not speak of the standards against which its performance is to be assessed. After all, the Protocol on the Eurogroup merely provides that its main task is to ensure close coordination of economic policies among the Euro-area Member States, in order to promote conditions for stronger economic growth.Footnote ²⁸ It is rightly argued that a meaningful accountability relationship

The Eurogroup’s role during the Euro-crisis, notably with regard to financial assistance programmes, provides a good illustration of this.Footnote ³⁰ ‘The [Eurogroup] was the body coordinating and, de facto, deciding whether financial assistance would be granted, and under which conditions, to a requesting Euro Area Member State. It is again gaining specific relevance in the context of the Recovery and Resilience Facility.’Footnote ³¹ The Eurogroup assesses the national implementation of the Euro-area recommendation through national recovery and resilience plans.Footnote ³² It is also evolved in coordinating the implementation of these plans.Footnote ³³

The ‘six-pack’ and ‘two-pack’ of EU legislation further make provision for Economic Dialogues.Footnote ³⁴ Economic Dialogues are held in order to enhance the dialogue between the EU institutions on the application of economic governance rules and with Member States, if appropriate, and to ensure greater transparency and accountability. The competent committee of the European Parliament, that is, the Committee on Economic and Monetary Affairs (ECON), may invite representatives of Member States, the European Commission, the President of the Council, the President of the European Council and the President of the Eurogroup, to discuss economic and policy issues.Footnote ³⁵ According to the relevant EU rules, the competent committee of the European Parliament may invite the President of the Eurogroup for an Economic Dialogue during certain stages of the implementation of the European Semester for economic policy coordination and in the context of macroeconomic adjustment programmes, including the post-programme surveillance phase.Footnote ³⁶ It should be stressed that, under the existing rules, the European Parliament has no powers to ‘sanction’ the Eurogroup for its performance or to amend any of the decisions taken. The relevant provisions instead focus on the information and debate stages of accountability.Footnote ³⁷ There is further the expectation that finance ministers participating in the Eurogroup will be held separately to account by their respective national parliaments, in accordance with national constitutional requirements.

The Eurogroup President takes part in an Economic Dialogue twice a year (in spring and in autumn) and, if needed, on an ad hoc basis. This practice was agreed during the 7th legislative term through an exchange of letters between the competent Committee and the Eurogroup President.Footnote ³⁸ Nine dialogues were held with the President of the Eurogroup in the ECON Committee during the 8th legislative term (autumn 2014 to spring 2019). Furthermore, the President of the Eurogroup occasionally participated in an exchange of views in plenary as well as in interparliamentary meetings relating to economic governance.Footnote ³⁹ The Economic Governance Support Unit (EGOV) of the European Parliament provided members of the ECON a briefing in advance of these dialogues, as well as papers written by external experts.Footnote ⁴⁰ This is important from the perspective of substantive accountability, because it helps address any information asymmetries between the European Parliament and the Eurogroup.Footnote ⁴¹ Five economic dialogues with the President of the Eurogroup have taken place thus far during the current (9th) legislative term.Footnote ⁴² In contrast to previous practice where only web streaming was available, a transcript of the dialogues is now made available to the public.Footnote ⁴³

In line with agreed practices, the following procedure is applied for the exchanges of views with the Eurogroup President. First, there are introductory remarks by the Eurogroup President for about ten minutes. These are followed by five-minute question-and-answer slots, with the possibility of a follow-up question, time permitting, within the same slot. Two minutes maximum are allocated for the question, and then three minutes maximum for the answer. In the first round of questions, each political group has one slot. Thereafter, the d’Hondt system is applied, which determines the order of questions by political groups. Any time for additional slots is allocated on a catch-the-eye basis.

Overall, the MEPs ask well-informed questions. In terms of the topics discussed, these are very much the issues of the day (whether it is, for example, financial assistance programmes back in the day or, nowadays, the assessment of recovery and resilience plans or the future of the EU fiscal rules). The MEPs also address structural issues pertaining to the EMU architecture, such as the completion of the Banking Union. Obviously, these two sets of issues sometimes intersect (as was the case, for example, with questions regarding the postponement of the work plan for the Banking Union). Further, there are questions about the Capital Markets Union, the digital euro, the enlargement of the Euro-area, as well as plenty of other issues. Whenever questions are not (adequately) answered by the Eurogroup President, it is common for the MEPs to return to the point made by their colleagues previously.Footnote ⁴⁴ It is clear that the questions asked focus not only on the procedure by means of which a particular decision or policy choice was made but also on the substantive worth of the policy decision itself.Footnote ⁴⁵

The Economic Governance Support Unit has conducted an extensive analysis of the Economic Dialogues with the President of the Eurogroup during the 8th legislative term (autumn 2014 to spring 2019). Nine dialogues were held in ECON during the said period. ‘As a general conclusion, one can say that issues raised during the dialogues reflected on-going policy work by the Eurogroup and other topical issues related to the well-functioning of the euro area, including the public attention given to a specific policy issue at the time of the dialogue.’Footnote ⁴⁶ The following figure provides an overview of the topics discussed during the 8th legislative term.

Reproduced with permission from EGOV. Source: Hagelstam, De Biase and Navarini, ‘Economic Dialogues with the President of the Eurogroup during 2014–2019’, available at: <www.europarl.europa.eu/RegData/etudes/IDAN/2019/634367/IPOL_IDA(2019)634367_EN.pdf> (last visited 18 Sept. 2021), at p. 2.

The Economic Dialogues with the Eurogroup President are rife with comments on accountability.Footnote ⁴⁷ It is clear that the European Parliament, and the ECON Committee in specific, wants more on part of the Eurogroup in terms of accountability and transparency. Moreover, it is clear that the MEPs take issue with the frequency of those meetings with the Eurogroup President.Footnote ⁴⁸ The Chair of the ECON Committee, Irene Tinagli, has opened the first two Dialogues with Eurogroup President Paschal Donohoe with an, to all intents and purposes, identical remark:

The Eurogroup President replied, on the second occasion that this comment was made, thus: ‘I’ll certainly reflect on what the Chair just said there regarding how we can structure our dialogue in the future.’ Overall, strengthening the (political) accountability of the Eurogroup remains work in progress. This places added emphasis on its legal accountability, which, as seen in the following section, is – at best – scant and indirect.Footnote ⁵⁰

6.3.2 Legal Accountability

The legal accountability of the Eurogroup has been the subject of lengthy litigation before the EU courts and remained ill-defined for a number of years. The leading authorities are Mallis and Chrysostomides. In very simple terms, it was held in Mallis that litigants cannot admissibly bring actions for annulment under Article 263 TFEU against the acts of the Eurogroup.Footnote ⁵¹ The Court noted that the term ‘informally’ is used in Protocol (No 14) on the Euro Group and that the Eurogroup is not a configuration of the Council pursuant to the latter’s Rules of Procedure. Accordingly, it could not be equated with a configuration of the Council or be classified as a body, office or agency of the EU within the meaning of Article 263 TFEU.Footnote ⁵²

In Chrysostomides, the Court held that the Eurogroup is not an ‘institution’ within the meaning of the second paragraph of Article 340 TFEU, such that its actions cannot trigger the non-contractual liability of the Union.Footnote ⁵³ What renders this judgment uniquely important for the accountability of the Eurogroup is the reasoning provided by the Court for its judgment denying that the Eurogroup is an EU entity established by the Treaties. The Court held that ‘the Euro Group was created as an intergovernmental body – outside the institutional framework of the European Union’ and that ‘Article 137 TFEU and Protocol No 14 … did not alter its intergovernmental nature in the slightest’.Footnote ⁵⁴ The Court further held that ‘the Euro Group is characterized by its informality, which … can be explained by the purpose pursued by its creation of endowing economic and monetary union with an instrument of intergovernmental coordination but without affecting the role of the Council – which is the fulcrum of the European Union’s decision-making process in economic matters – or the independence of the ECB’.Footnote ⁵⁵ It also held that

As argued extensively elsewhere, the Court’s reasoning in Chrysostomides is unconvincing.Footnote ⁵⁷ First, it is not adequately explained in the judgment why Article 137 TFEU and Protocol No 14 did not alter the Eurogroup’s intergovernmental nature in the slightest. Insofar as the Court refers selectively to arguments provided by the Advocate General, notably his literal and teleological interpretation, this interpretation of the provisions of the Protocol is not straightforward in textual terms, and that whatever the origins of the Eurogroup and its functions prior to the Treaty of Lisbon may have been, they do not seem to warrant the conclusion that, following the entry into force of the Treaty of Lisbon, the Eurogroup remains an entity situated outside the EU legal and institutional framework. Second, it is not clear from the judgment why the informal nature of the Eurogroup means that it is not an EU entity established by the Treaties for the purposes of non-contractual liability. In reality, formally recognizing the Eurogroup by means of primary law provisions would not affect the role of the Council, insofar as those Treaty provisions which confer powers on the Council remained unchanged. It is perfectly possible to recognize the existence of an entity within the EU institutional framework which would not encroach on the powers of the Council. It is also unclear why the informal nature of the Eurogroup is necessary to preserve the ECB’s independence. Third, contrary to what the Court stated, we have seen that various EU law provisions confer powers on the Eurogroup. This also prompts the question of whether secondary EU law may confer powers or tasks on informal, non-EU bodies, especially to the point of involving them in the accountability mechanisms for a formal EU institution, the ECB.

According to the Court in Chrysostomides, individuals may bring before the EU courts an action to establish non-contractual liability of the EU against the Council, the Commission and the ECB in respect of the acts or conduct that those EU institutions adopt following the political agreements concluded within the Eurogroup.Footnote ⁵⁸ Moreover, the principle established in Ledra Advertising applies,Footnote ⁵⁹ meaning that an action for damages is admissible insofar as it is directed against the Commission and the ECB on account of their alleged unlawful conduct at the time of the negotiation and signing of the Memorandum of Understanding (MoU) with the European Stability Mechanism (ESM).Footnote ⁶⁰ Furthermore, the Court extended the Ledra principle to the participation of the Commission in the activities of the Eurogroup. It held that

The Court is effectively arguing that there is a complete system of remedies and procedures, such that litigants in this area are ensured effective judicial protection. Unfortunately, this is most certainly not the case when the agreements reached in the Eurogroup are implemented by non-EU bodies, such as is the case when the MoU with the ESM gives concrete expression to a macroeconomic adjustment programme. The ESM Treaty, as it currently stands, gives jurisdiction to the CJEU only when an ESM Member contests the internal resolution of disputes (with another ESM Member or the ESM itself) on the interpretation and application of the ESM Treaty or the compatibility of ESM decisions with the ESM Treaty.Footnote ⁶² Private litigants have no standing to challenge the decisions of the ESM organs. What is more, as explained extensively elsewhere, there may be no measures adopted by formal EU institutions incorporating the specific harmful measures that litigants wish to challenge.Footnote ⁶³ The relevant Council Decision, whether adopted on the basis of Articles 136(1) and 126(6) TFEU as was the case in Chrysostomides or – nowadays – on the basis of ‘two-pack’ legislation,Footnote ⁶⁴ may not include all the terms from the Eurogroup statement and/or the MoU with the ESM. Chrysostomides is a case in point here, as only some of the harmful measures were mentioned in the impugned Council Decision. EU courts may or may not be able to read any terms that are not (fully) replicated into the relevant Council Decision.Footnote ⁶⁵

It should be noted that the Court in Chrysostomides recognized, for the first time, that EU law measures (in casu, a Council Decision) that post-dated the adoption of the harmful measures by the national authorities concerned may nevertheless trigger the non-contractual liability of the Union, provided that the relevant Union institution (the Council) had required the maintenance or continued implementation of the harmful measures and that the national authorities concerned had no margin of discretion to escape that requirement.Footnote ⁶⁶ However, as explained elsewhere, the terms of those measures are often vague, such that the national authorities concerned have a margin of discretion for the purpose of laying down the impugned rules.Footnote ⁶⁷ Chrysostomides is again a case in point, and the actions for damages were declared inadmissible insofar as they were directed against the relevant Council Decision. The extension of the Ledra principle to the Commission’s participation in the activities of the Eurogroup may appear more promising, but, as argued elsewhere, its scope of application remains uncertain.Footnote ⁶⁸ It seems that the Commission retains its role of guardian of the Treaties as regards all the activities of the Eurogroup, such that any failure on its part to check that (any of) the political agreements concluded within the Eurogroup are in conformity with EU law may give rise to non-contractual liability of the Union. This is a much broader scope of application for the Ledra principle than the financial assistance context in which it was first elaborated. Further, it is not clear what the Commission should do if, according to its assessment, a political agreement concluded within the Eurogroup is not in conformity with EU law.

7.4.1 Which Accountability Goods Do MEPs Prioritise?

Figure 7.2 shows the number of questions identified across the four goods in absolute numbers. In terms of percentages, the highest value – 52 per cent of all questions – prioritises substantive issues regarding the merit of policy decisions or measures. Next, 42 per cent of all questions are deemed procedural because they cover various aspects of the process through which decisions were taken. Finally, 6 per cent of all questions do not have a clear accountability claim and are considered opinion questions about developments in the Member States or ongoing policy debates.

Figure 7.2 Types of questions identified in the Economic Dialogues with the Eurogroup (January 2013–May 2019), in absolute numbers.

Among the four accountability goods, openness is the most frequent, not only in respect to decision-making processes but also when it comes to the content and outcomes of decisions. Requests for transparency make 40 per cent of all questions, with a slightly higher emphasis on procedural as opposed to substantive issues (ninety-nine versus ninety-one occurrences). In terms of procedural openness, one important example comes from the special Dialogue on Cyprus in May 2013, when MEPs questioned a controversial Eurogroup decision to ensure financing for the Cypriot economy by imposing a 6.75 per cent levy on all bank depositors, regardless of the protection offered by EU deposit insurance guidelines to small deposits under 100,000 euros.Footnote ⁵⁰ While the Eurogroup soon backtracked on the measure – not least because the Cypriot parliament rejected it – MEPs wanted to know how the Eurogroup reached the decision in the first place and who supported the move:

Another memorable question on the same matter is posed by Sven Giegold from the Greens, a long-standing advocate of more transparency in the EMU:

Leaving the political rhetoric aside, the interest in procedural openness featured throughout the period and went beyond transparency about negotiating positions in the Eurogroup: more generally, MEPs asked questions about the stage and timing of negotiations or about the evidence used as a basis for taking decisions. At the same time, MEPs made numerous requests for information about the substantive policy position of the Eurogroup on different matters. For instance, MEPs inquired whether the Cypriot bank levy on deposits could be applied to different countries as wellFootnote ⁵³ or whether the Eurogroup President Mario Centeno meant what he said to the Greek finance minister that ‘the ball is [now] in your court’.Footnote ⁵⁴ Other subjects of substantive openness concerned future EMU reforms planned in the ‘Five Presidents Report’ (2015) and the Commission’s 2017 ‘Roadmap for completing EMU’, as well as the risks posed to the euro area economy by Brexit and steps taken to prevent them. At times, MEPs just asked the Eurogroup President to clarify points about policy:

The second-most frequent category is made of questions concerning the effectiveness of policy decisions – 26 per cent in total – with a clear prioritisation of substantive aspects over procedural ones (95 as opposed to 30 occurrences). Many questions in this category concern the effectiveness of the European Semester and the implementation of CSRs by national governments. For example:

Other questions concern strategies to improve the current effectiveness of EU policies, for instance, ‘if you are a responsible policymaker, you have to have contingency plans; what is your contingency plan if growth would not come back?’Footnote ⁵⁷ The effectiveness of the Troika and of austerity policies in particular are also questioned, as MEPs point to the lack of growth in Greece as a sign that the Eurogroup’s approach has failed.Footnote ⁵⁸ Conversely, procedural effectiveness has to do with the swiftness of decision-making processes and strategies to prioritise certain files or issues in order to reach agreements. For example, MEPs questioned the wisdom of not having a strategy in case Greece had left the euro area in 2015, under the Tsipras government.Footnote ⁵⁹ Another long-standing aspect has been the proposal to create a European Deposit Insurance Scheme (EDIS), the final step of the Banking Union, which was deadlocked time and again since 2015.

Next, there are questions regarding publicness (15 per cent overall) and non-arbitrariness (12 per cent overall). The interest in publicness is almost equally procedural as it is substantive (36 and 37 occurrences, respectively). One recurrent issue concerns the transformation of the ESM into an Economic Monetary Fund under EU law, with the involvement of the European Parliament. Another aspect refers to the Parliament’s opposition to the creation of an independent fiscal council to monitor national budgets, as captured below:

A similar criticism about the Eurogroup’s lack of democratic accountability referred to substantive issues and thus fell under ‘substantive publicness’. One area of conflict concerned representing the public interest of a Member State (e.g. Alexis Tsipras after winning the election in Greece) as opposed to safeguarding the interest of the euro area as a whole:

In respect to non-arbitrariness, there are more procedural questions encountered than substantive ones, but the difference is not significant (33 vs. 25 occurrences). On the procedural side, multiple questions address the uniform application of rules on the SGP and the ‘special treatment’ granted to large countries like France and even Spain. An interesting issue is raised regarding the duplicity of national ministers, who agree to CSRs in the ECOFIN Council/Eurogroup and then make public statements against the Commission to their domestic audiences:

The point is not about the Eurogroup President specifically but by members of his institution, which is important because it shows that the Eurogroup President cannot be held accountable for the conduct of other finance ministers, especially when such conduct occurred in a domestic setting.

Finally, there are also questions focused on substantive non-arbitrariness, which focus mainly on equal treatment (of citizens, economic actors, or countries) in the context of ESM or EU measures. For example, in relation to the ESM programme in Cyprus, the Chair of the ECON Committee, Sharon Bowles asked how ‘can we establish that there has been equality of citizens and member states in the various bailouts? And is this within both the spirit and the letter of the Treaties and legislation?’Footnote ⁶³ Overall, non-arbitrariness plays a limited role among the accountability concerns of MEPs, not least because the legal mandate of the Eurogroup is ambiguous while the relationship with the Parliament is not strictly defined. It is difficult for MEPs to constrain the discretion of the Eurogroup if (1) the boundaries of that discretion are fluid, and (2) the Parliament does not set or review the tasks of the Eurogroup in the EMU.

To sum up, the European Parliament uses the Economic Dialogues to make a variety of accountability claims vis-à-vis the Eurogroup. However, most questions focus on openness (both procedural and substantive) as well as substantive effectiveness, revealing a systematic parliamentary interest in the transparency of the Eurogroup and the economic impact of its decisions. Ultimately, MEPs prioritise knowing what the Eurogroup is doing, and whether its actions achieve the intended results. While there is some questioning of the publicness and arbitrariness of Eurogroup decisions, such concerns are secondary to openness and effectiveness. The next section discusses how Eurogroup President responds to parliamentary questions in the Economic Dialogues.

7.4.2 The Answerability of the Eurogroup

When it comes to the types of answers provided by the Eurogroup Presidents, there is a clear trend observable across the four accountability goods. Regardless of the questions addressed by MEPs, Eurogroup Presidents have the tendency to disagree with the points raised or defend the conduct of their institution in respect to both procedural and substantive aspects. Disagreement or defence of conduct was identified in 55 per cent of all answers, with a higher incidence in response to questions on substantive issues (32 per cent) as opposed to procedural ones (23 per cent). Excluding opinion questions (which have no accountability claim), the frequency of answers in agreement with MEPs or simply providing the information is 20 per cent. On the other hand, evasion or lack of replies due to time constraints was identified in 18 per cent of all cases (also excluding opinion questions). In terms of specific accountability goods, answerability is similar. Figure 7.3 provides a snapshot of the various types of replies encountered.

Figure 7.3 Types of answers identified in the Economic Dialogues with the Eurogroup (January 2013–May 2019).

To start with, answers that agree with points raised by MEPs or simply provide the information requested are categorised as ‘agree/provide’ [a reply]. Most of these answers concern openness in either its procedural (22 occurrences) or substantive form (24 occurrences). When the Eurogroup President is asked about the sequence of decision-making regarding the 2013 Cypriot programme, he is transparent about the process and considerations at the time but not about the specific positions of different Member States, which he feels he needs to protect as chairman of the Eurogroup.Footnote ⁶⁴ Calls for decision-making transparency are finally met in 2016, when several reforms are passed:

In respect to substantive issues, the Eurogroup President is generally open to clarifying the Eurogroup’s policy stances or views on the future reforms of the EMU. For instance, in response to the question about the relationship between flexibility and credibility in relation to structural reforms (posed by Paul Tang), Dijsselbloem provides a lengthy answer and explains his position in respect to the preventive and corrective arms of the SGP.Footnote ⁶⁶ Eurogroup Presidents also seem happy to provide their own opinions about lessons learned from holding the position, advice to their successors, or ongoing policy debates (see opinion questions, with answers provided in 25 out of 28 occurrences).

The next pages illustrate the range of replies found in the dataset, corresponding to the questions listed in Section 7.4.1. For instance, in response to the question by MEP Astrid Lulling on the effectiveness of CSRs in the European Semester, the Eurogroup President explains that the problem is not ‘the quality of recommendations, but the quality of the implementation and the progress being made where budgets are concerned’.Footnote ⁶⁷ Years later, in 2017, Dijsselbloem still defended the effectiveness of the Semester:

Furthermore, the Eurogroup President also defends the democratic accountability of the ESM, arguing that each finance minister is accountable to her own national parliaments. In the Dialogue on 20 February 2014, he also refers to a letter sent by his predecessor Jean-Claude Juncker pledging to report to the European Parliament on a regular basis on the workings of the ESM. In his view: ‘The easy thing is I am here now you can ask me anything you want on the ESM.’ The MEP who originally asked the question (Bas Eickhout from the Greens/the Netherlands) retorts that this is not the same because ‘for example the Dutch Parliament does not have a veto on any payment … whereas the German Parliament has because of the voting rules. So there is a democratic gap in the ESM and … that [needs] more than just that you are here coming.’ The minister replies that the Dutch parliament can fulfil its accountability obligations without the formal voting rules because ‘There is no subject that is debated that much and that often in the Dutch Parliament as the Eurozone agenda including all the programs and all the money that comes from the ESM.’Footnote ⁶⁹

Furthermore, reacting to the question of MEP Jonás Fernández about creating an independent fiscal council, the Eurogroup President rejects ever saying that such an institution ‘should intervene in national procedures’ on budgets or ‘step into the authority of the Commission’. He argues that it would be good to have ‘a European Fiscal Council that could independently assess whether we are taking the Pact seriously; sometimes criticise us, sometimes evaluate what we’ve done, … but also advise on what we discussed just now, the fiscal stance in the Euro zone’.Footnote ⁷⁰ In response to Marco Valli’s question about the Greek elections and respecting the democratic wishes of the voters, Dijsselbloem defends the intergovernmental nature of the Eurogroup and the need ‘to deal with 19 ministers who have 19 mandates from 19 electorates’.Footnote ⁷¹ Last but not least, on the question of Astrid Lulling regarding the hypocrisy of national governments who berate CSRs after voting for them in the Council, the Eurogroup President defends the right of Member States to implement reforms their own way – as long as they engage seriously with the Commission’s recommendations.Footnote ⁷²

Elsewhere, the point about the equality of citizens and Member States in the various bailouts (raised by Sharon Bowles) is first dodged by the Eurogroup President until it is picked up again by another MEP. At that point, Jeroen Dijsselbloem agrees that ‘every country can be treated different, but it should be done on the same principles and one of the guiding principles is debt sustainability – that the country should be able to recover’.Footnote ⁷³ Speaking of evasions more generally, Mario Centeno has the worst record in the dataset (with 26 out of 60 questions evaded). In fact, Centeno tends to answer questions in very general terms, without going into any details about the specific questions raised by MEPs. He is also inclined to defend Eurogroup positions through examples with Portugal – and how things worked domestically – although his country was not part of the questions raised by MEPs.Footnote ⁷⁴

Overall, the answerability of Eurogroup Presidents varies depending on the personality and experience of the incumbent, but there is a broader trend observable across time. In general, Eurogroup Presidents defend the conduct of their institution or openly disagree with the points of MEPs almost three times more often than they provide the answer requested or agree to parliamentary demands. This is not surprising in itself: after all, the job of Eurogroup Presidents is to represent – and by implication protect – the interests of the executive body that they are chairing. This trend, however, is more problematic in the context of the legal framework of the EMU and the Eurogroup in particular. Since the European Parliament cannot impose sanctions on the Eurogroup or force euro area finance ministers to take specific decisions, the type of accountability at play remains limited. The Eurogroup is not responsive to the European Parliament; if anything, the analysis above shows a form of selective transparency and willingness to justify (but not change) decisions already taken. The final section discusses the implications of these findings.

8.3.1 Questions Related to the ‘Fiscal’ CSR 1

8.3.2 Questions Related to the ‘Social’ CSR 2

8.3.3 Questions Related to the ‘Business’ CSR 3/4