CEPR Policy Paper 6: Preparing the ECB for Enlargement

Enlargement of EMU will soon be a reality. Central bank governors of each new EMU member will get a vote on the European Central Bank?s (ECB) key decision-making body, the Governing Council. Euroland?s interest-setting body will thus expand from its current 18 members to 30 or more members ? clearly too many for efficient decision-making. This Paper argues that, as a matter of urgent concern, the ECB and/or the European Commission should formulate a response to this challenge, since even medium-term challenges may have immediate effect when they are predictable. The European Central Bank (ECB) has been under siege for some time. Yet even though it is too early for an evaluation, the Bank?s decision-making structure has worked well so far, having proved its mettle in a series of challenges ? the Russian and LTCM crises, the oil and food price hikes, the stock market tech-wreck and the US slowdown. But is the ECB ready for the challenge of enlargement?