The Delegation Mandate of the European Central Bank during the Euro-Crisis : A Principal-Agent Analysis

Bachelor Thesis from the year 2014 in the subject Politics - International Politics - Topic: European Union, grade: 1,7, Dresden Technical University, language: English, abstract: On September 6, 2012, the President of the ECB, Mario Draghi, announced that the ECB "will do whatever it takes [...] to preserve the euro" (Draghi, 2012b). Due to the unfavorable economic situation and the emerging fear of an involuntary break-up of the Eurozone, the Governing Council decided to launch the OMTs program that would allow the ECB to buy unlimited government bonds from countries of the Eurozone on the secondary market. This announcement led to a subject of considerable political debate across the world. It is with this background in mind that the research question arises: Did the European Central Bank exceed its mandate by announcing the bond-buying program, outright monetary transactions (OMTs)? This paper will show that the principals' preferences heterogeneity with regard to different crisis solution approaches changes when it comes to the survival of the Eurozone. Thus, the agent was given more discretion to do everything to defend the Euro as a common goal. The aim of this contribution is to answer the research question from a principal-agent perspective, not to provide a jurisprudential or economic analysis of the issue. Therefore, the decision of the German Federal Constitution Court will not be included in the following work. The remainder of this paper is organized as follows: The first part gives a brief introduction to the main assumptions of the PA approach. The next chapter discusses the ECB as an institution, together with the framework and the design of its mandate to consider the level of autonomy of the ECB and which gaps in the policy-making authority could occur. The third part outlines the technical features of the announced OMTs program to see if the bond-buying program is in accordance with the mandate. Then, the debate on this program from a PA perspectiv