It is “absurd” that Germany has the same voting weight as Malta and Cyprus on the European Central Bank’s governing council, according to a top German official and author.
Prof. Brun-Hagen Hennerkes – president of the influential Foundation for Family Enterprises (SMEs) – told the German daily Deutsche Mittelstands Nachrichten restructuring was badly needed at the Governing Council of the ECB.
“Germany, which shoulders 27 per cent of the risk burden at the bank, has the same voting weight as Malta and Cyprus. This is totally absurd,” he said.
Germany is expected to continue to push for further ECB reforms amid mounting pressure on the Merkel government to increase its country’s influence on the bank’s governance, particularly when it comes to monetary policy.
According to ECB rules, each of the euro’s 17 national central bank governors plus the six members of the ECB’s executive board have an equal vote when the Frankfurt-based European Central Bank decides on or other monetary policy matters.
On the other hand, topics relating to the euro system’s accounts, like foreign currency reserves, are made according to the weight of paid-in capital by EU member states. Germany, with the largest share, holds about 19 per cent of votes while Malta, by far the smallest euro economy, holds 0.06 per cent.
Many German politicians and influential bodies are calling for the latter system to be adopted also where it comes to setting interest rates.
German public opinion recently became increasingly critical to the current governance of the euro system as they perceive that Germany is being made to contribute disproportionately to the failures of other countries such as Ireland, Portugal and Greece.
Although this is only a perception, as Germany has contributed to the recent bailouts according to the size of its GDP, the same way as other euro area member states, the German public is demanding a change in the one-country-one-vote system at the ECB.
Central Bank Governor Josef Bonnici, who sits on the ECB’s Governing Council, played down the German demands and said that according to the rules, members of the governing council are not meant to represent their country’s interests by that of the euro area.
“It is worth noting that membership of the Governing Council is in an individual capacity and not intended to represent the interests of particular member states,” he told The Sunday Times.
“In any case, voting in the ECB is not the main issue, but rather it’s the excessive debt by some member states, which is being tackled,” Prof. Bonnici said.
Like EU Commissioners, members of the ECB Governing Council are duty bound to take decisions in the interest of the euro area, rather than national interests, though it is a well known secret this is not always the case.
Although Germany is expected to keep pushing for increased influence on the ECB – particularly as the country prepares for next year’s federal election – there is little hope the other member states will give in to these demands.
Changes to the ECB statute require unanimous consensus among the 27 member states, something which currently appears impossible.