The various roles of the ECB in the new EMU architecture

During the crisis, the ECB had an increasing influence, distinguishing itself as the single
most decisive and most successful player among all European institutions (Collignon,
2013). The author asserts this function is not sustainable for the long-term because of
economic reasons like the overburden of the ECB with other responsibilities outside its
technical and finite role, but also for political reasons like generating a legitimacy crisis
for European citizens. The role of ECB should originate in its functions: lender to the
banking system, supervise credit institutions and monitor their creditworthiness, maintain
price stability.
Although criticized by some for breaking its mandate, ECB created the Outright
Monetary Transactions (OMT) Program, which allowed ECB to buy sovereign bonds,
keeping however to some established clear principles. This decision is considered to
have stopped the fire sales, which are viewed as one main reason for the Euro crisis
and its duration. In addition it restored stability in the Euro financial system.
For the sustainability of the monetary union in the long run and to determine which policy
is effective and which not, public choices have to be taken into consideration. Therefore,
the process of designing an efficient architecture for EMU must be brought back into
democratic debate.
However, it seems that the opportunity of learning from the Euro crisis was missed.
Five lessons from the Spanish cajas debacle for a new euro-wide supervisor
The financial crisis has threatened the solvency of Spain and destroyed the credibility of
the Spanish supervisors because of the financial systems (both cajas and Central bank)
delay in confronting to the reality of its losses.
The solutions proposed by the article are aimed at improving the supervisors ability and
professionalism to cope with issues aroused in the financial system and at learning from
the mistakes of the Spanish regulators in dealing with the cajas. The supervisors should
obtain all the relevant information covering the entire banking system, must be rotated
from accounts with a certain frequency, must take into consideration that dynamic
provisioning may delay decision making, must be able and willing to stand up to
politicians to ensure the necessary professionalism and knowledge and must adopt the
appropriate resolution regime once irregularities and capital shortfalls are uncovered.