LA ÉLITE EXTRANJERA EN EGIPTO

Since its inception, the ECB’s formal decision rule has been simple majority voting under the principle of ‘one head, one vote’. The idea behind granting France and Ger- many the same voting power as Luxemburg and Finland was to increase the independ- ence of national representatives. As one of the Euro’s architects explained this reason- ing: “If you have as many votes as your GDP, you are not independent, but represent

your GDP, your country” (Padoa-Schioppa 1996: 7). However, the fact that the bigger

member states accepted this egalitarian voting scheme, Padoa-Schioppa admitted, “verges on the miraculous” (ibid). Possibly, this miracle reflects that nobody assumed the French and the Maltese central bank governor to actually be equally influential in practice. If no formal votes are taken and policies are developed through deliberation (as ‘consensus voting’ suggests), some voices may find more attentive ears than oth- ers. ECB expert David Marsh (2015) pokes at this discrepancy between formal rules and actual practices by stating that “in the shadowy world of European Central Bank decision-making, all central banks are equal — but some are more equal than others.” Members of the Governing Council can enjoy outsize influence because of the econo- my they represent (as Marsh seems to suggest), but also by virtue of their individual profiles. Eurozone governments are arguably well advised to appoint a governor who is highly respected within central banking circles, if they wish to have an influential voice inside the GC. Arguably, this is the most immediate way of exerting influence. For instance, Athanasios Orphanides as central bank governor of Cyprus represented one of the Eurozone’s smallest members. Yet he played “an influential role on the ECB’s 22-strong governing council because he worked previously at the US Federal Reserve where he became an expert on the 1930s Great Depression and Japan’s expe- rience of deflation in the 1990s,”21 as the Financial Times pointed out. In the world of central banking, such credentials serve as important reputational resources.

The formal rule of ‘one head, one vote’ has recently been slightly amended, too. With the accession of Lithuania as the Eurozone’s nineteenth member in 2015, a rotation scheme has been put in place, which gives different groups of countries slightly differ- ent voting frequencies. In every monetary policy meeting, four NCB governors will not be allowed to cast a formal vote. Those include one out of the five largest countries in terms of the ECB’s capital key (Germany, France, Italy, Spain, and the Netherlands) and three of the remaining 14 governors (see ECB 2009).22 The six members of the ECB’s executive board, to the contrary, retain their permanent vote.

21

“ECB should hold course on rates, says Orphanides”, Financial Times, 21 Dec 2009.

22

This implies a voting frequency of 80% for the five biggest members comprising Group 1 and a voting fre- quency of 79% for the other countries in Group 2 in a setting with 19 national governors. Should the number of national governors increase in the future, however, only the voting frequency of Group 2 will decrease further (ECB 2009: 92). If EMU membership should exceed 21 countries in the future, there will be three different groups of members with varying voting frequencies, further complicating the formal decision rule.

37 Originally the rotating scheme should have come into force much earlier, when the sixteenth member joined EMU (Slovakia in 2009). However, the GC decided in 2008 to delay the implementation. Whether the scheme fundamentally changes how the ECB makes decisions is doubtful. After all, every member will continue to participate in all meetings and will retain the right to speak. If ECB decisions are indeed mostly determined through deliberation rather than voting, then the change should be fairly meaningless. However, both the decision to delay the implementation of the rotation scheme in 2008 and to finally start implementing it in 2014 were hotly debated, cast- ing doubt on the presumably deliberative and consensual nature of ECB decision- making.

How could we know? Insights from other central banks

Since the ECB refrains from publishing voting records, it is impossible to establish empirically whether ‘one head, one vote’ applies in practice or whether the preferences of particular policymakers’ carry disproportionate weight. Skepticism about the ab- sence of national bias in ECB decision-making has inspired numerous studies which model ECB decisions based on theoretical assumptions (see e.g. Heinemann & Huefner 2004; Kool 2006; Hayo & Méon 2013). However, such studies suffer from the absence of reliable data. While the ECB has begun to publish ‘accounts’ summa- rizing monetary policy meetings in 2015, analysts still cannot access detailed minutes. Furthermore, these ‘accounts’ contain neither individual statements nor votes. The ra- tionale behind this is to protect ECB officials and (most importantly) national central bank governors from scrutiny,23 which presumably makes it easier for them to adopt a pan-European perspective instead of representing their domestic constituencies.24 Therefore it remains impossible to know with certainty which GC members argued and voted for which policy and why.

Academics interested in voting behavior within central bank committees have there- fore looked for insights elsewhere. Central banks offering extensive minutes and vot- ing records for analysis include, among others, the US Federal Reserve, the Bank of England, the Bank of Japan, the National Bank of Poland and the Swedish Riksbank. These institutions have provided a wealth of data, making analyses of individual poli- cy preferences and voting patterns in monetary policy committees possible. As the in- sights of such studies may apply to ECB’s decision-making as well, I summarize their most important findings below.

First, monetary policy deliberations and voting are “characterized by considerable het- erogeneity among policymakers” (Jung 2013: 146). The Bank of England’s monetary policy committee (MPC), for instance, “has been divided about two-thirds of the time”

23

“New ECB minutes to provide detail on QE debate, but no names”, Reuters, 18 Feb 2015.

24

Adolph (2013) provides support for this view, suggesting that central bankers may be more tempted to signal their ‘usefulness’ to constituencies and ‘shadow principals’ (past and potential future employers), when their individual votes and deliberations are made public.

38 (Hix et al. 2010: 731) since 1997. When confronted with the same information about the state of the British economy, why do members of the MPC disagree on the appro- priate interest rate so much? Hix et al. (2010) and most other studies focus on inflation preference differentials (i.e. the classic dichotomy between ‘hawks’ and ‘doves’) as drivers or voting behavior. However, Hansen et al. (2013) show that voting are also driven by heterogeneous assessments of the economy. This implies that even central bankers with similar preferences may vote differently because they differ about how they perceive the state of the economy.

Second, policymakers’ origins matter. This is suggested by studies of the Fed’s Open Market Committee (FOMC). Like the Eurosystem, the Federal Reserve System is a hybrid organization designed to represent both national (supranational) and regional (national) concerns. In their classic study of the FOMC, Meade and Sheets (1995) show that individual Fed policymakers disproportionally take unemployment devel- opments of their home states into account. Somewhat surprisingly, this effect is even stronger for national Board members than for the presidents of the regional Reserve Banks – suggesting that home bias is not so much a matter of institutional representa- tion but rather related to policymakers’ regional identities (see Meade & Sheets 1995: 662).

In sum, policymakers vote differently because they differ in several aspects: their ori- gins, their perception of economic conditions, and their preferred inflation hawkish- ness. If this is true elsewhere, we may expect similar dynamics to be at play in the ECB’s policy committee. Indeed, as ECB policymakers serve a supranational central bank which governs a very heterogeneous currency union, one might expect them to differ even more. After all, the Eurozone consists of heterogeneous countries, with dif- ferent business cycles and different economic problems. Yet, in the absence of voting records or minutes revealing the views of individual policymakers, how are we to know?

Assumptions about ECB politics: does size matter?

One way of coping with the lack of reliable data is proposed in Hayo & Méon (2013). Attempting to identify a decision rule that best simulates the ECB’s actual interest rate decisions between 1999 and 2006, the authors simulate five different scenarios. They find that the scenario which resembles actual decisions most closely is one “in which individual members of the Governing Council follow national objectives, bargain over the interest rate, and their weights are based on their country’s share of the zone’s GDP” (Hayo & Méon 2013: 135). This suggests that ECB’s policymakers take the needs of its bigger members – most notably France and Germany – disproportionally

39 into account (for similar arguments see Kool 2006; von Hagen & Brückner 2003).25 In this light, Padoa-Schioppa’s vision of ECB decisions being taken independent of na- tional interests may account to little more than wishful thinking.

To sum up the key findings from studies of other central banks as well as assumptions- based models of ECB decision-making, two insights are of particular relevance for my argument:

1. ‘One head one vote’ does in all likelihood not represent a realistic model of ac- tual ECB decision-making.

2. Policymakers’ origins and identities matter – and this holds true not only for the governors of national central banks, but for members of the ECB’s executive board as well.