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The Institutionalization of Europe$
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Alec Stone Sweet, Wayne Sandholtz, and Neil Fligstein

Print publication date: 2001

Print ISBN-13: 9780199247967

Published to Oxford Scholarship Online: April 2004

DOI: 10.1093/019924796X.001.0001

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Where Do Rules Come From? The Creation of the European Central Bank

Where Do Rules Come From? The Creation of the European Central Bank

Chapter:
(p.155) 8 Where Do Rules Come From? The Creation of the European Central Bank
Source:
The Institutionalization of Europe
Author(s):

Kathleen R. Mcnamara

Publisher:
Oxford University Press
DOI:10.1093/019924796X.003.0008

An analysis is presented of the creation and development of rules governing the organizational form and the policy content of the European Central Bank (ECB). The establishment of the ECB and the launching of the Euro constitute an extraordinary innovation, one that opens and organizes a new institutional space in Europe. The ECB system is assessed in the light of three broad theoretical approaches emphasizing, respectively, power politics, institutions as rational solutions to collective problems, and pre-existing normative (social) structures. Power politics and functional rationality approaches are found to fail to account for important aspects of the ECB’s rules and policy mandates, while, in contrast, a sociological emphasis on institutional context is useful in explaining the continuities linking the ECB to the normative structure that had previously developed – largely within the network of central-bank governors – and diffused throughout the organizational field in which monetary policy-making was embedded. It was the need to legitimize the new ECB in terms of these broader norms that shaped the ECB’s organizational structure and governing rules: in particular, pre-existing norms influenced three key aspects of the ECB – its political independence, its criteria for membership, and its rules for price stability.

Keywords:   criteria for membership, European Central Bank, European policy, functional rationality, institutional creation, institutional innovation, institutional space, institutions as rational solutions, monetary policy, monetary union, normative structures, organizational rules, organizational structure, political independence, power politics, price stability, rule-making, social structures

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