The role of the European Central Bank in response to COVID19. An evaluation of its mandate

Abstract

ABSTRACT This article evaluates the role of the ECB in response to COVID19. The article assess this response in light of the separation of economic and monetary policy. It concludes that the ECB has responded in a more conservative manner during the COVID19 crisis. The ECB did however confirm its willingness to respond to an economic crisis. The ECB has confirmed this willingness by generating a framework of different policy options. This article then concludes that whilst these policies deviate from a very conservative central bank, they are not perse illegal. There is however some indication that the ECB is deviating from its capital key and thereby violating important rules. This violation may erode some of its legitimacy. This article further briefly assesses whether these changes should be considered permanent. Based upon the structure of policies that the ECB is creating these measures indicate permanence.