Reconciling Lopsided Mandates, Secondary Objectives and the Importance of Sustainability: The Role of the European Central Bank in the Single Supervisory Mechanism

Abstract

The article analyses the institutional and legal framework governing the ECB’s monetary policy competence to promote price stability alongside its banking supervisory objectives as set forth under the Single Supervisory Mechanism Regulation. The article argues that the ECB’s primary mandate to promote price stability in the EU Treaty creates an imbalance in its institutional competence to pursue other secondary objectives referred to in the Treaty and in EU legislation. It is further argued that this so-called lop-sided mandate in favour of the price stability objective may undermine its effectiveness in pursuing other objectives, such as banking sector stability, climate change mitigation and in addressing other emerging financial risks. The article proposes some modifications to the current separation of competences within the ECB in order to achieve more institutional balance so that its objectives can be more effectively carried out. Banking Union, Single Supervisory Mechanism, European Central Bank, banking supervision, price stability, secondary objectives, monetary policy, economic policy, sustainability, regulation