Introduction

Important questions concerning the structure and operation of a European central bank (ECB) remain to be answered. How much independence should national central banks retain during the transition to a single currency? What voting or mediation rules should be used to resolve conflicts among the national representatives on the ECB's governing council? What role should be played by existing central banks in implementing pan-European policies once the ECB comes into operation?

The Delors Report and the provisional statutes of the ECB, drafted by the governors of European Community central banks in Basel in November 1990, provide clearer answers to some of these questions than others. According to the Delors Report, during the transition to a single central bank (‘Stage 2’ of the process of monetary unification in the language of Brussels), national central banks will retain full nominal independence in the sense of continuing to issue their own national currencies and to intervene in domestic financial markets, but little real autonomy in that exchange rates will become immutably fixed and hence money supplies and interest rates will be determined by market forces. According to the draft statutes of the ECB, the policies of the new institution will be decided by votes cast by members of the bank's council, consisting of the 12 governors of the existing central banks and 6 executive directors appointed by the European Council. Voting will be by simple majority.