The ECB Powers as a Catalyst for Change in EU Law (Part I). The ECB’s Mandates

The sovereign debt crisis in the Eurozone has evidenced the shortcomingsoffinancialsupervisionandregulationin theEU In the summer of 2012, at the height of the crisis, and in the absence of a clear protector of financial stability in the Eurozone, it was the bold pledge of the President of the European CentralBank (ECB) to do "whatever it takes to preservethe euro" thatmanagedtorestraincontagion.Butdid the ECB really have the power to act as the safeguard of financialstability in the Eurozone? EU Policy makers have reacted to those shortcomings by introducing deeply transformative changes in financial regulation. The birth of the Banking Union might be the paramountexample. In the institutionallandscapearisingfrom the Banking Union, the European CentralBank (ECB) stands as a centralplayer, especially as the competent authorityfor the prudential supervision of the most significant credit institutionsin the Eurozone. Yet the scope of its new powers as the guardianoffinancialstability is unclear. Forexample, in the event of anotherfinancialcrisis, could the ECB provide financial assistance to credit institutions facing liquidity problems as a Lender ofLast Resort (LOLR)? In thispaper, we look at the ECB's core mandatesin the Treaties to delineate the scope of those new powers. Unlike monetary policy, financial stability is not a core mandate of the ECB under the TFEU. We begin by exploring whether the ECB could perform LOLR functions within its core mandates;particularly,within its mandate of monetarypolicy. For that, we delve into the recent decision of the CJEU in Gauweiler and others v. Deutscher Bundestag and Bundesregierung,andpropose aframework to define the scope of the ECB's monetary policy mandate. We then examine the prudentialsupervisionpowers conferredon the ECB under the Single Supervisory Mechanism (SSM) and the Single Resolution Mechanism (SRM), andexplore thepossible limitationsarising from the distribution of competences at the vertical and horizontal levels. We conclude with an analysis of the limitations that may arise if the ECB's powers on prudential supervision were to clash with its monetary policy mandate.