My Phd Thesis on the ECB – Looking Back After 22 Years
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206 Ars Aequi ##notdef## literatuur Voortschrijdend inzicht arsaequi.nl/maandblad AA20200206 My PhD thesis on the ECB – looking back after 22 years René Smits* 1 Looking back after twenty-two not be not foreseen or included, so that years the book’s value is time-bound. For Surprised by the request to formu- instance, only basic elements of the late reflections on my PhD thesis, ECB’s most recently conferred task, decades after its defence, I was eager undertaken since 2014, of supervis- to ruminate its origin and composi- ing banks in the Euro Area3 could be tion and the tenets I submitted at the discussed at the time. outset of the Economic and Monetary * Prof.dr. R. Smits is professor of the Law of the Union (EMU). My thesis preceded the My thesis preceded Economic and Monetary Union at the Univer- establishment of the object of its study, sity of Amsterdam. He is an alternate member the European Central Bank (ECB), by the establishment of of the ECB’s Administrative Board of Review and an assessor at the Belgian Competition Au- over one year. The defence took place the object of its study, thority; he is also a consultant on EMU law and on 4 April 1997 while the ECB was es- the European Central banking regulation. This contribution is written tablished on 1 July 1998. Its predeces- in a personal capacity and does not reflect the Bank, by over one year. views of the ECB, the SSM or the Eurosystem. sor, the European Monetary Institute 1 R. Smits, The European Central Bank – Insti- (EMI), had been in operation since It came in time to become tutional Aspects, The Hague/London/Boston: 1994 and the provisions governing the Kluwer Law International 1997. for some their ‘Bible’ 2 For precision’s sake: the ECB only became an ECB had been adopted a few years ‘institution’ of the European Union with the before, when the Maastricht Treaty on the new European Lisbon Reform Treaty (2007); before, its status was signed and, ultimately ratified monetary authority was so unclear that I could devote my inaugural address (2003) to discussing the position of the (after a first Danish ‘nej’ had been ECB in the European constitutional order, see overcome by four detailed opt-outs). R. Smits, The European Central Bank in the The timing of the book The European 2 The origin and composition of European constitutional order, Utrecht: Eleven International Publishing 2003. 1 Central Bank – Institutional Aspects the thesis 3 Disclosure: since 2014, I contribute to this task was therefore very fortunate. It came My thesis was constructed on the basis as an alternate member of the Administrative in time to become for some their of already-existing building blocks: Board of Review, the independent body man- dated to review the ECB’s supervisory decisions ‘Bible’ on the new European monetary contributions on the EMU provisions at the request of an applicant. authority, as I learned afterwards of the EC Treaty (as it then was) to 4 Commentary on Articles 105, 109 and 109 M from readers who were studying the the 5th edition of a major German- of the EC Treaty, and on Articles 2, 3, 4, 5, 6, 2 17 to 24, and 25 of the Statute of the European new institution. Looking back, this is language handbook, Kommentar zum System of Central Banks and the European also the drawback of writing so early EG-Vertrag,4 and chapters of or con- Central Bank, in: H. von der Groeben, J. Thie- on a novel legal entity with a central tributions to previous work on EMU. sing & C.-D. Ehlermann (eds.), Kommentar zum EU-/EG-Vertrag, Baden-Baden: Nomos position in Europe’s monetary union: Notable among these was a joint work Verlagsgesellschaft 1997, p. 3/152-3/179, 3/244- many of the later developments could directed by Jean-Victor Louis, Professor 3/286, 3/532-3/567, 3/609-3/663. arsaequi.nl/maandblad AA20200206 rode draad Ars Aequi ##notdef## 207 at the Université Libre de Bruxelles First, the ‘juridification’ of central and General Counsel of the National banking. Hitherto, central banks had Bank of Belgium.5 Early work on a predominantly been operating on the draft for the statutes of a European basis of a few statutory provisions on System of Central Banks (ESCB) had the monetary authority: its composi- been undertaken under his chairman- tion, the relationship with the govern- ship.6 I submitted these proposed stat- ment and its tasks. There was the utes to the late Huib Muller, then direc- odd national statute on money and on tor in charge of banking supervision at foreign exchange relations but central De Nederlandsche Bank NV (DNB), the banking was largely an unregulated Dutch central bank where I worked. He affair. Preparations for EMU led to the noted that such preparatory work from adoption of a host of legal provisions academics and practi tioners was likely which replaced informal arrangements to be helpful once the establishment that previously had been dominant of a European central bank would be in the area of monetary policy. Also, 5 R. Smits, ‘The Community and International taken up by politicians. Around that the transition to the single currency Context’, in: Banking Supervision in the Euro- time, politicians were, indeed, seri- required novel legal acts and the pean Community: Institutional Aspects (Report of a Working Group of the ECU Institute under ously taking up this issue: in 1988, the requirement to adapt national law to the Chairmanship of Jean-Victor Louis, Études European Council mandated the Delors the EU’s monetary union provisions Européennes), Brussels: Université de Brux- Committee7 to examine and propose entailed identifying which national elles 1995. 6 Vers un système européen de banques centrales: concrete stages leading to EMU, result- provisions needed adapting and modi- projet de dispositions organiques (Rapport du ing in the blueprint for EMU.8 fying laws and regulations at State groupe présidé par Jean-Victor Louis, Études level. My second ‘tenet’ referred to Européennes), Brussels: Université de Brux- this juridification of central banking; elles 1989. The idea of ‘stapling 7 Officially: the Committee for the Study of Eco- it men tioned the rule of law and the nomic and Monetary Union. together’ previous primacy of the law: 8 Committee for the Study of Economic and Mon- contributions is how I etary Union, Report on economic and monetary ‘<Maastricht> marks not only the communau- union in the European Community, 12 April ‘sold’ the idea of writing tarisation but also the juridification of central 1989, at: www.cvce.eu/en/obj/725f74fb-841b- banking in the European Union: the transfer 4452-a428-39e7a703f35f.html (last consulted on a PhD thesis at home 6 December 2019). of monetary competences to the Community 9 R. Smits, ‘The ECB and the rule of law’, in: level implies the embedment of the European Building bridges: central banking law in an The idea of ‘stapling together’ previ- Central Bank and the National Central Banks interconnected world (Proceedings of the ECB in a system based on the rule of law. This nec- ous contributions is how I ‘sold’ the Legal Conference 2019), Frankfurt am Main: essarily limits the scope for informal arrange- European Central Bank 2019, p. 350-384, avail- idea of writing a PhD thesis at home. ments and political understandings which fail able at www.ecb.europa.eu/pub/pdf/other/ Professor Martijn van Empel, who to do justice to the primacy of the law’. ecb.ecblegalconferenceproceedings201912~932 5c45957.en.pdf. taught European Union Law at the 10 Article II section 2 of the IMF’s Articles of University of Amsterdam, was enthu- There is continuity here: I recently Agreement opens membership ‘to other coun- siastic about my plans and agreed to presented a paper at the ECB’s 2019 tries’ than those represented at the Bretton Woods Conference that led to the adoption of supervise my PhD thesis. Starting a Legal Conference annex Legal Work- the IMF’s statutes. thesis was adding another burden on shop on ‘The ECB and the rule of law’.9 11 Art. 109(4) EC Treaty; currently, Art. 138(2) an already full professional life. As Second, accession of the Community TFEU. 12 Proposal for a Council Decision on the Rep- head of the legal department at DNB, (now: the EU) to the International resentation and Position Taking of the Com- I worked full-time and intensively on Monetary Fund (IMF) remains topical munity at International Level in the context of the preparations for the introduction but has still not been fulfilled after Economic and Monetary Union, COM(1998) 637 final. of the single currency. My last, 11th, so many years. I strongly pleaded for 13 Commission Decision of 21 October 2015 ‘tenet’ or stelling, when defending my IMF accession. I argued that with the withdrawing Commission proposal for Council thesis would show the stress I had Community assuming – in the area decision on the Representation and Position Taking of the Community at International experienced: ‘Ideally, writing a thesis of money, a central element of sover- Level in the context of Economic and Monetary requires mastery of balancing acts’. eignty – characteristics of a ‘country’,10 Union COM(1998) 637 final, C(2015) 8001 final. Fortunately, the central bank had al- it should become a member of the IMF. 14 Proposal of 21 October 2015 for a Council Deci- sion laying down measures in view of progres- lowed me to have eight weeks research A European Treaty provision allows sively establishing unified representation of the study leave, spread out over several for unified representation at interna- euro area in the International Monetary Fund, months, to finalise my thesis.