Voting rights at the ECB: New club rules

WHEN Latvia becomes the 18th country to adopt the euro, at the start of 2014, European leaders will celebrate the occasion as an endorsement of the battered single currency, even though the Baltic state has a population of just 2m. But the renewed expansion may prove destabilising. Latvia will be the last country to join under the current system of voting rights at the European Central Bank (ECB), which is becoming ever more unwieldy and unrepresentative. The planned changes are also controversial.The ECB’s governing council consists of the heads of the euro countries’ central banks plus a six-strong executive board, which includes Mario Draghi, the bank’s president. With Latvia in, the council will thus be 24 strong. Each of its members has one vote on monetary policy and, from November 2014, on banking supervision (though decisions on that will generally be made by a new supervisory body). Ilmars Rimsevics, the Latvian governor, will accordingly have as much say as Jens Weidmann, head of the Bundesbank, even though Germany’s economy is over 100 times bigger than Latvia’s.If, as expected, Lithuania joins the euro in 2015, the voting structure will shift slightly in bigger countries’ favour. The number on the council who can vote at any one time will shrink to 21. The six executive-board members, who are appointed by a vote among euro-zone heads of government, will keep…

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