Newly-minted MEP Brian Hayes became agitated at the weekend about the Republic's potential loss of its franchise at the euro zone's top interest-rate-setting table – the governing council of the ECB. Hayes worried that the new voting procedures that will accompany Lithuania's adoption of the euro next January could lead to "some form of second-class euro membership" as the "one country one vote" system at the ECB dies away in favour of voting rotation.
This will mean not every euro member will have a vote at every monthly rate-setting meeting of the governing council. Hayes says he plans to corner ECB president Mario Draghi on the matter when next they meet. Where did this sudden fuss come from? It all dates from the distant days of late 2002, when the ECB brought forth a new voting system aimed at avoiding unwieldy decision-making as the EU grew larger. At the time, it said that when the number of national central banks voting at the governing council exceeded 15, rotational voting would kick in. But did the number of national central bank governors at the table not exceed 15 long ago? Yes, but the original plan allowed the introduction of voting by rotation to be postponed, and that is what the ECB did in 2008. At that stage, it decided to maintain the existing voting system until the number of central bank governors with votes exceeded 18, which is where we will be after Lithuania joins the happy club in January.
Why not postpone again? The rules don’t allow it. The ECB says the original 2002 decision allowed for a postponement until member numbers reached 18, but “this option has been used”. A further postponement would violate EU treaties, apparently. So what happens in January? Things are still a little bit up in the air, with the ECB expected to issue further clarification next month. As things stand though, euro area countries are expected to be divided up according to the size of their economy and financial sector. The top five countries (Germany, France, Italy, Spain and the Netherlands) would share four votes, while the remaining 14 (including the Republic) would share 11 votes. The votes would rotate from country to country, in a similar fashion to the system in place at the Federal Reserve in the US.
And how would rotation work for the Republic? Within the Irish group, a country could expect to vote for eleven months in a row and then sit out three of the monthly votes, while still attending all meetings and taking part in discussions on all the matters at hand. For larger countries, the same principle would apply, with governors such as the Bundesbank's Jens Weidmann sitting out decisions once every five months. The ECB points out, amid the detail, that most decisions are in practice made "on a consensual basis". What if the euro zone gets bigger again? If member numbers reach 22, things will get more complicated, with three voting groups to be formed. The big five would remain in place, with a second group then probably sharing eight votes and a third sharing three votes. As the Bundesbank has pointed out, "further expansion of the monetary union will most notably reduce the relative voting weight of small countries".
