Structure, agency, and structural reform: The case of the European Central Bank

A mixed-methods study of the the ECB’s advocacy for structural reforms.

Benjamin Braun

Donato Di Carlo

Sebastian Diessner

Maximilian Düsterhöft


Monetary and financial integration has been shown to increase the pressure on states to liberalize social and labor market policies. If structures do not come with instruction sheets, how do monetary regime pressures translate into policy? Through a case study of the euro area, we show that central banks play an underappreciated role in this process. Using mixed methods to analyse a large amount of data, including the complete corpus of speeches, we trace the evolution of the European Central Bank’s advocacy for structural reforms between 1999 and 2019. To explain the ECB’s activism in a policy area outside of its mandate, we theorize the ECB as navigating a dilemma between governability and legitimacy. Handed a monetary regime under which flexible labor markets were seen as a condition for governability, the ECB saw no alternative to pushing governments on structural reforms, despite the reputational risks. The ECB ended its advocacy when increasing political backlash coincided with a structural regime shift from an inflationary to a deflationary environment.

Draft paper available here.