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Abstract

How do European institutions affect the tension between economic globalization and social protection? While scholars have focused on the legal and economic logics of European integration embodied by the European Court of Justice and the Commission, much less is known about the monetary logic of integration embodied by the European Central Bank (ECB). Although the ECB lacks the authority to intervene in labor market or social policies, we document its persistent advocacy for structural reforms between 1999 and 2014, and its subsequent silence on the topic. To explain this puzzling pattern, we draw on the rationalist variant of historical institutionalism. Based on a mixed-methods analysis of speeches, parliamentary hearings, and interviews, we show that the ECB navigated a trade-off between ungovernability and illegitimacy. To maintain monetary governability in a heterogeneous currency area, the ECB pushed for structural reforms until legitimacy concerns compelled it to reverse course.