The naked ECB: the central bank's voting arrangements are in need of reform.

• Author: Davies, Howard
• Position: European Central Bank

The crisis in the eurozone remains far from resolution. Investor worries are now concentrated on the health of European banks, many of which have large exposures to Greece and the other southern European countries with severe fiscal problems.

Europe's leaders have so far applied only plaster to the wounds. A stabilization fund has been established, but on a temporary basis. New arrangements for monitoring member states' budget balances have been introduced, but they can do nothing about the stock of debt outstanding. And the European Central Bank has begun to buy government bonds, including those of Greece, at prices well above those that would prevail in a free market.

The latter move by the European Central Bank has underscored a number of unresolved questions about the structure of the Bank and how it makes its decisions. Some issues that Europe's decision makers have wanted to keep under the carpet have now been rudely exposed.

The decision to buy Greek bonds directly was not unanimous. The world now knows that Axel Weber, the president of the Bundesbank, voted against it. His was one vote out of twenty-two, but he represents 27 percent of eurozone GDR so he cannot be dismissed as an insignificant outlier. It was the first time that the president of the ECB has had to reveal that a decision was not unanimous.

In theory, we have always known that the ECB would, if necessary, make decisions on the basis of majority rule. But until now, no such case had arisen, and there were no procedures for disclosing votes. This stands in marked contrast to the U.S. Federal Reserve, and also the Bank of England, where individual votes on the Monetary Policy Committee are routinely revealed.

The argument against transparency has been that, in the unusual circumstances of the ECB, to expose the votes of individual members of the Governing Council would put pressure on them as representatives of member states. The governor from a country in recession might feel almost bound to vote against an increase in interest rates, or for a cut, regardless of overall conditions in the eurozone.

But can an absence of clarity about the ECB's voting arrangements last forever? Nout Wellink of the Dutch central bank has explicitly said that more disclosure would one day be needed as the ECB reaches maturity. Weber's dissenting voice on Greek bond purchases brings that day dramatically closer.

It also exposes a more fundamental problem. The voting structure in the ECB is...