In a bricks-and-mortar declaration that the euro is indeed here to stay, and the European Central Bank is its headquarters, the bank marked a milestone Thursday in construction of an imposing new pair of office towers that will replace the provisional quarters it has occupied since the introduction of the common currency in 1999.
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Times Topic: European Central Bank
In effect, the new building sets in concrete — and lots of steel and glass — the declaration this month by Mario Draghi, the E.C.B.’s president, that “the euro is irreversible.”
But in an embarrassing disclosure for an institution that has preached austerity to countries like Greece and Spain, the E.C.B. said it had encountered a little spending problem. Increases in the cost of construction materials and unexpected construction problems will add as much as €350 million, or $450 million, to the original estimated price tag of €850 million. That would make it a €1.2 billion building.
“There have been a number of unforeseen challenges that needed to be dealt with,” Jörg Asmussen, a member of the E.C.B. Executive Board, said at a reception to mark the completion of the building’s structure.
Disclosure of the cost overrun tarnished a topping-out ceremony held in the unfinished frame of the 45-story headquarters on a riverside site once occupied by a fruit and vegetable warehouse that served a grim role as a Jewish deportation depot during the Nazi era.
The new E.C.B. headquarters, two sculptural towers looming over the Main River, symbolizes not only the growing power the central bank has acquired over the course of the euro zone debt crisis. It gives Frankfurt, with its 700,000 people, a new status symbol in its efforts to establish itself as the Continent’s premier financial center, also home to Deutsche Bank, the German stock market and the German central bank, the Bundesbank.
“We Frankfurters are proud to have the E.C.B. in our city,” Peter Feldmann, the lord mayor of Frankfurt, said as guests at the ceremony sipped Champagne and local apple wine.
Besides its original core task of setting benchmark interest rates for the 17 countries in the euro zone, the E.C.B. has become the main source of financing for hundreds of banks that cannot borrow on money markets. Mr. Draghi has declared the E.C.B.’s intention to rein in borrowing costs for countries like Spain by buying their bonds on open markets, effectively becoming lender of last resort.
And the E.C.B. is set to take over regulatory supervision of more than 6,000 euro zone banks — unless opponents of that plan, like many in the German government, succeed is limiting that purview to only the region’s biggest banks.
Like the common currency itself, though, the E.C.B. as an institution has been a work in progress. Its current headquarters, a plain office tower in downtown Frankfurt, hardly seems worthy of the E.C.B.’s expanding importance. That building is not large enough to hold all 1,600 E.C.B. employees, many of whom work in rented space elsewhere.
The existing quarters are also embarrassingly modest compared to the nearby seat of the Bundesbank, which dominated European monetary policy before the euro and still exerts tremendous influence.
The Bundesbank and other national central banks continue to do much of the day-to-day operational work that a currency union requires. With more than six times as many employees throughout Germany as the E.C.B., the Bundesbank occupies a park-like campus complex, a fortress of glass boxes in a different neighborhood of Frankfurt. Built in the 1970s, it was a symbol of Germany’s postwar economic miracle. It is notably greener and more spacious than the current E.C.B. accommodations.
The new E.C.B. headquarters, scheduled for occupancy in 2014, could be read as something of a declaration of independence from the Bundesbank’s anti-inflation dogma.
Defending price stability, as the Bundesbank did implacably for decades, was a founding principle of the E.C.B. and is still its prime mandate. But with his recent promise to buy government bonds in unlimited amounts to help contain the borrowing costs of troubled euro countries, Mr. Draghi has defied Bundesbank gospel and earned sharp criticism from its president, Jens Weidmann.
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