The institutional design of the European Central Bank (ECB) has been the subject of considerable political debate. In particular, it has been argued that the Bank suffers from a 'democratic deficit'. This article applies the principal- agent approach to this debate so as to identify more dearly the logic that underpins the basic arguments about the democratic legitimacy of the ECB. Moreover, on the assumption that the Bank does suffer from a democratic deficit, the article also shows how principal-agent theory can point to the ways in which this problem may be addressed. Thus, the principal-agent approach is used as an heuristic device to help identify the empirical and normative claims that underpin the debate about the accountability of the ECB and how it might be reformed.