Central bank independence: It is protected, but is it clearly delineated?

Abstract

On 13 September 2022, the Court of Justice, in its Grand Chamber formation, ruled in Banka Slovenije that Slovenian legislation that required the Central Bank of Slovenia to compensate certain holders of financial instruments was incompatible with EU law and in particular Article 123 TFEU. Although the judgment was about preventing a central bank from monetizing government debt, it indirectly strengthened the defences of central banks’ independence from political interference. Commentary and analysis on the extent of independence and the nature of accountability of the European Central Bank have filled hundreds, perhaps thousands, of pages of scholarly journals and books. Article 130 TFEU stipulates that ‘neither the European Central Bank, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions’, while Article 282(3) provides that the ECB ‘shall be independent in the exercise of its powers and in the management of its finances’. These are powerful statements that have raised important questions about the purpose and scope of the ECB’s independence in democratic political systems such as those of the EU and its Member States. Such questions have spawned a voluminous literature. The Court of Justice has also given us some rather surprising answers.