European Law Journal, Vol. 14, No. 4, July 2008, pp. 446–460.
© 2008 The Author
Journal compilation © 2008 Blackwell Publishing Ltd, 9600 Garsington Road, Oxford, OX4 2DQ, UK
and 350 Main Street, Malden, MA 02148, USA
Central Bank Independence in the EU:
From Theory to Practice
Dr Lorenzo Bini Smaghi1
Abstract: This article provides an overview of the practical problems which arise in
ensuring the effective independence of central banks in the EU, drawing on the European
Central Bank’s consultative experience. Four aspects of central bank independence are
discussed separately: functional, institutional, personal and financial. The possible issues
raised by central bank involvement in prudential supervision are touched upon. The main
conclusion of the article is that a set of legal provisions is generally not sufficient to ensure
proper central bank independence; a culture of respect for independence, including its
limits, among all parties involved is essential.
I
Introduction
The issue of central bank independence has been the subject of important academic
work. However, the literature has mainly focused on the theoretical and formal aspects
of independence, without considering that the distance between theory and practice is
not always short.2 The experience of the past few years has shown that the implementation of the rule of law is not without challenges, even inside the EU. While it is in no
way an objective of this article to offer a critical survey of the existing academic
literature on the subject, I endeavour to shed some light on the more practical matters
involved in safeguarding central bank independence. The main sources for the material
referred to in this article are the convergence reports and the legal opinions of the
European Central Bank (ECB), the latter provided to national legislators in line with
the ECB’s consultative competence.3 A selection of the ECB’s main legal opinions in
the field of central bank...