Independence, discretion and accountability in the evolving monetary policy framework of the European Central Bank

Abstract

The role of the European Central Bank (ECB) has expanded substantially in recent years due to subsequent crises. As a result, its accountability has been a matter of growing concern. This paper focuses on recent monetary policy decisions (specifically, the 2020–21 monetary policy strategy review and the Transmission Protection Instrument) and the evolving accountability practices of the ECB. After discussing three relevant key dimensions of central bank design (independence, discretion and accountability) and their relationship over time, the article shows that the highlighted recent developments will lead to a much greater degree of discretion on the part of the ECB, and that accountability practices have not evolved in a commensurate manner. The article concludes by making specific proposals to improve, to some degree, the accountability of the ECB to the European Parliament, and address the current imbalance between independence, discretion and accountability.