Hostname: page-component-74656f9884-qr5l4 Total loading time: 0 Render date: 2026-11-04T15:35:34.254Z Has data issue: false hasContentIssue false
  • English
  • Français

Central bank activism as constitutional struggle: the ECB’s mandate

Published online by Cambridge University Press:  27 July 2026

Michael Ioannidis Open the ORCID record for Michael Ioannidis [Opens in a new window]
Michael Ioannidis*
Affiliation:
Max-Planck-Institute for Comparative Public Law and International Law , Heidelberg, Germany European Central Bank , Frankfurt, Germany
*
Email: ioannidis@mpil.de
Rights & Permissions [Opens in a new window]

Abstract

This article applies the concept of economic activism, the theme of this symposium, to explore the ECB’s role within a more interventionist European Union. “Central bank activism” brings together and structures several legal, political, and economic debates on the changing role of central banks. The article focuses on the ECB’s mandate, starting from the premise that both its primary mandate, price stability, and its secondary mandate, support for the Union’s general economic policies, are subject to constitutional contestation as to their limits.The article suggests that these contestations should be situated within two core dimensions of EU constitutional law. The first reflects the principles of democracy and institutional balance, which concern the allocation of authority between independent, non-majoritarian institutions and electorally accountable political bodies. The second is the relationship between public intervention and market mechanisms. The article argues that the Union’s monetary constitution allows a significant degree of interpretive flexibility, but that such flexibility must remain within, and be guided by, the Union’s constitutional core: democracy, institutional balance, and market functioning. This framework helps in thinking about ECB activism within the broader turn towards economic activism in the EU. The article suggests that relying on the secondary mandate, rather than expanding the primary mandate, may offer advantages within this economic, political, and constitutional turn.

Keywords

ECB mandateeconomic constitutioncentral bank activismEMU law

Information

Type
Dialogue and debate: Symposium on the (re-)turn to activist government in the European Union
Information
European Law Open , Volume 5 , Issue 2 , June 2026 , pp. 544 - 559
Creative Commons
Creative Common License - CCCreative Common License - BY
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (https://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution and reproduction, provided the original article is properly cited.
Copyright
© The Author(s), 2026. Published by Cambridge University Press

1. Introduction

Applying economic activism, the central concept of this symposium, to central banking may appear to be a controversial proposition. Talk of ‘activism’ in central banking can sound ominous – rather like loosening Ulysses’ hands from the proverbial mast. More than the other institutions involved in economic governance, central banks have traditionally been understood to be tightly bound to their competences by an intricately woven rope of rules and conventions. From that position, the story goes, they can rely on their superior technical expertise and, insulated from electoral cycles, do the basic thing they are tasked with doing: maintaining price stability.

This conventional narrative, which has dominated central banking for more than four decades, has been increasingly challenged. The catalyst for this challenge to central bank orthodoxy was the expansion of central bank activities in the aftermath of the 2008 Global Financial Crisis and the Covid-19 emergency – most visibly in the expansion of their balance sheets, but also in other aspects of their role, such as the establishment of foreign currency swap lines.Footnote 1 These developments ushered in a new era of central banking.Footnote 2

After 2008, central banks became key players not only in maintaining price stability and ensuring financial stability, but far beyond these traditional functions. This expansion of central banks’ roles drew a much wider audience into the debate on their appropriate place in economic governance. For some participants in this debate, what is sometimes portrayed as firing up the money-printing presses to combat poverty and underinvestment, or conditioning central bank operations on environmental considerations, amounts to a red line. For others, central banks have become too important an actor to shelter behind the pretence of a narrowly defined mandate, thereby leaving public resources idle when pressing problems call for action.

The debate on the role of central banking in a period of more active public intervention in the economy constitutes a central thread of the broader inquiry pursued in this symposium. This thread has many complex strands, but its core question is relatively straightforward: to what extent can, or should, the ECB support a broader revival of economic activism within the European Union? With the NGEU approaching its end, could the ECB be called upon to step in and compensate for the absence of political agreement on new EU fiscal instruments to fund investment? While the answers to these questions necessarily depend on the specific design of any such arrangements, this paper proposes some elements of a general framework for addressing them through the lens of the ECB’s mandate.Footnote 3 From a legitimacy perspective, it draws on theories of deliberative democracy, which recognise that central bank decisions cannot be justified solely by technical expertise, but must also be assessed in light of the constitutional structures that enable debate and contestation.Footnote 4

While this discussion is situated within a broader global rethinking of the role of central banks, the European case presents a number of distinctive features. Three particularities stand out. First, the ECB is a supranational institution operating within a polity in which politics and core macroeconomic decisions remain predominantly national. An ‘activist’ European Central Bank therefore implies a transfer of authority not only between branches of government, but also across levels of governance. Second, EU monetary policy and ‘ECB activism’ have conventionally been historicised as an ‘infant disease’ of the Union, allegedly compensating for the underdevelopment of other parts of the Economic and Monetary Union (EMU), such as the absence of a robust financial support mechanism or a macro-stabilising function. Under this inverse relationship, a more mature EMU would leave less room for activist central banking. Third, the debate on central banking in Europe is a highly legalised one. In jurisdictions such as the United Kingdom and the United States, arguments grounded in economic expediency and the legitimacy of central bank activism tend to dominate, while legal considerations, where present, are far less prominent, both within the institutions themselves and in academic commentary.Footnote 5

The legalisation of European central banking is the legacy of the Eurozone crisis and its aftermath, which not only generated substantial legal contestation as part of the political debate, but also brought numerous issues before the courts – a practice uncommon in other jurisdictions, where central banking is often non-justiciable. In Europe, therefore, the debate over ‘central bank activism’ frames discussions about the proper allocation of public authority using legal terms. Most importantly for the purposes of this contribution, the legal framework of European central banking must be read in light of the EU’s constitutional core: the basic rules and principles that define the Union as a liberal constitutional order grounded in democracy and the rule of law.Footnote 6

Building on these observations, this contribution pursues a twofold objective. First, it seeks to propose a specifically European conceptual framework for discussing ‘central bank activism’, a notion that has gained currency in international debates on central banking. To this end, this contribution examines some of the core legal concepts within which contemporary contestation over the role of central banking in the EU is taking place. In doing so, it aligns with the view that the rules of Economic and Monetary Union (EMU) – and in particular those governing the ECB’s mandate – do allow for such contestation (Part Three). Second, the paper advances a submission concerning the constitutional position and legitimacy of the ECB (Part Four). Prior to addressing these two sets of questions, the paper provides an overview of the broader debate on the meaning and scope of ‘central bank activism’ in the EU context (Part Two).

2. Central bank activism: a primer

A. Unpacking ‘central bank activism’

‘Central bank activism’ is situated within the broader paradigm of economic activism (or interventionism), understood as the deliberate and proactive deployment of economic instruments by public authorities to pursue their objectives, going thus beyond reliance on market forces and the mere provision of the institutional infrastructure for the operation of those forces.Footnote 7 The first element of central bank activism thus lies in its integration into a broader paradigm of economic interventionism. The second element concerns its association with actions taken by central banks to address issues extending beyond their traditional mandates.Footnote 8 This does not mean that central bank activism refers exclusively to actions falling outside a central bank’s mandate. Rather, it concerns operation in a grey area in which the boundaries of the mandate are contested. Since most contemporary central banks operate with a primary objective of price stability,Footnote 9 questions of activism often begin by interrogating the scope of what ‘price stability’ entails, or by drawing attention to other central bank mandates. While the discussion of activism may begin with the concept of mandate, it ultimately extends beyond it. The value of ‘activism’ as an analytical category lies in its capacity to bring together and structure multiple debates about the evolving role of central banks: legal, political, and economic. Central bank activism thus engages questions concerning the public–market divide, the relationship between independent and electorally accountable institutions, broad versus narrow interpretations of mandates, the balance of powers, and the role of public money in modern economies.

Addressing these questions involves a range of actors. The discourse and contestation they generate engage not only central banks themselves, but also courts, political institutions, and the broader public. The intensity and form of this engagement vary depending on local political and constitutional arrangements. Such contestation is ongoing, but at times it unfolds within a broader space. At critical junctures, this space opens more dramatically, creating the potential for lasting institutional transformations.Footnote 10 During the Global Financial Crisis, for instance, central banks worldwide shifted from institutions narrowly focused on setting an optimal policy rate to manage inflation to actors also tasked with safeguarding financial stability and monitoring systemic risk, supported by an expanded policy toolkit.Footnote 11 For the ECB, the Eurozone crisis constituted such a critical juncture, propelling it to the role of a primary actor in safeguarding the integrity of the monetary union.

The community of constitutional interpretation responsible for managing these contestations operates within the textual boundaries of the monetary constitution. As will be discussed in more detail below, however, these boundaries are often broad and leave room for contestation. Interpretive choices between broader or narrower readings must therefore be guided by the overarching rules and principles that form the constitutional core of EU law.Footnote 12 These rules and principles frame the debate on a more or less activist central bank from two distinct but interrelated perspectives.

The first, institutional category of constitutional principles is often invoked to support a narrow interpretation of central bank mandates, on the grounds that such restraint preserves the prerogatives of electorally legitimised institutions, namely governments and parliaments.Footnote 13 As Skinner cautions in the US context, being an ‘activist central bank’ means ‘altering the balance of power between the Fed, the executive branch and Congress’Footnote 14 and ‘making value judgments otherwise reserved for elected officials’.Footnote 15 The Bundesverfassungsgericht has similarly opted for a narrow and strict interpretation of the central bank mandate on the basis that central banks are independent institutions, and therefore ‘operate on the basis of a diminished level of democratic legitimation’.Footnote 16 For thinkers along the lines of Skinner and the Bundesverfassungsgericht, central bank activism is circumscribed by the democratic principle, the principle of central bank independence, the separation of powers, and, where relevant, the rules of federalism. These approaches typically rest on the assumption of a clear dichotomy between democratically legitimised political institutions and technocratic central banks – a dichotomy that, as argued below, requires qualification when applied to the EU and must be read in light of the Union’s core constitutional principles.

The second category of constitutional considerations approaches central bank activism from a state-market perspective. Here, the question is not which public institution should make the relevant decision, the central bank or the parliament/government, but whether the decision should be taken by a public institution at all, rather than by the market. This set of constitutional considerations reflects on the appropriate relationship between the state and the market, and, ultimately, on the most important economic question: whether it is the market or the administration who should assign economic (ie, social) value to human effort. The core argument is that money issued by central banks enjoys special privileges conferred by the state, most notably legal tender status. Central bank activism is therefore said to risk exploiting this extraordinary prerogative to expand the role of the state into areas of the economy that ought, on this view, to be governed by market processes. In constitutional terms, this objection is typically framed through reference to the principle of the market economy, market neutrality, or the nature of money itself.

In sum, the debate on central bank activism begins with the specific provisions that define the central bank’s mandate, but quickly expands to encompass a wider range of constitutional norms and principles that shape the interpretation of that mandate. While the relative prominence of these arguments varies across jurisdictions – some foregrounding democratic principles, others emphasising the state–market dichotomy – the underlying constitutional repertoire is largely shared.

B. ‘Activist’ – but how?

The typical powers of central banks are not coercive, at least not in the traditional sense of commanding the means of physical coercion, and their law-making powers are limited. The most significant instrument available to an activist central bank is instead its prerogative to create and allocate public money. This occurs through various channels, of which – given the constraints of length – this contribution for reasons of length focuses only on one: asset purchases.

The most iconic and controversial form of money creation and selective allocation has been asset purchase programmes (APPs), which in many quarters have become synonymous with central bank activism. Over the past decade, as conventional monetary policy tools proved insufficient, central banks in major advanced economy resorted to unconventional monetary policies, including quantitative easing (QE),Footnote 17 involving substantial expansions of their balance sheets. These programs were further intensified in 2020 in response to the economic and financial repercussions of the Covid-19 crisis. The sheer size of these programmes has fuelled debate about the effects of large-scale asset purchases on public finances,Footnote 18 inequality,Footnote 19 corporate financing,Footnote 20 and climate change.Footnote 21

In these debates, APPs are scrutinised from two principal perspectives. The first concerns the impact of central bank interventions on market structures, for example by inflating financial asset prices or by financing sovereigns through newly created money. The second focuses on the potential use of central bank money creation to promote public policies beyond price stability. In this latter strand of the discussion, attention turns to the design of eligibility criteria governing the selective allocation of newly created central bank money: should central banks, for instance, restrict purchases to green bonds, or even exclude companies with poor gender-equality records from their portfolios?

3. Contested mandates

This Part turns to the EU, focusing on the key legal concepts that frame the debate on ECB activism and the constitutional struggles surrounding their interpretation. As noted above, a central premise of this contribution is that the rules governing European central banking do allow for contestation, and that such contestation has in fact become much more common in the post-2008 period. Arguments that were previously underexplored have moved to the foreground, others have receded, and prevailing assessments have shifted.

This Part substantiates that claim by examining the first two sentences of Article 127(1) TFEU, which set out the core of the mandate of the Union’s central bank.Footnote 22 Two fundamental sites of contestation are embedded in this provision. First, how far the ECB may go in order to ‘maintain price stability’; and second, what the ECB may do in order to ‘support the general economic policies in the Union’.

A. The primary objective

Even with regard to the primary objective of price stability, the uncontested protagonist of modern central banking, there remains room for discretion in several aspects: whether price stability is pursued through inflation targeting or price-level targeting;Footnote 23 how it is quantified; whether the target is symmetric; and the time horizon over which inflation (or the price level) is required to return to that target. Choices concerning symmetry – that is, whether the central bank responds equally to inflation and deflation – open up different policy paths, as do decisions regarding the horizon over which price stability is assessed. A very long-term horizon may lead to greater inflation variability. More importantly, the choice of horizon affects how, at any given moment, the pursuit of price stability interacts with other potential policy objectives.Footnote 24

The most controversial aspect of the primary objective concerns the extent to which the ECB may act to address the preconditions for the pursuit of price stability. This debate has become a classic in EU constitutional law.Footnote 25 The CJEU has elaborated on the distinction between monetary and economic policy in three landmark judgments, Pringle,Footnote 26 Gauweiler,Footnote 27 and Weiss.Footnote 28 Famously, the CJEU held that the contested ECB actions fell within the scope of monetary policy, yet it largely refrained from articulating an autonomous definition of what constitutes monetary policy, instead referring back to the pursuit of the objectives assigned to monetary policy by the Treaties.

This case law generated a series of contested concepts. The CJEU held that the competence to define and implement monetary policy also encompasses the power to preserve the transmission mechanism through which ECB decisions influence prices.Footnote 29 The Court further stated that a measure adopted by the ECB under its monetary policy mandate is not rendered an (impermissible) economic measure because it produces indirect effects on the real economy.Footnote 30

What can the ECB do under the ‘transmission-mechanism’ argument and what are ‘indirect effects’ as well as the application of the principle of proportionality opened a new territory to be explored both by policymakers and scholars – one that is central for assessing the limits of central bank activism. Post-Eurozone crisis, this debate has crystallised in the decisions of the ECB with regard to the Covid-19 pandemic, climate change, and the introduction of a framework for countering unwarranted, disorderly divergences in sovereign bond yield spreads.

During the Covid-19 pandemic, the ECB introduced its Pandemic Emergency Purchase Programme (PEPP), an asset-buying program of 750 billion EUR. Aim of the programme was to ‘enhance the transmission of monetary policy, facilitate the provision of credit to the euro area economy, ease borrowing conditions for households and firms, and support the sustained convergence of inflation rates to levels below, but close to, 2%’.Footnote 31 In that case, the ECB considered the economic effects of the purchases to be only indirect and the measure to be proportionate to its intended objectives.Footnote 32 When it comes to the environment, the ECB has actively engaged with this idea in its 2021 Strategy Review. As ECB analysis highlighted, there could be ways in which climate change impacts the pursuit of price stability, such as climate risks affecting the transmission of monetary policy through financial markets and the banking sector via the stranding of assets and sudden repricing of climate-related financial risks.Footnote 33 Changes to the APP eligibility criteria for asset purchases could be thus justified under the primary objective if they were necessary for the pursuit of the objective of price stability, for example, if necessary to mitigate climate-related shocks to the economy and the effects on environmental policy would only be ‘indirect’. In 2022, the ECB decided the green tilting of the CSPP, amending the CSPP framework to adjust reinvestments towards issuers with better climate performance.Footnote 34 The ECB justified this adjustment also under its primary objective of price stability, arguing that climate-related risks affect inflation dynamics, the transmission of monetary policy, and the risk profile of the Eurosystem’s balance sheet.

The Transmission Protection Instrument (TPI), established by the ECB in 2022, places, under the ‘transmission mechanism’ heading, secondary-market purchases of public-sector securities that are necessary to counter ‘unwarranted, disorderly divergences in sovereign bond yield spreads’.Footnote 35 ‘Unwarranted and disorderly’ means that the deterioration in financing conditions is not justified by country-specific fundamentals.Footnote 36 This, in turn, is assessed with reference to eligibility criteria tied to sound fiscal and macroeconomic policies. The assessment of these criteria remains with the ECB; it is, however, linked to the performance of the Member State concerned within the broader EU macroeconomic framework.Footnote 37

Applying the ‘transmission mechanism’ argument to a potential ECB funding of European investment, within a more activist EU macroeconomic model, would need to be assessed in light of the criteria developed in the preparation and justification of the OMT, PEPP, the green tilting of the APP, and the TPI. Such assessments are necessarily case-specific and depend heavily on the particular circumstances deemed to impede the transmission mechanism. Measures aimed at investment would need to be justified under the transmission mechanism rationale, satisfy the requirement of (only) indirect effects, and comply with the proportionality test. The threshold for any ECB engagement in such activism is necessarily high, however. Reading the primary objective in light of the democratic principle – part of the Union’s constitutional core – also points to a high threshold: decisions concerning which investments to promote, and to what extent, are highly political in nature and are typically reserved for electorally accountable bodies. Article 127(1) TFEU, however, entrusts monetary policy stricto sensu exclusively to the ECB, which, under the Treaties, exercises this Union competence with full independence. What matters for present purposes is that allowing investment-related measures to fall under the transmission mechanism would also bring them within the ECB’s exclusive field of competence.Footnote 38 This marks a key difference between the ECB’s primary and secondary mandates: in the latter case, the ECB is closely linked to the decisions and priorities of the Union’s political institutions.

B. A secondary objective?

The most important recent development in European central banking is the gradual (and contested) awakening of the secondary mandate of the ECB.Footnote 39 According to the second sentence of Article 127(1) TFEU, ‘[w]ithout prejudice to the objective of price stability, the [ECB] shall support the general economic policies in the Union with a view to contributing to the achievement of the objectives of the Union as laid down in Article 3 of the [TEU]’.

The wording of the second sentence of Article 127(1) TFEU establishes an obligation of the ECB (‘shall support’). The obligatory nature of the secondary objective does not only derive from the wording of the provision but is also the interpretation more closely aligned with Articles 2 and 10 TEU: the requirement that all Union institutions, acting within the limits of their mandates, support objectives defined by politically accountable institutions gives expression to the principle of democracy.Footnote 40 As regards its content, one view, long favoured by the classic monetarist tradition, holds that the secondary objective is ancillary to the primary objective: the two necessarily go hand-in-hand, leaving no room for action based solely on the secondary objective. This understanding prevailed in the ECB’s 1998 and 2003 Strategy Reviews,Footnote 41 as well as during the Eurozone crisis and is immediate aftermath. Even so, the secondary objective was invoked by the Court of Justice to support the role of the ECB in the context of the ESM,Footnote 42 and was subsequently relied upon – albeit sparingly – by the Court in Weiss and Gauweiler.Footnote 43

According to another view, the secondary objective is distinct from the primary objective and confers on the ECB a self-standing competence. By establishing a priority rule between the primary and secondary objectives (‘without prejudice to’), the Treaties imply that situations could arise where the two objectives might conflict. This should be read as indicating that the secondary objective need not always be pursued in conjunction with the primary objective.Footnote 44 This competence, however, is radically different from that exercised the primary objective. With respect to economic policies in the Union, the ECB’s mandate is explicitly ‘supportive’, a qualification that opens up a distinct set of questions concerning accountability, legitimacy, and independence.

Unlike the first sentence of Article 127(1) TFEU, which assigns the ECB the role of (exclusive) policymaker in the field of price stability, the second sentence of Article 127(1) TFEU does not confer a competence for autonomous policymaking with regard to ‘general economic policies’, but instead establishes a merely supportive role. What, then, is the ECB required to ‘support’? The object of the secondary objective constitutes a central point of contestation.

One possible reading is that the ECB directly supports the objectives of the Union as set out in Article 3 TEU. According to another reading, however, the ECB shall support the ‘general economic policies in the Union’ with a view to contributing to the achievement of the objectives of the Union laid down in Article 3 TEU. On this latter interpretation, the second sentence of Article 127(1) TFEU does not mandate the ECB to support the Union’s objectives directly, but rather to do so indirectly, by supporting the policies through which the competent institutions have specified and operationalised these objectives. This distinction is critical. It implies that neither Article 3 TEU nor Article 127(1) TFEU impose an obligation on the ECB to proactively set policies in pursuit of objectives beyond price stability and needs to defer to political institutions in this regard. The secondary objective of the ECB is thus one: to support the economic policies decided by the competent authorities.

Another point of active contestation concerns the relationship between the secondary objective and price stability. Pursuant to the second sentence of Article 127(1) TFEU, the ECB shall pursue its secondary objective ‘[w]ithout prejudice to the objective of price stability’. According to one possible reading, this clause requires a balancing of the actual effects of a given monetary policy option on the primary and the secondary objectives: a measure that is marginally detrimental to price stability but proportionately much more supportive of the secondary objective could, on this view, be permissible. According to another interpretation, however, where support for the general economic policies in the Union conflicts in any way with price stability, the Treaties require primacy to be given to price stability. On this account, the hierarchical structure of objectives does not allow for an even weighting of contributions to the primary and secondary objectives.Footnote 45 By contrast, where the ECB faces a choice between several policy options that contribute equally to the maintenance of price stability, but where one option provides more effective support for the general economic policies in the Union, the ECB must prefer that option, assuming all other relevant factors are equal. This approach is reflected in the use of the secondary objective in the green tilting decision.Footnote 46

4. Activism under the constitutional core

The discussion above shows that the EU’s monetary constitution is a flexible one when it comes to key elements of the ECB’s mandate. Crucial provisions, and especially the one on the secondary mandate, leave open more than one possible course of action. Assessing these alternatives involves a range of considerations, political, economic, and legal. Some of these considerations can be also framed from an internal constitutional perspective, that is, by reference to the rules and principles of the Union legal order and in particular in light of the Union’s constitutional core. These considerations fall into two categories. The first concerns the independence of the central bank and its democratic legitimacy compared to other authorities; the second addresses the constitutional relationship between the state and the market.

A. Independence and the democratic principle

Any discussion of a broad or narrow interpretation of central bank mandates must, sooner or later, confront the question of independence. The conventional perspective starts from independence to conclude for a narrow central banking mandate. As noted above, this approach rests on a schematic dichotomy between an independent technocratic institution, on the one hand, and electorally legitimated institutions, on the other hand. In the specific case of the EU, this dichotomy requires qualification in at least two respects.

First, independence has conventionally been crafted with the primary mandate in mind. Giving effect to the secondary mandate requires a rethinking of this relationship. Students of central banking, and even constitutional courts, often treat independence as a rule laid down in Articles 130 and 282(3) TFEU.Footnote 47 Independence, however, is better understood as a principle, expressed and constructed through a network of provisions of the TFEU and the ECB/ESCB Statute.Footnote 48 As a principle, central bank independence structures legal material, guides interpretation, and allocates burdens of argumentation.Footnote 49 Unlike rules, which provide determinate answers, principles state reasons that point in a certain direction without dictating a specific outcome;Footnote 50 where principles conflict, resolution depends on an assessment of their relative weight and of the consequences of different courses of action for the objectives they pursue.Footnote 51

As a principle, independence must therefore be defined in light of the objectives the central bank is entrusted to pursue. When the ECB performs its primary mandate of maintaining price stability, its independence must be read strictly. This conclusion is supported not only by Article 130 TFEU, but also by Article 127(1) TFEU, which designates the ECB as the sole policymaker in this field. It is the combined reading of these provisions that determine the scope of independence in this field. The second sentence of Article 127(1) TFEU, however, presents a different configuration. It provides that the ECB shall ‘support’ the general economic policies in the Union. This supporting character of the secondary objective requires the ECB, when acting on that basis, to defer to the assessments of other EU institutions. Such deference means that the ECB cannot autonomously make policy choices related to general economic policies, but must instead reflect the choices made by politically accountable institutions.Footnote 52

Understood in this way, deference is not in conflict with central bank independence. The assessments and prioritisations of Union institutions do not amount to instruction within the meaning of Article 130 TFEU.Footnote 53 More fundamentally, the concept of ‘support’, enshrined in the second sentence of Article 127(1) TFEU, calls for a specific reading of ECB independence when it acts in pursuit of its secondary mandate. In other words, Article 130 TFEU and Article 127(1), second sentence, jointly define the scope of independence. This interpretation allows for structured communication between the ECB and political institutions and, in doing so, qualifies a central objection to a broader reading of the ECB’s mandate.Footnote 54

This reading is also compatible with the principle of democracy enshrined in Article 2 TEU. When it comes to policies outside the maintenance of price stability, such as climate change, recourse to the secondary objective has the advantage of making the role of the central bank transparent and of committing it to a deferential stance vis-à-vis the prioritisation choices of political institutions. This constitutionally required deference would impose a further significant limitation on the ECB’s ability to assume an activist role in place of a potentially non-renewed NGEU. After the Covid-19 crisis, the expansion of the Union’s spending power and the definition of its priorities were debated and decided by the political institutions. Allowing the programme to lapse is itself a political choice to which the ECB, when acting under its secondary mandate, ought to defer.

The second qualification of the traditional dichotomy concerns the source of legitimation of central banking in Europe. In the conventional understanding, the legitimacy of the ECB is essentially technocratic, broadly comparable to that of the Federal Reserve or the Bank of England, and it is therefore contrasted with that of democratically accountable institutions such as parliaments or governments. The ECB, however, is unique in many respects. First, it is the central bank of a supranational polity in which politics and fiscal decision-making remain at the national level. For both practical and legitimacy-related purposes, there is no equivalent of a Chancelry, Treasury, or Congress at the Union level. Second, the conventional approach overlooks the uniqueness of the ECB as a multilayered system of governance, rather than a Frankfurt-based agency. Additionally, and unlike the Fed, the ECB is itself a constitutional institution, not a creature of statute with powers delegated by the legislature.

The conventional approach to the legitimacy of the ECB is often reflected in the case law, where the primary justification for deference in the area of monetary policy lies in the specific technical expertise of the Eurosystem and the complex nature of its assessments.Footnote 55 In Gauweiler, the ECJ subjected the ECB’s analysis of the conditions governing its action only for ‘manifest error of assessment’Footnote 56 and stated that ‘nothing more can be required of the ESCB apart from that it use its economic expertise and the necessary technical means at its disposal to carry out that analysis with all care and accuracy’.Footnote 57 According to yet a further, typically complementary line of justification, the members of the Governing Council of the ECB derive legitimacy from their mode of appointment: the members of the Executive Board of the ECB are appointed by the European Council, while the governors of the Eurosystem’s national central banks are appointed by the competent institutions of the Member States.Footnote 58 Moreover, the Member States have democratically decided to entrust the task of independently conducting monetary policy to the Eurosystem.Footnote 59 This line of reasoning grounds the legitimacy of the ECB in the constitutional construction of delegation and, accordingly, conditions its validity on the continuous fulfilment and effective control of the conditions governing that delegation.

Both justifications – the expertise-oriented one as well as the one tracing democratic legitimacy to the establishment of the ECB and the appointment of its organs – are valid but need to be supplemented. Monetary policy is not simply a technical exercise, and its legitimacy can therefore never be exclusively technocratic.Footnote 60 At the same time, the electoral legitimacy conveyed through appointment by the European Council or national governments and parliaments is too indirect and attenuated to suffice on its own.

In the liberal constitutional tradition, certain policy spaces are reserved for deliberation conducted through special procedures and by specialised bodies with the capacity to process and contest expert information. This is true of non-majoritarian decisions-making across jurisdictions. As Eric Monnet explains in the context of central banking, legitimacy is thus built on the capacity of institutions ‘to organize deliberation so that the decisions taken are justified not as the application of a technical evidence, but as the result of a choice between several positions whose social and economic consequences are made explicit’.Footnote 61

Such a deliberative approach to the legitimacy of central banking has a number of consequences. It may focus on the embedment of central banking within broader deliberations on the macroeconomic governance of a polity, including within the European Parliament, or even suggest the establishment of new institutions tasked with enhancing deliberation on ECB decisions.Footnote 62 Beyond these proposals, which aim at fostering deliberation external to the ECB, it is also necessary to look seriously inside the institution.

Monetary policy in the euro area is not entrusted to a handful of individuals sitting in Frankfurt, but is rather meant to be the outcome of multiple layers of painstaking supranational deliberation within the ECB, including its Committees.Footnote 63 These operate within a system that the Court has characterised as a ‘highly integrated system’,Footnote 64 drawing on the input of both national and Union experts, with ultimate decision vested in the Governing Council, where Union and national officials deliberate together within an EU body. This is not unlike other instances of decision-making in the European context, where the deliberative potential of non-majoritarian decision-making acquires an additional quality by virtue of its multi-layered structure, which brings together Union and national officials within structures that place a premium on argumentation rather than on the projection of interests.Footnote 65 Arguably, the constitutional choice for a system of sequential control, expert-informed deliberation, and multi-level contestation aims at generating a legitimacy that warrants a certain degree of deference. Importantly, in a monetary union in which majoritarian macroeconomic choices continue to reflect national political processes, the (relative) independence of the Eurosystem from those politics may create institutional spaces conducive to the articulation of something closer to a Union interest.

While it is true that the deliberative space could be enhanced by embedding the ECB more fully within broader deliberative processes, the fact that ultimate decision-making authority remains with the ECB nonetheless places a significant constitutional barrier on decisions involving the discretionary allocation of investment capital by the ECB.

The focus on deliberation as a metric of the legitimacy of central banking also conditions the interpretation of its legal mandates. It both justifies and limits their reach. In the field of the primary mandate, the multi-level deliberative structure of the Eurosystem is particularly well developed. The legitimatory space, however, becomes considerably narrower in the context of the secondary mandate. The legitimacy of the integrated ESCB/Eurosystem framework is weaker along two principal dimensions when it comes to supporting general economic policies. First, the expertise and discursive infrastructure underpinning monetary policy are far more robust than those available for broader economic objectives. Second, and more fundamentally, EU constitutional law assigns primary responsibility for general economic policies to the Union’s political institutions and to the Member States. Even where the ECB remains within the limits of its competences and refrains from crossing the boundary into economic policymaking, these legitimacy constraints narrow the scope of its permissible action. It is true that the deliberative space could be enhanced by embedding the ECB more fully within broader deliberative processes, and suggestions to that direction have merit from a constitutional perspective. However, the fact that ultimate decision-making authority would have to remain with the ECB nonetheless places a significant constitutional barrier on decisions involving the discretionary allocation of capital by the ECB.

B. Market v state

The second set of legitimacy considerations, concerning the state v market dichotomy, is currently expressed (and contested) primarily through the legal principle of an open market economy.Footnote 66 This concept sets limits on the ECB’s action, which, according to Article 127(1) TFEU, shall act in accordance with the principle of an open market economy with free competition, favoring an efficient allocation of resources, and in compliance with the principles laid down in Article 119 TFEU.Footnote 67

Early in the Eurozone crisis, this clause was specified as requiring ‘market neutrality’ with respect to the ECB’s private-sector asset purchases. In practical terms, this meant that the ECB ought to purchase bonds in proportion to their outstanding market volume, thereby minimising relative price distortions resulting from asset purchases.Footnote 68 Under this understanding, ECB action with repercussions for the relative allocation of capital across industries would be excluded.

After 2021, the interpretation of the principle of an open market economy was reconsidered. Under its current interpretation, that principle is understood to require that the ECB refrain from policy measures that would unduly disrupt the normal functioning of markets or unduly restrict competition, while providing justification for its action.Footnote 69 In fact, during the Eurozone crisis, the ECB had already decided not to rely on the market’s assessment of risk in pursuing its primary objective.Footnote 70 The PSPP is guided by the ECB capital key rather than the sovereign bond market. In any event, the conduct of monetary policy will inevitably have an impact on market outcomes.Footnote 71

Moreover, pursuant to Articles 120 and 127(1) TFEU, the rationale of the principle of an open market economy with free competition is to favor ‘an efficient allocation of resources’. Two readings are possible in this respect. According to the first, ‘an efficient allocation of resources’ operates as a precondition for deference to the market. On this interpretation, the ECB would be permitted to address market failures, including, for example, in the field of environmental protection. According to a second reading, Articles 127(1) TFEU and 119(2) TFEU express the assumption that, as a general rule, the market pricing mechanism consitutes the primary mechanism of achieving an efficient allocation of resources in the Union. This second reading appears more consistent with a mandate-based differentiation of the ECB’s powers. While, in the context of the primary objective, the ECB is empowered to interfere with market forces at its discretion, the situation is different with respect to the secondary objective. Once again, this limitation does not (only) stem from the caveat contained in Article 127(1) TFEU, but rather from the ‘supportive’ role assigned to the ECB under the secondary mandate. In that context, the appropriate balance between market mechanisms and public intervention is left to the legislature.

In sum, this reading of the principle of open market economy provides further evidence of the flexibility allowed by the EU’s monetary constitution. Over time, the principle has been gradually dissociated from a strict notion of market neutrality and is no longer understood as establishing an absolute prohibition on ECB interference with market functioning. Rather, it requires the ECB to justify its assessment and actions in accordance with proportionality standards. The intensity of this justification varies depending on the mandate pursued by the ECB. Where action is taken in pursuit of the primary objective, interference with the principle of an open market economy may stem directly from the ECB’s mandate. By contrast, the scope for such interference is more constrained where action is taken in pursuit of the secondary objective.

5. Conclusion

The EU’s shift towards a more intensive interventionist engagement in the economy also has a central banking dimension. This contribution has sought to set out some elements of the basic framework for discussing this question from the perspective of the ECB’s mandate. A basic element of this framework is that the core concepts of European central banking remain open to different interpretations; from this perspective, the EU’s monetary constitution allows for the accommodation of new challenges and social transformations. These interpretations, however, must be structured in light of the Union’s constitutional core, and in particular the principle of democracy and the allocation of responsibilities between public sector and the market.

Applying this line of reasoning offers some guidance for thinking about ‘ECB activism’. A first such direction is that considerations of democratic transparency and accountability support framing any such discussion under the secondary mandate rather than ‘inflating’ the primary objective. This framing is not only more transparent, but also allows for an allocation of responsibilities between the ECB and political institutions that accommodates the requirements of Articles 2 and 10(2) TEU. Even in this context, however, the responsibilities conferred on the ECB remain clearly circumscribed. ECB action could neither substitute for a decision of political institutions, such as to phase out the NGEU, nor place the ECB in a position to determine autonomously the allocation of resources within the Union. Rather, the role of the ECB is to support the choices of political institutions by following their general directions and, where it intervenes in market functioning, reinforcing their preferences.

Acknowledgements

I would like to thank the convenors and participants of the workshop in Trento, as well as an anonymous reviewer, for their insightful comments. This publication is the result of a conference funded by the European Union – Next Generation EU, Mission 4 Component 2, CUP E53D23006970006, within the framework of the PRIN 2022 call, project ‘ROOSEVELT IN BRUSSELS. A revival of activist government in post-pandemic Europe?’ (2022X3ZFXF). The views expressed are personal and do not necessarily reflect those of the European Central Bank. In line with the request of full disclosure per ELO policy, the publication of the article has been approved in the standard ECB internal review process of publications by its personnel.

Competing interest

The author has no conflicts of interest to declare.

References

1 This paper does not address tasks related to banking supervision. Although banking supervision, as well as macroprudential policy, is often carried out by central banks, these functions are distinct from monetary policy in terms of mandate, legitimacy, and independence. The analysis that follows therefore concerns central banking in the narrower sense.

2 L Wansleben, The Rise of Central Banks: State Power in Financial Capitalism (Harvard University Press 2023); M Moschella, Unexpected Revolutionaries. How Central Banks Made and Unmade Economic Orthodoxy (Cornell University Press 2024).

3 Other aspects, most notably the prohibition of monetary financing, are not covered here.

4 The call for deliberation as a source of legitimacy is primarily directed at legislatures rather than administrative agencies. Nevertheless, the premises of deliberative democratic theory are also relevant beyond the ballot box. In particular, the emphasis that deliberative democracy places on reason-giving and on the transformation of preferences through the exchange of arguments renders it pertinent also to discretionary administrative decision-making, see D Held, Models of Democracy (3rd edn, Polity Press 2006) 237; R Dean, ‘Deliberating Like a State: Locating Public Administration Within the Deliberative System’ 72 (2024) Political Studies 924. For central banking in particular, see É Monnet, Balance of Power: Central Banks and the Fate of Democracies (The University of Chicago Press 2024); E Monnet, ‘The Democratic Challenge of Central Bank Credit Policies’ 14 (2024) Accounting, Economics, and Law: A Convivium 431.

5 P Tucker, Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State (Princeton University Press 2018); CP Skinner, ‘Central Bank Activism’ 71 (2021) Duke Law Journal 247; P Conti-Brown and DA Wishnick, ‘Technocratic Pragmatism, Bureaucratic Expertise, and the Federal Reserve’ 130 (2021) Yale Law Journal 546; J Crawford, ‘A Threshold Test for Fed Activism’ 16 (2024) Wm & Mary Bus L Rev 1.

6 J Bast and A von Bogdandy, ‘The Constitutional Core of the Union: On the CJEU’s New, Principled Constitutionalism’ 61 (2024) Common Market Law Review 1471.

7 See M Dani, ‘EU-enabled state activism: equalising or asymmetric?’ in this Symposium.

8 Skinner, ‘Central Bank Activism’ (n 5), 254 (‘when the Fed bends or stretches its legal mandates to address social or economic problems of the day (if and as they might emerge), it engages in “activism”[…]’).

9 S Dikau and U Volz, ‘Central Bank Mandates, Sustainability Objectives and the Promotion of Green Finance’ 184 (2021) Ecological Economics 107022.

10 In critical junctures, for a brief phase, agents face a broader than typical range of feasible options and their choices are likely to have a significant impact, triggering a path-dependent process that constrains future choices, see G Capoccia and R D Kelemen, ‘The Study of Critical Junctures: Theory, Narrative, and Counterfactuals in Historical Institutionalism’ 59 (2007) World Politics 341, 348.

11 A Baker, ‘The New Political Economy of the Macroprudential Ideational Shift’ 18 (2013) New Political Economy 112; M DiLeo, ‘Climate Policy at the Bank of England: The Possibilities and Limits of Green Central Banking’ 23 (2023) Climate Policy 671, 675.

12 Bast and von Bogdandy, ‘The constitutional core of the Union: On the CJEU’s new, principled constitutionalism’ (n 6), 1493 et seq.

13 Skinner, ‘Central Bank Activism’ (n 5), 253–4 and 312 ff. Obviously, an alternative solution to the dilemma could be the limitation of central bank independence. Evidence, however, shows that post-2008 central banking has experienced a ‘a remarkable global shift towards enhancing the independence of monetary authorities’, D Romelli, ‘Trends in Central Bank Independence: A De-jure Perspective’ (2024) BAFFI CAREFIN Centre Research Paper No 217.

14 Skinner, ‘Central Bank Activism’ (n 5), 255.

15 Ibid., 259.

16 BVerfG, Judgment of the Second Senate of 5 May 2020 – 2 BvR 859/15, para 143. See also BVerfG, Order of the Second Senate of 14 January 2014 – 2 BvR 2728/ 13, para 59; BVerfG, Judgment of the Second Senate of 21 June 2016 – 2 BvR 2728/ 13, paras 187ff; BVerfG, Order of the Second Senate of 18 July 2017 – 2 BvR 859/ 15, para 103.

17 Major central banks in advanced economies were not the only ones to engage in quantitative easing. For emerging market economies, see J Beirne and E Sugandi, ‘Central Bank Asset Purchase Programs in Emerging Market Economies’ 54 (2023) Finance Research Letters 103769.

18 D Malliaropulos and P Migiakis, ‘A Global Monetary Policy Factor in Sovereign Bond Yields’ 70 (2023) Journal of Empirical Finance 445; A Afonso and JT Jalles, ‘Quantitative Easing and Sovereign Yield Spreads: Euro-Area Time-Varying Evidence’ 58 (2019) Journal of International Financial Markets, Institutions and Money 208; H Kinateder and N Wagner, ‘Quantitative Easing and the Pricing of EMU Sovereign Debt’ 66 (2017) The Quarterly Review of Economics and Finance 1.

19 Several observers express concern that highly accommodative monetary policies, such as quantitative easing, disproportionately favour wealthier households, thereby contributing to greater income and wealth inequality. Others, by contrast, argue that expansionary monetary policy may reduce inequality by stimulating economic activity, job creation, and wage growth, see M Lenza and J Slacalek, ‘How Does Monetary Policy Affect Income and Wealth Inequality? Evidence from Quantitative Easing in the Euro Area’ 39 (2024) Journal of Applied Econometrics 746; C De Luigi et al, ‘Quantitative Easing and Wealth Inequality: The Asset Price Channel’ 85 (2023) Oxford Bulletin of Economics and Statistics 638.

20 K Todorov, ‘Quantify the Quantitative Easing: Impact on Bonds and Corporate Debt Issuance’ 135 (2020) Journal of Financial Economics 340.

21 S Matikainen, E Campiglio and D Zenghelis, ‘The Climate Impact of Quantitative Easing’ (May 2017) Grantham Research Institute on Climate Change and the Environment Policy Paper.

22 See, however, also Art 127(5) TFEU regarding financial stability.

23 The main difference between inflation targeting and price-level targeting is the consequence of missing the target. Unanticipated shocks to inflation lead to corrective action when the price is the target. By contrast, inflation targeting aims for average (ie, on-target) inflation in future years regardless of the level of current inflation. Ian Harnett, ‘It’s prices stupid: how inflation targeting has failed electorates’ <https://www.ft.com/content/fb325e0f-f344-4c09-a23b-15cb0de149d1>.

24 On the discretion-broadening character of this element, A Hinarejos and D Rakic, ‘Independence, Discretion and Accountability in the Evolving Monetary Policy Framework of the European Central Bank’ 30 (2023) Maastricht Journal of European and Comparative Law 473, 482–3.

25 For reflection on the broader importance of this discussion D Adamski, ‘Economic Constitution of the Euro Area after the Gauweiler Preliminary Ruling’ 52 (2015) Common Market Law Review 1451; V Borger, The Currency of Solidarity: Constitutional Transformation During the Euro Crisis (2020); M Dani et al, ‘“It’s the Political Economy…!” A Moment of Truth for the Eurozone and the EU’ 19 (2021) International Journal of Constitutional Law 309; I Feichtner, ‘The German Constitutional Court’s PSPP Judgment: Impediment and Impetus for the Democratization of Europe’ 21 (2020) German Law Journal 1090.

26 C-370/12 Pringle ECLI:EU:C:2012:756.

27 C-62/14 Gauweiler and Others ECLI:EU:C:2015:400.

28 C-493/17 Weiss and Others ECLI:EU:C:2018:1000.

29 During the Eurozone crisis, the ECB repeatedly lowered its key interest rate and reduced to zero the interest rate it paid private banks for depositing money with the ECB. Under normal conditions, such an interest rate policy would lead to the reduction of all interest rates in the monetary union. That, however, did not happen and the interest rates paid by households and companies in the countries of the periphery remained disproportionally high. The reason for this was that the interest rates for individual private banks and companies reflected on the funding costs of the Member States where they were domiciled. In Gauweiler, The CJEU agreed with the ECB that the OMT program was necessary to preserve the transmission mechanism and thus pertained to the primary objective laid down in Art 127(1) TFEU, Gauweiler (n 27), para 50.

30 Gauweiler (n 27), paras 51–2; Weiss (n 28), paras 64–6.

31 Recital 2, Decision (EU) 2020/440 of the European Central Bank of 24 March 2020 on a temporary pandemic emergency purchase programme (ECB/2020/17).

32 Approvingly, S Grund, ‘Legal, Compliant and Suitable: The ECB’s Pandemic Emergency Purchase Programme (PEPP)’ (2020) Policy Brief: Jacques Delors Center/Bertelsmann Stiftung; A M Mooij, ‘The Role of the European Central Bank in Response to COVID19. An Evaluation of its Mandate’ 45 (2023) Journal of European Integration 649, 655 et seq.

33 Workstream on climate change, ‘Climate Change and Monetary Policy in the Euro Area’, ECB Occasional Paper Series 271/ September 2021 (2021), 108 et seq.

34 Decision (EU) 2022/1613 of the European Central Bank of 9 September 2022, amending Decision (EU) 2016/948 on the implementation of the corporate sector purchase programme (ECB/2016/16) (ECB/2022/29).

35 ECB, The Transmission Protection Instrument, Press Release, 21 July 2022. For an analysis, K Bernoth et al, ‘The ECB’s Transmission Protection Instrument: A Legal and Economic Analysis’ (2022) European Parliament, Policy Department for Economic, Scientific and Quality of Life Policies.

36 ECB, The Transmission Protection Instrument, Press Release, 21 July 2022.

37 The criteria include: (1) compliance with the EU fiscal framework: not being subject to an excessive deficit procedure (EDP), or not being assessed as having failed to take effective action in response to an EU Council recommendation under Article 126(7) of the Treaty on the Functioning of the European Union (TFEU); (2) absence of severe macroeconomic imbalances: not being subject to an excessive imbalance procedure (EIP) or not being assessed as having failed to take the recommended corrective action related to an EU Council recommendation under Article 121(4) TFEU; (3) fiscal sustainability: in ascertaining that the trajectory of public debt is sustainable, the Governing Council will take into account, where available, the debt sustainability analyses by the European Commission, the European Stability Mechanism, the International Monetary Fund and other institutions, together with the ECB’s internal analysis; (4) sound and sustainable macroeconomic policies: complying with the commitments submitted in the recovery and resilience plans for the Recovery and Resilience Facility and with the European Commission’s country-specific recommendations in the fiscal sphere under the European Semester. According to the ECB, these criteria are ‘an input into the Governing Council’s decision-making and will be dynamically adjusted to the unfolding risks and conditions to be addressed’, ECB, The Transmission Protection Instrument, Press Release, 21 July 2022.

38 To this effect, Hinarejos and Rakic, ‘Independence, Discretion and Accountability in the Evolving Monetary Policy Framework of the European Central Bank’ (n 24), 484–5.

39 See C Zilioli and M Ioannidis, ‘Climate Change and the Mandate of the ECB: Potential and Limits of Monetary Contribution to European Green Policies’ 59 (2022) Common Market Law Review 363; M Ioannidis, S J Hlásková Murphy and C Zilioli ‘The Mandate of the ECB: Legal Considerations in the ECB’s Monetary Policy Strategy Review’ (2021) ECB Occasional Paper Series 276/ September 2021; J van ‘t Klooster and N de Boer, ‘What to Do with the ECB’s Secondary Mandate’ 61 (2023) JCMS: Journal of Common Market Studies 730.

40 Bast and von Bogdandy, ‘The Constitutional Core of the Union: On the CJEU’s New, Principled Constitutionalism’ (n 6), 1498.

41 van ‘t Klooster and de Boer, ‘What to Do with the ECB’s Secondary Mandate’ (n 39), 4 et seq.

42 Pringle (n 26), para 165.

43 Gauweiler (n 27), para 43; Weiss (n 28), para 51. Arguably, some of the ECB’s crisis-related measures under the APP could have been more readily justified on the basis of this clause.

44 See in detail Ioannidis, Hlásková Murphy and Zilioli ‘The Mandate of the ECB:Legal Considerations in the ECB’s Monetary Policy Strategy Review’ (n 39).

45 H Siekmann, ‘Article 119’ in H Siekmann (ed), The European Monetary Union: A Commentary on the Legal Foundations (Hart Publishing 2022), para 44; C Calliess and E Tuncel, ‘The Role of Article 11 TFEU in the Greening of the ECB’s Monetary Policy’ 24 (2023) German Law Journal 796, 807–8.

46 Recital (3) Decision ECB/2022/29.

47 BVerfG, Judgment of the Second Senate of 5 May 2020 - 2 BvR 859/15, para 143. Art 7 ESCB/Statute is identical with Art 130 TFEU.

48 Art 130 TFEU second sentence 2 und Art 7 ESCB/ECB Statute second sentence speak explicitly of principle. The ECJ has also recognised central bank independence as a principle, C-45/21 Banka Slovenije EU:C:2022:670, para 95.

49 For the terminology and functions of principles in Union law, see A von Bogdandy and L D Spieker, Die Verfassungsprinzipien, in: J Bast and A von Bogdandy, (eds), Unionsverfassungsrecht (Nomos 2025) 131 et seq.; A Jakab, European Constitutional Language (Cambridge University Press 2016) 368 et seq.

50 R Dworkin, ‘The Model of Rules’ 38 (1967–1968) University of Chicago Law Review 14; T Tridimas, The General Principles of EU Law (Oxford University Press 2006) 2.

51 J Raz, ‘Legal Principles and the Limits of Law’ 81 (1972) Yale Law Journal 831.

52 The institutions responsible for indicating priorities for the purposes of 127(1) TFEU are primarily the European Council, the Council, and the European Parliament. Pursuant to Art 15(1) TEU, ‘the European Council shall provide the Union with the necessary impetus for its development and shall define the general political directions and priorities thereof’. Moreover, under Article 121(2) TFEU, the European Council is to ‘discuss a conclusion on the broad guidelines of the economic policies of the Member States and of the Union’. The Council and the European Parliament, acting as co-legislators, likewise articulate policy priorities through their legislative activity. Deference to these institutions is further justified by the fact that, under Article 10(2) TEU, they represent Union citizens, directly or indirectly, and thus confer electoral accountability at Union level. Priorities set out by the European Commission may also be relevant, in light of the Commission’s competence to ‘promote the general interest of the Union’ and its indirect electoral legitimacy. All of these institutions express priorities when acting within the competences conferred on them by the Treaties. This occurs primarily through the adoption of legal acts and the assumption of international obligations – such as the conclusion of the Paris Agreement – but may also take place through non-legislative means, particularly in the case of the European Council.

53 Indeed, EU institutions cannot require the ECB to take action in a specific field or in a specific manner. It is the ECB which orients itself to their assessments in the exercise of its secondary mandate.

54 For concrete suggestions on how to engage the ECB and political institutions in the performance of the secondary objective, van ‘t Klooster and de Boer, ‘What to Do with the ECB’s Secondary Mandate’ (n 39), 739 et seq.

55 On the question of deference to the ECB, see Gauweiler (n 27), paras 68 and 75. L B Larsen, ‘Legal bridges over troubled waters? Standard of review of European Central Bank decisions by the EU Courts’ in ECB Legal Services (ed), Building bridges: central banking law in an interconnected world ECB Legal Conference 2019 (European Central Bank 2019) 51, presenting a matrix of four factors that calibrate the intensity of review of the CJEU: legislative will (for administrative discretion), technical expertise in assessing factual circumstances, political legitimacy in making complex assessments, and the impact of the reviewed decision on individuals, ibid., 49; M Goldmann, ‘Adjudicating Economics? Central Bank Independence and the Appropriate Standard of Judicial Review’ 15 (2014) German Law Journal 265, 271–2.

56 Gauweiler (n 27), para 74, 81, and 91; Weiss (n 28), paras 24, 78, 81, 86, 91, and 93.

57 Gauweiler (n 27), para 75; Weiss (n 28), para 91. Overall, the ECJ has recognised the ECB’s broad discretion with regard to the substantive proportionality of its actions, which it justified by the technical nature of the choices to be made and the need to undertake forecasts and the complex assessments, see Gauweiler, para 68; Weiss (n 28), para 73.

58 J Kokott and C Sobotta, ‘Judicial Review and Institutional Balance with Regard to European Monetary Policy’ in ECB Legal Services (ed), Shaping a New Legal Order for Europe: A Tale of Crises and Opportunities Proceedings of the ECB Legal Conference 2017 (European Central Bank 2017) 108.

59 Ibid.

60 Moschella, Unexpected Revolutionaries. How Central Banks Made and Unmade Economic Orthodoxy (n 2), 17–22; D Argyroulis and N Vagdoutis, ‘Revisiting ECB’s Technocratic Legitimacy: No Longer Fit-for-Purpose?’ 13 (2025) Politics and Governance; E Jones and M Matthijs, ‘Rethinking Central-Bank Independence’ 30 (2019) Journal of Democracy 127. Hinting to an understanding of ‘complexity’ that also covers the political nature of the decision, which requires the settling of controversial issues and the balancing of different views and interests, K Lenaerts, ‘Proportionality as a Matrix Principle Promoting the Effectiveness of EU Law and the Legitimacy of EU Action – Keynote Speech’ in ECB Legal Services (ed), Continuity and Change – How the Challenges of Today Prepare the Ground for Tomorrow Proceedings of the ECB Legal Conference 2021 (European Central Bank 2022), 32. See also Case T-79/13 Alessandro Accorinti and Others v European Central Bank ECLI:EU:T:2015:756, para 68.

61 Monnet, ‘The Democratic Challenge of Central Bank Credit Policies’ (n 4), 443.

62 See, for example, the proposal of Monnet for a European Credit Council, Monnet, Balance of Power: Central Banks and the Fate of Democracies (n 4), 146 et seq.

63 On ECB committees, see M Ioannidis, ‘The European Central Bank’ in F Amtenbrink, C Herrmann and R Repasi (eds), The EU Law of Economic and Monetary Union (Oxford University Press 2020) 367–9.

64 Joined Cases C-202/18 and C-238/18 Ilmārs Rimšēvičs and European Central Bank v Republic of Latvia ECLI:EU:C:2019:139, para 70.

65 Pathbreaking C Joerges and J Neyer, ‘From Intergovernmental Bargaining to Deliberative Political Processes. The Constitutionalisation of Comitology’ 3 (1997) European Law Journal 273; C Joerges and J Neyer, ‘Transforming Strategic Interaction into Deliberative Problem-solving. European Comitology in the Foodstuffs Sector’ 4 (1997) Journal of European Public Policy 609; J H H Weiler, ‘Epilogue: “Comitology as Revolution” - Infranationalism, Constitutionalism and Democracy’ in C Joerges and E Vos (eds), EU Committees: Social Regulation, Law and Politics (Hart 1999).

66 Other concepts may also reflect this contestation, such as the very nature of ‘money’, see I Feichtner, ‘Public Law’s Rationalization of the Legal Architecture of Money: What Might Legal Analysis of Money Become?’ 17 (2016) German Law Journal 875. At the present juncture, however, these issues do not appear to command the attention of the interpretative community.

67 The ECB has to date relied on the operational concept of market neutrality in the context of its collateral framework and its APPs. For example, in the context of the CSPP, it has maintained that ‘to ensure the effectiveness of monetary policy, while keeping a level playing field for all market participants and avoiding undue market distortions, the range of debt instruments eligible for the CSPP is deliberately broad and does not discriminate on the basis of the economic activity of the issuers’, see ECB, Corporate sector purchase programme (CSPP), Questions & Answers <https://www.ecb.europa.eu/mopo/implement/app/html/cspp-qa.en.html> (last accessed 15 May 2026). The operational concept is referred to by Advocate General Wathelet in his Opinion in the Weiss case as being part of the principle of an open market economy, Opinion of Advocate General Wathelet in Case C-493/17 Weiss and Others, ECLI:EU:C:2018:815, para 74.

68 F Hammermann et al, ‘Taking Stock of the Eurosystem’s Asset Purchase Programme After the End of Net Asset Purchases’ 2 (2019) Economic Bulletin Articles, European Central Bank.

69 Ioannidis, Hlásková Murphy and Zilioli ‘The Mandate of the ECB: Legal Considerations in the ECB’s Monetary Policy Strategy Review’ (n 39). See, in general, P Weismann, ‘The Principle of an Open Market Economy and the Potential of ESCB’s Monetary Policy Contribution to Climate Change Mitigation’ 49 (2024) European Law Review 553.

70 This was notably the case in Decision ECB/2010/3 on temporary measures relating to the eligibility of marketable debt instruments issued or guaranteed by the Greek Government. In that case, the ECB’s own assessment of the risks represented by the relevant bonds were based on the existence of a financial assistance programme and the associated conditionality. Note that the ECB submitted that the OMT programme was justified by the ‘special situation’ whereby interest rates on the government bonds of various States were characterised by high volatility and extreme spreads, which were not accounted for solely by macroeconomic differences between the States concerned, but were caused by the demand for excessive risk premia for the bonds issued by certain Member States, based on concerns regarding the risk of a break-up of the euro-area. Case C-62/14 Gauweiler (n 27) , para 72.

71 See also Gauweiler (n 27), para 108; Weiss (n 28), para 130.