ECB's discretion vs legitimacy: in defence of a limited central bank

The European sovereign debt crisis, and later the pandemic, led the ECB to take unconventional monetary policy measures to restore confidence in the Euro. While these measures were necessary to preserve Europe’s financial and economic stability, they also resulted in an increasing accumulation of power by the ECB, which may warrant a rebalance of the framework that underpins its legitimacy. While independent central banks are widely recognised as essential to avoid manipulation in favour of short-term political interests, it is also crucial to ensure that they remain legitimate in the eyes of constitutional democracies. This balance seems increasingly challenging to achieve, especially when the ECB’s actions imply value judgments that may be outside its technocratic scope. Moreover, doubts arise as to whether it can effectively deliver on its mandate in the current high inflation context. Against this background, this paper assesses how the ECB’s increasing scope of action may threaten its legitimacy. To carry out this analysis, we first focus on the concept of discretion, illustrating how some of the ECB’s current policies fall outside its technocratic sphere, entering a political dimension. Then, we reflect on the consequences of this behaviour, arguing that the ECB needs to reduce its scope of action to remain relevant in the future.