Central Bank Independence in the EU: From Theory to Practice

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.