Is the principle of central bank independence established at EU level?

The principle of central bank independence is provided for under Article 130 of the Treaty on the Functioning of the European Union¹: “When exercising the powers and carrying out the tasks and duties conferred upon them by the Treaties and the Statute of the ESCB and of the ECB, neither the European Central Bank, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions from Union institutions, bodies, offices or agencies, from any government of a Member State or from any other body. The Union institutions, bodies, offices or agencies and the governments of the Member States undertake to respect this principle and not to seek to influence the members of the decision-making bodies of the European Central Bank or of the national central banks in the performance of their tasks.”

The principle of central bank independence is also laid down in Article 7 of the Statute of the European System of Central Banks and of the European Central Bank, Protocol (No 4) annexed to the Treaty on the Functioning of the European Union, which reiterates the provisions under Article 130 of the Treaty and is presented in detail in the convergence reports of the European Commission and the European Central Bank.

Is ensuring the independence of the National Bank of Romania binding on the Government of Romania?

Compatibility of national legislation, including the Statute of the central bank, with the EU legislation ranked among the conditions implied by Romania’s accession to the European Union. Following Romania’s entry, the National Bank of Romania became a member of the European System of Central Banks and of the European Central Bank.

Article 2 of the Act concerning the conditions of accession of the Republic of Bulgaria and Romania and the adjustments to the treaties on which the European Union is founded, annexed to the Treaty on the admission of the Republic of Bulgaria and Romania to the European Union, signed by Romania in Luxembourg on 25 April 2005, ratified by Law No. 157/2005, sets forth that “From the date of accession, the provisions of the original Treaties and the acts adopted by the institutions and the European Central Bank before accession shall be binding on Bulgaria and Romania and shall apply in those States under the conditions laid down in those Treaties and in this Act.” In addition, Article 131 of the Treaty on the Functioning of the European Union specifies that “Each Member State shall ensure that its national legislation including the statutes of its national central bank is compatible with the Treaties and the Statute of the ESCB and of the ECB.”

What does Law No. 312/2004 on the Statute of the National Bank of Romania stipulate?

Art. 1 para. (2) of Law No. 312/2004 sets forth that the National Bank of Romania is “an independent public institution”, while Art. 3 para. (1) specifies that “the National Bank of Romania and the members of its decision-making bodies shall not seek or take instructions from public authorities or from any other institution or authority.”

What does the independence of national central banks consist in?

The concept of central bank independence includes four types of independence, i.e. functional, institutional, personal and financial independence, which are described in the Convergence Reports of the European Central Bank. Analysing the independence-related aspects plays a key role in assessing the convergence between the national legislation of EU Member States that have not adopted the single currency, on the one hand, and the Treaties and the Statute of the ESCB and of the ECB, on the other.

What is functional independence?

Central bank independence is not an end in itself, but is instrumental in achieving a clearly defined objective, i.e. to maintain price stability. Functional independence is served by providing the national central banks with the necessary means and instruments for achieving this objective independently of any other authority. The Treaty’s requirement of central bank independence reflects the generally held view that the primary objective of price stability is best served by a fully independent institution with a precise definition of its mandate.

What is institutional independence?

The principle of institutional independence is expressly stated in Article 130 of the Treaty and in Article 7 of the Statute of the ESCB and of the ECB. These two articles prohibit national central banks and members of their decision-making bodies from seeking or taking instructions from Union institutions or bodies, from any government of a Member State, or from any other body. In addition, the said articles prohibit Union institutions, bodies, offices or agencies and the governments of the Member States from seeking to influence the members of the decision-making bodies of the national central banks whose decisions may influence the fulfilment of ESCB-related tasks by national central banks. National legislation should reflect both prohibitions and should not limit their scope.

What is personal independence?

Pursuant to Article 14.2 of the ESCB Statute, the statutes of the national central banks should set forth that the governors’ term of office shall be no less than five years. Furthermore, this article acts as a safeguard against any arbitrary dismissal of governors by specifying that governors may be relieved from office only if they no longer fulfil the conditions required for the performance of their duties or if they have been guilty of serious misconduct. A decision to this effect may be referred to the Court of Justice of the European Union.

What is financial independence?

Financial independence is an institution’s capacity to autonomously avail itself of its resources. The overall independence of a central bank would be jeopardised if it could not autonomously avail itself of sufficient financial resources to fulfil its mandate (i.e. perform the ESCB-related tasks entrusted to it under the Treaty and the Statute). The principle of financial independence also implies that a central bank should have sufficient means to fulfil not only its ESCB-related tasks, but also its national tasks (e.g. financing its administration and own operations).

What might be the consequences of restricting the NBR’s independence?

Restricting the independence of the National Bank of Romania may entail sanctions imposed by the European Union due to the violation of the provisions of the Treaty on the Functioning of the European Union. Thus, the infringement procedure may be opened against Romania, pursuant to Article 258 of the Treaty, which stipulates: “If the Commission considers that a Member State has failed to fulfil an obligation under the Treaties, it shall deliver a reasoned opinion on the matter after giving the State concerned the opportunity to submit its observations. If the State concerned does not comply with the opinion within the period laid down by the Commission, the latter may bring the matter before the Court of Justice of the European Union”.

¹⁾ Consolidated version of the Treaty on the Functioning of the European Union, resulting from the amendments introduced by the Treaty of Lisbon, which was signed on 13 December 2007 and entered into force on 1 December 2009.