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The independence of the central bank at risk

The independence of the central bank at risk

The authors of the blog are worried that the recent judgement of the German Federal Constitutional Court on the ECB’s monetary policy undermines the constitutional basis of the independence of the central bank and its own price stability mandate.

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The ruling of the German Federal Constitutional Court (GFCC) of May 5 on the ECB’s monetary policy affects not merely the relation of Germany to the ECB and the Court of Justice of europe (ECJ) but also the constitutional foundations of monetary policy. The court departs from the German tradition of entrusting monetary policy to an unbiased central bank that’s only given the duty of pursuing price stability. Based on the court’s reasoning, a lot of what the German Bundesbank i did so wouldn’t normally be permissible beneath the German Basic Law.