Democratic legitimacy to prioritise among ECB secondary objectives

 In the absence of conflict[1], the European Central Bank (hereafter ECB) must honour the primary objective of the monetary policy of the Union, namely to maintain price stability (Articles 119(2), 127(1) and 282(2) TFEU), as well as its secondary objectives, namely to support the general economic policies in the Union with a view to contributing to the achievement of “the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment” (Article 3(3) TEU). While performing its tasks, the ECB must attend to Article 11 TFEU, which calls for the integration of environmental protection requirements into the definition and implementation of the Union's policies and activities, in particular with a view to promoting sustainable development, and, as “horizontal” clause, applies to all policies of the Union, including the monetary policy, and is binding on all relevant EU institutions, including the ECB[2]. Article 3 TEU and Article 11 TFEU incorporate environmental policy objectives into the mandate of the ECB and the national central banks comprised in the Eurosystem, thereby giving them the power to contribute to environmental protection.
The paper addresses the extension of this power, discussing the hierarchy of environmental protection vis à vis other goals mentioned in Article 3 TEU as well as vis à vis the ECB democratic legitimacy, independence and credibility. My contribution adds to the literature by fine tuning the legal criterion used to determine to what extent environmental objectives fall within the ECB mandate, with resource to the principle of sustainable development and the principal-agent theory. I argue that some cases where the decision of the ECB to prioritise environmental goals among its secondary objectives is usually considered as a political decision are more correctly assessed as an application of the principle of sustainable development. Moreover, my argument goes, in several other cases where a prioritisation of environmental goals among the ones mentioned in Article 3(3) TEU in fact needs to occur for the ECB to address climate change such prioritization might be democratically legitimized by the past communication of the European Parliament (hereafter also EP). Following the signalisation of a hierarchy among its secondary objectives by the EP, the ECB might determinate its secondary mandate, adopting in its strategy review the hierarchy signalled by the EP as operating rule, like in 1998 it defined what price stability is by spelling out the 2% rule[3]. Hence, the space of manoeuvre the ECB currently enjoys to pursue environmental protection within its mandate is significantly vast.
At her confirmation hearing before the European Parliament (4th September 2019), Christine Lagarde has pledged to ensure that all institutions, including the ECB, “have climate change risk and protection of the environment at the core of their understanding of their mission. (..) Primary mandate is price stability, of course. But it has to be embedded that climate change and environmental risk are mission-critical””[4] and should hence be seen as a priority[5]. Article 3 TEU includes environmental protection as one of several aims of the Union and a priori these goals are at the same level of normative priority[6]. Benoît Cœuré highlighted that it is not for the ECB itself to prioritize its secondary objectives as “[s]etting priorities among different objectives, this is the definition of politics […] and this is what parliaments do”, or, in other words, it is up to European political institutions to clarify the secondary priorities of the ECB (outside of price stability), in order for the central bank to get the full political legitimacy to act on this field[7].
I challenge a common broad stance in this matter[8] and argue that, by making use of the concept of sustainable development, the space, where addressing environmental goals in monetary policy indeed requires a political decision of the ECB entailing a prioritisation of environmental goals above other secondary objectives, is smaller than usually claimed. For example, the ECB´s decision to reduce the carbon content of its corporate sector purchase programme (hereafter CSPP) does not entail a political decision once one refocus the debate on the principle of sustainable development, since the core idea of this principle is that environmental protection, economic growth and social development are mutually compatible, rather than conflicting, objectives[9], and the ECB bias in favour of heavy carbon emitters[10] is not accurately reflected in public goods, as these sectors are still over-represented in the ECB purchases when compared to their contribution to employment and economic activity[11]. An important consequence of this approach is that ECB decisions taken following the application of the principle of sustainable development would be able to satisfy even the most rigorous national scrutiny performed by national constitutional courts, as the German Constitutional Court (Bundesverfassungsgericht), which requires the formal intervention of the German parliament (Bundestag) for any expansion of the ECB mandate[12].
But the principle of sustainable development is not always sufficient to underpin the greening of the ECB´s action without raising issues of democratic legitimacy, since Article 11 TFUE does not impose an absolute priority of environmental protection over other specific objectives found in Article 3 TEU[13]. In several cases, supporting the climate transition might require a prioritisation between ECB´s secondary objectives. Following the application of the principal-agent theory, I argue, adding to the literature discussing the gaps in the central bank mandate to address choices entailing non-purely technical matters[14], that the ECB should be considered democratically legitimised to perform the mentioned prioritisation when such hierarchy was previously signalled by the European Parliament with reference to monetary policy and the result of the decision does not conflict with its primary objective. To assess whether this occurred, all the relevant communication of the EP along a reasonable period of time needs to be analysed. Though, the literature highlights episodes where the EP underpinned the importance of having the ECB addressing climate change[15], it does not specifically assess whether such EP communication can be classified as an authorization to prioritise environmental concerns among other ECB´s secondary objectives.
Once such prioritisation is confirmed, my argument goes, some consequences with regard to the application of Article 11 TFEU by the Court of Justice of the European Union (hereafter CJEU) will emerge. For example, while in the absence of the named prioritisation the CJEU is expected to use a rather lenient standard of compliance with the procedural obligation established in Article 11 TFEU, using this norm as standard for reviewing the validity of ECB decisions only where ecological interests manifestly have not been taken into account or where they have been completely disregarded[16], because when EU institutions exercise their discretion in policy areas involving complex assessments, like in monetary policy, the CJEU has tended to regard the principle of proportionality as a rather lenient limit to such political discretion[17]; once the named prioritisation takes place, the Court is expected to adopt a more demanding standard of compliance, requiring the ECB to fully explains why, in the use of its discretion, it did not prioritise environmental objectives when the latter were compatible with its primary objective. Moreover, while in the absence of the named prioritisation, a principle of non-discrimination would be a relevant limit to the exercise of the ECB´s political discretion if, for example, the CSPP Decision excluded polluting issuers from the eligibility criteria, once environmental concerns are prioritised such an exclusion would be justified.
 
[1] Court of Justice of the European Union, Case C-493/17, Weiss and Others, ECLI:EU:C:2018:1000, paragraph 60.
[2] E. Cerrato, F. Agostini and N. Jaberg, “Why the PSPP judgment of the German Federal Constitutional Court gives the ECB another incentive to integrate climate change considerations into monetary policy”, available online: Why the PSPP judgment of the German Federal Constitutional Court gives the ECB another incentive to integrate climate change considerations into monetary policy – European Law Blog [Last accessed 3 Fev 2021]; Javier Solana, The Power of the Eurosystem to promote environmental protection, University of Oslo Faculty of Law Legal Studies Research Paper Series N. 2018-23, 2018.
[3] ECB, “The outcome of the ECB’s evaluation of its monetary policy strategy”, Monthly Bulletin (2003), 79–92.
[4] Positive Money Europe, “What can we hope from Christine Lagarde as ECB President?”, 7 September 2019, available online: https://www.positivemoney.eu/2019/09/lagarde-ecb-president/ [Last accessed 13 Nov 2020].
[5] European Parliament (Committee on Economic and Monetary Affairs), Draft Report on the Council recommendation on the appointment of the President of the European Central Bank (C9-0048/2019 – 2019/0810(NLE)), 29 August 2019.
[6] Martin Wasmeier, ‘Integration of Environmental Protection as a General Rule for Interpreting Community Law, Common market law review, Vol. 38, N. 1, 2001, 159-177, 163.
[7] Wojtek Kalinowski, Nicolas Hercelin and Stanislas Jourdan,“Benoît Coeuré explique à l’Assemblée nationale comment la BCE peut agir pour le climat”, Veblen Institute for Economic Reforms, 23 May 2019, available online: https://www.veblen-institute.org/Benoit-Coeure-explique-a-l-Assemblee-nationale-comment-la-BCE-peut-agir-pour-le.html [Last accessed 13 Nov 2019].
[8] Nik de Boer and Jens van ’t Klooster, “The ECB, the courts and the issue of democratic legitimacy after Weiss”, Preprint and unedited version of the article forthcoming in the Common Market Law Review, volume 57 issue 6, 2020, available online: The ECB, the Courts and the Issue of Democratic Legitimacy After Weiss by Nik de Boer, Jens van 't Klooster :: SSRN [Last accessed 6 Feb 2021].
[9] Andrea Lenschow, “Greening the European Union: An Introduction”, in Andrea Lenschow (ed), Environmental policy integration: Greening sectoral policies in Europe, Earthscan 2002, 3-21, 5. See also Beate Sjåfjell, “The Legal Significance of Article 11 TFEU for EU Institutions and Member States”, in Beate Sjåfjell and Anja Wiesbrock (eds), The greening of European business under EU law: taking article 11 TFEU seriously, Paperback edition, Routledge, 2017, 51-72, 55.
[10] See for example Lisa Hanzl, Oliver Picek und Joel Tölgyes, “Wie „grün“ sind die EZB-Käufe österreichischer Unternehmensanleihen?”, Momentum Institut, Policy Brief 23/2020, December 2020, available online: pb_23.2020_1217_greenmonetarypolicy_0.pdf (momentum-institut.at) [Last accessed 6 Feb 2021]; Jens van ’t Klooster and Clément Fontan, “The Myth of Market Neutrality: A Comparative Study of the European Central Bank’s and the Swiss National Bank’s Corporate Security Purchases”, New Political Economy, Vol. 25, N. 6, 2020, 865-879, available online: 10.1080/13563467.2019.1657077 [Last accessed 6 Feb 2021]; Yannis Dafermos, Daniela Gabor, Maria Nikolaidi, Adam Pawloff and Frank van Lerven; Decarbonising is easy. Beyond market neutrality in the ECB's corporate QE, Greenpeace, New Economics Foundation (NEF), SOAS University of London, University of the West of England and University of Greenwich, 20 October 2020; Patrick Honohan, "Should Monetary Policy Take Inequality and Climate Change into Account?”, Peterson Institute for International Economics Working Paper 19-18, October 2019; Stanislas Jourdan and Wojtek Kalinowski, Aligning Monetary Policy with the EU’s Climate Targets, Report from Veblen Institute for Economic Reforms and Positive Money Europe, April 2019, p. 3; Sini Matikainen, Emanuele Campiglio and Dimitri Zenghelis, ‘The Climate Impact of Quantitative Easing’, Grantham Research Institute on Climate Change and the Environment and Centre for Climate Change Economics and Policy (CCCEP) Policy Paper, May 2017; Corporate Europe Observatory, “The ECB’s ‘quantitative easing’ funds multinationals and climate change”, Corporate Europe Observatory [website], 12 December 2016, available online: The ECB’s ‘quantitative easing’ funds multinationals and climate change | Corporate Europe Observatory [Last accessed 6 Feb 2021]. Federica Agostini et al, “EU Treaties require Eurozone monetary policy to take environmental objectives into account”, FSJ Project Policy Brief 1/2020, May 2020, University of Glasgow, available online: Media_723215_smxx.pdf (gla.ac.uk) [Last accessed 6 Feb 2021]).
[11] Yannis Dafermos, Daniela Gabor, Maria Nikolaidi, Adam Pawloff, Frank van Lerven, “Decarbonising is easy. Beyond market neutrality in the ECB's corporate QE”, Greenpeace, New Economics Foundation, SOAS University of London, University of the West of England and University of Greenwich, 20 October 2020.
[12] See, for example, 2 BvR 2134, 2 BvR 2159/92, Maastricht, BverfGE 89, 155, Judgment of 12 October 1993; Second Senate of 14 January 2014 - 2 BvR 2728/13 -, paragraphs 1-24, available online: http://www.bverfg.de/e/rs20140114_2bvr272813en.html [Last accessed 6 Feb 2021], paragraphs 39-40 and 63-68; BVerfG, Order of the Second Senate of 18 July 2017 - 2 BvR 859/15 -, paragraphs 1-137, available online: http://www.bverfg.de/e/rs20170718_2bvr085915en.html [Last accessed 6 Feb 2021], paragraphs 65, 102-103; 142, 158-160.
[13] Case C-405/92 Mondiet, ECLI:EU:C:1993:906, paragraph 26. Case 336/00 Huber, EU:C:2002:509, paragraph 33. Case C-62/88 Greece v Council, EU:C:1990:153, paragraphs 19 and 20. Javier Solana, The Power of the Eurosystem to promote environmental protection, University of Oslo Faculty of Law Legal Studies Research Paper Series N. 2018-23, 2018.
[14] See, for example, Nik de Boer and Jens van ’t Klooster, “The ECB, the courts and the issue of democratic legitimacy after Weiss”, Preprint and unedited version of the article forthcoming in the Common Market Law Review, volume 57 issue 6, 2020, available online: The ECB, the Courts and the Issue of Democratic Legitimacy After Weiss by Nik de Boer, Jens van 't Klooster :: SSRN [Last accessed 6 Feb 2021]; Jens van ’t Klooster, “The Ethics of Delegating Monetary Policy”, Journal of Politics, Vol. 82, 2020, 587–599; Chiara Zilioli, “Standard of review of central bank decisions: an introduction”, in ECB Legal Conference 2019, 2019, 23–27; Fromage et al., “ECB independence and accountability today: Towards a (necessary) redefinition?”, Maastricht Journal of European and Comparative Law, Vol. 26, 2019, 3–16; Vestert Borger, “Central Bank Independence, Discretion, and Judicial Review”, in Joana Mendes (Ed.), EU Executive Discretion and the Limits of Law, Oxford University Press, 2019, 118–131; Hanns Peter Nehl, “Judicial Review of Complex Socio-Economic, Technical, and Scientific Assessment in the European Union”, in Joana Mendes (Ed.), EU Executive Discretion and the Limits of Law, Oxford University Press, 2019, 157–197; Rene Smits, “Accountability of the European Central Bank”, Ars Aequi (2019), 27–37; Kenneth Rogoff, “Is This the Beginning of the End of Central Bank Independence?”, G30 Occasional Paper, 2019, available online: Is This the Beginning of the End of Central Bank Independence? | Kenneth Rogoff (harvard.edu) [Last accessed 6 Feb 2021]; Jens van ’T Klooster, “Central Banking in Rawls’s Property-Owning Democracy”, Political Theory, Vol. 47, N. 5, 674-698, 2019, available online: Jens van ’T. Klooster, Central Banking in Rawls’s Property-Owning Democracy - PhilPapers [Last accessed 6 Feb 2021]; Clément Fontan, Emmanuel Carré and Guillaume L`Oeillet, “Theoretical perspectives on the new era of central banking”, Fr Polit, Vol. 16, 2018, 453–470, available online: https://doi.org/10.1057/s41253-018-0067-8 [Last accessed 6 Feb 2021]; Jens van't Klooster, “Democracy and the European Central Bank's Emergency Powers”, Midwest Studies in Philosophy, Vol. 42, N. 1, 2018, 270-293; Tucker, Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State, Harvard University Press, 2018; Andrej Lang, “Ultra vires review of the ECB’s policy of quantitative easing: An analysis of the German Constitutional Court’s preliminary reference order in the PSPP case”, Common Market Law Review, Vol. 55, 2018, 923–952; Antti Ronkainen and Ville-Pekka Sorsa, “Quantitative Easing Forever? Financialisation and the Institutional Legitimacy of the Federal Reserve’s Unconventional Monetary Policy”, New Political Economy, Vol. 23, N. 6, 2018, 711-727, available online: https://doi.org/10.1080/13563467.2018.1384455 [Last accessed 6 Feb 2021]; Armin Steinbach, “All’s well that ends well? Crisis policy after the German constitutional court’s ruling in Gauweiler”, Maastricht Journal of European and Comparative Law, Vol. 24, 2017, 140–149; Deirdre Curtin, “’Accountable Independence’ of the European Central Bank: Seeing the Logics of Transparency”, European Law Journal, Vol. 23, 2017, 28–44; United Nations, “On the Role of Central Banks in Enhancing Green Finance”, United Nations Environment Programme, Inquiry Working Paper 17/01, February 2017; E. Balls, James Howat and Anna Stansbury, “Central Bank Independence Revisited: After the Financial Crisis, What Should a Model Central Bank Look Like?”, M-RCBG Associate Working Paper 67, Harvard Kennedy School, November 2016; Marco Lamandini, David Ramos and Javier Solana, “The European Central Bank (ECB) as a catalyst for change in EU Law. Part 1: The ECB's mandates”, Vo. 23, N. 1, 2016, 1-54; V. Borger, “Outright Monetary Transactions and the stability mandate of the ECB: Gauweiler”, Common Market Law Review, Vol. 53, 2016, 139–196; Clément Fontan, F. Claveau and Peter Dietsch, “Central Banking and Inequalities: Taking Off the Blinders”, Politics, Philosophy & Economics, Vol. 15, N. 4, 2016, 319-357, available online: Central Banking and Inequalities: Taking Off the Blinders | Canada Research Chair in Applied Epistemology (epistemopratique.org) [Last accessed 6 Feb 2021]; D. Lombardi and M. Moschella, “The government bond buying programmes of the European Central Bank: an analysis of their policy settings”, Journal of European Public Policy, 23, 2016, 851–70; Claire Kilpatrick, “On the Rule of Law and Economic Emergency: The Degradation of Basic Legal Values in Europe’s Bailouts”, Oxford Journal of Legal Studies, Vol. 35, N. 2, 2015, 325–53; Rosa Lastra, International Financial and Monetary Law, Oxford University Press, 2nd ed., 2015; Matthias Goldmann, “Adjudicating Economics? Central Bank Independence and the Appropriate Standard of Judicial Review”, German Law Journal, Vol. 15, 2014, 265–280; A. Héritier and D. Lehmkuhl, “New modes of governance and democratic accountability”, Government and Opposition, Vol. 46, 2011, 126–44; K. McNamara, “Rational fictions: central bank independence and the social logic of delegation”, West European Politics, Vol. 25, 2002, 47–76; Paul Magnette, “Towards ‘Accountable Independence’? Parliamentary Controls of the European Central Bank and the Rise of a New Democratic Model”, European Law Journal, Vol. 6, 2000, 326–340; Jakob de Haan and Sylvester C.W. Eijffinger, “The democratic accountability of the European Central Bank: a comment on two fairy-tales”, Journal of Common Market Studies, Vol. 387, N. 3, 2000, 393–407; ECB, “The accountability of the ECB”, November Monthly Bulletin, 2002, 45–57; Christopher Taylor, “The role and status of the European Central Bank: some prospects for accountability and cooperation”, in Colin Crouch (ed.), After the Euro. Shaping Institutions for Governance in the Wake of European Monetary Union, Oxford University Press, 2000, 179–202; Ottmar Issing, “The Eurosystem: Transparent and Accountable or ‘Willem in Euroland’”, Journal of Common Market Studies, Vol. 37, 1999, 503–519; Fabian Amtenbrink, The Democratic Accountability of Central Banks, Hart Publishing, 1999; Martin Westlake, “The European Parliament’s emerging powers of appointment”, Journal of Common Market Studies, Vol. 36, N. 4, 1998, 431–44; Mark A. Pollack, ‘Delegation, agency, and agenda-setting in the European Community’, International Organization, Vol. 51, N. 1, 1997, 99–134; A. S. Posen, “Declarations Are Not Enough: Financial Sector Sources of Central Bank Independence”, NBER, 1995, 253–274; Rosa Lastra, “The Independence of the European System of Central Banks”, The Harvard International Law Journal, Vol. 33, 1992, 475–520; Mathew D. McCubbins and Talbot Page, “A theory of congressional delegation”, in Mathew D. McCubbins and Terry Sullivan (eds), Congress. Structure and Policy, Cambridge University Press,1987, 409–25; Mathew D. McCubbins and Thomas Schwartz, “Congressional oversight overlooked: police patrols versus fire alarms”, American Journal of Political Science, Vol. 28, N. 1, 1984, 165–79.
[15] Javier Solana, The Power of the Eurosystem to promote environmental protection, University of Oslo Faculty of Law Legal Studies Research Paper Series N. 2018-23, 2018. Also Stanislas Jourdan and Marc Beckmann, “Wieso eine grüne Geldpolitik legal und legitim ist”, Makronom, 7 December 2020, available online: Wieso eine grüne Geldpolitik legal und legitim ist (makronom.de) [Last accessed 6 Feb 2021].
[16] Opinion of AG Geelhoed in case C-161/04, Austria v Parliament and Council, paragraph 59. Opinion of AG Kokott in case C-304/01, Spain v Commission, EU:C:2003:619, paragraph 69. Case C-304/01, Spain v Commission, EU:C:2004:495, paragraphs 39-43.
[17] Mark Dawson and Ana Bobic, “Quantitative Easing at the Court of Justice – Doing whatever it takes to save the euro: Weiss and Others”, Common Market Law Review, Vol. 56, 2019, 1005–1040; Javier Solana, The Power of the Eurosystem to promote environmental protection, University of Oslo Faculty of Law Legal Studies Research Paper Series N. 2018-23, 2018; Armin Steinbach, “All’s well that ends well? Crisis policy after the German constitutional court’s ruling in Gauweiler”, Maastricht Journal of European and Comparative Law, Vol. 24, 2017, 140–149; Takis Tridimas and Napoleon Xanthoulis, “A legal analysis of the Gauweiler case: Between monetary policy and constitutional conflict”, Maastricht Journal of European and Comparative Law, Vol. 23, 2016, 17–39.

Idoneidade do empresário como condição necessária para o licenciamento ambiental

 Cabe à Administração Pública acautelar o interesse público no processo de licenciamento. O que apenas poderá acontecer quando a entidade competente tenha expetativas objetivamente fundadas de que o sujeito a quem é atribuída a licença irá respeitar a lei e o interesse coletivo. Quando, apesar de condenação em sede de processos de contraordenação no passado, o sujeito voltou a adotar uma conduta censurável, apresentando um historial de várias contraordenações ambientais graves e/ou muito graves, mostrando falta de consciência ambiental, permitir que troque de “manto”, criando para o efeito uma nova pessoa coletiva, não afasta a expetativa de que o mesmo venha a manter um comportamento socialmente censurável e lesivo do interesse coletivo caso o título lhe venha a ser atribuído. Por essa razão, a idoneidade do empresário no caso de indústrias perigosas deveria ser condição sine qua non para a emissão do título de exploração do estabelecimento industrial e para a atribuição de uma licença ambiental, tal como acontece no setor financeiro e no setor da mediação imobiliária.
No setor financeiro, a qualidade de membro de órgãos de administração e fiscalização ou a titularidade de funções essenciais nas entidades supervisionadas pelo Banco de Portugal carece da verificação da idoneidade profissional do sujeito (Info do Banco de Portugal n.º 12/2015). O Banco de Portugal tem competência para proceder à verificação da adequação dos membros dos órgãos de administração e fiscalização e dos titulares de funções essenciais nas instituições de crédito (artigo 30.º do Decreto-Lei n.º 298/92), sendo que a adequação, para o exercício das respetivas funções, dos membros dos órgãos de administração e fiscalização das instituições de crédito está sujeita a avaliação para o exercício do cargo e no decurso de todo o seu mandato, consistindo na capacidade de assegurar, em permanência, garantias de gestão sã e prudente das instituições de crédito, tendo em vista, de modo particular, a salvaguarda do sistema financeiro e dos interesses dos respetivos clientes, depositantes, investidores e demais credores.
Também no setor da mediação imobiliária, a atribuição de licenciamento para o exercício da atividade de mediação imobiliária tem como condição necessária a existência de idoneidade comercial (artigo 5.º da Lei n.º 15/2013). Condição que não se verifica nos sujeitos que tenham sido representantes legais de uma empresa de mediação imobiliária punida, pelo menos duas vezes, com coima pela prática dolosa dos ilícitos de mera ordenação social previstos na alínea b) do n.º 1 do artigo 32.º da Lei n.º 15/2013; que tenham sido punidos ou tenham sido representantes legais de empresa de mediação imobiliária punida com coima pela prática dolosa do ilícito de mera ordenação social referido na alínea a) do n.º 1 do artigo 32.º da mesma lei, desde que fique demonstrada a violação repetida de um dos deveres estipulados na lei (artigo 17.º, nos ns, 1 e 2 do artigo 18.º e no n.º 3 do artigo 19.º da referida lei); ou que tenham sido representantes legais de empresa de mediação imobiliária punida com a sanção acessória de interdição do exercício da atividade, nos termos da alínea b) do n.º 3 do artigo 32.º do mesmo diploma legislativo, durante o período dessa interdição.
Cautelas semelhantes, com a exigência de idoneidade profissional, deveriam também ser exigidas para atribuição de uma licença ambiental, pelo superior interesse público de que se reveste a proteção do ambiente, em função da especial relevância dos direitos e interesses em causa, e o elevado impacto sistemático que uma conduta negligente que coloque em risco bens ambientais pode ter, tanto nas gerações atuais como nas vindouras. Elementos incontornáveis na apreciação da referida idoneidade devem ser as punições passadas por contraordenações graves e muito graves, bem como por crimes ambientais, tanto do sujeito pessoa singular como de pessoa coletiva por ele representada.
E, tal como no sector financeiro, deve haver também a fiscalização da idoneidade dos órgãos colegiais da pessoa coletiva que requeira a atribuição de uma licença ambiental, para não se permitir que o empresário se esconda atrás de um Conselho de Administração composto por ´homens/mulheres de palha´ (vulgo ´testas de ferro´). Refira-se a este propósito o artigo 30.º do Decreto-Lei n.º 298/92, que embora previsto para o setor financeiro, poderia prestar um bom exemplo do que seria necessário para efeitos de desenvolvimento de atividades com impacto ambiental. Na disposição mencionada prevê-se que, no caso de órgãos colegiais, a avaliação individual de cada membro deva ser acompanhada de uma apreciação coletiva do órgão, tendo em vista verificar se o próprio órgão, considerando a sua composição, reúne qualificação profissional e disponibilidade suficientes para cumprir as respetivas funções legais e estatutárias em todas as áreas relevantes de atuação, devendo a avaliação dos membros dos órgãos de administração e fiscalização obedecer ao princípio da proporcionalidade, considerando, entre outros fatores, a natureza, a dimensão e a complexidade da atividade da instituição de crédito e as exigências e responsabilidades associadas às funções concretas a desempenhar.

Texto de apoio ao comentário de Cláudia Dias Soares às iniciativas legislativas relativas ao processo de revisão da LBA Assembleia da República (CAOTPL-XII), Lisboa, 28 Nov 2012

 

Link:

Microsoft Word - Fiscalidade ambiental AR 28Nov2012 CDS VFinal (parlamento.pt)

Sustainable finances, the ECB & its legal mandate

 

How an ECB self-imposed rule leads to the infringement of its mandate: 

The principle of market neutrality

The concern the European Central Bank (hereafter ECB) and other central banks[1] devote to the principle of market neutrality in their monetary policies seems to differ not only quantitatively, being the references to “market neutrality” apparently more frequent in the ECB communication than in the one from other central banks^[2], but also qualitatively, being the ECB´s version often classified as the one leading to the most faithful reproduction of the market. In that sense the ECB adheres to a strong notion of neutrality^[3]. However, pressured by the environmental and pandemic^[4] context, the ECB has been taking increasing efforts to re-read this principle[5].

It is here questioned whether the current interpretation of the principle of market neutrality by the ECB serves its purpose. This publication is divided in three parts. Section 1 (‘The degree of legal bendiness of the principle of market neutrality’) analyses the legal feasibility of a revision of the principle of market neutrality. Section 2 (‘The design of the Corporate Sector Purchase Programme (CSPP) and its bias’) critically assess the neutrality of the ECB implementation of the named principle in its assets purchase programme. Section 3 (‘The lack of neutrality and the infringement of the ECB mandate’) draws conclusions on the impact of the pointed bias on the fulfilment of the ECB mandate.

My conclusion is that, though the vagueness of the ECB mandate requires the adoption of self-imposed restrictions to avoid arbitrariness and allow judicial control, the current version of the principle of market neutrality is inappropriate due to two main sets of reasons, namely a principial one (the principle of market neutrality is based on invalid assumptions) and an operational one (the application of this principle has a pernicious effect on the fulfilment of the ECB mandate, since its implementation biases the ECB´s action). A normative analysis suggests that compliance with the ECB primary and secondary objectives requires the revision of the meaning currently attributed by the ECB to the principle of market neutrality. The approach here proposed is the introduction of the concept of market externality in the analysis. Such concept, is argued, allows the ECB to operationalise the principle of an open market economy in its quantitative easing (hereafter QE) programmes without incurring a deficit of democratic legitimacy. This does not amount to “[g]iving more leeway”[6] to the ECB to pursue societal and environmental priorities, but rather to allowing this institution to break free from self-imposed restrictions based on inaccurate assumptions that currently keep it from complying with its mandate.

 

1.       The degree of legal bendiness of the principle of market neutrality

As primary objective, the ECB has a price stability mandate, which is enshrined in Article 127(1) Treaty on the Functioning of the European Union (TFEU). But it is also apparent from Articles 119(2) TFEU, 127(1) TFEU and 282(2) TFEU that, without prejudice to the objective of price stability, the European System of Central Banks (ESCB) is to support the general economic policies in the Union^[7]. Article 3(3) Treaty on European Union (TEU) and Article 11 TFEU incorporate environmental policy objectives into the Union monetary policy as a secondary objective. For the discharge of its mandate the ECB enjoys a large measure of independence, being entitled to choose the most appropriate instrument(s) to fulfil its mandate among the ones explicitly mentioned in the Statute^[8]. The ECB must exercise its independence within the legal framework setting the limits to its mandate, among which are the principle of judicial control; the principle of conferral (Article 5(2) TEU), which allows its action only within the limits of the competences conferred upon it by the Member States in the Treaties to attain the objectives set out therein; the principle of proportionality (Article 5(4) TEU; Article 282(4) TFEU), which requires that ECB´s actions are limited to what is essential to achieve the objectives of the Treaties; and the requirement to act according to the principle of an open market economy favouring an efficient allocation of resources, enshrined in Article 119 TEU and also mentioned both in Article 127(1) TFEU and Article 2 of the Statute.

The principle of market neutrality is not mentioned neither in primary European Union (EU) law nor in the Statute, it is also scarcely mentioned in the ECB´s legal literature, and when that occurs it is outside the core policies of the ECB^[9]. Therefore, the legal relevance of such references should not be overstated. The principle of market neutrality is a mere operative rule (mainly used by the ECB in its QE programmes), which was self-imposed by the ECB in order to hinder arbitrariness in its decisions and allow their judicial control, given the vagueness of its mandate. This self-restriction follows from the ECB´s interpretation of the principle of an open market economy. Underpinning the latter principle is the belief that general markets distribute resources more efficiently than public authorities, and hence “central bank actions should not blunt price signals or overwhelm market forces”^[10]. The ECB then shapes its principle of market neutrality as aimed at avoiding “unintended side effects on market functioning”^[11] and the distortion of relative pricing of securities^[12] (“neutral regarding the market’s structure”^[13]).

Moreover, the case law of the Court of Justice of the European Union (hereafter CJEU) nuances the importance and rigidity of the principle of market neutrality^[14], bringing forward an interpretation of this principle that allows the ECB to carry forward its own judgement on the neutrality of the market and to adopt a corrective monetary policy when, following such judgement, the market is assessed as failing to function. Based on this jurisprudence, the market neutrality principle does not impair, for example, an active role of the ECB against climate change once the concept of market failure is added to the analysis.

From a legal standpoint, there are hence no obstacles to the revision of the principle by the Governing Council, as long as it is operationalised through the adoption of rules that allow its judicial control. This could be done through the insertion of its revised version, for example, in the new ECB’s strategy review. The legal framework set by the Treaties to lead and restrict the ECB´s action might even require such revision, if, as it is argued below, the current reading of the principle of market neutrality by the ECB functions as an obstacle to the fulfilment of its mandate. The German Constitutional Court (hereafter BVerfG) has recently signalled that a programme like the CSPP, where the principle of market neutrality is applied, might qualify as economic policy rather than monetary policy if it amounts to state aid or a substantial distortion of competition^[15], which would then consubstantiate a violation of the principle of conferral. Therefore, from a legal perspective, it is important to assess whether the current ECB reading of the referred principle serves its purpose or rather requires an overhaul.

 

 

2.       The design of the Corporate Sector Purchase Programme (CSPP) and its bias

The ECB underpins in its aim for a market-neutral implementation of the Assets Purchase Programme (hereafter APP), the conduction of CSPP purchases only according to an objective benchmark, namely the proportion to the overall eligible market. The ECB first specifies a target for the value of bonds that it wishes to hold on its balance sheet and next identifies the eligible bond universe by applying a set of criteria to the entire universe of euro denominated, nonbank corporate bonds issued by an institution established in the euro area, namely remaining maturity, at the time of the purchase, of at least 28 days (if less than 1 year) or between 6 months and 31 years (if more than 1 year), and investment grade rating (to be eligible for purchase, securities must be eligible as collateral for Eurosystem credit operations). The universe of CSPP-eligible bonds is “deliberately broad” and its composition is “primarily guided by monetary policy and risk management considerations”[16]. The ECB purchases securities issued in both the primary and the secondary markets. Prohibitions of specific companies are limited to the exclusion of financial institutions for reasons of conflict of interest, without making purchases subject to ethical guidelines, in contrast to what is the case in other central banks (for instance, the Swiss National Bank[17]).

The ECB argues, the idea underpinning its market neutral intervention is to “preserve the price discovery mechanism and limiting distortions in market liquidity”, with the objective of maintaining price stability[18]. Additionally, the ECB justifies the market neutrality approach as a way to ensure the apolitical position of the bank^[19], since it is “mandated to act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources”[20]. However, as explained next, the current ECB´s interpretation of the principle of an open market economy contradicts its rational by leading to an inefficient allocation of resources due to the reproduction (and at times exacerbation) of pre-existing market failures^[21].

 

 

3.       The lack of neutrality and the infringement of the ECB mandate

The ECB must operationalise the vague mandate the Treaties confer on it without taking “political choices”, so goes the monetarist paradigm. The idea of market neutrality in central banking has its roots in the latter paradigm, according to which monetary policy is an apolitical, technical area of policymaking^[22]. This old paradigm is based on three assumptions, namely (i) the central bank will make better policy over the longer-term than elected representatives with their political considerations would dictate in the shorter-term; (ii) the costs of central bank monetary policy decisions will not fall consistently on the same groups; and (iii) disagreements within central banks are essentially technical and not political, meaning they are about how the economy really works and how it can best be managed, and not about who wins and who loses from monetary policy decisions[23]. These assumptions end up amounting to three fictions or illusions, respectively that (i) monetary policymakers are not politicians, (ii) money is neutral over the longer-term, and (iii) technical disagreements are somehow distinct (or distinguishable) from self-interest”[24]. Since money is a political object, the institutions in charge of managing it must be substantially political, insofar as not only their decisions are shaped by policy and politics, as their mandates are based on certain ideological assumptions about the positive and normative functioning of the economy (for example, monetary policy aimed at price stability prioritises inflation control, which absence hits the owners of capital the hardest, over employment creation, which would benefit the most those individuals selling their labour force in the economy), but also their actions shape markets, narratives and policies[25].

This political dimension is particular visible in the case of the ECB, which is not a mere currency manager, but a political actor and facilitator of the EU project, to which the EU environmental goals and ambitioned role in collective leadership at international level in climate change policy belong. Such political dimension is clear in the Treaties when it is imposed on the ECB that, in the absence of conflict[26], this institution honours the primary objective of the monetary policy of the Union, namely to maintain price stability (Articles 119(2), 127(1) and 282(2) TFEU), as well as its secondary objectives, namely to support the general economic policies in the Union with a view to contributing to the achievement of “the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment” (Article 3(3) TEU).

The apolitical nature of monetary policy is hence a myth^[27]. All monetary policy measures have allocative effects^[28] The election of price stability as primary objective of monetary policy is in itself a political choice, certainly not inevitable[29] and maybe currently obsolete[30]. Markets embody a specific, political vision of society, which is not shared by every member of the polity[31]. Consequently, “market neutrality is a myth: no attempt to replicate market structure will ever succeed in removing the political dimension from security purchases and ‘offset’ distributive consequences”, and “even if central bank purchases perfectly reflected the structure of the corporate sector, they would still reflect specific political views”[32]. The pursuit of market neutrality itself has distributive consequences^[33]. By solely targeting bonds, and not equity shares, the CSPP is by itself the result of non-neutral choices[34]. Though the CSPP is meant to benefit market segments beyond the narrow range of assets included in the programme, it has more impact on the price of bonds that are eligible than those that are not[35] and, consequently, not all gain equally from this programme. Emitting bonds is a costly procedure, which Small & Medium Enterprises (SMEs) usually refrain from, and even if they do emit, they are unlikely to meet the high credit standards of the ECB. Hence SMEs tend to benefit less than their multinational competitors from CSPP.

Focusing further on the environmental side of the discussion, one should note that the market neutrality narrative is based on the efficient market hypothesis, i.e. asset prices reflect perfectly the risk of these assets given the available information[36]. However, central banks, including the ECB, are increasingly concerned that “there is a strong risk that climate related financial risks are not fully reflected in asset valuations”[37]. Available empirical studies do not find a climate-related risk premium in the fair value of assets, with difficulties for markets to price in climate-related risks spanning from data gaps to radical uncertainty, and including investment decisions based on excessively short horizons[38]. There is a consensus that climate change should be treated as a new financial risk, namely as a “climate risk” composed by physical risks, transition risks and accountability risks[39]. By keeping the narrative that its purchases should not benefit certain assets over others, but rather faithfully reflect risk premia set by financial markets, the ECB bases its action in an invalid assumption.

 

Given the current consensus that the assumption of accuracy of risk premia is false, the ECB reading of the principle of market neutrality leads to the reduction of the manoeuvring space it is entitled to by the Treaties and to the violation of its mandates. The application of such reading in asset purchase programmes and liquidity operations is fuelling financial instability and exposing the ECB to potential financial losses, since climate change, if not mitigated, will have a disruptive effect on the financial system and on the economy^[40]. In as far as the ECB secondary objectives (Article 3(3) TEU) are concerned, it is worth mentioning the CSPP´s bias in favour of polluters, as firms whose securities are purchased under the CSPP have a disproportionate carbon footprint^[41].

With its CSPP the ECB actively influences the market, since keeping the prices low is due to stimulate the demand. Therefore, though relative prices are kept unchanged, the ECB intervention is not market neutral and this lack of neutrality has a negative impact on EU climate goals, since carbon-intensive industries are protected from the natural functioning of the price discovery mechanism via the ECB market intervention. Such implicit subsidies further distort pre-existing market failures, in an action that contributes to the annulment of the EU and Member States´ environmental policies. Therefore, the ECB corporate purchases not only infringe Article 3(3) TEU and Article 11 TFEU, but are also structurally misaligned with EU commitments to the Paris climate agreement and do not adequately reflect climate related financial risks^[42]. With the introduction of the concept of market externality in the analysis, which could occur, for example, by linking the QE eligibility criteria to the EU Green Taxonomy approved by the European Parliament and the Council[43], the principle of market neutrality could better serve its purpose, namely to operationalise the principle of an open market economy.

Claudia Dias Soares

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[1] The literature has analysed the use of the referred principle in the design of the quantitative easing (hereafter QE) policy of the Eurosystem vis à vis the implementation of the same principle by the Federal Reserve (Martijn Boermans and Viacheslav Keshkov, “The impact of the ECB asset purchases on the European bond market structure: Granular evidence on ownership concentration”, DNB Working Paper N. 590, 2018; M. A. Boermans and R. Vermeulen, “Quantitative easing and preferred habitat investors in the euro area bond market”, DNB Working Paper N. 586, 2018; S. Carpenter, S. Demiralp, J., Ihrig and E. Klee, “Analyzing Federal Reserve asset purchases: From whom does the Fed buy?”, Journal of Banking & Finance, Vol. 52, 2015, 230–244), the Bank of England (Martijn Boermans and Viacheslav Keshkov, “The impact of the ECB asset purchases on the European bond market structure: Granular evidence on ownership concentration”, DNB Working Paper N. 590, 2018; M. A. Boermans and R. Vermeulen, “Quantitative easing and preferred habitat investors in the euro area bond market”, DNB Working Paper N. 586, 2018; M. A. Joyce, Z. Liu and I. Tonks, “Institutional investors and the QE portfolio balance channel”, Journal of Money, Credit and Banking, Vol. 49, N. 6, 2017, 1225–1246), the Swiss National Bank (Jens van ’t Klooster and Clément Fontan, “The Myth of Market Neutrality: A Comparative Study of the European Central Bank’s and the Swiss National Bank’s Corporate Security Purchases”, New Political Economy, Vol. 25, N. 6, 865-879, 2020, available online: 10.1080/13563467.2019.1657077 [Last accessed 6 Feb 2021]. T. Jordan, “Comments on the SNB’s monetary and investment policy”, Speech, 09th Ordinary General Meeting of Shareholders of the Swiss National Bank, 28 April 2017, Swiss National Bank, available online: https://www.snb.ch/en/mmr/speeches/id/ref_20170428_tjn [Last accessed 8 Feb 2021]; A. Maechler, “Investment policy in times of high foreign exchange reserves”, Speech, Money Market Event, Zurich, 31 March 2016, Swiss National Bank, available online: https://www.snb.ch/en/mmr/speeches/id/ref_20160331_amr [Last accessed 6 Feb 2021]; F. Zurbrügg, “The SNB’s investment policy: options and limitations”, Speech, Money Market Event, Zurich, 27 March 2014, Swiss National Bank, available online: Swiss National Bank (SNB) - The SNB's investment policy: options and limitations) [Last accessed 6 Feb 2021]). and the Bank of Japan (Martijn Boermans and Viacheslav Keshkov, “The impact of the ECB asset purchases on the European bond market structure: Granular evidence on ownership concentration”, DNB Working Paper N. 590, 2018; F M. A. Boermans and R. Vermeulen, “Quantitative easing and preferred habitat investors in the euro area bond market”, DNB Working Paper N. 586, 2018; M. S. Arslanalp and D. P. Botman, “Portfolio rebalancing in Japan: Constraints and implications for quantitative easing”, IMF Working Paper N. 186, 2015, 15-186; I. Fukunaga, N. Kato and J. Koeda, “Maturity structure and supply factors in Japanese government bond markets”, Monetary and Economic Studies, Vol. 4, 2015, 45–96).

[2] Nicolas Hercelin, “Why the ECB should go beyond ‘Market Neutrality’, Positive Money Europe, 18 September 2019, available online: https://www.positivemoney.eu/2019/09/ecb-market-neutrality-doctrine/ [Last accessed 6 Feb 2021]: “Curiously, the market neutrality principle is mentioned in the documentation of the ECB, but almost never in other central banks. We found more than 70 occurrences of “market neutrality” on the ECB websites, and more than 80 for “market neutral”. On the contrary, the Bank of England and the Federal Reserve have less than 10. Moreover two later central banks mainly refer to market neutrality in the context of non-monetary portfolio while the ECB mainly refers to their QE programmes”.

[3] Jens van ’t Klooster and Clément Fontan, “The Myth of Market Neutrality: A Comparative Study of the European Central Bank’s and the Swiss National Bank’s Corporate Security Purchases”, New Political Economy, Vol. 25, N. 6, 865-879, 2020, available online: 10.1080/13563467.2019.1657077 [Last accessed 6 Feb 2021].

[4] For example, in early 2020, faced with the threats posed by the Corona crises and the anormal market conditions, the ECB did its best to ward off a credit crunch by instead of buying a country’s assets in rough proportion to the size of its GDP, as had been the case until then, buying more of those of Italy and Spain (M. Bet, “Macron plot exposed in 'plan to get German taxpayers to pay for political union'”, 17 January 2021, available online: Emmanuel Macron plot exposed in 'plan to get German taxpayers to pay for political union' | World | News | Express.co.uk [Last accessed 2 Fev 2021]).

[5] European Parliament, Lagarde recommended for ECB President by Economics and Monetary Affairs Committee, 04.09.2019, Press Releases, Written reply to Question n. 21, available online: https://www.europarl.europa.eu/news/en/press-room/20190904IPR60306/economics-and-monetary-affairs-committee-recommend-lagarde-for-ecb-president, [Last accessed 13 Nov 2021]).

[6] Jens van ’t Klooster and Clément Fontan, “The Myth of Market Neutrality: A Comparative Study of the European Central Bank’s and the Swiss National Bank’s Corporate Security Purchases”, New Political Economy, Vol. 25, N. 6, 865-879, 2020, available online: 10.1080/13563467.2019.1657077 [Last accessed 6 Feb 2021], 874-875.

[7] Court of Justice of the European Union, Case C‑62/14, Gauweiler and Others, 16 June 2015, ECLI:EU:C:2015:400, paragraph 59; also Court of Justice of the European Union, Case C-493/17, Weiss and Others, 11 December 2018, ECLI:EU:C:2018:1000, paragraph 60.

[8] Statute of the European System of Central Banks and of the European Central Bank, OJ 2012, C 326, 230.

[9] The principle of market neutrality was expressly mentioned in Article 4(2) of the Guideline (EU) 2019/671 of the European Central Bank of 9 April 2019 on domestic asset and liability management operations by the national central banks.

[10] Yves Mersch, Speech at the Natixis Meeting of Chief Economists, Paris, 23 June 2016, available online: Monetary policy in the euro area: scope, principles and limits (europa.eu) [Last accessed 8 Feb 2021].

[11] ECB, ECB Economic Bulletin, Issue 2/2019, 69 and 73 ff, available online: Economic Bulletin (europa.eu) [Last accessed 6 Feb 2021].

[12] ECB, “The ECB’s corporate sector purchase programme: Its implementation and impact”, ECB Economic Bulletin, Issue 4/2017, 40–45, 40, available online: The ECB's corporate sector purchase programme: its implementation and impact (europa.eu) [Last accessed 14 Nov 2020].

[13] Benoît Cœuré, addressing the members of the French Parliament’s finance committee, May 2019, quoted by Nicolas Hercelin, Positive Money Europe, 28 May 2019, available online: https://www.positivemoney.eu/2019/05/climate-coeure-hearing-french-parliament/, [Last accessed 12 Nov 2020].

[14] See, for example, Case C‑62/14, OMT judgement, 16 June 2015, which Considerations 72 to 76 and 127 of the judgement can be understood as an acknowledgement by the Court of the right of the ECB to adopt a corrective monetary policy intervention in the market based on its own assessment. The Court accepted that (1) it is up to the ECB to judge which conditions correspond to a neutral market (Consideration 72) and (2) the ECB is entitled to correct what the institution assesses as a bad functioning of the market (Consideration 76).

[15] 2 BvR 71/20, 2 BvR 72/20 CSPP, Second Senate of 15 June 2020 - Rn. 1-30 -, available online: ECLI:DE:BVerfG:2020:rk20200615.2bvr007120 [Last accessed 6 Feb 2021].

[16] ECB, “The ECB’s corporate sector purchase programme: Its implementation and impact”, ECB Economic Bulletin, Issue 4/2017, 40–45, 40, available online: The ECB's corporate sector purchase programme: its implementation and impact (europa.eu) [Last accessed 14 Nov 2020].

[17] Jens van ’t Klooster and Clément Fontan, “The Myth of Market Neutrality: A Comparative Study of the European Central Bank’s and the Swiss National Bank’s Corporate Security Purchases”, New Political Economy, Vol. 25, N. 6, 865-879, 2020, available online: 10.1080/13563467.2019.1657077 [Last accessed 6 Feb 2021].

[18] See Decision (EU) 2016/948 of the European Central Bank of 1 June 2016 on the implementation of the corporate sector purchase programme (ECB/2016/16), OJ L 157, 15 June 2016, p. 28.

[19] “Deviating from market neutrality and interfering with economic policy risks exposing the ECB to litigation. It is not up to the central bank but to elected governments to decide which industry is to be closed and when” (Yves Mersch, “Climate change and central banking”, Workshop discussion: Sustainability is becoming mainstream, Frankfurt, 27 November 2018, available online: Climate change and central banking (europa.eu) [Last accessed 6 Feb 2021]).

[20] ECB, “The ECB’s corporate sector purchase programme: Its implementation and impact”, ECB Economic Bulletin, Issue 4/2017, 40–45, 40, available online: The ECB's corporate sector purchase programme: its implementation and impact (europa.eu) [Last accessed 14 Nov 2020].

[21] For example, Yannis Dafermos, Daniela Gabor, Maria Nikolaidi, Adam Pawloff and Frank van Lerven, Decarbonising is easy. Beyond market neutrality in the ECB's corporate QE, Greenpeace, New Economics Foundation (NEF), SOAS University of London, University of the West of England and University of Greenwich, 20 October 2020. See also Martijn Boermans and Viacheslav Keshkov, “The impact of the ECB asset purchases on the European bond market structure: Granular evidence on ownership concentration, DNB Working Paper N. 590, 2018; W. Arrata and B. Nguyen, “Price impact of bond supply shocks: Evidence from the eurosystem’s asset purchase program”, Banque de France Working Paper 623, 2017; and K. Schlepper, H. Hofer, R. Riordan and A. Schrimpf, “Scarcity effects of QE: A transaction-level analysis in the Bund market”, BIS Working Paper N. 625, 2017.

[22] Nik de Boer and Jens van ’t Klooster, “The ECB, the courts and the issue of democratic legitimacy after Weiss”, Preprint and unedited version of the article forthcoming in the Common Market Law Review, volume 57 issue 6, 2020, available online: The ECB, the Courts and the Issue of Democratic Legitimacy After Weiss by Nik de Boer, Jens van 't Klooster :: SSRN [Last accessed 6 Feb 2021]; M. Marcussen, “Scientization of central banking: the politics of a-politicization”, in K.H.F. Dyson and M. Marcussen (eds.), Central banks in the age of the euro: Europeanization, convergence, and power, Oxford University Press, 2009, 373–90.

[23] Erik Jones, “The political independence of the ECB in question”, 3 July 2019, available online: https://erikjones.net/2019/07/03/the-political-independence-of-the-ecb-in-question/, [Last accessed 14 Nov 2020].

[24] Erik Jones, “The political independence of the ECB in question”, 3 July 2019, available online: https://erikjones.net/2019/07/03/the-political-independence-of-the-ecb-in-question/, [Last accessed 14 Nov 2020].

[25] Also Stanislas Jourdan, “Ending the fiction: Central Banks are not just technical institutions”, Positive Money Europe, 5 July 2019, available online: https://www.positivemoney.eu/2019/07/ending-fiction-central-banks-not-technical-institutions/ [Last accessed 14 Nov 2020].

[26] Court of Justice of the European Union, Case C-493/17, Weiss and Others, ECLI:EU:C:2018:1000, paragraph 60.

[27] See, for example, Nik de Boer and Jens van ’t Klooster, “The ECB, the courts and the issue of democratic legitimacy after Weiss”, Preprint and unedited version of the article forthcoming in the Common Market Law Review, Vol. 57, N. 6, 2020, available online: The ECB, the Courts and the Issue of Democratic Legitimacy After Weiss by Nik de Boer, Jens van 't Klooster :: SSRN [Last accessed 6 Feb 2021]; Jens van ’t Klooster and Clément Fontan, “The Myth of Market Neutrality: A Comparative Study of the European Central Bank’s and the Swiss National Bank’s Corporate Security Purchases”, New Political Economy, Vol. 25, N. 6, 2020, 865-879, available online: 10.1080/13563467.2019.1657077 [Last accessed 6 Feb 2021]; Adolph, “Bankers, Bureaucrats, and Central Bank Politics: The Myth of Neutrality”, Cambridge Studies in Comparative Politics, Cambridge University Press, 2013.

[28] For example, J. Montecino and G. Epstein, “Did quantitative easing increase income inequality?”, INET Working Paper Series No. 28, 2015, Institute for New Economic Thinking; Bank of England, “The distributional effects of asset purchases”, Quarterly Bulletin, 52, 2012, 254–66. As S. Strange, States and Markets, Continuum, 1986.

[29] K. McNamara, “Rational fictions: central bank independence and the social logic of delegation”, West European Politics, Vol. 25, 2002, 47–76.

[30] For example, Adam Tooze, “The Death of the Central Bank Myth”, Foreign Policy, 13.05.2020, available online: https://foreignpolicy.com/2020/05/13/european-central-bank-myth-monetary-policy-german-court-ruling/ [Last accessed 4 Dec 2020].

[31] W. Streeck and A. Schäfer, Politics in the age of austerity, John Wiley & Sons, 2013.

[32] Jens van ’t Klooster and Clément Fontan, “The Myth of Market Neutrality: A Comparative Study of the European Central Bank’s and the Swiss National Bank’s Corporate Security Purchases”, New Political Economy, Vol. 25, N. 6, 2020, 865-879, available online: 10.1080/13563467.2019.1657077 [Last accessed 6 Feb 2021]).

[33] Jens van ’t Klooster and Clément Fontan, “The Myth of Market Neutrality: A Comparative Study of the European Central Bank’s and the Swiss National Bank’s Corporate Security Purchases”, New Political Economy, Vol. 25, N. 6, 2020, 865-879, available online: 10.1080/13563467.2019.1657077 [Last accessed 6 Feb 2021]; and Adam Tooze, “The Death of the Central Bank Myth”, Foreign Policy, 13.05.2020, available online: https://foreignpolicy.com/2020/05/13/european-central-bank-myth-monetary-policy-german-court-ruling/ [Last accessed 4 Dec 2020]).

[34] Pierre Monnin, “Central banks should reflect climate risks in monetary policy operations”, SUERF Policy Note Issue N. 41, September 2018.

[35] N. Abidi and I. Miquel-Flores, “Who benefits from the corporate QE? A regression discontinuity design approach”, ECB Worling Paper No. 2145, 2018.

[36] B. G. Malkiel and E. F. Fama, “Efficient capital markets: A review of theory and empirical work”, Journal of Finance, Vol. 25, N. 2, 1970, 383-417; F. Black and M. Scholes, “The pricing of options and corporate liabilities”, Journal of Political Economy, Vol. 81, N. 3, 1973, 637-654; R. C. Merton, “On the pricing of corporate debt: The risk structure of interest rates”, Journal of Finance, Vol. 19, N. 2, 1974, 449-470.

[37] NGFS, “NGFS First Comprehensive Report. A Call for Action - Climate Change as a Source of Financial Risk”, Network of Central Banks and Supervisors for Greening the Financial System, April 2019, 4.

[38] Signe Krogstrup and William Oman, Macroeconomic and Financial Policies for Climate Change Mitigation: A Review of the Literature, IMF Working Paper Monetary and Capital Markets Department Research Department WP/19/185, 2019.

[39] For example, Network for Greening the Financial System, Creating green bond markets-insight, innovations and tools from the emerging markets, October 2018.

[40] Patrick Honohan, "Should Monetary Policy Take Inequality and Climate Change into Account?”, Peterson Institute for International Economics Working Paper 19-18, October 2019: “If central banks applied, to their own bond purchases, the new approach to climate-related financial risk that they are pressing on private bankers, they would reduce their purchases of bonds issued by carbon-intensive firms (…) is it consistent to tell the private sector you should not invest in such asset because it involves a risk that this asset becomes stranded because of climate change (…) and at the same time saying that in the monetary policy operations the asset purchase of the ECB, you are perfectly neutral and you don’t distinguish between those type of assets?”. Nicolas Hercelin, “Why the ECB should go beyond ‘Market Neutrality’, Positive Money Europe, 18 September 2019, available online: https://www.positivemoney.eu/2019/09/ecb-market-neutrality-doctrine/ [Last accessed 6 Feb 2021].

[41] See for example Lisa Hanzl, Oliver Picek und Joel Tölgyes, “Wie „grün“ sind die EZB Käufe österreichischer Unternehmensanleihen?”, Momentum Institut, Policy Brief 23/2020, December 2020, available online: pb_23.2020_1217_greenmonetarypolicy_0.pdf (momentum-institut.at) [Last accessed 6 Feb 2021]; Jens van ’t Klooster and Clément Fontan, “The Myth of Market Neutrality: A Comparative Study of the European Central Bank’s and the Swiss National Bank’s Corporate Security Purchases”, New Political Economy, Vol. 25, N. 6, 2020, 865-879, available online: 10.1080/13563467.2019.1657077 [Last accessed 6 Feb 2021]; Yannis Dafermos, Daniela Gabor, Maria Nikolaidi, Adam Pawloff and Frank van Lerven, “Decarbonising is easy. Beyond market neutrality in the ECB's corporate QE”, Greenpeace, New Economics Foundation (NEF), SOAS University of London, University of the West of England and University of Greenwich, 20 October 2020; Patrick Honohan, "Should Monetary Policy Take Inequality and Climate Change into Account?”, Peterson Institute for International Economics Working Paper 19-18, October 2019; Stanislas Jourdan and Wojtek Kalinowski, “Aligning Monetary Policy with the EU’s Climate Targets”, Report from Veblen Institute for Economic Reforms and Positive Money Europe, April 2019; Sini Matikainen, Emanuele Campiglio and Dimitri Zenghelis, “The Climate Impact of Quantitative Easing”, Grantham Research Institute on Climate Change and the Environment and Centre for Climate Change Economics and Policy (CCCEP) Policy Paper, May 2017; Corporate Europe Observatory, “The ECB’s ‘quantitative easing’ funds multinationals and climate change”, Corporate Europe Observatory [website], 12 December 2016, available online: The ECB’s ‘quantitative easing’ funds multinationals and climate change | Corporate Europe Observatory [Last accessed 6 Feb 2021]. Following an information request placed by the Finance and Social Justice Project, the German Bundesbank confirmed on 30 April 2020 that this continued to be the case (Federica Agostini et al, “EU Treaties require Eurozone monetary policy to take environmental objectives into account”, FSJ Project Policy Brief 1/2020, May 2020, University of Glasgow, available online: Media_723215_smxx.pdf (gla.ac.uk) [Last accessed 6 Feb 2021]).

[42] Yannis Dafermos, Daniela Gabor, Maria Nikolaidi, Adam Pawloff and Frank van Lerven, “Decarbonising is easy. Beyond market neutrality in the ECB's corporate QE”, Greenpeace, New Economics Foundation (NEF), SOAS University of London, University of the West of England and University of Greenwich, 20 October 2020.

[43] Regulation (EU) 2020/852 (Taxonomy) on the establishment of a framework to facilitate sustainable investment, OJ L 198, 22 June 2020.