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
[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]; , “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] , “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] , “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]).
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[35] N. Abidi and I. Miquel-Flores,
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[36] B. G. Malkiel and E. F. Fama,
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[37] NGFS, “NGFS First
Comprehensive Report. A Call for Action - Climate Change as a Source of
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[38] Signe Krogstrup and William
Oman, Macroeconomic and Financial Policies for Climate Change Mitigation: A
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[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
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https://www.positivemoney.eu/2019/09/ecb-market-neutrality-doctrine/
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[41] See for example Lisa Hanzl,
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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’
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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.
