Euro at 20: Ensuring legitimacy is an ongoing process

Interesting speech by ECB Vice-President Luis de Guindos. It gets to core of any institution in a democracy – legitimacy. What makes an institution like central bank legitimate for citizens? Or how does it earn its legitimacy?

Our Union is founded on the value of democracy. And, following the tradition of liberal democracies, it is based on principles, rules and institutions that protect freedoms, rights and the rule of law to avoid abuse of powers.

On the one hand, legitimacy in such a system requires that all European citizens, our demos, have a choice and a voice. On the other, it is grounded in fundamental rules that form the basis of our social contract. Nevertheless, ensuring legitimacy is not a one-off activity; it requires an ongoing effort by institutions.

Let me look at the example of the ECB, of which I have the honour to be Vice-President.

The ECB’s democratic mandate is laid down in the EU Treaties, which were ratified in all Member States according to their constitutional requirements.

Within this mandate, and to fulfil the euro-area wide objectives assigned to the ECB, the ECB has discretion to use its instruments as necessary. And its independence is protected, precisely to ensure that the legitimacy of its decisions is not undermined by accusations of political interference for short-term electoral gains.

As a necessary counterpart to that independence, the ECB is accountable to the European Parliament, which represents the people of the EU. This is complemented by judicial review of the ECB’s decisions by the Court of Justice of the EU and the audit of the operational efficiency of the management of the ECB by the European Court of Auditors.

All these elements allow us to show that we are acting in accordance with our mandate and not arbitrarily.

We take our accountability to the European Parliament very seriously. Over the years, we have developed a strong and comprehensive accountability framework, which goes beyond the Treaty requirements. We can affirm that the European Parliament has been very diligent in its regular and in-depth scrutiny. As one should expect, the intensity of this scrutiny was stepped up during the crisis.

Nice way to put it..

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