Abstract
The Maastricht Treaty requires the central banks of the countries in the European Union (EU) to become fully “independent” before the start of the third phase of Economic and Monetary Union (EMU) and the creation of the European Central Bank (ECB). The treaty dictates several conditions for a central bank to be considered “independent.” Central bank independence (CBI) is therefore a condition for participating in the EMU, to be considered together with the macroeconomic convergence criteria on inflation, interest and exchange rates and on the governments’ financial deficits and debts. In this sense the relationship between CBI and a credible and permanent commitment to fixed exchange rates is one of complementarity. Fixing exchange rates and unifying currencies requires a common monetary policy. In order to be able to delegate their monetary policies to a supernational agency, the countries must first free their central banks of national political influences.
The author, keeping full responsibility for the chapter and for all possible remaining errors, is grateful for useful criticisms and observations to the discussants Robert Raymond, Cathy Minehan and Clive Briault. He also thanks: Ian Macfarlane and the participants in the seminar held at the H.C. Coombs Centre for Financial Studies, Sydney, where a previous version of the chapter was presented on 30 October 1995; Eduard Hochreiter, Sylvester Eijffinger and the other participants in a workshop at the Austrian Nationalbank, where the chapter was discussed on 15 December 1995. He owes a special debt of gratitude for valuable suggestions to Donato Masciandaro. He is also grateful for their comments to Mario Gilli, Andrea Ichino, Claudio Michelacci, Riccardo Rovelli, Fabrizio Saccomanni and Guido Tabellini.
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Bruni, F. (1997). Central Bank Independence in the European Union. In: Kuroda, I. (eds) Towards More Effective Monetary Policy. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-25382-1_11
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