The European Central Bank and Dissensus over Liberal Democracy

Abstract As the Bretton Woods system fell in the 1970s, the neoliberal consensus came along and established some hard dogmas in the monetary field. Money neutrality brought about a firm belief in the benefits of central bank independence and the technocratisation of money. This inevitably shaped the powers of the European Central Bank (ECB) in 1992. In the wake of the Euro crisis, the ECB significantly affected financial assistance conditionality as part of the Troika and put into place two large-scale public sector purchase programmes, thereby becoming the largest creditor in the Eurozone. This chapter explores the dissensus concerning the ECB’s practice of monetary neutrality and independence under conditions of a clear expansion of its original mandate and an increasingly political character of its decisions, as evidenced by the unprecedented redistributive effects of its policies. Despite these fundamental transformations, the ECB continues to insist it is acting within its original mandate in order to protect its independence. I argue that the severe dissensus over the ECB’s policies that we are witnessing is focused on the symptoms instead of the root cause of the problem: central bank independence itself. In other words, so long as the values of central bank independence and monetary neutrality remain uncontested, the ECB will continue on its independent path without democratic accountability.