In a keynote speech, European Central Bank Executive Board member and ECB Supervisory Board Vice-Chair Frank Elderson argued that a strong rule of law is a practical precondition for the ECB to deliver on its price stability mandate and for ECB Banking Supervision to support financial stability. He also set out that, within its treaty-based competences, the ECB has specific responsibilities and tools to help safeguard the legal foundations that support central banking and supervision. The speech linked the rule of law to trust in fiat money through legal tender status for central bank money and the legal basis for convertibility at par of commercial bank deposits, and described the digital euro as part of the ECB’s work to adapt public money to the digital age within a robust legal framework. It also framed rule-of-law predictability as necessary for credible economic analysis and monetary policy, and for enforceable supervisory action including bank-specific capital requirements set through the Supervisory Review and Evaluation Process and sanctions for breaches of prudential rules. Elderson further pointed to operational dependencies such as the enforceability of collateral rights and the ability to compel accurate statistical reporting, and noted that weaknesses at national level can affect the functioning of the European System of Central Banks and the Single Supervisory Mechanism given their integrated structures. Elderson outlined five ECB channels for supporting the rule of law in areas relevant to its mandate: judicially reviewable adherence to law and transparency and accountability; treaty powers to challenge national measures undermining national central bank governors’ independence before the Court of Justice of the European Union; a “guardian of the Treaties” role vis-à-vis national central banks, including unused powers to bring infringement proceedings and to restrict national central bank functions that interfere with ESCB objectives; mandatory consultation on draft EU and national legislation within the ECB’s fields of competence; and convergence reporting that also assesses legal compatibility, citing the recent report on Bulgaria. He also highlighted the ECB’s role in international cooperation aimed at upholding the international rule of law.
European Central Bank 2025-06-09
European Central Bank explains how the rule of law underpins price stability, supervision and central bank independence
In a keynote speech, ECB Executive Board member Frank Elderson emphasized the rule of law as essential for the ECB's price stability mandate and financial stability support. He highlighted the ECB's responsibilities in safeguarding legal foundations, adapting public money to the digital age, and ensuring enforceable supervisory actions. Elderson outlined five channels through which the ECB supports the rule of law, including judicial review, treaty powers, and international cooperation.