Central Bank Independence in Southeastern Europe with a View to EU Integration – Revisited

This contribution updates an analysis of central bank legislation in eight Southeastern European (SEE) countries published in 2004. It uses the ECB classification and examines functional, institutional, personal and financial independence. The relevant Treaty requirements serve as a benchmark for assessing the degree of legal central bank independence (CBI) already achieved in the respective areas. The author finds that since 2004 some SEE countries have achieved further progress in aligning central bank legislation with Treaty requirements. As in 2004, the degree of CBI continues to correspond largely to the respective country’s level of integration with the EU. The main remaining weakness can be found in the area of personal independence, in particular in the provisions on the dismissal of central bank top officials. Further crucial areas are the prohibition of monetary financing and provisions on loss coverage. The paper concludes that legal arrangements to protect the status of the central bank are a necessary, though not sufficient, prerequisite for CBI. In fact, the importance of practical implementation cannot be overestimated.