OPINION. “BCE: accountability is no longer enough” (Michel Santi)

On October 9, a parliamentary committee recommended the referral of Adam Glapiński to the State Court for indirect deficit financing and asset purchases without required authorizations. The Diet has yet to decide. The governor had already hit the headlines in September 2023, when rates were lowered by 0.75 points six weeks before the legislative elections while inflation exceeded 10%. This drop had fueled suspicion of bias. In a rule of law, we must be able to protect a governor against illegal eviction and examine his conduct. But this does not say how a democracy debates legal choices and the sacrifices they impose.

In his defense, Glapiński cites debt purchases by the Fed, the ECB and the Bank of England. The comparison has its limits: Article 123 TFEU prohibits direct financing of States; purchases on the secondary market remain possible, provided you do not circumvent this ban. This is precisely what the commission accuses him of. His argument, however, reiterates the essential: central banks weigh on the cost of borrowing and the value of securities.

In Frankfurt, the TPI provides an illustration of this power. Created in July 2022 to protect monetary transmission, it allows purchases on the secondary market without a ceiling set in advance, when tensions are deemed unjustified and disorderly. The criteria are public. The decision remains with the Board of Governors, without a parliamentary vote.

For France, the line between an unjustified crisis of confidence and the sanction of its fragilities is no longer theoretical. On October 22, the yield on the ten-year OAT rose to 5.14%, the highest since 2002, while the gap with the Bund widened to around 170 basis points, to levels not seen since the sovereign debt crisis. Frankfurt's assessment can then weigh on financing conditions and budgetary margins. Legally compliant does not mean politically neutral.

This power is also exercised in the ordinary. From July 2022 to September 2023, the ECB raised rates by 4.5 points, the fastest tightening in its history. In France, the average rate for new property loans increased from 1.06% at the end of 2021 to 4.04% at the end of 2023. Inflation also imposes losses, unevenly distributed. Between the cost of credit and that of inflation, the pace of tightening decides who pays. However, the mandate sets the objective; it doesn't dictate every step.

In the United Kingdom, the chancellor sets the inflation target each year; the Bank of England has chosen the means since 1997. The elected power defines the ends, the central bankers are responsible for the means.

This model cannot be transposed mechanically. The Bank of England faces a single Treasury. The ECB conducts a single monetary policy in the face of twenty-one national budgetary policies. In a union of several states, subjecting the target to a political decision would in particular raise fears that a coalition would favor debt relief to the detriment of monetary stability. This asymmetry explains why the target remained in the hands of Frankfurt. But the British example shows that the independence of instruments does not require the central bank to set it itself.

Machine-translated from French