Regulating Ex-ante and Ex-post Democratic Control of Independent Central Banks

Independent central banks are subject to multiple mechanisms of ex-ante and ex-post democratic control by the electoral-representative branches of government, the Legislative and Executive. This paper presents and compares legal provisions regulating several, but not all, of those control mechanisms ex-ante guidance or signaling and ex-post accountability. The ex-ante mechanisms analyzed in this study are: (i) the appointment channel, the rules of selection, appointment and tenure; (ii) the remuneration channel; (iii) the financial resourcing and management, particularly concerning the approval of the budget of central banks, the allocation of their profits and payment of dividends, and the regimes of fiscal backstop; (iv) the legal mandate; (vi) regimes of issuance of political instructions to central banks; (vii) the cross-participation of political officials on central banks’ governing bodies, and vice-versa; and (viii) duties of interinstitutional cooperation. The two mechanisms of ex-post democratic control studied in this paper are (i) parliamentary accountability and (ii) regimes of reappointment. The combination of these mechanisms of democratic control, with other channels of direct relationship of central banks with the public, give the People and its Democratic Representatives a “good enough democratic control” over independent central banks