The History of the Bundesbank: Lessons for the European Central Bank

By Jakob De Haan | Go to book overview

2

How independent is the Bundesbank really?

A survey
Philipp Maier and Jakob de Haan
2.1 Introduction
The Deutsche Bundesbank is widely regarded as being one of the most independent central banks. Eijffinger and de Haan (1996) provide the ranking of the Bundesbank according to a number of measures of legal central bank independence, which are all based upon the statutes of the central banks. Although the ranking of central bank charters by their degree of legal independence is a difficult task that involves some subjective judgement, it is remarkable that all proxies for legal independence yield the same outcome for the Bundesbank. Nevertheless, it is unclear whether formal independence also guarantees de facto independence. Forder (1996:43-4) argues that ‘a central bank may be independent by statute, and it is nevertheless accepted—on all sides—that the government will have its wishes implemented…it is quite clear that the reading of statutes is not a measure of independence in the sense required by the theory…. There is no theory that says it matters what the rules say. There is only a theory that says it matters what the behaviour is.’ Of course, one could conjecture that the statutes of the central bank may (at least partially) shape the options for the central bank to pursue the kind of policies that he or she deems necessary. 1 Still, one might wonder whether the members of the Bundesbank Council have indeed always been politically neutral technocrats with a strong esprit de corps as Marsh (1992) claims. However, even if they are not, the German public clearly has high esteem for the Bundesbank. A survey of a German research institute on attitudes towards public institutions reflects a high level of trust by the German population in both the Federal Constitutional Court and the Bundesbank (which score 2.2 and 2.1, respectively, on a scale of 3). This compares favourably with the scores of the federal government (0.6) and the lower house of parliament (0.9), respectively. 2The literature has identified two main approaches to examine whether the government’s preferences with respect to economic policy affect central bank behaviour:
Direct influence may force the central bank to alter its policy according to the wishes of the government.

-6-

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The History of the Bundesbank: Lessons for the European Central Bank
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Figures viii
  • Tables ix
  • Preface xi
  • Introduction xii
  • 1 - Introductory Remarks on 50 Years of the Bundesbank 1
  • 2 - How Independent Is the Bundesbank Really? 6
  • Notes 39
  • 3 - The Bundesbank’s Reaction to Policy Conflicts 43
  • Notes 63
  • 4 - From Low Inflation to Price Stability in Germany 67
  • Notes 94
  • 5 - Credibly Conservative Monetary Policy and Labour-Goods Market Organisation 97
  • 6 - Monetary Policy of the Ecb 125
  • References 142
  • 7 - The European Central Bank as a New Institution and the Problem of Accountability 143
  • References 155
  • Index 157
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