How an ECB self-imposed rule leads to the infringement of its mandate: The principle of market neutrality

13 Pages Posted: 18 Oct 2022

Date Written: February 2, 2021

Abstract

The apolitical nature of the monetary policy is a myth. As far as the ECB secondary objectives (Article 3(3) TEU) are concerned, it is worth mentioning the CSPP´s bias in favour of polluters, as firms whose securities are purchased under the CSPP have a disproportionate carbon footprint. Such implicit subsidies further distort pre-existing market failures, in an action that contributes to the annulment of the EU and Member States´ environmental policies. Therefore, the ECB corporate purchases not only infringe Article 3(3) TEU and Article 11 TFEU but are also structurally misaligned with EU commitments to the Paris climate agreement and do not adequately reflect climate-related financial risks. With the introduction of the concept of market externality in the analysis, which could occur, for example, by linking the QE eligibility criteria to the EU Green Taxonomy approved by the European Parliament and the Council, the principle of market neutrality could better serve its purpose, namely to operationalise the principle of an open market economy.

Keywords: European Central Bank, principle of an open market economy, principle of market neutrality, ECB Corporate Sector Purchase Programme (CSPP mandate,

JEL Classification: [comma separated]K19,K29, K32, G28,

Suggested Citation

Dias Soares, Claudia, How an ECB self-imposed rule leads to the infringement of its mandate: The principle of market neutrality (February 2, 2021). Available at SSRN: https://ssrn.com/abstract=4222871 or http://dx.doi.org/10.2139/ssrn.4222871

Claudia Dias Soares (Contact Author)

ex-Portuguese Catholic University ( email )

Portugal

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