The institutional politics of Central Bank Independence in France, Greece and the U.K.

This thesis analyses the politics of making central banks independent within the European Union. Unlike other studies that focus solely on the economics of the debate, this study also concentrates on the political aspects of the reform through an institutional approach. It examines the interaction of interests, institutions and ideas in the process of reforming one of the most essential organs in the process of economic policy-making. The research concerns the attempts of governments of three member-states of the European Union - France, Greece and the U.K. - which signed the same Treaty, but which nonetheless followed different paths in implementing Central Bank Independence (CBI). The thesis aims to explain the differences between the three cases about the considerations of CBI, the exact timing of introducing the reform and the particular models of independence chosen. This study suggests that there are three main variables which shaped and influenced why, when and how the three member-state governments implemented CBI in the 1990s. Those variables are the position of the country within the international political economy, the established rules and processes of political competition, and finally the traditional patterns of post distribution and democratic control. The first variable mainly explains the interest and attitude towards CBI, based on the standing and the status of each country in the European and the international politico-economic scene. The analysis of the case studies showed that the greater the exposure of an economy to global economic pressures and financial market flows, the more likely were its elites, in seeking monetary stability and credibility, to consider the idea of CBI and to bring it onto the political agenda. The second refers to the domestic politico-economic parameters which determine the stance of the main actors and account for the time and method of establishing CBI. The research revealed that the electoral cycle is particularly important. Newly elected governments, whether of the same party or not, attempt significant reforms early to show their difference, prove their effectiveness and minimize opposition. In all three cases CBI has been established by new governments which took advantage of the significant parliamentary majority they had and the 'grace period' they enjoyed during their first months. Finally, the third variable justifies the differences among the institutional characteristics between the models of CBI. Policy makers are bound by the prevailing arrangements of distributing public offices and the procedures for democratic control in each country and therefore adopt CBI appointment and accountability procedures which follow these traditional patterns