The ECB's secondary mandate requires it to support broader economic policies by and in the EU. How should the ECB deal with its many, potentially conflicting, objectives? To answer that question, this article combines normative and legal analysis with new archival sources, as well as analysis of ECB speeches and documents. A more important role for its secondary mandate fits well with the new, more political role of the ECB. However, the requirements that the legal text imposes on the ECB are paradoxical. While strictly binding, the secondary mandate is also highly indeterminate, and the ECB lacks the democratic legitimacy and legal competence to develop its own policies for pursuing the secondary objectives. To resolve this paradoxical situation, we propose that the specification of the ECB's secondary objectives should take place via high-level coordination with the political institutions of the EU.

This article analyses the new challenges the ECB faces in implementing its monetary policy and asks to what extent judicial review can help address these.The ECB mandate provides no clear guidance for many of the ECB’s recent challenges, which include a sovereign bond market panic, technical limits to the efficacy of its tools, and questions concerning the environmental impact of its operations. For this reason, the ECB’s decisions suffer from democratic authorization gaps; it makes choices with far-reaching consequences for which there is no clear basis in the mandate. In this context, courts can either opt to accept choices made by the ECB, as the ECJ has mostly done, or, as the Bundesverfassungsgericht decided to do, itself weigh in on monetary policy. Neither approach, we argue, can improve the tenuous democratic legitimacy of the ECB in the absence of proper democratic guidance. There are, however, ample ways the Member States and the EU’s political institutions can provide the ECB with guidance on how to deal with its new choices.

The ECB’s secondary mandate requires it to the support broader economic policies by and in the EU. Until recently absent from the ECB strategy, the secondary mandate features prominently in the ECB’s 2021 review of its monetary policy strategy. This report asks: How should the ECB interpret the many objectives that the secondary mandate mentions? And how should it act on them? A more prominent role for its secondary mandate fits well with the new, more political role of the ECB, but it should not act on the secondary mandate alone. Why is that? The requirements that the legal text imposes on the ECB are paradoxical and difficult to reconcile. We explain the paradox in terms of three features. Firstly, the secondary mandate is binding on the ECB so that it must support the EU’s economic policies where this is possible without prejudice to price stability. However and secondly, the secondary mandate is also highly indeterminate because there are many relevant secondary objectives and ways to support them. Acting on the secondary mandate requires prioritising objectives and designing new instruments. Yet, thirdly, the ECB lacks the competence to develop its own policies to pursue the secondary objectives. For the ECB to simply choose its own secondary objectives and act on them raises severe legal and democratic objections. To resolve this paradoxical situation, we propose that the specification of the secondary objectives should take place via high-level coordination with the political institutions of the EU. Unlike direct instructions which are illegal under EU law, coordination would be compatible with central bank independence and strengthen the ECB’s ability to pursue price stability. We propose three main avenues to give shape to such interinstitutional coordination.

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This article analyses the new challenges that the ECB faces in implementing its monetary policy and asks to what extent judicial review can help address these. The ECB mandate provides no clear guidance for many of the ECB’s recent challenges, which include a sovereign bond market panic, technical limits to the efficacy of its tools, and questions concerning the environmental impact of its operations. For this reason, the ECB’s decisions suffer from democratic authorization gaps; it makes choices with far-reaching consequences for which there is no clear basis in the mandate. In this context, courts can either opt to accept choices made by the ECB, as the ECJ has mostly done, or, as the Bundesverfassungsgericht decided to do, itself weigh in on monetary policy. Neither approach, we argue, can improve the tenuous democratic legitimacy of the ECB in the absence of proper democratic guidance. There are, however, other ways the Member States and the EU’s political institutions can provide the ECB with guidance on how to deal with its new choices.