Cases in point, to name a few, are the defence of competition and the regulation of specific industries, such as energy and telecommunications (under the responsibility of the National Markets and Competition Commission – CNMC – in Spain), the auditing of public sector accounts and economic management (carried out by the Spanish Court of Auditors) and, a more recent development, effective compliance by the general government sector with the principle of budgetary stability (the preserve of the Independent Authority for Fiscal Responsibility, AIRef). As I stated, the ultimate aim of assigning these functions to independent agencies is to obtain an institutional design that ensures a greater level of collective well-being. In this respect, allow me to begin by recalling the main reason why the control of inflation was assigned to independent monetary authorities in a large number of economies. The argument is what the economic literature calls “time inconsistency”, which highlights the role of expectations in agents’ behaviour. I believe price stability unquestionably enhances economic growth and improves well-being in the long run. However, if the monetary authority is not independent and, having regard to other more short-term goals, uses monetary policy to stimulate demand repeatedly and above what would be consistent with its inflation objective, an inflationary bias is generated. In the short run higher levels of economic activity and employment can be attained, but the costs emerge later. The inflationary bias is ultimately anticipated and incorporated into agents’ expectations and, therefore, into price-setting and wage bargaining.

where DirectorsGeneral, the governing bodies at the proposal of Directors-General or persons responsible for their subsidiary bodies, by delegation or substitution, have made or informed decisions in connection with those banks) Absolute prohibition: banks supervised by the Banco de España or in their economic group, and banks or associations representing the collective interests of the former Private banks, or banks in the same group, affected by decisions in which they have participated  President  3 years  Members  2 years  Any other financial institution, and any entity engaged in lobbying in relation to the ECB, or consultancy and/or advocacy for the ECB, or for financial institutions Counterparties to the Eurosystem in monetary policy or foreign exchange operations Payment or settlement system operators, central counterparties and providers of payment instruments subject to ECB oversight  Significant or less significant credit institutions  Any other financial institution and any entity engaged in lobbying in relation to the ECB, or consultancy and/or advocacy for the ECB, or for financial institutions Counterparties to the Eurosystem in monetary policy or foreign exchange operations Payment or settlement system operators, central counterparties and providers of payment instruments subject to ECB oversight Lobbying its members or staff in connection with matters for which they were responsible within their portfolio Lobbying its members or staff in connection with matters for which they were responsible within their portfolio 10  ANNEX 4 – Governor mandates in European countries: terms of office and renewability Term of office, assuming one renewal,  NCB  Governor’s term of office  Renewable  BE  5 years  YES  10 years  DE  8 years  YES  16 years  EE  7 years  YES  14 years  IE  7 years  YES  14 years  GR  6 years  YES  12 years  ES  6 years  Non-renewable  6 years  FR  6 years  YES (once)  12 years  IT  6 years  YES (once)  12 years  CY  5 years  YES  10 years  LT  5 years  YES (unlimited)  10 years  LV  6 years  YES (unlimited)  12 years  LU  6 years  YES  12 years  MT  5 years  YES  10 years  NL  7 years  YES  14 years  AT  6 years  YES  12 years  PT  5 years  YES (once)  10 years  SI  6 years  YES  12 years  SK  6 years  YES (once)  12 years  FI  7 years  YES  14 years  ECB  8 years  Non-renewable  8 years  UK  8 years  Non-renewable  8 years  if allowed  NOTE: The power to renew terms of office has not been used in SI, MT or CY, while it has been used at least once in DE, AT, BE, EE, SK, LV, LT, LU, FI, FR, GR, NL, IT and PT (and in IE prior to the existence of the Eurosystem).