As regards the tasks allocated to the Commission and the ECB by the ESM Treaty, these are in line with the various tasks which the Treaties confer on these Union institutions. In the specific case of the ECB, by virtue of its duties under the ESM Treaty, the ECB supports the general economic policies of the Union, in accordance with Articles 127(1) and 282(2) of the Treaty. This approach was confirmed by the General Court in its  http://www.ecb.europa.eu/press/key/date/2017/html/sp170330.en.html[03.04.2017 15:53:14]  Central bank independence revisited  Ledra[48] judgment. The role of the Commission, in liaison with the ECB, was finally mirrored in Union legislation strengthening economic governance in relation to euro area Member States under a financial assistance programme of the ESFS/ESM. [49] This brings me to the conclusion that the ECB has no decisionmaking powers of its own in the context of its liaising role in the ESM/EFSF programmes, but is acting essentially as a technical advisor to the ESM/EFSF. Therefore, the protection provided to the ECB by the requirement of central bank independence in the Treaty is simply not relevant in this field, as the ECB does not adopt any decisions and does not have its own instruments for the implementation of decisions. This is without prejudice to the financial independence of the ECB because if the ECB did not have sufficient financial and human resources to perform its technical advisory tasks, this might undermine its ability to perform its tasks under the Treaty.

In particular, it features a flexible and shock-dependent medium-term horizon, meaning that monetary policy does not  http://www.ecb.europa.eu/press/key/date/2017/html/sp170330.en.html[03.04.2017 15:53:14]  Central bank independence revisited  automatically respond to shocks, unless there is a risk of these shocks becoming embedded in inflation expectations. And it also features a monetary pillar. Under this pillar, trends in credit markets are monitored, and factored into policy decisions, even when inflation has not moved. [57] As a built-in feature, this ensures a certain leaning-againstthe-wind attitude in policymaking. However, although the ECB’s two-pillar monetary policy strategy incorporates financial stability considerations, macroprudential policy cannot seek to impose its needs on the monetary pillar. Against this background, one may wonder why microprudential supervision was not considered sufficient to address financial stability issues. One reason is that microprudential supervision is aimed at ensuring the soundness of individual financial institutions by mitigating their vulnerability to idiosyncratic risks. However, setting up a regulatory framework which guarantees the soundness of individual banks does not automatically ensure the soundness of the financial system as a whole. Financial institutions’ inter-connectedness contributes to generating systemic risk, even when such institutions, taken in isolation, seem sound. Moreover, since financial institutions tend to engage in similar investment strategies both in upturns and downturns of the financial cycle, over time common exposures to similar sets of risks can create financial imbalances or credit disruptions, leading to pro-cyclicality. When a shock surfaces, interconnections may contribute to amplifying expansionary and contractionary phases of the financial cycle.