As I explained earlier, entrusting the ECB with the authority to make monetary policy decisions is not considered to give rise to legitimacy concerns because the ECB’s very clearly defined mandate in this area allows the public to hold it accountable for the performance of its tasks. In other words, the clear Treaty mandate of the ECB to maintain price stability, which has been quantified since the very beginning,[36] provides the citizens of the Union with a benchmark against which to judge whether this mandate has been fulfilled. Unlike the objective of the monetary policy, however, the objectives of the ECB’s supervisory tasks, as defined in the SSM Regulation, are diverse and multifaceted; and they are also not quantifiable. [37] For this reason, it is necessary for the tradeoffs and judgement calls concerning these objectives to be subject to a greater degree of scrutiny by democratically elected institutions, or sometimes to a degree of control by democratically elected institutions. In view of the multiple objectives of banking supervision that at times might even conflict with the ECB’s primary objective of maintaining price stability, it would not be justifiable to extend the independence under Article 130 of the Treaty to the ECB as supervisor. Let me emphasise at this point that I do not question the necessity for banking or financial supervisors to be operationally independent from undue political, commercial banking or other third party influences.

While the business cycle relates to real GDP fluctuations, the financial cycle considers the evolution of variables such as credit developments and house prices. Empirical analysis suggests that the financial cycle typically lasts longer than the business cycle. [56] De-synchronisation does not mean that business and financial cycles are uncorrelated. It simply means, for instance, that significant risks and imbalances can gradually build up in the financial system even in periods of low inflation and low output volatility. This is what happened during the “Great Moderation”, before the recent financial crisis surfaced. Such a de-synchronisation between the financial and business cycles suggests that, if monetary policy seeks to stabilise the financial cycle, it may take actions which are detrimental to its primary objective of achieving price stability. In addition, seeking to mitigate financial risks by changing monetary policy rates may produce inefficient outcomes. The reason is that variations in policy rates typically influence all sectors of an economy and may therefore be too broad and too blunt a tool http://www.ecb.europa.eu/press/key/date/2017/html/sp170330.en.html[03.04.2017 15:53:14]  Central bank independence revisited  to address sector-specific financial imbalances, such as in real estate. Second, to achieve simultaneously price stability and financial stability, is it necessary to have two independent policy domains, each endowed with separate goals and instruments? While monetary policy would aim to guarantee price stability, macroprudential policy aims to ensure financial stability. In particular, within the euro area, as Member States often have heterogeneous business and financial cycles, macroprudential instruments have the advantage that they can target countryspecific imbalances.