22. 12. 2020 testimony by the governor of the banco de espana before the audit committee on democratic quality, the fight against corruption, and institutional and legal reforms congress of deputies pablo hernandez de cos governor ladies and gentlemen, i appreciate your request that i should appear before this audit committee on democratic quality, the fight against corruption, and institutional and legal reforms to address the question of the impartiality and autonomy of independent economic authorities. allow me to take as a starting point for my address the importance the economic literature has attributed in recent decades to the quality of institutions, as a linchpin of economic development and growth. as part of this broad notion of the quality of institutions, independent agencies – over which governments have no controlling or management powers – are particularly important for achieving certain goals. indeed, in some areas of the economy independent institutions have a long - standing tradition in market economies and are a basic pillar of their institutional structure. the rationale behind such institutions lies in considerations of general interest, with the conviction that independence allows a greater benefit to be had for society than that which would be attained were powers assumed directly by political authorities. independent agencies acquire this status by decision of the maximum political authorities of the state ( parliaments ), and are given a remit in specific decision - making areas ( for instance, monetary policy for central banks ) and a legal framework to decide and act independently in the matters under their purview. the public interest objective underlying the status of independence leads me to view it as a value that should be preserved and strengthened, for the benefit of properly fulfilling the mission with which the agency has been entrusted and, thereby, of greater social well - being. in any event, independence should be accompanied by guarantees as to the professional competence and personal integrity of the members of the independent body, especially its senior officials, and as to the controls to which it is subject and its accountability. to attain these guarantees, controls and accountability, action must be taken on selection, appointment and dismissal procedures for individuals in management and governance positions in the independent body, on the transparency of conduct and results, and on the governance of the institution. i shall commence by reviewing the arguments that justify the independence of economic authorities and supervisors. i shall then address the elements that give shape to an institution ’ s formal independence, and their specific configuration in the case of the banco de espana. thirdly, i shall offer my thoughts on the status of independence as a necessary, but insufficient, condition

of the governing council ( gov c ), the supervisory board ( sb ), the executive board ( exb ), the steering committee, the mediation panel 2 years 2 years private banks that have been subject to their supervision or regulation 1 year ( extendable to 2 in the case of direct involvement in supervision ) significant or less significant credit institutions 6 months 1 year members of the exb and the gov c ecb code of conduct for high - level ecb officials ( 2019 / c 89 / 03 ) gov c and sb alternates 6 months 6 months ( extendable to 12 in the case of direct involvement in supervision ) 3 months 6 months gov c alternates 3 months ec code of conduct for the members of the european commission ( 2018 / c 65 / 06 ) professional activities related to credit institutions, specialised lending institutions and securities markets private banks affected by decisions in which they have participated with their vote in the case of governing council members, the prohibition extends to any private entity subject to regulation or supervision by the banco de espana, including spanish banks within the remit of the ssm relative prohibition : banks directly related to the duties of the office held ( i. e. 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 espana 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 annex 4 – governor