Legal Certainty and Central Bank Autonomy in Latin American Emerging Markets

This book provides a comparative analysis of the legal frameworks of six Latin American central banks to determine whether there is legal certainty regarding central bank autonomy. It examines three key areas: a constitutional analysis, a detailed study of the central bank, and a study of underexplored threats to central bank autonomy. It suggests that there are serious doubts about the ability of Latin American central banks to maintain price stability over time due to a lack of clarity, inconsistencies, or generous exceptions in the law.

Format: Paperback / softback
Length: 273 pages
Publication date: 30 April 2022
Publisher: Springer Nature Switzerland AG

This book delves into a comprehensive comparative analysis of the legal frameworks of six Latin American central banks, aiming to assess the level of legal certainty surrounding central bank autonomy. Through this analysis, it seeks to determine whether the design of legal institutions, particularly those governing central bank autonomy, offers reasons to believe that central banks can effectively manage inflation, even in the face of fiscal challenges or conflicting government objectives.

The study encompasses three key areas: a constitutional analysis, a detailed examination of the central bank itself
and a comprehensive study of various underexplored threats to central bank autonomy. By defining and categorizing different types of legal certainty and establishing their relationship with the credibility of government promises, the author proceeds to explore the legal grounds. The author then examines the grounds that the law provides for confidence in the independence of central banks, particularly in the context of political influence.

The second part of the book focuses on a granular analysis of the legal design of central bank objectives and autonomy. This section delves into the legal frameworks and mechanisms that govern the central bank's operations, including its mandate, powers, and independence. It also examines the legal safeguards. The third part features two case studies that represent little-known and unusual institutional threats to legal certainty relating to central bank autonomy. These case studies highlight interventions by the Constitutional Court of Colombia in the autonomy of the Colombian central bank and the interventions of the Argentinean executive and legislative branches in the autonomy of Argentina's central bank through stabilization plans introduced via emergency laws and decrees.

In conclusion, the book suggests that there are serious doubts about the ability of Latin American central banks to maintain price stability over time. Although central banks have been granted a degree of autonomy, authorities in Latin American countries are able to exert significant influence over them. The book calls for a reassessment of the legal frameworks and mechanisms that govern central bank autonomy, with a particular focus on ensuring that they are robust enough to withstand political pressures and other external threats. It also emphasizes the importance of transparency, accountability, and independence in central bank operations to maintain public trust and confidence in the financial system.

Weight: 462g
Dimension: 235 x 155 (mm)
ISBN-13: 9783030709884
Edition number: 1st ed. 2021