On June 9, 2025, Frank Elderson, a member of the Executive Board of the European Central Bank (ECB) and Vice-Chair of the Supervisory Board of the ECB, delivered a keynote speech at the Italian Constitutional Court in Rome, focusing on the critical importance of the rule of law in European central banking.

Elderson began by reflecting on his formative years as a law student, emphasizing the integral role of the rule of law in democracy and the protection of individual freedoms.

He posited that the rule of law is essential not only for legal scholars but also for central banks, asserting its significance in achieving economic prosperity and stability.

He cited research indicating that a robust rule of law correlates with sustained economic growth, highlighting a causal relationship between institutional strength and economic performance.

Elderson underscored that central banks operate more effectively within contexts of strong legal frameworks, facilitating better monetary policy decisions.

He elaborated on three main areas where the rule of law is foundational to the ECB's operations: the trust in money, the delivery of its mandates, and the independence of the central bank.

Elderson detailed how trust in currency is rooted in legal frameworks that validate money as a medium of exchange, a concept stemming from the necessity for public confidence in central banking authorities.

He pointed out that the forthcoming development of a digital euro encapsulates these principles by marrying advanced technology with a robust legal structure.

The ECB's mandate, according to Elderson, relies heavily on the stability provided by consistent and transparent legal rules, which are crucial for informed monetary policy.

He further elaborated on how the ECB's banking oversight functions depend on a comprehensive legal system that enables enforceable supervisory decisions.

Additionally, he made clear that the central bank's independence—shielded from political pressures—correlates directly with the effectiveness of its price stability mandate and overall public trust in monetary policy.

In discussing central bank responsibilities, Elderson made it evident that while the ECB cannot oversee the general conditions of the rule of law, it is bound to uphold legal principles and must respond to potential legal violations by other institutions.

He indicated that the ECB operates under the jurisdiction of the Court of Justice of the European Union (CJEU), reinforcing that its decisions are subject to judicial scrutiny, distinguishing it from many other central banks globally.

Lastly, Elderson concluded that the integrated nature of the European System of Central Banks (ESCB) underscores the significance of rule of law deficiencies at the national level, which could impede the functionalities of both the ECB and national central banks.

He reaffirmed that ensuring a robust legal framework is essential for maintaining the ECB's independence and its ability to accomplish its mandates surrounding price stability and financial integrity.