Legal Certainty and Central Bank Autonomy in Latin American Emerging Markets

289 Pages·5.152 MB·English

by  Andrea Lucia Tapia-Hoffmann

EYIEL Monographs
Studies in European and International Economic Law 15
Andrea Lucia Tapia-Hoffmann
Legal Certainty
and Central Bank
Autonomy in
Latin American
Emerging Markets
European Yearbook of International Economic Law
EYIEL Monographs - Studies in European
and International Economic Law
Volume 15
SeriesEditors
MarcBungenberg,Saarbrücken,Germany
ChristophHerrmann,Passau,Germany
MarkusKrajewski,Erlangen,Germany
JörgPhilippTerhechte,Lüneburg,Germany
AndreasR.Ziegler,Lausanne,Switzerland
EYIEL Monographs is a subseries of the European Yearbook of International
EconomicLaw(EYIEL). It contains scholarly worksinthe fields ofEuropeanand
international economic law, in particular WTO law, international investment law,
internationalmonetarylaw,lawofregionaleconomicintegration,externaltradelaw
oftheEUandEUinternalmarketlaw.Theseriesdoesnotincludeeditedvolumes.
EYIELMonographsarepeer-reviewedbytheserieseditorsandexternalreviewers.
Moreinformationaboutthissubseriesathttp://www.springer.com/series/15744
Andrea Lucia Tapia-Hoffmann
Legal Certainty and Central
Bank Autonomy in Latin
American Emerging Markets
AndreaLuciaTapia-Hoffmann
MartinLutherUniversityHalle-Wittenberg
Halle(Saale),Germany
ISSN 2364-8392 ISSN 2364-8406 (electronic)
EuropeanYearbookofInternationalEconomicLaw
ISSN2524-6658 ISSN2524-6666 (electronic)
EYIELMonographs-StudiesinEuropeanandInternationalEconomicLaw
ISBN978-3-030-70985-3 ISBN978-3-030-70986-0 (eBook)
https://doi.org/10.1007/978-3-030-70986-0
Dissertation zur Erlangung des Grades eines Doktors der Rechte (Dr. iur.) der Juristischen und
WirtschaftswissenschaftlichenFakultätderMartin-Luther-UniversitätHalle-Wittenberg
Vorgelegtvon:AndreaLuciaTapia-Hoffmann,Leipzig
Erstgutachter:Prof.Dr.ChristianTietje,LL.M.
Zweitgutachter:Prof.Dr.MatthiasLehmann,D.E.A.,LL.M.,J.S.D.
TagderöffentlichenVerteidigung:15.Oktober2019,HalleanderSaale
©TheEditor(s)(ifapplicable)andTheAuthor(s),underexclusivelicensetoSpringerNatureSwitzerland
AG2021
Thisworkissubjecttocopyright.AllrightsaresolelyandexclusivelylicensedbythePublisher,whether
thewholeorpartofthematerialisconcerned,specificallytherightsoftranslation,reprinting,reuseof
illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and
transmission or information storage and retrieval, electronic adaptation, computer software, or by
similarordissimilarmethodologynowknownorhereafterdeveloped.
Theuseofgeneraldescriptivenames,registerednames,trademarks,servicemarks,etc.inthispublication
doesnotimply,evenintheabsenceofaspecificstatement,thatsuchnamesareexemptfromtherelevant
protectivelawsandregulationsandthereforefreeforgeneraluse.
The publisher, the authors, and the editorsare safeto assume that the adviceand informationin this
bookarebelievedtobetrueandaccurateatthedateofpublication.Neitherthepublishernortheauthorsor
theeditorsgiveawarranty,expressedorimplied,withrespecttothematerialcontainedhereinorforany
errorsoromissionsthatmayhavebeenmade.Thepublisherremainsneutralwithregardtojurisdictional
claimsinpublishedmapsandinstitutionalaffiliations.
ThisSpringerimprintispublishedbytheregisteredcompanySpringerNatureSwitzerlandAG.
Theregisteredcompanyaddressis:Gewerbestrasse11,6330Cham,Switzerland
To my family
Acknowledgments
Thisbookbenefitedfromcommentsofmanycolleagues,friends,andprofessionals.
First and foremost, I am thankful for the support of Prof. Christian Tietje. He is a
wonderful teacher and great academic guide. I am also thankful to Prof. Matthias
Lehmannforimportantdiscussionsandcommentsonthisproject,especiallywhenI
gotstarted,aswellasmyformercolleaguesJuliaSchaarschmidtandLinaLorenzoni
fortheirfriendshipandsupport.
IamgratefultoProf.RichardEpstein,NYULaw,andProf.MarioRizzo,NYU
Economics, for being great hosts during my research stay at the Classical Liberal
InstituteatNYULaw.IamthankfultoProf.AaronSimowitz,fellowattheClassical
Liberal Institute, as well as many others for discussing my research and providing
hintsonhowtomoveforward.
Further,IthankCarlosGustavoCano,formerboardmemberoftheBankofthe
RepublicofColombia,andAlbertoBoadaOrtiz,generalsecretaryoftheboard,for
their hospitality during my research visit at the bank and the many insights they
provided.
ix
Contents
1 Introduction. . . . .. . . .. . . . .. . . .. . . . .. . . .. . . .. . . . .. . . .. . . 1
1.1 MonetaryStabilityinLatinAmerica. . . . . . . . . . . . . . . . . . . . . . 1
1.2 Outline. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2 LegalCertainty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 ThePrincipleofLegalCertaintyandtheRuleofLaw. . . . . . . . . 7
2.2.1 TheRuleofLawandtheLaw. . . . . . . . . . . . . . . . . . . . . 7
2.2.1.1 ObjectivesoftheRuleofLaw. . . . . . . . . . . . . . 9
2.2.1.2 TheStateandtheLaw. . . . . . . . . . . . . . . . . . . 10
2.2.1.3 TheProblemsoftheEstadodeDerechoinLatin
America. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.2.2 LegalCertaintyandtheRuleofLaw. . . . . . . . . . . . . . . . 14
2.2.2.1 UnderstandingLegalCertainty. . . . . . . . . . . . . 14
2.2.2.2 LegalCertaintyinLatinAmericanLaw. . . . . . . 15
2.2.2.3 ABriefNoteonLegalRulesVersus
Principles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.3 NotionsofLegalCertainty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.3.1 FormalLegalCertainty. . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.3.1.1 DefinitionandImportance. . . . . . . . . . . . . . . . . 19
2.3.1.2 FormalLegalCertaintyandLawMaking. . . . . . 19
2.3.1.3 Characteristics. . . . . . . . . . . . . . . . . . . . . . . . . 20
2.3.2 SubstantiveLegalCertainty. . . .. . . . . . . .. . . . . . . .. . . 22
2.3.2.1 DefinitionandImportance. . . . . . . . . . . . . . . . . 22
2.3.2.2 SubstantiveLegalCertaintyandLaw
Applying. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.3.2.3 AccessibilityoftheLegalRulesandLaw
Finding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.3.3 SubjectiveLegalCertainty. . . . . . . . . . . . . . . . . . . . . . . 29
xi
xii Contents
2.4 LegalCertaintyandOtherPrinciplesofLaw. . . . . . . . . . . . . . . . 31
2.4.1 LegalCertaintyandthePrincipleofNon-Retroactivity. . . 31
2.4.2 LegalCertaintyandtheProtectionofLegitimate
Expectations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.5 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
LegalReferences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3 LegalCertaintyandLegalCommitmentMechanisms. . . . . . . . . . . 45
3.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.2 LegalFrameworkandCommitments. . . . . . . . . . . . . . . . . . . . . 46
3.2.1 LegalRulesandInstitutions. . . . . . . . . . . . . . . . . . . . . . 46
3.2.2 LegalCommitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
3.3 LegalCertaintyandtheCostsofModifyingLegalCommitment
Devices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
3.3.1 InternationalAgreements. . . . . . . . . . . . . . . . . . . . . . . . 51
3.3.2 TheConstitutionasaCommitmentDevice. . . . . . . . . . . . 55
3.3.2.1 TheRoleoftheConstitution. . . . . . . . . . . . . . . 55
3.3.2.2 ObjectiveLegalCertaintyandtheConstitution:
ConsistencyoftheLegalFrameworkandthe
NeedforStability. . . . . . . . . . . . . . . . . . . . . . . 57
3.3.2.3 TheProblemofSubjectiveLegalCertainty
inLatinAmerica:LackofEntrenchmentofthe
Constitution. . . . . . . . . . . . . . . . . . . . . . . . . . . 58
3.3.3 TheImplicationsofProceduresinLawMaking:Organic
Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
3.3.4 DistributionofPowerandDelegation. . . . . . . . . . . . . . . 64
3.4 AnAnalysisofProceduralDifferencesinLawCreationand
Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
3.4.1 ProceduralDifferencesWithinEachLegalFramework. . . 69
3.4.1.1 Argentina. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
3.4.1.2 Brazil. . . . .. . . . . . . .. . . . . . . .. . . . . . . .. . . 71
3.4.1.3 Chile. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
3.4.1.4 Peru. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
3.4.1.5 Mexico. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
3.4.1.6 Colombia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
3.4.2 ProceduralDifferencesBetweenLegalFrameworks. . . . . 81
3.5 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
LegalReferences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
4 CentralBankObjectivesandAutonomy. . . . . . . . . . . . . . . . . . . . . 89
4.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
4.2 InflationasaCentralBankObjectiveandtheNeedfor
Autonomy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
4.2.1 InflationandItsCosts. . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Contents xiii
4.2.1.1 MoneyandInflation. . . . . . . . . . . . . . . . . . . . . 90
4.2.1.2 CostsofInflationandInflationVariability. . . . . 92
4.2.2 LegalReasonstoProtectMonetaryStability.. . . .. . . .. . 93
4.2.2.1 MonetaryInstabilityandContracts. . . . . . . . . . . 93
4.2.2.2 PropertyRightsPerspective. . . . . . . . . . . . . . . . 94
4.2.2.3 InflationandtheRighttoLivewithDignity. . . . 95
4.2.3 TheGovernment’sProblemsinAchievingMonetary
Stability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
4.2.3.1 KnowledgeProblems. . . . . . . . . . . . . . . . . . . . 97
4.2.3.2 Mal-incentivesandCommitmentProblems. . . . . 97
4.2.3.3 DelegationofMonetaryPolicytoan
AutonomousInstitution. . . . . . . . . . . . . . . . . . . 99
4.3 LegalCertaintyandCentralBankObjectivesinLatinAmerica. . . 101
4.3.1 ClarityoftheLegalObjectives. . . . . . . . . . . . . . . . . . . . 101
4.3.2 ConsistencyoftheLegalObjectives. . . . . . . . . . . . . . . . 105
4.3.3 StabilityofLegalObjectives. . . . . . . . . . . . . . . . . . . . . . 111
4.4 LegalRankofCentralBankAutonomyandLegalCertainty. . . . 112
4.4.1 ImplicationsoftheConstitutionalRankforLegal
Certainty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
4.4.2 LegalAutarchiesandLegalCertainty. . . . . . . . . . . . . . . 116
4.5 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
LegalReferences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
5 CentralBankStatutesandAutonomy. . . . . . . . . . . . . . . . . . . . . . . 129
5.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
5.2 PersonalAutonomyandFinancialAutonomy. . . . . . . . . . . . . . . 130
5.2.1 PersonalAutonomy. . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
5.2.1.1 CompositionoftheCentralBankBoards. . . . . . 130
5.2.1.2 AppointmentoftheBoardMembers. . . . . . . . . 131
5.2.1.3 TenureandRenewalofBoardMembers. . . . . . . 133
5.2.1.4 HeadsoftheCentralBankBoards. . . . . . . . . . . 135
5.2.1.5 ConfidentialityoftheOpinionsofBoard
Members. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
5.2.1.6 ProfessionalProfileofBoardMembers. . . . . . . 138
5.2.1.7 ForbiddenandAllowedActivities. . . . . . . . . . . 140
5.2.2 FinancialAutonomy. . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
5.2.2.1 GovernmentFinancing. . . . . . . . . . . . . . . . . . . 142
5.2.2.2 DealingwithProfitsandLosses. . . . . . . . . . . . . 146
5.2.2.3 BoardControlOverBudgetandSalaries. . . . . . 147
5.3 Accountability. . .. . . .. . . .. . . .. . . .. . . . .. . . .. . . .. . . .. . 149
5.3.1 AutonomyVersusAccountability. . . . . . . . . . . . . . . . . . 149
5.3.2 Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
5.3.3 Dismissal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
5.3.4 TransparencyandPublicScrutiny. . . . . . . . . . . . . . . . . . 159