ABSTRACT
The Corporate Sector Purchase Programme (CSPP) portfolio has a carbon bias. Members of the Governing Council of the ECB have defended the composition of the CSPP portfolio by pointing to the need to respect the principle of market neutrality, which, they argue, operationalizes the ‘principle of an open market economy with free competition’ laid down in article 127(1) Treaty on the Functioning of the E.U. The legal nature of this latter principle is open to interpretation: the Treaty does not define its content, and the case law of the Court of Justice of the E.U. is scant. This chapter explores the different elements that comprise the principle and examines its legal nature. The main argument is that the principle has a directive nature. It then explores the implications of this characterization for the controversial CSPP, including an evaluation of the recent proposal by Ms Isabel Schnabel, a member of the Executive Board of the ECB, to adopt market efficiency as an alternative approach to market neutrality in the design and implementation of monetary policy. It concludes with a brief reflection on the programmatic role that law in general, and constitutions in particular, play in financial systems.
