More recently, central bank independence has become a topical issue not only in

Western Europe ( in the context of the European Central Bank), but also in the

transition countries of Central and Eastern Europe, where institution building, in

particular in connection with financial sector reform, has emerged as a crucial

element of the transformation process. The establishment of a two – tier banking

system with an independent central bank whose main tasks are clearly specified

is of critical importance for successful stabilization policies and constitutes, at the

same time, an indispensable prerequisite for a functioning market economy.
 

This chapter surveys legal arrangements of central banks in the following ten

Central and Eastern European transition countries: Bulgaria, the Czech Republic,

Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia.
 

All of these countries under consideration have already concluded an

Association Agreement with the European Union. As every country examined in

this chapter strives for eventual EU membership, the harmonization of legal

standards, e.g. in the field of central banking, is important, particularly in the

context of conforming to the Maastricht Treaty.

I focus on institutional issues of central banking and make a cross – country

comparison of central bank legislation in the following areas: legal status of these

countries, political and functional independence and democratic legitimacy and

accountability.
 

Since the beginning of the political and economic opening – up of Central and

Eastern Europe, much has been accomplished by the countries under

consideration. Since 1989, all countries studied have adopted new central bank

laws – the timing being dependent on the countries particular political setting –

the monobank-system has been broken up and financial markets have been

developing.