What does the EU Lisbon Treaty say about the objectives and the basic tasks of the European System of Central Banks (ESCB) and the European Central Bank (ECB)?
Would the Treaty of Lisbon be more likely to prevent financial meltdown by instituting banking supervision at European level, under the auspices of the European Central Banks?
Are the national supervisory structures appropriate for global and European financial institutions?
We start by looking at the contents of the Treaty of Lisbon.
The current Treaty establishing the European Community (TEC) was ─ perhaps still is destined ─ to become the Treaty on the Functioning of the European Union (TFEU), and generally the so called innovations as agreed in the 2004 IGC were to be inserted into the Treaty by way of specific modifications ‘in the usual manner’ (points 17 and 18, pages 6 and 7).
I found nothing specific in the mandate of the intergovernmental conference (IGC 2007 Mandate, Council document 11218/07, 26 June 2007) about Article 105 TEC.
In Article 2, point 91 of the original Treaty of Lisbon (ToL) the IGC 2007 agreed on the following concerning Article 105 TEC (OJ 17.12.2007 C 306/72):
91) Article 105 shall be amended as follows:
(a) in the first sentence of paragraph 1, ‘ESCB’ shall be replaced by ‘European System of Central Banks, hereinafter referred to as “ESCB”,’;
(b) in the second indent of paragraph 2, the reference to Article 111 shall be replaced by a reference to Article 188 O;
(c) The text of paragraph 6 shall be replaced by the following:
‘6. The Council, acting by means of regulations in accordance with a special legislative procedure, may unanimously, and after consulting the European Parliament and the European Central Bank, confer specific tasks upon the European Central Bank concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings.’.
The TFEU table of equivalences confirms that Article 105 TFEU (ToL) in the original Treaty of Lisbon was to be renumbered Article 127 TFEU in the consolidated version, under the title ‘Economic and monetary policy’, renumbered Title VIII (OJ 17.12.2007 C 306/211─212).
(In the consolidated version of the Lisbon Treaty, OJ 9.5.2008 C 115, the Tables of equivalences start on page 361, but the ToL numbers have been omitted.)
Consolidated Lisbon Treaty
Article 127 of the Treaty on the Functioning of the European Union (TFEU) is found in the consolidated versions of the Treaty on European Union and the Treaty on the Functioning of the European Union, published in the Official Journal of the European Union, OJ 9.5.2008 C 115/102─103:
Part Three Union policies and internal actions
Title VIII Economic and monetary policy
Chapter 2 Monetary policy
Article 127 Lisbon Treaty
(ex Article 105 TEC)
1. The primary objective of the European System of Central Banks (hereinafter referred to as ‘the ESCB’) shall be to maintain price stability. Without prejudice to the objective of price stability, the ESCB shall support the general economic policies in the Union with a view to contributing to the achievement of the objectives of the Union as laid down in Article 3 of the Treaty on European Union. The ESCB shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources, and in compliance with the principles set out in Article 119.
2. The basic tasks to be carried out through the ESCB shall be:
— to define and implement the monetary policy of the Union,
— to conduct foreign-exchange operations consistent with the provisions of Article 219,
— to hold and manage the official foreign reserves of the Member States,
— to promote the smooth operation of payment systems.
3. The third indent of paragraph 2 shall be without prejudice to the holding and management by the governments of Member States of foreign-exchange working balances.
4. The European Central Bank shall be consulted:
— on any proposed Union act in its fields of competence,
— by national authorities regarding any draft legislative provision in its fields of competence, but within the limits and under the conditions set out by the Council in accordance with the procedure laid down in Article 129(4).
The European Central Bank may submit opinions to the appropriate Union institutions, bodies, offices or agencies or to national authorities on matters in its fields of competence.
5. The ESCB shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system.
6. The Council, acting by means of regulations in accordance with a special legislative procedure, may unanimously, and after consulting the European Parliament and the European Central Bank, confer specific tasks upon the European Central Bank concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings.
The following post is going to compare Article 127 TFEU with the current TEC, the draft Constitution and the Constitution, and then take a look at some legislative materials and comments.