Wednesday, 29 October 2008

European Central Bank Ig: Amending ESCB Statute

Amending the treaties of the European Union is a laborious (some would say impossible) process in a union of 27. All the same, the member states have negotiated voluminous treaties and protocols in fine detail. This leads to recurring needs for amendments when policies evolve and circumstances change.

The member states have generally put themselves in the place of Tantalus: Constant hunger and thirst, but no satisfaction.

Well, not totally. The enabling clause (passerelle) has been introduced to make simplified amendments possible, in details here and there.

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Protocol (No 18) on the Statute of the European System of Central Banks and of the European Central Bank (annexed to the latest consolidated version of the current treaties, OJ 29.12.2006 C 321 E/256─280) is a treaty level document, in principle requiring the application of the rules for treaty amendment if something has to be changed.

Mercifully, the member states’ governments have agreed that some household rules can be tweaked without a full-scale intergovernmental conference and ratification in every EU member state.

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Article 107(5) of the Treaty establishing the European Community (TEC) offers an ‘amendment light’ procedure for changing parts of the ESCB Statute. This ‘passerelle’ type provision is limited to certain Articles, and four EU bodies are involved in each change, with the representatives of the member states (the Council) making the decision.

Here is paragraph 5 on the scope of simplified amendments (as in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/88):

Article 107(5) TEC


5. Articles 5.1, 5.2, 5.3, 17, 18, 19.1, 22, 23, 24, 26, 32.2, 32.3, 32.4, 32.6, 33.1(a) and 36 of the Statute of the ESCB may be amended by the Council, acting either by a qualified majority on a recommendation from the ECB and after consulting the Commission or unanimously on a proposal from the Commission and after consulting the ECB. In either case, the assent of the European Parliament shall be required.

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For some people, enabling clauses are one more devious example of power-creep by ‘Brussels’ (although the European Central Bank is located in Frankfurt am Main), so we have to take a closer look at how the TEC places our distinct heritages and age-old freedoms at risk. In other words, we have to turn to the ESCB Statute to see what the Articles cover.

Article 5.1: Collecting statistical information.

Article 5.2: National central banks gathering statistical information.

Article 5.3: ECB rules for the collection, compilation and distribution of statistics.

Article 17: The ECB and the national central banks have the authority to open accounts
for credit institutions, public entities and other market participants and accept assets, including
book entry securities, as collateral.

Article 18: The ECB and the national central banks carry out open market and credit operations according to general principles established by the ECB.

Article 19.1: The ECB can determine the minimum reserve accounts credit institutions and national central banks have to hold, and the ECB can levy penalty interest and impose sanctions in case of non-compliance.

Article 22: the ECB may make regulations to ensure efficient and sound clearing and payment systems.

Article 23: The ECB and the national central banks can establish international relations with central banks and financial institutions in other countries and, where appropriate, with international organisations, and they can conduct international banking operations.

Article 24: the ECB and national central banks may enter into operations for their administrative purposes or for their staff.

Article 26: On annual financial accounts of the ECB and a consolidated ESCB balance sheet.

Article 32.2: Guidelines for determining each national central bank’s annual monetary income from its assets.

Article 32.3: An alternative method for determining the national central bank’s monetary income.

Article 32.4: Deductions from the monetary income.

Article 32.6: Clearing and settlement of monetary income.

Article 33.1(a): Allocation of the net profit of the ECB.

Article 36: The Governing Council lays down the conditions of employment of the staff of the ECB, and the Court of Justice has jurisdiction in disputes.

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Most of the tasks listed above look necessary, if the ECB is to function as a central bank, so it is difficult to imagine the abolishment of (m)any powers. On the other hand, only a few of the Articles seem to leave any room for positive amendments, because the ECB appears to have the (necessary) power.

This leaves us puzzled.

Has the enabling clause for simplified amendments been written for (educational) reasons of principle or for fun?

Or are there concrete and practical reasons to anticipate amendments of the ESCB Statute?

I would be most pleased, if knowledgeable readers would care to comment.

Ralf Grahn