Thursday, 30 October 2008

European Central Bank Ih: Complementary ECB legislation

The European Central Bank (ECB) is operationally independent, within the limits of the treaty and the statute, but especially in matters concerning the member states, the national central banks or outside operators, certain additional parameters are subject to outside political control, with the Council as decision-maker.

We look at the system for complementary ECB legislation.

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Article 107(6) of the Treaty establishing the European Community (TEC), in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/88, provides the legal base for certain provisions referred to in the ESCB Statute:

Article 107(6) TEC

6. The Council, acting by a qualified majority either on a proposal from the Commission and after consulting the European Parliament and the ECB or on a recommendation from the ECB and after consulting the European Parliament and the Commission, shall adopt the provisions referred to in Articles 4, 5.4, 19.2, 20, 28.1, 29.2, 30.4 and 34.3 of the Statute of the ESCB.

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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) contains the Articles referred to.

Article 4 ESCB Statute concerns the mandatory consultation of the European Central Bank on any proposed Community act in its fields of competence and by national authorities regarding any draft legislative provision in its fields of competence.

Article 42 ESCB Statute gave the Council an obligation to act:
Article 42 ESCB Statute
Complementary legislation

In accordance with Article 107(6) of this Treaty, immediately after the decision on the date for the beginning of the third stage, the Council, acting by a qualified majority either on a proposal from the Commission and after consulting the European Parliament and the ECB or on a recommendation from the ECB and after consulting the European Parliament and the Commission, shall adopt the provisions referred to in Articles 4, 5.4, 19.2, 20, 28.1, 29.2, 30.4 and 34.3 of this Statute.

Pursuant to ESCB Statute Article 5.4, the Council, in accordance with the procedure laid down in Article 42, shall define the natural and legal persons subject to reporting requirements, the confidentiality regime and the appropriate provisions for enforcement.

According to ESCB Statute Article 19.2 the Council shall, in accordance with the procedure laid down in Article 42, define the basis for minimum reserves and the maximum permissible ratios between those reserves and their basis, as well as the appropriate sanctions in cases of noncompliance.

Article 20 ESCB Statute gives the ECB Governing Council the right to decide, by a majority of two thirds of the votes cast, upon the use of such other operational methods of monetary control as it sees fit, but within the scope of such methods defined by the Council, if they impose obligations on third parties.


Article 28.1 ESCB Statute concerns the capital of the ECB. Initially it was set at ECU (later euro) 5 000 million, but subject to later increases by such amounts as may be decided by the
Governing Council acting by the qualified majority provided for in Article 10.3, within the limits
and under the conditions set by the Council under the procedure laid down in Article 42.

ESCB Statute Article 29.2 regards the statistical data used to determine the ECB capital key subscription. The data shall be provided by the Commission in accordance with the rules adopted by the Council under the procedure provided for in Article 42.


Article 30.4 ESCB Statute provides for the possible transfer of additional foreign reserve assets from national central banks to the European Central Bank, within the limits and under the conditions set by the Council in accordance with the procedure laid down in Article 42.



Article 34.3 ESCB Statute provides for the Council to set the limits and the conditions of the fines and periodic penalty payments the ECB is entitled to impose on undertakings for failure to comply with obligations under its regulations and decisions.

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At this stage, I leave it to the interested reader to look for the concrete Council Decisions and Regulations implementing ESCB Statute Article 42.


Ralf Grahn