Thursday, 6 November 2008

European Central Bank: Regulatory powers

The European Central Bank needs legislative and decision-making powers in order to function as a central bank.


***


Current treaty

Article 110 (ex Article 108a) of the Treaty establishing the European Community (TEC) sets out the regulatory powers conferred upon the European Central Bank (ECB), i.e. to legislate and to decide in order to fulfil its tasks as the central bank, in principle for the European Union, but in practice for the Eurosystem (euro area).

Here is the text of Article 110 TEC, from the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/89:

Article 110 TEC

1. In order to carry out the tasks entrusted to the ESCB, the ECB shall, in accordance with the provisions of this Treaty and under the conditions laid down in the Statute of the ESCB:

— make regulations to the extent necessary to implement the tasks defined in Article 3.1, first indent, Articles 19.1, 22 and 25.2 of the Statute of the ESCB and in cases which shall be laid down in the acts of the Council referred to in Article 107(6),

— take decisions necessary for carrying out the tasks entrusted to the ESCB under this Treaty and the Statute of the ESCB,

— make recommendations and deliver opinions.

2. A regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States.

Recommendations and opinions shall have no binding force.

A decision shall be binding in its entirety upon those to whom it is addressed.

Articles 253, 254 and 256 shall apply to regulations and decisions adopted by the ECB.

The ECB may decide to publish its decisions, recommendations and opinions.

3. Within the limits and under the conditions adopted by the Council under the procedure laid down in Article 107(6), the ECB shall be entitled to impose fines or periodic penalty payments on undertakings for failure to comply with obligations under its regulations and decisions.


***

Original Lisbon Treaty

In Article 2, point 95, of the original Treaty of Lisbon (ToL) the intergovernmental conference (IGC 2007) amended Article 110 (OJ 17.12.2007 C 306/74):

95) In Article 110, the first four subparagraphs of paragraph 2 shall be deleted.

***

Renumbering

The TFEU table of equivalences confirms that Article 110 TFEU (ToL) in the original Treaty of Lisbon was to be renumbered Article 132 TFEU in the consolidated version, under the title ‘Economic and monetary policy’, renumbered Title VIII (OJ 17.12.2007 C 306/214).

(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: TFEU

Article 132 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 115/104:

Part Three Union policies and internal actions

Title VIII Economic and monetary policy

Chapter 2 Monetary policy

Article 132 TFEU
(ex Article 110 TEC)

1. In order to carry out the tasks entrusted to the ESCB, the European Central Bank shall, in accordance with the provisions of the Treaties and under the conditions laid down in the Statute of the ESCB and of the ECB:

— make regulations to the extent necessary to implement the tasks defined in Article 3.1, first indent, Articles 19.1, 22 and 25.2 of the Statute of the ESCB and of the ECB in cases which shall be laid down in the acts of the Council referred to in Article 129(4),

— take decisions necessary for carrying out the tasks entrusted to the ESCB under the Treaties and the Statute of the ESCB and of the ECB,

— make recommendations and deliver opinions.

2. The European Central Bank may decide to publish its decisions, recommendations and opinions.

3. Within the limits and under the conditions adopted by the Council under the procedure laid down in Article 129(4), the European Central Bank shall be entitled to impose fines or periodic penalty payments on undertakings for failure to comply with obligations under its regulations and decisions.

***

Regulatory powers

The powers of the European Central Bank are limited generally by the treaties and the ESCB Statute; Article 110(1) TEC.

The legislative powers, to make regulations, are further limited by the enumerated provisions of the ESCB Statute and the acts of the Council mentioned; Article 110(1) TEC first indent. The instruments are called ECB Regulations.

The power to take binding decisions (ECB Decisions) is accompanied by the competence to impose sanctions for failure to comply, in accordance with Article 110(3) TEC.

***

ESCB Statute

With minute differences, ESCB Statute Article 34 on legal acts reiterates the wording of Article 110 TEC. See Protocol (No 18) on the Statute of the European System of Central Banks and of the European Central Bank (1992), OJ 29.12.2006 C 321 E/272-273:

CHAPTER VII
GENERAL PROVISIONS

Article 34 ESCB Statute
Legal acts

34.1. In accordance with Article 110 of this Treaty, the ECB shall:

— make regulations to the extent necessary to implement the tasks defined in Article 3.1, first indent, Articles 19.1, 22 or 25.2 and in cases which shall be laid down in the acts of the Council referred to in Article 42;

— take decisions necessary for carrying out the tasks entrusted to the ESCB under this Treaty and this Statute;

— make recommendations and deliver opinions.

34.2. A regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States.

Recommendations and opinions shall have no binding force.
A decision shall be binding in its entirety upon those to whom it is addressed.

Articles 253, 254 and 256 of this Treaty shall apply to regulations and decisions adopted by the ECB.

The ECB may decide to publish its decisions, recommendations and opinions.

34.3. Within the limits and under the conditions adopted by the Council under the procedure laid down in Article 42, the ECB shall be entitled to impose fines or periodic penalty payments on undertakings for failure to comply with obligations under its regulations and decisions.


***

Summaries

How has the ECB used its regulatory powers?

The ECB booklet Legal framework of the Eurosystem and the European System of Central Banks – ECB legal acts and instruments (July 2008) presents summaries of the relevant ECB Regulations and ECB Decisions in the following areas:

– ECB institutional provisions;
– Monetary policy and operations;
– Payment and settlement systems (TARGET2);
– Banknotes and coins, means of payment and currency matters;
– Foreign reserves, foreign exchange and reserve management services;
– Statistics; and
– Fraud prevention, transparency and data protection.




Ralf Grahn