ANNUAL REPORT 2008 - Polymer Bank Notes of the World

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spillover effects and that a level playing-field ismaintained across countries.First, the ECOFIN Council decided on 7 Octoberto increase the EU minimum protection forindividual deposits to €50,000 for at least oneyear. As a result, the Commission adopted aproposal for the amendment of the Directive ondeposit guarantee schemes on 15 October 2008.The Directive, with the amendments approvedby the European Parliament and the EU Council,is expected to be published in the OfficialJournal around March 2009. In particular, theDirective will increase the level of mandatoryprotection for individual deposits to €50,000 byJune 2009 and further to €100,000 by end-2010unless the Commission reports that this wouldbe inappropriate.Second, a set of “EU common principles”were defined, which were complemented bymore precise guidelines agreed at the summitof euro area countries in Paris on 12 Octoberand subsequently endorsed by all 27 MemberStates at the European Council meeting of15-16 October. They determined, among otherthings, the common features for MemberStates’ interventions, including the guaranteesapplied to the funding and recapitalisation ofbanks.In the case of measures aimed at supporting“liquidity-constrained solvent banks”, it was agreedthat government guarantees could be provided fornew medium-term (up to five years) bank seniordebt issuance. The criteria for determining whichfinancial institutions are eligible to take part in theguarantee scheme must be non-discriminatory andinclude subsidiaries of foreign institutions withsubstantial operations in an EU Member State.The scheme should also be limited in amountand expire on 31 December 2009. Importantly,the Paris declaration states that governmentsmust “work in cooperation with the EuropeanCentral Bank so as to ensure consistency withthe management of liquidity by the Eurosystemand compatibility with the operational frameworkof the Eurosystem”.With regard to recapitalisation measures,Member States decided to make core capitalavailable to relevant financial institutions,for instance by acquiring preferred shares.Although governments committed themselves toproviding the appropriate amount of capital whenneeded, they will generally favour the raising ofprivate capital.The European Council at its meeting of15-16 October underlined the importanceof cooperation mechanisms and announcedthe establishment of a “financial crisis cell”.This cell, in which the President of the ECBparticipates, aims to improve crisis managementamong EU Member States through measuresincluding informal warnings, informationexchange and an evaluation mechanism. TheEuropean Council also stressed the importanceof regular meetings of national supervisors.Finally, the ECOFIN Council, at its meetingon 2 December 2008, specifically emphasisedthe need to establish, without delay, nationalschemes to support the banking sector in respectof guarantees and, in particular, recapitalisationplans. The European Commission was requestedto work closely with the ECB on these issues.With the aim of enhancing the stability of thefinancial system and maintaining a level playingfield,the Eurosystem issued recommendationson government guarantees for bank debt and onthe pricing of bank recapitalisations. InDecember 2008 the European Commissionadopted a communication on the recapitalisationof financial institutions, which also reflected theECB’s recommendations on this matter. 5In February 2009 the ECOFIN Council agreedthat, in order to safeguard banking sectorstability, measures to deal with impaired assetscould in specific cases complement governmentguarantees for bank debt and recapitalisations.These measures should remain consistent5 The communication was published in January 2009 (OJ C 10,15.1.2009, pp. 2-10).ECBAnnual Report2008153
with the principles set out in October 2008,in particular with regard to: i) safeguardingfinancial stability and restoring the provision ofcredit and lending to the economy; ii) ensuring alevel playing-field within the Single Market; andiii) containing the impact on public finances. TheCommission, in cooperation with the ECB, hasprovided elements of guidance in this respect atthe EU level.154 ECBAnnual Report2008
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EN2008EUROPEAN CENTRAL BANK ANNUAL
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© European Central Bank, 2009Addre
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CHAPTER 4FINANCIAL STABILITY AND IN
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7 Statistical accounting consequenc
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ABBREVIATIONSCOUNTRIESOTHERSBE Belg
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in the course of the year, in line
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currencies, T2S will be a major ste
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CHAPTER 1ECONOMICDEVELOPMENTS ANDMO
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Chart 1 ECB interest rates and mone
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Despite moderating, the annual grow
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substantial downward revisions in r
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in July, annual inflation in the OE
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As regards the Chinese economy, rea
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generally tighter financing conditi
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were recorded in December, but thes
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was driven mainly by developments i
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market tensions, particularly for l
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anking and financial system. At the
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cash flows to compensate for a redu
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quarter of 2008 and -0.1% in Decemb
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whereby investors’ uncertainty su
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September onwards, amid the great u
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Chart C Trading volumes for governm
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sponsored rescue plans were initiat
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The annual growth rate of consumer
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end of 2007. By December 2008 this
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calculated as the balance between g
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commodity prices (see Box 4). Conve
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Chart D Longer-term inflation expec
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apidly to 1.7% in December, mainly
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productivity slowed to 0.2% in the
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Table 3 Composition of real GDP gro
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Corporate investment, which had exp
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Box 5LABOUR MARKET DEVELOPMENTS IN
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Chart C Breakdown of employment gro
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Box 6DEVELOPMENTS IN THE ISSUANCE A
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Chart B Government bond yield sprea
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Box 7STATISTICAL ACCOUNTING CONSEQU
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warranted because of the need to co
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sharp depreciation of the euro was
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prices in the first eight months of
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focused more on the production rath
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segments and, in turn, affected eur
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and Bulgaria registered robust grow
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In the remaining non-euro area EU c
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Estonian kroon and the Lithuanian l
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Table 10 Official monetary policy s
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the Bank of England and Sveriges Ri
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CHAPTER 2CENTRAL BANKOPERATIONSAND
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Box 10MONETARY POLICY OPERATIONS DU
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Chart A Liquidity supply through op
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Page 106 and 107: MINIMUM RESERVE SYSTEMCredit instit
Page 108 and 109: with the ample allotments in the fi
Page 110 and 111: 2008. By contrast, the average shar
Page 112 and 113: and SDR holdings increased by aroun
Page 114 and 115: and the ECB). As a result of carefu
Page 116 and 117: cross-CSD settlement. T2S will thus
Page 118 and 119: ELIGIBLE LINKS BETWEEN NATIONAL SEC
Page 120 and 121: Chart 48 Number of euro banknotes i
Page 122 and 123: 3.3 BANKNOTE PRODUCTION AND ISSUANC
Page 124 and 125: 4 STATISTICSThe ECB, assisted by th
Page 126 and 127: iii) payments statistics and iv) de
Page 128 and 129: 5 ECONOMIC RESEARCHThe main functio
Page 130 and 131: were organised to disseminate resea
Page 132 and 133: the Financial Collateral Directive,
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Page 136 and 137: standards by individual Eurosystem
Page 138 and 139: CHAPTER 3ENTRY OF SLOVAKIAINTO THE
Page 140 and 141: Table 13 Main economic indicators f
Page 142 and 143: As of January 2009 Slovakia is thus
Page 144 and 145: 3 OPERATIONAL ASPECTS OF THE INTEGR
Page 146 and 147: 4 THE CASH CHANGEOVER IN SLOVAKIATH
Page 149 and 150: Willem F. Duisenberg accepting the
Page 151 and 152: 1 FINANCIAL STABILITYThe Eurosystem
Page 153: With regard to merger and acquisiti
Page 157 and 158: 2.2 BANKINGCAPITAL REQUIREMENTS DIR
Page 159 and 160: 3 FINANCIAL INTEGRATIONThe Eurosyst
Page 161 and 162: The market for short-term paper in
Page 163 and 164: de France and the Banca d’Italia.
Page 165 and 166: and the Eurosystem’s business con
Page 167 and 168: 4.2 RETAIL PAYMENT SYSTEMS ANDINSTR
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Page 171 and 172: Willem F. Duisenberg at his farewel
Page 173 and 174: 1 EUROPEAN ISSUESIn 2008 the ECB co
Page 175 and 176: for financial institutions, to faci
Page 177 and 178: 1.3 DEVELOPMENTS IN AND RELATIONS W
Page 179 and 180: On a number of occasions in 2008, t
Page 181 and 182: countries have voiced support for t
Page 183 and 184: Former Italian President Carlo Azeg
Page 185 and 186: 1 ACCOUNTABILITY VIS-À-VIS THE GEN
Page 187: implementation of the steps foresee
Page 190 and 191: CHAPTER 7EXTERNALCOMMUNICATION
Page 192 and 193: 2 COMMUNICATION ACTIVITIESThe ECB a
Page 195 and 196: Panel at the Fifth ECB Central Bank
Page 197 and 198: 1 DECISION-MAKING BODIES AND CORPOR
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Page 201 and 202: 1.3 THE EXECUTIVE BOARDThe Executiv
Page 203 and 204: 1.4 THE GENERAL COUNCILThe General
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The Eurosystem/ESCB committees have
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members of the Executive Board. 13
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for their current position. On the
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statistical office (Statistisches B
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4 ANNUAL ACCOUNTS OF THE ECB212 ECB
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function, and by the Governing Coun
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BALANCE SHEET AS AT 31 DECEMBER 200
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PROFIT AND LOSS ACCOUNT FOR THE YEA
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mid-market prices on 30 December 20
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The defined benefit obligation is c
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NOTES ON THE BALANCE SHEET1 GOLD AN
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Eurosystem (see “Banknotes in cir
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(see “Banknotes in circulation”
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values at which the transactions we
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15 CAPITAL AND RESERVESCAPITALPursu
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epresenting the remainder of its ca
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NOTES ON THE PROFIT AND LOSS ACCOUN
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individual circumstances. Basic sal
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5 CONSOLIDATED BALANCE SHEET OF THE
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ANNEXES
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Number Title OJ referenceECB/2008/1
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Number Title OJ referenceECB/2009/1
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Number 2 Originator SubjectCON/2008
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Number 4 Originator Subject OJ refe
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oth the marginal lending facility a
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OVERVIEW OF THE ECB’S COMMUNICATI
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y the respective NCBs will also be
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OPEN MARKET OPERATIONS BY CURRENCYE
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USD operationsType oftransaction 1)
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DOCUMENTS PUBLISHED BY THEEUROPEAN
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95 “Financial stability challenge
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1012 “Petrodollars and imports of
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GLOSSARYThis glossary contains sele
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Economic analysis: one pillar of th
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Financial stability: condition in w
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MFIs (monetary financial institutio
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Reserve base: the sum of the eligib
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