ANNUAL REPORT 2008 - Polymer Bank Notes of the World

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their participation in the Eurosystem/ESCBcommittees (see Section 1.5 of this chapter).They may perform non-Eurosystem functions ontheir own responsibility, unless the GoverningCouncil finds that such functions interfere withthe objectives and tasks of the Eurosystem.The Eurosystem and the ESCB are governedby the decision-making bodies of the ECB: theGoverning Council and the Executive Board.The General Council is constituted as a thirddecision-making body of the ECB, for as longas there are EU Member States which havenot yet adopted the euro. The functioning ofthe decision-making bodies is governed bythe Treaty, the Statute of the ESCB and therelevant Rules of Procedure. 2 Decision-makingwithin the Eurosystem and the ESCB iscentralised. However, the ECB and the euroarea NCBs jointly contribute, strategically andoperationally, to attaining the common goalsof the Eurosystem, with due respect to theprinciple of decentralisation in accordance withthe Statute of the ESCB.1.2 THE GOVERNING COUNCILThe Governing Council comprises themembers of the Executive Board of the ECBand the governors of the NCBs of the MemberStates which have adopted the euro. Its mainresponsibilities, as laid down in the Treaty, are:––to adopt the guidelines and take the decisionsnecessary to ensure the performance of thetasks entrusted to the Eurosystem;to formulate the monetary policy of theeuro area, including, as appropriate,decisions relating to intermediate monetaryobjectives, key interest rates and the supplyof reserves in the Eurosystem, and toestablish the necessary guidelines for theirimplementation.The Governing Council meets, as a rule, twicea month at the ECB’s premises in Frankfurtam Main, Germany. It conducts, inter alia, anin-depth assessment of monetary and economicdevelopments and takes related decisionsspecifically at its first meeting of the month,while the second meeting usually focuses onissues related to other tasks and responsibilitiesof the ECB and the Eurosystem. In 2008 twomeetings were held outside Frankfurt: one washosted by the Bank of Greece in Athens and theother by the Nationale Bank van België/BanqueNationale de Belgique in Brussels.When taking decisions on monetary policy andon other tasks of the ECB and the Eurosystem,the members of the Governing Council do notact as national representatives, but in a fullyindependent personal capacity. This is reflectedby the principle of “one member, one vote”applied within the Governing Council. On18 December 2008 the Governing Councildecided to continue its current voting regime 3and to introduce the rotation system only whenthe number of governors of the euro area NCBsexceeds 18. 4 This decision was triggered by theincrease in the number of governors in theGoverning Council to 16 as a result of theadoption of the euro by Slovakia on1 January 2009. At the same time, the Governing2 For the ECB’s Rules of Procedure, see Decision ECB/2004/2of 19 February 2004 adopting the Rules of Procedure of theEuropean Central Bank, OJ L 80, 18.3.2004, p. 33; DecisionECB/2004/12 of 17 June 2004 adopting the Rules of Procedureof the General Council of the ECB, OJ L 230, 30.6.2004,p. 61; and Decision ECB/1999/7 of 12 October 1999 concerningthe Rules of Procedure of the Executive Board of the ECB,OJ L 314, 8.12.1999, p. 34. These rules are also available on theECB’s website.3 As provided for by Article 10.2 of the Statute of the ESCB,which limits the number of governors with a voting right to15 but also foresees the possibility for the Governing Councilto postpone the implementation of the rotation system until thenumber of governors exceeds 18.4 See the press release of 18 December 2008 and DecisionECB/2008/29 to postpone the start of the rotation system in theGoverning Council of the European Central Bank.ECBAnnual Report2008197
Council decided on the main aspects of theimplementation of the rotation system 5 once thenumber of governors exceeds 18. Havinganalysed a number of models, the GoverningCouncil opted for the following rotation model:governors will rotate in and out of the votingright after one month. The number of governorsrotating at any one time will be determined bythe difference between the number of governorsand the number of votes allocated to each groupminus two, taking the absolute value in the eventof a negative number. This rotation modelachieves short periods without vote forindividual governors and ensures the relativestability of the composition of the votingcollege. 656On 19 December 2002 the Governing Council decided on arotation system according to which the NCB governors willexercise a voting right with different frequencies dependingon an indicator of the relative size of the economies of theircountries within the euro area. Based on this indicator, NCBgovernors will be allocated to different groups. This allocationdetermines how often the governors can exercise a voting right.Initially, there will be two groups and, once there are 22 euroarea countries, there will be three groups. For a description ofthe rotation system, see also the press release of 20 December2002 at http://www.ecb.europa.eu/press/pr/date/2002/html/index.en.htmlThe rotation model will be formally implemented via an ECBDecision amending Decision ECB/2004/2 of 19 February 2004adopting the Rules of Procedure of the European Central Bank;further details can be found in a forthcoming ECB MonthlyBulletin article.198 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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franc funding needs of banks with n
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MINIMUM RESERVE SYSTEMCredit instit
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with the ample allotments in the fi
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2008. By contrast, the average shar
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and SDR holdings increased by aroun
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and the ECB). As a result of carefu
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cross-CSD settlement. T2S will thus
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ELIGIBLE LINKS BETWEEN NATIONAL SEC
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Chart 48 Number of euro banknotes i
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3.3 BANKNOTE PRODUCTION AND ISSUANC
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4 STATISTICSThe ECB, assisted by th
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iii) payments statistics and iv) de
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5 ECONOMIC RESEARCHThe main functio
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were organised to disseminate resea
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the Financial Collateral Directive,
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on the Banque centrale du Luxembour
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standards by individual Eurosystem
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CHAPTER 3ENTRY OF SLOVAKIAINTO THE
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Table 13 Main economic indicators f
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As of January 2009 Slovakia is thus
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3 OPERATIONAL ASPECTS OF THE INTEGR
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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 and 154: With regard to merger and acquisiti
Page 155 and 156: with the principles set out in Octo
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
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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
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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: 1 DECISION-MAKING BODIES AND CORPOR
Page 201 and 202: 1.3 THE EXECUTIVE BOARDThe Executiv
Page 203 and 204: 1.4 THE GENERAL COUNCILThe General
Page 205 and 206: The Eurosystem/ESCB committees have
Page 207 and 208: members of the Executive Board. 13
Page 209 and 210: for their current position. On the
Page 211 and 212: statistical office (Statistisches B
Page 213 and 214: 4 ANNUAL ACCOUNTS OF THE ECB212 ECB
Page 215 and 216: function, and by the Governing Coun
Page 217 and 218: BALANCE SHEET AS AT 31 DECEMBER 200
Page 219 and 220: PROFIT AND LOSS ACCOUNT FOR THE YEA
Page 221 and 222: mid-market prices on 30 December 20
Page 223 and 224: The defined benefit obligation is c
Page 225 and 226: NOTES ON THE BALANCE SHEET1 GOLD AN
Page 227 and 228: Eurosystem (see “Banknotes in cir
Page 229 and 230: (see “Banknotes in circulation”
Page 231 and 232: values at which the transactions we
Page 233 and 234: 15 CAPITAL AND RESERVESCAPITALPursu
Page 235 and 236: epresenting the remainder of its ca
Page 237 and 238: NOTES ON THE PROFIT AND LOSS ACCOUN
Page 239: individual circumstances. Basic sal
Page 243 and 244: 5 CONSOLIDATED BALANCE SHEET OF THE
Page 246 and 247: 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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ANNUAL REPORT 2008 - Polymer Bank Notes of the World

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