ANNUAL REPORT 2008 - Polymer Bank Notes of the World

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Economic analysis: one pillar of the European Central Bank’s framework for conducting acomprehensive analysis of the risks to price stability, which forms the basis for the GoverningCouncil’s monetary policy decisions. The economic analysis focuses mainly on the assessment ofcurrent economic and financial developments and the implied short to medium-term risks to pricestability from the perspective of the interplay between supply and demand in goods, services andfactor markets at those horizons. Due attention is paid to the need to identify the nature of shocksaffecting the economy, their effects on cost and pricing behaviour, and the short to medium-termprospects for their propagation in the economy (see also monetary analysis).Economic and Financial Committee (EFC): a consultative Community body which contributesto the preparation of the work of the ECOFIN Council and the European Commission. Its tasksinclude reviewing the economic and financial situation of the Member States and of the Community,and budgetary surveillance.Economic and Monetary Union (EMU): the process that led to the single currency, the euro, andthe single monetary policy in the euro area, as well as to the coordination of the economic policiesof the EU Member States. This process, as laid down in the Treaty, took place in three stages.Stage Three, the final stage, started on 1 January 1999 with the transfer of monetary competence tothe European Central Bank and the introduction of the euro. The cash changeover on 1 January2002 completed the process of setting up EMU.Effective exchange rate (EER) of the euro (nominal/real): a weighted average of bilateral euroexchange rates against the currencies of the euro area’s main trading partners. The EuropeanCentral Bank publishes nominal EER indices for the euro against two groups of trading partners:the EER-21 (comprising the 11 non-euro area EU Member States and 10 main trading partnersoutside the EU) and the EER-41 (composed of the EER-21 and 20 additional countries). Theweights used reflect the share of each partner country in euro area trade and account for competitionin third markets. Real EERs are nominal EERs deflated by a weighted average of foreign, relativeto domestic, prices or costs. They are thus measures of price and cost competitiveness.EONIA (euro overnight index average): a measure of the effective interest rate prevailing inthe euro interbank overnight market. It is calculated as a weighted average of the interest rates onunsecured overnight lending transactions denominated in euro, as reported by a panel of contributingbanks.Equities: securities representing ownership of a stake in a corporation. They comprise shares tradedon stock exchanges (quoted shares), unquoted shares and other forms of equity. Equities usuallyproduce income in the form of dividends.Equity market: the market in which equities are issued and traded.ERM II (exchange rate mechanism II): the exchange rate mechanism which provides theframework for exchange rate policy cooperation between the euro area countries and the noneuroarea EU Member States. ERM II is a multilateral arrangement with fixed, but adjustable,central rates and a standard fluctuation band of ±15%. Decisions concerning central rates and,possibly, narrower fluctuation bands are taken by mutual agreement between the EU Member Stateconcerned, the euro area countries, the European Central Bank (ECB) and the other EU MemberStates participating in the mechanism. All participants in ERM II, including the ECB, have the rightto initiate a confidential procedure aimed at changing the central rates (realignment).ECBAnnual Report2008277
EURIBOR (euro interbank offered rate): the rate at which a prime bank is willing to lend fundsin euro to another prime bank, as reported by a panel of contributing banks, computed daily forinterbank deposits with different maturities of up to 12 months.Euro area: the area encompassing those Member States which have adopted the euro as the singlecurrency in accordance with the Treaty and in which a single monetary policy is conducted underthe responsibility of the Governing Council of the European Central Bank. The euro areacurrently comprises Belgium, Germany, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg,Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.European Central Bank (ECB): the ECB lies at the centre of the Eurosystem and the EuropeanSystem of Central Banks (ESCB) and has its own legal personality in accordance with theTreaty (Article 107(2)). It ensures that the tasks conferred upon the Eurosystem and the ESCB areimplemented either through its own activities or through those of the NCBs, pursuant to the Statuteof the ESCB. The ECB is governed by the Governing Council and the Executive Board, and, as athird decision-making body, by the General Council.European Monetary Institute (EMI): a temporary institution established at the start of StageTwo of Economic and Monetary Union on 1 January 1994. It went into liquidation following theestablishment of the European Central Bank on 1 June 1998.European System of Accounts 1995 (ESA 95): a comprehensive and integrated system ofmacroeconomic accounts based on a set of internationally agreed statistical concepts, definitions,classifications and accounting rules aimed at achieving a harmonised quantitative description of theeconomies of the EU Member States. The ESA 95 is the Community’s version of the world Systemof National Accounts 1993 (SNA 93).European System of Central Banks (ESCB): composed of the European Central Bank (ECB)and the NCBs of all 27 EU Member States, i.e. it includes, in addition to the members of theEurosystem, the NCBs of those Member States that have not yet adopted the euro. The ESCB isgoverned by the Governing Council and the Executive Board of the ECB, and, as a third decisionmakingbody of the ECB, by the General Council.Eurosystem: the central banking system of the euro area. It comprises the European CentralBank and the NCBs of the Member States that have adopted the euro.Excessive deficit procedure: the provision set out in Article 104 of the Treaty and specified inProtocol No 20 on the excessive deficit procedure requires EU Member States to maintain budgetarydiscipline, defines the criteria for a budgetary position to be considered an excessive deficit andregulates steps to be taken following the observation that the requirements for the budgetary balanceor government debt have not been fulfilled. Article 104 is supplemented by Council Regulation(EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the implementation of the excessivedeficit procedure (as amended by Council Regulation (EC) No 1056/2005 of 27 June 2005), whichis one element of the Stability and Growth Pact.Executive Board: one of the decision-making bodies of the European Central Bank (ECB).It comprises the President and the Vice-President of the ECB and four other members appointed bycommon accord by the Heads of State or Government of the Member States that have adopted theeuro.278 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
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Willem F. Duisenberg accepting the
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1 FINANCIAL STABILITYThe Eurosystem
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With regard to merger and acquisiti
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with the principles set out in Octo
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2.2 BANKINGCAPITAL REQUIREMENTS DIR
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3 FINANCIAL INTEGRATIONThe Eurosyst
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The market for short-term paper in
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de France and the Banca d’Italia.
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and the Eurosystem’s business con
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4.2 RETAIL PAYMENT SYSTEMS ANDINSTR
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for Clearing and Settlement, and th
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Willem F. Duisenberg at his farewel
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1 EUROPEAN ISSUESIn 2008 the ECB co
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for financial institutions, to faci
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1.3 DEVELOPMENTS IN AND RELATIONS W
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On a number of occasions in 2008, t
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countries have voiced support for t
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Former Italian President Carlo Azeg
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1 ACCOUNTABILITY VIS-À-VIS THE GEN
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implementation of the steps foresee
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CHAPTER 7EXTERNALCOMMUNICATION
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2 COMMUNICATION ACTIVITIESThe ECB a
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Panel at the Fifth ECB Central Bank
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1 DECISION-MAKING BODIES AND CORPOR
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Council decided on the main aspects
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1.3 THE EXECUTIVE BOARDThe Executiv
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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
Page 227 and 228: Eurosystem (see “Banknotes in cir
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Page 231 and 232: values at which the transactions we
Page 233 and 234: 15 CAPITAL AND RESERVESCAPITALPursu
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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
Page 248 and 249: Number Title OJ referenceECB/2008/1
Page 250 and 251: Number Title OJ referenceECB/2009/1
Page 252 and 253: Number 2 Originator SubjectCON/2008
Page 258 and 259: Number 4 Originator Subject OJ refe
Page 260 and 261: oth the marginal lending facility a
Page 262 and 263: OVERVIEW OF THE ECB’S COMMUNICATI
Page 264 and 265: y the respective NCBs will also be
Page 266 and 267: OPEN MARKET OPERATIONS BY CURRENCYE
Page 268 and 269: USD operationsType oftransaction 1)
Page 270 and 271: DOCUMENTS PUBLISHED BY THEEUROPEAN
Page 272 and 273: 95 “Financial stability challenge
Page 274 and 275: 1012 “Petrodollars and imports of
Page 276 and 277: GLOSSARYThis glossary contains sele
Page 280 and 281: Financial stability: condition in w
Page 282 and 283: MFIs (monetary financial institutio
Page 284 and 285: Reserve base: the sum of the eligib
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ANNUAL REPORT 2008 - Polymer Bank Notes of the World

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