The Economy of Catalonia

mean that Catalonia would have to give up the euro as its official currency.
The new State could choose to keep the euro as its official currency
in regular transactions, instead of setting up its own currency and
monetary policy. This situation would not be unprecedented: there are
several countries that do not belong to the EU (nor therefore to the Eurozone)
that have the euro as their official currency (Monaco, San Marino,
the Vatican, Andorra, Montenegro and Kosovo, to name those located
in Europe). The main function of the BC in this scenario would be
as a banking supervisor. Moreover, financial institutions operating in
Catalonia could access ECB liquidity through those parent companies,
subsidiaries or branches established in Eurozone member countries that
meet the requirements to be counterparties. It is important to emphasize
that these requirements do not include the parent bank having its headquarters
in the Eurozone 15 ; in actual fact, many banks outside the Eurozone,
some of which are not even European, regularly take part in ECB
financing operations through subsidiaries and branches located in the
Eurozone. 16 The main requirement for taking part is to be «financially
solvent» and to be subject to supervision by the competent national authorities
within the EU or the European Economic Area or, in the case
of banks established as companies outside this area, to a supervision, the
standards of which, are comparable to theirs.
Nevertheless, in this scenario a formal articulation of the relationship between
Catalonia and the Eurozone would be desirable (and beneficial for
all parties involved), and it could take the form of a «monetary agreement»
between the EU and Catalonia. Presumably an agreement of this
kind would not require unanimity of EU countries and, therefore, could
not be vetoed by any member State. The monetary agreement with the
Principality of Monaco (an important financial centre that does not belong
to the EU or the Eurozone, although it has the euro as its sole official
currency) is, despite the difference in circumstances, a useful reference.
In addition to «blessing» the use of the euro in the Principality, it
ensures the banks established there have access to ECB funding mecha-
15. Conditions for access to ECB credit mechanisms are described in Chapter 2 of
the publication «The implementation of monetary policy in the euro area: General Documentation
on Eurosystem Monetary Policy Instruments and Procedures», ECB, November
2011. https://www.ecb.europa.eu/pub/pdf/other/gendoc201109en.pdf
16. See http://www.ecb.int/stats/money/mfi/general/html/elegass.en.html for a
list of registered financial institutions subject to minimum reserve requirements, a condition
for entities potentially wishing to become counterparties with the ECB.
88 The Economy of Catalonia