ECB and ESCB
The European Central Bank (ECB) was established on 1 June 1998. Its forerunner was the European Monetary Institute, a temporary institution established on 1 January 1994 which aim was the preparation for the introduction of the single currency euro.
The European System of Central Banks (ESCB) comprises the ECB and the NCBs of all EU Member States. The CNB is a part of the ESCB.
The ECB has its headquarters in Frankfurt am Main, Germany.
The ECB, which has legal personality, is the core of the Eurosystem and the European System of Central Banks.
The Eurosystem came into being on 1 January 1999 and comprises the ECB and the national central banks (NCBs) of the EU Member States that have adopted the euro.
The euro area consists of the EU Member States that have adopted the euro.
The primary objective of the ESCB under the Treaty on the Functioning of the European Union is to maintain price stability. Without prejudice to the primary objective, the ESCB supports the general economic policies in the Union with a view to contributing to the achievement of the objectives of the Union as laid down in Article 3 of the Treaty on European Union, i.e. to promote peace, Union’s values and the well-being of its peoples, offer citizens of the Union an area of freedom, security and justice, establish an internal market and economic and monetary union and promote Union‘s values and interests in its relations with the wider world.
Under the Treaty, the basic tasks of the ESCB are to define and implement the monetary policy of the Union, to conduct foreign exchange operations consistent with the provisions of the Treaty, to hold and manage the official foreign reserves of the Member States and to promote the smooth operation of payment systems.
The main bodies of the ECB are:
- the Governing Council
- the Executive Board
- the General Council
The Governing Council
The Governing Council comprises the members of the Executive Board and the governors of the NCBs of the euro area countries. The CNB Governor is not a member of the Governing Council; he will become member when the Czech Republic adopts the single currency.
The Governing Council formulates the monetary policy of the Union and takes decisions relating to intermediate monetary objectives, key interest rates and the supply of reserves.
The Governing Council meets twice a month; it takes monetary policy decisions on the first meeting in each month.
The Executive Board
In accordance with the second subparagraph of Article 283(2) of the Treaty on the Functioning of the European Union, the President, the Vice-President and the other members of the Executive Board shall be appointed by the European Council, acting by a qualified majority, from among persons of recognised standing and professional experience in monetary or banking matters, on a recommendation from the Council after it has consulted the European Parliament and the Governing Council.
The General Council
The General Council comprises the President and the Vice-President of the ECB and the governors of the NCBs of all EU Member States. It issues decisions, recommendations and opinions.
The General Council meets four times a year. The meetings of the General Council can take the form of a teleconference.
The CNB Governor has been a member of the General Council since 1 May 2004.
The cooperation between the CNB and the European Central Bank dates back to the period of preparation for the Czech Republic's accession to the EU.
On 1 May 2004, the CNB became part of the European System of Central Banks. The CNB is responsible for relations with the ESCB and the ECB in accordance with the requirements of the Treaty and the Statute of the ESCB and the ECB. Since June 2004, the CNB Governor has attended the meetings of the General Council as a full member. In doing so he may be accompanied by an accompanying person and, in case of necessity, may be represented by an alternate (Deputy Governor E. Zamrazilová). In doing so he is accompanied by a Deputy Governor and may be represented by an alternate. Representatives of the CNB are members of 13 ESCB committees; two CNB employees have been appointed by the Bank Board to each of these committees. CNB representatives are also involved in the working groups and task forces of the committees.
List of ESCB committees
There are 13 ESCB committees covering the bank's various activities, namely:
|
1. |
Accounting and Monetary Income Committee |
AMICO |
|
2. |
Banknote Committee |
BANCO |
|
3. |
Financial Stability Committee |
FSC |
|
4. |
External Communications Committee |
ECCO |
|
5. |
Internal Auditors Committee |
IAC |
|
6. |
International Relations Committee |
IRC |
|
7. |
Information Technology Committee |
ITC |
|
8. |
Legal Committee |
LEGCO |
|
9. |
Market Operations Committee |
MOC |
|
10. |
Monetary Policy Committee |
MPC |
|
11. |
Payment and Settlement Systems Committee |
PSSC |
|
12. |
Statistics Committee |
STC |
|
13. |
Human Resources Conference |
HRC |
Capital
The ECB’s subscribed capital amounts to around €10.83 billion (as at 1 October 2020).
According to Article 29 of the Statute of the ESCB and of the ECB, each national central bank is assigned a weighting in a key equal to the sum of 50% of the share of its respective Member State in the population of the Community and 50% of the share of its respective Member State in the gross domestic product at market prices of the Community.
National central banks of the Eurosystem (participating NCBs) are required to pay up their subscription to the ECB’s capital in full. National central banks of the non-euro area countries (non-participating NCBs) are required pay up 3,75% of their subscription to the ECB’s capital. The amount for the Czech National Bank is around €7.63 million.
FACTS - the European Central Bank, the Eurosystem and the European System of Central Banks