Protocols annexed to the Treaty establishing the European Community

Author:Secretariat General
Profession:Council of the European Union
Pages:32-64
SUMMARY

Protocol (No 18) on the Statute of the European System of Central Banks and of the European Central Bank (1992)- Chapter I Constitution of the ESCB- Article i The European System of Central Banks- Chapter II Objectives and Tasks of the ESCB- Article 2 Objectives- Article 3 Tasks- Article 4 Advisory functions Article 5 Collection of statistical information- Article 6 International cooperation- Chapter III Organisation of the ESCB- Article 7 Independence- Article 8 General principle- Article 9 The European Central Bank- Article 10 The Governing Council Article 11 The Executive Board- Article 12 Responsibilities of the decision-making bodies- Article 13 The President- Article 14 National central banks- Article 15 Reporting commitments- Article 16 Banknotes- Chapter IV Monetary Functions and Operations of the ESCB Article 17 Accounts with the ECB and the national central banks- Article 18 Open market and credit operations- Article 19 Minimum reserves- Article 20 Other instruments of monetary control- Article 21 Operations with public entities- Article 22 Clearing and payment systems- Article 23 External operations Article 24 Other operations- Chapter V Prudential Supervision- Article 25 Prudential supervision- Chapter VI Financial Provisions of the ESCB- Article 26 Financial accounts- Article 27 Auditing- Article 28 Capital of the ECB Article 29 Key for capital subscription- Article 30 Transfer of foreign reserve assets to the ECB- Article 31 Foreign reserve assets held by national central banks- Article 32 Allocation of monetary income of national central banks- Article 33 Allocation of net profits and losses of the ECB- Chapter VII General Provisions- Article 34 Legal acts Article 35 Judicial control and related matters- Article 36 Staff- Article 37 Seat- Article 38 Professional secrecy- Article 39 Signatories- Article 40 Privileges and immunities- Chapter VIII Amendment of the Statute and Complementary Legislation Article 41 Simplified amendment procedure- Article 42 Complementary legislation- Chapter IX Transitional and Other Provisions for the ESCB- Article 43 General provisions- Article 44 Transitional tasks of the ECB- Article 45 The General Council of the ECB- Article 46 Rules of Procedure of the General Council Article 47 Responsibilities of the General Council- Article 48 Transitional provisions for the capital of the ECB- Article 49 Deferred payment of capital, reserves and provisions of the ECB- Article so Initial appointment of the members of the Executive Board- Article si Derogation from Article 32- Article 52 Exchange of banknotes in Community currencies- Article 53 Applicability of the transitional provisions Protocol (No 20) on the excessive deficit procedure (1992)- Article 1- Article 2- Article 3- Article 4- Protocol (No 21) on the convergence criteria referred to in Article 121 of the Treaty establishing the European Community (1992)- Article 1 Article 2- Article 3- Article 4- Article 5- Article 6- Protocol (No 25)on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland (1992)

 
INDEX
CONTENT

Page 32

Protocol (No 18) on the Statute of the European System of Central Banks and of the European Central Bank (1992)

THE* HIGH CONTRACTING PARTIES, DESIRING to lay down the Statute of the European System of Central Banks and of the European Central Bank provided for in Article 8 of the Treaty establishing the European Community, HAVE AGREED upon the following provisions, which shall be annexed to the Treaty establishing the European Community.

Chapter I Constitution of the ESCB
Article i The European System of Central Banks

1.1. The European System of Central Banks (ESCB) and the European Central Bank (ECB) shall be established in accordance with Article 8 of this Treaty; they shall perform their tasks and carry on their activities in accordance with the provisions of this Treaty and of this Statute.

1.2. In accordance with Article 107(1) of this Treaty, the ESCB shall be com posed of the ECB and of the central banks of the Member States ('national central banks'). The Institut montaire luxembourgeois will be the central bank of Luxembourg.Page 33

Chapter II Objectives and Tasks of the ESCB
Article 2 Objectives

In accordance with Article 105(1) of this Treaty, the primary objective of the ESCB shall be to maintain price stability. Without prejudice to the objective of price stability, it shall support the general economic policies in the Community with a view to contributing to the achievement of the objectives of the Community as laid down in Article 2 of this Treaty. The ESCB shall act in accordance with the principle of an open market economy with free competition, favouring an ecient allocation of resources, and in compliance with the principles set out in Article 4 of this Treaty.

Article 3 Tasks

3.1. In accordance with Article 105(2) of this Treaty, the basic tasks to be carried out through the ESCB shall be:

- to dene and implement the monetary policy of the Community;

- to conduct foreign-exchange operations consistent with the provisions of Article 111 of this Treaty;

- to hold and manage the ocial foreign reserves of the Member States;

- to promote the smooth operation of payment systems.

3.2. In accordance with Article 105(3) of this Treaty, the third indent of Article 3.1 shall be without prejudice to the holding and management by the Gov ernments of Member States of foreign-exchange working balances.

3.3. In accordance with Article 105(5) of this Treaty, the ESCB shall contribute to the smooth conduct of policies pursued by the competent authorities relat ing to the prudential supervision of credit institutions and the stability of the nancial system.Page 34

Article 4 Advisory functions

In accordance with Article 105(4) of this Treaty:

(a) the ECB shall be consulted:

- on any proposed Community act in its elds of competence;

- by national authorities regarding any draft legislative provision in its elds of competence, but within the limits and under the conditions set out by the Council in accordance with the procedure laid down in Article 42;

(b) the ECB may submit opinions to the appropriate Community institutions or bodies or to national authorities on matters in its elds of competence.

Article 5 Collection of statistical information

5.1. In order to undertake the tasks of the ESCB, the ECB, assisted by the national central banks, shall collect the necessary statistical information either from the competent national authorities or directly from economic agents. For these purposes it shall cooperate with the Community institutions or bodies and with the competent authorities of the Member States or third countries and with international organisations.

5.2. The national central banks shall carry out, to the extent possible, the tasks described in Article 5.1.

5.3. The ECB shall contribute to the harmonisation, where necessary, of the rules and practices governing the collection, compilation and distribution of statistics in the areas within its elds of competence.

5.4 The Council, in accordance with the procedure laid down in Article 42, shall dene the natural and legal persons subject to reporting requirements, the condentiality regime and the appropriate provisions for enforcement.

Article 6 International cooperation

6.1. In the eld of international cooperation involving the tasks entrusted to the ESCB, the ECB shall decide how the ESCB shall be represented.

6.2. The ECB and, subject to its approval, the national central banks may participate in international monetary institutions.

6.3. Articles 6.1 and 6.2 shall be without prejudice to Article 111(4) of this Treaty.Page 35

Chapter III Organisation of the ESCB
Article 7 Independence

In accordance with Article 108 of this Treaty, when exercising the powers and carrying out the tasks and duties conferred upon them by this Treaty and this Statute, neither the ECB, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions from Community institutions or bodies, from any Government of a Member State or from any other body. The Community institutions and bodies and the Governments of the Member States undertake to respect this principle and not to seek to influence the members of the decision-making bodies of the ECB or of the national central banks in the performance of their tasks.

Article 8 General principle

The ESCB shall be governed by the decision-making bodies of the ECB.

Article 9 The European Central Bank

9.1. The ECB which, in accordance with Article 107(2) of this Treaty, shall have legal personality, shall enjoy in each of the Member States the most extens ive legal capacity accorded to legal persons under its law; it may, in particular, acquire or dispose of movable and immovable property and may be a party to legal proceedings.

9.2. The ECB shall ensure that the tasks conferred upon the ESCB under Art icle 105(2), (3) and () of this Treaty are implemented either by its own activ ities pursuant to this Statute or through the national central banks pursuant to Articles 12.1 and 14.

9.3. In accordance with Article 107(3) of this Treaty, the decision-making bod ies of the ECB shall be the Governing Council and the Executive Board.Page 36

Article 10 The Governing Council

10.1. In accordance with Article 112(1) of this Treaty, the Governing Council shall comprise the members of the Executive Board of the ECB and the gov ernors of the national central banks.

10.2. Each member of the Governing Council shall have one vote. As from the date on which the number of members of the Governing Council exceeds 21, each member of the Executive Board shall have one vote and the number of governors with a voting right shall be 15. The latter voting rights shall be assigned and shall rotate as follows:

- as from the date on which the number of governors exceeds 15, until it reaches 22, the governors shall be allocated to two groups, according to a ranking of the size of the share of their national central bank's Member State in the aggregate gross domestic product at market prices and in the total aggregated balance sheet of the monetary nancial institutions of the Member States which have adopted the euro. The shares in the aggregate gross domestic product at market prices and in the total aggregated balance sheet of the monetary nancial institutions shall be assigned weights of 5/6 and 1/6, respectively. The rst group shall be composed of ve governors and the second group of the remaining governors. The frequency of voting rights of the governors allocated to the rst group shall not be lower than the frequency of voting rights of those of the second group. Subject to the previous sentence, the rst group shall be assigned four voting rights and the second group 11 voting rights;

- as from the date on which the number of governors reaches 22, the gov ernors shall be allocated to three groups according to a ranking based on the above criteria. The rst group shall be composed of ve governors and shall be assigned four voting rights. The second group shall be composed of half of the total number of governors, with any fraction rounded up to the nearest integer, and shall be assigned eight voting rights. The third group shall be composed of the remaining governors and shall be assigned three voting rights;

- within each group, the governors shall have their voting rights for equal amounts of time;

- for the calculation of the shares in the aggregate gross domestic product at market prices Article 29.2 shall apply. The total aggregated balance sheet of the monetary nancial institutions shall be calculated in accordance with the statistical framework applying in the European Community at the time of the calculation;Page 37

- whenever the aggregate gross domestic product at market prices is adjusted in accordance with Article 29.3, or whenever the number of governors increases, the size and/or composition of the groups shall be adjusted in accordance with the above principles;

- the Governing Council, acting by a two-thirds majority of all its members, with and without a voting right, shall take all measures necessary for the implementation of the above principles and may decide to postpone the start of the rotation system until the date on which the number of gov ernors exceeds 18.

The right to vote shall be exercised in person. By way of derogation from this rule, the Rules of Procedure referred to in Article 12.3 may lay down that members of the Governing Council may cast their vote by means of teleconferencing. These rules shall also provide that a member of the Governing Council who is prevented from attending meetings of the Governing Council for a prolonged period may appoint an alternate as a member of the Governing Council.

The provisions of the previous paragraphs are without prejudice to the voting rights of all members of the Governing Council, with and without a voting right, under Articles 10.3,10.6 and 41.2.

Save as otherwise provided for in this Statute, the Governing Council shall act by a simple majority of the members having a voting right. In the event of a tie, the President shall have the casting vote.

In order for the Governing Council to vote, there shall be a quorum of two thirds of the members having a voting right. If the quorum is not met, the President may convene an extraordinary meeting at which decisions may be taken without regard to the quorum.

10.3. For any decisions to be taken under Articles 28, 29, 30, 32, 33 and 51, the votes in the Governing Council shall be weighted according to the national central banks' shares in the subscribed capital of the ECB. The weights of the votes of the members of the Executive Board shall be zero. A decision requir ing a qualied majority shall be adopted if the votes cast in favour represent at least two thirds of the subscribed capital of the ECB and represent at least half of the shareholders. If a Governor is unable to be present, he may nominate an alternate to cast his weighted vote.

10.4. The proceedings of the meetings shall be condential. The Governing Council may decide to make the outcome of its deliberations public.

10.5. The Governing Council shall meet at least 10 times a year.

10.6. Article 10.2 may be amended by the Council meeting in the composition of the Heads of State or Government, acting unanimously either on a recom mendation from the ECB and after consulting the European Parliament and the Commission, or on a recommendation from the Commission and afterPage 38 consulting the European Parliament and the ECB. The Council shall recommend such amendments to the Member States for adoption. These amendments shall enter into force after having been ratied by all the Member States in accordance with their respective constitutional requirements.

A recommendation made by the ECB under this paragraph shall require a decision by the Governing Council acting unanimously.

Article 11 The Executive Board

11.1. In accordance with Article ii2(2)(a) of this Treaty, the Executive Board shall comprise the President, the Vice-President and four other members. The members shall perform their duties on a full-time basis. No member shall engage in any occupation, whether gainful or not, unless exemption is exceptionally granted by the Governing Council.

11.2. In accordance with Article 112(2) (b) of this Treaty, the President, the Vice- President and the other members of the Executive Board shall be appointed from among persons of recognised standing and professional experience in monetary or banking matters by common accord of the Governments of the Member States at the level of the Heads of State or Government, on a recom mendation from the Council after it has consulted the European Parliament and the Governing Council.

Their term of oce shall be eight years and shall not be renewable.

Only nationals of Member States maybe members of the Executive Board.

11.3. The terms and conditions of employment of the members of the Execut ive Board, in particular their salaries, pensions and other social security bene ts shall be the subject of contracts with the ECB and shall be xed by the Governing Council on a proposal from a Committee comprising three mem bers appointed by the Governing Council and three members appointed by the Council. The members of the Executive Board shall not have the right to vote on matters referred to in this paragraph.

11.4. If a member of the Executive Board no longer fulls the conditions required for the performance of his duties or if he has been guilty of serious misconduct, the Court of Justice may, on application by the Governing Coun cil or the Executive Board, compulsorily retire him.

11.5. Each member of the Executive Board present in person shall have the right to vote and shall have, for that purpose, one vote. Save as otherwise pro vided, the Executive Board shall act by a simple majority of the votes cast. InPage 39 the event of a tie, the President shall have the casting vote. The voting arrangements shall be specied in the Rules of Procedure referred to in Article 12.3.

11.6. The Executive Board shall be responsible for the current business of the ECB.

11.7. Any vacancy on the Executive Board shall be lled by the appointment of a new member in accordance with Article 11.2.

Article 12 Responsibilities of the decision-making bodies

12.1. The Governing Council shall adopt the guidelines and take the decisions necessary to ensure the performance of the tasks entrusted to the ESCB under this Treaty and this Statute. The Governing Council shall formulate the mon etary policy of the Community including, as appropriate, decisions relating to intermediate monetary objectives, key interest rates and the supply of reserves in the ESCB, and shall establish the necessary guidelines for their implementa tion.

The Executive Board shall implement monetary policy in accordance with the guidelines and decisions laid down by the Governing Council. In doing so the Executive Board shall give the necessary instructions to national central banks. In addition the Executive Board may have certain powers delegated to it where the Governing Council so decides.

To the extent deemed possible and appropriate and without prejudice to the provisions of this Article, the ECB shall have recourse to the national central banks to carry out operations which form part of the tasks of the ESCB.

12.2. The Executive Board shall have responsibility for the preparation of meetings of the Governing Council.

12.3. The Governing Council shall adopt Rules of Procedure which determine the internal organisation of the ECB and its decision-making bodies.

12.4. The Governing Council shall exercise the advisory functions referred to in Article .

12.5. The Governing Council shall take the decisions referred to in Article 6.

Article 13 The President

13.1. The President or, in his absence, the Vice-President shall chair the Governing Council and the Executive Board of the ECB.Page 40

13.2. Without prejudice to Article 39, the President or his nominee shall represent the ECB externally.

Article 14 National central banks

14.1. In accordance with Article 109 of this Treaty, each Member State shall ensure, at the latest at the date of the establishment of the ESCB, that its national legislation, including the statutes of its national central bank, is com patible with this Treaty and this Statute.

14.2. The statutes of the national central banks shall, in particular, provide that the term of oce of a Governor of a national central bank shall be no less than ve years.

A Governor may be relieved from oce only if he no longer fulls the conditions required for the performance of his duties or if he has been guilty of serious misconduct. A decision to this eect may be referred to the Court of Justice by the Governor concerned or the Governing Council on grounds of infringement of this Treaty or of any rule of law relating to its application. Such proceedings shall be instituted within two months of the publication of the decision or of its notication to the plainti or, in the absence thereof, of the day on which it came to the knowledge of the latter, as the case maybe.

14.3. The national central banks are an integral part of the ESCB and shall act in accordance with the guidelines and instructions of the ECB. The Governing Council shall take the necessary steps to ensure compliance with the guidelines and instructions of the ECB, and shall require that any necessary information be given to it.

14.4. National central banks may perform functions other than those speci ed in this Statute unless the Governing Council nds, by a majority of two thirds of the votes cast, that these interfere with the objectives and tasks of the ESCB. Such functions shall be performed on the responsibility and liability of national central banks and shall not be regarded as being part of the functions of the ESCB.

Article 15 Reporting commitments

15.1. The ECB shall draw up and publish reports on the activities of the ESCB at least quarterly.

15.2. A consolidated nancial statement of the ESCB shall be published each week.Page 41

15.3. In accordance with Article 113(3) of this Treaty, the ECB shall address an annual report on the activities of the ESCB and on the monetary policy of both the previous and the current year to the European Parliament, the Council and the Commission, and also to the European Council.

15.4. The reports and statements referred to in this Article shall be made available to interested parties free of charge.

Article 16 Banknotes

In accordance with Article 106(1) of this Treaty, the Governing Council shall have the exclusive right to authorise the issue of banknotes within the Community. The ECB and the national central banks may issue such notes. The banknotes issued by the ECB and the national central banks shall be the only such notes to have the status of legal tender within the Community.

The ECB shall respect as far as possible existing practices regarding the issue and design of banknotes.

Chapter IV Monetary Functions and Operations of the ESCB
Article 17 Accounts with the ECB and the national central banks

In order to conduct their operations, the ECB and the national central banks may open accounts for credit institutions, public entities and other market participants and accept assets, including book entry securities, as collateral.

Article 18 Open market and credit operations

18.1. In order to achieve the objectives of the ESCB and to carry out its tasks, the ECB and the national central banks may:

- operate in the nancial markets by buying and selling outright (spot and forward) or under repurchase agreement and by lending or borrowing claims and marketable instruments, whether in Community or in non-Community currencies, as well as precious metals;Page 42

- conduct credit operations with credit institutions and other market participants, with lending being based on adequate collateral.

18.2. The ECB shall establish general principles for open market and credit operations carried out by itself or the national central banks, including for the announcement of conditions under which they stand ready to enter into such transactions.

Article 19 Minimum reserves

19.1. Subject to Article 2, the ECB may require credit institutions established in Member States to hold minimum reserve on accounts with the ECB and national central banks in pursuance of monetary policy objectives. Regula tions concerning the calculation and determination of the required minimum reserves may be established by the Governing Council. In cases of non-com pliance the ECB shall be entitled to levy penalty interest and to impose other sanctions with comparable eect.

19.2. For the application of this Article, the Council shall, in accordance with the procedure laid down in Article 42, dene the basis for minimum reserves and the maximum permissible ratios between those reserves and their basis, as well as the appropriate sanctions in cases of non-compliance.

Article 20 Other instruments of monetary control

The Governing Council may, by a majority of two thirds of the votes cast, decide upon the use of such other operational methods of monetary control as it sees t, respecting Article 2.

The Council shall, in accordance with the procedure laid down in Article 42, dene the scope of such methods if they impose obligations on third parties.

Article 21 Operations with public entities

21.1. In accordance with Article 101 of this Treaty, overdrafts or any other type of credit facility with the ECB or with the national central banks in favour of Community institutions or bodies, central governments, regional, local or other public authorities, other bodies governed by public law, or public under-Page 43 takings of Member States shall be prohibited, as shall the purchase directly from them by the ECB or national central banks of debt instruments.

22.2. The ECB and national central banks may act as scal agents for the entities referred to in Article 21.1.

22.3. The provisions of this Article shall not apply to publicly owned credit institutions which, in the context of the supply of reserves by central banks, shall be given the same treatment by national central banks and the ECB as private credit institutions.

Article 22 Clearing and payment systems

The ECB and national central banks may provide facilities, and the ECB may make regulations, to ensure ecient and sound clearing and payment systems within the Community and with other countries.

Article 23 External operations

The ECB and national central banks may:

- establish relations with central banks and nancial institutions in other countries and, where appropriate, with international organisations;

- acquire and sell spot and forward all types of foreign exchange assets and precious metals; the term 'foreign exchange asset' shall include securities and all other assets in the currency of any country or units of account and in whatever form held;

- hold and manage the assets referred to in this Article;

- conduct all types of banking transactions in relations with third countries and international organisations, including borrowing and lending opera tions.

Article 24 Other operations

In addition to operations arising from their tasks, the ECB and national central banks may enter into operations for their administrative purposes or for their sta.Page 44

Chapter V Prudential Supervision
Article 25 Prudential supervision

25.1. The ECB may oer advice to and be consulted by the Council, the Com mission and the competent authorities of the Member States on the scope and implementation of Community legislation relating to the prudential supervi sion of credit institutions and to the stability of the nancial system.

22.2. In accordance with any decision of the Council under Article 105(6) of this Treaty, the ECB may perform specic tasks concerning policies relating to the prudential supervision of credit institutions and other nancial institutions with the exception of insurance undertakings.

Chapter VI Financial Provisions of the ESCB
Article 26 Financial accounts

26.1. The nancial year of the ECB and national central banks shall begin on the rst day of January and end on the last day of December.

26.2. The annual accounts of the ECB shall be drawn up by the Executive Board, in accordance with the principles established by the Governing Council. The accounts shall be approved by the Governing Council and shall thereafter be published.

26.3. For analytical and operational purposes, the Executive Board shall draw up a consolidated balance sheet of the ESCB, comprising those assets and liab ilities of the national central banks that fall within the ESCB.

26.4. For the application of this Article, the Governing Council shall establish the necessary rules for standardising the accounting and reporting of opera tions undertaken by the national central banks.

Article 27 Auditing

27.1. The accounts of the ECB and national central banks shall be audited by independent external auditors recommended by the Governing Council andPage 45 approved by the Council. The auditors shall have full power to examine all books and accounts of the ECB and national central banks and obtain full information about their transactions.

27.2. The provisions of Article 248 of this Treaty shall only apply to an examination of the operational eciency of the management of the ECB.

Article 28 Capital of the ECB

28.1. The capital of the ECB, which shall become operational upon its estab lishment, shall be ECU 5 000 million. The capital may be increased by such amounts as may be decided by the Governing Council acting by the qualied majority provided for in Article 10.3, within the limits and under the condi tions set by the Council under the procedure laid down in Article 42.

28.2. The national central banks shall be the sole subscribers to and holders of the capital of the ECB. The subscription of capital shall be according to the key established in accordance with Article 29.

28.3. The Governing Council, acting by the qualied majority provided for in Article 10.3, shall determine the extent to which and the form in which the capital shall be paid up.

28.4. Subject to Article 28.5, the shares of the national central banks in the sub scribed capital of the ECB may not be transferred, pledged or attached.

28.5. If the key referred to in Article 29 is adjusted, the national central banks shall transfer among themselves capital shares to the extent necessary to ensure that the distribution of capital shares corresponds to the adjusted key. The Gov erning Council shall determine the terms and conditions of such transfers.

Article 29 Key for capital subscription

29.1. When in accordance with the procedure referred to in Article 123(1) of this Treaty the ESCB and the ECB have been established, the key for subscription of the ECB's capital shall be established. Each national central bank shall be assigned a weighting in this key which shall be equal to the sum of:

- 50 % of the share of its respective Member State in the population of the Community in the penultimate year preceding the establishment of the ESCB;Page 46

- 50 % of the share of its respective Member State in the gross domestic product at market prices of the Community as recorded in the last ve years preceding the penultimate year before the establishment of the ESCB.

The percentages shall be rounded up to the nearest multiple of 0.05 percentage points.

29.2. The statistical data to be used for the application of this Article shall be provided by the Commission in accordance with the rules adopted by the Council under the procedure provided for in Article 42.

29.3. The weightings assigned to the national central banks shall be adjusted every ve years after the establishment of the ESCB by analogy with the provi sions laid down in Article 29.1. The adjusted key shall apply with eect from the rst day of the following year.

29.4. The Governing Council shall take all other measures necessary for the application of this Article.

Article 30 Transfer of foreign reserve assets to the ECB

30.1. Without prejudice to Article 28, the ECB shall be provided by the national central banks with foreign reserve assets, other than Member States' curren cies, ecus, IMF reserve positions and SDRs, up to an amount equivalent to ECU 50 000 million. The Governing Council shall decide upon the proportion to be called up by the ECB following its establishment and the amounts called up at later dates. The ECB shall have the full right to hold and manage the for eign reserves that are transferred to it and to use them for the purposes set out in this Statute.

30.2. The contributions of each national central bank shall be xed in proportion to its share in the subscribed capital of the ECB.

30.3. Each national central bank shall be credited by the ECB with a claim equivalent to its contribution. The Governing Council shall determine the denomination and remuneration of such claims.

30.4. Further calls of foreign reserve assets beyond the limit set in Article 30.1 may be eected by the ECB, in accordance with Article 30.2, within the limits and under the conditions set by the Council in accordance with the procedure laid down in Article 42.

30.5. The ECB may hold and manage IMF reserve positions and SDRs and pro vide for the pooling of such assets.

30.6. The Governing Council shall take all other measures necessary for the application of this Article.Page 47

Article 31 Foreign reserve assets held by national central banks

31.1. The national central banks shall be allowed to perform transactions in ful lment of their obligations towards international organisations in accordance with Article 23.

31.2. All other operations in foreign reserve assets remaining with the national central banks after the transfers referred to in Article 30, and Members States' transactions with their foreign exchange working balances shall, above a cer tain limit to be established within the framework of Article 31.3, be subject to approval by the ECB in order to ensure consistency with the exchange rate and monetary policies of the Community.

31.3. The Governing Council shall issue guidelines with a view to facilitating such operations.

Article 32 Allocation of monetary income of national central banks

32.1. The income accruing to the national central banks in the performance of the ESCB's monetary policy function (hereinafter referred to as 'monetary income') shall be allocated at the end of each nancial year in accordance with the provisions of this Article.

32.2. Subject to Article 32.3, the amount of each national central bank's mon etary income shall be equal to its annual income derived from its assets held against notes in circulation and deposit liabilities to credit institutions. These assets shall be earmarked by national central banks in accordance with guide lines to be established by the Governing Council.

33.3. If, after the start of the third stage, the balance sheet structures of the national central banks do not, in the judgment of the Governing Council, per mit the application of Article 32.2, the Governing Council, acting by a qualied majority, may decide that, by way of derogation from Article 32.2, monetary income shall be measured according to an alternative method for a period of not more than ve years.

33.4. The amount of each national central bank's monetary income shall be reduced by an amount equivalent to any interest paid by that central bank on its deposit liabilities to credit institutions in accordance with Article 19.

The Governing Council may decide that national central banks shall be indemnied against costs incurred in connection with the issue of banknotes or in exceptional circumstances for specic losses arising from monetary policy operations undertaken for the ESCB. Indemnication shall be in a formPage 48 deemed appropriate in the judgment of the Governing Council; these amounts maybe oset against the national central banks' monetary income.

33.5. The sum of the national central banks' monetary income shall be allocated to the national central banks in proportion to their paid up shares in the capital of the ECB, subject to any decision taken by the Governing Council pursuant to Article 33.2.

33.6. The clearing and settlement of the balances arising from the allocation of monetary income shall be carried out by the ECB in accordance with guide lines established by the Governing Council.

33.7. The Governing Council shall take all other measures necessary for the application of this Article.

Article 33 Allocation of net profits and losses of the ECB

33.1. The net prot of the ECB shall be transferred in the following order:

(a) an amount to be determined by the Governing Council, which may not exceed 20 % of the net prot, shall be transferred to the general reserve fund subject to a limit equal to 100 % of the capital;

(b) the remaining net prot shall be distributed to the shareholders of the ECB in proportion to their paid-up shares.

33.2. In the event of a loss incurred by the ECB, the shortfall may be oset against the general reserve fund of the ECB and, if necessary, following a deci sion by the Governing Council, against the monetary income of the relevant nancial year in proportion and up to the amounts allocated to the national central banks in accordance with Article 32.5.

Chapter VII General Provisions
Article 34 Legal acts

34.1. In accordance with Article 110 of this Treaty, the ECB shall:

- make regulations to the extent necessary to implement the tasks dened in Article 3.1, rst indent, Articles 19.1, 22 or 25.2 and in cases which shall be laid down in the acts of the Council referred to in Article 42;Page 49

- take decisions necessary for carrying out the tasks entrusted to the ESCB under this Treaty and this Statute;

- make recommendations and deliver opinions.

34.2. A regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States.

Recommendations and opinions shall have no binding force.

A decision shall be binding in its entirety upon those to whom it is addressed.

Articles 253, 254 and 256 of this Treaty shall apply to regulations and decisions adopted by the ECB.

The ECB may decide to publish its decisions, recommendations and opinions.

34.3. Within the limits and under the conditions adopted by the Council under the procedure laid down in Article 42, the ECB shall be entitled to impose nes or periodic penalty payments on undertakings for failure to comply with ob ligations under its regulations and decisions.

Article 35 Judicial control and related matters

35.1. The acts or omissions of the ECB shall be open to review or interpretation by the Court of Justice in the cases and under the conditions laid down in this Treaty. The ECB may institute proceedings in the cases and under the condi tions laid down in this Treaty.

35.2. Disputes between the ECB, on the one hand, and its creditors, debtors or any other person, on the other, shall be decided by the competent national courts, save where jurisdiction has been conferred upon the Court of Justice.

35.3. The ECB shall be subject to the liability regime provided for in Article 288 of this Treaty. The national central banks shall be liable according to their respective national laws.

35.4. The Court of Justice shall have jurisdiction to give judgment pursuant to any arbitration clause contained in a contract concluded by or on behalf of the ECB, whether that contract be governed by public or private law.

35.5. A decision of the ECB to bring an action before the Court of Justice shall be taken by the Governing Council.

35.6. The Court of Justice shall have jurisdiction in disputes concerning the ful lment by a national central bank of obligations under this Statute. If the ECB considers that a national central bank has failed to full an obligation under this Statute, it shall deliver a reasoned opinion on the matter after giving the national central bank concerned the opportunity to submit its observations. IfPage 50 the national central bank concerned does not comply with the opinion within the period laid down by the ECB, the latter may bring the matter before the Court of Justice.

Article 36 Staff

36.1. The Governing Council, on a proposal from the Executive Board, shall lay down the conditions of employment of the sta of the ECB.

36.2. The Court of Justice shall have jurisdiction in any dispute between the ECB and its servants within the limits and under the conditions laid down in the conditions of employment.

Article 37 Seat

Before the end of 1992, the decision as to where the seat of the ECB will be established shall be taken by common accord of the Governments of the Member States at the level of Heads of State or Government.

Article 38 Professional secrecy

38.1. Members of the governing bodies and the sta of the ECB and the national central banks shall be required, even after their duties have ceased, not to disclose information of the kind covered by the obligation of professional secrecy.

38.2. Persons having access to data covered by Community legislation impos ing an obligation of secrecy shall be subject to such legislation.

Article 39 Signatories

The ECB shall be legally committed to third parties by the President or by two members of the Executive Board or by the signatures of two members of the sta of the ECB who have been duly authorised by the President to sign on behalf of the ECB. Page 51

Article 40 Privileges and immunities

The ECB shall enjoy in the territories of the Member States such privileges and immunities as are necessary for the performance of its tasks, under the conditions laid down in the Protocol on the privileges and immunities of the European Communities.

Chapter VIII Amendment of the Statute and Complementary Legislation
Article 41 Simplified amendment procedure

41.1. In accordance with Article 107(5) of this Treaty, Articles 5.1, 5.2, 5.3, 17, 18,19.1, 22, 23, 24, 26, 32.2, 32.3, 32.4, 32.6, 33.1(a) and 36 of this Statute may be amended by the Council, acting either by a qualied majority on a recommenda tion from the ECB and after consulting the Commission, or unanimously on a proposal from the Commission and after consulting the ECB. In either case the assent of the European Parliament shall be required.

41.2. A recommendation made by the ECB under this Article shall require a unanimous decision by the Governing Council.

Article 42 Complementary legislation

In accordance with Article 107(6) of this Treaty, immediately after the decision on the date for the beginning of the third stage, the Council, acting by a qualied majority either on a proposal from the Commission and after consulting the European Parliament and the ECB or on a recommendation from the ECB and after consulting the European Parliament and the Commission, shall adopt the provisions referred to in Articles , .,19.2, 20, 28.1, 29.2, 30.4 and 34.3 of this Statute.Page 52

Chapter IX Transitional and Other Provisions for the ESCB
Article 43 General provisions

43.1. A derogation as referred to in Article 122(1) of this Treaty shall entail that the following Articles of this Statute shall not confer any rights or impose any obligations on the Member State concerned: 3, 6,9.2,12.1,14.3,16,18,19, 20, 22, 23, 26.2, 27, 30, 31, 32, 33, 34, 50 and 52.

43.2. The central banks of Member States with a derogation as specied in Art icle 122(1) of this Treaty shall retain their powers in the eld of monetary policy according to national law.

43.3. In accordance with Article 122(4) of this Treaty, 'Member States' shall be read as 'Member States without a derogation' in the following Articles of this Statute: 3,11.2,19, 34.2 and 50.

43.4. 'National central banks' shall be read as 'central banks of Member States without a derogation' in the following Articles of this Statute: 9.2,10.1,10.3,12.1, 16,17,18, 22, 23, 27,30, 31,32, 33.2 and 52.

43.5. 'Shareholders' shall be read as 'central banks of Member States without a derogation' in Articles 10.3 and 33.1.

43.6.'Subscribed capital of the ECB' shall be read as 'capital of the ECB subscribed by the central banks of Member States without a derogation' in Articles 10.3 and 30.2.

Article 44 Transitional tasks of the ECB

The ECB shall take over those tasks of the EMI which, because of the derogations of one or more Member States, still have to be performed in the third stage.

The ECB shall give advice in the preparations for the abrogation of the derogations specied in Article 122 of this Treaty.Page 53

Article 45 The General Council of the ECB

45.1. Without prejudice to Article 107(3) of this Treaty, the General Council shall be constituted as a third decision-making body of the ECB.

45.2. The General Council shall comprise the President and Vice-President of the ECB and the Governors of the national central banks. The other members of the Executive Board may participate, without having the right to vote, in meetings of the General Council.

45.3. The responsibilities of the General Council are listed in full in Article 47 of this Statute.

Article 46 Rules of Procedure of the General Council

46.1. The President or, in his absence, the Vice-President of the ECB shall chair the General Council of the ECB.

46.2. The President of the Council and a Member of the Commission may par ticipate, without having the right to vote, in meetings of the General Council.

46.3. The President shall prepare the meetings of the General Council.

46.4. By way of derogation from Article 12.3, the General Council shall adopt its Rules of Procedure.

46.5. The Secretariat of the General Council shall be provided by the ECB.

Article 47 Responsibilities of the General Council

47.1. The General Council shall:

- perform the tasks referred to in Article ;

- contribute to the advisory functions referred to in Articles 4 and 25.1.

47.2. The General Council shall contribute to:

- the collection of statistical information as referred to in Article ;

- the reporting activities of the ECB as referred to in Article 15;

- the establishment of the necessary rules for the application of Article 26 as referred to in Article 26.4;Page 54

- the taking of all other measures necessary for the application of Article 29 as referred to in Article 29.4;

- the laying down of the conditions of employment of the sta of the ECB as referred to in Article 36.

47.3. The General Council shall contribute to the necessary preparations for irrevocably xing the exchange rates of the currencies of Member States with a derogation against the currencies, or the single currency, of the Member States without a derogation, as referred to in Article 123(5) of this Treaty.

47.4. The General Council shall be informed by the President of the ECB of decisions of the Governing Council.

Article 48 Transitional provisions for the capital of the ECB

In accordance with Article 29.1 each national central bank shall be assigned a weighting in the key for subscription of the ECB's capital. By way of derogation from Article 28.3, central banks of Member States with a derogation shall not pay up their subscribed capital unless the General Council, acting by a majority representing at least two thirds of the subscribed capital of the ECB and at least half of the shareholders, decides that a minimal percentage has to be paid up as a contribution to the operational costs of the ECB.

Article 49 Deferred payment of capital, reserves and provisions of the ECB

49.1. The central bank of a Member State whose derogation has been abrog ated shall pay up its subscribed share of the capital of the ECB to the same extent as the central banks of other Member States without a derogation, and shall transfer to the ECB foreign reserve assets in accordance with Article 30.1.

The sum to be transferred shall be determined by multiplying the ecu value at current exchange rates of the foreign reserve assets which have already been transferred to the ECB in accordance with Article 30.1, by the ratio between the number of shares subscribed by the national central bank concerned and the number of shares already paid up by the other national central banks.

49.2. In addition to the payment to be made in accordance with Article 49.1, the central bank concerned shall contribute to the reserves of the ECB, to those provisions equivalent to reserves, and to the amount still to be appropriated to the reserves and provisions corresponding to the balance of the prot and loss account as at 31 December of the year prior to the abrogation of the derogation.

The sum to be contributed shall be determined by multiplying the amount ofPage 55 the reserves, as dened above and as stated in the approved balance sheet of the ECB, by the ratio between the number of shares subscribed by the central bank concerned and the number of shares already paid up by the other central banks.

49.3 1. Upon one or more countries becoming Member States and their respective national central banks becoming part of the ESCB, the subscribed capital of the ECB and the limit on the amount of foreign reserve assets that may be transferred to the ECB shall be automatically increased. The increase shall be determined by multiplying the respective amounts then prevailing by the ratio, within the expanded capital key, between the weighting of the entering national central banks concerned and the weighting of the national central banks already members of the ESCB. Each national central bank's weighting in the capital key shall be calculated by analogy with Article 29.1 and in compliance with Article 29.2. The reference periods to be used for the statistical data shall be identical to those applied for the latest quinquennial adjustment of the weightings under Article 29.3.

Article so Initial appointment of the members of the Executive Board

When the Executive Board of the ECB is being established, the President, the Vice-President and the other members of the Executive Board shall be appointed by common accord of the Governments of the Member States at the level of Heads of State or Government, on a recommendation from the Council and after consulting the European Parliament and the Council of the EMI. The President of the Executive Board shall be appointed for eight years. By way of derogation from Article 11.2, the Vice-President shall be appointed for four years and the other members of the Executive Board for terms of oce of between ve and eight years. No term of oce shall be renewable. The number of members of the Executive Board maybe smaller than provided for in Article 11.1, but in no circumstance shall it be less than four.

Article si Derogation from Article 32

51.1. If, after the start of the third stage, the Governing Council decides that the application of Article 32 results in signicant changes in national central banks' relative income positions, the amount of income to be allocated pursuant to Article 32 shall be reduced by a uniform percentage which shall not exceedPage 56 60 % in the rst nancial year after the start of the third stage and which shall decrease by at least 12 percentage points in each subsequent nancial year.

51.2. Article 51.1 shall be applicable for not more than ve nancial years after the start of the third stage.

Article 52 Exchange of banknotes in Community currencies

Following the irrevocable xing of exchange rates, the Governing Council shall take the necessary measures to ensure that banknotes denominated in currencies with irrevocably xed exchange rates are exchanged by the national central banks at their respective par values.

Article 53 Applicability of the transitional provisions

If and as long as there are Member States with a derogation Articles 43 to shall be applicable. Page 57

Protocol (No 20) on the excessive deficit procedure (1992)

THE HIGH CONTRACTING PARTIES, DESIRING to lay down the details of the excessive decit procedure referred to in Article 104 of the Treaty establishing the European Community, HAVE AGREED upon the following provisions, which shall be annexed to the Treaty establishing the European Community:

Article 1

The reference values referred to in Article 104(2) of this Treaty are:

- 3 % for the ratio of the planned or actual government decit to gross do mestic product at market prices;

- 60 % for the ratio of government debt to gross domestic product at market prices.

Article 2

In Article 104 of this Treaty and in this Protocol:

- government means general government, that is central government, regional or local government and social security funds, to the exclusion of commercial operations, as dened in the European System of Integrated Economic Accounts;

- decit means net borrowing as dened in the European System of Integ rated Economic Accounts;

- investment means gross xed capital formation as dened in the European System of Integrated Economic Accounts;

- debt means total gross debt at nominal value outstanding at the end of the year and consolidated between and within the sectors of general govern ment as dened in the rst indent.

Article 3

In order to ensure the eectiveness of the excessive decit procedure, the Governments of the Member States shall be responsible under this procedure for the decits of general government as dened in the rst indent of Article 2.Page 58

The Member States shall ensure that national procedures in the budgetary area enable them to meet their obligations in this area deriving from this Treaty. The Member States shall report their planned and actual decits and the levels of their debt promptly and regularly to the Commission.

Article 4

The statistical data to be used for the application of this Protocol shall be provided by the Commission.Page 59

Protocol (No 21) on the convergence criteria referred to in Article 121 of the Treaty establishing the European Community (1992)

THE HIGH CONTRACTING PARTIES, DESIRING to lay down the details of the convergence criteria which shall guide the Community in taking decisions on the passage to the third stage of economic and monetary union, referred to in Article 121(1) of this Treaty, HAVE AGREED upon the following provisions, which shall be annexed to the Treaty establishing the European Community:

Article 1

The criterion on price stability referred to in the rst indent of Article 121(1) of this Treaty shall mean that a Member State has a price performance that is sustainable and an average rate of inflation, observed over a period of one year before the examination, that does not exceed by more than 11/2 percentage points that of, at most, the three best performing Member States in terms of price stability. Inflation shall be measured by means of the consumer price index on a comparable basis, taking into account dierences in national denitions.

Article 2

The criterion on the government budgetary position referred to in the second indent of Article 121(1) of this Treaty shall mean that at the time of the examination the Member State is not the subject of a Council decision under Article 104(6) of this Treaty that an excessive decit exists.

Article 3

The criterion on participation in the Exchange Rate Mechanism of the European Monetary System referred to in the third indent of Article 121(1) of this Treaty shall mean that a Member State has respected the normal fluctuation margins provided for by the exchange rate mechanism of the European Monetary System without severe tensions for at least the last two years before the examination. In particular, the Member State shall not have devalued its currency's bilateral central rate against any other Member State's currency on its own initiative for the same period.Page 60

Article 4

The criterion on the convergence of interest rates referred to in the fourth indent of Article 121(1) of this Treaty shall mean that, observed over a period of one year before the examination, a Member State has had an average nominal long-term interest rate that does not exceed by more than 2 percentage points that of, at most, the three best performing Member States in terms of price stability. Interest rates shall be measured on the basis of long-term government bonds or comparable securities, taking into account dierences in national denitions.

Article 5

The statistical data to be used for the application of this Protocol shall be provided by the Commission.

Article 6

The Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament, the EMI or the ECB as the case may be, and the Committee referred to in Article 114, adopt appropriate provisions to lay down the details of the convergence criteria referred to in Article 121 this Treaty, which shall then replace this Protocol.Page 61

Protocol (No 25)on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland (1992)

THE HIGH CONTRACTING PARTIES, RECOGNISING that the United Kingdom shall not be obliged or committed to move to the third stage of economic and monetary union without a separate decision to do so by its Government and parliament, NOTING the practice of the Government of the United Kingdom to fund its borrowing requirement by the sale of debt to the private sector, HAVE AGREED the following provisions, which shall be annexed to the Treaty establishing the European Community:

  1. The United Kingdom shall notify the Council whether it intends to move to the third stage before the Council makes its assessment under Article 121(2) of this Treaty.

    Unless the United Kingdom noties the Council that it intends to move to the third stage, it shall be under no obligation to do so.

    If no date is set for the beginning of the third stage under Article 121(3) of this Treaty, the United Kingdom may notify its intention to move to the third stage before 1 January 1998.

  2. Paragraphs 3 to 9 shall have eect if the United Kingdom noties the Council that it does not intend to move to the third stage. 3. The United Kingdom shall not be included among the majority of Member States which full the necessary conditions referred to in the second indent of Article 121(2) and the rst indent of Article 121(3) of this Treaty.

  3. The United Kingdom shall retain its powers in the eld of monetary policy according to national law.

  4. Articles 4(2), 104(1), (9) and (11), 105(1) to (5), 106,108,109,110,111,112(1) and (2)(b) and 123(4) and () of this Treaty shall not apply to the United King dom. In these provisions references to the Community or the Member States shall not include the United Kingdom and references to national central banks shall not include the Bank of England.

  5. Articles 116(4) and 119 and 120 of this Treaty shall continue to apply to the United Kingdom. Articles 114(4) and 124 shall apply to the United Kingdom as if it had a derogation.

  6. The voting rights of the United Kingdom shall be suspended in respect of acts of the Council referred to in the Articles listed in paragraph . For thisPage 62 purpose the weighted votes of the United Kingdom shall be excluded from any calculation of a qualied majority under Article 122(5) of this Treaty. The United Kingdom shall also have no right to participate in the appointment of the President, the Vice-President and the other members of the Executive Board of the ECB under Articles ii2(2)(b) and 123(1) of this Treaty.

  7. Articles 3, 4, 6, 7, 9.2,10.1,10.3,11.2,12.1,14,16,18 to 20, 22, 23, 26, 27, 30 to 34, 50 and 52 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank ('the Statute') shall not apply to the United Kingdom.

    In those Articles, references to the Community or the Member States shall not include the United Kingdom and references to national central banks or shareholders shall not include the Bank of England.

    References in Articles 10.3 and 30.2 of the Statute to 'subscribed capital of the ECB' shall not include capital subscribed by the Bank of England.

  8. Article 123(3) of this Treaty and Articles 44 to 48 of the Statute shall have eect, whether or not there is any Member State with a derogation, subject to the following amendments:

    (a) References in Article 44 to the tasks of the ECB and the EMI shall include those tasks that still need to be performed in the third stage owing to any decision of the United Kingdom not to move to that stage.

    (b) In addition to the tasks referred to in Article 47 the ECB shall also give advice in relation to and contribute to the preparation of any decision of the Council with regard to the United Kingdom taken in accordance with paragraphs 10(a) and 10(c).

    (c) The Bank of England shall pay up its subscription to the capital of the ECB as a contribution to its operational costs on the same basis as national cen tral banks of Member States with a derogation.

  9. If the United Kingdom does not move to the third stage, it may change its notication at any time after the beginning of that stage. In that event:

    (a) The United Kingdom shall have the right to move to the third stage pro vided only that it satises the necessary conditions. The Council, acting at the request of the United Kingdom and under the conditions and in accordance with the procedure laid down in Article 122(2) of this Treaty, shall decide whether it fulls the necessary conditions.

    (b) The Bank of England shall pay up its subscribed capital, transfer to the ECB foreign reserve assets and contribute to its reserves on the same basis as the national central bank of a Member State whose derogation has been abrog ated.Page 63

    (c) The Council, acting under the conditions and in accordance with the procedure laid down in Article 123(5) of this Treaty, shall take all other necessary decisions to enable the United Kingdom to move to the third stage.

    If the United Kingdom moves to the third stage pursuant to the provisions of this Protocol, paragraphs 3 to 9 shall cease to have eect.

  10. Notwithstanding Articles 101 and 116(3) of this Treaty and Article 21.1 of the Statute, the Government of the United Kingdom may maintain its 'ways and means' facility with the Bank of England if and so long as the United Kingdom does not move to the third stage.Page 64

Protocol (No 26) on certain provisions relating to Denmark (1992)

THE HIGH CONTRACTING PARTIES, DESIRING to settle, in accordance with the general objectives of the Treaty establishing the European Community, certain particular problems existing at the present time, TAKING INTO ACCOUNT that the Danish Constitution contains provisions which may imply a referendum in Denmark prior to Danish participation in the third stage of economic and monetary union, HAVE AGREED on the following provisions, which shall be annexed to the Treaty establishing the European Community:

  1. The Danish Government shall notify the Council of its position concerning participation in the third stage before the Council makes its assessment under Article 121(2) of this Treaty.

  2. In the event of a notication that Denmark will not participate in the third stage, Denmark shall have an exemption. The eect of the exemption shall be that all Articles and provisions of this Treaty and the Statute of the ESCB refer ring to a derogation shall be applicable to Denmark.

  3. In such case, Denmark shall not be included among the majority of Mem ber States which full the necessary conditions referred to in the second indent of Article 121(2) and the rst indent of Article 121(3) of this Treaty.

  4. As for the abrogation of the exemption, the procedure referred to in Article 122(2) shall only be initiated at the request of Denmark.

  5. In the event of abrogation of the exemption status, the provisions of this Protocol shall cease to apply.

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* In addition to amendments made by Treaties subsequent to the Treaty of Maastricht, this text incorporates the amendments made by Council Decision 2003/223/EC.

[1] Paragraph added by the 2003 Act of Accession.