The ECBs decisionmaking bodies The General Council of
The ECB's decision-making bodies • • • The General Council of the ECB is the ECB's decision-making body, consisting of the ECB's President and Vice-President and the governors of the national central banks of all 27 EU Member States. It can be regarded as a transitional body and it will be dissolved once all EU Member States have introduced the euro (since at that point, the composition of the ECB's General Council will be identical to the composition of the ECB's Governing Council). The Governing Council of the ECB is the main decision-making body of the Eurosystem that adopts monetary policy decisions for the euro area (including decisions about interest rates), and it consists of the Executive Board members (President and Vice-President and four other members) and the governors of the national central banks of the 17 EU Member States that have introduced the euro. The council decides by simple majority(one person one vote) The Executive Board of the ECB is an operational decision-making body of the ECB and the Eurosystem, which manages day-to-day business. It consists of the ECB's President, Vice-President and four other members (a total of 6 members). Their term in office is 8 years and are appointed by the European Council
Independence • • • Independence of the ECB and national central banks Both the ECB and national central banks are independent in performing their tasks. Functional independence implies that ECB, in order to meet its primary objective of price stability, has at its disposal all instruments and competencies necessary for the conduct of an efficient monetary policy and is authorised to decide autonomously how and when to use them. Institutional independence implies that neither the ECB nor the national central banks (NCBs), nor any member of their decision-making bodies, are allowed to seek or take instructions from European Community institutions or bodies, from any government of an EU Member State or from any other body. At the same time, Community institutions, governments and bodies are forbidden to give instructions or, in any other way, to influence the ECB's decision-making bodies or the national central banks. Personal independence implies a minimum term of office for NCB governors of five years (with a possibility of re-appointment) and a non-renewable term of office of eight years for members of the Executive Board of the ECB. In addition, the members of the decision-making bodies cannot be removed from office, except in the cases provided for by the ESCB and ECB Statute. Financial independence implies that the ECB and national central banks must be capable of providing, independently, sufficient financial resources for fulfilling its tasks. The ECB has its own capital, subscribed and paid up by the NCBs and it also has its own budget, kept separate from that of other EU institutions. The national central banks also must have sufficient financial resources for carrying out their tasks, both their own and those related to the ESCB.
Open market operations • • • The Eurosystem’s regular open market operations consist of one-week euro liquidity-providing operations (main refinancing operations or MROs, durata prefissata due settimane) as well as 3 months euro liquidity-providing operations (longer-term refinancing operations or LTROs). Queste avvengono ogni mese. MROs serve to steer short-term interest rates, to manage the liquidity situation, and to signal the stance of monetary policy in the euro area, ( gestione della politica monetaria in relazione all’andamento congiunturale) while LTROs aim to provide additional, longer-term refinancing to the financial sector. After October 2008 the weight of the refinancing operations shifted towards LTROs. Lending through open market operation normally takes place in the form of reverse transactions(P/T di acquisto) : the ECB buys assets from a bank under a repurchase agreement (the bank buys the assets back). Reverse transactions are therefore temporary OMO which provide funds for a limited pre-specified period Fine tuning operations ( aste veloci, procedure bilaterali ) Operazioni strutturali (Acquisti definitivi, emissioni di certificati di deposito della BCE)
Unconventional monetary policy during the crisis • • • Extension of the maturity of LTROs : six, twelve and thirty-six months. The 36 months LTRO was launched in November and December 2011. In December 2011 was also decided to temporary reduce the reserve ratio from 2 to 1 %. The Ec. B lent almost 490 billion euros in December 2011 and 530 billions in February 2012 to banks. US-dollar liquidity-providing operations (through swap lines with FED). Extension of the list of collateral assets accepted by the ECB for granting a loans to banks In addition, the Eurosystem has launched two Covered Bond Purchase Programmes (CBPP 1, which ended in June 2010 and CBPP 2, which started in November 2011) in order to purchase eurodenominated covered bonds and, since 10 May 2010, it has conducted interventions in debt markets under the Securities Markets Programme (SMP). For a chronological listing of the measures see the Annex "Chronology of monetary policy measures of the Eurosystem" in the November 2011 Monthly Bulletin [3. 15 MB] and for details on the ECB's non-standard measures, including a comparison with the Fed and the Bank of Japan, see "IV. The ECB’s response to the financial crisis" of the former President Trichet's speech "The ECB’s enhanced credit support" (13 July 2009). For details on the ECB’s response to the financial crisis, see the article “The ECB’s response to the financial crisis” in the October 2010 Monthly Bulletin. For details on the ECB’s response to the sovereign debt crisis, see September 2011 Monthly Bulletin.
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