Abstract
This chapter first examines in detail the definition of the single monetary policy, as well as its implementation, with an emphasis on the instruments used, the eligible counterparties, the assets eligible as collateral in the Eurosystem and then, in particular, the implementation of this policy following the recent (2007–2009) international financial crisis and the ongoing fiscal crisis in the euro area. The (recent) introduction of the euro short-term rate is also discussed in this section. The second section analyses the other basic tasks of the European Central Bank (ECB) within the Eurosystem: the exchange-rate policy, holding and managing foreign reserve assets, and promoting the smooth functioning of payment systems. In relation to the latter, the 2014 ECB Regulation on oversight requirements for systemically important payment systems, the Trans-European Automated Real-Time Gross Settlement Express Transfer 2 (TARGET2) payment system and the TARGET2-Securities system are discussed in more detail. Finally, the third section develops on the powers of the ECB in relation to the issuance of euro-denominated banknotes and coins.
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Notes
- 1.
On this TFEU Article and the related Articles of the ESCB/ECB Statute, which are presented below, see, by way of mere indication, Smits (1997), pp. 223–288, European Central Bank (2011), Lastra and Louis (2013), pp. 79–80 and Wutscher (2019), pp. 2049–2052. On the evolution of the single monetary policy and its framework (until the start of the recent crises), see also Weber (1995) (in the prospect of the creation of the ECB), Eijffinger and de Haan (2000), pp. 54–79, Issing et al. (2001), De Grauwe (2004), pp. 177–200, Louis (2005) and Issing (2008).
- 2.
The following analysis is based on European Central Bank (2011), pp. 55–82.
- 3.
On the HICP, see at: https://www.ecb.europa.eu/stats/macroeconomic_and_sectoral/hicp/html/index.en.html.
- 4.
For a chart depicting the transmission mechanism of monetary policy effects, see European Central Bank (2011), p. 59.
- 5.
The reference value is reviewed on an annual basis and is derived from the standardised relationship between money, prices, real economic activity and velocity described in the quantity theory of money equation (on the basis of the ‘Fischer equation’). This equation shows that the growth rate of money supply (ΔΜ) is equal to the output growth rate (ΔΥ) and the inflation rate (ΔΡ), minus the growth rate of money velocity (ΔV). Therefore, the reference value is illustrated by the formula: ΔΜ = ΔΥ + ΔΡ − ΔV.
- 6.
On this system, as adjusted to develop into the ‘TARGET2’ system, see Sect. 7.2.4.
- 7.
In this context, the Council adopted (as part of its complementary legislation) Regulation (EC) No 2533/98 (OJ L 318, 27.11.1998, pp. 8–19), and the ECB issued Regulation ECB/1998/16 (OJ L 356, 30.12.1998, pp. 7–40).
- 8.
Such a system is the ‘TARGET2-Securities system’ for securities settlement in central bank money (see Sect. 7.2.4, as well).
- 9.
- 10.
- 11.
OJ L 91, 2.4.2015, pp. 3–135; by August 2019, this legal act had been amended eight times. An unofficial consolidated text is available at: https://www.ecb.europa.eu/ecb/legal/pdf/celex_02014o0060-20190805_en_txt.pdf.
- 12.
Guideline ECB/2015/35 of 18 November 2015 (OJ L 14, 21.1.2016, pp. 30–35), as in force, Guideline ECB/2014/9 of 20 February 2014 as in force and Decision ECB/2014/23 of 5 June 2014 (OJ L 168, 5.6.2014, p. 115–116), as in force, respectively. Relevant is also the Agreement of 19 November 2014 between the NCBs—Members of the Eurosystem “on net financial assets”, by virtue of which these NCBs undertook the general obligation that, in each year, the average value of their net financial assets shall not exceed their net financial asset ceiling for that year (available at: https://www.ecb.europa.eu/ecb/legal/pdf/en_anfa_agreement_19nov2014_f_sign.pdf).
- 13.
For an overview of all ECB legal acts pertaining to the ‘general framework’ of monetary instruments (a term used to distinguish these instruments from those that formpart of the ECB’s ‘unconventional’ monetary policy and are known under the term ‘temporary framework’—see Sect. 7.1.3), see the ECB’s website at: https://www.ecb.europa.eu/ecb/legal/1002/1014/html/index-tabs.en.html (constantly updated).
- 14.
ESCB/ECB Statute, Article 18.2.
- 15.
Guideline ECB/2014/60, Article 5(1)–(3). The five instruments are defined in Article (2), points (9), (40), (47), (72) and (80) and further analysed in Articles 10–14; and for a summary, see Table 7.1.
- 16.
Ibid., Articles 6–9, respectively.
- 17.
Tender procedure means a procedure whereby the Eurosystem provides liquidity to, or withdraws liquidity from, the market whereby the NCB enters into transactions by accepting bids submitted by counterparties after a public announcement (ibid., Article 2, point (92)). The indicative calendar for the Eurosystem’s regular tender operations is endorsed by the GC and indicates the timing of the reserve maintenance period, as well as the announcement, allotment and maturity of main refinancing operations and regular longer term refinancing operations (ibid., Article 2, point (42)).
- 18.
This is the main ECB rate.
- 19.
On the extension of LTROs’ maturity during the last years, see Sect. 7.1.3.
- 20.
Bilateral procedure means a procedure whereby the NCBs or, in exceptional circumstances the ECB, conduct fine-tuning operations or outright transactions, directly with one or more counterparties, or through stock exchanges or market agents, without making use of tender procedures; the Eurosystem provides liquidity to, or withdraws liquidity from, the market whereby the NCB enters into transactions by accepting bids submitted by counterparties after a public announcement (ibid., Article 2, point (4)).
- 21.
In the case of fine-tuning operations, this applies without prejudice to Article 45(3) of Guideline ECB/2014/60 on bilateral procedures executed by means of direct contact with counterparties (ibid., Article 8(2), point (d)).
- 22.
On the two latter aspects, see also later. The tender and bilateral procedures for Eurosystem open market operations are governed by Articles 24–54 of Guideline ECB/2014/60. On the main features of the Eurosystem’s open market operations, see Table 7.2.
- 23.
ESCB/ECB Statute, Article 18(2).
- 24.
Guideline ECB/2014/60, Articles 17–23. For an overview of the characteristics of both Eurosystem open market operations and Eurosystem standing facilities, see also Table I of the Guideline.
- 25.
ESCB/ECB Statute, Article 19(1)–(2).
- 26.
OJ L 318, 27.11.1998, pp. 1–3; this legal act is in force as (slightly) amended by Council Regulation (EC) No 134/2002 of 22 January 2002 (OJ L 24, 26.1.2002, p. 1).
- 27.
OJ L 250, 2.10.2003, pp. 10–16; by August 2019, this legal act had been amended four times.
- 28.
Regulation ECB/2003/9, Articles 2(1) and 4, respectively; the reserve base is determined in Article 3. Annex I of Guideline ECB/2014/60 also deals with minimum reserves (albeit for information purposes only).
- 29.
Guideline ECB/2014/60, Article 2, point (32).
- 30.
Ibid., Article 55.
- 31.
- 32.
The criteria for the assessment of institutions’ financial soundness are laid down in Article 55a of Guideline ECB/2014/60.
- 33.
Specific rules govern access to open market operations executed by means of standard tender procedures and to standing facilities and the selection of counterparties for access to open market operations executed by means of quick tender procedures or bilateral procedures (ibid., Articles 56 and 57).
- 34.
Initially, assets were divided into two tiers: while Tier 1 assets were specified by the ECB as marketable assets fulfilling certain uniform euro area-wide eligibility criteria, Tier 2 assets consisted of marketable or non-marketable assets, which were of particular importance for national financial markets and banking systems of euro-area Member States. Eligibility criteria for Tier 2 assets (which were normally not used by the Eurosystem in outright transactions) were established by the NCBs, subject to ECB approval.
- 35.
This term includes both liquidity-providing reverse transactions, that is liquidity-providing Eurosystem monetary policy operations excluding foreign exchange swaps for monetary policy purposes and outright purchases, and ‘intraday credit’; the latter term is defined in Article 2, point (6) of Guideline ECB/2012/27 on the TARGET2 system (see Sect. 7.2.4) (Guideline ECB/2014/60, Article 2, points (31) and (46), respectively).
- 36.
Collateral provided by counterparties in respect of intraday credit must also comply with the eligibility criteria, as outlined in Guideline ECB/2012/27.
- 37.
Guideline ECB/2014/60, Article 58.
- 38.
Ibid., Articles 59(1)–(3). Additional credit quality requirements for marketable and non-marketable assets are applied by the Eurosystem in accordance with Articles 60–88 and 89–112. When assessing credit quality requirements, the Eurosystem takes into account credit assessment information from credit assessment systems in accordance with Articles 119–136 (ibid., Article 59(5)). The ECAF follows the definition of ‘default’ laid down in the CRD IV and the CRR (ibid., Article 59(7)).
- 39.
Ibid., Article 59(6).
- 40.
- 41.
- 42.
- 43.
The (above-mentioned) three series of targeted LTROs are governed by Decisions ECB/2014/34 of 29 July 2014 (OJ L 258, 29.8.2014, pp. 11–29), as in force, ECB/2016/10 of 28 April 2016 (OJ L 132, 3.5.2016, pp. 107–128), as in force, and ECB/2019/21 of 22 July 2019 (OJ L 204, 2.8.2019, pp. 100–122), respectively.
- 44.
- 45.
See Sect. 7.1.1.
- 46.
For an overview of all ECB legal acts pertaining to this temporary framework, see the ECB’s website at: https://www.ecb.europa.eu/ecb/legal/1002/1014/html/index-tabs.en.html (constantly updated); for a general assessment, see European Central Bank (2010), Claeys and Leandro (2016), European Parliament (2014), Ross et al. (2015a) and (2015b), Claeys and Leandro (2016), Zilioli and Athanassiou (2018), pp. 633–644, Smits (2018), Draghi (2019) and Wutscher (2019), pp. 2052–2054. On the evolution of the Eurosystem’s balance sheet during the period 2007–2017 as a result of the ECB’s ‘unconventional’ monetary policy, see Table 7.3.
- 47.
Decisions ECB/2009/16 OJ L175, 4.7.2009, pp. 18–19) and ECB/2011/17 (OJ L 297, 16.11.2011, pp. 70–71), respectively. The legal bases in both cases were Article 127(2), first indent TFEU and Article 12.1, second sub-paragraph (in conjunction with the first indent of Article 3.1 and Article 18.1) ESCB/ECB Statute.
- 48.
Decision ECB/2010/5 (OJ L 124, 20.5.2010, pp. 8–9), adopted on the same legal bases as its above-mentioned decisions on the CBPP and the CBPP2.
- 49.
ECB purchases of Member States’ sovereign bonds in the primary market (i.e. upon their issuance) are prohibited under Article 123(1) TFEU.
- 50.
Case C-62/14, 16 June 2015, (EU:C:2015:400), available at: https://curia.europa.eu/juris/celex.jsf?celex=62014CJ0062&lang1=el&type=TXT&ancre.
- 51.
- 52.
On this programme, see European Central Bank (2015); see also at: https://www.ecb.europa.eu/mopo/implement/omt/html/index.en.html (continually updated).
- 53.
Decisions ECB/2014/40 (OJ L 335, 22.10.2014, pp. 22–24), ECB/2014/45 (OJ L 1, 6.1.2015, pp. 4–7), ECB/2015/10 (OJ L 121, 14.5.2015, pp. 20–24) and ECB/2016/16 (OJ L 157, 15.6.2016, pp. 28–32), respectively (and all as in force). The legal bases of all these decisions are, equally in this case, Article 127(2), first indent TFEU and Article 12.1, second sub-paragraph (in conjunction with the first indent of Article 3.1 and Article 18.1) Statute. On the PSPP, see Baroncelli (2019), pp. 220–230, also discussing the relevant ECJ judgment of 11 December 2018 in Case C-493/17 (EU:C:2018:1000) Heinrich Weiss and Others.
- 54.
OJ L 199, 26.7.2019, pp. 8–17.
- 55.
Guideline ECB/2019/19, Article 1.
- 56.
OJ L 171, 29.6.2016, pp. 1–65.
- 57.
Guideline ECB/2019/19, recital (1). The legal bases of the Guideline are Articles 127(2) and 127(5) TFEU, since the absence of robust and reliable benchmarks might trigger financial market disruptions with a possible significant adverse impact on the transmission of ECB monetary policy decisions and on the Eurosystem’s ability to contribute to the smooth conduct of policies pursued by the competent authorities relating to stability of the financial system (ibid). The Guideline is also in line with the 2013 IOSCO Principles for Financial Benchmarks; although neither these IOSCO Principles nor Regulation (EU) 2016/1011 apply to central banks, in determining the euro short-term rate, the ECB as its administrator will endeavour to transpose the intention of these principles, where relevant and appropriate (ibid, recital (7)). The IOSCO Principles are available at: https://www.iosco.org/library/pubdocs/pdf/IOSCOPD415.pdf.
- 58.
Ibid., Articles 3 and 6(1).
- 59.
Ibid., Article 10.
- 60.
Ibid., Articles 15(2) and 16(2).
- 61.
- 62.
- 63.
On this, see Smits (1997), pp. 375–376.
- 64.
TFEU, Articles 219(1), first sub-paragraph, and 219(3).
- 65.
Ibid., Article 219(1), second sub-paragraph.
- 66.
Ibid., Article 219(2).
- 67.
Resolution of the European Council on Economic Policy Coordination in Stage 3 of EMU and on Treaty Article 109 and 109b, Annex 1, Luxembourg European Council Presidency conclusions, 12–13 December 1997, paragraph 8, available at: https://www.consilium.europa.eu/media/21114/luxembourg-european-council.pdf.
- 68.
TFEU, Article 219(4). This aspect is governed by Article 138; see on this Potacs (2019), pp. 2095–2097.
- 69.
On the contrary, the ECB became itself a member of the BIS in 2000 (along with several other NCBs—Members of the Eurosystem), by virtue of an amendment to Article 15 of the BIS Statutes, according to which its members are central banks in general and not only national central banks (as initially provided for).
- 70.
Luxembourg European Council’s Resolution, 12–13 December 1997, paragraph 10, in finem.
- 71.
On this Article, see Wutscher (2019), pp. 2055–2056.
- 72.
ESCB/ECB Statute, Articles 30.1, first and third sentences and 30.2. Each NCB is credited by the ECB with a claim equivalent to its contribution; the denomination and remuneration of such claims is determined by the GC (ibid., Article 30.3).
- 73.
See, in this respect, the Appendix to the ECB Guideline of 3 November 1998, as amended in 2000 (ECB/2000/15, OJ L 336, 3012.2000, pp. 114–117), which also sets out the composition and valuation of foreign reserve assets, modalities for their initial transfer, as well as the denomination and remuneration of equivalent claims.
- 74.
This decision was adopted on the basis of Article 30.1, third sentence ESCB/ECB Statute.
- 75.
OJ L 192, 19.7.2008, pp. 63–83; this Guideline, adopted on the basis of Article 30.6 ESCB/ECB Statute, is in force as amended by Guideline ECB/20013/45 (OJ L 57, 4.3.2014, pp. 23–24). Under, inter alia, the same legal basis, the ECB adopted on 26 September 2002 Guideline ECB/2002/6 on the minimum standards for the ECB and NCBs when conducting monetary policy operations, foreign exchange operations with ECB’s foreign reserves and managing ECB’s foreign reserve assets (OJ L 270, 8.10.2002, p. 14–16). It is noted, however, that—as indicated by its title—this Guideline is of horizontal applicability (hence, another legal basis are the first three indents of Article 127(2)).
- 76.
Relevant in this respect is Council Regulation (EC) No 1010/2000 (OJ L 115, 16.5.2000, pp. 2–3).
- 77.
ESCB/ECB Statute, Article 30.4–30.5. Article 48 governs the deferred payment of reserves when a Member State’s derogation has been abrogated.
- 78.
Ibid., Article 31.1 with reference to Article 23.
- 79.
Ibid., Articles 31.2 and 31.3.
- 80.
On this Article, see Wutscher (2019), pp. 2056–2057.
- 81.
- 82.
See details in Sect. 7.2.4.
- 83.
OJ L 217, 23.7.2014, pp. 16–30; an unofficial consolidated text is available at: https://www.ecb.europa.eu/ecb/legal/pdf/celex_02014r0795-20171206_en_txt.pdf. Further detailed rules are laid down in relation to the procedural aspects concerning the imposition of corrective measures for non-compliance with this Regulation, the methodology for calculating sanctions for infringements of the oversight requirements for SIPS, and the procedure and conditions for exercise by a competent authority of certain powers in relation to oversight of SIPS (Decisions ECB/2017/33 of 3 November 2017 (OJ L 299, 16.11.2017, pp. 34–37) ECB/2017/35 of 3 November 2017 (OJ L 299, 16.11.2017, pp. 31–33) and ECB/2019/25 of 26 July 2019 (OJ L 214, 16.8.2019, pp. 16–24), respectively), adopted on the basis of this Regulation.
- 84.
Available at: https://www.bis.org/cpmi/publ/d101a.pdf.
- 85.
OJ L 166, 11.6.98, pp. 45–50. Despite the fact that TARGET2 has been developed as an SSP platform, NCBs maintain the rules they used to have during the operation of TARGET, which can mainly be attributed to monetary policy reasons (based on the obligation to mandatorily hold deposits with accounts of NCBs, but also mainly based on the principle of the decentralised implementation of the single monetary policy).
- 86.
‘FMI’ means a multilateral system among participating institutions, including the system operator, used to clear, settle or record payments, securities, derivatives or other financial transactions (ibid., article 2, point (17)).
- 87.
Regulation ECB/2014/28, Article 1(2)–(3); the relevant list is maintained on the ECB’s website and updated after each change (see at: https://www.ecb.europa.eu/paym/pol/activ/systems/html/index.en.html); inter alia, it includes the TARGET2 system (Decision ECB/2014/35, L 245, 20.8.2014, pp. 5–8).
- 88.
Ibid., Articles 3–4. ‘SIPS operator’ means the legal entity legally responsible for operating a SIPS (ibid., article 2, point (4)).
- 89.
Ibid., Articles 5–15.
- 90.
Ibid., Articles 16–21, 21a, 21b and 22.
- 91.
- 92.
See Sect. 7.1.1.
- 93.
- 94.
OJ L 140, 24.5.2001, pp. 72–86; this Guideline repealed the non-published Guideline ECB/2000/9. Its legal basis was Article 105(2), first and fourth indents, TEC, as well as Articles 3.1, 12.1, 14.3, 17, 18 and 22 ESCB/ECB Statute.
- 95.
RTGS systems of Member States with a derogation were allowed connection to TARGET and, conditionally, could process the euro as a foreign currency alongside their respective national currencies (Guideline ECB/2001/3, Article 2(2)).
- 96.
See, on this, European Central Bank (2006): TARGET Annual Report 2005, March.
- 97.
See European Central Bank (2002): The long-term evolution of TARGET, Press Release, 24 October.
- 98.
Initially, two different views had emerged: the ‘advanced common features model’ and the ‘single platform model’, which was finally accepted, in December 2004, by the GC.
- 99.
OJ L 237, 8.9.2007, pp. 1–70.
- 100.
OJ L 237, 8.9.2007, pp. 71–107; by August 2019, this decision had been amended eleven times. An unofficial consolidated text is available at: https://www.ecb.europa.eu/ecb/legal/pdf/celex_02007d0007-20181130_en_txt.pdf. Decision ECB/2010/9 on access to and use of certain TARGET2 data was also adopted on 29 July 2010 (OJ L 211, 12.8.2010, pp. 45–47); by August 2019, this decision had been amended six times. An unofficial consolidated text is available at: https://www.ecb.europa.eu/ecb/legal/pdf/celex_02007d0007-20181130_en_txt.pdf.
- 101.
OL L 30, 30.1.2013, pp. 1–93; by August 2019, this Guideline, adopted, inter alia, on the basis of (the above-mentioned) Article 22 ESCB/ECB Statute, had (already) been amended six times. An unofficial consolidated text is available at: https://www.ecb.europa.eu/ecb/legal/pdf/celex_02007d0007-20181130_en_txt.pdf.
- 102.
European Central Bank (2007): Single Shared Platform, General Functional Specifications, Document for users, Version 2.1, chap. 1.2. The latest update to this document is dated 22 March 2019 (Version 13.0).
- 103.
- 104.
OL L 125, 11.8.2012, pp. 19–29; by August 2019, this Guideline, adopted, inter alia, on the basis of Article 22 ESCB/ECB Statute as well, had been amended three times.
- 105.
Decisions ECB/2011/5 of 20 April 2011 (OJ L 134, 21.5.2011, pp. 22–26) and ECB/2011/20 of 16 November 2011 (OJ L 319, 2.12.2011, pp. 117–123). Decision ECB/2019/1666 (OJ L 102, 22.4.2009, pp. 12–17) governs the operation of the Market Infrastructure Board, the mandate of which is laid down in Annex I of the Decision.
- 106.
For more details on the eligibility conditions of EEA currencies other than the euro for use in T2S, see Guideline ECB/2010/2 (OJ L 118, 12.5.2010, pp. 65–80), Article 18.
- 107.
Guideline ECB/2010/2, Article 1(2). On this system, see Kokkola (2010), pp. 265–270.
- 108.
Guideline ECB/2012/27, Articles 1(1), first sentence, and 1(2). Instant payments are governed by Articles 36 and 66–67 PSD II and Commission Delegated Regulation (EU) 2018/389 of 27 November 2017 (OJ L 69, 13.3.2018, pp. 23–43).
- 109.
Ibid., Articles 2 and 5. Intra-Eurosystem settlement is governed by Article 6 of the Guideline.
- 110.
Ibid., Article 2, points (8) and (9), respectively. The opening and management of PM accounts is governed by Article 12 of Annex II of the Guideline.
- 111.
The names of TARGET2 national components comprise only the term ‘TARGET2’ and the name or abbreviation of the respective central bank or the Member State corresponding to the Eurosystem NCB (e.g. the Greek component is indicated as TARGET2-GR) (ibid., Article 3).
- 112.
Ibid., Article 4.
- 113.
‘Instant payment order’ means, in line with the European Payments Council’s SEPA Instant Credit Transfer (SCT Inst) scheme, a payment instruction which can be executed 24 hours a day any calendar day of the year, with immediate or close to immediate processing and notification to the payer (ibid., Article 2, point (81)); ‘positive recall answer’ is a payment order as defined in Article 2, point (83).
- 114.
These also include the following liquidity transfer orders: ‘T2S DCA to T2S DCA’, ‘T2S DCA to PM’, ‘PM to T2S DCA’, ‘TIPS DCA to PM’ and ‘PM to TIPS DCA’; all these terms are defined in Article 2.
- 115.
Ibid., Article 2, point (6) and Annex II, Articles 4(1) and 5(2). Article 4(2)–(3) of Annex II lays down further access criteria for direct participation and Article the application procedure.
- 116.
Ibid., Article 2, point (13) and Annex II, Article 6(1). Article 7 of Annex II specifies the responsibilities of PMaccount holders.
- 117.
Ibid., Annex II, Article 5(2)–(3). ‘Addressable BIC holder’ means an entity which holds a Business Identifier Code (the ‘BIC’), is not recognised as an indirect participant in the PM and is a correspondent or customer of a PMaccount holder or a branch of a direct or indirect participant, and is able to submit payment orders to and receive payments from a TARGET2 component system via the PMaccount holder (ibid., Annex II, Article 1, first indent). On the differences between direct and indirect participation in TARGET2, see Table 7.5.
- 118.
Ibid., Annex II, Article 1; Article 5(4) lays down specific rules.
- 119.
Ibid., Annex II, Article 9.
- 120.
This aspect is governed by Article 19.
- 121.
Ibid., Article 17.
- 122.
Ibid., Annex II, Articles 3(2) and 13, respectively. The rules governing the acceptance and rejection of payment orders are laid down in Article 14 of Annex II.
- 123.
Ibid., Annex II, Article 15(2); Article 15(2)–(3) contains rules on the designation of specific payment orders as highly urgent or urgent.
- 124.
Ibid., Annex II, Articles 16, 17 and 17a, respectively.
- 125.
Ibid., Article 10 and Annex II, Articles 23–26. It is noted that the entities concerned must have established intraday credit arrangements with the respective participating NCB (ibid., Annex II, Article 24(4)–(7)).
- 126.
Ibid., Articles 2, points (26) and 12(1)–(2); the arrangements implementing the rules on the provision of such credit (eligibility of entities and collateral, credit extension procedure, as well as suspension, limitation or termination) are laid down in Annex III.
- 127.
Ibid., Article 2, point (44) and Annex II, Article 29(1); the technical details of this module are laid down in Annex II, Appendix I.
- 128.
Ibid., Article 2, point (31). The TARGET2 system serves the needs of both settlement models for ancillary systems in central bank money in Member States, that is the ‘interfaced model’, whereby the settlement in central bank money of participant positions in the ancillary system takes place in the RTGS, and the ‘integrated model’ to settle securities transactions in central bank money, whereby the final settlement of the cash leg of transactions takes place within the ancillary system itself.
- 129.
Ibid., Article 13(1).
- 130.
An ancillary systems interface means the technical device allowing an ancillary system to use a range of special, predefined services for the submission and settlement of ancillary system payment instructions. It may also be used by an NCB participating in TARGET2 for the settlement of cash operations resulting from cash deposits and withdrawals (ibid., Article 2, point (32)).
- 131.
On the ancillary systems settling payments in central bank money through the TARGET2 system, see European Central Bank: Country and Ancillary Systems Profiles, available (and constantly updated), at: https://www.ecb.int/paym/t2/professional/participation/html/index.en.html#profiles.
- 132.
The settlement procedures in ancillary systems are governed by Annex IV of Guideline ECB/2012/27. The ECB regularly publishes the times and procedures for settlement in central bank money through the TARGET2 system that are selected by ancillary systems; see on this European Central Bank: Ancillary Systems Settlement Times, available (and constantly updated) at: https://www.ecb.int/paym/t2/professional/participation/html/index.en.html#times.
- 133.
Guideline ECB/2012/27, Article 21 and Annex II, Article 27. ‘TARGET2 coordinator’ means a person appointed by the ECB to ensure the daily operational management of TARGET2, to manage and coordinate activity in the event of an abnormal situation occurring and to coordinate the dissemination of information to PMaccount holders (ibid., Article 2, point (45)). Business continuity and contingency procedures are further described in Appendix IV of Annex II.
- 134.
Ibid., Annex II, Article 28.
- 135.
TFEU, Article 139(2), point (d) and ESCB/ECB Statute, Article 42.4.
- 136.
On these Articles, see Wutscher (2019), pp. 2061–2065.
- 137.
TFEU, Article 128(1), first sentence, and ESCB/ECB Statute, Article 16, first sentence.
- 138.
TFEU, Article 128(1), second sentence, and ESCB/ECB Statute, Article 16, second sentence.
- 139.
For banknotes of national currency units of euro area Member States, this provision was necessary in order to allow their NCBs to continue to issue such banknotes for as long as their circulation was allowed following the start of Stage Three (by contrast, no provision granted the right to issue such banknotes to the ECB).
- 140.
TFEU, Article 128(1), third sentence, and ESCB/ECB Statute, Article 16, third sentence.
- 141.
The wording of this provision provoked controversy with regard to whether the banknotes denominated in national currency units of euro area Member States—for as long as they would circulate after the start of Stage Three—would have the status of legal tender across the (then) European Community or merely in the jurisdiction of the issuing NCB. This matter was settled with Council Regulation (EC) No 974/98.
- 142.
Council Regulation (EC) No 974/98, Articles 9, 10, first sentence, 15(1) and 16, respectively.
- 143.
OJ L 118, 30.4.2013, pp. 37–42; this is in force as amended by Decision ECB/2019/9 of 4 April 2019 (OJ L 113, 29.4.2019, pp. 6–8).
- 144.
OJ L 35, 9.2.2011, pp. 26–30; by August 2019, this legal act had been amended four times.
- 145.
Even the mere further reference to these legal acts is beyond the scope of this book. For those interested in reading further information, see the ECB’s website at: https://www.ecb.europa.eu/ecb/legal/1004/1329/html/index.en.html (on euro banknotes production), https://www.ecb.europa.eu/ecb/legal/1004/107641/html/index.en.html (on euro banknotes issuance), https://www.ecb.europa.eu/ecb/legal/1004/1019/html/index.en.html (on the protection of the euro) and https://www.ecb.europa.eu/ecb/legal/1004/1020/html/index.en.html (on the 2002 cash changeover).
- 146.
These banknotes were designed by Robert Kalina, an Austrian banknote designer, who drew inspiration from the theme ‘Ages and Styles of Europe’.
- 147.
Decision ECB/2013/10, Article 1(1), as amended by Article 1 of Decision ECB/2019/9. The copyright on euro banknotes belongs to the ECB and has been passed on to it from the initial holder, the EMI, in 1998 (ibid., recital (4)).
- 148.
Ibid., Article 3(2)–3(3). Reproduction means any tangible or intangible image that uses all or part of a euro banknote or parts of its individual design elements (such as, inter alia, colour, dimensions and use of letters or symbols), which (image) may resemble or give the general impression of a genuine euro banknote (ibid., Article 3(1)).
- 149.
Ibid., Article 3(6).
- 150.
Ibid., Article 3(1)–(2).
- 151.
Ibid., Article 6.
- 152.
Decision ECB/2010/29, Articles 1, point (d) and 4. On the banknote allocation key applying since 1 January 2019 (as determined by Decision ECB/2018/31 of 29 November 2018, which amended Decision ECB/2010/29, OJ L 9, 11.1.2019, pp. 194–195), see Table 7.6.
- 153.
Ibid., Article 3.
- 154.
TFEU, Article 128(2), first sentence.
- 155.
Ibid., Article 128(2), first and second sentences, respectively.
- 156.
Regulation (EC) No 975/98 (OJ 139, 11.5.1998, pp. 6–8); this was repaled by Council Regulation (EU) No 729/2014 of 24 June 2014 (OJ L 194, 2.7.2014, pp. 1–7), which is currently in force.
- 157.
OJ L 328, 12.12.2015, pp. 123–125; this legal act was amended by Decision ECB/2017/41 of 8 December 2017 (OJ L 344, 23.12.2017, pp. 63–64).
- 158.
For the year 2019, Decision ECB/2018/35 is applicable (OJ L 327, 21.12.2018, pp. 87–88).
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Gortsos, C.V. (2020). The Basic Tasks of the European Central Bank Within the Eurosystem and Issuance of Banknotes and Coins. In: European Central Banking Law. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-34564-8_7
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