ECB Annual Report 2013

Written by Angelos Delivorias

The European Central Bank has to present an annual report each year covering the activities of the European System of Central Banks and monetary policy, for both the year in review and the current year. With the ECB’s monetary policy decisions under more scrutiny than ever before, particularly in the light of the decisions made by the January meeting of the Governing Council, the debate in plenary – the only occasion each year on which ECB President Mario Draghi appears before the full Parliament, although he and other members of the Bank’s Executive Board meet regularly with the ECON Committee – promises to be far-reaching.

The ECB’s Annual Report 2013 was presented to the Committee on Economic and Monetary Affairs (ECON) of the European Parliament on 7 April 2014. It is due to be discussed in plenary on 25 February 2015, in the presence of ECB President, Mario Draghi. In this context, the report from the ECON Committee (rapporteur Pablo Zalba Bidegain, EPP, Spain) was tabled for plenary on 27 January 2015. The vote is expected to take place during the March I plenary.

The ECB’s report is composed of eight chapters, together with the annual accounts and a series of annexes detailing its activities in the year 2013.

Chapter I – Economic developments and monetary policy

This chapter presents the monetary, financial and economic developments in the euro area − that is, the improved, but still challenging, macroeconomic environment; monetary and financial developments, including the earlier repayment of funds received via the three-year longer-term refinancing operations conducted in December 2011 and February 2012; price and cost developments (i.e. a sharp decrease in the harmonised index of consumer prices (HICP) inflation and subdued price pressures); output, demand and labour market developments with a focus on bank loans and on trends in export-market shares in the euro area; and fiscal developments − the economic and monetary developments in non-euro area EU member states and the monetary policy decisions of the European Central Bank in 2013, with particular focus on the introduction of forward guidance in July 2013.

Chapter II – Central bank operations and activities

Chapter 2 treats the monetary policy instruments, the foreign exchange operations, and the investment activities of the ECB, as well as risk-management issues related to investment portfolios and securities held for monetary policy purposes. It then briefly considers developments in the areas of payment and securities settlement systems (TARGET2, TARGET2-Securities and settlement procedures for cross-border collateral), banknotes and coins including counterfeiting issues, statistics collection, compilation and dissemination, economic research (activities, publications and conferences), as well as other tasks and activities such as compliance with the prohibition of monetary financing and privileged access.

Chapter III – Entry of Latvia into the euro area

This chapter deals with Latvia’s preparation for entering the euro area on 1 January 2014. It summarises economic and monetary developments in Latvia before the crisis, as well as the fiscal consolidation strategy followed since; legal and operational aspects of the integration of the national bank of Latvia into the Eurosystem; and presents the information campaign on the introduction of the euro and the logistics of the cash changeover in Latvia.

Chapter IV – Financial stability, tasks related to the ESRB and financial integration

The main development in the area of financial stability in 2013 was the progress towards establishing the Single Supervisory Mechanism. The chapter also outlines the tasks of the ECB in relation to the functioning of the European Systemic Risk Board, with a brief review of the Institutional framework and presentation of the support the ECB provides to the ESRB. The developments in the area of financial regulation and supervision in banking, securities and accounting are mentioned. The chapter proceeds with the efforts of the Eurosystem and the ESRB towards more financial integration. Finally, it describes the oversight of payment systems and market infrastructure.

Chapter V – European issues

This chapter deals with policy and institutional issues (the Single Supervisory Mechanism, the countries under excessive deficit procedure in the context of the Stability and Growth Pact and the implementation of the ‘two-pack’ regulations in the context of the European Semester 2013), as well as with the enlargement of the EU (to Croatia) and relations with EU candidate countries and potential candidates.

Chapter VI – International issues

This part concerns developments in the international monetary and financial system. It includes the ECB’s contribution to the surveillance of macroeconomic policies and the reforms in international institutional processes and practices, as well as its technical cooperation with central banks of countries outside the EU, (especially candidates and potential candidates), to strengthen their institutional capacity and to enhance compliance with European and international standards.

Chapter VII – External communication and accountability

The chapter reviews the accountability and communication policy of the ECB; its communication activities; and its accountability to the European Parliament. In this context, there is a reference to the hearings of the President, as well as the Vice-Presidents of the ECB in the European Parliament in 2013, in the context of which the Banking Union and the financing conditions of the real economy were discussed with Members.

Chapter VIII – Institutional framework and organisation

The first part of the chapter concerns the decision-making bodies (general information about the Eurosystem and the European System of Central Banks and more specific information about the members and functions of the Governing Council, the Executive Board, the General Council and the different Committees), as well as corporate governance in the ECB (that is, the control layers, the anti-fraud measures and the anti-money laundering/counter-terrorist financing programme). The second part of the chapter describes the main organisational developments in the areas of human resource management (among others, the increase in full-time equivalents from 1 450 to 1 907, relating to the Single Supervisory Mechanism) and social dialogue.

Annual accounts

The annual accounts are composed of the management report for the year ending 31 December 2013 (the nature of the enterprise, its objectives and tasks, the key resources and processes, risk management and its components, the financial resources, as well as the financial result for 2013); the balance sheet as at 31 December 2013 and the profit and loss account for the year ending 31 December 2013; the accounting policies followed, as well as notes on the balance sheet and on the profit and loss account, that provide further clarification on particular topics. In this section, there is also the auditor’s report, a note on the profit distribution, and the consolidated balance sheet of the Eurosystem as at 31 December 2013.

Annexes

In the annexes to the report are the legal instruments (ECB opinions following a consultation by a European institution, opinions following a consultation by a Member State, as well as decisions, guidelines and recommendations) adopted by the ECB, the chronology of monetary policy measures of the Eurosystem in 2013, an overview of the ECB’s communication related to the provision of liquidity in euro and in other currencies, the publications produced by the ECB in 2013, as well as a glossary.

Read the pdf of this At a glance here