The division of responsibilities within the Eurosystem

ii.The division of responsibilities within the Eurosystem

Under Articles 6.1 and 12.5 of the Statute of the ESCB, it is up to the Governing Council to decide how the Eurosystem should be represented at the international

1 This is the case for the four Council Decisions concerning monetary relations with the Principality of Monaco, the Republic of San Marino, the Principality of Andorra and the

Vatican City, as well as the two Council Decisions on exchange rate matters relating to the Cape Verde escudo and the CFA franc and Comorian franc.

level. The ECB is entitled to participate in international monetary institutions, as are the NCBs, subject to Governing Council approval. The Governing Council has decided that the NCBs should continue to take part in international organisations and fora, depending on the extent to which their respective countries are involved in such bodies, whereas the ECB should ensure that the Eurosystem is consistently represented where necessary and appropriate.

i i i . T h e d i v i s i o n o f p ow e r s b e t w e e n t h e C o m m u n i t y a n d the euro area countries

As discussed in Section 1.2.2, the individual euro area countries remain responsible for all economic policies except for monetary and exchange rate policies. This means that the involvement of the ECB, the Community and individual EU Member States in the process of international cooperation varies depending on the mandates of the relevant international organisations and fora.

i v. T h e i n s t i t u t i o n a l s e t - u p o f t h e i n d i v i d u a l i n t e r n a t i o n a l organisations and fora

The transfer of monetary sovereignty posed some unique questions for the institutional framework for international relations, as the arrangements in place at the time were not tailored to the involvement of a monetary union as large as the euro area. The existing array of international organisations and fora has been designed to promote cooperation among sovereign states that had full competence for the conduct of their economic, monetary and financial policies. To become effective, the provisions governing the international relations of the Community and the ECB required the negotiation of adjustments to the rules and procedures on which international relations are based. Until now such adjustments have largely been based on pragmatism. This is in line with the Presidency Conclusions of the Vienna European Council of December 1998, which stated that “a pragmatic approach might be the most successful which could minimise the adaptation of current rules and practices provided, of course, that such an approach resulted in an outcome which recognised properly the role of the euro”.

The pragmatic solutions that have been devised so far allow ECB participation in international organisations and fora where the tasks entrusted to the Eurosystem are concerned.

• Whenever international cooperation concerns the single monetary policy, the ECB is the sole institution entitled to represent policy positions of the European Community, since the single monetary policy is an exclusive competence of the ECB’s main decision-making bodies, the Governing Council and the Executive Board.

• As regards the euro exchange rate, the ECB shares responsibility with the EU Council (ECOFIN) and the Eurogroup. Thus, both the President of the ECB and the President of the Eurogroup are involved in consultations with third parties – for example at the G7 level – and communication policy.

• In the area of payment systems, the ECB may formulate positions at the international level on issues related to the Eurosystem’s responsibility for promoting the smooth and efficient operation of payment and settlement systems. The euro area NCBs, which participate in international organisations and fora alongside the ECB, may also express views reflecting their own responsibility and experience in managing and overseeing domestic payment and settlement systems.

• In statistical matters, the Statute of the ESCB imposes a general obligation on the ECB to cooperate with international organisations. This provision, which takes into account the fact that statistical work is carried out in a global context, allows the ECB to formulate positions along with other competent Community bodies (e.g. Eurostat).

• In the area of prudential supervision and financial stability, the ECB may participate in relevant international meetings and state its positions alongside those of the national authorities that have competence in this field (e.g. NCBs and national supervisory agencies).

5 . 2 P O L I C Y C O N T E N T O F T H E E C B ’ S I N T E R N AT I O N A L R E L AT I O N S

The ECB’s main activities in the field of international cooperation involve exchanging information and views with other policy-makers within multilateral organisations and fora. Peer review of the economic developments and policies in major economic areas is particularly important in this context as it enhances the ECB’s ability to analyse the impact of external developments on the euro area economy. Exchanges of information and views are further complemented by surveillance carried out by independent organisations, such as the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD).

The ECB also participates in the efforts of the international community to develop common understandings on a number of best practices and rules designed to make policy-making more efficient and transparent. Best practices are usually laid down in core principles, standards and codes to be implemented in each individual country on a voluntary basis. The identification of best practices encourages emulation and transparency among policy-makers, thus making the notion of good public governance a central component of international cooperation.

However, the policy content of the ECB’s international cooperation does not include ex ante coordination of its monetary and exchange rate policy with the policies carried out by non-euro area countries. This could easily become incompatible with its mandate and independent status: attempts to coordinate ex ante would not only blur the specific responsibilities of policy-makers, but also reduce their accountability.

5 . 3 E C B R E L AT I O N S W I T H I N T E R N AT I O N A L O R G A N I S AT I O N S

The ECB has established relations with the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD). Both these organisations regularly monitor and assess economic and policy developments in their member countries.