Jean-Claude Trichet: The Eurosystem team at ten years
Dinner address by Mr Jean-Claude Trichet, President of the European Central Bank, on the
occasion of the 10th Anniversary of the Central Bank of Luxembourg, Luxembourg,
12 November 2008.
* * *
Cher Jean-Claude, cher Yves,
Monsieur le Ministre,
Chers collègues de la Banque centrale du Luxembourg, dear colleagues of the Eurosystem,
Dear guests, ladies and gentlemen,
It is a great pleasure for me to celebrate with you this evening the 10th anniversary of the
Banque centrale du Luxembourg (BCL) which, I might note, is of the exact same age as the
ECB. The BCL was created with the aim to have it firmly anchored both within the European
System of Central Banks and the national institutional environment. Looking at how the
Banque centrale du Luxembourg has developed in the past ten years, I am impressed by the
professionalism and the determination with which it accomplishes its mission. One extremely
important factor when setting up of the BCL was to guarantee its full independence, in line
with the provisions of the Treaty and the ESCB Statute. I am particularly pleased to note that
this year, and most recently on 24 October 2008, amendments were made to the legislative
framework of the BCL, which among other things further improve and strengthen the
provisions relating to its independence and its role in the field of financial stability. The ECB
was duly consulted and has welcomed these developments in its legal opinions.1
Let me turn now to the institutional context in which the BCL operates: The creation of
European Monetary Union is one of the most profound steps in the history of European
integration with major significance for the everyday life of our fellow citizens. Indisputably,
one of its main accomplishments is the introduction of a single currency and the set-up of a
federally-structured European System of Central Banks. No historical precedent exists for
such a structure. It is unique. The US Federal Reserve System is comparable only to a
limited extent, as it is based on a single nation state and is therefore not applicable to the
diverse and multilingual euro area which is made up of individual sovereign nation states.
I would like to recall that a very original federal-type structure was chosen since it
corresponds best to the institutional diversity of the Community, keeping some continuity by:
•
respecting the NCBs' institutional set-up, infrastructure and operational capacities
and, at the same time,
•
benefiting from their rich and vast experience.
The principle of decentralisation introduces a national anchoring that creates closeness to
the local financial communities and the local general public.
At first glance, the decentralised set-up with its checks and balances, might seem quite
complex and one might wonder how it can work in practice. Therefore, let us have a closer
look at how the system functions and how it has evolved over the past ten years.
In the Eurosystem architecture the Governing Council has a decisive role as the main
decision-making body within the Eurosystem. Its members, through their ad personam
participation, are required to focus on the European perspective. The one-member/one vote
principle guarantees that each member has to assess the interest of the euro area as a
whole, instead of the interest of any particular country, a feature which makes the ECB very
different from other European institutions, like the Commission and the Council. In that sense
I will dare say that the Eurosystem could be called one of the most truly European of all
European institutions.
Let me add at this stage, in particular in current times of very high market tensions, it is of the
essence to take decisions which reflect the collegial wisdom and expertise of all the
members of the Executive Board and all the members of the Governing Council. In the
and
present circumstances we have at times to decide rapidly to have these decisions
implemented timely, usually via the National Central Banks. As regards monetary policy
since the start of the turbulences, let me stress once again that we have applied our
"separation principle". The Eurosystem has been able to preserve medium-term confidence
in price stability, in constantly designing the monetary policy stance to that end, whilst at the
same time refinancing the commercial banks, with short-term rates close to policy rates, with
a view to smooth as much as possible market tensions.
Let me now turn to how the interaction between the component parts of the system, the ECB
and the National Central Banks, which are an integral part of the Eurosystem, are organized.
The Statute gives some guidance regarding the distribution of labour within the
Eurosystem where it states:
• the ECB shall ensure that the tasks conferred upon the ESCB [Eurosystem] are
implemented either by its own activities or through the NCBs (Art. 9.2);
•
to the extent deemed possible and appropriate, the ECB shall have recourse to the
NCBs to carry out operations which form part of the tasks of the ESCB [Eurosystem]
(Article 12.1)
From these Articles it is clear that in the system of currently sixteen component parts the
ECB has a special position: it is the "captain of the team". The ECB and its
decisionmaking bodies, the Governing Council and the Executive Board, are the decision-making
centre of the Eurosystem, and many important decisions taken are - in full conformity with
the principle of decentralisation - implemented by the (respective) National Central Banks; of
course, on behalf of the Eurosystem.
Still, at the beginning, it was probably hard to imagine how the Eurosystem would work in
practice, since the Statute allows a degree of leeway on how to design the interaction
between the ECB and the National Central Banks. It is clear that the major achievements of
the Eurosystem which include the successful establishment and conduct of the single
monetary policy, the smooth introduction of the euro and the launch of the euro banknotes,
could only be accomplished through the
very close cooperation of the staff of the
Eurosystem central banks. The teamwork necessary to successfully master these
challenges and the experiences gained in the process contributed to the emergence of a
shared identity which found its concrete expression in the Eurosystem Mission
Statement, its Strategic Intents and Organisational Principles. I regard the signature of
this strategic document by all Eurosystem central banks in 2004 to be major achievement of
our team and I am sure that Yves shares this view.
Together these documents define the role of the Eurosystem, the principles it should
rely on to achieve its main objectives, and how all its members should interact and
cooperate on the basis of shared values. In other words, these three tools aim at
increasing the coherence and unity of the Eurosystem by basing its activities on common
guidelines and by agreeing on high-level standards for the Eurosystem. With these aims in
mind, they demonstrate the Eurosystem's commitment to credibility, trust, closeness to the
citizens of Europe and the shared identity of the Eurosystem.
The Eurosystem has explicitly committed itself to applying effective and efficient
organisational structures and working methods. This means that all members in the
Eurosystem strive at performing their functions with a spirit of cooperation, teamwork,
efficiency, effectiveness and full transparency. We consider these values to be crucial to the
successful functioning of the system. The principles also stress that the Eurosystem activities
shall be performed by exploiting synergies, avoiding duplications and being cost efficient.
A very tangible example of implementing the Organisational Principles concerns the
establishment of a common Eurosystem Procurement Coordination Office (EPCO).
EPCO will facilitate the adoption and exchange of best practices within the Eurosystem,
develop a working infrastructure enabling purchasing power to be pooled, and coordinate the
Eurosystem procurement agenda. Just imagine the significant synergies that could be
achieved for example in the field of IT procurement, where the benefits would not only apply
to pooling purchasing power but, at the same time, could bring the significant advantage of
implementing systems/applications which are fully compatible across central banks which, in
turn, would substantially enhance and facilitate cooperation. Eurosystem central banks will
participate in EPCO on a voluntary basis; and also non-euro area central banks have been
invited to join this initiative. Central banks expressed their interest in hosting EPCO, and
participated in a competitive process. I mention this with particular pleasure here at the
Banque centrale du Luxembourg, since the Governing Council decided in December 2007 to
award the hosting of EPCO to the Banque centrale du Luxembourg until to end-2012. EPCO
demonstrates that the before mentioned (organizational) principles are, indeed, pursued and
implemented, but also that all NCBs participate on a level-playing filed. ECPO is indeed a
tangible proof of the team spirit at work within the Eurosystem.
The Eurosystem continues to strive for efficiency and effectiveness, using to the full extent
the resources available in the Eurosystem. Further evidence of this are the major
Eurosystem projects and initiatives currently either already in operation or under
development. Allow me to mention just a few examples.
TARGET2 provides a centralised payment system based on a single technical platform. It
guarantees a harmonised level of service for banks all over Europe combined with one single
transaction price for domestic and cross-border payments and is one of the best individual
payment systems in the world. This system was developed and is operated by a "consortium"
of central banks - the Banca d'Italia, the Banque de France and the Deutsche Bundesbank -
on behalf of the Eurosystem. will be a platform for the cross-border
TARGET2 Securities
and domestic settlement of securities against central bank money. The development and
operation of this system was assigned to the Deutsche Bundesbank, the Banco de España,
the Banque de France and the Banca d'Italia.
Following a review of the current Eurosystem collateral management handling procedures, in
particular, the Correspondent Central Banking Model (CCBM), the Governing Council
decided to again develop a single platform, called CCBM2, allowing the Eurosystem to
manage collateral both for domestic and cross-border operations. Work will be undertaken by
the Nationale Bank van België/Banque Nationale de Belgique and De Nederlandsche Bank
based on their existing system. As you can see a range of different organisational models
are explored to achieve maximum synergies, e.g. specialisation, attribution to one particular
member of the Eurosystem team, decentralisation and, when and where needed, pooling,
which means that a group of central banks provides a service for the entire Eurosystem. You
will not be surprised that I would stress that in call cases it is important that the ECB ensures
the coherence of the full team by exercising in an appropriate fashion its captainship.
Let me conclude by warmly congratulating the Banque centrale du Luxembourg on its
10th anniversary. I think I can say that both our institutions are looking back on a decade of
challenges successfully mastered. During the ten years of the Eurosystem's existence, and
in particular during the recent months of financial crisis, we have proven that the Eurosystem
functions well, even in periods of great stress. The Eurosystem has passed the test of its first
decade of existence. Looking ahead, I am confident that with its unique architecture and a
strong and enduring team spirit it is also prepared to tackle the challenges of the future.
I thank you for your attention.