Opinion of the European Monetary Institute following a consultation by the Council of the European Union under Article 109f(6) of the Treaty establishing the European Community (“the Treaty”) and Article 5.3 of the Statute of the EMI (“the Statute”); on a Proposal for a Council Regulation (EC) on the European System of National and Regional Accounts in the European Community (COM(94) 593 final, dated 16th December 1994) (CON/95/7)
Date: 1995-06-21
Institutions: European Monetary Institute
Subjects: EU statistics, Economic and Monetary Union, European accounting system, confidentiality, data transmission, national accounts

OPINION OF THE EUROPEAN MONETARY INSTITUTE

following  a  consultation  by  the  Council  of  the  European  Union  under  Article  109f(6)  of  the  Treaty

establishing  the  European  Community  (“the  Treaty”)  and  Article  5.3  of  the  Statute  of  the  EMI  (“the

Statute”);

on  a  Proposal  for  a  Council  Regulation  (EC)  on  the  European  System  of  National  and  Regional

Accounts in the European Community (COM(94) 593 final, dated 16th December 1994).

CON/95/7

1.

The present consultation was initiated on 28th April 1995 by the Council of the European Union

which, for this purpose, transmitted document  COM(94) 593 final containing the Proposal for a

Council  Regulation  (EC)  on  the  European  System  of  National  and  Regional  Accounts  in  the

European Community (“the proposed Council Regulation”) to the EMI.

2.

The purpose of the proposed Council Regulation is to adapt the European System of Integrated

Economic  Accounts  by  providing  for  (a)  a  methodology  on  common  standards,  definitions,

classifications  and  accounting  rules,  referred  to  as  the  European  System  of  Accounts  95

(ESA  95),  and  (b)  a  programme  for  transmitting  for  Community  purposes  on  precise  dates  the

accounts  and  tables  compiled  according  to  the  ESA  95.  ESA  95  is  given  in  Annex  A  and  the

transmission  programme  of  national  accounts  data  is  specified  in  Annex  B  of  the  proposed

Council Regulation.

3.

Amendments  to  the  ESA  95  shall  be  adopted  by  Commission  Decision  in  accordance  with  the

procedure provided for in Article 5 of the proposed Council Regulation, provided that they do not

change  the  underlying  concepts  of  ESA  95,  do  not  require  additional  resources  for  their

implementation  and  do  not  cause  an  increase  in  own  resources  in  the  Community.  In  addition,

any  changes  in  the  data  requested  from  the  Member  States  may  also  be  the  subject  of

Commission  Decisions  in  accordance  with  the  procedure  provided  for  in  Article  5  of  the

proposed Council Regulation.

4.

The procedure provided for in Article 5  refers  to  the  Statistical  Programme  Committee  (SPC)

established by Council Decision 89/382/EEC, Euratom of 19th June 1989. In addition, according

to Article 4 of the proposed Council Regulation, the SPC shall examine all matters relating to its

implementation that are raised by its chairman, either on his own initiative or at the request of a

Member  State.  The  SPC  is  composed  of  representatives  of  the  statistical  institutes  of  the

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Member States and chaired by a representative of the Commission (the Director-General of the

Statistical Office of the European Communities).

According  to  Article  6  of  the  proposed  Council  Regulation,  headed  co-operation  with  other

committees, the Commission shall request the opinion of the Committee on Monetary, Financial

and  Balance  of  Payments  Statistics  (CMFB)  established  by  Council  Decision  91/115/EEC  of

25th February 1991 on all matters falling within its competence. The CMFB shall be composed

of  one,  two  or  three  representatives  per  Member  State  coming  from  the  institutions  principally

concerned  with  financial,  monetary  and  balance  of  payments  statistics,  up  to  three

representatives of the Commission and up to three representatives of the EMI.

5.

The EMI considers the proposed Council Regulation as a major contribution to the establishment

and  multilateral  surveillance  of  an  Economic  and  Monetary  Union.  In  addition,  the  EMI

acknowledges  that  the  ESA  95  is  consistent  with  the  System  of  National  Accounts  1993.  This

will facilitate comparisons between the economic developments of the European Union, including

the future Monetary Union, and other developed market economies.

6.

The EMI welcomes in particular the integration of the concept of Monetary Financial Institutions

(MFIs)  for  statistical  purposes,  as  defined  by  the  EMI,  in  the  ESA  95  classification  of

institutional  sectors.  Subject  to  the  proviso  that  the  proposed  definitions  of  the  Financial

Corporations sector and sub-sectors remain unaltered in the final text enacted by the Council of

the European Union, the ESA 95 will provide the uniform standard for the sector classification of

Monetary  Union  money  and  banking  statistics.  This  approach  complies  with  the  users

requirements  for  monetary  analysis  within  a  wide  and  integrated  framework  and  enables  also

significant  savings  to  be  made  in  the  reporting  burden  since  it  avoids  divergent  classification

standards in the different fields of statistics.

7.

The  EMI  takes  also  favourably  note  of  the  improvements  achieved  in  the  methodology  of

financial  accounts  statistics  to  which  several  of  the  National  Central  Banks  (NCBs)  have

actively contributed. It supports, in particular, the implementation of financial balance sheets for

the  institutional  sectors  and  the  integration  of  measures  of  money  in  the  financial  accounts

statistics,  as  outlined  in  the  Annex  of  the  ESA  95  financial  transactions  chapter.  Financial

accounts statistics, both balance sheets and flows, may be needed by the European Central Bank

(ECB)  in  order  to  assess  the  effect  of  monetary  policy  and  the  influence  of  external

developments  on  the  different  sectors  of  the  Monetary  Union.  This  includes,  in  particular,

monitoring  the  development  of  sectoral  monetary  and  financial  positions  and  assessing  the

working of the transmission mechanism in the Monetary Union. Financial accounts statistics may

also help analysis when disintermediation occurs.

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8.

The transmission programme of the accounts and tables, laid down in Annex B of the proposed

Council Regulation, includes annual financial transactions (table 8) and financial balance sheets

(table  9)  of  institutional  sectors  and  sub-sectors.  Both  sets  of  tables  shall  be  provided

commencing  with  the  year  1999  and  shall  be  available  within  nine  months  after  the  recording

date. In view of the timetable scheduled by the Treaty for the third stage for achieving Economic

and Monetary Union, the EMI would consider that delay in the transmission of financial accounts

statistics  based  on  ESA  95  would  not  be  warranted.  The  deadline  of  nine  months  after  the

recording date should be seen as a maximum workable for policy use of these tables.

9.

The EMI has strong reservations about the procedure provided for in Article 5 of the proposed

Council Regulation which refers to the SPC only.  According  to  Article  109f  (3)  of  the  Treaty

and Article 4.2 of the Statute, the EMI shall, for the preparation of the third stage for achieving

Economic  and  Monetary  Union,  promote  the  harmonisation,  where  necessary,  of  the  rules  and

practices governing the collection, compilation and distribution of statistics in the areas within its

field  of  competence.  The  EMI  considers  financial  accounts  statistics  as  one  of  the  statistical

areas, where the EMI and later the ECB should share competence with the Commission, closely

co-operating in a partnership of independent institutions. The reason is that these statistics meet

a variety of policy needs of both the ECB and the Commission. Within the shared competence,

one partner would take the lead in those conceptual questions and in  providing  instructions  for

the collection of those data where it had a clear policy need and expertise.

Furthermore, when financial  accounts  statistics  based  on  ESA  95  will  have  to  be  reported  the

first  time  by  end  of  September  1999,  the  European  System  of  Central  Banks  (ESCB)  shall  be

well  established  and  shall  collect  statistical  information  in  accordance  with  Article  5  of  its

Statute. At the same time, in the majority of the Member States of the European Union in which

financial  accounts  statistics  are  regularly  available,  the  NCBs  are  responsible  for  producing

them. Commission Decisions in accordance with the procedure provided for in Article 5 of the

proposed  Council  Regulation  on  changes  in  the  data  requested  from  the  Member  States  are

binding  in  their  entirety  upon  those  to  whom  they  are  addressed  and  these  are  typically  the

NCBs when the changes refer to financial accounts statistics. It is therefore very important to

ensure that these statistical tasks of the ESCB and the Commission are assumed in a coherent

manner.

Against this background, Article 6 of the proposed Council Regulation does not concede the EMI

and the NCBs a sufficient influence on financial  accounts statistics.  In stage two for achieving

Economic and Monetary Union, the influence would be appropriately strengthened by providing,

in the procedure laid down in Article 5 of the proposed Council Regulation, the CMFB with the

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same  status  as  the  SPC  on  all  matters  falling  within  the  competence  of  the  CMFB  and  by

accordingly  confining  the  responsibility  of  the  SPC  to  all  matters  not  falling  within  the

competence of the CMFB. This would be deemed sufficient for the EMI to comply with Article

109f (3) of the Treaty and it would provide the NCBs with an appropriate right to  a  say  in  the

preparation  of  Commission  Decisions  which  are  binding  for  them.  Moreover,  such  an

arrangement  would  comply  with  the  Proposal  for  a  Council  Regulation  (EC)  on  Community

action in the field of statistics (COM(94) 78 final), in particular Articles 1.4 and 8 thereof. It may

require  an  amendment  of  Council  Decision  91/115/EEC  of  25th February  1991  establishing  the

CMFB to enable it to exercise such functions as are attributed to it by acts of the Council in the

field  of  statistics,  in  accordance  with  the  procedures  laid  down  by  such  provisions,  in  line  with

Council Decision 87/373/EEC of 13th July 1987.

Accordingly,  the  EMI  considers  that  Articles  4,  5  and  6  of  the  proposed  Council  Regulation

should be modified in order to properly reflect the status of the EMI and the future ESCB in the

area of statistics as laid down in the Treaty and the Protocols annexed to it.

10.

The  Protocol  on  the  excessive  deficit  procedure  annexed  to  the  Treaty  defines  government

deficit by reference to the ESA. The CMFB advised the Commission on the statistical treatment

of privatisation receipts with government deficit in mind at its meeting on 30th January 1995. The

EMI strongly recommends to incorporate this statistical treatment of privatisation receipts in the

ESA 95. Paragraph 4.165g of the ESA 95 (“Other capital transfers include that part of realised

capital gains (or losses) which is redistributed to another sector”) is inconsistent with the CMFB

advice on the treatment of privatisation receipts and should be deleted.

Furthermore,  the  discussions  on  the  statistical  treatment  of  debt  assumption,  initiated  by  the

CMFB with government deficit in mind, revealed that several paragraphs of the ESA 95 relating

to  capital  transfers  (D.9)  are  ambiguous  when  applied  on  the  relationship  between  general

government  and  public  corporations  or  quasi-corporations.  The  EMI  urges  the  Council  of  the

European Union not to accept any undue ambiguity in the ESA 95 concerning the compilation of

government deficit in view of the excessive deficit procedure as laid down in Article 104c of the

Treaty.  The  redraft  of  the  ESA  95  section  on  capital  transfers  should  explicitly  state  the

borderline  between  capital  transfers  (D.9)  and  transactions  in  shares  and  other  equity  (F.5)

when  funds  are  exchanged  between  general  government  and  public  corporations  or  quasi-

corporations.

11.

Subject  to  the  reservations  expressed  in  paragraphs  9  and  10  above,  the  EMI  welcomes  the

proposed Council Regulation.

12.

The EMI has no objection to its opinion being made public.

5

13.

This  opinion  refers  exclusively  to  the  draft  Council  Regulation  as  contained  in  the  document

COM(94)  593  final,  dated  16th  December  1994.  In  view  of  its  importance  for  the  statistical

activities  of  the  ECB,  the  EMI  requests  that  the  final  amended  version  is  submitted  for

consultation to the EMI before it is adopted by the Council.

 21st June 1995