Opinion of the European Monetary Institute on a consultation from the Austrian Federal Ministry of Finance under Article 109f (6) of the Treaty establishing the European Community (the “Treaty”) and Article 5.3 of the Statute of the EMI as elaborated in the Council Decision of 22 November 1993 (93/717/EC) (the “Decision”) concerning a draft Federal Act on the participation of Austria in the New Arrangement to Borrow with the International Monetary Fund (CON/97/16)
Date: 1997-08-27
Institutions: European Monetary Institute
Subjects: Austria, International Monetary Fund, national law, public borrowing

OPINION OF THE EUROPEAN MONETARY INSTITUTE

on a consultation from the Austrian Federal Ministry of Finance under Article 109f (6) of the Treaty

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

elaborated in the Council Decision of 22 November 1993 (93/717/EC) (the “Decision”)

concerning a draft Federal Act on the participation of Austria in the New Arrangement to Borrow with

the International Monetary Fund

CON/97/16

1. 

On  18  July  1997  the  EMI  received  from  the  Oesterreichische  Nationalbank  on  behalf  of  the

Austrian  Federal  Ministry  of  Finance  the  request  for  an  opinion  on  a  draft  Federal  Act  on  the

participation  of  Austria  in  the  New  Arrangement  to  Borrow  (NAB)  with  the  International

Monetary Fund (IMF).

2. 

The subject matter of the draft Act is intended to authorise the Oesterreichische Nationalbank to

grant,  in  the  name  of  the  Republic  of  Austria,  a  loan  of  a  maximum  of  SDR  412  million  to  the

IMF. This loan will be part of a credit facility established in January 1997, the New Arrangement

to Borrow, which will amount in total to SDR 34 billion. The decision to grant the loan shall be

made by the Federal Minister of Finance in agreement with the Oesterreichische Nationalbank.

3. 

The  EMI’s  competence  to  deliver  an  opinion  is  based  on  Article  1.1,  second  indent,  of  the

Decision.  Clearly,  the  draft  act  concerns  arrangements  in  relation  to  the  IMF  to  which  the

Member States are parties rather than national central banks. However, the fact that the draft

act explicitly involves the Oesterreichische Nationalbank in the individual implementation of this

arrangement by granting - in the name of the republic of Austria - a loan to the IMF influences

the status and powers of the Oesterreichische Nationalbank foreseen by the national law.

4. 

The  EMI  welcomes  the  general  approach  of  the  Act.  The  participation  of  EU  countries  in  the

NAB  can  be  an  important  contribution  to  safeguard  the  international  financial  system  against

systemic crises. The NAB will enable the IMF to ward off a threat to the international monetary

system  even  in  the  presence  of  large  and  volatile  capital  movements.  This  objective  is  of

considerable  importance  to  the  euro  area,  which  will  host  one  of  the  world’s  largest  financial

markets.

 
 
 
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5. 

The  EMI  confirms  that  the  arrangement  does  not  interfere  with  Article  104  of  the  Treaty  as

according  to  Article  7  of  Council  Regulation  (EC)  No  3603/93  of  13  December  1993  the

financing by the national central banks of obligations falling upon the public sector vis-à-vis the

International  Monetary  Fund  shall  not  be  regarded  as  a  credit  facility  within  the  meaning  of

Article 104.

6. 

The  EMI  would  like  to  note  that  the  possible  implications  of  the  activation  of  the  NAB  on  the

monetary  policy  of  the  ESCB,  in  particular  liquidity  effects,  would  need  some  special

consideration. Therefore, it would be recommendable to ensure that the ECB is informed prior to

granting a loan to the IMF in order to enable the former to sterilise any liquidity effects resulting

from it, as appropriate.

7. 

This  opinion  does  not  prejudice  the  right  of  the  ECB  to  express  its  views  on  national  central

banks’ involvement in the implementation of the NAB.

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

27 August 1997