Guideline of the European Central Bank of 27 September 2001 for participating Member States' transactions with their foreign exchange working balances pursuant to Article 31.3 of the Statute of the European system of central banks and of the European Central Bank (ECB/2001/9)
Date: 2001-09-27
Institutions: European Central Bank
Subjects: EU Member State, European Central Bank, central bank, financial transaction, foreign currency, working capital

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Official Journal of the European Communities

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(Acts whose publication is not obligatory)

EUROPEAN CENTRAL BANK

GUIDELINE OF THE EUROPEAN CENTRAL BANK

of 27 September 2001

for participating Member States' transactions with their foreign exchange working balances
pursuant to Article 31.3 of the Statute of the European system of central banks and of the
European Central Bank

(ECB/2001/9)

(2001/737/EC)

THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL
BANK,

HAS ADOPTED THIS GUIDELINE:

Having regard to the Statute of the European System of Central
Banks and of the European Central Bank (hereinafter referred
to as the ‘Statute’) and in particular to Articles 31.2, 31.3 and
43.1 thereof,

Whereas:

(1)

(2)

(3)

The transactions of participating Member States with
their foreign exchange working balances shall, above a
certain limit to be established within the framework of
Article 31.3 of the Statute, be subject to approval by the
European Central Bank (ECB) in order to ensure consis-
tency with the exchange rate and monetary policies of
the Community.

Pursuant to Article 31.3 of the Statute, the Governing
Council shall issue guidelines with a view to facilitating
such operations.

Transactions carried out by national central banks as
agents on behalf of participating Member States and not
recorded in national central banks' financial accounts are
covered by this guideline whereas
transactions by
national central banks in their own name and at their
own risk are covered by the guideline on national
central banks' operations pursuant to Article 31.3 of the
Statute,

Article 1

Definitions

For the purposes of this guideline:

— ‘participating Member States’ shall mean all Member States
which have adopted the single currency in accordance with
the Treaty establishing the European Community,

— ‘national central banks’ shall mean national central banks of

participating Member States,

— ‘transactions’ shall mean all transactions listed in the second
and third indents of Article 23 of the Statute, carried out in
the market and involving exchange of non-euro assets for
euro or for any other non-euro assets by participating
Member States,
including without limitation transactions
carried out by national central banks on behalf of partici-
pating Member States and not recorded in the national
central banks' financial accounts,

— ‘foreign exchange working balances’ shall mean holdings of
assets denominated in any unit of account or currency
other than the euro that are maintained by participating
Member States' public authorities directly or through their
agents,

— ‘non-euro assets’ include securities and all other assets in
the currency of any country outside the euro area or units
of account in whatever form held,

for

foreign exchange. This

— ‘off-market’ shall mean foreign exchange operations where
neither contractual party is a participant in the interbank
interbank market
market
consists exclusively of commercial
institutions.
Central banks, international organisations, commercial non-
financial organisations, participating Member States and the
European Commission are deemed not to be part of the
interbank market.

financial

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Article 2

Scope of application

Responsibility for the reporting requirements set out in
4.
Articles 4 and 6 lies with the participating Member States,
which shall collect all relevant data and provide such data to
the ECB through their respective national central banks.

This guideline shall apply to the modalities of transactions
carried out by all public authorities of participating Member
States with their foreign exchange working balances. The
procedures established for ex ante and ex post reporting by
central governments differ from those established for other
public authorities.

Article 3

Thresholds for prior notification

The thresholds at or below which participating Member
1.
States' public authorities may conduct
transactions on any
given trade day with their foreign exchange working balances
without prior notification being given to the ECB, and above
which various types of transactions on any given trade day
with their foreign exchange working balances may not be
conducted without prior notification to the ECB, are set out in
Annex I.

The following foreign exchange transactions shall not be

2.
subject to the prior notification procedure:
— any transactions involving on both sides foreign exchange
assets denominated in the same currency (for example
substitution of a USD Treasury note for a USD Treasury
bill),

— foreign exchange swaps,
— any transactions carried out with national central banks of

participating Member States.

Article 4

Organisational issues

States

shall put

Participating Member

appropriate
1.
arrangements in place in order to ensure that transactions with
foreign exchange working balances conducted by all partici-
pating Member States' public authorities, including those trans-
actions carried out through national central banks acting as
agents on behalf of participating Member States, which are
above the threshold levels set out in Annex I, are communi-
cated to the ECB in accordance with the procedures set out in
this guideline.

Participating Member States' central governments shall
2.
provide the ECB on a monthly basis with estimates of all
forthcoming transactions with foreign exchange working
balances to be carried out by participating Member States'
central governments, including those transactions carried out
through national central banks acting as agents on behalf of
participating Member States. The standard format to be used
for reporting such estimates is set out in Annex II.

All other public authorities shall provide the ECB with
3.
estimates of all forthcoming transactions, including those trans-
actions carried out through national central banks acting as
agents on behalf of participating Member States, with foreign
exchange working balances above the threshold levels estab-
lished by the ECB, as set out in Annex III.

Article 5

Prior notification procedure and the ECB's approval of the
way in which transactions are conducted

1.
Participating Member States' public authorities, including
national central banks acting as agents on behalf of Member
States, shall notify the ECB as far in advance as possible of all
transactions with their foreign exchange working balances
above the threshold levels set out in Article 3. The ECB shall
receive such notifications no later than 11 a.m. ECB time on
the trade date. The standard format to be used for any such
notification is set out in Annex IV and shall be supplied to the
ECB through the participating Member States'
respective
national central banks.

2.
The ECB shall respond to prior notifications provided
pursuant to paragraph 1 as soon as possible, and in any case
by no later than 1 p.m. ECB time on the envisaged trade date.
In the event that, by such time, no response has been received
from the ECB, the transaction shall be deemed to have been
authorised according to the terms and conditions specified by
the relevant participating Member State's public authority.

In the event that a notification is received by the ECB
the consultation procedure

3.
later than 11 a.m. ECB time,
described in paragraph 5 will apply.

The ECB shall consider prior notifications with a view to
4.
facilitating, as far as possible,
transactions by participating
Member States' public authorities. The ECB shall consider such
transactions with a view to ensuring consistency with the
monetary and exchange rate policies of the Community, having
regard to the transactions' impact on the liquidity of the euro
area banking system. In the light of these considerations, the
ECB shall decide if a transaction may be performed within the
time-frame and in the manner envisaged by the participating
Member State involved.

5.
In exceptional circumstances, either related to policy
considerations, adverse market conditions, or late notification
by participating Member States, the ECB may advise that the
timing of a transaction, or the manner in which a transaction is
to be performed, be modified. In such circumstances, the ECB
shall initiate a consultation procedure with the parties involved,
namely the national public authority concerned and the
national central bank of the relevant participating Member
State. The ECB may request that the transaction be performed
off-market through the ESCB,
in which case the ECB may
request
the transaction be performed either with the
national central bank concerned or with the ECB. The ECB may
also request that the overall amount of any such transaction be
divided into two or more transactions. The ECB may also
request a combination of partial performance off-market
through the ESCB as set out above and partial division of the
transaction into two or more transactions, as also set out
above.

that

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In very exceptional circumstances, the ECB may request
6.
that a transaction be delayed, in which case the postponement
of such transaction shall be prescribed for as short a period of
time as possible which shall not, under any circumstances,
either be indefinite or prevent fulfilment of the terms and
conditions of maturing obligations.

Article 7

Confidentiality

All the information and data exchanged in the context of the
procedures set out in this guideline shall be treated confiden-
tially.

Article 8

Article 6

Repeal of Guideline ECB/1998/NP7

Reporting of working balances

Guideline ECB/1998/NP7 is repealed.

1.
In order to ensure that the ECB has an adequate overview
of the level of participating Member States' foreign exchange
working balances, participating Member States shall report
their foreign exchange working balances on a monthly ex post
basis.

2.
The standard format to be used by participating Member
States' central governments for ex post reporting of foreign
exchange working balances to the ECB is set out in Annex V.

3.
All other public authorities of the participating Member
States shall report their foreign exchange working balances
above a threshold level established by the ECB, as set out in
Annex VI.

Article 9

Final provisions

This guideline is addressed to the participating Member States.

This guideline shall enter into force on 1 November 2001.

This guideline shall be published in the Official Journal of the
European Communities.

Done at Frankfurt am Main, 27 September 2001.

On behalf of the Governing Council of the
ECB

Willem F. DUISENBERG

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ANNEX I

Thresholds for prior notification to the ECB of Member States' foreign exchange transactions pursuant to
Article 3(1)

Types of transaction

Threshold applicable
(reference: trade date)

Outright purchase or sales, spot and
forward, of foreign exchange assets

Against the euro

EUR 500 million (gross aggregate
transactions)

Against
exchange
assets (‘cross-currency transactions’)

foreign

other

EUR 500 million equivalent (gross
aggregate transactions per currency
pair)

A gross aggregate transaction is defined as the total of purchases and the total of sales of foreign exchange assets on a
given trade day.

These thresholds also apply to transactions carried out by national central banks as agents on behalf of participating
Member States and not recorded in the national central banks' financial accounts.

ANNEX II

Standard format for ex ante reporting of estimated forthcoming foreign exchange transactions by participating
Member States pursuant to Article 4(2) and (3)

Participating Member States' central governments shall provide the ECB with estimates of their forthcoming foreign
exchange transactions on a monthly basis. These estimates shall cover all transactions carried out by central governments.
All other public authorities shall report estimates of their forthcoming foreign exchange transactions above the thresholds
set out in Annex III. The messages containing participating Member States' estimated forthcoming foreign exchange
transactions should include the following data:

Breakdown:

By currency pairs.

Periodicity:

Deadline:

Interpretation:

Monthly.

6 p.m. ECB time on the last business day of the preceding month.

Total purchases and total sales in transactions against the euro or in cross-currency transactions. The
currency to be purchased should be indicated in the first column/cell and the currency to be sold in
the second column/cell. Trade and value dates should be specified for significant transactions.

Valuation:

The 2.15 p.m. reference rates of the reporting day should be used in determining the amount for the
uncertain amount.

Rounding:

To the closest euro million equivalent.

The time-frame of these messages in one calendar month. The thresholds are day-specific, which means that if the
thresholds are expected to be exceeded on one or more days during the coming month, an ex ante report must be sent
before the last business day preceding this month. The monthly ex ante report should cover the daily period(s) during
which the thresholds are expected to be exceeded.

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ANNEX III

Thresholds for ex ante reporting by participating Member States' public authorities other than central govern-
ment pursuant to Article 4(3)

Participating Member States' public authorities other than central governments shall provide the ECB with monthly
estimates of all forthcoming transactions with their foreign exchange working balances above the following threshold
levels:

Types of transaction

Threshold applicable
(reference: trade date)

Outright purchase or sales, spot and
forward, of foreign exchange assets

Against the euro

EUR 100 million (gross aggregate
transactions)

Against
exchange
assets (‘cross-currency transactions’)

foreign

other

EUR 500 million equivalent (gross
aggregate transactions per currency
pair)

A gross aggregate transaction is defined as the total of purchases and the total of sales of foreign exchange assets on a
given trade day.

Prior notification requests by participating Member States (1) and the ECB's replies pursuant to Article 5(1)

ANNEX IV

Prior notification messages should contain the following information:
— participating Member State notifying transactions,
— public authority responsible for the transaction,
— date and time of the notifications,
— trade date,
— value date,
— size of the transactions (in millions of euro or millions of euro equivalent),
— currencies involved (ISO codes),
— operation category,
— maturing contractual obligation (Y/N).

The ECB's reply to the prior notifications also contains the following data:
— date, time and content of the ECB reply.

Note: Participating Member States are requested to channel their notifications to the ECB via their respective national

central bank.

(1) It should be recalled that only transactions conducted by the Member States in the market, i.e. not with their respective national
central bank as counterparty, are subject to prior notification. Member States' transactions conducted with their respective national
central bank as counterparty are covered by prior approval and reporting procedures applicable to national central banks' opera-
tions.

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ANNEX V

Standard format for ex post reporting to the ECB of foreign exchange working balances held by participating
Member States pursuant to Article 6(2)

The participating Member States' central governments are required to report their outstanding foreign currency working
balances on a monthly basis. Other public authorities have to report only if the highest of either their monthly average
holdings or end-of-month holdings exceed the threshold set out in Annex VI.

Breakdown:

Periodicity:

Deadline:

Interpretation:

Valuation:

All foreign currency working balances, no breakdown by currency. Monthly average, high of the
month, end of the month and low of the month.

Monthly.

6 p.m. ECB time on the fifth business day following the reporting period.

Participating Member States' total holdings of foreign currencies held outside the ESCB. Forward
positions are also to be included in the data (i.e. forward positions should be added to the
current holdings and only one figure per item should be reported). In addition, spot transactions
which have been contracted but which have not yet been settled should be included in the data
(i.e. the data should be compiled on a trade-date basis).

The 2.15 p.m. reference rates should be used by the national central banks to convert the
information received from participating Member States into euro (i.e. if the participating Member
States report foreign currencies actually held). Securities should be valued at market prices, but
for practical reasons a single reference source for prices is not required. Since the bulk of
working balances are likely to be held in the form of deposits, the impact of slightly different
market sources used for valuing securities should be very limited.

Rounding:

To the closest euro million equivalent.

If should be noted that other public authorities are obliged to report only if the highest of either their monthly average
holdings or end-of-month holdings exceeds the reporting threshold. However, if the reporting threshold is triggered, they
should use the same data format as central governments (i.e. monthly average, high of the month, end of the month and
low of the month).

The ex post reporting obligation contained in this Annex includes all foreign exchange transactions carried out by national
central banks as agents on behalf of public authorities of participating Member States.

ANNEX VI

Threshold for ex post reporting by participating Member States' public authorities other than central govern-
ment pursuant to Article 6(3)

Participating Member States' public authorities other than central governments shall report to the ECB their foreign
exchange working balances above the following threshold levels:

Types of assets

Threshold applicable
(reference: trade date)

Holdings of foreign exchange assets (total of all currencies,
in millions of euro equivalent): the figure reported shall be
the higher of the following ones:
— average of the month,
— end of the month.

EUR 50 million equivalent