2001/914/EC: Decision of the European Central Bank of 6 December 2001 on the allocation of monetary income of the national central banks of participating Member States from the financial year 2002 (ECB/2001/16)
Date: 2001-12-06
Institutions: European Central Bank
Subjects: European Central Bank, central bank, euro area, monetary policy

20.12.2001

EN

Official Journal of the European Communities

L 337/55

DECISION OF THE EUROPEAN CENTRAL BANK

of 6 December 2001

on the allocation of monetary income of the national central banks of participating Member States
from the financial year 2002

(ECB/2001/16)

(2001/914/EC)

THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL
BANK,

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 Article 32 thereof,

Whereas:

(1)

(2)

(3)

(4)

to credit

the Statute, monetary
According to Article 32.1 of
income is the income accruing to the national central
banks (NCBs) in the performance of the monetary policy
function. Under the provisions of Article 32.2 of the
Statute, the amount of each NCB's monetary income
shall be equal to its annual
income derived from its
assets held against notes in circulation and deposit liabil-
ities
institutions. These assets are to be
earmarked by NCBs in accordance with the guidelines of
the Governing Council. As from the financial year 2003,
NCBs should earmark the assets ensuing from the
performance of the monetary policy function as assets
held against the notes in circulation and deposit liabili-
ties to credit institutions. According to Article 32.4 of
the Statute, the amount of each NCB's monetary income
shall be reduced by an amount equivalent to any interest
paid by that NCB on its deposit liabilities to credit
institutions in accordance with Article 19 of the Statute.

Pursuant to Article 32.5 of the Statute, the sum of the
monetary income of the NCBs shall be allocated to them
in proportion to their paid-up shares in the capital of
the European Central Bank (ECB).

According to Article 32.6 and Article 32.7 of
the
Statute, the Governing Council of the ECB is empowered
to establish guidelines for the clearing and settlement by
the ECB of the balances arising from the allocation of
monetary income and to take all other measures neces-
sary for the application of Article 32 of the Statute.

Pursuant to Article 10 of Council Regulation (EC) 974/
98 of 3 May 1998 on the introduction of the euro (1),
from 1 January 2002, the ECB and the NCBs (hereinafter
referred to as the ‘Eurosystem’) shall put into circulation
banknotes denominated in euro. Article 15 of this Regu-
lation provides for the continuation of the legal tender
status of banknotes denominated in national currency

(1) OJ L 139, 11.5.1998, p. 1.

units during a maximum period of six months after the
end of the transitional period. The year 2002 should
thus be regarded as a special year, since banknotes in
circulation denominated in national currency units may
still account for a considerable proportion of the total
value of Eurosystem banknotes in circulation and with
different patterns in Member States. This situation is
comparable to the situation from 1999 to 2001 and,
therefore, for the financial year 2002 monetary income
should be calculated by a method analogous to that
provided for in Decision ECB/2000/19 of 3 November
1998 as amended by Decision of 14 December 2000 on
the national
the allocation of monetary income of
central banks of participating Member States and losses
of the ECB for the financial years 1999 to 2001 (2) in
order to ensure that changes in the patterns of bank-
notes circulation do not significantly affect the relative
income positions of NCBs. For 2002, Article 32.3 of the
Statute allows the Governing Council to decide, by way
of derogation from Article 32.2, that monetary income
be measured according to an alternative method.

(5)

(6)

Article 9(1) of Guideline ECB/2001/1 of 10 January
2001 adopting certain provisions on the 2002 cash
changeover (3) provides that euro banknotes frontloaded
to credit institutions or to their appointed agents shall
be debited in their respective accounts with the NCBs, as
the case may be, for their face value, according to the
following ‘linear debiting model’: one third of the fron-
tloaded sum on 2 January 2002, one third on 23
January 2002, and the last third on 30 January 2002.
The calculation of monetary income for the year 2002
needs to take account of this ‘linear debiting model’.

This Decision is related to Decision ECB/2001/15 of 6
December 2001 on the issue of euro banknotes (4) that
issue euro
provides that the ECB and the NCBs shall
banknotes. Decision ECB/2001/15 establishes the alloca-
tion of euro banknotes in circulation to the NCBs in
proportion to their paid-up shares in the capital of the
ECB. The same Decision allocates to the ECB 8 % of the
total value of euro banknotes in circulation. The alloca-
tion of euro banknotes among Eurosystem members

(2) OJ L 336, 30.12.2000, p. 119.
(3) OJ L 55, 24.2.2001, p. 80.
(4) See page 52 of this Official Journal.

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rise to intra-Eurosystem balances. The remu-
gives
neration of
these intra-Eurosystem balances on euro
banknotes in circulation has a direct effect on the
income of each Eurosystem member, and therefore it
should be regulated under this Decision. The income
accruing to the ECB on the remuneration of its intra-
Eurosystem claims on NCBs related to its share of euro
banknotes in circulation should in principle be distrib-
uted to the NCBs in accordance with the decisions of the
Governing Council, in proportion to their shares in the
subscribed capital key in the same financial year it
accrues.

(10)

(11)

The adjustments to the intra-Eurosystem balances on
euro banknotes in circulation need to take account of
the special situation of the Grand Duchy of Luxembourg
arising from its recent monetary history.

The Governing Council of the ECB has adopted this
Decision with the expectation that its economic results
and the financial equilibrium that such economic results
entail remain unchanged during the period of applica-
tion of Article 4 of this Decision and, therefore, it is the
firm commitment of the Governing Council of the ECB
to ensure the maintenance of the regime provided for by
this Decision until 31 December 2007,

(7)

(8)

The net balance of
the intra-Eurosystem claims and
liabilities on euro banknotes in circulation should be
remunerated by applying an objective criterion defining
the cost of money. In this context, the main refinancing
operations rate used by the Eurosystem in its tenders for
main refinancing operations is regarded as appropriate.

HAS DECIDED AS FOLLOWS:

Article 1

Definitions

amount of

The net intra-Eurosystem liabilities on euro banknotes in
circulation should be included in the liability base for
the purposes of the calculation of the NCBs monetary
income under Article 32.2 of the Statute as they are
equivalent to banknotes in circulation. The settlement of
interest on intra-Eurosystem balances on euro banknotes
in circulation will therefore result in the distribution of a
substantial
the Eurosystem's monetary
income among NCBs in proportion to their paid-up
shares in the capital of the ECB. These intra-Eurosystem
balances should be adjusted to allow for a gradual adap-
tation of the NCBs' balance sheets and profit and loss
accounts. The adjustments should be based on the value
of banknotes in circulation of each NCB during a period
prior to the introduction of euro banknotes. These
adjustments should take account of the special circum-
stances of the year 2002, during which Member States
have different changeover scenarios, and during which
credit institutions will increase to different levels their
normal cash holdings, and should apply on a yearly
basis in accordance with a fixed formula for no more
than five years thereafter.

(9)

The adjustments to the intra-Eurosystem balances on
euro banknotes in circulation have been calculated in
order to compensate for any significant changes in the
NCBs' income positions as a consequence of the intro-
duction of the euro banknotes and the subsequent allo-
cation of monetary income. The Governing Council has
therefore decided not to have recourse to the derogation
from Article 32 of the Statute, allowed by Article 51 of
the Statute.

For the purposes of this Decision:

(a) ‘participating Member States’ shall mean the Member States
which have adopted the single currency in accordance with
the Treaty establishing the European Community';

(b) ‘NCBs’ shall mean the national central banks of the partici-

pating Member States;

(c) ‘liability base’ shall be the amount of qualifying liabilities,
within the balance sheet of each NCB, specified in accord-
ance with Annex I to this Decision;

(d) ‘earmarkable assets’ shall be the amount of assets held
against the liability base, within the balance sheet of each
to this
specified in accordance with Annex II
NCB,
Decision;

(e) ‘intra-Eurosystem balances on euro banknotes in circula-
tion’ shall mean the claims and liabilities arising between a
NCB and the ECB and between a NCB and the other NCBs
as a result of the application of Article 4 of Decision
ECB/2001/15 of 6 December 2001 on the issue of euro
banknotes;

(f) ‘subscribed capital key’ shall mean the percentages that
result from applying to the NCBs the weighting in the key
referred to in Article 29.1 of the Statute and as laid down
in Decision ECB/1998/13 of 1 December 1998 on the
national central banks' percentage shares in the key for the
capital of the European Central Bank (1);

(g) ‘credit institutions’ shall mean credit institutions subject to
minimum reserve requirements under Regulation ECB/
1998/15 (2) on the application of minimum reserves, as
amended by Regulation ECB/2000/8 (3);

(1) OJ L 125, 19.5.1999, p. 33.
(2) OJ L 356, 30.12.1998, p. 1.
(3) OJ L 229, 9.9.2000, p. 34.

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(h) ‘HBS’ shall mean the harmonised balance sheet as struc-
tured in Annex IX to the Guideline ECB/2000/18 on the
legal framework of accounting and reporting in the Euro-
pean System of Central Banks as amended on 15 December
1999 and 14 December 2000 (1);

(i) ‘reference rate’ shall be the latest available marginal interest
rate used by the Eurosystem in its tenders for main refi-
nancing operations under paragraph 3.1.2 of Annex I to
Guideline ECB/2000/7 of 31 August 2000 on monetary
policy instruments and procedures of the Eurosystem (2).
Where more than one main refinancing operation is
conducted for settlement on the same day, a simple average
of
the operations conducted in
parallel

the marginal rates of

is used.

Article 2

Intra-Eurosystem balances

on
circulation

euro

banknotes

in

1.
The intra-Eurosystem balances on euro banknotes in
circulation shall be calculated on a monthly basis and shall be
recorded in the books of the ECB and the NCBs on the first
business day of the month with a value date of the last business
day of the preceding month.

The first calculation of the intra-Eurosystem balances on euro
banknotes in circulation under the previous paragraph shall be
made for frontloaded euro banknotes on 2 January 2002 with
a value date of 1 January 2002.

2.
The intra-Eurosystem balances on euro banknotes in
circulation, including those resulting from the application of
Article 4 of this Decision, shall be remunerated at the reference
rate.

The remuneration referred to in the previous paragraph

3.
shall be settled by Target payments on a quarterly basis.

4.
In derogation from the previous paragraph, for the finan-
cial year 2002, the remuneration referred to in paragraph 2
shall be settled at the end of the year.

Article 3

Method for measuring monetary income

1.
In 2002, the amount of each NCB's monetary income
shall be determined in accordance with the following formula:

MI = LB × RR,

whereby:

MI

LB

RR

is the amount of each NCB's monetary income to be
pooled,

is the liability base of each NCB,

is the reference rate.

From 2003 the amount of each NCB's monetary income
2.
shall be determined by measuring the actual
income that
derives from the earmarkable assets recorded in its books. As

(1) OJ L 33, 2.2.2001, p. 21.
(2) OJ L 310, 11.12.2000, p. 1.

an exception thereof, gold shall be considered to generate no
income.

3. Where the value of a NCB's earmarkable assets exceeds or
falls short of the value of its liability base, the difference shall
be offset by applying to the value of the difference the average
rate of return on the earmarkable assets of all NCBs taken
together.

This average rate of return shall be calculated in the following
income accrued by all NCBs on their
manner. The total
earmarkable assets, excluding all income arising from net intra-
Eurosystem claims resulting from TARGET transactions (Annex
II, A.3) and net intra-Eurosystem claims on euro banknotes in
circulation including those resulting from the application of
Article 4 (Annex II, A.4), shall be divided by the average
amount of the total earmarkable assets of the Eurosystem. The
average rate of return shall be applied on a 360 days basis.

Article 4

Adjustments to intra-Eurosystem balances

For the purposes of monetary income calculation, each
1.
NCB's intra-Eurosystem balances on euro banknotes in circula-
tion shall be adjusted by a compensatory amount determined
in accordance with the following formula:

CA = (K – A) × C,

whereby:

CA

is the compensatory amount,

K

A

is the amount
for each NCB that results from the
application of the subscribed capital key to the average
value of banknotes in circulation during the period 1
July 1999 to 30 June 2001,

is the average value for each NCB of banknotes in
circulation during the period 1 July 1999 to 30 June
2001,

C

is the following coefficient for each financial year:

Financial year

Coefficient

2002

2003

2004

2005

2006

2007

1

0,8606735

0,7013472

0,5334835

0,3598237

0,1817225

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The sum of the compensatory amounts of the NCBs shall

Article 5

2.
be 0.

3.
The compensatory amounts and the accounting entries to
balance those compensatory amounts shall be recorded on
separate intra-Eurosystem accounts in the books of each NCB
with a value date of 1 January on the first business day of each
year. The accounting entries to balance the compensatory
amounts shall not be remunerated.

In the event that the value of euro banknotes that the
4.
Banque centrale du Luxembourg puts into circulation in 2002
exceeds the average value of its banknotes in circulation during
the period from 1 July 1999 to 30 June 2001 by 25 % or
more, letter ‘A’ in the formula of paragraph 1 shall be for the
Banque centrale du Luxembourg the value of banknotes put
into circulation by the Banque centrale du Luxembourg in
2002 up to a maximum limit of EUR 2,2 billion. Upon
this derogation, all compensatory amounts
application of
to
calculated on the basis of Article 4(1) shall be subject
retroactive adjustments at the end of 2002, in order to ensure
compliance with paragraph 2. Such retroactive adjustments
shall be in proportion to the subscribed capital key.

In derogation from paragraph 1, upon the occurrence of
5.
specific contingencies relative to changes in patterns of bank-
note circulation as described in Annex III to this Decision, each
NCB's intra-Eurosystem balances on euro banknotes in circula-
tion shall be adjusted in accordance with the provisions set out
in that Annex.

6.
The adjustments to intra-Eurosystem balances provided
for in this Article shall cease to apply from 1 January 2008.

Calculation and allocation of monetary income

1.
The calculation of each NCB's monetary income shall be
effected by the ECB on a daily basis. The calculation shall be
based on accounting data reported by NCBs to the ECB. The
ECB shall inform the NCBs of the cumulative amounts on a
quarterly basis.

2.
The amount of each NCB's monetary income shall be
reduced by an amount equivalent to any interest accrued or
paid on liabilities included within the liability base, and in
accordance with any decision of the Governing Council of the
ECB under the second paragraph of Article 32.4 of the Statute.

The allocation of

the sum of each NCB's monetary
3.
income in proportion to the subscribed capital key shall take
place at the end of each financial year.

Article 6

Final provisions

1.

This Decision shall enter into force on 1 January 2002.

This Decision shall be published in the Official Journal of

2.
the European Communities.

Done at Frankfurt am Main, 6 December 2001.

On behalf of the Governing Council of the
ECB

Willem F. DUISENBERG

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ANNEX I

COMPOSITION OF THE LIABILITY BASE

A. The liability base shall

include, with the exclusion of any other item:

1. banknotes in circulation

In the financial year 2002, for the purposes of this Annex and for each NCB,
(i) shall also include banknotes issued by it and denominated in its national currency unit; and
(ii) shall be reduced by the value of the non-remunerated loans related to frontloaded euro banknotes that have not

‘banknotes in circulation’:

been yet debited (part of asset item 6 of the harmonised balance sheet (HBS)).

From the financial year 2003, for the purposes of this Annex and for each NCB, ‘banknotes in circulation’ shall
include banknotes denominated in euro, to the exclusion of any other banknotes;

2.

liabilities to euro area credit institutions related to monetary policy operations denominated in euro, including:

(a) current accounts including minimum reserve requirements under Article 19.1 of the Statute (liability item 2.1

of the HBS);

(b) amounts in deposit under the Eurosystem deposit facility (liability item 2.2 of the HBS);

(c) fixed-term deposits (liability item 2.3 of the HBS);

(d) liabilities arising from fine-tuning reverse operations (liability item 2.4 of the HBS);

(e) deposits related to margin calls (liability item 2.5 of the HBS);

3.

intra-Eurosystem liabilities of NCBs arising from the issue to the ECB of promissory notes backing the issuance of
ECB debt certificates under Chapter 3.3 of Annex I to Guideline ECB/2000/7 (liability item 10.2 of the HBS);

4. net intra-Eurosystem liabilities resulting from TARGET transactions (part of liability item 10.3 of the HBS);

5. net intra-Eurosystem liabilities on euro banknotes in circulation, including those resulting from the application of

Article 4 of this Decision.

B. The amount of each NCB's liability base shall be calculated in accordance with the harmonised accounting principles
and rules established in Guideline ECB/2000/18 on the legal framework of accounting and reporting in the European
System of Central Banks as amended on 15 December 1999 and 14 December 2000. (1)

(1) OJ L 33, 2.2.2001, p. 21.

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ANNEX II

EARMARKABLE ASSETS

A. Earmarkable assets shall

include, with the exclusion of any other item:

1.

2.

lending to euro area credit institutions related to monetary policy operations denominated in euro (asset item 5 of
the harmonised balance sheet (HBS));

intra-Eurosystem claims equivalent to the transfer of foreign reserve assets other than gold to the ECB under Article
30 of the Statute (part of asset item 9.2 of the HBS);

3. net intra-Eurosystem claims resulting from TARGET transactions (part of asset item 9.4 of the HBS);

4. net intra Eurosystem claims on euro banknotes in circulation including those resulting from the application of

Article 4 of this Decision;

5. gold, including claims in respect of gold transferred to the ECB, in an amount permitting each NCB to earmark a
proportion of its gold that corresponds to the application of its share in the subscribed capital key to the total
amount of gold earmarked by all NCBs. (asset item 1 and part of asset item 9.2 of the HBS).

For the purposes of this Decision, and at least until the calculation of monetary income for the financial year 2007,
gold shall be valued on the basis of the gold price in euro per fine ounce as at 31 December 2002.

B. The value of each NCB's earmarkable assets shall be calculated in accordance with the harmonised accounting
principles and rules established in Guideline ECB/2000/18 on the legal framework of accounting and reporting in the
European System of Central Banks as amended on 15 December 1999 and 14 December 2000 (1).

(1) OJ L 33, 2.2.2001, p. 21.

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ANNEX III

SPECIAL CONTINGENT ADJUSTMENTS

A. First contingent adjustment

In the event that the total average of banknotes in circulation in 2002 is lower than the total average of banknotes,
denominated in the national currency of the Member States that have adopted the euro, in the period of 1 July 1999
to 30 June 2001, the coefficient ‘C’ applying to the financial year 2002 in accordance with Article 4(1) shall be
reduced with retroactive effect in the same proportion as the decrease in the total average of banknotes in circulation.

The reduction shall not result in a coefficient lower than 0,8606735. Upon application of this derogation, one quarter
of the resulting reduction to the NCBs compensatory amounts ‘CA’ applicable in the year 2002 shall be added to each
of the NCBs compensatory amounts applicable in 2004, 2005, 2006, and 2007 under Article 4(1).

B. Second contingent adjustment

In the event that those NCBs for which the compensatory amount referred to in Article 4(1) is a positive figure, pay
net remuneration on intra-Eurosystem balances on banknotes in circulation that, when added to the item ‘net result of
pooling of monetary income’ in their profit and loss account at the end of the year, results in a net expense, the
coefficient ‘C’ applying to the financial year 2002 in accordance with Article 4(1) shall be reduced to the extent
necessary to eliminate this condition.

The reduction shall not result in a coefficient lower than 0,8606735. Upon application of this derogation, one quarter
of the resulting reduction to the NCBs compensatory amounts ‘CA’ applicable in the year 2002 shall be added to each
of the NCBs compensatory amounts applicable in 2004, 2005, 2006, and 2007 under Article 4(1).