Recommendation, under Article 10.6 of the Statute of the European System of Central Banks and of the European Central Bank, for a Council Decision on an amendment to Article 10.2 of the Statute of the European System of Central Banks and of the European Central Bank (ECB/2003/1)
Date: 2003-02-03
Institutions: European Central Bank
Subjects: European Central Bank, European System of Central Banks, central bank, decision-making body (EU), vote

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EUROPEAN CENTRAL BANK

Recommendation, under Article 10.6 of the Statute of the European System of Central Banks and
of the European Central Bank, for a Council Decision on an amendment to Article 10.2 of the
Statute of the European System of Central Banks and of the European Central Bank

(ECB/2003/1)

(2003/C 29/07)

(Submitted by the European Central Bank on 3 February 2003)

EXPLANATORY MEMORANDUM

It provides:

‘Article 10.2 (of

With the Treaty of Nice a new Article 10.6 has been added to
the Statute of the European System of Central Banks and of the
European Central Bank.
the
Statute) may be amended by the Council meeting in the
composition of
the Heads of State or Government, acting
unanimously either on a recommendation from the ECB and
after consulting the European Parliament and the Commission,
or on a recommendation from the Commission and after
consulting the European Parliament
and the ECB. The
Council shall recommend such amendments to the Member
States for adoption. These amendments shall enter into force
after having been ratified by all
in
accordance with their respective constitutional requirements
. . .’ Article 10.6 has to be read in conjunction with the
Declaration on Article 10.6 of the Statute of the European
System of Central Banks and of the European Central Bank
which was annexed to the Treaty of Nice. This Declaration
‘The Conference expects that a recommendation
provides:
within the meaning of Article 10.6 of
the
European System of Central Banks and of
the European
Central Bank will be presented as soon as possible.’

the Member States

the Statute of

In view of the above, the ECB submits the present recommen-
dation for a Council Decision on an amendment to Article
In accordance with the provisions of
10.2 of
Article 10.6 of
the recommendation has been
adopted by the Governing Council of the ECB by unanimity.
It will be published in the Official Journal of the European Union.

the Statute.

the Statute,

Council meetings (Article 10.1 of the Statute), and as such to
participate in the discussions. Moreover, any adjustment of the
voting modalities does not have any implications for voting on
decisions taken under Articles 28, 29, 30, 32, 33 and 51 of the
Statute (Article 10.3 of the Statute).

To maintain the Governing Council's capacity for efficient and
timely decision-making in an enlarged euro area, the number
of governors having voting rights has to be smaller than the
overall number of governors in the Governing Council. A
rotation system is an equitable, efficient and acceptable way
of assigning voting rights among the governors. The six
members of the Executive Board maintain permanent voting
rights. Any change to this would be difficult to reconcile with
their special status as laid down in the EC Treaty and the
Statute. They are
the Governing
Council who are appointed at the European level by a Treaty
procedure and who operate solely in the euro area context and
for the ECB, the competence of which spans the whole euro
area. Finally, it has to be taken into account that the President,
a member of the Executive Board, also has the casting vote in
the event of a tie in the Governing Council.

the only members of

The design of the rotation system should be guided by five
‘ad
fundamental principles,
‘automaticity/
personam participation’;
robustness’ and ‘transparency’.

‘one member one vote’;

‘representativeness’;

i.e.

1. GENERAL CONSIDERATIONS

the voting modalities

Article 10.6 of the Statute provides the legal basis for the
adjustment of
in the Governing
Council. As it restricts any amendments to Article 10.2 of
is
the Statute, any adjustment of
without prejudice to the right of
the
to be present during the Governing
Governing Council

the voting modalities
the members of

First, the ‘one member one vote’ principle, which is the core
principle of the ECB/Eurosystem's decision-making, has to be
retained for members having a voting right. However, a
rotation system necessarily implies that there will no longer
be permanent voting rights
the
the members of
Governing Council as the number of governors increases.

for all

Second, all members of the Governing Council will continue to
participate in its meetings, irrespective of whether they have
the voting right or not, in a personal and independent capacity.

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Third, since the introduction of a rotation system could theor-
etically lead to situations in which the members of
the
Governing Council having voting rights were from Member
States which, taken together, might be perceived as not being
sufficiently representative of the euro area economy as a whole,
it should be designed in a manner which excludes such
outcomes. In order to achieve representativeness, the rotation
system has to differentiate between governors with respect to
the frequency with which they have voting rights, with
governors from larger Member States enjoying more frequent
periods with voting rights than those from smaller Member
States. Although the introduction of considerations of repre-
sentativeness marks a departure from the existing provisions
for voting in the Governing Council,
is exclusively
motivated by the need to accommodate the impact of
enlargement on the Governing Council's decision-making.
This ex ante differentiation between governors should apply
exclusively to the prior determination of the frequency with
which each governor has the voting right. For all governors
having voting rights at any point in time, the ‘one member one
vote’ principle would continue to apply. Consequently, this
differentiation should not
substantive
decision-making, but is only relevant in the process of deter-
mining who votes when.

impact on actual

this

Fourth, the rotation system has to be devised in a manner
whereby the system itself, any rule on the allocation of
governors to different groups, and any rule on the assignment
of voting rights to such groups, allow the system to adjust
automatically to the process of euro area enlargement.
In
addition,
it has to be capable of accommodating up to 27
Member States, i.e. the current EU Member States and the 12
accession countries
in the Declaration on the
enlargement of the European Union which is annexed to the
Treaty of Nice. This ‘robustness’ principle implies, in particular,
the
the avoidance of situations in which, as a result of
workings of the rotation system, the members of a group of
smaller Member States enjoy higher voting frequencies than the
members of a group of relatively larger Member States.

listed

Fifth, the design of the rotation system has to be transparent.
Consequently, the language of the revised Article 10.2 of the
Statute has
the
requirements of primary Community law.

reasonably accessible

and meet

to be

With these fundamental principles in mind, the adjustment of
the Governing Council's voting modalities has been designed as
laid down in Article 1.

2. COMMENTS ON THE ARTICLES

Article 1

Within the limits laid down by Article 10.6 of the Statute,
Article 1 establishes a system for the rotation of voting
rights in the Governing Council. As from the date on which
the number of members of the Governing Council exceeds 21
the voting modalities
in the Governing Council will be
In line with the current institutional arrangement,
adjusted.

special

status (see above),

the six members of

the total number of voting rights is limited to 21. In view of
their
the
Executive Board will continue to have permanent voting
rights. The governors will share the remaining 15 voting
rights which will rotate among them according to pre-estab-
lished rules. Each member of the Governing Council with a
voting right will have one vote to be exercised in a personal
and independent capacity only. To ensure that any decisions
taken by the Governing Council are representative of the euro
area economy as a whole, governors will be allocated to groups
which differ with respect to the frequency with which their
members may have voting rights. The allocation of governors
to groups will be done in accordance with a ranking of their
respective NCB's Member State. This ranking will be based on
the Member States' shares in the euro area total according to
an indicator with two components:
the share in the
aggregate gross domestic product at market prices (hereinafter
GDP mp) of the Member States without a derogation; and (ii)
the share in the total aggregated balance sheet of the monetary
financial
institutions (hereinafter TABS-MFIs) of the Member
States without a derogation. The selection of the first and
most significant component, GDP mp,
is justified on the
grounds of its widespread use as the most objective reflection
the overall economy of each participating
of
Member State. The second is
justified by the need to
recognise the specific relevance of the financial sector of the
participating Member States for central bank decisions. A 5/6
weight is attributed to GDP mp and a 1/6 weight to TABS-MFIs.
This choice of weights is suitable, as this will mean that the
financial sector is sufficiently and meaningfully represented.

the size of

(i)

As regards the operation of the rotation system, two stages,
dependent on the sequencing of the enlargement of the euro
area, are foreseen:

— as from the date on which the number of governors
exceeds 15, until
the governors will be
it reaches 22,
allocated to two groups. For reasons of continuity it is
considered appropriate to start with a rotation scheme
which represents only a marginal departure from the
current voting provisions and which is rather simple. The
length of time during which this rotation scheme will be in
operation is uncertain since it depends on the sequencing
of euro area enlargement. The first group will be composed
of the five governors of the NCBs of the Member States
with the biggest shares in the euro area total according to
the indicator described above. The second group will be
composed of all the other governors. The five governors
the first group share four voting rights and the
of
remaining governors of
the second group share 11.
However, from the start of the rotation system until the
number of governors exceeds 18, there is a need for excep-
tional arrangements in order to avoid that the members of
the first group have lower voting frequencies than the
members of the second group. This may have an impact
on how the 15 voting rights are assigned to the two
groups.
In order to avoid the situation that governors
within any group have a voting frequency of 100 %, the
Governing Council may also decide to postpone the start of
the rotation system until the number of governors exceeds
18. The
rotation
arrangements which are limited in time should be left to
the Governing Council.

implementation of

specific

these

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— As from the date on which the number of governors
the governors will be allocated to three
reaches 22,
groups. The first group will be composed of
the five
governors of the NCBs of the Member States with the
biggest shares in the euro area total according to the
indicator described above. The second group will be
composed of half of
the total number of governors
rounded up where necessary and taking into consideration
the robustness principle so as to ensure a degree of
continuity in the frequency of voting rights of the second
group. Governors in this group will come from the NCBs
of the Member States holding the subsequent positions in
the country ranking based on the above criteria. The third
group will be composed of the remaining governors. Four
voting rights are assigned to the first group, eight to the
second and three to the third. When there are 27 euro area
Member States, the voting frequency of the first group will
be 80 %, that of the second 57 % and that of the third
38 %.

The rotation of the voting rights among governors will also be
governed by the principle
that within each group the
governors will have their voting rights for equal amounts of
time. The measures necessary for the implementation of this
principle, which are of an operational nature only, will be
taken by the Governing Council.

The composition of the groups will be adjusted whenever the
aggregate GDP mp is adjusted in accordance with Article 29.3
of the Statute, or whenever the number of governors increases
as a consequence of the enlargement of the euro area. The data
for the calculation of the shares in the aggregate GDP mp will
be provided by the Commission in accordance with the rules
adopted by the Council under Article 29.2 of the Statute. The
data for the calculation of the shares in the TABS-MFIs will be
calculated in accordance with the
framework
applying in the European Community at the time of calcu-
lation. As a consequence, they will be calculated by the ECB
within the framework decided by the Council under Article 5.4
of the Statute, i.e. Council Regulation (EC) No 2533/98 of 23

statistical

collection of

statistical
November 1998 concerning the
information by the European Central Bank (1), and as further
detailed by the ECB by Regulation (EC) No 2423/2001 of the
European Central Bank of 22 November 2001 concerning the
consolidated balance sheet of the monetary financial institution
sector (2) as amended by Regulation (EC) No 2174/2002 (3).

follows

the
The abovementioned quinquennial adjustment
the Statute. The new shares
rationale of Article 29.3 of
resulting from such adjustments will apply as from the first
day of the following year. Upon one or more new governors
becoming members of the Governing Council, the reference
periods to be used to calculate the shares of their respective
NCB's Member State in the aggregate GDP mp and in the
TABS-MFIs of
the Member States without a derogation
should be identical to those used for the latest quinquennial
adjustment of the shares. The new shares resulting from such
irregular adjustments will apply as from the day on which the
new governor(s) join(s) the Governing Council. These details
will be part of the implementing provisions to be adopted by
the Governing Council.

Any decision which is necessary to implement the operational
details of the rotation system will, as an exception to the new
voting modalities, be adopted by all members of the Governing
Council — irrespective of whether or not they hold a voting
right at the time of the decision — by a two-thirds majority.

Article 2

The Council Decision amending Article 10.2 of the Statute has
to be recommended to the Member States for adoption. The
amendment will only enter into force once it has been ratified
by all Member States in accordance with their respective
the entry into
requirements. The timing of
constitutional
force has been framed on the same model as the final
provisions of the Treaty of Nice.

(1) OJ L 318, 27.11.1998, p. 8.
(2) OJ L 333, 17.12.2001, p. 1.
(3) OJ L 330, 6.12.2002, p. 29.

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Recommendation of the European Central Bank for a

COUNCIL DECISION

on an amendment to Article 10.2 of the Statute of the European System of Central Banks and of
the European Central Bank

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Statute of the European System of Central
Banks and of the European Central Bank, and in particular to
Article 10.6 thereof,

Having regard to the recommendation from the European
Central Bank (1),

Having regard to the opinion of the European Parliament (2),

Having regard to the opinion of the Commission (3),

Whereas:

(1) The enlargement of the euro area will lead to an increase in
the number of members of the Governing Council of the
European Central Bank (ECB). There is a need to maintain
the Governing Council's capacity for efficient and timely
decision-making in an enlarged euro area,
irrespective of
the number of Member States that adopt the euro. In order
to do so, the number of governors having voting rights will
have to be smaller than the overall number of governors in
the Governing Council. A rotation system is an equitable,
efficient and acceptable way of assigning voting rights
in the Governing Council. A
among the governors
number of 15 voting rights for the governors strikes an
appropriate balance between, on the one hand, continuity
with the existing set-up including a balanced assignment of
voting rights between the six members of the Executive
Board and the other members of the Governing Council
and, on the other hand,
the need to ensure efficient
decision-making in a substantially enlarged Governing
Council.

(2) In view of their appointment at European level by a Treaty
procedure and their role at the ECB, the competence of
which spans the whole euro area, each member of the
Executive Board has to maintain a permanent voting
right in the Governing Council.

(3) The voting modalities

in the Governing Council are
adjusted on the basis of Article 10.6 of the Statute. As
this Article only concerns amendments to Article 10.2 of
the Statute, any adjustment of the voting modalities has no
implications for voting on decisions taken in accordance
with Articles 10.3, 10.6 and 41.2 of the Statute.

(4) Five fundamental principles are reflected in the constitutive
elements of the chosen rotation system. The ‘one member
one vote’ principle, which is the Governing Council's core
decision-making principle,
to apply to all
members of the Governing Council having a voting right.
the Governing Council continue to
All members of

continues

(1) OJ . . .
(2) OJ . . .
(3) OJ . . .

participate in its meetings in a personal and independent
capacity, irrespective of whether they have a voting right or
not. The rotation system is robust in the sense that it is
able to accommodate any euro area enlargements up to the
currently envisaged maximum number of Member States.
Moreover, the rotation system avoids producing situations
in which those governors having a voting right are from
the national central banks (NCBs) of Member States which,
taken together, are perceived as unrepresentative of the
euro area economy as a whole. Finally,
the rotation
system is transparent.

is

(5) The allocation of governors to groups and the assignment
of specific numbers of voting rights to these groups are
designed to ensure that those governors having a voting
right are from the NCBs of Member States which, taken
together, are representative of the euro area economy as a
whole. Governors will exercise their voting right with
different
frequencies depending on the relative size of
their NCB's Member State's economy within the euro
area. The allocation of governors
thus
to groups
their NCB's Member State
dependent on a ranking of
based on an indicator with two components: the size of
the share of their NCB's Member State (i) in the aggregate
gross domestic product at market prices (hereinafter GDP
mp) of the Member States without a derogation; and (ii) in
the total aggregated balance sheet of the monetary financial
institutions (hereinafter TABS-MFIs) of the Member States
without a derogation. The economic weight of a Member
State as
reflected in its GDP mp is an appropriate
component as the impact of central bank decisions is
greater in Member States with larger economies than in
those with smaller economies. At the same time, the size
of a Member State's financial sector also has a particular
relevance
the
bank
counterparties of central bank operations belong to this
sector. A 5/6 weight is attributed to GDP mp and a 1/6
weight to TABS-MFIs. This choice of weights is suitable,
as this will mean that the financial sector is sufficiently and
meaningfully represented.

decisions,

central

since

for

(6) In order to provide for the smooth introduction of the
rotation system,
takes place in two
its establishment
stages. In the first stage the governors will be allocated
to two groups as soon as their number exceeds 15. The
frequency of voting rights of the governors allocated to the
first group will not be lower than the frequency of voting
rights of those of the second group. When a significant
number of new Member States have entered the euro
i.e. the number of governors exceeds 21, they will
area,
be allocated to three groups. Within each group governors
have a voting right for equal amounts of time. The detailed
implementing provisions regarding the two principles as
well as any possible decision to postpone the start of the
rotation system so as to avoid the situation that governors
within any group have a voting frequency of 100 % are to
be adopted by the Governing Council, acting by a
two-thirds majority of all its members, with and without
a voting right.

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(7) The shares of each NCB's Member State in the aggregate
GDP mp and in the TABS-MFIs of the Member States
without a derogation are to be adjusted whenever the
aggregate GDP mp is adjusted in accordance with Article
29.3 of the Statute or whenever the number of governors
in the Governing Council
increases. The new shares
resulting from the regular adjustments will apply as from
the first day of the following year. Upon one or more
governors becoming members of the Governing Council,
the reference periods to be used to calculate the shares of
their respective NCB's Member State in the aggregate GDP
mp and in the TABS-MFI of the Member States without a
derogation should be identical to those used for the latest
quinquennial adjustment of the shares. The new shares
resulting from such non-regular adjustments will apply as
from the day on which the governor(s)
the
Governing Council. These operational details are part of
the
to be adopted by the
Governing Council,

implementing provisions

join(s)

HAS DECIDED AS FOLLOWS:

Article 1

The Statute is amended as follows:

Article 10.2 is replaced by the following:

‘Each member of the Governing Council shall have one
from the date on which the number of
vote. As
members of
the Governing Council exceeds 21, each
member of the Executive Board shall have one vote and
the number of governors with a voting right shall be 15.
The latter voting rights shall be assigned and shall rotate as
follows:

State

in the

aggregate

the share of

— as from the date on which the number of governors
exceeds 15, until it reaches 22, the governors shall be
allocated to two groups, according to a ranking of the
their national central bank's
size of
Member
gross domestic
product at market prices and in the total aggregated
balance sheet of the monetary financial institutions of
the Member States without a derogation. The shares in
the aggregate gross domestic product at market prices
and in the total aggregated balance sheet of
the
assigned
institutions
monetary
weights of 5/6 and 1/6, respectively. The first group
shall be composed of five governors and the second
group of the remaining governors. The frequency of
voting rights of the governors allocated to the first
group shall not be lower
than the frequency of
voting rights of those of the second group. Subject
to the previous sentence,
the first group shall be
assigned four voting rights and the second group 11
voting rights;

shall be

financial

— as from the date on which the number of governors
reaches 22, the governors shall be allocated to three
groups according to a ranking based on the above
criteria. The first group shall be composed of
five
governors and shall be assigned four voting rights.
The second group shall be composed of half of the
total number of governors, with any fraction rounded
up to the nearest integer, and shall be assigned eight
voting rights. The third group shall be composed of the
remaining governors and shall be assigned three voting
rights;

— within each group,

the governors shall have their

voting rights for equal amounts of time;

— for the calculation of the shares in the aggregate gross
domestic product at market prices Article 29.2 shall
apply. The total aggregated balance sheet of
the
monetary financial
institutions shall be calculated in
accordance with the statistical framework applying in
the European Community at the time of the calcu-
lation;

— whenever

the aggregate gross domestic product at
market prices is adjusted in accordance with Article
29.3, or whenever the number of governors increases,
the size and/or composition of the groups shall be
adjusted in accordance with the above principles;

— the Governing Council, acting by a two-thirds majority
of all its members, with and without a voting right,
shall take all measures necessary for the implemen-
tation of
the above principles and may decide to
postpone the start of the rotation system until the
date on which the number of governors exceeds 18.

The right to vote shall be exercised in person. By way of
derogation from this rule, the Rules of Procedure referred
to in Article 12.3 may lay down that members of the
Governing Council may cast their vote by means of tele-
conferencing. These rules shall also provide that a member
of the Governing Council who is prevented from attending
meetings of the Governing Council for a prolonged period
may appoint an alternate as a member of the Governing
Council.

The provisions of the previous paragraphs are without
prejudice to the voting rights of all members of
the
Governing Council, with and without a voting right,
under Articles 10.3, 10.6 and 41.2.

Save as otherwise provided for
the
Governing Council shall act by a simple majority of the
members having a voting right. In the event of a tie, the
President shall have the casting vote.

in this Statute,

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In order for the Governing Council to vote, there shall be
a quorum of two-thirds of the members having a voting
right. If the quorum is not met, the President may convene
an extraordinary meeting at which decisions may be taken
without regard to the quorum.’

This Decision shall enter into force on the first day of the
2.
second month following that in which the instrument of rati-
fication is deposited by the last signatory State to fulfil that
formality.

Article 2

Final provision

Done at Brussels, . . .

1.
This Decision is to be ratified by all Member States in
accordance with their respective constitutional requirements.
The instruments of ratification are to be deposited with the
Government of the Italian Republic.

For the Council

The President

. . .