Guideline of the European Central Bank of 23 October 2003 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/2003/12)
Date: 2003-10-23
Institutions: European Central Bank
Subjects: EU Member State, European Central Bank, European System of Central Banks, financial transaction, foreign currency, working capital

31.10.2003

EN

Official Journal of the European Union

L 283/81

EUROPEAN CENTRAL BANK

GUIDELINE OF THE EUROPEAN CENTRAL BANK

of 23 October 2003

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/2003/12)

(2003/775/EC)

THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL BANK,

— ‘national central banks’ shall mean the national central

banks of participating Member States,

Having regard to the Statute of the European System of Central
Banks and of the European Central Bank 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 the national central banks as
agents on behalf of participating Member States and not
recorded in the national central banks' financial accounts
are covered by this Guideline whereas transactions by
the national central banks in their own name and at
their own risk are covered by the Guideline on the
national central banks' operations pursuant to Article
31.3 of the Statute,

HAS ADOPTED THIS GUIDELINE:

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,

— ‘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 the national central banks on behalf of parti-
cipating 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,

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

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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 United States dollar Treasury note for a
United States dollar Treasury bill),

— foreign exchange swaps,

— any transactions carried out with the national central banks.

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 the 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.

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

3.
All other public authorities shall provide the ECB with
estimates of all forthcoming transactions, including those trans-
actions carried out through the 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
the 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 11.30 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 above as soon as possible, and in any
case by no later than 13.00 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
consultation procedure
the
than 11.30 ECB time,

3.
later
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.

the ECB may advise that

5.
In exceptional circumstances, in relation to policy consid-
erations, adverse market conditions, or late notification by
the
participating Member States,
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 European System of Central Banks
(ESCB), in which case the ECB may request that 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.

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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 6

Reporting of working balances

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 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

Repeal of Guideline ECB/2001/9

Guideline ECB/2001/9 is hereby repealed.

Article 9

Final provisions

This Guideline is addressed to the participating Member

1.
States.

This Guideline shall enter into force on 1 November

2.
2003.

This Guideline shall be published in the Official Journal of

3.
the European Union.

Done at Frankfurt am Main, 23 October 2003.

On behalf of the Governing Council of the ECB

The President

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 other foreign exchange assets
(‘cross-currency transactions’)

— 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 the 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. Those estimates shall cover all transactions carried out by central govern-
ments. 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.

Frequency:

Deadline:

Interpretation:

monthly.

18.00 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 14.15 reference rates of the reporting day should be used in determining the amount for the un-
certain amount.

Rounding:

to the closest euro million equivalent.

The time frame of these messages is 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 other foreign exchange assets
(‘cross-currency transactions’)

— 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' operations.

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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 exceeds the threshold set out in Annex VI.

Breakdown:

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

Frequency:

Deadline:

Interpretation:

Valuation:

monthly.

18.00 ECB time on the fifth business day following the reporting period.

participating Member States' total holdings of foreign currencies held outside the ESCB. Forward posi-
tions 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 14.15 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.

It 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 the
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