Proposal for a Council Decision amending Decision 2003/77/EC laying down multiannual financial guidelines for managing the assets of the ECSC in liquidation and, on completion of the liquidation, the Assets of the Research Fund for Coal and Steel
Date: 2018-02-05
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: EU financing



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ROADMAP  











Title of the initiative




Amended financial guidelines for the assets of the European Steel and Coal Community






Lead dg  - responsible unit




DG ECFIN-L6






Likely Type of initiative




Interinstitutional legislative file






Indicative Planning




Q2 2018






Additional Information




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This Roadmap is provided for information purposes only and its content may change. It does not prejudge the final decision of the Commission on whether this initiative will be pursued or on its final content. All elements of the initiative described by the Roadmap, including its timing, are subject to change.









A. Context, Problem definition and Subsidiarity Check






Context 






Pursuant to Article 2 of Council Decision 2003/77/EC
                           1
 (the "Financial Guidelines" of the ECSC i.L.), the Commission has to reassess the operation and effectiveness of the Financial Guidelines every five years and has to propose amendments if appropriate. As a new assessment is being carried out in 2017, experience gained over the last five years and most recent developments in the financial markets suggest that it would be beneficial to modify the guidelines.






Problem the initiative aims to tackle 






Due to changes in the ECB monetary policy over the very last years (quantitative easing programme, negative rate on the deposit facility, etc.), the euro-denominated fixed income market has seen its liquidity reduced markedly while yields have reached historically low or even negative levels – entailing increased probabilities of low or negative returns for the coming years. In this context, it is proposed to expand the investment universe eligible under the Financial Guidelines by allowing additional asset classes, market operations (e.g. hedging instruments) and eligible currencies. 


The objective is to cope as best as possible with these new market conditions and enhance the diversification and resilience of the portfolio over a long-term horizon, as the ECSC i.L. portfolio resembles an endowment fund (i.e. relatively free of material liabilities and meant to provide annual revenue streams for research projects). 






Basis for EU intervention (legal basis and subsidiarity check)






The legal basis giving the EU the right to act is the Treaty on the Functioning of the European Union, the Protocol No 37 annexed to the Treaty on the Functioning of the European Union (TFEU) on the financial consequences of the expiry of the ECSC Treaty and on the Research Fund for Coal and Steel, and the Council Decision 2003/76/EC of 1 February 2003 establishing the measures necessary for the implementation of the Protocol, annexed to the Treaty on the Functioning of the European Union, on the financial consequences of the expiry of the ECSC Treaty and on the Research Fund for Coal and Steel and in particular Article 2(2).


The initiative falls under the exclusive competence of the EU according to Protocol No 37 annexed to the TFEU. Therefore, the subsidiarity principle does not apply.


The added-value of the initiative consists in allowing the Commission to better manage the ECSC i. L. portfolio under the current changed market conditions. The initiative is in line with asset management principles applied by the Commission for other portfolios managed by it, such as the principles contained in the recent guidelines adopted for the guarantee fund of the European Fund for Strategic Investments, one of the other major portfolios managed by the Commission.  






B. What does the initiative aim to achieve and how 






Amend the Financial Guidelines in order to authorise more asset classes, investment instruments and eligible currencies. The objective is to address the new market conditions, enhance diversification and better cater for the long-term investment horizon of the mandate of ECSC i.L., which resembles an endowment fund relatively free of material liabilities and aimed at providing annual revenue streams for research projects. 


In particular, it is proposed to allow investments in non-euro denominated securities, other asset classes / operations (e.g. hedging instruments in order to manage various risk exposures) as well as in collective investment vehicles. It is also proposed to adopt a more dynamic approach as regards the technical aspects of implementation that need some flexibility (such as determining risk, maturity and concentration limits).






C. Better regulation






Consultation of stakeholders and citizens






Given the nature of the proposed initiative a public consultation is not considered necessary. The main stakeholders are the Members States, who will be consulted during the legislative process in the Council. 






Evidence base and data collection






An impact assessment is not necessary since the initiative has a limited scope, without any significant political, economic or budget implications. The initiative aims at providing the Commission with more flexibility in the management of the ECSC i. L. portfolio. Its precise impact cannot be clearly quantified ex ante. 


As the initiative is solely aimed at modifying the investment guidelines that the Commission needs to follow in the management of the ECSC i.L. portfolio, there is no need for an implementation plan.






The initiative is based on the results of the five yearly assessment on the appropriateness of the guidelines carried out under Article 2 of Council Decision 2003/77/EC, which found that market conditions have changed over the last years. In such a context, the Commission's approach in the management of the ECSC i. L. portfolio needs to be revised and put in line with the approach used for the management of other portfolios. 











(1)


 Relevant text of COUNCIL DECISION 2003/77/EC of 1 February 2003 laying down multiannual financial guidelines for managing the assets of the ECSC in liquidation and, on completion of the liquidation, the Assets of the Research Fund for Coal and Steel (OJ L 29, 5.2.2003, p. 25):



"Article 2


The financial guidelines shall be reviewed or supplemented, if appropriate, every five years, first period ending on 31 December 2007. To this end, and at the latest in the first six months of the last year of each five-year period, the Commission shall reassess the operation and effectiveness of the financial guidelines and shall propose any appropriate amendments. 


If it sees fit, the Commission may carry out such reassessment and shall submit proposals for any appropriate amendments to the Council before the expiry of the five-year period."