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Voting arrangements in the ECB's Governing Council

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Voting arrangements in the ECB's Governing Council

SUMMARY OF:

Decision 2003/223/EC — amendment to Article 10.2 of the Statute of the European System of Central Banks and of the European Central Bank

SUMMARY

WHAT DOES THIS DECISION DO?

  • It introduces a voting rotation system within the Governing Council of the European Central Bank (ECB), to ensure fair and efficient decision-making.
  • It takes into account the fact that the number of governors of national central banks increases as new countries introduce the euro.
  • It also establishes the rules on the assignment and rotation of the governors’ voting rights.

KEY POINTS

Governing Council

  • The Governing Council is one of the 3 decision-making bodies of the ECB. The other 2 bodies are the Executive Board and the General Council.
  • The Governing Council is the main decision-making body. In particular, it defines the monetary policy for the euro area.
  • The Governing Council is composed of 6 members of the Executive Board and the governors of the national central banks of the euro area countries. The number of governors therefore increases each time a new country joins the euro area.

A voting rotation system by groups

  • As from the date on which the number of members of the Governing Council exceeds 21, the voting arrangements are adjusted.
  • The total number of voting rights is thus limited to 21. The 6 members of the Executive Board continue to have permanent voting rights. The governors share the remaining 15 voting rights, which rotate among them.
  • The governors are therefore allocated to groups which differ with respect to the frequency with which their members have voting rights. The groups are formed in accordance with a ranking of euro area countries, based on:
    • the share in the aggregate gross domestic product at market prices (GDP mp)* in the euro area countries;
    • the share in the total aggregated balance sheet of the monetary financial institutions of the euro area countries.
  • These indicators aim at ensuring objectivity by taking into account the economic weight of the country in the euro area and the size of its financial sector.
  • Furthermore, the decision provides for the voting rotation system to be implemented in 2 stages.

Stage one: Voting rights when the number of governors exceeds 15

  • As of the date on which the number of governors exceeds 15, and until it reaches 22, the governors are allocated to 2 groups.
    • The first group is composed of 5 governors of the national central banks of the countries with the biggest shares in the euro area total according to the indicators described above.
    • The second group is composed of all the other governors.
  • The 5 governors in the first group share 4 voting rights and the remaining governors in the second group share 11.
  • The governors in the first group cannot have lower voting frequencies than those in the second group.
  • Stage one would normally have been reached in January 2009, when Slovakia joined the euro area as its 16th member. However, in December 2008, the Governing Council took a decision to postpone the start of the rotation system.
  • Instead, the new rotation system was introduced on 1 January 2015 when Lithuania joined the euro area as its 19th member.

Stage two: Voting rights when the number of governorsreaches22

  • As of the date on which the number of governors reaches 22, the governors will be allocated to 3 groups.
    • The first group will be composed of 5 governors of the national central banks of the countries with the biggest shares in the euro area total.
    • The second group will be composed of half of the total number of governors. Governors in this group will come from the national central banks of the countries holding the subsequent positions in the ranking based on the above criteria.
    • The third group will be composed of all the other governors.
  • 4 voting rights will be assigned to the first group, 8 to the second and 3 to the third.
  • Within each group, the governors will have their voting rights for equal amounts of time. The Governing Council will take the necessary measures for the implementation of this principle.

Implementation, adjustments and future changes

  • Whenever the number of governors increases, the composition of the groups will be adjusted and the adjustments will apply as of the day on which the governor(s) join the Governing Council. Whenever the aggregate GDP mp* is adjusted (required every 5 years), the composition of the groups will be adjusted in line with any changes and will apply from the first day of the following year.
  • Any decision which is necessary to implement the operational details of the rotation system will, with the exception of the new voting arrangements, be adopted by all members of the Governing Council by a two-thirds majority, irrespective of whether or not they hold a voting right at the time of the decision.
  • The Governing Council adopted measures covering the rotation rate, rotation period, order of governors within groups and the transition from a 2- to 3-group system in 2009 (Decision 2009/328/EC).

BACKGROUND

Before being able to introduce the euro, EU countries must fulfil a number of economic and financial conditions known as ‘convergence criteria’.

Currently, only 19 of the 28 EU countries have met these criteria and adopted the euro as a single currency. The other countries are subject to derogations until they meet the criteria. Denmark and the United Kingdom are subject to exemptions as they do not currently intend to adopt the euro.

KEY TERM

* Gross domestic product at market price (GDP mp): the money value of all domestic final gross output or product of a country.

ACT

Decision 2003/223/EC of the Council, meeting in the composition of the Heads of State or Government of 21 March 2003 on an amendment to Article 10.2 of the Statute of the European System of Central Banks and of the European Central Bank (OJ L 83, 1.4.2003, pp. 66-68)

RELATED ACTS

Decision 2009/5/EC of the European Central Bank of 18 December 2008 to postpone the start of the rotation system in the Governing Council of the European Central Bank (ECB/2008/29) (OJ L 3, 7.1.2009, pp. 4-5)

Decision 2009/328/EC of the European Central Bank of 19 March 2009 amending Decision ECB/2004/2 of 19 February 2004 adopting the Rules of Procedure of the European Central Bank (ECB/2009/5) (OJ L 100, 18.4.2009, pp. 10-11)

last update 08.03.2016

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