HC Deb 02 May 1996 vol 276 cc617-8W
Mr. Llew Smith

To ask the Chancellor of the Exchequer if he will list each of the proposed responsibilities and functions of the European Central bank, indicating when these powers will enter into force; and if he will list the legal opportunities available to EU member state Governments or other EU institutions to change the statute of the ECB. [27347]

Mrs. Angela Knight

Article 105(1) of the EC treaty provides that theprimary objective of the ESCB

—The European system of central banks, consisting of the European central bank and participating national central banks— shall be to maintain price stability".

It also states that, without prejudice to this objective, the ESCB shall support other Community policies and objectives.

Article 105(2) provides that the basic tasks of the ESCB shall be to define and implement the monetary policy

of the single currency area, to conduct foreign exchange operations … to hold and manage the official foreign reserves of member states",

and to promote the smooth operation of payment systems".

Article 105(4) provides for the European central bank to be consulted and to submit opinions. Article 105(5) states that the ESCB shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system".

The functions of the ECB in relation to banknotes and coins are prescribed by article 105a.

The statute of the ESCB, forming protocol No. 3 to the EC treaty, makes further provision in relation to functions of the ECB.

Article 1091 prescribes the process for the establishment of the ECB. the European Council in Madrid in December 1995 agreed a timetable for the introduction of the single currency which anticipates the ECB being set up during 1998, and carrying out preparatory work from that date, so that the ESCB can start to fulfil its tasks and meet its objectives from the start of the third stage of economic and monetary union on the date set out in the treaty of 1 January 1999.

Article 41 of the statute of the ESCB provides for certain articles of the statute to be amended by the Council of Ministers, acting by a qualified majority on a unanimous recommendation from the governing council of the ECB and after consulting the Commission, or acting unanimously on a proposal from the Commission and after consulting the ECB. In either case, the assent of the European Parliament would be required. The articles in question deal in particular with the collection of statistical material, central bank accounts, monetary policy instruments and operations, banking and external operations, administration, and the allocation of monetary income and profits. Other changes to the statute would require amendment of the treaty.