European Central Bank to face major changes in 2015

A new voting system will come into operation in 2015 on the ECB's policy-setting governing council. ― Reuters pic
A new voting system will come into operation in 2015 on the ECB's policy-setting governing council. ― Reuters pic

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FRANKFURT, Dec 30 ― The European Central Bank, in addition to the many monetary policy challenge it faces in 2015, will see some major changes in the way it is run next year.

Here are the main operational adjustments the ECB faces from January 1:

New voting system

With the arrival of Lithuania as the eurozone's 19th member state, a new voting system will come into operation on the ECB's policy-setting governing council.

Since the ECB took over the monetary policy reins for the euro area, the council has had a one man-one vote system under which each of the six members of the ECB's executive board and each national central bank governor has one vote.

But with the prospect of more and more countries signing up to the single currency, a new system was agreed back in 2003 whereby once membership exceeded 18 states, a system of rotating votes would be introduced to prevent the decision-making process from becoming too unwieldy.

So, with Lithuania joining the single currency bloc on January 1, this new system will come into effect.

From then on, the eurozone's five biggest economies ― France, Germany, Italy, the Netherlands and Spain ― will share four votes, and the other 14 member states will share 11 votes.

That means that in one out of every five meetings, Germany, Europe's paymaster, will not have a vote in any ECB decisions.

Officially, neither the German government nor the country's central bank, the Bundesbank, is fazed by such a prospect.

And insiders and ECB watchers insist that little will actually change, anyway.

The ECB itself points out that even if an individual governor will not actually have a vote, all central bank chiefs will continue to participate actively in the meetings and make their voice heard in every debate.

And anyway, the ECB traditionally likes to reach its decisions by consensus, rather than putting them to a vote.

Timing of meetings

Another major overhaul will be the rhythm of the ECB's policy meetings.

Starting from 2015, the governing council will meet every six weeks, instead of once a month, as it has done since its inception.

The change became necessary as a result of the complexity of the situation in the eurozone since the outbreak of the financial and debt crisis and the enlargement of the single currency area.

Ostensibly, the ECB wanted to stamp out expectations on the part of the financial markets for action every time the central bank's governing council met, president Mario Draghi argued when the decision was announced back in July.

Publication of minutes

In a bid to make the thinking behind the ECB's monetary policy decisions more transparent, the governing council will also follow the example of the likes of the US Federal Reserve and the Bank of England and publish minutes or accounts of its closed-door debates.

The minutes will be published with a delay of four weeks, but unlike the US Fed, for example, they will not reveal which central bank governor voted for or against a particular policy decision. This is necessary to prevent the central bank chiefs being put under political pressure in their home countries.

The ECB is fiercely independent and its governing council members take a vow to act in the interests of the eurozone as a whole rather than their individual countries.

Moving headquarters

Finally, the ECB will officially inaugurate its brand-new headquarters in the re-developed east of Frankfurt.

Since it was set up in 1998, the ECB has been housed in a skyscraper in downturn Frankfurt. But work began on a spectacular twin-tower building, designed by Vienna-based architects Coop Himmelb(l)au, in the historic Grossmarkthalle (wholesale market) in the east of the city in 2008.

Staff moved there in December and the new headquarters will be officially inaugurated on March 18.

The current Eurotower building in downturn Frankfurt will house the ECB's new banking-sector supervisory staff. ― AFP

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