What is the banking system like in Eastern Europe? Banking system of EU countries. The European banking system needs fundamental change The introduction of the euro should tip the scales in favor of change To survive in the new environment, banks must implement
The European System of Central Banks (ESCB) is an international banking system, consisting of a supranational European central bank(ECB) and National Central Banks (NCBs) of member states of the European Economic Community.
The existence of this system is an integral part of the process of establishing the European Economic and Monetary Union. In its structure, the ESCB is somewhat similar to the Federal Reserve System in the United States, consisting of 13 banks headed by The Bank of New-York and generally performing the role of a central bank. At the same time, the national central banks of Great Britain, Denmark, Greece and Sweden are members of the European System of Central Banks with a special status: they are not allowed to take part in decisions regarding the implementation of a common monetary policy for the euro area and implement such decisions.
The European system of central banks includes the European Central Bank and the National Central Banks of the countries participating in the euro area. The statutes of the ESCB and the ECB proclaim the independence of these organizations from other bodies of the Union, from the governments of the member countries of the EMU and any other institutions. This is quite consistent with the normal status of a central bank within a single country. At the same time, the “general principle” enshrined in a special article of the charter is of significant importance, according to which the European System of Central Banks is governed by the leadership (“decision-making bodies”) of the European Central Bank, and above all, by the Board of Governors. 32
The Governing Council, the supreme governing body, includes all members of the Executive Directorate and managers of the national securities of the member countries of the European Economic and Monetary Union only.
The main functions of the Board of Governors include:
adapting instructions and making decisions to ensure the achievement of the objectives of the creation of the European System of Central Banks;
identification of key elements monetary policy EMU, such as interest rates, the amount of minimum reserves of National Central Banks,
development of specific instructions for its implementation.
In addition, the Governing Council approves the rules for the internal organization of the European Central Bank and its governing bodies, acts as an adviser to the ECB and determines the manner in which it represents the European System of Central Banks in the field of international cooperation.
The Executive Directorate includes the President, Vice President and four members selected from among candidates with extensive professional experience in financial or banking sector. They are appointed from among the citizens of the EMEA member countries at a meeting of the heads of government of these countries on a proposal from the Council of Europe after consultation with the European Parliament and the Governing Council of the ECB (for subsequent elections). The Executive Directorate shall conduct monetary policy in accordance with the instructions and rules adopted by the Governing Council of the European Central Bank and thus direct the actions of the NCB, adopting departmental instructions as necessary.
The General Council, the third governing body of the European System of Central Banks, includes the President and Vice-President of the European Central Bank and the Governors of the National Central Banks of all countries of the European Economic Community, regardless of their participation in the EEAS.
The General Council carries out functions that were previously carried out by the European Monetary Institute and which need to be continued in the third stage of the EMEA plan.
The main tasks of the General Council include the following:
implementation of advisory functions of the ESCB;
collection and processing of statistical information;
preparation of quarterly and annual reports on the activities of the ECB, as well as weekly consolidated financial statements;
development and adoption of the necessary rules for standardization accounting and reporting on operations carried out by the National Central Bank;
taking measures related to the payment of the Authorized Capital of the European Central Bank to the extent not regulated by the General Agreement of the EEC;
development job descriptions and rules of employment at the ECB;
organizational preparation for the procedure for establishing the final fixed exchange rate of national currencies to the euro.
The President of the European Central Bank is simultaneously the chairman of all three of its governing bodies: the Board of Governors, the Executive Directorate and the General Council; Moreover, in the first two cases, he has a casting vote in the event of an equal distribution of votes.
In addition, the President represents the ECB in external organizations or appoints a proxy for this role. In relation to third parties, he, by law, represents the ECB.
The national central banks of the member countries are an integral part of the European System of Central Banks and act in accordance with the directions and instructions of the ECB. In organizing the activities of the European Central Bank, the institution of curators is widely and successfully used, in which each of the six members of the Executive Directorate oversees a specific area of activity of the European Central Bank.
The Governing Council of the ECB is empowered to develop monetary policy, and the Executive Directorate is responsible for implementing it. To the extent possible and appropriate, the European Central Bank shall make use of the capabilities of National Central Banks.
During the development and creation of the ESCB, preparatory work was carried out, in particular, by three committees and six specialized working groups, bringing together representatives of National Central Banks and the European Monetary Institute.
This experience of close cooperation continues within the ESCB with necessary modifications.
Thirteen Committees operate under the leadership of the Board of Governors:
Committee of Internal Auditors;
Banknote Committee;
Budget Committee;
External Communications Committee;
Accounting and Cash Revenue Committee;
Legal Committee;
Market Operations Committee;
Monetary Policy Committee;
International Relations Committee;
Statistics Committee;
Banking Supervision Committee;
Information Systems Committee;
Payment and Settlement Systems Committee.
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Credit institutions selected for this purpose must meet a number of criteria:
under the conditions of mandatory reserves, the circle of authorized counterparties is limited only to those credit institutions that have created minimum reserves;
otherwise, the range of possible authorized counterparties extends to all credit institutions located in the euro area.
The ECB has the right, on a non-discriminatory basis, to deny access to credit institutions which, by the nature of their activities, cannot be useful in the conduct of monetary policy;
the financial position of authorized counterparties must be checked by national authorities and found to be satisfactory (this provision does not apply to branches of organizations whose headquarters are located outside the European Economic Area);
counterparties must meet any specific operational criteria established by National Central Banks or the ECB.
Authorized counterparties have access to the capabilities of the European System of Central Banks only through the National Central Bank of the EEAS member state in which they are located. NCBs collect applications to participate in the operations of the European Central Bank and transmit this data to the ECB's central computer in Frankfurt. Based on the collected applications, the ECB determines the market price of resources and issues appropriate instructions to the National Central Banks, which distribute transactions among counterparties.
Taking into account the capabilities of modern information technologies, even relatively small organizations can participate in the operations of the ESCB.
If necessary, tenders can be carried out within an hour based on electronic information exchange.
The European System of Central Banks has the right to deny access to monetary policy instruments for reasons of reliability or in the event of a gross or repeated violation of its obligations by a counterparty.
The main European banking systems are considered, which, despite the diversity of levels of development, features of functioning and management, constitute a single “organism”. The integration processes observed in Western Europe are reflected in the convergence of the banking systems of individual countries and the tendency towards the unification of banking legislation. At the same time, due to the requirements modern market integration faces the opposite factor - the desire of its own producers and financial institutions to maintain national identity. This process may be based on: the desire to protect national security, the fear of relatively weak institutions being absorbed in the course of competition by stronger foreign ones and therefore lobbying for the isolation of the domestic market, negative public opinion provoked by nationalists, and much more.
Each of the European banking countries has made its own development path, which began in different centuries. They still retain many traditions, which are currently expressed mainly in the structural structure, the system of relationships between banks and the state, the place and role of the central bank in the hierarchy of state power.
Many of the European systems have gone through a phase of mobilization towards state-regulated financing real sector economy. Having fulfilled the forced role of lender to priority areas of the economy, banks received a bad loan portfolio and an ineffective internal management system tailored to administrative subordination to government agencies. Therefore, in the process of liberalizing economic management mechanisms, such banks from being conductors financial policy states turned into a brake economic reforms, a threat to the general financial crisis, the elimination of which requires or large government spending, or finding schemes to attract external investment, including from abroad. Moreover, financial institutions from more prosperous countries due to uneven economic development received better opportunities for their foreign expansion, which, among other factors, still determines the distribution of ownership of European banks and the division of national markets, taking into account the attractiveness of its individual segments. As a rule, the causes of banking crises are political miscalculations of government authorities in choosing economic models, errors in the field of financial regulation and banking supervision and a number of others. This cause-and-effect relationship can be briefly characterized by the following thesis: “The problems of the financial and credit system today are a reflection of the state’s desire to appear better yesterday.”
From the analysis of the European banking systems considered, the following conclusions can be drawn:
One of the most important issues that determine the level and prospects for the development of national banking systems is the independence of the country's central bank in implementing monetary policy. There are no states in which the authorities do not declare financial and price stability as one of their goals. Therefore, to determine their real policy, attention should be paid to the degree of liberalization of monetary policy. To implement a liberal monetary policy, a central bank independent of the Government is simply not needed. In this case, the presence of two opposing centers only brings harm, and the central bank must pursue the policy of the government's technical agent in the field of monetary policy. If the government really chooses to achieve or maintain price stability as a goal, then a central bank independent of the Ministry of Finance is simply necessary. The Ministry of Finance dominates the Central Bank, whose task is to finance budget expenditures in the event of a budget deficit, it uses the central bank as a source of covering it. The data presented in the chapter fully confirm this conclusion. Therefore, in most countries Western Europe There is a tendency to give the Central Bank greater independence.
The general control of the authorities, especially the legislative one, over the activities of an independent Central Bank is one of the most important counterbalances to its broad powers in matters of managing the country’s financial and credit system, the role of which can be compared to the circulatory system of a living organism.
The legislation of Western European countries allows central banks to have private or mixed public-private ownership. However, maintaining such a structure of the Central Bank is a tribute to tradition, and the participation of private shareholders in their management is purely formal. The overwhelming majority of central bank profits are not paid to shareholders and are not used for the needs of the banks themselves, but are transferred to the budget.
Central banks pursuing tight monetary policies should have their own research services. The experience of the Bank of France and the Austrian National Bank confirms this conclusion. These banks not only have extensive information base for developing and making decisions on monetary policy and in the field of interaction with banks, but they themselves are of interest to the business community, which contributes to their useful interaction.
Countries with traditions of evolutionary banking have naturally turned into European and global financial centers. The exception in this case is Germany, where banks were repeatedly exposed to destructive effects during well-known historical processes. But the enormous economic potential and consistent, reasonable policies of the German authorities allowed it to become a new world financial center.
Popular wisdom says: “Money leads to money”; also, a developed, reliable and stable banking system attracts foreign financial and credit institutions and, most importantly, clients, whose funds, instead of going to the use of national banks, contribute to the further strengthening of positions foreign leaders.
The fragmentation of the banking system, the absence of banks that are among the world leaders, make it easily vulnerable to external adverse influences, difficult to regulate and poorly mobilized to solve global problems, contribute to the lack of national banking standards, slow down the development of new banking technologies and lead to other negative consequences .
Banking systems develop more successfully in countries with a high cultural level of the population and a rational style of thinking that prevails among them.
A common European trend is to combat money laundering. Countries that are reticent to limit customer banking secrecy rights gain an advantage over their neighbors and experience pressure from them.
Banking integration in Western Europe was formed long before the creation of the European Union (hereinafter referred to as the EU) and began with elements of monetary integration. The Treaty of Rome, which consolidated its creation, was preceded by an agreement on multilateral currency compensation between France, Italy, Belgium, the Netherlands, Luxembourg and Germany, which joined them in 1947. However, the process of integration in the banking sector begins at the stage of formation of an economic and monetary union, within which the free movement of goods, services, capital, and currencies is ensured on the basis of equal conditions of competition and the unification of legislation in this area.
The European banking system, founded in the first post-war years, is the result and at the same time one of the important instruments of European integration and European monetary system. The creation of an efficient banking system required not only fundamental changes at the legislative level of the countries that were part of the monetary union, but also the adoption of unified requirements by all member countries. The processes of reorganization of the banking systems of the countries of the European Monetary Union and the creation of the European banking system have passed through several important stages of development.
At the first stage, currency agreements between Western European countries were concluded primarily on a bilateral basis. On the basis of these agreements, the following were carried out: mutual regulation of balances of payments, non-cash payments, mandatory offset of mutual claims and obligations, preferential lending. So, during 1947-1950 pp. More than 400 foreign exchange clearing transactions were concluded, accounting for almost two-thirds of internal European trade.
The next stage in the evolution of currency relations was the functioning in 1950-1958 of the European Payments Union (hereinafter - EPU), which developed on a multilateral clearing basis. This union united 17 countries of Western Europe. Calculations within its limits were carried out using a conventional monetary unit; the gold content was equal to 1 American. dollars. This unit became the prototype of the European monetary unit, and the ENP - the prototype of the European banking system.
The signing in 1957 of the Treaty of Rome establishing the European Economic Community (hereinafter referred to as the EEC) began the next stage in the development of currency relations. On January 31, 1959, the European Monetary Union (hereinafter referred to as EMU) began to function, in which all 17 countries that were part of the former ENP promoted cooperation. Subsequently, the Monetary Union of the participating countries was separated from the EMU structure Common Market. The program for creating this union was developed by a special commission headed by the former Prime Minister of Luxembourg P. Werner. After the adoption of this program on March 22, 1971 by the Council of Ministers of the EMU, this document was called the “Werner Plan”, the implementation of which was important in the development of the European banking system and was designed for 10 years - until 1980
At the first stage (1971-1974 pp.) It was envisaged to narrow the limits of exchange rate fluctuations, first to ± 1.2% and then to 0%, to introduce full mutual convertibility of currencies, to unify monetary policy on the basis of its harmonization and coordination, harmonization of economic and financial and monetary policy. The second stage (1975-1976 pp.) was characterized by the completion of these activities. The basis of the third stage (1977-1979 pp.) was to be: the transfer of certain powers belonging to national governments to supranational EU bodies, the creation of a European currency in order to equalize exchange rates and prices on the basis of fixed parities. It was planned to create a unified budget system, optimize the activities of banks and banking legislation. The goal was to establish a common center for resolving monetary and financial issues and unite the EU central banks following the example of the US Federal Reserve System to harmonize monetary and exchange rate policies.
Despite some progress in the integration process, the Werner Plan was not implemented. This was due to disagreements in the EU, in particular between national sovereignty and attempts at supranational regulation of monetary relations, differences in the pace of economic development, and the crises of the 70s and early 80s.
The long stagnation in the creation of the European banking system lasted from the mid-70s to the mid-80s. The situation began to change qualitatively in the 80s. By this time, economic interdependence and interstate regulation had increased. An extensive institutional and organizational structure was formed.
The next attempt to create a European banking system was associated with the transformation of the European Monetary Union into the European Monetary System. The essence of the development of these processes was determined by the implementation of the proposals of the Chairman of the EU Commission, J. Delors, which, after their appropriate approval in April 1989. The Council of the EU called it the Delors Plan. It provided for the gradual transformation of the European Monetary System into the European Monetary Union - not just deep monetary integration, but the formation of a common European Central Bank for the EU member countries and the replacement in the future of national monetary units a single community currency.
An important event in the implementation of the Delors Plan was the signing in February 1992 in Maastricht and (the Netherlands) of the Maastricht Agreement, which determined the institutional and legal basis EMU.
The agreement defines the main prerequisites for the formation of the EMU: the implementation by EU countries of complete unlimited convertibility of national currencies, absolute liberalization of capital movements, integration of banking and other financial markets, strict fixation
(without any marginal assumptions) exchange rates. The main stages in the formation of the European banking system have been identified.
The main result of the first stage, which began in 1992 and ended at the beginning of 1994, was the ratification of the Maastricht Agreement by all participating countries; complete liberalization of capital migration within the EU; implementation of a system of measures aimed at bringing inflation rates closer to the level of countries that have favorable indicators for this (Table 17.1); reduction of budget deficits.
Table 17.1 - Main indicators of the functioning of countries in accordance with the provisions of the Maastricht Agreement
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Performance indicator |
Compliance criterion |
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Inflation,% |
Should not exceed by 1.5% the average inflation rate in the top three EU member states for this indicator |
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Nominal rate on long-term loans,% |
Should not differ by more than 2% from the average rate of the three best member countries and in the EU for this indicator |
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Shortage state budget,% of GDP |
Not higher than 3% of GDP |
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Public debt,% of GDP |
No more than 60% of GDP |
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Stability of the national currency exchange rate,% |
Two years of successful participation in the ERM II system (preventing the exchange rate from deviating from the fluctuating limits set by the European Commission) |
The second stage (January 1, 1994 - December 31, 1998) was devoted to further preparation of member countries before the introduction of the euro. The main event in the creation of an organizational structure for the transition to a single currency was the establishment of the European Monetary Institute, which acted as a prototype of the European Central Bank (hereinafter referred to as the ECB), the main task of which was to determine the legal, organizational and logistical prerequisites necessary for the ECB to perform its functions, starting from the third stage. The European Monetary Institute was also responsible for strengthening the coordination of the monetary policies of member countries on the eve of the establishment of an economic and monetary union and could make recommendations to national central banks. At this stage, the following integration processes took place:
Passage of legislation prohibiting support activities public sector through lending by central banks to its enterprises and organizations in member countries, as well as direct acquisition by central banks of government debts. The same ban applies to the ECB in the third stage;
The adoption of legislation abolishes the privileged access of public sector enterprises and organizations to the resources of financial institutions. A similar ban applies to the ECB in the third stage;
Approval of legislation prohibiting the assumption of public sector obligations of one member state by another member state or the EU as a whole;
Statement of the requirement that participating countries must endeavor to avoid excessive deficits public finance(the budget deficit indicator is not higher than 3% of GDP and the amount government debt not higher than 60% of GDP), which was then reinforced by the EU Council’s monitoring procedure for the budgetary process of member countries with recommendations on corrective measures if such excessive deficits occur;
The adoption of national legislation grants the central banks of member countries statutory independence from their governments in order to compare their legal status with that granted by the ECB.
By the end of the second stage, there was a noticeable convergence of the main macroeconomic indicators of the EMU member countries, real success was achieved in ensuring price stability, improving public finances, reducing long-term interest rates, and stabilizing exchange rates of national currencies (Table 17.2).
Table 17.2 - Countries that met the conditions for the introduction of the euro
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State shortage, |
Debt, |
Inflation rate |
Unemployment rate, |
Economy, growth, |
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Germany |
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Ireland |
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Luxembourg |
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Netherlands |
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Portugal |
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Finland |
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On May 2, 1998, the European Council decided which countries were allowed to switch to the euro from the beginning of the third stage of the economic and monetary union. They were Austria, Belgium, Germany, Ireland, Spain, Italy, Luxembourg, the Netherlands, Portugal, Finland and France. This decision was made on the basis of the recommendations of the EU Economic and Financial Affairs Council, based on individual benchmark assessments by the EU Commission and the European Monetary Institute on the extent to which individual member states have met the convergence criteria established by the Maastricht Treaty and its Protocol.
The third stage (January 1, 1999 - July 1, 2002) became the stage of the practical transition of member countries to a single currency. Since January 1, 1999 were recorded exchange rates euro to national currencies member countries of the euro area, and the euro became their common currency. The ECU was also replaced with the Euro in a 1:1 ratio.
The European System of Central Banks (hereinafter referred to as the ESCB) began its activities, which includes the ECB and the central banks of countries that have adopted the euro.
Article III-289 bis defines:
"1. The Board of Governors of the Central European Bank consists of members of the board of directors of the Central European Bank and the governors of the national central banks of the member states, which are not subject to exceptions within the meaning of Article III-91 (we are talking about countries not included in the euro area. - A. P.).
2. a) The board consists of a chairman, deputy chairman and four members.
b) The Chairman, Deputy Chairman and members of the Board shall be appointed by a qualified majority of the European Council on the recommendation of the Council (Ministers) and after consultation with the European Parliament and the Board of Governors of the European Central Bank from persons whose authority and professional experience in the field of monetary and banking are generally recognized.
The duration of their mandate is eight years and is non-renewable.
Only people from EU member states can be members of the board."
Article III-289:
"1. The President of the Council and one member of the Commission may take part, without the right of casting vote, in meetings of the Board of Governors of the Central European Bank.
The President of the Council (of Ministers) may question the decision of the Board of Governors of the Central European Bank.
2. The President of the European Central Bank shall be invited to participate in meetings of the Council when the latter is discussing matters relating to the objectives and mission of the European System of Central Banks.
3. The European Central Bank shall submit an annual report on the activities of the System of European National Banks and budget policy for the previous and current year to the European Parliament, the Council (of Ministers) and the Commission, as well as to the European Council. The President of the European Central Bank submits this report to the Council and the European Parliament, which can hold a general debate on its basis.
The President of the European Central Bank and other members of the board may, at the request of the European Parliament and on their own initiative, be heard by the competent bodies of the European Parliament."
As for the competence of the bank, it can mainly be judged from the section on monetary policy. Only the European Bank has the right to authorize the issue of banknotes in euros. These notes can be issued not only by the European Central Bank, but also by national central banks, and only these banknotes are legally circulated in the Union. Eurocurrency coins can be issued by member states of the Union in the amount determined by the Central Bank.
Central European Bank advises on any act proposed by the Union in areas affecting its competence, as well as national authorities on any draft regulation in areas relating to its competence, but within the limits and under conditions established by the Council. Within the limits of its competence, the Bank may provide opinions to institutions, bodies of the Union or national authorities. European law may confer on the Bank special powers relating to control credit institutions and stability financial system. Without encroaching on the competence of the Bank, European law or framework law defines the necessary measures for the use of the euro as a single currency. The law is adopted after consultation with the Central European Bank. The Bank may decide to publish its European decisions, recommendations and opinions.
The national banks of the European Union states, together with the Central European Bank, form the European System of Central Banks. Its main goal is to maintain price stability. In addition, the system contributes to maintaining the overall economic policy Union and the implementation of its goals. In accordance with Part 2 of Art. III-77
Constitution, the main tasks of the Central Banking System are:
"a) determination and implementation of the Union's monetary policy;
b) conducting exchange transactions;
c) maintenance and management of official exchange reserves of the Union member states;
d) promoting the quality functioning of payment systems."
The central banking system contributes to the policies of the competent authorities regarding the control of credit institutions and the stability of the financial system. The activities of the System of Central Banks are guided by decisions of the Board of Governors and the Board of Directors of the Central European Bank.
In relations with members of the Union, the Constitution sets the following tasks for the Central European Bank: strengthening cooperation between central national banks; strengthening the coordination of the monetary policy of the Union member states in order to ensure price stability; supervision of the functioning of the exchange rate mechanism; holding consultations on issues within the competence of national central banks and strengthening stability financial institutions and markets; implementation of the former functions of the European Monetary Cooperation Fund (Article III-93, Part 2).
At the turn of the two millennia, a tendency towards creating a multipolar world began to manifest itself.
Europe also began to play the role it once played before the Second World War.
The United States was the only country in the world that emerged from that war with economic advantages in the system of international economic relations. Europe was almost completely destroyed, had lost its gold reserves due to the war, and was in need of loans.
As a result of this dependence of Europe on the United States, the nature of world monetary systems has changed. The dollar became the world reserve currency, and the abolition of the gold standard in the 70s of the 20th century, including the abandonment of the gold standard in 1992 in Russia, completely subordinated all world currencies monetary system USA.
But then increased integration, and, as a consequence, the increased influence of Europe throughout the world, including the formation of the European Union, put on the agenda the issue of creating a single currency for European countries. As a result of integration, the euro is now gradually becoming one of the reserve currencies that effectively competes with the dollar. Its relationship with the dollar in the 21st century shows a tendency for this new currency to strengthen.
The creation of the euro area logically led to the creation of a single central bank, coordinating the issue of this currency and developing a common monetary policy for the European System of Central Banks.
The European Central Bank (ECB) was founded in 1998 by an 11-nation Agreement. The European System of Central Banks consists of the European Central Bank and the central banks of the member states of the system.
All central banks that have acceded to the treaty form a system of central banks. The question of systemicity is considered important, since central banks that have been included in the system remain, but only as its integrated parts. * (201)
The objectives of the system are enshrined in the Agreement on the Statute of the European System of Central Banks and the European Central Bank.*(202) Characteristically, Article 2 of the Statute states that, in accordance with the requirements of Article 105(1) of this Agreement, the first objective of the system should be to maintain price stability. *(203) The Statute stipulates that, without contradicting the goal of price stability, the ECB strategy supports the fundamental economic directions policies of the European Community with a view to contributing to the achievement of the objectives of that Community.*(204)
As the President of the ECB noted in an interview, the main thing is to ensure price stability: “The ECB is an independent authority. We are committed to our goal of ensuring price stability. By ensuring price stability, we make it possible for the emergence of financial conditions favorable to economic growth and job creation. Sometimes we are recommended to increase rates, sometimes to reduce or keep them at the same level. Regarding our current position on October 6 in Athens, I said that interest rate at 2% is still adequate. Again, our mandate is to ensure price stability. This is our duty to the people of Europe, who consider it extremely important."*(205)
Let us draw your attention to the fact that the first place in the activities of the ECB is “debt to the people of Europe”.
We know that European states are social states. Here, nothing is valued so highly by public institutions as the attitude towards them from citizens.
It would be good if in Russia the management of the Bank of Russia, just like the ECB does, would put its responsibility towards the residents of Russia first. However, in Russia it is different. The Bank of Russia usually does not pose the question this way. Most often, in interviews with Bank of Russia executives, one hears concern about something else, something that interests it together with commodity companies - the ruble exchange rate is too high. A strong ruble means its high purchasing power, which Russians need so much today. But the Bank of Russia has now achieved the abolition of this obligation in the Federal Law - the obligation to maintain the purchasing power of the ruble. We will talk about this in more detail later when we consider the goals and functions of the Bank of Russia. For now, let’s return to the outline of our discussions about the ECB.
The system of European central banks operates in accordance with the principle of open market economy with free competition. It supports efficient resource allocation.
The tasks of the ECB, implemented through the central banks included in this system:
Determination and implementation of the monetary policy of the European Community;
Conducting international exchange transactions in accordance with the provisions of Article 111 of this Agreement;
Ownership and disposal of official reserves of Member States in foreign currency;
Promoting the smooth functioning of payment systems.
In exercising their powers to achieve their objectives, neither the European Central Bank, nor national central banks, nor any member of their governing bodies shall seek or receive instructions from Community institutions or management, from any government of a Member State or from any another authority. According to the statute, both the Community authorities and the governments of the Member States are obliged to respect this principle and must not attempt to influence members of the governing bodies of the European Central Bank or national central banks in the performance of their tasks.
The European Central Bank is a legal entity.
The governing bodies of the European Central Bank are the Governing Council and the Executive Committee.*(206)
The Governing Council consists of members of the Executive Committee of the European Central Bank and the Governors of the national central banks. Only members of the Governing Council have voting rights. Each of them has one vote. They must be present in person to vote. Decisions are made by a simple majority. In case of equality of votes, the President's vote is decisive.
Executive Committee: President, Vice President and four other members. They perform their duties on a permanent basis. They are prohibited from engaging in any paid activity. No member of the Executive Committee may engage in any activity except with the exclusive permission of the Governing Council.
The President, Vice-President and other members of the Executive Committee are appointed by common consent of the governments of the Member States, on the recommendation of the Council, and after consultation with the European Parliament and the Governing Council. Their term of office is 8 years. This period will not be extended. Only citizens of member states can be members of the Executive Committee.
The Governing Council determines the guidelines for banking activities, forms monetary policy, and makes decisions in order to solve the problems of the European System of Central Banks. And then the Executive Committee implements monetary policy in accordance with the guidelines and decisions of the Governing Council.
The Executive Committee gives appropriate instructions to central banks.
So, generalizing the above information for some countries, we can conclude that the organizational and legal form of the central bank in general, and therefore the Bank of Russia in particular, is not given once and for all and can be improved. Legal forms and internal organizational structures Central banks are very diverse, which creates room for experimentation.
However, with all the diversity of central banks, there are some general patterns that need to be taken into account in the process of improving the legal status of the Bank of Russia.
Firstly, this is the concern of central banks about the citizens of their countries and about price stability.
Secondly, this is a broad representation of social interests, which is legislatively enshrined in the organization of central banks.
Thirdly, this is the presence of mechanisms for control by society and its institutions over the activities of the Central Bank, so that its practical goals do not diverge from the goals of civil society. This ensures the necessary transparency in the organization and functioning of central banks.
In one form or another, Russian banking legislation must take into account these general patterns. At the same time, in conditions transition economy, as already mentioned, there is an opportunity, starting, as it were, from scratch (there are no banking traditions yet), to create a more advanced central bank organization.
