National Bank Of Slovakia As A Part Of European System Of Central Banks And The Euro System

National Bank Of Slovakia As A Part Of European System Of Central Banks And The Euro System Presented by: Prof. Dr. Štrkolec Date: 15 February 2024 Legal Framework – EU Level - Treaty on European Union (TEU) Art. 13/1: ECB as the institution of the EU • Treaty on the Functioning of the European Union (TFEU) Art. 282/1: The European Central Bank, together with the national central banks, shall constitute the European System of Central Banks (ESCB). The European Central Bank, together with the national central banks of the Member States whose currency is the euro, which constitute the Euro system, shall conduct the monetary policy of the Union. • TFEU Art. 127/1: The primary objective of the European System of Central Banks (hereinafter referred to as 'the ESCB') shall be to maintain price stability. • TFEU Art. 131: Each Member State shall ensure that its national legislation including the statutes of its national central bank is compatible with the Treaties and the Statute of the ESCB and of the ECB. ESCB and EUROSYSTEM - The European System of Central Banks (ESCB) consists of the ECB and the national central banks of all EU member states, whether or not they have adopted the euro. - In addition to the eurozone countries, this includes the national central banks of countries with a special status (Denmark) and countries with a granted exception (Bulgaria, the Czech Republic, Hungary, Poland, Romania and Sweden). - States with a special status or exemption still have their own national currency, conduct their own monetary policy, and their national central banks retain their independence in matters of monetary policy for the time being. - The Euro system and the ESCB will exist in parallel until all EU Member States become members of the Eurozone - that is the question? National Bank of Slovakia - Constitutional framework: • Art. 56 effective 1992-2001: The Slovak Republic establishes an issue bank. The details shall be established by law. • Art. 56 effective from 2001: The National Bank of Slovakia is an independent central bank of the Slovak Republic. The highest governing body of the National Bank of Slovakia is the Banking Council of the National Bank of Slovakia. Details shall be established by law. • Legal framework: Act on the National Bank of Slovakia (Act no. 566/1992 Coll.) Art. 2/1: The main objective of the National Bank of Slovakia is to maintain price stability. Activities of NBS - Participates in the common monetary policy determined by the ECB for the euro area - Issues euro banknotes and euro coins according to special regulations valid in the euro zone for issuing euro banknotes and euro coins, - Supports the smooth and efficient functioning of payment systems, - Maintains foreign exchange reserves, - Other activities including financial market supervision - The places where the powers of the ECB and the NBS overlap - Common monetary policy - Banking union (supervision of credit institutions) Common Monetary Policy - Art. 3/1 TFEU: EU shall have exclusive competence in the monetary policy for the Member States whose currency is the euro - Art. 128/1,2 TFEU: ECB shall have the - exclusive right to authorize the issue of euro banknotes within the Union. ECB and the national central banks may issue such notes. The banknotes issued by the ECB and the national central banks shall be the only such notes to have the status of legal tender within the Union. Member States may issue euro coins subject to approval by the European Central Bank of the volume of the issue. - NBS has limited powers since 1 January 2009 (Slovak Republic joined the Eurozone): • Participates in the common monetary policy • Issues euro banknotes and euro coins according to special regulations valid in the euro zone • Manages cash circulation in the Slovak republic • Imposes sanctions also in the area of monetary policy Banking Union - The first pillar - Single Supervisory Mechanism - ECB and the national supervisory authorities of the participating countries (SSM regulation no. 1024/2013) - The essence of the SSM - cooperation of the ECB and the relevant national authorities in the supervision of credit institutions (significant and less significant). - Members: states of Eurozone (plus Bulgaria, which established close cooperation with European banking supervision). - In EU together 109 significant institutions, in Slovakia 3 (Všeobecná úverová banka, a.s., Tatra banka, a.s., Slovenská sporiteľňa, a.s.). • Criteria: size, economic importance, cross-border activities, three of the most important banks in the state. ECB and NBS powers Powers in the area of banking supervision: - ECB: • Supervision of significant banks in cooperation with the NBS • Decisions on granting and withdrawal of a banking license to all banks, as well as assessing the acquisition of qualified participations in banks - NBS: • Supervision of less important banks State Sovereignty And Responsibility - Slovakia as a member of Eurozone since 2009: • Loss of sovereignty in monetary policy (cash payments as a human right??? Art. 39a of Constitution of Slovak republic and Proposal for a Regulation on the legal tender of euro banknotes and coins) • Limited sovereignty in the area of banking supervision (unidentified collision moment and in cooperation with ECB and NBS) • Satisfaction of citizens - 90% satisfaction with membership in the Eurozone • Absence of scientific research on satisfaction with the banking union