The European Central Bank was originally scheduled to announce its first monetary-policy decision of 2015 today, followed by President Mario Draghi’s regular press conference. Instead, it’s embarking on a new era of less frequent decisions and more transparent communication.
This is also a year of expansion, with a new member for the euro area, a list of tasks for the ECB’s new bank-supervision unit, and possibly the region’s biggest monetary stimulus yet. Here are five changes to remember:
Schedule
The Governing Council will meet to set monetary policy every six weeks, replacing the previous practice of doing so on the first working Thursday of each month.
Eight interest-rate decisions are scheduled this year, each followed by Draghi’s media briefing at which further measures may be announced. The next gathering will be on Jan. 22 at the ECB’s new 1.3 billion-euro ($1.6 billion) headquarters in Frankfurt’s east end, when officials will consider a quantitative-easing package that will probably include buying government bonds.
Two meetings a year will be held outside Germany, with the next of those on March 5 in Cyprus. The council will also hold two interim meetings in every six-week cycle, in theory to address non-monetary policy matters. The first of those was yesterday in Frankfurt.
Lithuania
The euro area welcomed its 19th member on Jan. 1 with the accession of Lithuania, the last of the Baltic countries to join after Estonia and Latvia.
The nation has a growing economy and low debt, as well as a keenness on European integration as nearby Russia shows signs of expansionism. Its membership shows that the single currency hasn’t lost its allure even as the ECB battles economic stagnation in the region.
Still, Lithuania will probably be the last new entrant for a while. Romania has set 2019 as its target date for joining, and eastern European Union members including Poland, the Czech Republic and Hungary are clinging to their currencies.
Voting Rotation
The arrival of Lithuania’s Vitas Vasiliauskas as the 19th central-bank governor triggers the start of a rotation system for voting rights in the Governing Council.
The largest economies -- Germany, France, Italy, Spain and the Netherlands -- will each lose their voting right once every five months, and the rest will do so for three months in every 14. The six members of the Executive Board, headed by Draghi, retain permanent voting rights.
While the system aims to smooth the running of the council, its impact shouldn’t be overestimated. All 25 members can still participate and speak at the sessions, and the ECB mostly takes decisions by consensus rather than formal vote.
Communication
The ECB will for the first time publish accounts of its monetary-policy meetings, similar to the practices of other major central banks such as the U.S. Federal Reserve, Bank of England and Bank of Japan.
The records will be released four weeks after each monetary-policy meeting, and will provide a “summary of the discussion” without attributing positions to individuals, according to the ECB. Accounts of non-monetary policy meetings will not be published, and the full minutes of discussions will continue to be kept secret for 30 years.
While the aim is to enhance transparency and public understanding of the ECB’s actions, it could also harden positions as dissenters ensure that their objections are put on the record.
Two weeks after each monetary-policy meeting, the ECB will publish an Economic Bulletin, replacing its monthly bulletin. The new document will contain a summary of decisions as well as economic analysis and research articles.
Supervision
This is the first full year for the ECB as the euro area’s bank supervisor.
The institution assumed responsibility in November after carrying out an in-depth assessment of lenders’ capital needs and testing their reaction to a simulated economic and financial downturn. It’ll be in charge of day-to-day oversight of 123 of the largest banks and work with national supervisors to monitor the thousands of smaller lenders.
Led by France’s Daniele Nouy, the Single Supervisory Mechanism now has to blend 19 sets of national supervisory habits into pan-European consistency, and prod banks to take more precautions against crises.
