Hitherto, the European Central Bank (ECB) always held its meetings on monetary policy on the first Thursday of every month, followed by a press conference with its president, Mario Draghi. Starting this year, this decision-making frequency will be reduced, and the communications will be more transparent. The Governing Council’s first meeting of 2015 – which could result in the largest stimulus for the euro area of all time– will be held on 22 January, and not on 8 January, which was the custom. 2015 is also a year of enlargement: with Lithuania joining the euro area as its 19th member state.
Eight ECB meetings in 2015
The ECB’s Governing Council will meet every six weeks this year, with two meetings taking place outside Frankfurt: one in Cyprus in March and another in Malta in October. Consequently, there are eight decisions on interest rates on the 2015 agenda, each followed by a press conference with Mario Draghi where he may disclose some of the new measures to be adopted. The Council will also hold two meetings every six weeks in which non-monetary issues will be discussed.
There are eight decisions on interest rates on the 2015
On 1 January Lithuania adopted the euro, which means that the Baltic region is now fully integrated in the Eurozone after Latvia and Estonia started using the single European currency in 2014 and 2011, respectively. By joining the euro area these three countries –which obtained their independence only after the collapse of the Soviet Union– seek further security guarantees in the midst of geopolitical unrest between Moscow and the West.
There are other countries knocking on the Eurozone’s door despite the economic stagnation of the bloc, but for the moment Lithuania appears to be its last member. Romania is striving to meet the necessary requirements to adopt the euro by 2019 whereas other Eastern European countries, such as Hungary, Poland and the Czech Republic, are holding on to their national currencies.
The eurozone’s 19 countries will now be classified into two groups, according to the size of their economies and financial sectors. The governors of the big five – Germany, France, Italy, Spain and the Netherlands – will all share four voting rights. The other 14 will share 11 voting rights.
By entering the euro area Lithuania opens the door to a new rotation system in the voting of the ECB’s Governing Council. The eurozone’s 19 countries will now be classified into two groups, according to the size of their economies and financial sectors. The governors of the big five – Germany, France, Italy, Spain and the Netherlands – will all share four voting rights. The other 14 will share 11 voting rights. The governors will rotate in the exercise of their right to vote on a monthly basis. The six members of the Executive Board led by Draghi will keep their permanent voting right.
Publication of minutes
Another important change being introduced this year affects the bank’s communication strategy. The ECB will publish for the first time minutes of the meetings on monetary policy, documents such as the ones issued by the US Federal Reserve, the Bank of England or the Bank of Japan.
The minutes will be made available to the public four weeks after each meeting, and they will include a summary of the discussion, although the positions and viewpoints of the participants will be kept anonymous. Moreover, some details of the discussions will remain secret for 30 years. Even though the goal is to improve the transparency and public understanding of the ECB’s proceedings, these changes could make decision-makers less flexible as dissenting voices will ensure that their objections are clearly reflected in the minutes.
In addition, two weeks after each meeting on monetary policy, the ECB will publish an Economic Bulletin that will replace the Monthly Bulletin. This report will cover any decisions adopted as well as economic analysis and research papers.
Finally, the Single Supervisory Mechanism adopted by the bank last November, which performed stress tests on European banks in 2014, faces its first full year in 2015. It will ensure, in close cooperation with national authorities, adherence to good practices of the 123 largest credit entities of the region, which make up 85% of the European banking system but are just 2.2% of the 6,000 plus banks that operate in the euro area.
