Transcript International Insolvency Law Organisational matters

Dr Marek Porzycki
Chair for Economic Policy
Central banks
National Bank of Poland (NBP)
European Central Bank (ECB), European
System of Central Banks (ESCB) and the
Eurosystem
Federal Reserve (Fed)
Topics
Legal basis for the central bank
Organisational structure
Basic features: mandate, independence
guarantees
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Article 227 of the Constitution of 1997, for EN
text see:
http://www.sejm.gov.pl/prawo/konst/angielski/
kon1.htm
Law of 29.8.1997 on the National Bank of Poland
http://www.nbp.pl/en/aktyprawne/the_act_on_the
_nbp.pdf
Treaty on the European Union:
- Art. 13 (ECB is an EU institution)
 Treaty on the Functioning of the European
Union
- Art. 127-133 (monetary policy)
- Art. 282-284 (institutional provisions)
 Statute of the ESCB and the ECB (Protocol to
the Treaty)
 „NCB statutes” – national laws governing
central banks of EU Member States (see Art.
14 of the Statute of the ECSB and the ECB)
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Article I, Sec. 8 of US Constitution: „The
Congress shall have Power (…) To coin
Money, regulate the Value thereof, and of
foreign Coin (…)”
Federal Reserve Act 1913 (codified as 12 USC
Chapter 3)
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unitary legal person of public law
Governor (President) of the NBP (Prezes): appointed by
the Sejm on request of the President of the Republic, for
a term of office of 6 years.
Narrow dismissal grounds listed in Article 9(5) of the
Law on the NBP.
Management Board of the NBP (Zarząd): Governor and
6-8 members (including 2 Vice-Governors)
Monetary Policy Council (Rada Polityki Pieniężnej):
Chairperson (NBP Governor) + 9 Members appointed for
6 years, in equal numbers by the President of the
Republic, the Sejm and the Senate
Division of decision-making powers (Art. 11, 12 and 17
of the Law on the NBP)
European Central Bank
An EU institution with seat in Frankfurt am Main.
Not a traditional central bank but rather a
coordination centre for the Eurosystem/ESCB.
 European System of Central Banks (ESCB) – ECB
and national central banks (NCBs) of all EU
Member States (including Member States outside
the euro area)
 Eurosystem – ECB and NCBs of euro area Member
States (currently 17, last joined by Estonia in
2011). Eurosystem, as a team, carries out the
central bank functions for the euro area.
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President – appointed by the European Council (EU
heads of state or of govt) for a non-renewable term
of office of 8 years (Art. 283(2) of the TFUE).
Executive Board – the President, the Vice-President
and 4 members. Appointment: like the President.
Very narrow grounds for dismissal – nonfulfillment of conditions required for the
performance of duties or serious misconduct 
compulsory retirement by the Court of Justice,
acting on application of the Governing Council or
of the Executive Board (art. 11.4 of the ESCB
Statute).
Governing Council (Art. 283(1) of the TFUE, Art. 10 and
12 of the ESCB Statute): 6 members of the Executive
Board and governors of the NCBs of euro area Member
States (currently 17)
- main decision-making body of the ECB
- takes key decisions on monetary policy
 corresponds to the Eurosystem
 General Council (Art. 45, 47 of the ESCB Statute):
President and Vice-President of the ECB and governors
of NCBs of all EU Member States (currently 27)
- mainly advisory functions
- in theory it will be dissolved when all Member States
adopt the euro
 corresponds to the ESCB
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Board of Governors – a federal agency, comprised of 7
members, appointed by the President of the U.S. for a
14-years term
Fed Chairman – member of the Board of Governors,
appointed as Chairman by the President of the U.S., for
4-years term
Federal Open Market Committee – 12 members (7 from
the Board of Governors + 5 from regional Federal
Reserve banks)
Federal Reserve Banks – 12 regional banks, responsible
for their districts
member banks – commercial banks owning stock in
regional Fed banks
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Primary: price stability (see Art. 227(1) of the
Constitution, Art. 3(1) of the Law on the NBP)
Understood as inflation within 1% margin
below or above 2,5% (inflation target set by
the Monetary Policy Council)
Secondary: supporting the economic policy of
the government, insofar as it does not
constrain the price-stability objective (Art.
3(1) of the Law on the NBP)
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Primary: price stability (Art. 127(1) of the
TFUE, Art. 2 of the ESCB Statute)
defined by the ECB Governing Council as
inflation below but close to 2% over the
medium term
Secondary: support for the general economic
policies in the Union, with a view to
contributing to the objectives of the EU laid
down in the EU Treaty, in accordance with the
principle of an open market economy with
free competition.
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Plural mandate: long run growth of the monetary and
credit aggregates commensurate with the economy's
long run potential to increase production, so as to
promote effectively the goals of maximum
employment, stable prices, and moderate long-term
interest rates (Sec. 2a of the Federal Reserve Act)
previously informal inflation target of 1,7-2,0%
since early 2012 the Federal Open Market Committee
has adopted an inflation target of 2,0%, which
however does not overrule the Fed’s plural mandate
(see FOMC statement of 25.1.2012
http://www.federalreserve.gov/newsevents/press/mo
netary/20120125c.htm)
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Constitutional position of the NBP (Art. 227 of
the Constitution) and the prohibition on
monetary financing (Art. 220(2) of the
Constitution)
Composition and narrow dismissal grounds
of NBP’s decision-making bodies
Clear definition of the NBP’s objective and
tasks (Art. 3 of the Law on the NBP)
Detailed provisions on interaction and
cooperation between the NBP and the State
authorities, safeguarding NBP’s independence
(Art. 21-24 of the Law of the NBP)
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Prohibition of monetary financing (Art. 123 of the TFUE)
Clear definition of the objective and tasks of the ESCB
(Art. 127 of the TFUE)
Composition and narrow dismissal grounds of ECB
decision-making bodies (Art. 129 of the TFUE+ Statute
of the ESCB)
Prohibition of ECB and NCB taking or seeking
instructions from EU institutions or governments, and
on influencing the members of ECB or NCB decisionmaking bodies by EU institutions or governments (Art.
130 of the TFUE)
Principle of independence in the exercise of ECB’s
powers and in the management of its finances (Art. 282
(3) of the TFUE)
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No strong constitutional or constitution-like
guarantees  Congress may amend the
Federal Reserve Act or pass legislation
influencing the Fed.
Fixed long terms of office for members of the
Board of Governors, starting and ending by
rotation (U.S. President may usually appoint
only 1 or 2 Governors during his term of
office).
Independent source of revenue.
Compulsory [fragments related to issues covered in the
presentation only]:
 Websites
- NBP
http://www.nbp.pl/homen.aspx?f=/en/onbp/onbp.html
- Fed http://www.federalreserve.gov/aboutthefed/
- ECB http://www.ecb.int/ecb/html/index.en.html
 Hanspeter K. Scheller, The European Central Bank. History,
Role and Functions, 2nd ed. Frankfurt 2006
(http://www.ecb.eu/pub/html/index.en.html)
Additional:
 F. Mishkin, The Economics of Money, Banking, and
Financial Markets, Pearson, 10th ed. 2013, Chapter 14,
Central Banks: A Global Perspective, pp. 354-378