Chapter 8 - Transitional Provisions
In order to ensure that the transition from the national monetary policies in Stage Two to the single monetary policy in Stage Three is effected smoothly, it is important to apply a harmonised approach to the termination of the national monetary policy operations at the end of Stage Two and the changeover to the ESCB's monetary policy framework at the start of Stage Three. In this respect, several areas have been identified where specific provisions need to be applied for the transition.
8.1 Open Market Operations and Standing Facilities
a. General provisions
Whereas existing legal rights and relationships entered into by the national central banks in Stage Two will not be overridden, national central banks will seek to smooth transition to Stage Three by ensuring, in particular, that any remaining monetary policy operations initiated in Stage Two expire as early as possible in Stage Three.
b. Open market operations
The operations calendar for the main and the longer-term refinancing operations to be conducted by the ESCB in the calendar year 1999 will be published by the ESCB not later than 1 October 1998 (see Section 5.1.2). The ESCB may execute fine-tuning and structural open market operations as from 4 January 1999. Open market operations that were initiated by national central banks prior to 1 January 1999 will remain under the responsibility of those national central banks until maturity.
Debt certificates issued by national central banks prior to 1 January 1999 will remain under the responsibility of those national central banks until maturity. These certificates will be eligible as tier one assets for mobilisation and pledging in ESCB monetary policy operations (see Section 6.2).
c. Standing facilities
The ESCB standing facilities will be operational as from 4 January 1999. Operations within the framework of the standing facilities of national central banks that were initiated prior to 1 January 1999 will remain under the responsibility of those national central banks until maturity.
d. Eligible assets
The eligibility criteria and risk control measures, as specified by the ECB and the national central banks for assets underlying ESCB monetary policy operations, will be applied for monetary policy operations initiated by the ESCB after 1 January 1999. For operations initiated by the national central banks prior to 1 January 1999, the eligibility criteria and the risk control measures for underlying assets will remain the responsibility of those national central banks until the maturity of those operations.
8.2 Minimum Reserves46
a. Implementation date
The ESCB's minimum reserves system will apply as from 1 January 1999. National central banks will apply the necessary provisions to ensure that their national minimum reserves systems are terminated by 31 December 1998 at the latest.
b. Determination of the reserve base for the first maintenance period
The reserve base of an institution for the first maintenance period of the ESCB's minimum reserves system will be defined in relation to elements of its balance sheet as of 31 December 1998, as reported to the national central banks within the general framework of the ECB's money and banking statistics.
Small institutions which are normally subject to lighter reporting requirements than other Monetary Financial Institutions are be required to report their balance sheet data to the national central banks as of 31 December 1998 according to the same reporting deadline as for other institutions. For these small institutions, the balance sheet data as of 31 December 1998 provide the basis for determining the reserve base for the first four maintenance periods.
c. The dates of the first maintenance period
The first maintenance period of the ESCB's minimum reserves system starts on 1 January 1999 and ends one day before the regular starting date of the maintenance period for minimum reserves in February 1999. (Accordingly, for small institutions, the fourth maintenance period ends in May 1999.)
ECB - European Central Bank