Annual Accounts of the European Central Bank for the year ending 31 December 2008

5 March 2009

The Governing Council of the European Central Bank (ECB) today approved the audited Annual Accounts of the ECB for the year ending 31 December 2008.

The ECB earned a surplus of €2,661 million in 2008, compared with a surplus of €286 million in 2007 that had reflected the effects of the euro’s appreciation against the US dollar and, to a lesser extent, the Japanese yen.

As at 31 December 2008, based on the Governing Council’s assessment of the ECB’s risk exposures, an amount of €1,339 million was transferred from this surplus to the provision against foreign exchange rate, interest rate and gold price risks, leaving a declared net result of €1,322 million. The provision would be used to cover possible losses arising from the exposure to the risks mentioned above, in particular valuation losses not covered by the revaluation accounts. Its size is reviewed annually. Following a decision by the Governing Council, out of the net result for 2008 an amount of €1,206 million, comprising part of the ECB’s income on euro banknotes in circulation, was distributed to the national central banks (NCBs) on 5 January 2009. The Governing Council decided on 5 March 2009 to distribute the remaining €116 million to the NCBs.

The ECB’s regular income is derived primarily from investment earnings on its holding of foreign reserve assets and its paid-up capital of €4.1 billion, and from interest income on its 8% share of the euro banknotes in circulation. Interest income in 2008 was affected to some extent by lower interest rates on US dollar-denominated assets.

The ECB earned total net interest income of €2,381 million from all sources, compared with €2,421 million in 2007. Excluding the interest income of €2,230 million earned on the share of banknotes in circulation, net interest income amounted to €151 million, compared with €417 million in 2007. The ECB paid remuneration of €1,400 million to the NCBs on their claims in respect of the foreign reserve assets transferred by them to the ECB.

In 2008, the revaluation accounts arising from unrealised gains on assets and liabilities amounted to €11.4 billion, compared with €6.2 billion in 2007. These gains were recorded in revaluation accounts, in line with the common accounting policies that have been established by the Governing Council for the Eurosystem.

The ECB’s administrative expenses on staff, rental of premises, professional fees, and other goods and services amounted to €364 million (€359 million in 2007). Depreciation charges on fixed assets amounted to €23 million.

The Annual Accounts, together with a management report for the year ending 31 December 2008, will be published in the ECB’s Annual Report on 21 April 2009.

Notes for editors

  1. Accounting policies of the ECB: Common accounting policies have been established by the Governing Council for the Eurosystem, including the ECB, in accordance with Article 26.4 of the Statute of the European System of Central Banks and of the European Central Bank (Statute of the ESCB), and have been published in the Official Journal of the European Union. [1] Although generally based on internationally accepted accounting practice, these policies were designed with special regard to the unique circumstances of the central banks of the Eurosystem. They pay particular attention to the issue of prudence given the large foreign exchange exposures of most of these central banks. This prudent approach applies particularly to the differing treatment of unrealised gains and unrealised losses for the purpose of recognising income, and to the prohibition against netting unrealised losses on one asset against unrealised gains on another. Unrealised gains are transferred directly to revaluation accounts, whereas unrealised losses at year-end that exceed revaluation account balances are treated as expenses. All NCBs are required to follow these policies for the purpose of reporting their operations as part of the Eurosystem, which are included in the Eurosystem’s weekly consolidated financial statements. All NCBs voluntarily apply broadly the same policies as the ECB in preparing their own annual financial statements.
  2. Remuneration of foreign reserve assets transferred to the ECB: On transferring foreign reserve assets to the ECB upon joining the Eurosystem, each NCB acquires a remunerated claim on the ECB equivalent to the amount it transfers. The Governing Council has decided that these claims should be denominated in euro, and should be remunerated on a daily basis at the latest available marginal rate for the Eurosystem’s main refinancing operations, adjusted to take account of the zero rate of return on the gold component. In 2008 this remuneration resulted in an interest expense of €1,400 million.
  3. Distribution of the ECB’s income on euro banknotes in circulation: The Governing Council decided that, from 2006, this income is due to the NCBs in the financial year in which it accrues, but is to be distributed on the second working day of the following year. [2] It is distributed in full unless the ECB’s net profit for the year is less than its income earned on euro banknotes in circulation and subject to a decision by the Governing Council before the end of the financial year to transfer part or all of this income to the provision for foreign exchange rate, interest rate and gold price risks. The latter was the case in 2008, due to the decision by the Governing Council to transfer approximately €1.0 billion out of the ECB’s income on euro banknotes in circulation to this provision. Consequently, the remaining income on euro banknotes of €1.2 billion was distributed to the NCBs on 5 January 2009.

[1] Decision ECB/2002/11 of 5 December 2002 on the annual accounts of the European Central Bank, OJ L 58, 3.3.2003, p. 38, as amended. With effect from 1 January 2007, this Decision was repealed and replaced by Decision ECB/2006/17, OJ L 348, 11.12.2006, p. 38, as amended.

[2] Decision ECB/2005/11 of 17 November 2005 on the distribution of the income of the European Central Bank on euro banknotes in circulation to the national central banks of the participating Member States, OJ L 311, 26.11.2005, p. 41.


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