Overview of the preparatory work undertaken by the EMI
Article 117 (ex Article 109f) of the Treaty establishing the European Community (the "Treaty") required the European Monetary Institute (EMI) to specify the regulatory, organisational and logistical framework necessary for the European System of Central Banks (ESCB), consisting of the European Central Bank (ECB) and the national central banks (NCBs) of the EU Member States, to perform its tasks in Stage Three of Economic and Monetary Union (EMU) and to submit this framework for decision to the ECB at the date of its establishment. One of the main tasks of the EMI was therefore to prepare the ground for the ESCB to be in a position to conduct its business as from the start of Stage Three.
Directly pursuant to its Treaty mandate, the EMI undertook in particular:
- to prepare a range of instruments and procedures for the conduct of the single monetary policy in the future euro area and to analyse potential monetary policy strategies;
- to promote the harmonisation of the collection, compilation and distribution of properly articulated euro area statistics in respect of money and banking, balance of payments and other financial data;
- to develop the framework for conducting foreign exchange operations as well as for holding and managing the official foreign exchange reserves of the Member States participating in the euro area;
- to promote the efficiency of cross-border payment and securities settlement transactions in order to support the integration of the euro money market, notably by developing the technical infrastructure (the TARGET system) for the processing of cross-border payments in euro to be as smooth as that of domestic payments; and
- to prepare the euro banknotes, including their design and technical specifications.
With a view to making further preparations for the establishment of the ESCB, as also outlined in the Statute of the European System of Central Banks and of the European Central Bank (the "Statute"), which is annexed to the Treaty, the EMI took on the task of:
- elaborating harmonised accounting rules and standards to make it possible to construct a consolidated balance sheet of the ESCB for internal and external reporting purposes;
- putting in place the necessary information and communications systems support for the operational and policy functions to be undertaken within the ESCB; and
- identifying the possible ways in which the ESCB would contribute to the policies conducted by the competent supervisory authorities to foster the stability of credit institutions and the financial system.
The EMI also assisted in the preparation of national and Community legislation relating to the transition to Stage Three, in particular in respect of monetary and financial legislation, including the statutes of the NCBs.
Furthermore, the EMI cooperated with other EU bodies in preparing for Stage Three. In particular, either pursuant to a Treaty requirement or in response to an invitation from the European Council, it submitted reports on:
- a scenario for the changeover to the single currency;
- monetary and exchange rate policy cooperation between the euro area and other EU countries; and
- the progress made in the fulfilment by the EU Member States of their obligations regarding the achievement of the conditions necessary for participation in Economic and Monetary Union (economic and legal convergence).
In accordance with its statutory requirements, the EMI regularly reported on the progress it had made in its preparatory work, most notably in its four Annual Reports covering the years 1994 to 1997. Moreover, in January 1997 the EMI published a report outlining the specification of the ESCB's operational framework for the conduct of the single monetary policy, pursuant to the Treaty requirement that this framework be specified by 31 December 1996 at the latest. Separate reports on progress towards convergence were released on three occasions. A number of more specialised publications covered topics in the areas of monetary policy, foreign exchange policy, payment and securities settlement systems, statistics, banknotes and the changeover to the euro. For a list of documents published by the EMI please refer to the section EMI archives - Publications.
Together with all the internal documents on the preparatory work carried out by the EMI with the assistance of the NCBs, and approved by the EMI Council at its 45 meetings held in Frankfurt am Main over the period from 1994 to 1998, an extensive body of conceptual, detailed design and implementation work was submitted to the ECB.