The organizational structure of the European System of Central Banks

The structure of the European System of Central Banks (ESCB) complies with the provisions of the Maastricht Treaty. Since there was to be no “United States of Europe”, there was no political centre which, as in most nation states, could have become the owner of the ECB. Consequently, the ESCB was chosen as the mechanism for control and the ECB was founded as a subsidiary of the national central banks of all EU member states, which had to raise the equity capital for the ECB. That all EU member states became owners of the ECB was a clear sign that the EMU was being thought of as a project for the whole EU. The equity share depended on two determinants with equal weighting. Each EU member had to provide a proportionate share of equity dependent on its population share in the EU. The other 50 per cent was calculated on the basis of the national share of each country in the EU's GDP. The shares are regularly reviewed and adjusted. At the beginning of 2019, for example, Germany had 18.4 per cent, France 14.2 per cent and Estonia 0.2 per cent of the ECB's equity capital (ECB 2019e). Profits and losses of the ECB are according to the capital share only distributed to the members of the EMU.

Figure 4.1 gives an overview of the structure of the ESCB. The General Council of the ESCB comprises the president and vice-president of the ECB and the governors of the central banks of all EU member states. The other members of the ECB's Executive Board, a member of the ECo and the president of the European Council can participate in meetings but are not allowed to vote. The governors of the national central banks are appointed by the institutions of their respective countries. In Germany, for example, the president of the Deutsche Bundesbank is appointed by the federal president on the recommendation of the federal government. Although monetary policy issues are discussed in the General Council, it does not make decisions in this arena, nor regarding other important topics concerning the EMU.