Vol. 564 No. 5
74 Mr. Howlin asked the Minister for Finance the proposed changes in the voting arrangements in the European Central Bank for the setting of interest rates; his views on these; and if he will make a statement on the matter. [9714/03]
Amendments to the voting modalities of the ECB governing council are necessitated by the pending accession of ten countries to the EU, their expected participation in ERM II, although not necessarily immediately after accession, and their expected ultimate adoption of the euro. The possibility of Sweden, Denmark and the UK adopting the euro, and of Bulgaria and Romania doing so should they accede to the EU in 2007, must also be allowed for. If the Council is to operate effectively and efficiently in such an expanded environment where there could be up to 27 euro area countries, some rotation of voting rights is required. Amendments to the voting modalities were allowed for in Article 5 of the Treaty of Nice.
The governing council is the ECB's most important decision-making organ. It is composed of the six members of the executive board together with the governors of the different national central banks of the member states belonging to the euro area – 12 governors at present. In the current system, each member of the governing council has a single voting right, giving a total of 18 votes in all. The governing council's role is not solely confined to the setting of interest rates.
ECB Recommendation ECB/2003/1 proposed amendments to the voting modalities of the ECB's governing council, through limiting the total number of voting rights in the governing council to a maximum of 21. While the six members of the executive board would benefit from a permanent right to vote, only 15 national governors at most would be able to exercise their voting right at any given time. Governors would be allocated to one of three groups – although until there are 21 of them there will only be two groups – on the basis of the relative rank of his or her country as measured by a composite indicator, based on GDP and on the importance of the financial sector in the country, and would vote on a rotating basis according to the share of the 15 votes assigned to their particular group.
This new voting arrangement will not come into effect until such time as the Governors of at least 15, and possibly up to 18, national central banks sit on the ECB's governing council, that is when at least 15 member states have adopted the euro as their domestic currency. It will be some time, therefore, before it comes into operation. It would be expected that the Irish Governor would be in the second group, which is to eventually have 14 members sharing eight voting seats, and therefore to vote 57% of the time. It should be emphasised that the governors vote in their capacity as members of the governing council, and not as national representatives.
