The Oesterreichische Nationalbank as Part of the European System of Central Banks
Austria’s entry into Stage Three of Economic and Monetary Union (EMU) has fundamentally changed the framework conditions under which the OeNB operates. The adoption of the euro on January 1, 1999, and the single monetary policy framework have redefined the roles of the participating European national central banks (NCBs). The provisions of the Treaty on European Union (TEU) and of the Treaty on the Functioning of the European Union (TFEU) are now the main legal basis for the NCBs’ operations.
The OeNB as Part of the ESCB/Eurosystem
The European System of Central Banks (ESCB) is composed of the European Central Bank (ECB) and the national central banks (NCBs) of all 28 EU Member States. Together with the ECB, the NCBs of the 19 Member States that have adopted the euro as the single currency form the Eurosystem, which has conducted the common monetary policy of the euro area since the introduction of the euro on January 1, 1999.
The NCBs, while retaining their legal independence under the umbrella of the ESCB, have formed a very close relationship within the ESCB and follow the common rules and principles laid down in the Treaty on the Functioning of the European Union (TFEU) and in the ESCB/ECB Statute. According to Article 127(1) of the TFEU, the primary objective of the ECB and the NCBs is to maintain price stability.
An Independent Central Bank
In fulfilling its function as the central bank of the Republic of Austria and as an integral part of the ESCB and the Eurosystem, the OeNB acts on the basis of full personal, financial and institutional independence. Its independence ensures that monetary policymaking remains free from political and other external influences and is thus a prerequisite for the maintenance of monetary stability.
The OeNB's Role within the Eurosystem
The primary objective of the Eurosystem, and hence of the OeNB, is to maintain price stability in the euro area in order to guarantee the purchasing power of the euro. Price stability and effective monetary policymaking hinge fundamentally on financial stability. To ensure financial stability, Austrian banks are subject to continuous oversight by the OeNB and the Financial Market Authority (FMA). Banks have had to intensify the monitoring and management of their risks under the Basel II framework, which became operational in 2007.
Since 2008, the OeNB has been solely responsible for conducting on-site examinations and for performing off-site analyses of banks. Based on the findings reported by the OeNB, the FMA assesses the risk of the banks examined and takes official action if banks violate the provisions of the legal framework for banking supervision, as determined by Federal Ministry of Finance.
The OeNB relies on its economic analyses to back up the monetary policy positions it takes within the Eurosystem. The OeNB delivers its input on economic issues to the respective Eurosystem/ESCB working groups and publishes macroeconomic forecasts for Austria every six months. Moreover, the OeNB is strongly committed to monitoring the integration process of the Central and Eastern European countries into the EU and EMU, providing technical cooperation, above all with the NCBs of those countries, and offering training support.
As the OeNB is an integral part of the Eurosystem, the operational implementation of monetary policy in Austria is one of its essential tasks. Based on the operational framework that the Eurosystem uses to manage liquidity, the OeNB is able to secure the supply of liquidity to Austria's banks and, through them, to businesses.
Another task linked to the implementation of monetary policy is the production and distribution of banknotes and coins. The OeNB is in charge of keeping the quality of banknotes and coins in circulation high and providing for counterfeit protection.