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Annual Report 2020

Foreword by the President

Ladies and gentlemen,

On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. For more than a year now, the COVID-19 pandemic has been holding Austria, Europe and the entire world in its grip. Drastic measures aimed to contain the spread of the disease, including several lockdowns, have fundamentally changed the way we live and work today. While the economic and social impacts are set to leave their mark, public health recommendations, such as testing and vaccinations, are likely to help ease the strain.

The economic fallout of the pandemic in Austria has taken on proportions unprecedented since World War II, with the recession triggered by the financial crisis in 2009 paling in comparison. In 2020, GDP growth contracted by some 7% in Austria, and unemployment rose to record levels. The recession called for massive support measures to temporarily help companies stay liquid and people keep their jobs. As a result of the fiscal and economic policy measures, both Austria’s budget deficit and government debt have been on the rise. Monetary policymakers likewise responded quickly, expanding the asset purchase programs already in place and launching new, targeted programs. This action aimed to prevent financial market distortions and to mitigate the economic downturn, which was putting downward pressure on prices.

Banks were granted regulatory, supervisory and operational relief in the face of the COVID-19 pandemic, which enabled them to supply the real economy with credit. This proved critical in particular in the first few months of the pandemic as it allowed companies to meet their liquidity needs. The Austrian banking sector remained resilient even under the difficult conditions prevailing in 2020 and continued to fulfill its intermediary function without fail.

In response to the economic emergency, central banks stepped in and took monetary policy action, which caused the risk position of the Oesterreichische Nationalbank (OeNB) to increase. This rise, combined with market distortions and reduced earnings, drove down the OeNB’s profit markedly in 2020.

Teaming up with the PSA Payment Services Austria GmbH, the OeNB laid the foundation, in 2020, for modernizing and future-proofing Austria’s infrastructure for settling retail payments. With the OeNPAY ­Financial Innovation HUB GmbH, the OeNB moreover established another subsidiary.

As a central economic policymaking institution, the OeNB has been playing its part in helping overcome these difficult times. The OeNB responded to the pandemic by taking organization-wide measures and enabling most staff members to work from home. This notwithstanding, the OeNB safeguarded the provision of critical cash services and payment systems, and it also accomplished all of its other core tasks in a reliable fashion. The OeNB’s solid IT infrastructure and advances in going paperless ensured that most of the OeNB’s staff were able to switch to remote working, while at the same time staying safe.

In closing, I would like to express my gratitude to the members of the Governing Board and of the General Council as well as to all our colleagues at the OeNB for their outstanding commitment and performance ­under exceptional circumstances.

Vienna, March 2021

Harald Mahrer, President

Foreword by the Governor

Ladies and gentlemen,

Amid the COVID-19 pandemic, the gross domestic product (GDP) of the euro area contracted by an
unparalleled 7% in real terms in 2020. The recession was above all driven by the plunge in private consumption and tourism exports following pandemic-related measures. Inflation remained subdued as both demand and the oil price were weakening. Consumer prices as measured by the Harmonised Index of Consumer Prices (HICP) only increased by 0.2% in 2020.

Throughout 2020, the Eurosystem took swift and targeted action to mitigate the economic fallout of the COVID-19 crisis. The Governing Council of the European Central Bank (ECB) adopted its first set of pandemic-­related monetary policy measures on March 12, 2020. In the following months, the measures were expanded, prolonged and adjusted to mitigate financial market distortions, the recession and, hence, the downward pressure on price growth. The temporary pandemic emergency purchase programme (PEPP) proved to be a vital Eurosystem measure, which, at the time of writing this report, comprised an envelope of EUR 1,850 billion. In addition, the Eurosystem provided banks with targeted refinancing operations and temporarily eased the criteria for eligible collateral. At the same time, the ECB’s key interest rates remained at an historically low level throughout 2020. Apart from its measures targeted at the euro area, the Eurosystem intensified its cooperation with central banks of both EU and non-EU countries to ensure that the financial system had access to adequate liquidity in euro and US dollars.

In addition to the crisis response, the Eurosystem prioritized the review of its monetary policy strategy in 2020. This strategy review has been focusing on the definition of price stability as well as incentives and instruments with which to achieve price stability. Together with the other national central banks (NCBs) of the euro area, the OeNB has been closely involved in the review, which is expected to end in September 2021. Both at the European and national level, the ECB and the euro area NCBs moreover lent their ears to interest groups and civil society organizations. During its “The OeNB listens” event on October 30, 2020, the OeNB reached out to numerous stakeholders in Austria to hear their take on the monetary policy strategy review. What is more, the OeNB aims to continue engaging in an open and direct dialogue with the Austrian public.

In June 2020, the OeNB presented its new strategy covering the period from 2020 to 2025. The OeNB will continue to steadfastly fulfill its core tasks, namely maintaining price stability and financial stability as well as safeguarding cash supply and payment systems. In addition, it is particularly keen to advance financial innovations, improve the Austrian public’s financial literacy and push ahead with digital transformation to modernize its organization. Another priority are both internal and external communication.

To conclude, I would like to thank all OeNB employees, the President and Vice President, the General Council as well as the other members of the Governing Board for their excellent cooperation and outstanding performance in the past few months. Pulling together as a team, we helped tackle the economic crisis at hand by successfully accomplishing our core tasks also under the difficult circumstances brought on by the COVID-19 pandemic.

Vienna, March 2021

Robert Holzmann, Governor

Members of the OeNB’s General Council

Harald Mahrer

President

Term of office:

September 1, 2018, to August 31, 2023

Barbara Kolm

Vice President

Term of office:

September 1, 2018, to August 31, 2023

Bettina Glatz-Kremsner

Director General,
Casinos Austria AG, Österreichische Lotterien Ges.m.b.H.

Term of office:
March 1, 2018, to February 28, 2023

Mag. Erwin Hameseder

Chairman of the Managing Board, Raiffeisen-Holding Niederösterreich-Wien reg. Gen.m.b.H.

Term of office:

March 6, 2020, to March 5, 2025

Stephan Koren

Chairman, Wüstenrot Wohnungswirtschaft reg. Gen.m.b.H.

Term of office:

September 8, 2018, to September 7, 2023

Franz Maurer

Partner, LIVIA Group

Aktuelle Funktionsperiode:

May 23, 2018, to May 22, 2023

Susanne Riess

Chair of the Managing Board, Bausparkasse Wüstenrot AG

Term of office:

March 6, 2020, to March 5, 2025

Peter Sidlo

Term of office:

March 1, 2018, to February 28, 2023

Christoph Traunig

Executive Partner, St. Stephan Capital Partners

Term of office:

September 1, 2018, to August 31, 2023

Brigitte Unger

Professor of Public Sector Economics, Utrecht School of Economics

Term of office:

March 6, 2020, to March 5, 2025

State Commissioner

Harald Waiglein

Director General,

Directorate General Economic Policy and Financial Markets, Federal Ministry of Finance

Term of office:

from July 1, 2012

Deputy State Commissioner

Alfred Lejsek

Head,

Directorate Financial Markets,
Federal Ministry of Finance

Term of office:

from April 1, 2016

Birgit Sauerzopf and Christian Schrödinger (alternate) are the representatives delegated by the Central Staff Council to participate in meetings of the General Council pursuant to Article 22 paragraph 5 Nationalbank Act.

Birgit Sauerzopf

Chair, Central Staff Council

Christian Schrödinger

Deputy Chair,
Central Staff Council

The OeNB’s ownership structure and decision-­making bodies

The OeNB’s owner

The OeNB is a stock corporation. However, given its particular status as a central bank, it is governed by a number of special provisions laid down in the Federal Act on the Oesterreichische Nationalbank 1984 (Nationalbank Act). Its nominal capital of EUR 12 million has been held in its entirety by the central government since July 2010.

The General Council of the OeNB

Functions

The General Council is charged with the supervision of all business not falling within the remit of the European System of Central Banks (ESCB). The General Council is convened by the President, as a rule once a month. Pursuant to Article 20 paragraph 2 Nationalbank Act, the General Council shall advise the Governing Board in the conduct of the OeNB’s business and in matters of monetary policy. Joint meetings of the General Council and the Governing Board must take place at least once every quarter. General Council approval is required for a number of management decisions, e.g. for starting and discontinuing lines of business, establishing and closing down branch offices, and acquiring and selling equity interests and real property.

Also, the General Council must approve ­appointments of members of supervisory boards and executive bodies of companies in which the OeNB is a shareholder. Appointments of second-­tier officials of the OeNB must likewise be ­approved by the General Council. Finally, the General Council has the exclusive right of decision on matters detailed in Article 21 paragraph 2 Nationalbank Act, e.g. on submitting to the Austrian federal government a short list of three candidates for appointments to the OeNB’s Governing Board by the Federal President, on defining general operational principles in matters outside the remit of the ESCB, on approving the annual accounts (financial statements) for submission to the General Meeting, and on ­approving the cost account and investment plan for the next financial year.

Composition

The General Council consists of the President, one Vice President and eight other members. Only persons holding Austrian citizenship may be members of the General Council. General Council members are appointed by the federal government for a term of five years and may be reappointed. Further provisions pertaining to the General Council are set out in Articles 20 through 30 of the Nationalbank Act.

Personnel changes of the General Council (between January 1, 2020, and March 4, 2021)

By January 1, 2020, the federal government had not yet appointed candidates to fill the mandates terminated early by General Council members Gabriele Payr, with effect from end-February 2019, and Gottfried Haber, with effect from July 10, 2019. On January 15, 2020, Walter Rothensteiner resigned early from his mandate as General Council member with effect from end-January 2020.

To fill these vacancies, the federal government, in its meeting on March 4, 2020, adopted the decision to appoint as members of the General Council, pursuant to Article 23 Nationalbank Act as amended, for a period of five years each and with a term of office from March 6, 2020, to March 5, 2025: Erwin Hameseder, Chairman of the Managing Board of Raiffeisen-Holding Niederösterreich-Wien reg. Gen.m.b.H.; Susanne Riess, Chair of the Managing Board of Bausparkasse Wüstenrot AG; and Brigitte Unger, Professor of Public Sector Economics at Utrecht School of Economics.

The Governing Board of the OeNB

The Governing Board is responsible for the overall running of the OeNB and for conducting the business of the OeNB. In pursuing the objectives and tasks of the ESCB, the Governing Board acts in accordance with the guidelines and instructions of the ECB. The Governing Board conducts the OeNB’s business in such a manner as enables the OeNB to fulfill the tasks allocated to it under the terms of the Treaty on the Functioning of the European Union (TFEU), the Statute of the ESCB and of the ECB, the ­directly applicable EU legislation adopted thereunder, and federal law.

The Governing Board comprises the Governor, the Vice Governor and two further members, all of whom are appointed by the Federal President on the basis of a proposal from the federal government. Each appointment is made for a term of six years. Persons holding office may be reappointed. The Governor of the OeNB is a member of the Governing Council of the ECB and of the General Council of the ECB. In performing these functions, the Governor and his deputy are not bound either by the decisions of the OeNB’s Governing Board or by those of the OeNB’s General Council, nor are they subject to any other instructions.

Further provisions pertaining to the Governing Board are set out in Articles 32 through 36 ­
of the Nationalbank Act. See www.oenb.at for additional information about the OeNB’s Governing Board.

Members of the OeNB’s Governing Board

December 31, 2020

Bild: Vize-Gouverneur Univ.-Prof. MMag Dr. Gottfried Haber, Gouverneur Univ.-Prof. Mag. Dr. Robert Holzmann, Direktor DDr. Eduard Schock, Direktor DI Dr. Thomas Steiner

From left to right: Vice Governor Gottfried Haber, Governor Robert Holzmann,
Executive Director Eduard Schock, Executive Director Thomas Steiner

The OeNB’s organization

The OeNB contributes to safeguarding
price stability and financial stability

Fast and focused: the Eurosystem’s policy response to the coronavirus pandemic

Eurosystem responds to COVID-19 crisis by adopting substantial set of non­standard measures

As measured by the IMF’s World Economic Outlook , global economic output contracted by 3.5% in 2020, in the face of the COVID-19 pandemic and government measures aimed at containing its impact. With a 4.9% decline, advanced economies suffered a larger setback than emerging economies, whose output diminished by 2.4%. Trade indicators complete the picture, with world trade plunging by 9.6% in 2020. Crude oil prices slumped by 60% in the first four months of 2020. While rebounding in the following months, Brent crude oil prices still ended the year some 25% below their January 2020 levels.

As the COVID-19 pandemic was unfolding in early 2020, financial markets showed strong signs of distortions. Risk aversion increased on a global scale in late February to early March, causing market volatility to rise, stock prices to fall, and risk premiums to widen. Amid these conditions, funding became more difficult for euro area banks. This jeopardized the stable flow of credit to businesses and households, which is essential for keeping the economy going.

What added to the climate of uncertainty for economic agents in the euro area beyond the COVID-19 pandemic were the United Kingdom’s exit from the EU on January 31, 2020, and negotiations about post-Brexit relations between the EU and the UK from 2021.

The euro area’s real gross domestic product (GDP) shrank by 7.3% in 2020, according to Eurosystem staff macroeconomic projections released in December 2020. The recession was driven by weak household consumption and business investment as well as by feeble exports. As regards inflation, the substantial drop in ­demand and the decline in crude oil prices had a downward effect. Consumer prices as measured by the Harmonised Index of Consumer Prices (HICP) rose by a mere 0.2% in 2020. In 2021, price pressures are expected to remain moderate by and large. This will be mainly due to three factors: the continued frailty of demand, low wage pressures and the appreciation of the euro. HICP inflation is projected to rise gradually to 1.0% in 2021, and to inch up to 1.4% until 2023 (Eurosystem staff macroeconomic projections, December 2020). All in all, the data imply that HICP inflation rates stand to remain below the price stability target of close to, but below, 2% in the years ahead.

In 2020, public authorities across the euro area and the pivotal EU policymaking institutions were faced with the challenge of alleviating the impact of the pandemic-related recession. The consensus was that the situation called for an adequate fiscal response to support vulnerable firms and their employees. All told, transfer payments and subsidies paid to euro area firms and households, including job retention schemes, reached some 4.5% of GDP in 2020, according to ECB estimates. Some of these measures will be continued in 2021. Consequently, the euro area’s gross debt ratio is expected to rise to some 100% of GDP in 2021, from 84% in 2019.

The national initiatives were flanked with a new set of tools at the EU level that were agreed by all EU member states. First and foremost, a EUR 750 billion temporary recovery instrument called NextGenerationEU is meant to help repair the immediate economic and social damage done by the coronavirus pandemic and the ­ensuing containment measures. The financing required will be raised by the European Commission through borrowing on capital markets. Second, access to SURE, a new instrument for temporary support to mitigate unemployment risks in an emergency, will help member states cover the cost of protecting jobs and income jeopardized by the pandemic-related recession. The SURE instrument has an overall firepower of up to EUR 100 billion. The financial support is provided in the form of EU loans granted to member states on favorable terms.

In the realm of monetary policy, the Euro­system likewise moved fast to put in place targeted measures to counter distortions in financial markets, the recession and the ensuing downward pressure on prices. A first package of monetary policy measures was adopted by the Governing Council of the European Central Bank (ECB), of which the OeNB governor is a member, on March 12, 2020. In the course of 2020, these measures were expanded and prolonged, to tackle the increasing economic fallout of the pandemic.

As a first step, the Governing Council of the ECB decided to top up the existing expanded asset purchase programme (APP) with a temporary envelope of additional net asset purchases of EUR 120 billion until the end of 2020. This measure enhanced the impact of the regular APP purchases, which continued to run at a monthly pace of EUR 20 billion. As before, the principal payments on securities purchased under the APP were reinvested as securities matured.

Expanded asset purchase ­programme (APP)

Under its expanded asset purchase programme, the Eurosystem has been buying different types of securities based on four underlying programmes: (1) the covered bond purchase programme (CBPP3), (2) the asset-backed securities purchase programme (ABSPP), (3) the public sector purchase programme (PSPP) as well as (4) the corporate sector purchase programme (CSPP). The PSPP accounts for the lion’s share (about 80%) of the entire APP portfolio.

It became clear rather quickly, though, that the financial market tensions related to the pandemic were more pronounced than initially assumed. Therefore, the ECB launched a temporary pandemic emergency purchase programme (PEPP), with the proposed purchases including all asset categories eligible under the APP. The goal of the PEPP is to alleviate market tensions, create and maintain favorable financing conditions and support the smooth transmission of monetary policy. Purchases of sovereign bonds across euro area countries are guided by the Eurosystem capital key, which spells out the contributions of the euro area central banks to the ECB’s capital. In this respect, PEPP purchases are fully aligned with APP purchases. The PEPP purchases are, however, subject to a higher degree of flexibility over time, across asset classes and among jurisdictions. Also, under the PEPP, the range of eligible assets was broadened.

In the course of 2020, the PEPP envelope was enlarged in several steps, to a total of EUR 1,850 billion. Net purchases started in March 2020 and will be terminated once the COVID-19 crisis phase is over, but in any case not before the end of March 2022 (chart 1). Redemptions from maturing PEPP securities will be reinvested at least until the end of 2023.

Pandemic emergency purchase programme (PEPP)

The PEPP is the crisis tool that the Eurosystem adopted to address the economic consequences of the COVID-19 pandemic. Thus, the Eurosystem systematically buys assets, between March 2020 and March 2022, with a view to maintaining favorable financing conditions and supporting the smooth transmission of monetary policy.

The OeNB contributes to the APP and PEPP purchases, alongside the other 18 national central banks and the ECB that together form the ­Eurosystem. Specifically, the OeNB buys Austrian sovereign bonds (PSPP and PEPP segment) and covered bonds issued by Austrian banks (CBPP3 and PEPP segment). To buy covered bonds – eligible for the CBPP3 and the corresponding PEPP segment – the OeNB mobilized close to EUR 2 billion in 2020, bringing the corresponding balance sheet items up to a total of EUR 9.5 billion. Under the PSPP and the corresponding PEPP segment, the OeNB moreover bought Austrian sovereign bonds worth close to EUR 24 billion, thus enlarging the relevant section of the sovereign bond portfolio to some EUR 74.5 billion until year-end.

In parallel, the Governing Council of the ECB adjusted the terms and conditions governing the third series of the Eurosystem’s targeted longer-term refinancing operations (TLTROs III). The interest rate for TLTRO III operations has been set to equal the average rate applied to the Eurosystem’s main refinancing operations over the life of the respective operation. Yet, for all TLTRO III operations outstanding between June 2020 and 2022, this rate was cut by 50 basis points. For counterparties whose lending pattern fulfills specific constraints stipulated by the ECB, the interest rate applied during those two years may even be 50 basis points below the average interest rate on the deposit facility prevailing over the same period. These measures provided incentives for banks to maintain the level of credit support for those segments that have been affected most by the spread of the corona­virus or the measures adopted to contain the spread, namely small and medium-sized ­enterprises and households.

In Austria, these favorable interest rate ­conditions for TLTROs III helped commercial banks keep their retail lending rates at low ­levels in 2020, amid heightened uncertainty and more expensive market financing (chart 2). Retail interest rates banks charge for new loans to nonfinancial corporations in Austria were among the lowest in the euro area throughout 2020. At 1.4%, the annual average was just slightly above the historically low level of 1.3% measured at the start of 2020.

Furthermore, the borrowing allowance, which limits the TLTRO III lending of commercial banks, was raised gradually. For the four operations conducted from March 2020
to December 2020, the borrowing allowance was 50% of eligible loans (as outstanding on ­February 28, 2019). This metric was raised to 55% for the four operations scheduled between March 2021 and December 2021. This entails a comparatively higher share of TLTRO funding for banks that specialize in consumer and corporate lending and whose share of such loans in total assets is high relatively speaking. All ten TLTROs III for which banks were or will be able to bid at quarterly intervals between ­September 2019 and December 2021 come with an unchanged maturity of three years. Thus, the central bank funding provided in the tenth operation scheduled for December 2021 will be available until December 2024.

Targeted longer-term refinancing operations (TLTROs III)

Loans against collateral with a maturity of three years that banks can take out from Eurosystem central banks. The applicable interest rate depends on the amount of onward lending by banks.

To lend special support to banks in the period between the two TLTROs III conducted in March and June 2020, the Eurosystem offered additional longer-term refinancing operations at weekly intervals, given that financing conditions in financial markets were particularly tight. The interest rate for these LTRO bridge operations was the same as the average interest rate for the deposit facility. These operations matured with the allotment of the fourth ­TLTRO III on June 24, 2020.

To provide an effective backstop against ­liquidity shortages, the ECB moreover launched, in May 2020, a new series of pandemic emergency longer-term refinancing operations (PELTROs). All in all, the ECB offers 11 PELTROs with maturities between 8 and 16 months. Like all other operations, PELTROs are carried out as fixed rate tenders with full allotment. The interest rate applied to PELTROs is 25 basis points ­below the interest rate on the main refinancing operations prevailing over the life of the respective PELTRO. These conditions are not subject to any constraints.

All Eurosystem tender operations are ­conducted by the national central banks of the euro area countries. Thus, Austrian commercial banks, as a rule, turn to the OeNB to obtain central bank liquidity. Demand for central bank liquidity was relatively stable in Austria in ­recent years but increased substantially from June 2020, when the TLTRO III conditions were adjusted. In the June TLTRO III alone, the bids submitted by Austrian banks totaled almost EUR 54 billion, which is the largest amount ever allotted by the OeNB in a tender operation. Until end-2020, TLTRO III lending rose to EUR 67 billion (chart 3).

To enable commercial banks to make full use of the Eurosystem’s refinancing operations in general and TLTROs III and PELTROs in particular, the ECB eased the criteria for eligible collateral temporarily, presumably until June 2022. These measures include, among other things, adjustments to the country-specific frameworks for additional credit claims (ACCs), which makes it easier to use credit claims as collateral. Thus, the OeNB decided to temporarily accept loans guaranteed by two special purpose banks that administer public loans and subsidies to Austrian firms (Austria Wirtschaftsservice GmbH − aws) and to the tourism industry in particular (Österrei­chische Hotel- und Tourismusbank GmbH − ÖHT). In addition, the OeNB temporarily lowered the threshold for using domestic credit claims as collateral, from EUR 25,000 to EUR 5,000. This made it possible to also use loans to small businesses as collateral. Furthermore, the valuation haircuts for collateral were cut by a fixed factor of 20%, which raised the collateral value of assets. Finally, the ECB adopted measures to temporarily mitigate the effect of pandemic-­induced rating downgrades on counterparties’ availability of collateral. Specifically, the Governing Council decided to grandfather the ­eligibility of marketable assets and the issuers of such assets that fulfilled minimum credit ­quality requirements on April 7, 2020, in the event of a deterioration in credit ratings. This ensured that any rating downgrades after April would not necessarily have an impact on collateral ­eligibility.

Pandemic emergency longer-term refinancing operations (PELTROs)

Loans against collateral with maturities between 8 and 16 months that banks can take out from Eurosystem central banks. The applicable interest rate is 25 basis points below the average interest rate applied to the Eurosystem’s main refinancing operations prevailing over the life of the respective PELTRO.

In addition, the Governing Council of the ECB left the key policy rates for the euro area unchanged throughout 2020. The interest rate on the main refinancing operations was left at 0.00%, the interest rate for the marginal lending facility at 0.25%, and the interest rate for the deposit facility at –0.50%. Accordingly, the €STR, the euro short-term rate calculated and published by the ECB since October 2019, fluctuated within a narrow range from –0.53% to –0.56%. The €STR reflects the average cost of unsecured overnight borrowing, as reported daily by around 50 euro area banks.

Through its forward guidance, the Governing Council continued to communicate its intention to keep the ECB’s policy rates at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection ­horizon, and until such convergence has been consistently reflected in underlying inflation dynamics.

As in previous years, the scope of action taken by the Eurosystem was not limited to the euro area but also extended to international ­cooperation. For instance, the ECB participated in a coordinated action with the Bank of Canada, the Bank of England, the Bank of Japan, the US Federal Reserve System and the Swiss National Bank, which was aimed at enhancing the provision of US dollar liquidity through the standing swap line arrangements. The frequency of operations was stepped up temporarily, and the interest rate premiums were decreased.

Moreover, the ECB established bilateral swap lines and opened repo lines with several other non-euro area central banks, both within and outside the EU. These swap and repo lines ­enabled the central banks of Albania, Bulgaria, Croatia, Denmark, Hungary, North Macedonia, Romania, San Marino and Serbia to provide euro liquidity to their domestic financial ­institutions. Last but not least, 2020 saw the creation of a new backstop facility, called the Eurosystem repo facility for central banks ­(EUREP). Providing precautionary euro repo lines to central banks outside the euro area against adequate collateral, EUREP addresses possible euro liquidity needs in case the COVID-19 shock causes market dysfunction. EUREP and the aforementioned swap arrangements and repo lines will presumably remain in place until March 2022.

Monetary policy strategy review

Committed to the principles of good governance, the Eurosystem seeks to critically review its monetary policy framework at regular intervals. This way, it makes sure its policymaking remains aligned with the scientific state of the art as well as with changing economic conditions. The current monetary policy strategy was defined in 1998 and some of its key elements were clarified in 2003. In 2020, the Eurosystem therefore launched a broad-based review of its monetary policy strategy, planning to involve, next to the experts of the national central banks, also interest groups and civil society organizations. The review is expected to be concluded in the second half of 2021.

In this exercise, the Eurosystem has been focusing on its quantitative definition of price stability, and also on the approaches and instruments it may use to achieve price stability. Reviewing economic and monetary analysis and communication practices is an important part as well. The Eurosystem is also factoring in how other considerations, such as financial stability, employment and environmental sustainability, can be relevant to the pursuit of the ECB’s mandate. Ultimately, the Governing Council of the ECB is taking stock of how the monetary policy strategy has helped fulfill the ECB’s mandate under the Treaty over the years to decide whether any elements of the strategy need to be adjusted. To this end, the review has been based on thorough analysis and open minds, with the Eurosystem central banks engaging with all stakeholders.

The OeNB reached out to stakeholders in Austria to hear their take on monetary policy strategy and its review on October 30, 2020 (“ The OeNB listens ”). During this event, the OeNB entered into a dialogue with a wide spectrum of stakeholders. They ranged from representatives of workers’ and employers’ organizations and research institutions to a host of groups representing the interests of the young and the elderly, families, teachers, the finance industry as well as trade associations and environmental groups. Between them, these organizations represent a fair share of the general public in Austria, and of the working population in particular. Interested parties had a chance to watch a live stream of the discussion and ask questions. The input thus collected adds important perspectives to the ongoing monetary policy strategy review.

This listening event was a first for the OeNB, but more events along these lines will follow, as the OeNB is prepared to keep listening. For a central bank, it is of utmost relevance to learn about the concerns of the general public and about people’s hopes and expectations. Monetary policymakers have a vested interest in knowing how monetary policy measures are perceived by the public, how such action affects people’s lives, and what people expect from monetary policy going forward.

COVID-19 pandemic sends Austria into deep recession in 2020

Strict lockdown of spring 2020 causes the Austrian economy to nosedive

The COVID-19 pandemic and the containment measures adopted to keep the virus from spreading resulted in a contraction of Austria’s GDP from March 2020 that is without precedent in more recent economic history. Unlike in earlier recessions, the economy was affected through both supply and demand channels. The extreme proportions of the downturn in the second quarter and the ensuing rapid recovery in the third quarter become particularly evident when we compare the quarterly growth rates of 2020 with those of 2009, when the economy hit bottom during the global financial and economic crisis (chart 4). The OeNB’s newly developed weekly GDP indicator, which draws on almost real-time data (box 2), was ­instrumental in keeping a closer tab on economic developments during the spring lockdown and the ensuing recovery in spring and summer.

Economy affected less severely by second lockdown in late fall 2020

In October, Austria recorded a spike in new coronavirus infections. When even stricter containment measures failed to stem the spreading of the virus, by November, Austria once more went into lockdown. The second lockdown again caused economic activity to shrink, but to a much lesser extent than in spring (box 2). In 2020 as a whole, the impact on annual GDP growth remained limited, but it will be more pronounced in 2021.

The weekly OeNB GDP indicator helps assess economic developments in real time 1

The COVID-19 pandemic has presented economic researchers with new challenges as they need to estimate, in a timely fashion, the size of the economic slump, the subsequent gradual recovery and post-pandemic developments. Typically, economic indicators become available only with substantial time lags and tend to be published on a monthly or quarterly basis. To overcome this problem, the OeNB compiled a new set of economic indicators relying on data that are collected on a daily or weekly basis, which means they are available almost in real time. The indicators capture data on truck mileage (provided by Austria’s highway authority ASFINAG), payments (provided by several payment service providers), the labor market (provided by the Public Employment Service Austria), electricity consumption (provided by E-Control and Austrian Power Grid), mobility (provided by Google and Apple) and the financial market. The enterprises mentioned proved very cooperative in making these data available. On the basis of these real-time economic data, we calculate a new indicator for economic activity in Austria that reflects developments in real GDP on a weekly basis. 2

According to the weekly OeNB GDP indicator3 , economic activity in Austria slumped by around one-quarter in the second half of March 2020. By the last week of March 2020, it had dropped to a level that was 27% below the comparable 2019 figure. The abrupt setback was driven at roughly equal rates by domestic demand and exports. Private consumption expenditure had contracted markedly, which was striking given that this GDP component is normally rather insensitive to the business cycle. Yet, the first lockdown in Austria had impacted private consumption disproportionately strongly.

The sudden recession in the second half of March 2020 was followed by a slight recovery in April that was carried by all demand components except tourism exports. But at end-April, Austria’s output gap (weekly year-on-­year GDP decline) still amounted to a substantial –18%. Significant signs of recovery were not recorded before the first full week of May, when the year-on-year output gap of –11% was less than half the size recorded at the peak of the spring lockdown. Once accommodation establishments and borders reopened, the recovery continued steadily. In early summer, Austria’s output gap came to no more than –5%. It did not improve notably over the summer, however. The gradual recovery in individual sections of the economy, such as tourism or construction, was canceled out by dwindling pent-up demand, in consumption in particular, and ongoing challenges faced by a range of service providers. In the first half of September 2020, Austria’s output gap reached its lowest level, hovering around –3%.

The measures taken to contain the second wave of COVID-19 infections further amplified the differences in sectoral developments. The partial lockdown that started in Austria on November 3, 2020, and the second lockdown that was in force from November 17, 2020, caused another downturn in the services sector, which hit tourism, the recreation industry and retail trade in particular. In contrast, goods exports and export-oriented industries as well as construction continued to recover even after the new containment measures had entered into force. During the first week of Austria’s second lockdown, economic output was down 8½% on the year; at end-November 2020, the output gap had widened to up to –13%. Still, the output gap was only half the size recorded in spring. The less severe outcome was mainly attributable to the fact that disruptions in global value chains were significantly less pronounced during Austria’s second lockdown than they had been in spring 2020. Also, in addition to lessons learned, there were no disruptions in the production sector.

After the second lockdown (November 17 to December 6, 2020), Austria entered into a three-week partial lockdown during which retail trade reopened while accommodation establishments and restaurants remained closed. During these three weeks, the output gap narrowed to –6.6.% year on year, again matching the values recorded during the first partial lockdown in the first half of November 2020. On December 26, 2020, lockdown measures in Austria were tightened again. Schools, universities, retail shops and close contact service providers were shut down again and social distancing rules were tightened. The lockdown measures did not apply to the production of goods and the construction sector, however. Given this situation, the output gap widened again to just under –11% and remained at this level until early February 2021. The containment measures continued to have a very mixed impact on the individual sectors of the economy. The almost complete loss in tourism exports, for example, remained unchanged, and recreation and cultural services were faced with major drops in sales. Retail trade also felt another blow, with shops having to close again right after Christmas. Domestic exports of goods and services excluding tourism, by contrast, continued to post figures that were above the previous year’s levels, thus signaling that industrial production was intact – a trend that even strengthened toward the end of January 2021. Performance in the construction sector likewise exceeded the overall economic average.

During the first lockdown in spring 2020, GDP losses, in terms of the difference to 2019 GDP levels, came to as much as EUR 2 billion per calendar week. During the second and third lockdowns in the fall and after Christmas, they amounted to around EUR 1 billion per week. From March 16, 2020, to February 7, 2021, GDP losses in Austria totaled EUR 33.1 billion. When we consider the 1¼% pre-pandemic growth forecast for the Austrian economy for the year 2020, aggregate GDP losses increase to EUR 37.6 billion or 9.4% of 2019 GDP.

External trade: setback triggered by first lockdown made up in second half of 2020

In the spring, extensive border closures had led to supply-chain disruptions, which severely hampered exports. In the second half of 2020, in contrast, goods exports kept rebounding broadly despite Austria’s second lockdown. From the middle of the fourth quarter, they even surpassed 2019 levels, according to OeNB estimates. Overall, goods and services exports were burdened above all by travel exports, ­initially as a result of travel warnings and then owing to the total shutdown of the hospitality industry in Austria. Given that tourism in ­general, and winter tourism in particular, is highly relevant to the Austrian economy, the OeNB pays great attention to monitoring and analyzing the relevant developments in a timely manner (box 3). New current account analyses will be made available by the OeNB in mid-2021.

Austrian tourism strongly affected by COVID-19 pandemic

Tourism is among the economic sectors that have been hit hardest by the COVID-19 pandemic. In Austria, the tourism industry contributes as much as 7.3% to economic value added – an above-average share by inter­national standards. Drawing on real-time data from several payment card providers, the OeNB started in the summer of 2020 to observe trends in domestic tourism. As we keep track of Austrian and foreign tourists’ ­expenditure on a weekly basis this way, we are able to estimate trends in tourism about one month before official figures on overnight stays are published by Statistics Austria. 3 Austrian tourism developed largely in sync with the overall economy until the late summer of 2020 (see box 2). As a result of the first lockdown imposed in March 2020, card payments by Austrian residents in accommodation establishments came to a complete and abrupt stop, and so did foreign tourists’ card payments in both accommodation establishments and restaurants (chart 6). Once accommodation establishments had reopened at end-May 2020, Austrian tourists’ card payments ­increased sharply, reaching – and later on even surpassing – 2019 levels. Expenditure by foreign tourists in Austria went up only gradually, by contrast, and remained around 20% below 2019 levels throughout the summer of 2020. 4 Yet, even during the summer months, the rise in domestic tourists’ expenses in Austria failed to compensate for the decline in spending by foreign tourists; moreover, in pre-crisis times, foreign tourists’ expenses in Austria clearly exceeded domestic tourists’ spending abroad.

From mid-September 2020, sales by Austrian accommodation establishments declined again. This downturn resulted from rising numbers of new COVID-19 infections both in Austria and its neighboring countries, to which major countries of origin, above all Germany, responded by increasingly issuing travel warnings for Austria. The fall holidays interrupted the downtrend only briefly. The nation-wide shutdown of accommodation establishments and restaurants from November 3, 2020, caused tourist expenditure in Austria to drop to almost zero again. Still, figures were slightly better during Austria’s second lockdown than during the first one in spring 2020, as business travel continued to be allowed now. Given that the Austrian government decided to keep accommodation establishments closed until after the Christmas holidays, we anticipate a 95% drop (year on year) in the number of overnight stays in November and December 2020. For the full year 2020, we expect that the total loss of the winter preseason, including the week around Christmas, will translate into a 36% year-on-year shortfall in the number of overnight stays in Austria. In January 2021, the situation remained unchanged. And the overall situation for Austrian tourism is not likely to change as long as accommodation establishments and restaurants remain closed by public order, namely at least until the beginning of March 2021, and the main countries of origin still have travel warnings for Austria in place.

One payment card provider’s data are broken down by countries of origin, which allows us to analyze foreign tourists’ expenditure along these lines (chart 7). Our analysis confirms Germany’s role as a key country of origin for Austrian tourism. In 2019 in Austria, every second foreign tourist, in terms of overnight stays, came from Germany, and German tourists booked four out of ten of the total overnight stays that were booked in Austria. Given the shift to noncash payments, German tourists’ payment card expenditure in Austria went up in the ­summer of 2020 against 2019, although the number of overnight stays by German tourists remained constant year on year. When German tourists stayed away from early October 2020, this caused the second slump in Austrian tourism in the reporting year.

Short-time work support cushions surge in domestic unemployment

Austria’s labor market did not remain unscathed by the sharp economic downturn in the spring of 2020. Within a mere 2½ weeks, the number of individuals registered as unemployed jumped by more than 200,000. Like in 2009, the ­deployment of short-time work schemes was instrumental in keeping unemployment numbers from rising further; in the second quarter of 2020, an average 882,000 individuals were ­registered for short-time work support. Factoring in the average reduction of working time, we arrive at a contraction of work volumes by 394,000 full-time equivalents. This number may also serve as a benchmark for the number of jobs saved through short-time work schemes. Thus, amid the spring lockdown, up to 547,000 individuals lost their jobs or, in the absence of short-time work schemes, would have lost their jobs. Over the summer, both the incidence of unemployment and the take-up of short-time work went down visibly. The renewed lockdown in late fall led to a resurgence of unemployment and short-time work, but to a much lesser extent than during the spring lockdown. All in all, in 2020, the number of payroll employees shrank by more than 80,000 year on year to 3.7 million individuals. The number of unemployed people averaged out at 410,000 in 2020, up from 301,000 a year earlier. Thus, Austria’s unemployment rate (national definition) increased from 7.4% in 2019 to 9.9% in 2020. 5

Domestic inflation exceeds euro area inflation also in 2020

Crude oil prices halved in 2020 amid the massive global economic downturn observed in the spring. In the first half of the year, inflation pressures thus eased in Austria. HICP inflation dropped from more than 2% in January and February to 0.6% in May, with the sharp decline having been cushioned by both supply restrictions and price rigidities, however.

Price rigidity

Also known as price stickiness or sticky prices; refers to the resistance of market prices to change quickly.

By July 2020, HICP inflation was back up at 1.8%, three times the level registered in May. Inflation measures observed in 2020 are subject to a heightened degree of uncertainty, however, because the lockdowns affected the collection of prices, especially in the services industry. The government-mandated shutdowns, over several weeks in a row, of the ­hospitality industry and of close contact ­services, such as hairdressing salons, triggered a shift in consumption patterns and also caused issues for price collection. In such instances, national ­statistical offices were advised by Eurostat to carry forward the last observed prices. In ­November 2020 for example, the carry-forward method had to be applied, according to Eurostat, to 18% of the products contained in Austria’s HICP goods basket. Thus, the official inflation rates shown in 2020 for the hospitality industry and recreational and cultural services, which signal sharp price increases despite a ­major setback in sales, need to be interpreted with caution.

By November 2020, HICP inflation had declined to 1.1%. Weak demand and the unfavorable climate for consumption had a moderating impact on inflation in the second half of the year above all for nonenergy industrial goods. Core inflation, which excludes energy and food prices, dropped as well, from 2.7% in July 2020 to 1.8% in November 2020, reflecting weakening growth rates for nonenergy industrial goods and services.

HICP inflation for 2020 as a whole totaled 1.4%, with core inflation amounting to 2.0%. As a result, Austria’s inflation differential to the euro area average widened substantially in 2020, to 1.1 percentage points, reflecting above all diverging price levels in the hospitality ­industry, the most visible economic victim of COVID-19.

Mixed response of Austria’s residential housing market to COVID-19 pandemic

The COVID-19 pandemic has also been affecting residential property prices in Austria. Prices accelerated throughout the first three quarters of 2020, with residential property prices exceeding 2019 prices by 9.5% in the third quarter. Above-average growth rates were recorded especially for single-family homes, which confirmed assumptions that ­increased working from home has raised ­demand for living outside big cities and/or in houses with a garden. For the third quarter of 2020, the OeNB fundamentals indicator for residential property prices implied an upward deviation of prices from fundamentals by 17% across Austria, and by 24% for prices in Vienna.

The COVID-19 pandemic also had direct repercussions for residential housing construction, including a temporary suspension of ­construction activity during the spring lockdown. The annual growth rate of investment in residential construction dropped by 5.5% in the first half of 2020. In other words, the ­pandemic situation accelerated the bottoming of the current residential construction investment cycle in Austria, which had started to flatten two years ago. The outlier was Vienna, where the number of housing completions ­observed in 2020 is estimated to have been ­almost twice as high as the combined average of the period from 2015 to 2018. 2021 may see building project delays because building permit issuance has been ­subject to lockdown delays.

Measures to ease economic crisis sharply drive up budget deficit

Following a budget surplus in 2019, we witnessed a massive deterioration of Austria’s ­budget balance in 2020, and a strong increase of the gross debt ratio. The main reasons were twofold: automatic stabilizers kicked in as the economy collapsed, and the federal government adopted a large-scale discretionary spending program with a view to keeping the economic repercussions of the pandemic in check. Compared with these two factors, additional health care spending (e.g. on tests and equipment) remained limited.

The measures with the highest impact on the budget balance (short-time work subsidies, fixed cost grants, lockdown compensation for lost turnover) are of a temporary nature. By contrast, there is only a limited number of comparatively smaller measures that will continue to affect the budget permanently (lower income tax rates) or for multiple years (investment ­incentives for the private sector). Moreover, some of the GDP lost in 2020 will presumably be offset by higher growth rates in the years ahead. Therefore, even without any consolidation, the budget deficit has been projected to improve again noticeably until the mid-2020s. Last but not least, two other factors should ­contribute to keeping consolidation needs at visibly lower levels after the pandemic-related recession than after the Great Recession in 2008 and 2009: the better fiscal starting point and the sharp downward trend with regard to public interest rate expenditure.

Fiscal measures taken in Austria to ease the economic impact of the COVID-19 pandemic 6

Targeted fiscal policy measures must accompany the Eurosystem’s accommodative monetary policy to effectively counteract the impact the COVID-19 pandemic has been having on the economy. When the COVID-19 crisis unfolded in spring 2020 and when the second lockdown was imposed in Austria in November and December 2020, the measures taken had two objectives: to ensure the proper functioning of the health care system and to ­support businesses and households. Moreover, as was the case with monetary policy measures, particular ­attention was given to strengthening the liquidity ­position of businesses. The set of fiscal policy measures adopted included granting tax deferrals, reducing ­advance tax payments, introducing a fixed cost grant, compensating for (part of) lost turnover, extending public guarantees for bank loans and offering payment moratoria. The short-time work scheme prevented layoffs and ­enabled enterprises to keep their employees on the payroll, and the hardship fund kept micro-enterprises and single proprietorships in business. Compensating businesses and households for income losses caused by the containment measures helped save production ­capacities that might have otherwise been lost permanently.

The fiscal policy measures taken in Austria since the summer of 2020 had two objectives as well. First and foremost, conventional economic stimuli, such as income tax cuts, VAT cuts for certain sectors as well as one-off payments of unemployment and child-care benefits, were intended to jump-start the economy after the lockdown. These measures were meant to stimulate consumer demand, in particular of households faced with liquidity constraints. Second, a number of initiatives were taken to promote private and public sector investment. Measures to support private investment comprise e.g. the loss carryover for 2020, accelerated depreciation and investment subsidies. Ideally, such ­fiscal stimuli are tied to long-term objectives – in Austria, these are primarily digitalization and climate protection. By enabling the shift to new, as well as environmentally friendly, technologies and new ways of working, measures tied to long-term goals can contribute to raising an economy’s long-term growth potential and thus its resilience.

It will be necessary, however, to carefully devise an exit strategy for the time when these emergency ­economic support measures will no longer be needed. After all, measures preserving the production potential may reduce incentives to adjust to changing business conditions and can thus lead to a loss in the long-term growth potential. At the same time, particular care must be taken not to restrict businesses’ investment and employment opportunities by a premature pullback of support measures. This might create a situation in which businesses would e.g. be forced to make major debt or tax repayments when they are not yet ready.

In light of the deep recession, the OeNB developed a new model for forecasting sectoral ­insolvency rates for Austrian firms. 7 As at end-December 2020, the data generated with the new tool show a marked increase of the ­insolvency ratios of Austrian firms, from 1.0% in the years from 2017 to 2019 to 1.3% (2020), 2.9% (2021) and 1.5% (2022). Were it not for the support measures that the government ­adopted (fixed cost grants, short-time work schemes, loan moratoria and forbearance, ­deferrals of taxes and social security contributions), these ratios would stand at 3.9% (2020), 3.0% (2021) and 1.3% (2022). The insolvency ratio simulations feed into an analysis of how the pandemic-related recession impacted ­Austrian banks (box 6).

CESEE economies also weaken visibly amid COVID-19 pandemic

Following several years of dynamic growth with average annual growth rates of about 4% and above, the economies of the EU member states in Central, Eastern and Southeastern ­Europe (CESEE 8 ) started cooling down somewhat in late 2019. Once the novel coronavirus was spreading across the world in spring 2020, economic activity ground to a halt also in ­CESEE: Output growth in the region shrank by more than 5% on average, with some countries reporting even sharper setbacks. Thus, 2020 will go down in history as the year of the sharpest economic downturn in CESEE since the transition period of the early 1990s.

And yet, the recession was somewhat less severe in the CESEE EU member states than in the euro area. In spring 2020, the CESEE EU countries outperformed most Western European countries in keeping infection rates low. They began easing their lockdown restrictions in May, and the summer months witnessed a broad-based and robust recovery of economic activity. The second wave of the pandemic, however, hit CESEE particularly hard. The ­resurgence of new infections since September 2020 and the sometimes severe tightening of containment measures dealt another blow to the region’s economy in the fourth quarter of 2020.

Monetary policymakers in the CESEE EU economies took swift and comprehensive ­action in response to the new economic conditions. While the Eurosystem’s monetary policy decisions enhanced monetary accommodation in those CESEE economies that are part of the euro area, most non-euro area countries in the region lowered their national policy rates. For instance, the Czech central bank cut its key policy rate in three steps from 2.25% to 0.25%, the Polish central bank in three steps from 1.5% to 0.1%, the Hungarian central bank in two steps from 0.9% to 0.6% and the Romanian central bank in three steps from 2.5% to 1.5%.

The central banks of some CESEE countries, including Croatia, Hungary, Poland and Romania, started to buy bonds issued by their respective governments. To provide the banking sector with sufficient liquidity, some ­national central banks in the area also adjusted minimum reserve requirements for banks and conducted longer-term refinancing operations. Furthermore, the adequate provision of liquidity was supported through the establishment of liquidity lines between the ECB and the central banks of Bulgaria, Croatia, Hungary and ­Romania. 9 A number of countries also implemented loan repayment moratoria and eased macroprudential regulations for the banking sector, for instance with regard to the size and planned adjustment of anticyclical capital ­buffers (e.g. in Bulgaria, Czechia, Lithuania and Slovakia) or with regard to the collateral framework and debt-servicing capacity rules for ­borrowers (e.g. in Slovenia). Last but not least, Croatia’s central bank intervened in the foreign exchange markets to counter downward pressures on the Croatian kuna.

The Western Balkans receive coordinated financial aid from international institutions 10

Fast and coordinated support from the EU and international institutions such as the IMF or the World Bank were crucial in helping the Western Balkans close pandemic-related funding gaps. As a sign of its strong solidarity, the EU reaffirmed its support for the European perspective of the Western Balkans and mobilized financial support amid the COVID-19 crisis with the Zagreb Declaration of May 2020. 11 The European Union herewith meets its special responsibility in assisting the Western Balkans. The European Commission announced that it would ­provide over EUR 3.3 billion jointly with the European Investment Bank (EIB) for the benefit of the health sector and for social and economic recovery in the Western Balkans. This includes EUR 750 million of EU macrofinancial assistance. 12

IMF funding and EU macrofinancial assistance (MFA)

Given the urgency of the situation, the European Commission for the first time proposed to provide MFA even to countries that do not have a full-fledged IMF program in place. Unconditional emergency funding under the IMF’s Rapid Financing Instrument (RFI) was considered sufficient for countries to qualify for MFA.

The IMF had earmarked about USD 40 billion as RFI funding to IMF member countries in March 2020, and temporarily raised the annual access limit from 50% to 100% of the respective quota (and from 100% to 150% of quota on a cumulative basis) until April 2021. With the exception of Serbia, all Western Balkan countries have applied for RFI assistance.

The crisis MFA program on which the EU agreed in view of the pandemic is shorter in duration than usual and demands only limited reforms to be recorded in memoranda of understanding. The loans with a maximum average duration of 15 years are made available for 12 months and disbursed in only two installments. The amount of granted MFA funds is based on a preliminary estimate of each partner’s residual external financing needs.

The CESEE countries also adopted comprehensive fiscal stimulus packages to support economic activity. Measures to cushion the worst economic effects of the COVID-19 pandemic include lockdown compensation payments for firms, subsidies for wage and social security payments, higher minimum wages, short-time work schemes as well as tax deferrals and ­public guarantees. Across the region, the size of ­fiscal stimulus varied depending on individual conditions and the available fiscal room for ­maneuver, but above all in the Central European countries, the amount of fiscal stimulus provided was comparable with Austrian levels. Beyond the above measures, the CESEE EU member states also benefited from the EU’s crisis ­response programs.

EU support in response to the pandemic

The EU and its member states have taken broad action to minimize the economic fallout of the COVID-19 pandemic. In April 2020, the EU implemented its Coronavirus Response Investment Initiative (CRII). This first package ­provided an upfront cash injection of EUR 8 billion, which could accelerate up to EUR 37 billion of public investment across the EU. EU member states were also granted maximum flexibility in applying EU spending rules and access to the EU Solidarity Fund. At a Special European Council in July 2020, EU leaders agreed on a comprehensive recovery package for Europe with an overall budget of EUR 1,824 billion for the period from 2021 to 2027, combining the multiannual financial framework (MFF) for this period (EUR 1,074 ­billion) with an extraordinary recovery effort called NextGenerationEU. For the NextGenerationEU instrument, the EU has set aside EUR 750 billion: EUR 390 billion in the form of grants and EUR 360 billion in the form of loans. The centerpiece of the instrument is the Recovery and ­Resilience Facility (RRF) with a scope of EUR 672 billion in loans and grants, which will be available from 2021 onward. On top of that, three additional safety nets totaling EUR 540 billion have been provided by three EU institutions: EUR 100 billion by the European Commission for temporary support to mitigate ­unemployment risks in an emergency (SURE) to help EU citizens; EUR 240 billion by the ­European Investment Bank (EIB) to help businesses; and EUR 200 billion by the European Stability Mechanism (ESM) to help EU member states. The combined funds available under the EU’s recovery plan and the additional safety nets thus total EUR 2,364 billion.

Work had been ongoing since late 2019 on a reform of the ESM, with a view to strengthening its role in the euro area. The ESM will act as a common backstop to the Single Resolution Fund (SRF) by means of a credit line and will replace the ESM Direct Recapitalisation Instrument for banks. The corresponding treaty agreements were signed on January 27, 2020, thus launching ratification procedures in all EU member states. The credit line will be available as of the beginning of 2022.

The UK leaves the EU with a deal

On January 31, 2020, the United Kingdom ­officially left the EU, with the Bank of England leaving the European System of Central Banks (ESCB) at the same time. The ECB kept its ­subscribed capital unchanged at EUR 10.8 billion after the Bank of England’s withdrawal from the ESCB. Based on an updated capital key, the Bank of England’s 14.3% share in the ECB’s subscribed capital was redistributed among the other 27 national central banks of the ESCB. In this process, the OeNB’s share increased to 2.3804% on February 1, 2020 (from 2.0325%). December 31, 2020, marked the end of the Brexit transition period, i.e. the UK’s departure from the EU’s Single Market and the customs union. By the end of 2020, the future relationship between the EU and the UK had been agreed successfully. Essentially, the agreement reached is a free trade agreement setting out arrangements in areas such as trade in goods and services between the EU and the UK. Apart from that, continued cooperation has been agreed in areas of mutual interest.

Bulgaria and Croatia join ERM II

With effect from July 13, 2020, the Bulgarian lev and the Croatian kuna have been part of the European exchange rate mechanism II (ERM II). The central rate of the Bulgarian lev was set at EUR 1 = BGN 1.95583 (the Bulgarian lev’s long-standing fixed exchange rate), and the central rate of the Croatian kuna was set at EUR 1 = HRK 7.53450 (the Croatian kuna’s market rate at the time). In parallel, the Governing Council of the ECB adopted an agreement on July 10, 2020, on close cooperation between the ECB and the Bulgarian and Croatian central banks in the context of the Single Supervisory Mechanism (SSM) (see section ­ Supervisory processes within the SSM and in Austria well aligned ). ERM II participation ­represents an important milestone in Bulgaria’s and Croatia’s efforts to join the euro area. To qualify for euro adoption, Bulgaria and Croatia must participate in ERM II without severe ­tensions for at least two years and achieve ­sustainable convergence with regard to other economic and legal criteria. Fulfillment of the convergence criteria is examined in the regular convergence reports prepared by the European Commission and the ECB.

Austria provides important funding for the IMF

February 7, 2020, marked the completion of the IMF’s 15th general review of quotas and its quota formula review. In the absence of sufficient consensus among IMF member states, IMF quotas were not increased and the quota formula was left unchanged. Thus, the total IMF quotas, which are denominated in Special Drawing Rights (SDRs), continue to stand at about SDR 477 billion, and Austria’s quota continues to stand at SDR 3.932 billion. The 16th general ­review, including a quota formula review, is to be completed no later than December 15, 2023.

Furthermore, the IMF’s Executive Board approved a doubling of the volume of its New Arrangements to Borrow (NAB) on January 16, 2020, for a new NAB period from January 1, 2021, to December 31, 2025. The NAB are a crisis tool that enables the IMF to top up its regular funding with additional resources from the strongest economies among its member states. Following ratification by all NAB-­participating countries, this reform took effect on January 1, 2021, as scheduled. The 38 NAB participants contribute an aggregate amount of SDR 361 billion to the IMF’s resource envelope. Austria participated in the NAB reform, and the OeNB has been authorized to grant the IMF a NAB credit line of up to SDR 3.63698 billion based on a legal act published on ­December 22, 2020, in Austria’s Federal Law Gazette Part I No. 137/2020.

On March 31, 2020, the IMF’s Executive Board also adopted a framework for a new round of bilateral borrowing. The 2020 Bilateral Borrowing Agreements have an initial term of three years through end-2023 and may be ­extended for one further year. Austria’s new ­bilateral loan agreement, effective from January 1, 2021, was initially concluded to amount to EUR 6.13 billion, as did the predecessor agreement. However, as the doubling of Austria’s NAB contribution became effective on the same day, Austria was entitled to a reduction under the roll-back clause reducing Austria’s bilateral borrowing agreement to EUR 2.641 billion.

With the doubling of its NAB amount and the conclusion of a new bilateral loan agreement, Austria has been making a substantial contribution to securing the effectiveness of the global financial safety net, with the IMF as its center, in particular in view of increased global funding requirements amid the COVID-19 pandemic.

The IMF’s annual Article IV consultations with Austria were held from February 24 to March 3, 2020. The 2020 round also completed the 2019 Article IV consultations, which had started in May 2019, but had not been concluded due to a government change in Austria. The preliminary findings of the 2020 Article IV consultations were presented at a press conference on March 3, 2020, together with the ­results of Austria’s Financial Sector Assessment Program (FSAP).

IMF member countries are represented at the IMF’s Executive Board meetings in constituencies. Austria is a member of the Central and Eastern European constituency, and the First Alternate Executive Director of this constituency, a permanent function, is Austrian. For the period from November 1, 2020, to October 31, 2022, the Hungarian representative holds the office of Executive Director of this constituency.

0 For technical details, see Fenz, G. and H. Stix. 2021. Monitoring the economy in real time with the weekly OeNB GDP indicator: background, experience and outlook . In: Monetary Policy & the Economy Q4/20-Q1/21. OeNB. 17–40.

1 We estimate demand-side GDP components by using bridge equations, i.e. forecasting equations that link up variables based on mixed frequencies.

2 The weekly OeNB GDP indicator is published regularly on the OeNB’s website as an interactive chart.

3 For a detailed analysis, see Fenz, G., H. Stix and K. Vondra. 2021. Austrian tourism sector badly hit by COVID-19 pandemic . In: ­Monetary Policy & the Economy Q4/20-Q1/21. OeNB. 41–63.

4 Because of the COVID-19 pandemic, people started using noncash payment options more frequently, which is why payment card ­expenditure data tend to overestimate total tourism expenditure in 2020.

5 According to Eurostat’s definition, the domestic unemployment rate rose to 5.3% in 2020 (2019: 4.5%). Eurostat’s definition does not capture the full increase in unemployment.

6 For a detailed analysis, see Prammer, D. 2021. Unprecedented fiscal (re)actions to ease the impact of the COVID-19 pandemic in Austria. In: ­Monetary Policy & the Economy Q4/20-Q1/21. OeNB. 153–173.

7 Puhr, C. and M. Schneider. 2021. Have mitigating measures helped prevent insolvencies in Austria amid the COVID-19 pandemic? In: ­Monetary Policy & the Economy Q4/20-Q1/21. OeNB. 77–110.

8 Bulgaria, Czechia, Estonia, Croatia, Latvia, Lithuania, Hungary, Poland, Romania, Slovenia and Slovakia.

9 Bulgaria and Croatia: euro-denominated swap agreements; Hungary and Romania: euro-denominated repurchase agreements.

10 World Bank. 2020. An Uncertain Recovery . Western Balkans regular economic report No. 18. Fall 2020, Figure 5.1.; OeNB. 2020: The impact of the COVID-19 crisis on financial stability in Austria – a first assessment . In: Financial Stability Report 39. 39–64.

11 European Council, press release , May 6, 2020.

12 European Commission, press release , April 29, 2020.

Reserve management amid the COVID-19 pandemic

The OeNB maintains a well-diversified reserve portfolio

The OeNB’s investment activities are subject to comprehensive risk management procedures and controls. Above all, these activities are aimed at maintaining a high degree of liquidity and security to ensure the ready availability of funds for coordinated intervention in financial markets whenever action should be required. Reserve asset allocation is characterized by a broad degree of diversification (chart 11). Apart from gold reserves, the OeNB’s investment portfolio is well diversified across currencies, regions and financial instruments (above all debt securities, but equity securities as well). The OeNB’s funds are typically invested in convertible currencies of countries with excellent credit ratings, in bonds issued by governments, agencies and supranational institutions and in covered bonds. Other assets such as ­corporate bonds and stocks have been included in the OeNB’s portfolio with a view to improving its risk-to-return ratio. In recent years, this ­investment strategy has been a key pillar of ­stability supporting the fulfillment of the OeNB’s tasks within the ESCB.

Financial markets fueled by monetary and fiscal policy support measures

Financial market developments in 2020 heavily reflected the repercussions of the COVID-19 pandemic and the support measures public ­authorities and central banks adopted to cushion its economic impact. Toward the end of the first quarter of 2020, the spreading of COVID-19 in Europe was leading to major market distortions across the globe. At the time, the US stock exchange index Standard & Poor’s (S&P) 500, for instance, plunged by more 30% within a couple of weeks, a decline last seen in 2008. Subsequently, however, markets reversed strongly, propped up by policy rate cuts, the large asset purchase programs of major central banks and cross-border liquidity support provided by central banks, i.a. through swap and repurchase arrangements. These unprecedented monetary policy measures, in combination with public support packages of equally historic proportions, caused yields and risk ­premiums to decline sharply.

The yield decline was particularly pronounced for US bonds: The yields of ten-year US Treasury bonds dropped by about 1 percentage point to 0.9% in 2020. Mirroring generally lower interest rate levels in Europe, yield declines were somewhat more moderate in Europe: Yields dropped by about 0.4 percentage points to –0.57% for ten-year German sovereign bonds and by 0.45 percentage points to –0.43% for Austrian sovereign bonds. The sharp setback of yields on government bonds reflected the strong expansion of this asset class (chart 12).

In the fourth quarter of 2020, markets were boosted by news of COVID-19 vaccine progress, enabling major stock markets to end 2020 with a profit. The S&P 500 rebounded especially strongly, as some major US firms in particular were reaping the benefits of the economic transformation prompted by the various lockdown periods (with businesses and consumers embracing high-tech solutions and online orders booming). At +16.0%, Japan’s leading index Nikkei 225 performed nearly as strongly as the S&P 500 (+16.3%). Stock market performance in Europe, meanwhile, was clearly weaker. While the EURO STOXX 50 declined by 5.1%, Austria’s leading stock market index, the ATX, even lost 12.8% in 2020.

The pandemic also shook up commodity prices. While crude oil prices receded by close to 13% on account of weak demand in 2020, the price of gold soared by more than 24% given heightened insecurity and falling interest rates.

The euro appreciated strongly in 2020. As monetary union continued to deepen, boosted by NextGenerationEU funds, the euro gained close to 9% against the US dollar during the year. As the center of the pandemic moved from Europe to the United States during the summer of 2020, the euro’s exchange rate against the US dollar increased to a rate of EUR 1 = USD 1.18 in late July, compared with EUR 1 = USD 1.08 in mid-May. The weakening of the US dollar also reflects the Fed’s particularly accommodative monetary policy stance. The Fed cut its policy rates by 1.5 percentage points and launched large liquidity-providing programs, causing the yield advantage of US dollar-denominated assets over euro-denominated assets to shrink visibly. For the pound sterling, 2020 was characterized by the uncertainty about a post-Brexit trade deal between the UK and the EU. The agreement reached ­toward year-end did little to reverse the pound sterling’s slide, which ultimately totaled about 5.5% against the euro in 2020.

Currencies with a greater sensitivity to economic and commodity price fluctuations, such as the Norwegian krone and the Australian dollar, came under heavy devaluation pressure given market distortions toward the end of the first quarter of 2020, but were able to reverse most of the losses against the euro until year-end. In this climate, some emerging market currencies (including the Turkish lira, the Russian ruble and the Brazilian real) traded particularly weakly, as reflected by a more than 13% drop of J.P. Morgan’s Emerging Market Currency index against the euro.

OeNB reserve management marked by risk-reducing measures

The OeNB’s investment strategy in 2020 was characterized by adjustments in view of financial market developments and a range of risk-reducing measures. First and foremost, the OeNB increased the share of safe-haven currencies, to account for more than half of the OeNB’s foreign currency assets. In particular, the OeNB has been investing in assets denominated in US dollars and Japanese yen. Moreover, the OeNB adjusted the allocation of its managed portfolios in 2020, temporarily reducing the share of cyclical assets such as stocks. The assets of the managed portfolios are generally considered to be riskier assets than the OeNB’s other assets. The contracts for managed portfolios are tendered among external asset managers in a multi-tier bidding process.

Managed portfolio

Managed portfolios are investment portfolios that are managed by external asset managers. These asset managers invest the assets entrusted to them in line with the investment goals defined by their clients.

The challenges created by the pandemic and the protracted period of low interest rates have, yet again, highlighted the relevance of a balanced allocation of the OeNB’s reserve assets and proper portfolio diversification. Above all, gold as a crisis currency has once more proved its worth. The assets invested in euro-denominated sovereign bonds, which account for some 15% of the OeNB’s entire investment portfolio, ­generated a performance gain of about 1% in 2020. In contrast, the OeNB’s debt securities portfolio, which contains both euro- and ­foreign currency-denominated assets, incurred a performance loss of about 1.75%, because the foreign currency portfolio was hit by the appreciation of the euro. The OeNB’s externally managed portfolios also exhibited a performance loss in 2020, which offset the performance gains achieved in previous years somewhat. Yet, these fluctuations were more than compensated by the strong performance gain (about 14%) of the OeNB’s gold reserves (chart 13), which account for slightly more than one-third of reserve assets. Thus, yet again, gold has shown itself to be an anchor of stability under the OeNB’s crisis ­prevention and crisis management strategy.

Beyond profit: in pursuit of social ­responsibility in investing

For many years, explicit sustainability criteria have informed the OeNB’s risk management decisions. Reflecting international standards, the OeNB initially defined exclusion criteria to prevent reputation risks. Since 2011, external asset managers making investments for the OeNB must have signed the UN-supported Principles for Responsible Investment. These principles address environmental, social and corporate governance (ESG) issues as well as responsible disclosure rules and ownership ­policies and practices.

With the widespread adoption of ESG ­criteria, the options for investing sustainably in international financial markets have broadened in recent years. Thus, the OeNB has been awarding portfolio management contracts ­containing ESG criteria and/or ESG benchmarks for selected asset classes since 2018, to ensure compliance with sustainable environmental standards, a responsible consideration of social aspects and good corporate governance in investment decisions. The OeNB’s internal portfolio managers have also been giving increasing preference to ­financial instruments that meet these quality standards. The application of ESG criteria will be developed further in the light of experience and in accordance with accepted procedures.

Environmental, social and ­corporate governance (ESG)

More and more financial and nonfinancial firms around the world believe that management decisions should give due consideration to environmental, social and corporate governance (ESG) issues. An increasing number of rating agencies and investors (such as the signatories of the UN-supported Principles for Responsible Investment) have come to include ESG criteria into their approach to securities analyses.

The OeNB contributes to maintaining financial stability

Increased bank resilience has been key in COVID-19 response

Solid capitalization enables banks to be ­effective financial intermediaries

The spreading of the coronavirus in the first quarter of 2020 put an end to the hitherto ­benign macrofinancial conditions in Austria and CESEE 13 by creating heightened uncertainty in the real economy and in financial markets, in particular in March 2020. To cushion the economic impact of the pandemic, the authorities put in place a broad range of support measures, including economic and supervisory measures (see box 7 and section Supervisory and regulatory response to COVID-19 includes temporary easing of requirements and adjustment of procedures and processes ). The role of banks was crucial in this context; after all, they continued to supply the real economy with loans and ­liquidity. Liquidity needs increased sharply as sales slumped when new infections resurged in the fall of 2020, fueling uncertainty about the trajectory of the pandemic and triggering the rollout of again more stringent containment measures.

Steadfastly fulfilling its intermediary function, the Austrian banking sector remained ­resilient even under the difficult conditions prevailing in 2020. The annual growth rate of lending to domestic nonfinancial corporations rose by 5.8% until September 2020, i.e. at a visibly faster pace than in early 2020. In the second and third quarters, 11% of new loans to nonfinancial corporations were backed by public guarantees. The take-up of public guarantees was strongest in the sectors most exposed to the COVID-19 containment measures and by firms with weaker credit ratings. With regard to loans to households, growth of mortgage lending remained strong, but growth of consumer loans slumped.

Public loan guarantees

To help nonfinancial corporations meet short-term liquidity needs generated by the COVID-19 pandemic, Austria’s government stands ready to back working capital loans with guarantees (up to 100%). These public loan guarantees were implemented by COFAG, the Austrian COVID-19 funding agency, and three special purpose banks, namely Austria Wirtschaftsservice (aws), Österreichische Hotel- und Tourismusbank (ÖHT) and Oester­reichische Kontrollbank (OeKB).

Unlike during the global financial and ­economic crisis of 2008 and 2009, banks have been a part of the solution in the current situation, given that they have significantly improved their risk resilience. Austrian banks have solid capital and liquidity buffers. Their common equity tier 1 (CET1) ratio amounted to 15.6% at the end of September 2020, unchanged from September 2019. 14 Compared with the level of bank capitalization before the financial crisis of 2008, the Austrian banking sector has since more than doubled its equity ratio in line with tightened regulatory requirements. Moreover, the loss absorption capacity of capital has ­improved as well. The increased intake of ­deposits from nonbanks and ample liquidity provided by the ECB, which also substituted for interbank funding, added to solid liquidity conditions in 2020. The supervisory liquidity coverage ratio rose to almost 170%, compared with pre-pandemic levels of below 150%.

The increased resilience of Austrian banks – boosted by prudential measures and, in ­particular, macroprudential capital buffers – has had a positive impact on banks’ lending ­capacity as well as on external ratings. In ­November 2020, for instance, the rating agency Moody’s listed the Austrian banking system among just 6 (out of 19) banking systems of ­European countries with a stable outlook. 15 Based on Standard & Poor’s latest Banking ­Industry Country Risk Assessment (BICRA) scores, Austrian banks rank among the world’s safest banks. On the BICRA scale, Austria is in group 2, with no country being in the top group. On its latest mission to Austria to ­conduct the Financial Sector Assessment ­Program (FSAP), which started in 2019 and was completed in early 2020, the IMF also found the Austrian financial sector to be ­resilient to shocks. 16

Uncertain, but challenging profit outlook for Austrian banks due to COVID-19 ­pandemic

As the number of corporate insolvencies in Austria is set to increase amid the pandemic ­despite the large-scale economic support measures, Austrian banks will also face a marked rise in the cost of credit risk. Banks have been making risk provisions accordingly, which visibly ­affected their net profit in the first three ­quarters of 2020. On a consolidated basis, they reported a net profit of EUR 2.5 billion for that period, which corresponds to a year-on-year decline of 51.8%. This decline was driven by a sharp rise in the cost of credit risk (by EUR 2.1 ­billion to EUR 2.3 billion). Austrian banks’ subsidiaries in CESEE reported an aggregated net profit after tax of EUR 1.6 billion for the first three quarters of 2020, down by one-­quarter compared with the same period of 2019. Even so, Austrian banks’ CESEE subsidiaries continued to be a key pillar of consolidated profits. The outlook for Austrian banks for 2021 is nonetheless characterized by challenging conditions, expectations of a rise in nonperforming loans (NPLs) and the need to maintain high risk ­provisions.

Chart 14 “Consolidated net profit of Austrian banks” is a column chart showing how the results of Austrian banks evolved from 2011 to 2019 and in the first three quarters of 2019 and 2020. The chart indicates low profitability in the years after the economic and financial crisis of 2008-2009, when profits remained below EUR 2 billion except for one year; 2013 even saw a EUR 1 billion loss. Thereafter, we observe significant profitability gains from 2015 (well above EUR 5 billion in some years) amid cyclical highs as well as a sharp decrease of the result for the first three quarters of 2020 due to a sharp rise in risk provisioning amid the COVID-19 pandemic. Source: OeNB.

The pandemic-related support measures (including loan moratoria) adopted in Austria were instrumental in preventing major loan ­defaults in 2020, which is why the NPL ratio remained at low levels (2.0% in September 2020). However, leading indicators of loan quality (for instance, IFRS indicators) have been signaling a deterioration. In general, the support measures have kept the real economy going and they have been benefiting the banking system, indirectly, through the prevention of loan defaults − while also making it more difficult to adequately assess the risk situation. In the longer term, the higher corporate leverage ratios resulting from pandemic-related measures negatively affect firms’ debt servicing capacity, and these effects will be more pronounced the later the economic recovery takes hold and the weaker it will be.

The volume of lending by Austrian banks to businesses in Austria totaled EUR 170 billion at the end of September 2020. The most vulnerable economic sectors of the COVID-19 pandemic (including the hospitality industry and the transportation business) account for some 9% thereof, both in Austria and in the loan portfolios of Austrian banks doing business in CESEE.

Loan moratorium

A loan moratorium provides for a change in the agreed payment plan, above all for a suspension, deferral or reduction of the installments for loan repayment, interest payments, or repayment rates including interest for a predefined period. All other terms and conditions of the loan contract, such as the agreed interest rate itself, remain unchanged.

The take-up of legislative and nonlegislative loan moratoria in Austria was rather high in the second quarter of 2020 but shrank in the second half of the year. The loan moratoria granted by Austrian banks until end-October 2020 totaled EUR 15.6 billion, or roughly 5% of all loans outstanding to households and nonfinancial corporations. Recourse to loan moratoria was highest among firms operating in the hospitality industry or providing health care and social ­services, and among firms offering other business services.

In view of rising credit risks (following the eventual lifting of public support measures) and heightened uncertainty, banks must be adequately capitalized. As recommended by the European Systemic Risk Board (ESRB) and the Single ­Supervisory Mechanism (SSM) (see section ­ Supervisory and regulatory response to COVID-19 includes temporary easing of requirements and adjustment of procedures and processes ), banks ought to refrain from or limit dividend payouts until September 30, 2021. Applying sustainable lending standards, especially in real estate lending, and complying with the quantitative guidance issued by the Financial Market Stability Board (FMSB) continue to be essential. 17 The pandemic also adds to existing challenges for the banking sector, such as the protracted period of low interest rates and the need to increase cost efficiency (in particular given pressure on interest margins). Cost efficiency continues to be relatively weak, as ­reflected by the cost-to-income ratio, which ­remains high at 68% (September 2020). At the same time, banks face the necessity to develop and implement strategies to deal with the ­challenges of new information technologies.

OeNB stress test confirms that Austrian banking sector remains resilient even subject to tighter coronavirus restrictions

To analyze the economic fallout of the COVID-19 pandemic on Austrian firms as well as the impact of public support programs, the OeNB developed a new corporate insolvency model. 18 The model shows that insolvency rates as aggregated across all sectors are rising visibly on average for the period from 2020 to 2023 compared with 2019. But the increase would be significantly higher in the absence of the public support measures (see section Support measures ease heightened insolvency risk of Austrian firms amid pandemic-related recession ).

To assess the impact of the pandemic on Austrian banks, the OeNB feeds both the modeled insolvency rates and information on support measures adopted in Austria and in other countries into its stress test. Different stress test scenarios serve to generate a range of “what if” assessments. They are one among several analytical tools used to arrive at an overall risk assessment for individual banks or the banking sector as a whole.

The analysis that the OeNB conducted in the third quarter of 2020 was based on two scenarios. The baseline scenario assumed that the pandemic would fade after the first lockdown in the spring of 2020, while the adverse scenario was built on a later and weaker economic recovery and conservative assumptions for other risks. In the adverse scenario, the capitalization of Austrian banks, as indicated by the common equity tier 1 (CET1) ratio, drops from 15.6% in early 2020 to 11.2% at end-2022. Given the underlying assumptions, this is a conservative assessment. Yet, at 11.2%, the capitalization ratio for the end of the forecasting horizon still exceeds the ratio that had been measured before the outbreak of the 2008 financial crisis, as banks have been strengthening capitalization in recent years. Apart from strong capitalization, banks have also been benefiting indirectly from public action taken to support the economy, because this has kept a lid on the size of loan defaults. Judging from the adverse scenario, even a worsening of the COVID-19 pandemic would not lead to major distortions of Austria’s banking sector.

Macroprudential measures strengthen Austria’s financial stability

Acting on the OeNB’s analyses, the Austrian Financial Market Stability Board (FMSB) ­renewed its recommendations on the systemic risk buffer (SyRB) and on the buffer for other systemically important institutions (O-SII) in June 2020. While the systemic risk buffer ­addresses the heightened vulnerability of Austria’s banking system to imbalances in the financial system, or parts thereof, stemming from financial interlinkages, the O-SII buffer addresses risks arising for the financial system and the real economy from the failure of a ­systemically important institution.

According to the EU’s revised Capital ­Requirements Directive (CRD V), the SyRB and the O-SII buffer will be additive once the new rules have been implemented at the ­national level, while until then the higher of the two ­applies. 19 The FMSB geared the recommendations it issued in June 2020 to the high uncertainty about the future path of the pandemic, which means that the overall buffer requirements were left broadly unchanged despite the ­upcoming change in the legal framework ­conditions. 20

Apart from the implementation of macroprudential capital buffers, measures to ensure sustainable standards for real estate financing remain crucial. The OeNB will therefore ­continue to monitor developments in the ­Austrian real estate markets as well as banks’ compliance with the standards of sustainable lending communicated by the FMSB. 21 2020 also saw the launch of a reporting framework for collecting data on residential housing loans, which will improve the monitoring of lending standards in this segment.

Compliance with supervisory guidance ­issued by the OeNB and the Austrian Financial Market Authority (FMA) – notably guidance on the reduction of foreign currency lending and guidance for large internationally active Austrian banks to strengthen the sustainability of their business models ( Sustainability Package ) – continues to contribute to lowering the vulnerability of the Austrian banking sector.

Five FAQs on macroprudential supervision in Austria

What is the goal of macroprudential supervision?

The ultimate objective of macroprudential supervision is preserving financial stability. Risks to financial stability emanate from systemic risks. Such risks may jeopardize the financial system as a whole or parts of it, which could have severe negative repercussions not only for the financial system but also the real economy.

What is the role of capital buffers?

Capital buffers are the key component of the macroprudential toolkit. The idea is for banks to build up capital buffers in “good times” (outside periods of stress) to ensure they can continue lending and absorb risks “in bad times.” In times of stress, banks can use, i.e. draw down, their capital buffers. Banks must hold these buffers in the form of common equity tier 1 (CET1). The buffers are placed on top of minimum capital requirements to enhance banks’ resilience against shocks.

What measures have been taken so far?

The Austrian banks that have been instructed to build up macroprudential capital buffers have so far set aside more than EUR 18 billion, or about 4% of their risk-weighted assets, in the form of CET1. The capital buffers that have been activated to date include the systemic risk buffer (SyRB), the buffer for other systemically ­important institutions (O-SII), the countercyclical capital buffer (CCyB) and the capital conservation buffer. The SyRB and the O-SII buffer are not additive at present, with banks ­having to meet the higher of the two.

What are the consequences of buffer usability?

Macroprudential buffers work like automatic stabilizers. When banks operate below their buffer ­requirements, banks face automatic restrictions on distributions, including dividends, bonus payments, and coupon payments on additional tier 1 (AT1) instruments. This helps reinforce the stability of the banking system. Since the ­outbreak of the COVID-19 pandemic, the Austrian Financial Market ­Authority (FMA) and the OeNB have been informing banks that they can use their buffers to maintain a steady supply of credit to the economy. ­Communicating this message proactively was meant to prevent potential stigma effects for banks.

What is the track record of macroprudential supervision so far?

Macroprudential supervision has been instrumental in strengthening the crisis resilience of the Austrian ­banking sector and in ensuring the supply of credit. Macroprudential capital buffers have played a ­decisive role in ­improving Austrian banks’ perception by investors, international financial institutions and rating agencies. ­Beyond the banking sector, the real economy has benefited from lower funding costs.

Box 7 Ending

Supervisory processes within the SSM and in Austria well aligned

Establishing the Single Supervisory Mechanism (SSM) in 2014 laid the groundwork for banking supervision on a pan-European scale and was instrumental in stabilizing the European banking sector after the latest financial crisis. Thanks to proactive supervision, much progress has been made in recent years in fostering a sound and resilient banking system in Europe. In a similar vein, it was important to Europe’s banking supervisors to protect the economy from risks arising from the COVID-19 pandemic and to support the financial system in serving the economy. To this end, SSM-wide supervisory practices and requirements have been adjusted in a number of ways. In Austria, the OeNB and the FMA continue to play a major role in supervising significant credit institutions, and, within the overall SSM context, they are directly ­responsible for less significant institutions.

Chart 15 “Cost of risk of significant institutions” is a line chart showing the changes in risk provisions made by significant institutions in Austria and other European countries supervised by the SSM in relation to credit volumes in the period from 2014 until the end of the third quarter of 2020. Following a gradual decline of the cost of risk in recent years, the COVID-19 pandemic and the related containment measures drove up the cost of risk substantially both for Austrian and other SSM-supervised banks. The third quarter of 2020 saw a decline in the cost of risk and hence a rise in bank profitability. Source: OeNB, ECB.

Amid the COVID-19 pandemic, banks ­today exhibit a visibly greater resilience to risks than during the financial crisis of 2008 and 2009, as they can build on high capital ratios and relatively good liquidity ratios. That this is the case is in no small part due to measures which the ECB has adopted, as they have enabled banks to build up sound liquidity buffers, increasingly in the form of central bank reserves. With regard to credit risk, we see that the cost of risk, which was on a steady decline in recent years, has been rising for significant institutions in Austria and those directly supervised by the SSM. The rising cost of risk has been the key driver of shrinking bank profits.

Banks continue to face economic pressures to keep developing their business models further.

Banking stock prices started 2020 already at historically low levels. Financial instruments were hit hardest by the sharp market downturn in March 2020 and have been slow to recover compared with other market segments. Low market prices compared with banks’ book values have made an accelerated consolidation within the banking sector more likely, as low market valuation increases the attractiveness of potential acquisitions − something we have observed in some European countries. To facilitate sustainable consolidation projects, the ECB published a new guide on the supervisory approach to ­consolidation in the banking sector. The aim of the guide is to provide a uniform and clear ­reference framework and to explain the current supervisory ­approach.

Upon joining the ­European exchange rate mechanism II in 2020, Bulgaria and Croatia also fully operationalized their close cooperation with the SSM. Consequently, the ECB took on direct supervision of five Bulgarian and eight Croatian significant institutions in October 2020, after having assessed the significance of the two countries’ banks.

Close cooperation

While the euro area countries are SSM-participating countries as a rule, other EU countries may seek to participate in the SSM under close cooperation agreements between the ECB and their national competent authorities. Once close cooperation has been established, the national competent authorities of these countries are full-fledged SSM members and may also join the Single Resolution Mechanism (SRM).

Supervisory and regulatory response to COVID-19 includes temporary easing of requirements and adjustment of procedures and processes

In response to the COVID-19 pandemic, numerous measures were also adopted in the area of banking supervision and regulation. The overarching aim of this action taken, inter alia, by the ECB, which oversees banking ­supervision from a European perspective in the SSM, the Single Resolution Board (SRB) and the European Banking Authority (EBA) is twofold: to increase banks’ capacity to lend to the real economy by providing temporary relief with regard to capital and ­liquidity requirements, and to show greater operational flexibility in the implementation of bank-specific super­visory measures.

Among other things, the ECB allowed banks to use their capital and liquidity buffers. It also lowered the standards for meeting the Pillar 2 capital requirement (P2R), by bringing forward a measure that was initially scheduled to come into effect in January 2021. Moreover, the EBA eased regulatory ­requirements for ­legislative and nonlegislative loan repayment moratoria, provided they meet specific constraints.

The key measures for providing operational relief for banks included a pragmatic approach to the supervisory review and evaluation ­process (SREP), the postponement of the EU-wide stress test, the reduction of recovery plan reporting to core elements and the easing of ­requirements for resolution planning. Moreover, nonessential data requests were either dropped or rescheduled, and the deadlines for other reports and disclosures were extended.

Supervisory review and ­evaluation process (SREP)

One of the key tasks of banking supervision is to ensure the sustained viability of credit institutions. To remain viable, banks need above all (1) an effective business model, (2) adequate risk management systems, (3) solid capitalization ratios and (4) comfortable liquidity positions and a stable funding base. They are the core elements that supervisors look at during the annual SREP reviews.

With a view to strengthening the resilience of the banking sector, the ECB, in March 2020, issued recommendations to significant institutions, and the FMA to Austria’s less significant institutions, not to pay out any dividends for the time being, to refrain from share buybacks aimed at remunerating shareholders and to be extremely moderate with regard to variable ­remuneration. This approach is in line with the recommendations provided by the European Systemic Risk Board (ESRB) and the EBA.

The ECB updated these recommendations in mid-December 2020, responding to the ­prevailing degree of elevated economic uncertainty. Banks were called on to continue ­refraining from, or limiting, dividend payouts or share buybacks aimed at remunerating ­shareholders. Moreover, the ECB and the FMA specified that, until September 30, 2021, any dividends and share buybacks should remain below 15% of the cumulated profit for the ­financial years 2019 and 2020, and should not be higher than 20 basis points of the CET1 ­ratio, whichever is lower.

Enhanced regulatory framework for banks

In addition to the temporary supervisory relief measures implemented for banks, the EU ­adopted a number of “quick fix” modifications to the Capital Requirements Regulation (CRR) to cushion the fallout from the COVID-19 ­pandemic. The changes include a privileged treatment of loans guaranteed by public institutions. Moreover, the application date of the revised SME supporting factor and of the new infrastructure supporting factor was brought forward. 22 In ­addition, the European Commission proposed a set of measures aimed at easing both corporate funding and recapitalization on capital markets and the securitization of nonperforming loans (NPLs) and SME loans. Anticipating a rise in NPLs in the aftermath of the COVID-19 pandemic, the European Commission also ­updated its action plan aimed at preventing a future buildup of NPLs. The Basel Committee on Banking Supervision, in turn, postponed the implementation of the outstanding part of the Basel III standards, published in December 2017, by one year. The revised implementation date is January 1, 2023, with corresponding EU legislation expected to follow suit. The EBA’s latest macroeconomic impact analysis concludes that the Basel III reforms will cause banks’ tier 1 capital requirements to rise by 18.5% (13.1% in the EU-specific scenario) ­until 2028, when the transition periods end. 23

Furthermore, the European Commission presented its new capital markets union (CMU) 2020 action plan. Based on the final report of a high-level forum on the CMU, this plan ­proposes 16 action points, including measures to make financing more accessible to SMEs and to facilitate the integration of national capital markets into a genuine single market.

As a key issue for the future, banking super­visors have been embracing the topic of sustainable or green finance, as evidenced by a number of activities at the global, European and national level. The OeNB, for instance, participates in the Network for Greening the Financial System. This network published climate scenarios in mid-2020, as a common reference point for central bank analyses on transition and physical risks. The OeNB also contributes to the EBA’s Sustainable Finance Network. In November 2020, this network published, for consultation, a discussion paper on the management and ­supervision of environmental, social and ­corporate governance (ESG) risks for credit institutions and investment firms. The feedback sought will inform the EBA’s final report, due in June 2021, which may feed into draft legislation to be proposed by the European Commission.

The ECB has also been taking action in the area of green finance. In late November 2020, it published a guide on climate-related and ­environmental risks for banks, which spells out supervisory expectations and will, from the first quarter of 2021, serve as the basis for the supervisory dialogue with banks on this matter.

An issue yet to be resolved at the European level is the completion of the European banking union through the establishment of a European deposit insurance scheme (EDIS). The purpose of EDIS is to secure cross-border protection of deposits. As proposed by the European Commission in 2015, the scheme would develop over time and in stages. By 2024, protection would be provided by a common deposit ­insurance fund (DIF) corresponding to 0.8% of deposits covered throughout the EU (some EUR 43 billion). The fund is to be financed through banks’ contributions, which would vary in line with banks’ individual risk profiles. Like the national deposit guarantee schemes that are in place, EDIS would provide for the protection of EUR 100,000 per customer per bank.

Negotiations on EDIS at the EU level have stalled so far for lack of a consensus on its ­design: Should the scheme cover only liquidity needs or losses as well? In other words, should EDIS operate on the basis of the mutualization of risk? Another issue yet to be resolved are ­additional risk reduction measures, e.g. changes in capital requirements for sovereign bonds.

In Austria, the number of deposit guarantee schemes was narrowed down to two with effect from January 1, 2019. With the exception of the savings bank (­Sparkassen) sector, which continues to run a dedicated ­system (Sparkassen-Haftungs GmbH), all other banks now contribute to a central deposit ­insurance scheme (Einlagensicherung Austria − ESA).

Deposit guarantee scheme

Deposit guarantee schemes guarantee that deposits will be paid out at all times, even if a bank is placed into insolvency or becomes illiquid. In a payout event, all deposits up to EUR 100,000 per customer and bank will be protected.

In 2020, malversations unearthed in the course of OeNB inspections at Commerzialbank Mattersburg led to the bank’s insolvency and to a deposit guarantee event. Proving its worth and stability, the Austrian guarantee scheme provided for the rapid payout of covered deposits in line with statutory requirements. In the ­aftermath of the event, the finance ministry ­installed a working group, to which FMA and OeNB staff contribute, with a view to developing concrete proposals for the way forward. The working group has been tasked to provide an overall assessment, draw conclusions and evaluate the potential for expanding the supervisory toolbox.

Prudential supervision of credit institutions is aimed at reinforcing the stability of the banking and financial system as a whole rather than the stability of individual banks. In other words, banking supervision is not designed to prevent individual banks’ market exit or ­insolvency. But it aims to reduce the likelihood of occurrence and to contain negative repercussions for the banking system. The legal framework for dealing with banks that are ­failing or likely to fail – the Bank Recovery and Resolution Directive (BRRD) – was adopted in 2014.

Essential in times of heightened ­uncertainty: monitoring, transparency and forward-looking analyses

Legislative and nonlegislative moratoria and guarantees have helped firms stay afloat during the COVID-19 pandemic. To get a handle on the effects of COVID-19-related measures, OeNB staff experts studied the data and intensified monitoring activities, in particular with regard to potential loan defaults, market risks, business processes, and capital and liquidity ­adequacy.

On-site inspections

To arrive at a comprehensive assessment of banks, supervisors complement off-site analysis with on-site analysis. In Austria, the OeNB is in charge of performing on-site inspections, acting on behalf of the ECB in the case of significant institutions – which have been subject to direct supervision by the ECB since the Single Supervisory Mechanism (SSM) became fully operational in November 2014. In the case of less significant institutions, which are indirectly supervised by the ECB under the SSM, the OeNB continues to act on behalf of the FMA. The findings gained from on-site inspections provide the starting point for official action taken by the ECB and the FMA.

The pandemic also temporarily changed the conditions for the OeNB’s on-site inspections of SSM-supervised institutions. In the case of significant institutions, inspections and internal model reviews have been limited to off-site ­inspections based on remote working solutions since mid-March 2020. In the case of less ­significant institutions supervised by the ­national competent authorities, the OeNB adjusted the usual procedures and processes on an ad hoc basis, depending on the importance of the ­inspection at hand and the prevalence of corona­virus infection rates. While remote analysis was the procedure of choice, a mix of procedures was used in 2020, ranging from fully physical inspection to fully remote inspection. The concomitant challenges notwithstanding, the OeNB managed to implement the bulk of its inspection program for 2020. The inspections focused on risk management processes and risk models and, of course, on COVID-19-­relevant issues. With regard to COVID-19, the focus was above all on reviewing the adequacy of risk alert systems, adequately mapping the current impact of the coronavirus on borrower credit assessments as well as on checking the adequate implementation of support measures, such as moratoria.

Bank recovery and resolution as key ­pillars of a common approach to bank resolution

Together with the implementation of macroprudential supervision, the framework created by the Bank Recovery and Resolution Directive provides important protection against the use of taxpayer money for bank bailouts. In the event of a crisis, an effective resolution regime will make sure to achieve a bank’s recovery or resolution with as little public aid as possible. From a financial stability perspective, the use of public funding for precautionary recapitalization must be the exception rather than the rule and must be preceded by a thorough ­review. As a rule, public aid will be warranted as a measure to safeguard the stability of the financial system or to enable the banking system to keep funding the economy.

Under the Single Resolution Mechanism (SRM), the Single Resolution Board (SRB) is in charge of planning and implementing, in a ­uniform manner, the resolution of significant institutions and other cross-border groups. Planning and implementing the resolution of Austrian banks which are not directly supervised by the SRB falls within the remit of Austria’s resolution authority, the FMA. The FMA, in turn, draws on the expertise of the OeNB. Here, the OeNB above all develops bank resolution plans and supports the FMA, as the resolution authority, with reviews and ­analyses if a bank is in default or about to ­default. In addition, the OeNB is consulted by the FMA on specific economic questions relating to ­financial stability, where the OeNB has a comparative knowledge advantage.

In 2020, the OeNB and the FMA agreed on a cooperative approach to banking crisis management. The manual documenting this approach contains a blueprint for dealing with a crisis event and defines the required procedures and processes. The joint manual serves to enhance interinstitutional cooperation and to foster the implementation of the SRM, launched in 2015, which continues to be put in place step by step.

OeNB and FMA jointly define super­visory priorities

Looking ahead to 2021, the OeNB and the FMA defined their common supervisory ­priorities, which broadly reflect the current ­supervisory priorities of the Single Supervisory Mechanism. The key objectives are to (1) strengthen banking resilience and financial ­stability further through adequate alert mechanisms and transparency in communication; (2) keep improving governance practices; (3) challenge and support banks in improving business model sustainability amid the accelerated digital transformation of work processes, as well as with regard to ensuring the implementation of adequate practices for dealing with cyber security risks; and (4) promote green and sustainable ­finance. On the last point, joining early efforts to develop a European strategy for sustainable finance supervision constituted an important contribution to establishing a methodological framework for analyzing the impact of climate risks and for starting to integrate this perspective into the supervisory agenda. This work is to be followed up with developing a climate stress test. Other supervisory priorities include the evaluation of lessons learned from managing the COVID-19 crisis with a view to adjusting standard operations accordingly, for ­instance by integrating decentralized and ­virtual work processes and expanding digital communication platforms for interacting with supervised institutions.

Addressing climate change: chances and risks for the Austrian financial sector

Two analyses published in the OeNB’s Financial Stability Report in November 2020 provide first insights into the challenges climate change and the transition to a low-carbon economy pose to Austrian banks and financial service providers.

The first of these studies discusses Austrian banks’ exposure to the risks brought about by climate change. 24 The authors find that, on the one hand, climate change may affect the value of financial assets and impair ­financial stability. On the other hand, a disorderly transition from an economy largely relying on fossil fuels to one relying on renewable energy sources may result in transition risks. Altogether, Austrian banks hold around 26%, or EUR 228 billion, of their financial assets in the six sectors that are most energy dependent and thus particularly sensitive to climate change. Transition risks could result from disruptive changes in climate policies, technological innovations or demand-side shocks. Austrian banks’ exposure to the sectors fossil fuels and utilities is relatively low; the lion’s share of their climate risk-sensitive assets is concentrated in the buildings sector. The results of the analysis are broken down by a number of bank characteristics, namely bank size, banking sector, banks’ geographical location and financial instruments used. Bonds deemed to be green by stock exchanges account for 2% of Austrian banks’ outstanding bonds. The authors did not identify any concentrations in specific segments of Austrian banks’ bond holdings. The Austrian banking sector’s direct exposure to climate risk-­sensitive sectors seems to be comparable to that seen in other countries. However, some banks are exposed to elevated climate-related transition risks. Thus, both banks and supervisors should monitor this risk closely.

The second study discusses the opportunities that sustainable, or green, financing is opening up for the ­Austrian financial sector. 25 It first identifies how much investment is needed at the global, European and Austrian level to fund the transition to a low-carbon economy. In Austria, annual investment needs will come to some EUR 17 billion between 2021 and 2030 according to the Austrian government’s National Energy and Climate Plan. Public funding alone will not suffice, however, to cope with the enormous challenge of transforming the economy. Therefore, private capital will have to be increasingly mobilized to finance sustainable projects and help green finance break out of its niche. In light of this, the development of Austria’s green finance market segments, although dynamic, is still rather sobering. The Austrian market for sustainable finance products is, indeed, underdeveloped by international standards and is dominated by mutual funds, most of which are owned by institutional investors. Depending on the definition of green finance, such holdings of sustainable financing instruments in Austria amount to EUR billion figures in the low double digits. This merely translates into a low single-digit percentage share in total financial wealth. And even this share may not necessarily reflect only ­climate-friendly investments as the commonly used umbrella term ESG (environmental, social and corporate governance) also covers social and corporate governance aspects apart from narrowly defined green finance. While surveys show that customers’ awareness of sustainable finance products is still low, reported customer preferences indicate that demand will continue to expand rapidly. Still, transparency will have to be increased to prevent the “greenwashing” of finance products, i.e. claims that they are environmentally sustainable while in fact this is not always the case. To prevent such practices, regulators and supervisors should help overcome ­market barriers and supply- and demand-side dysfunctionalities. To this end, they can take various measures, e.g. adopt common definitions for sustainable finance products, raise transparency, advance harmonization, offer certification, impose mandatory disclosure rules and the requirement to provide financial advice, and offer financial education. Noteworthy efforts in this respect are the European Commission’s action plan on ­sustainable finance , the ECB’s announcement of paying greater attention to climate issues and the Austrian government’s Green Finance Agenda. In the same vein, independent ecolabels and online information platforms help make sustainable finance products more transparent to customers. All in all, green finance can only complement, but not replace, legislative efforts to make the economy sustainable. Probably the most effective way to foster green finance would be to adequately price greenhouse gas emissions – an approach that would also be most in line with the polluter pays principle.

13 This section is based on a broad definition of Central, Eastern and Southeastern Europe (CESEE) that also includes Belarus, Russia and Ukraine.

14 To put the observation on risk resilience in perspective, it should be noted that the volume of risk-weighted assets has remained ­virtually unchanged as lending activity increased in an environment of heightened macrofinancial risks. Moreover, as has been pointed out, super­visory requirements have been eased temporarily.

15 The other five countries with a stable outlook were Czechia, Ireland, Poland, Sweden and Switzerland.

16 See OeNB. 2020. Annual Report 2019 . Box 6: Risk resilience of Austria’s banking industry confirmed by the IMF’s FSAP and by stress tests. 55.

17 The guidance spells out the FMSB’s expectations regarding sustainable lending standards for real estate financing (including minimum borrower downpayments, loan maturities and debt servicing).

18 Guth, M., C. Lipp, C. Puhr and M. Schneider, 2020. Modeling the COVID-19 effects on the Austrian economy and banking system. In: Financial Stability Report 40. OeNB. 63–86. Puhr, C. and M. Schneider. 2021. Have mitigating measures helped prevent ­insolvencies in Austria amid the COVID-19 pandemic? In: Monetary Policy & the Economy Q4/20-Q1/21. OeNB. 77–110.

19 Implementation at the national level is expected to be completed in the first half of 2021.

21 On the OeNB’s initiative, the FMSB quantified its understanding of sustainable lending in its meeting of September 21, 2018 .

22 A multiplication factor of 0.75 will be applied to the capital requirements for lending to entities operating or financing physical structures or facilities, systems and networks that provide or support essential public services. The funded assets must meet several conditions, e.g. they must contribute to environmental objectives.

23 The EU-specific scenario provides for additional features, such as the application of the SME supporting factor, exemptions for credit valuation adjustment, implementation of the change in prudential treatment of software assets and exercise of the jurisdictional discretion for ­calculating operational risk capital.

24 Battiston, S., M. Guth, I. Monasterolo, B. Neudorfer and W. Pointner. 2020. Austrian banks’ exposure to climate-related transition risk . In: Financial Stability Report 40. OeNB. 31–44.

25 Breitenfellner, A., S. Hasenhüttl, G. Lehmann and A. Tschulik. 2020. Green finance – opportunities for the Austrian financial ­sector . In: Financial Stability Report 40. OeNB. 45–61.

Reliable statistics provide guidance in periods of ­economic difficulty

The COVID-19 pandemic was the dominant factor in 2020 also in the field of statistics, with established methods and processes of economic statistics in particular being tested to ­maximum capacity and proving their full functionality. To ensure the continued and smooth collection of reliable data and evidence also during the ­pandemic, it was key for the OeNB to communicate well with reporting agents (mostly banks and nonfinancial corporations). Also, work on a number of current focus areas, in particular at the international level, was continued ­although conditions kept changing as the pandemic evolved.

The OeNB’s role within the ESCB’s ­strategy for statistics

In 2020, the OeNB helped support the creation of a harmonized and integrated European ­reporting framework by sharing with its European peers the strategic and practical experience it had gained in developing and implementing an integrated reporting framework that combines statistical, resolution and supervisory reporting at the national level. A feasibility study carried out by the European Banking ­­Authority (EBA) evaluated the creation of a common standard data dictionary, a joint ­committee and a central data warehouse. The first half of 2020 was devoted to collecting ­evidence and conducting research, while in the second half, an in-depth analysis and assessment of ­potential options began. The findings of this process will be presented in a comprehensive report. In a first step toward integration, the ESCB plans to harmonize the respective ­reporting requirements for banks under its ­Integrated Reporting Framework (IReF). Until April 2021, a cost-benefit analysis is being ­performed with the key players in data reporting, data processing and data usage. Its results will feed into an IReF reporting regulation to be published in 2021 or 2022. The first round of reporting based on this regulation can be ­expected as of 2024.

Data dictionary

A data dictionary is a repository of metadata describing the definitions, semantic meaning and structure of data. A data dictionary enhances data accessibility and usability.

Chaired by the OeNB, the ESCB working group on AnaCredit deals with issues related to the development and operation of the ­AnaCredit database, which facilitates the large-scale ­collection of granular credit data based on a core set of concepts and definitions harmonized across the euro area. In 2020, the AnaCredit working group focused in particular on making data accessible to authorized users from all fields of central banking and supervision.

The OeNB also participates in the expert network on consolidated banking data (CBD); in 2020, it contributed in particular to a feasibility study on centralized CBD calculation at the ECB and to a revision of the corresponding ECB guideline.

Consolidated banking data (CBD)

Aggregate data reported by consolidated banking groups and unconsolidated individual credit institutions while taking account of regulatory intragroup links.

At the beginning of 2020, the OeNB took over the chair, for the next two years, of the European Committee of Central Balance Sheet Data Offices (ECCBSO), a consultative body of ­central banks on issues regarding the balance sheet data of nonfinancial corporations. Work in 2020 focused not only on pandemic-­related analyses, but also on the data and methods ­required for measuring climate risks and on ­integrating balance sheet data with other data sources.

As a member of the coordination group of the Statistics Committee, the OeNB made ­major contributions to defining the ESCB’s ­statistics strategy for the next few years and was able, in particular, to share its experience in the vertical and horizontal integration of ­statistics and in data governance.

Moreover, the OeNB chairs the strategic ECB working group “From Micro to Macro and from Macro to Micro,” which in 2020 analyzed the connections between different data sources, identifying microdata as the crucial link between statistical and supervisory data. Further potential for the future use of microdata was also identified. The results produced by the working group provide fundamental guidance for the Statistics Committee’s further strategic considerations.

Fine-tuning of reporting requirements and reporting framework

To support credit institutions in minimizing the economic impact of the COVID-19 pandemic, the EBA eased regulatory requirements for moratoria on loan repayments and issued guidelines to this effect. In addition, many EU member states launched state guarantee programs for new lending. To be able to monitor the risks and volumes related to these measures, rapid action was necessary in harmonizing the ­reporting of corresponding data across Europe and adjusting the existing reporting framework accordingly (integrating statistical measures for credit institutions’ liquidity situation; reporting of risk positions, loan moratoria and guarantees).

Since the fall of 2020, reporting agents deemed statistically relevant have received electronic notifications to submit data for the OeNB’s annual surveys on FDI and affiliated companies abroad. This was the last process in the collection of data on external assets and ­liabilities that went digital.

The OeNB produces the Austrian balance of payments (BOP) and related statistics. The reporting framework for the external statistics ­required in this process has been revised with the aim of keeping the reporting burden at a minimum; compliance with the new ­framework will be mandatory as of the December 31, 2021, reporting date under the OeNB’s new BOP Reporting Regulation 1/2022. The OeNB thus implements new international requirements in the reporting of cross-border payment transactions, taking account of recent developments in payments.

In supervisory reporting, 2020 saw continued efforts toward implementing the EU banking package (CRR II, CRD V, BRRD II). Apart from implementing numerous amendments to the regulatory reporting framework, a cost-­benefit analysis was developed to identify ways to reduce the reporting burden under current EBA ­requirements in particular for small, noncomplex institutions.

In December 2020, the ECB amended its regulation on payment statistics; in the run-up to this amendment, the OeNB had shared its expertise in an ESCB task force while communicating closely with reporting agents to keep them up to date with the latest reporting ­requirements. Above all, reporting requirements were expanded to cover payment innovations and include the obligation to report fraudulent payment transactions. The new ­reporting framework supports the multi-use of data by integrating the requirements of both the ECB and the EBA within one reporting process.

In the beginning of 2021, a project was launched to develop the OeNB’s data reporting model further with a view to providing data in machine-readable format. Machine-readability will significantly improve data development, maintenance, analysis, accessibility (both for in-house users and banks) and data integration with other statistics systems in use at the OeNB.

Better and easier access to statistical data via myData

A series of new OeNB projects under the ­common heading “myData” aim to make it ­easier for both in-house and external users to access data that are available at the OeNB. To better support these goals, the organizational structure of the OeNB’s Statistics Department was ­adjusted from January 1, 2021. Basically, horizontal ­statistics functions were pooled in one division. This new organizational unit will, inter alia, be in charge of introducing a data governance framework at the OeNB. This framework will create the conditions necessary to make the available programs and databases more flexible and to help improve users’ understanding of data.

Data governance

Data governance is a concept in data management that comprises processes, roles, institutions, regulations and standards. Data are considered an economic commodity (asset) whose benefit for a given institution must be maximized. By implementing data governance measures, the use of data is to be enhanced to fully exploit their potential.

As part of the myData project, a preliminary examination was carried out to identify the ­requirements a modern data analytics platform must fulfill to be able to provide a safe environment for projects and collaboration in the fields of data science and advanced analytics. Another preliminary examination dealt with the collection of existing metadata with a view to generating a repository of metadata to further ­increase data usability. As part of its ongoing efforts to adjust the range of statistical data it makes available online to the current needs of data ­users, the OeNB published more, and more ­detailed, tables on loans and deposits, securities, reserve requirements and insurance statistics in 2020.

Credit assessment of nonfinancial ­corporations

The Common Credit Assessment System ­(CoCAS) was jointly developed by the ­Deutsche Bundesbank and the OeNB. It supports central banks’ in-house credit assessment systems (ICAS) by generating ratings of nonfinancial corporations from balance sheet data. One Eurosystem central bank signed a five-year contract to use CoCAS from 2021, while another Euro­system central bank left the CoCAS partnership ­because of a strategic decision at the ­national level to enhance the central bank’s own ICAS. Work on developing a statistical rating model for CoCAS based on less rigid ­assumptions – which would make the model more flexible and accessible – began in 2018 and was stepped up thereafter. In 2020, work on the new rating model was completed; 2021 will see the new model go into action. Another key issue in 2020 was the use of AnaCredit data in ICAS. By heading the ICAS Expert Group, the OeNB was able to help move the related initiatives ­forward.

Secure and efficient payments: the OeNB delivers on core competences also in times of crisis

Despite the use of payment innovations, cash continues to play a major role in Austria. Together with its subsidiary GELDSERVICE AUSTRIA (GSA), the OeNB introduced a total of 1.22 billion euro banknotes into the cash cycle in 2020, while 1.36 billion euro banknotes were returned from circulation. Recirculation of ­returned banknotes into the cash cycle is, as a rule, preceded by authentication and fitness checks. Moreover, the OeNB monitors compliance with the provisions on the processing and recirculation of cash by professional cash handlers other than the OeNB, thus contributing essentially to keeping cash security and the quality of cash in circulation in Austria at high levels.

Given its vast experience in cash logistics planning and cross-border cash transports, the OeNB has established itself as a cash supply hub in central Europe. This is also why the OeNB has become a key location for holding Euro­system Strategic Stock. Given Austrian banks’ activities in CESEE, significant amounts of euro cash are circulating in the region, being used both as means of payment and a store of value. In 2020, around 21% of all lodgments of euro banknotes with the OeNB and around 9% of total withdrawals of euro cash from the OeNB were managed via international bank­note wholesalers.

The role of cash during the COVID-19 pandemic

Cash was one of the issues that moved to the center of public attention during the COVID-19 pandemic. At the beginning of the first lockdown in Austria in March 2020, cash demand went up significantly, in particular demand for higher denominations (EUR 100 and EUR 200 banknotes). The reason for this uptrend was heightened ­uncertainty among the population, who wanted to make sure they had enough cash at hand.

By closely monitoring the situation, the OeNB and GELDSERVICE AUSTRIA (GSA) were able to swiftly react to the rising demand for cash. Continuous cash supply across Austria was ensured through the close cooperation with Austrian banks and cash-in-transit companies as well as organizational measures that guaranteed smooth operations; the latter included keeping longer opening hours at the OeNB’s wholesale customer counter, providing additional OeNB and GSA staff on standby duty during weekends, and having cash-in-transit companies running extra cash transports out of turn.

From mid-April 2020, cash demand in Austria subsided again. This was i.a. attributable to a decline in cash payments as private consumption slumped because retail shops remained closed during the lockdown. The gradual easing of containment measures resulted in another rise in cash demand, starting in July 2020 and continuing until Austria’s second lockdown in November 2020. Unlike the first lockdown, the November lockdown did not see a rise in cash demand though.

On average, in 2020, both banknote lodgments and banknote withdrawals in Austria declined sharply as a result of the COVID-19 pandemic, dropping by around 27% and around 28%, respectively, against 2019 figures.

One question that arose during the pandemic was whether viruses can be transmitted via banknotes and coins. People’s concerns about potential infection risks related to using cash were reflected in changes in payment behavior. With many supermarket operators inviting customers to opt for contactless payment, an increase in card payments was observable from March 2020. The limit for contactless payments without PIN was raised from EUR 25 to EUR 50, which also drove up noncash payments. Still, cash continues to be widely used in Austria.

A study commissioned by the ECB to establish whether viruses can be transmitted via cash showed that banknotes and coins do not pose any heightened risk of contagion.

As an operator of critical infrastructure, the OeNB has been able to fulfill its cash delivery commitments, both at the national and international levels, and to ensure nationwide cash supply at all times throughout the pandemic – even though containment measures required staff to work either in split teams or remotely from home.

Since the introduction of euro cash in 2002, both the volumes and value of euro cash in circulation have increased steadily – a trend that continued also in 2020 despite the COVID-19 pandemic (chart 16). The euro is becoming more and more important in particular as a store of value, both in the euro area and abroad.

A total of 26.47 billion euro banknotes were in circulation at end-2020, worth EUR 1,434.51 billion. This corresponds to a 10% rise in terms of volume and an 11% rise in terms of value. Both the number and value of euro coins in circulation went up as well, by 2.2% to 138.07 billion euro coins worth around EUR 30.41 billion (+1.4%). The total value of euro cash in circulation thus came to EUR 1,464.91 billion (up 10.7% against the comparable period of 2019).

With euro banknotes circulating across euro area countries and beyond, the actual ­circulation of euro banknotes in Austria can only be estimated. For a number of years, the OeNB has based its estimations on the amounts of banknotes actually lodged with the OeNB, considering the velocity of circulation, amounts processed by cash handlers other than the OeNB or the GSA as well as data reported by banknote wholesalers. According to these estimations, around 553.0 million euro banknotes worth EUR 31.1 ­billion 26 were in circulation in Austria at end-2020 (2019: 627.4 million bank­notes worth EUR 31.4 billion). This corresponds to a 12% decrease in volume and a 1% decrease in value against 2019 – a downtrend that can be ­attributed to the COVID-19 pandemic.

Chart 16 “Continuous rise in number of euro banknotes in circulation” is a line chart showing changes in the total number of euro banknotes in circulation from 2002 to 2020, broken down by denomination. Each of the 7 denominations (EUR 5 to EUR 500) is represented by a line. The vertical axis shows the number of euro banknotes in circulation (in billions), and the horizontal axis shows the years from 2002 to 2020. The most widely circulated denomination is the EUR 50 banknote. For 2009, 2012, 2015, 2019 and 2020, the following circulation figures (in billions) were recorded for the individual denominations (listed from the most to the least widely circulated denomination). EUR 50 banknote: 2009: 4.6; 2012: 5.8; 2015: 7.4; 2019: 11.2; 2020: 12.7 EUR 20 banknote: 2009: 2.4; 2012: 2.7; 2015: 3.0; 2019: 4.2; 2020: 4.5 EUR 100 banknote: 2009: 1.4; 2012: 1.6; 2015: 2.0; 2019: 3; 2020: 3.4 EUR 10 banknote: 2009: 1.9; 2012: 1.9; 2015: 2.1; 2019: 2.8; 2020: 2.8 EUR 5 banknote: 2009: 1.4; 2012: 1.5; 2015: 1.7; 2019: 2; 2020: 2.0 EUR 200 banknote: 2009: 0.2; 2012: 0.2; 2015: 0.2; 2019: 0.4; 2020: 0.7 EUR 500 banknote: 2009: 0.5; 2012: 0.6; 2015: 0.6; 2019: 0.4; 2020: 0.4 Source: OeNB, ECB.

Fewer incidences of counterfeiting in Austria

A total of 6,321 counterfeit euro banknotes were recovered from circulation in Austria in 2020 (2019: 7,977) (see chart 17). This decline also reflects the situation created by the COVID-19 pandemic. As a result of Austria’s lockdowns and the related limitations to ­consumer spending, fewer counterfeits were recovered in Austria in 2020 than in previous years. Counterfeits of the EUR 50 banknote topped the list (1,865 counterfeit banknotes ­recovered), followed by counterfeits of the EUR 20 banknote (1,796 counterfeits) and the EUR 10 banknote (1,388 counterfeits). ­Together, these three denominations account for 79.9% of all counterfeit euro banknotes recovered in Austria in the reporting year. The situation in Europe is very similar, with counterfeits of the EUR 50, EUR 20 and EUR 10 banknotes ­together accounting for around 83% of all counterfeits recovered.

Around 48% of counterfeits recovered from circulation in Austria belong to the “movie money” or “prop copy” category. These are simply fake prints without any security ­features that were initially produced for movie or theater productions and have the words “movie money” or “prop copy” printed on them.

Most incidences of counterfeit banknotes in Austria (around 26.4%) continued to be ­recorded in Vienna, followed by Styria (17.8%) and Upper Austria (12.2%). In 2020, the overall damage caused by euro counterfeits in Austria came to EUR 320,190 (2019: EUR 551,950.)

Compared with other euro area countries, Austria’s share in overall counterfeits continues to be relatively low at 1.4%. This means that most people still have only a minimal chance of coming across counterfeit banknotes in Austria.

Chart 17 is a column chart entitled “Number of counterfeit euro banknotes recovered from circulation in Austria continues to decline.” It shows the figures for the period from 2002 to 2020. The vertical axis shows the numbers of counterfeit euro banknotes recovered from circulation. The horizontal axis shows the years since 2002. In each year under observation, the following numbers of counterfeit euro banknotes were recovered from circulation in Austria: in 2002: 3,409; in 2003: 7,467; in 2004: 13,386; in 2005: 7,127; in 2006: 5,919; in 2007: 7,768; in 2008: 8,082; in 2009: 9,780; in 2010: 8,812; in 2011: 5,583; in 2012: 6,327; in 2013: 8,193; in 2014: 8,461; in 2015: 14,502; in 2016: 12,234; in 2017: 9,893; in 2018: 11,698; in 2019: 7,977; in 2020: 6,321. Source: OeNB.

New market structures for future-proof cashless payments

Teaming up with PSA Payment Services Austria GmbH, the OeNB laid the foundation, on ­September 30, 2020, for a new infrastructure for settling retail ­payments in Austria, with the PSA acting as a shared services platform to which the OeNB and its subsidiary GSA moved the operation of retail payment clearing ­services at the ­beginning of 2021. Apart from fulfilling its payment ­system oversight function, the OeNB will continue to act as a settlement agent to ­ensure the secure settlement of all transactions in central bank money.

Shared services platform

A shared services platform consolidates particular business operations to be performed by an organization in a centralized hub. This approach requires the standardization of processes and increases operational efficiency.

This forward-looking arrangement was ­coordinated with all Austrian banking groups and, as such, will be an ideal starting point for modernizing the settlement of retail payment transactions in Austria. As a key investment in future-proof cashless payments, the new infrastructure will support both real-time payment systems and other similar projects and initiatives in the fields of paytech and fintech.

Also, at the end of 2020, the OeNB established another subsidiary, OeNPAY Financial Innovation HUB GmbH (see section Subsidiaries support the OeNB in fulfilling its tasks ).

With digital payments becoming more and more popular and more and more frequent in the euro area, the Eurosystem decided to ­consider the possibility of a digital euro, publishing a comprehensive report on the subject on October 2, 2020 (box 11) .

The Eurosystem retail payments strategy

In recent years, substantial progress has been made in creating a secure, efficient and integrated European payments market. A major milestone in this context was the implementation of the Single Euro Payments Area (SEPA) infrastructure. In SEPA, all cross-border cashless payments are as fast, safe and cost-efficient as national payments.

But even 20 years after the introduction of the single currency, there is still no common European card payment scheme. At the moment, ten European countries still have only national card schemes in place that do not accept ­payment cards issued in other EU countries. Given this high fragmentation of the European market for point of sale (POS) and online payments, more than two-thirds of all card payment trans­actions in the EU at end-2016 were made with inter­national card payment schemes.

Under its newly revised 2019 retail payments strategy, the Eurosystem supports the development of pan-European, banking industry-led payment solutions under European governance to meet consumers’ rising need for secure, low-cost instant payments across Europe. Against this background, the ECB welcomes the European Payments Initiative (EPI), a network of currently 16 banks from five European countries aiming to create a pan-European payment solution based on the SEPA Instant Credit Transfer (SCT Inst) scheme.

Timeline for T2-T2S consolidation ­extended

The Eurosystem’s project to consolidate ­TARGET2 (T2) and TARGET2-Securities (T2S) ­comprises the following core elements: the introduction of a Central Liquidity Management ­component, the separation of retail payments from central bank operations and the euro area-wide ­migration to ISO 20022 standards. Given the challenges posed by the COVID-19 pandemic and the ­rescheduling of SWIFT’s ­migration to ISO 20022, the consolidated ­system is now scheduled to start operations in November 2022.

Subsidiaries support the OeNB in fulfilling its tasks

In performing its core tasks in cash production, cash provision and cashless payments, the OeNB is supported by the following companies: Münze Österreich Aktiengesellschaft (MÜNZE), the Oesterreichische Banknoten- und Sicherheitsdruck GmbH (OeBS) and GELDSERVICE AUSTRIA Logistik für Wertgestionierung und Transportkoordination G.m.b.H. (GSA). These subsidiaries carry out their tasks as separate business entities, setting great store by quality, security, sustainability and cost effectiveness.

Within European monetary union, MÜNZE is the official mint of the Republic of Austria. Its exclusive right to mint and issue coins in Austria is laid down in the provisions of the Coinage Act. In line with the prevailing legal provisions, MÜNZE meets the domestic ­demand for euro coins. In 2020, MÜNZE ­supplied the OeNB with a total of 134.1 million euro coins with a face value of EUR 43.0 million. Moreover, MÜNZE is internationally renowned for first-class precious metal processing and the production of innovative and durable precious metal investment products and collectors’ items. MÜNZE continually develops new and innovative product lines, e.g. collector coins and various coin series.

During the COVID-19 pandemic, demand for gold and silver intensified. In this crisis ­environment, MÜNZE was able to strengthen its global position as a reliable producer.

In its capacity as a Eurosystem technology partner, the OeBS focuses its R&D activities on technologies for the printing of security ­features and for banknote authentication sensors used in banknote-sorting machines. Within the Euro­system, the OeBS produces the share of annual euro banknote production volumes allocated to Austria on the basis of the OeNB’s share in the ECB’s capital key. In 2020, the OeBS produced 40 million EUR 50 banknotes and 134.58 million EUR 5 banknotes of the second, i.e. Europa, series. For the first time in 2020, the OeBS produced euro banknotes for the Belgian central bank within the framework of central bank ­cooperation. After the first wave of the ­pandemic in Austria, when all operations were suspended except for critical services, the OeBS stepped up efforts to compensate the lockdown-related reductions in output. Despite the challenging conditions created by the ­pandemic, however, the OeBS managed to keep up normal operations in line with legal ­requirements during most of the year.

Individual tasks defined in the Eurosystem’s R&D strategy have been assigned to specific ­national central banks. Since 2012, the OeBS has been entrusted by the ECB to perform banknote test prints for the Eurosystem and monitor patents to avoid unnecessary duplication in banknote prototype production.

The GSA, whose core tasks include cash ­logistics, was established as a limited liability company. Its majority owner was the OeNB, with the remaining shares primarily held by Austrian commercial banks. In November 2020, all other shareholders sold their GSA shares to the OeNB, which has since held 100% ownership in the GSA.

The GSA’s regional cash centers in Vienna, Graz, Linz, Salzburg, Klagenfurt, Innsbruck and Bregenz support the OeNB in its task of supplying euro cash all over Austria; in doing so, they contribute to maintaining the high quality of cash in circulation.

Since 2011, the GSA had been operating a clearing house for the settlement of national ­interbank payments, Clearing Service Austria (CS.A). On behalf of the OeNB, the GSA ­operated Clearing Service International (CS.I), which Austrian commercial banks may use to settle cross-border payments within SEPA. From 2021, PSA Payment Services Austria GmbH has taken over the operation of clearing services for retail payments from the OeNB and the GSA, acting as a shared services ­platform for Austrian banks.

At the end of 2020, the OeNB established another wholly owned subsidiary as a limited liability company, OeNPAY Financial Innovation HUB GmbH. OeNPAY was designed to act as a catalyst for the creation of secure, innovative and internationally competitive payment services in Austria and to offer efficient, targeted and market-neutral coordination services to domestic banks and financial services providers. Specifically, the services offered by OeNPAY range from providing specialist, technical and economic advice to support for innovative business models in the field of paytech.

The real estate investment group IG-­Immobilien-Gruppe serves to optimally ­manage the OeNB’s real estate investments. It is, inter alia, responsible for preserving and sustainably ­improving the value of OeNB real estate holdings and for optimizing current earnings on the individual properties. The premises management group BLM Betriebs-Liegenschafts-­Management GmbH is in charge, in particular, of the provision of premises required by the OeNB or its subsidiaries to carry out their ­business activities.

On their websites, the OeNB’s subsidiaries publish annual reports pursuant to the Federal Public Corporate Governance Code adopted by the federal government on October 30, 2012.

Table 11 provides a comprehensive list of the OeNB’s direct and indirect equity ­interests.

A cash access point can be reached in three minutes on average: access to cash in Austria’s rural areas is good

People mainly obtain cash from automated teller machines (ATMs) or at bank branches 27 . As cash continues to play a major role in Austria both for everyday payments and as a store of value, the accessibility of ATMs and bank branches and their spatial distribution matters. Providing people in Austria and the Austrian economy with cash is one of the OeNB’s core tasks, which it fulfills in cooperation with its subsidiaries.

From end-2005 to end-2019, the number of ATMs in Austria went up by 1,600, from around 7,400 to around 9,000. Over the same period, the number of bank branches went down by around 1,000, which means that the total number of cash access points (ATMs plus bank branches) increased by around 600.

To be able to assess the accessibility of cash access points and to identify areas of low accessibility, an OeNB study calculated the distances from people’s homes to the nearest cash access points in a high spatial resolution.

The main findings of this exercise are:

  • On average, the nearest cash access point for people living in Austria is 1.2 km from their homes. It can be reached, on average, within a walk or drive of just under three minutes.
  • In larger cities, the average distance to the nearest ATM or bank branch is around 0.5 km. In medium-sized towns of 5,000 to 10,000 inhabitants, it is 1.3 km. In towns and villages of 2,000 inhabitants or less, it is around 2 km.
  • Two-thirds of Austria’s population have a cash access point within less than 1 km, and for 97.3% of them, this distance is less than 5 km.
  • Even in towns and villages of less than 2,000 inhabitants, just above 9 out of 10 inhabitants can obtain cash within less than 5 km from their homes.

These findings show that in Austria, the average distance to the nearest ATM or bank branch is moderate, which means that people have good access to cash.

Figure 1 “Average distance to nearest ATM or bank branch” shows a map of Austria featuring color codes for the average distances to either the nearest ATM or the nearest bank branch for all populated 1 km times 1 km grid cells. Unpopulated grid cells (white) can primarily be found in Vorarlberg, Tyrol, Salzburg and western Styria. The inhabitants of most grid cells (color code: blue, light blue, green or orange) can reach the nearest ATM or bank branch within 5 km or even less. Darker grid cells indicate longer distances than that and can be found in all Austrian provinces, albeit more frequently in Carinthia, Lower Austria and eastern Styria. The underlying data were computed by averaging the results for 100 m times 100 m grid cells using population weights. Source: Statistics Austria, OeNB.

References

Stix, H. 2020a. A spatial analysis of access to ATMs in Austria . In: Monetary Policy & the Economy Q3/20. OeNB. 39–59.

Stix, H. 2020b. The Austrian bank branch network from 2000 to 2019 from a spatial perspective . In: Financial Stability Report 40. OeNB. 87–101.

Five FAQs on a digital euro

How do central banks see the future of digital money?

As more and more areas of the economy are going digital, efforts are ongoing at central banks around the world to explore the case for issuing central bank digital money for end-users. Given that access to digital payments varies greatly across the world, however, the answers have been mixed.

What is the Eurosystem doing about a digital euro?

With digital payments becoming more and more popular and more and more frequent across the euro area, the Eurosystem has been examining the issuance of a digital euro that consumers and businesses could use for retail payments as an additional payment method next to cash and bank transfers. As a result of these discussions, in October 2020 the ECB published a report drafted by the Eurosystem High-level Task Force on central bank digital currency (CBDC), to which the OeNB also contributed. The report examines the pros and cons of a digital euro for the euro area. In following up on the ­report and with a view to deciding whether to launch a digital euro investigation project, the Eurosystem has been analyzing functional design options and possible reasons for issuing a digital euro.

What would a digital euro that is accessible to the general public be good for?

A digital euro would be central bank money made available in digital form for use in retail payments, complementing cash and deposits. It would be a payment innovation that is as safe and accessible as cash. Moreover, a digital euro would strengthen Europe’s strategic autonomy in the field of digital ­means of payment and reduce the dependence on international providers of electronic payment services.

When will the digital euro arrive?

While the report currently sees no necessity to introduce a digital euro, it concludes that the Eurosystem should be prepared for future scenarios in which the introduction of a digital euro might be an advantage or even necessary. Such scenarios might e.g. involve a strong future decline in cash demand, a potential rise in the popularity of foreign digital means of payments in the euro area or the need to enhance the resilience of electronic payments (in case of blackouts, cyber attacks etc.). Discussing the policy issues and technical and organizational challenges that would be connected to the introduction of a digital euro, the report concludes that these challenges are manageable. However, to be sufficiently prepared to take the respective decisions, considerable time and effort would have to be spent on further analysis.

The findings obtained so far do not pre-empt any decisions and do not commit the Eurosystem to ­issue a digital euro. Quite in line with the OeNB’s attitude on the subject, the report also makes it clear that a digital euro would only be introduced as an additional means of payment and that it would not replace euro cash. At the end of 2020, a public consultation took place to collect evidence on people’s demand and potential requirements for a digital euro. Based on technical experiments and further analysis, criteria will be defined to support the Governing Council of the ECB in deciding, by mid-2021, whether to launch a specific digital euro investigation project that would run for several years.

What is the digital euro?

What would be the difference between a digital euro and euro cash or traditional euro deposits?

  • EUR 1 in cash: The central bank guarantees its value; the owner is responsible for storage and/or the handling of payments.
  • EUR 1 in a bank account: The commercial bank guarantees its value (cash withdrawal at face value is possible any time) and is in charge of storage and/or the handling of payments as instructed by ­end-users.
  • EUR 1 in digital currency: The central bank guarantees its value. Users and/or private sector ­providers of digital wallets (e.g. banks) are in charge of storage and/or the handling of payments as instructed by end-users.

    Adequate protection, both of customers’ privacy and against abuse of the law, can be ensured via technical and legal measures for all three variants.

References

ECB. 2020. Report on a digital euro .

Box 11 Ending

26 The estimated value of euro banknotes in circulation differs from the value of banknotes in circulation recognized in the balance sheet, which is calculated on the basis of the ECB’s capital key. In addition, the estimates also reflect national particularities in payment behavior.

27 Bank branches refer to staffed branches or head offices. See Stix (2020b) for details.

The OeNB – a sustainable enterprise

The OeNB – a resilient institution

The OeNB’s strategy for 2020 to 2025

The Oesterreichische Nationalbank (OeNB) acts on the basis of its legal mandate, as laid down in the Federal Act on the Oesterrei­chische Nationalbank 1984, and operates as an integral part of the Eurosystem. All activities the OeNB engages in ultimately serve to fulfill its statutory objectives: maintaining price stability and financial stability and ensuring the smooth functioning of cash and cashless payments. The OeNB works for Austria, the Austrian economy, the people living in Austria and the Eurosystem.

Under its new management, and following a redistribution of tasks and responsibilities among the executive directorates with effect of January 1, 2020, the OeNB successfully revised its strategy for 2020 to 2015 in the reporting year. The new strategy focuses on the following horizontal issues: (1) the OeNB’s role as a Eurosystem central bank and as a monetary and economic policymaking institution, (2) financial market strategy, financial stability and the consideration of environmental, social and corporate governance (ESG) criteria, (3) financial innovation, (4) financial education, (5) the OeNB as an enterprise; human resources and digital solutions, and (6) communication.

The OeNB’s strategy for 2020 to 2025 was developed in-house from September 2019 until the summer of 2020 under the responsibility of the OeNB’s Governing Board. The process combined a top-down and a bottom-up approach, applying innovative concepts of strategy development to generate, collect and integrate as many different ideas as possible. In a first round, the Governing Board invited staff input on predefined strategic priority areas. The prospective strategic focus was then presented and discussed in open debates before being finalized by the Governing Board. Four townhall meetings gave OeNB staff and members of the OeNB’s Governing Board the opportunity to exchange information and ideas and engage in live discussions.

The OeNB’s administrative measures in response to COVID-19

Business continuity

The OeNB is aware of its responsibility as an operator of critical infrastructure and has been able to maintain its particularly critical functions also during the pandemic.

In this context, the relocation of one of its data centers and a backup data site to locations that are further away from the OeNB’s premises was completed in 2020 as scheduled. This step improves the OeNB’s resilience by minimizing the effects of various potential system failure scenarios on the OeNB’s business operations.

The OeNB’s Corona Working Group

To discuss and handle all issues related to the pandemic, the OeNB established a special coronavirus task force, the Corona Working Group. The working group meets regularly and supports the OeNB’s Governing Board in its pandemic-related decisions. Its members come from the areas of risk monitoring, human resources, facilities and security management, the press office, the staff council and the company health center. The Governing Board of the OeNB continually evaluated the situation in cooperation with the Corona Working Group and, basing its decisions on the available facts and figures, directed business operations in a way to create the best possible conditions to ensure the fulfillment of the OeNB’s tasks.

COVID-19 pandemic accelerates digital innovation

The OeNB’s IT department has had to cope with great challenges during the pandemic. In addition to fulfilling its regular tasks, remote IT access had to be implemented for all members of staff that are able to work from home. This meant increasing the capacities of the OeNB’s IT infrastructure virtually overnight – an achievement that was only possible by quickly deploying additional hardware. The number of staff using remote access soared from an average of 200 a day (before the pandemic) to 1,050 a day. Participation in teleconferences via Skype and Webex increased by a factor of 50 in some business areas.

Table 1: Trends in Skype and Webex meetings  
Unit Q4 19 Q1 20 Q2 20 Q3 20 Q4 20
Webex meetings number 265 1,852 3,982 2,804 3,824
Participants number 472 5,480 19,160 12,073 16,314
Overall duration minutes 11,697 59,463 188,049 135,127 178,298
Skype meetings number 467 6,214 22,850 18,903 25,426
Participants number 1,682 22,872 91,096 68,666 98,052
Overall duration minutes 1,336 132,923 742,556 576,601 883,121
Source: OeNB.

2020 also saw major progress in the digitalization of formerly paper-bound processes, the use of mobile authorization workflows and electronic signatures. The new work situation created by the pandemic also fueled the systematic review and advancement of existing and new digital innovation projects, such as a ­contract data base, a digital library or the ­electronic refunding of expenses. The design of meetings and events changed fundamentally as well. At short notice, software solutions for both virtual and hybrid events had to be ­provided, and the technical equipment in ­meeting rooms and event halls had to be adapted accordingly. A new cloud-based tool (including a smartphone app) was put into ­operation to provide effective and efficient crisis communication.

In February 2020, the OeNB’s previous electronic filing system was replaced by a ­modern electronic document management and filing system. The new system supports uniform digital processes and workflows that make ­cooperation easier by integrating decision processes into one system.

Table 2: Indicators of knowledge-based processes  
Unit 2017 2018 2019 2020
Process efficiency
Certified areas number 10 10 10 10
Entries in the OeNB’s terminology database number 22,628 22,901 23,308 23,748
Error-free payment transactions % 100 100 100 100
Staff suggestions for improvements number 30 48 41 19
Technical infrastructure
IT services for the ESCB/Eurosystem number 3 3 3 3
Major IT projects number 6 6 5 5
Source: OeNB.

Future-oriented human resources ­management

The OeNB proved to be a reliable employer also during the COVID-19 pandemic, ensuring stable and secure conditions for its staff to ­fulfill their everyday tasks. The OeNB has a long history of offering a wide range of flexible working arrangements that staff have made ­frequent use of; these arrangements include part-time work, flexitime and structural teleworking; two years ago, occasional teleworking was introduced as an additional model for working remotely. Given its technical experience and the existing IT infrastructure (almost all employees have their own laptops), the OeNB was well equipped to meet the challenges posed by the new working situation created by the pandemic. During Austria’s lockdowns, almost all OeNB staff worked from home to ensure best possible protection; moreover, split teams were created to reduce contacts on site in times when staff presence was required. Chart 18 shows that more than 80% of OeNB employees were working from home at times in 2020. During the summer, when restrictions were eased, a split team scheme was in place, which is also reflected in the chart.

Chart 18 “Where OeNB staff were working in 2020” is a plane diagram illustrating the percentage shares of OeNB staff that were working on site or from home or that were absent in the period from March 2020 to January 2021. While in spring 2020 (from March to May), almost all OeNB staff were working remotely and only less than 10% were present on site at the OeNB, during the summer months, staff presence on site went up and numbers in both categories were roughly equal. From fall 2020, the share of OeNB employees working from home increased again, and from November 2020 to January 2021, in line with the prevailing lockdown provisions, the share of staff working on site dropped again to below 10%. Source: OeNB.

The functionality of critical business areas (e.g. cash supply) that require physical presence was ensured in compliance with strict safety standards. These measures made sure that the OeNB was able to fulfill its tasks at all times. All in all, OeNB staff worked from home for an average of 131 days per person in 2020. To make this possible, workplace flexibility policies were adjusted temporarily in particular for staff with childcare duties.

This also highlights the OeNB’s specific emphasis on assisting its staff in combining work with family life. The OeNB is certified as a family-friendly employer (“berufundfamilie” audit) and as such offers a wide range of measures to support its staff in achieving a healthy work-life balance. In particular, the OeNB was able to keep up its established holiday childcare options for school-aged children of OeNB staff. In compliance with all relevant safety precautions, 61 children participated in these holiday camps during the 2020 summer holidays.

The OeNB continues to be a stable employer, as can be seen, inter alia, in the staff fluctuation rate, which even decreased slightly year on year to 2.1%. As a result of the COVID-19 pandemic, the OeNB’s indicators for staff mobility and further education and training went down: the number of education and training days per employee declined markedly to 1.7 (from 3.9 in 2019) and the education and training participation rate contracted to 61.9% (from 82.2% in 2019). While most OeNB seminars that were scheduled for early in 2020 had to be canceled, the majority of seminars in the second half of the year took place online. Particular attention was given to the skills necessary for leading and moderating virtual and hybrid teams. In total, 130 online training seminars took place.

Table 3: Share of women in expert career track and management positions by career levels  
Share of women
%
Expert career track
Level 1 30.8
Level 2 40.0
Level 3 31.3
Level 4 70.0
Total 35.2
Management positions
Head of unit 23.2
Deputy head of division 32.4
Head of division 26.3
Director of department 22.2
Total 26.3
Source: OeNB.
Note: As at December 31, 2020.

The share of women in expert career track and management positions went down slightly in 2020 (table 4). Increasing the overall number of female employees is key to ensuring that more women are represented at all levels of the corporate hierarchy. This also became clear in an evaluation of the relevant gender ­diversity indicators carried out in 2020 under the OeNB’s action plan for the advancement of women. With digital innovations advancing rapidly, the OeNB, like most enterprises, is ­increasingly seeking mathematics, informatics, natural sciences and technology (MINT) qualifications in candidates applying for jobs not only in established IT-heavy areas such as statistics and treasury operations but also in other business areas. To help increase the recruitment of women in these traditionally male-dominated areas, the OeNB launched a regular recruiting event specifically for women majoring in MINT subjects that is to take place every two years; moreover, the OeNB expanded the range of ­internships available exclusively for female ­students.

Management shadowing, a tried and tested tool in human resources development, is also intended to help women, in particular, advance in their careers. By accompanying a manager from a different business area within the company, participants can gain insights in management and leadership tasks. To promote ­women’s empowerment, the OeNB complemented this format in 2020 with a day of training and ­individual coaching geared exclusively to ­female participants.

Table 4: Indicators of investment in knowledge-based capital  
Unit 2017 2018 2019 2020
Staff structure
Full-time equivalent staff (year-end)1 number 1,100.0 1,079.3 1,069.6 1,097.5
aged up to 30 years % 10.9 9.2 7.1 7.3
aged 30 to 40 years % 28.3 28.6 29.4 28.9
aged 41 years or older % 60.8 62.2 63.5 63.8
average age years 43.4 44.0 44.4 44.6
Fluctuation rate % 1.3 2.8 2.6 2.1
Share of university graduates in total staff % 63.2 64.9 65.8 67.4
Staff-to-manager ratio number 7.0 7.0 7.1 7.6
Flexible working arrangements
Part-time employees % 15.3 16.0 18.3 18.6
Structural and occasional teleworking/remote work
(annual average per employee)2
days 7.8 9.6 10.8 130.7
Staff on sabbatical number 4 6 5 3
Gender management
Share of women in total staff % 39.1 38.8 39.3 39.6
Share of women in management positions % 28.7 27.9 28.8 26.3
Share of women in expert career track % 33.1 37.9 36.2 35.2
Share of women in part-time employees % x x 72.9 72.7
Share of women in structural teleworking schemes % x x 47.6 47.3
Share of women in education and training participation rate % x x x 41.0
Mobility
Participants in in-house job rotation program number 39 40 30 23
Working visits to national and international organizations
(external job rotation)
number 52 56 57 43
Working visits at the OeNB (incoming) number 7 32 31 5
Interns number 66 75 77 70
Knowledge acquisition
Education and training days (annual average per employee) days 4.1 4.1 3.9 1.7
Education and training participation rate (share of employees
that attended at least one training event per year)
% 73.9 82.2 82.2 61.9
Source: OeNB.
1 Figures include part-time employees on a pro rata basis.
2 In general, the OeNB offers two different teleworking schemes: structural and occasional teleworking. In 2020,
remote work increased beyond the scope of both schemes in response to the pandemic.

Digital communication gains speed in 2020

COVID-19 pandemic calls for changes in communication

Demand for the OeNB’s economic expertise, which is provided through a variety of communication channels, rose sharply as concerns about the impact of the COVID-19 pandemic on the economy, and on the Austrian economy in particular, moved center stage. To help readers track pandemic-related information provided by the OeNB, this information is made available (mostly in German) in a dedicated section on the OeNB’s website. A prominent feature of this section is the new weekly OeNB GDP indicator, developed by a team of OeNB experts and first released in May 2020 (see box 2 ). In addition, numerous online publications and fact sheets provide insights into the economic development of banks, enterprises and households. Beyond pandemic-related contributions, the OeNB’s website e.g. currently features facts and figures and a timeline for Austria’s first 25 years of EU membership. Moreover, the OeNB launched a special section (“Thema im Fokus”) on its German website to address and explain current issues.

The OeNB’s established social media channels saw a strong rise in access numbers in the reporting year: The number of the OeNB’s ­followers on Twitter almost doubled to around 4,000; and the OeNB twittered almost daily in 2020. The number of the OeNB’s followers on Instagram even tripled to around 3,200. Since March 2020, the OeNB has been represented also on the LinkedIn online career platform, and in November 2020, it set up its own podcast channel (in German only). The number of e-mail queries to the OeNB’s hotline went up significantly in 2020, while the number of telephone queries declined substantially.

The exceptional social and economic situation created by the pandemic was also reflected in the semiannual OeNB Barometer 28 survey. The recorded confidence levels clearly mirrored the uncertainty people in Austria felt in view of the two lockdowns and the constantly changing economic forecasts. Confidence in the OeNB went down markedly from 76% in the second half of 2019 to 70% in the first half of 2020. Similar trends were observed also for other ­domestic institutions and banks.

Intranet communication on the rise

Internal communication on the OeNB’s intranet intensified in 2020, with the first lockdown in Austria requiring a swift transition to remote working, which largely cut off other lines of communication and virtually eliminated the social component of working together on site. To keep staff motivated and to boost identification, efforts centered around creating a sense of unity – the idea of the OeNB as a team. Regular online staff chats were organized to foster the personal exchange among colleagues – a feature of everyday working life no longer available for remote workers. In addition, networking opportunities were created through coffee roulette meetings that randomly match employees for virtual chats with colleagues across the OeNB. A number of other activities also contributed to fostering social exchange among OeNB staff.

Expert conferences with broad impact

The OeNB organizes numerous events to promote the exchange of monetary and economic policy views. In 2020, some events were moved online or made available in a hybrid format. The largest audiences (several hundred participants) are reached with the annual Economics Conference and the annual Conference on ­European Economic Integration (CEEI). While the Economics Conference, which usually takes place in the first half of the year, had to be ­canceled in 2020 because of the COVID-19 pandemic, the CEEI was, for the first time, hosted as a virtual event. It took place on ­November 5 to 6, 2020, and discussed the topic of “CESEE in the COVID-19 crisis – the role of the EU and global spillovers.” In 2020, the OeNB also organized a wide range of other – hybrid or virtual – workshops, press conferences and seminars, which generated lively interest among economists in Austria and abroad.

Analyses, studies and outlooks published in the OeNB’s scientific publications

The OeNB publishes the results of the scientific work carried out by its experts in three quarterly journals. Monetary Policy & the Economy ­focuses on monetary policy issues, economic activity and the Austrian economy, and provides in-depth discussions of special issues as they arise. In the reporting year, the Monetary Policy & the Economy series featured i.a. a comprehensive double issue dedicated to 25 years of Austrian EU membership (Q1/20-Q2/20) and another double issue analyzing the economic impact of the COVID-19 pandemic on the Austrian economy (Q4/20-Q1/21).

The Focus on European Economic Integration series focuses on macroeconomic and macro­financial topics related to Central, Eastern and Southeastern Europe (CESEE) and also features related economic outlooks and reports. Both journals are published in English and are subject to external peer review; they are also both listed in EconLit , a database on economics ­literature provided by the American Economic Association. Statistiken , the OeNB’s third quarterly, provides data and analyses on Austrian financial institutions, financial flows and the external sector (in German, with executive summaries in English).

In addition, the OeNB publishes a Working Paper series that features scientific working ­papers authored, or co-authored, by OeNB ­researchers. On average, around ten OeNB working papers are published per year. Finally, the semiannual Financial Stability Report ­essentially serves as the OeNB’s platform for providing an assessment of the yearly results ­reported by the banking and financial sector (first issue of the year) and for presenting ­selected research evidence on financial stability issues (second issue of the year). (See Notes, Periodical publications .)

Digital innovation campaign in financial education

In 2020, the OeNB further expanded its financial education capacities, not least by including ­financial education as a key issue in its strategy for 2020 to 2025. The strategy envisaged a one-year project to review, until mid-2021, the OeNB’s financial education activities and ­identify alternative future work streams. One important issue in this context is to strengthen cooperation across Austria. A first step toward this goal has been the establishment of a ­national foundation for economic education (Stiftung für Wirtschaftsbildung). As one of seven co-­founding institutions, the OeNB is also represented on the foundation’s supervisory board. The foundation began operations on January 1, 2021; it aims to finance dedicated school ­projects and to help establish the topic of financial education in national curricula.

As in many other areas, the pandemic also posed new challenges to the OeNB’s endeavors in financial education. Many school projects that were to take place on site had to be ­canceled in view of the pandemic, and the OeNB’s Money Museum had to close for an ­extended period for the first time since it was opened in 2003. In reaction to these circumstances, the OeNB stepped up its efforts in ­digital innovation and further enhanced its range of e-learning products.

Euro-Aktiv online

Logo Euro Aktiv

Since the end of March 2020, the OeNB’s Euro-­Aktiv workshop program for students aged 15 to 19 has been available also as an interactive online presentation. During the 45-­minute program, students are guided through a discussion of current ­issues, learn what modern ­central banks do and are invited to reflect on how they manage their own money. Students are invited in particular to share their know­ledge and ­everyday experience by participating in a video conference.

Euro logo online challenge

Another financial education initiative was the OeNB’s “Euro logo online challenge” that was launched in the fall of 2020. The target group are school children aged 13 to 14, who can ­participate in the challenge on their smartphones no matter whether classes are being held in the classroom, for split classes or ­remotely. During an interactive presentation, children are invited to work on practical ­questions, share their own experiences and solve specific problems; the challenge ends with a quiz.

Enhanced teaching material

A wide range of free teaching and information material can be downloaded from the OeNB’s website; in the reporting year, primary school material in particular was upgraded and ­expanded. New and interesting things to know about money and its history as well as questions testing children’s knowledge about euro banknotes were added to the primary school worksheets, all with a view to keeping them suitable for the age group.

My Money Guide – financial tips for young women

Apart from offering new digital solutions, the OeNB’s “Euro­logisch” financial literacy program was also expanded to reach out to new target groups. In cooperation with Vienna University of Economics and Business, a guide providing financial tips specifically for young women was prepared in 2020. The guide, which is available in German only, helps young people, and women in particular, to manage their personal finances and get started in their financial lives.

The OeNB’s Money Museum

Given the COVID-19 containment measures in place during most of 2020, the OeNB’s Money Museum counted no more than 2,790 visitors in the reporting year (2019: 11,019). During the first and second lockdowns in Austria, the museum remained closed for a total of 4½ months; during the other months, guided tours were possible only for limited numbers.

On August 11, 2020, the museum’s new special exhibition “FUNNY MONEY. Money in caricature” was opened for restricted ­numbers of individual visitors. As the name suggests, the exhibits present a humorous and entertaining view on the topic of money.

The materials presented in the Money ­Museum’s guided tours and workshops were published in the “Wissenswelt Geld” series for teachers and students and are also available in German on the OeNB’s website in the Money Museum’s section on museum didactics.

Training course for journalists

For many years, the OeNB has offered seminars for journalists participating in an economics training course co-initiated by the OeNB and organized by Austria’s press agency APA. During the seminars, participants learn about economic and financial issues relevant for ­everyday media work in workshops or lectures presented by OeNB experts.

The Joint Vienna Institute in virtual mode

Switching to online courses and webinars

The Joint Vienna Institute (JVI) offers training to central bank experts and public sector ­officials on a broad range of topics with a focus on economic, fiscal, monetary and financial market policy. The course participants mostly come from CESEE countries and the Common­wealth of Independent States (CIS). The JVI is co-sponsored by the Austrian Federal Ministry of Finance, the IMF and the OeNB. Since its foundation in 1992, the JVI has trained a total of 47,158 course participants.

The COVID-19 pandemic presented major challenges also to the JVI: From March 2020, face-to-face teaching on the JVI’s premises in Vienna was no longer possible, but by mid-June, the JVI had successfully moved online, concentrating on the following three products: (1) virtual courses: To make these courses as ­interactive as possible, the number of participants was reduced and classes were shorter than usual. In 2020, a total of 60 weeks of training courses were held at the JVI, with 756 persons (women: 53%) attending. The OeNB offered four virtual courses; seven courses had to be canceled or postponed to 2021. (2) webinars (one-off 90-minute events for an unlimited number of participants): Between June and mid-December 2020, the JVI offered 23 ­webinars, reaching 2,117 participants ­altogether. Topics were closely related to coping with the impact of the pandemic, and the OeNB was invited to share its expertise with participants as well. (3) technical assistance: Projects that had started before the beginning of the COVID-19 crisis were continued online (e.g. with Uzbekistan).

Pandemic causes strong decline in multi­lateral and bilateral technical cooperation

The OeNB is a member of the ESCB Working Group on Central Bank Cooperation, which i.a. coordinates large-scale EU-funded ­programs supporting non-EU central banks in bringing their practices in line with EU standards. A ­regional program for EU candidates and potential candidates in the Western Balkans that had been running since 2019 began to stagnate ­because of the pandemic and will have to be extended. At the bilateral level, the OeNB started a new cooperation with the Ukrainian central bank.

Taking social responsibility seriously

Donations for those affected by the COVID-19 pandemic

As a visible sign of solidarity with those people in Austria most vulnerable to the wide range of adverse effects of the COVID-19 crisis, the OeNB strongly reduced the funds reserved for staff incentives, paying out bonuses only for specific pandemic-related performances. In ­return, the OeNB donated a total of EUR 879,000 to altogether 50 nonprofit organizations, thereby helping to implement many different charitable projects and initiatives supporting those affected most by the pandemic.

Development aid group

The development aid group within the OeNB, a registered association that has been run by dedicated volunteers (both active and retired staff) for more than 35 years, supports humanitarian projects by raising funds through member­ship fees and donations from staff and the Governing Board of the OeNB. In line with the UN Sustainable Development Goals, the group provides funding for selected humanitarian projects that aim to eradicate extreme poverty and hunger, achieve universal primary education, improve the health of mothers and children, promote the economic participation of women and ensure the sustainable use of natural ­resources. Since the COVID-19 pandemic has further exacerbated existing poverty in the poorest regions of the world, the development aid group decided at its general meeting in 2020 to support two COVID-19-related ­projects of the Austrian Entwicklungshilfeklub (hygiene parcels for the poorest and the world-wide coronavirus emergency fund) in addition to the ten humanitarian aid projects suggested for funding by OeNB staff.

Table 5: Indicators of knowledge-based output  
Unit 2017 2018 2019 2020
Cooperation and networks
National bodies with OeNB representatives number 86 84 85 79
International and European bodies with OeNB representatives (ESCB, etc.) number 364 356 323 331
Technical assistance activities with CESEE and CIS central banks days 557 451 4941 345
Course participants at the Joint Vienna Institute (JVI) number 2,155 2,282 2,410 756
OeNB-hosted national and international events days 186 209 200 43
Lectures delivered by OeNB staff to external audiences number 828 870 879 474
Communication and information
Queries to OeNB hotlines number 13,335 12,449 11,432 9,756
Research cooperation projects with external partners number 90 100 150 126
Visitors to the Money Museum number 13,027 11,482 11,019 2,790
Cash training course participants (including Euro Shop Tour) number 16,159 5,979 16,939 3,354
Children and teachers reached through school outreach ­activities number 22,565 29,252 27,914 12,172
Seminars for teachers number 7 21 25 27
Contacts during the Euro Info Tour number 45,562 30,208 19,189 . .2
Press conferences number 12 13 20 9
Press releases number 177 187 114 114
Publications
Articles published by OeNB staff number 111 119 79 72
of which: refereed papers number 30 30 36 27
Confidence and image
Confidence ratio in the second half of the year % 67.0 71.0 76.0 76.0
Image index in the second half of the year (values between 5.5 and 10.0 signal a positive image) value 6.9 6.9 7.2 6.9
Source: OeNB.
1 Corrected figure.
2 The Euro Info Tour was discontinued in 2020.

28 OeNB Barometer survey (IFES), H1 2020.

The OeNB promotes research, the economy, science, art and culture and donates funds to charity

The OeNB supports the promotion of research...

Following a thorough evaluation and reform process, the strategic focus of the OeNB Anniversary Fund for the Promotion of Scientific Research and Teaching was readjusted in 2019. After a transition period that ended in 2020, the OeNB Anniversary Fund will now seek to promote projects that broaden, or deepen, the current level of scientific research on economic policy and business location issues. Particular heed will be paid to the research clusters ­communicated by the OeNB.

It is the declared aim of the OeNB Anni­versary Fund to ensure fair conditions in the ­competition for funding for highly focused ­basic research projects and, in doing so, to ­contribute to making economic research in Austria both more competitive and more ­attractive.

Guided by these considerations, the Governing Board of the OeNB approved funding totaling around EUR 8 million for 51 Anniversary Fund scientific research and teaching ­projects in 2020.

... and of economic activity in Austria

Another type of funding is available under the European Recovery Program (ERP), more widely known as the Marshall Plan, that the United States had set up to help rebuild Europe after World War II. The OeNB was instrumental in implementing the initial program and ­continues to administer the ERP central bank assets. Most recently, the OeNB was managing 575 ERP loans granted in the industry, trade and services sectors, with an outstanding ­volume totaling EUR 745 million.

The OeNB is committed to Austria’s cultural heritage

Currently, the OeNB’s collection of historical string instruments numbers 45 instruments, all of them crafted by the most renowned violinmakers of the Italian and French schools. The OeNB lends all of these instruments to Austrian musicians free of charge, thus making a contribution to Austria’s excellent international reputation as a musical nation. Four violins have been made available since 2019 to outstanding students enrolled at Austria’s music universities, allowing them to prepare for competitions and auditions.

Despite the COVID-19 pandemic, the OeNB was able to continue its long-standing cooperation with the Austrian radio station Ö1 in 2020 and organize a concert in Innsbruck at which instruments from the OeNB’s collection were played. Additional concerts were held at Ossiach Abbey in cooperation with the Carinthian Summer Music Festival.

In 2020, the OeNB purchased 15 works of contemporary Austrian art. In selecting artworks for its collection, the OeNB took special care in the reporting year to ensure that the purchases also served to promote living Austrian artists and their galleries. The OeNB thus added to its collection works by four previously unfeatured contemporary Austrian artists of international renown: Jürgen Messensee, Rudolf Polanszky, Eva Schlegel and Heimo Zobernig. By purchasing these new artworks, the OeNB strengthened the focus of its collection on abstraction in ­contemporary art.

In 2020, the OeNB lent items from its ­collection to six exhibitions at Austrian museums, thus making these works accessible to the public for a while. Museums that featured works from the OeNB’s collection in special exhibitions in 2020 were the State Gallery of Lower Austria in Krems, the Museum der Moderne Salzburg, the Tyrolean State Museum Ferdinandeum in Innsbruck, and Belvedere 21, the Leopold ­Museum and the Albertina Modern in Vienna. Some of these exhibitions continue into 2021.

Preparations for the Shoah memorial have begun

On behalf of the federal government, the federal facility management company BIG is setting up a memorial for the Jewish children, women and men from Austria that were murdered during World War II. The Shoah memorial will be built at Ostarrichi Park, in front of the OeNB’s main building; part of the park is OeNB property. The project is funded by the federal government, while the OeNB makes available part of its property.

Risk management

Enterprise risk management

In the OeNB’s strategy for 2020 to 2025, the implementation of an enterprise risk management (ERM) framework was defined as one of the OeNB’s strategic objectives. The OeNB ­already has a number of different risk management systems in place that serve to reduce risks associated e.g. with investment, equity holdings, IT systems or compliance as well as risks arising from specific projects. The new ERM framework is intended to integrate and harmonize the various nonfinancial risk management systems currently in use at the OeNB. The underlying goal is to improve the effectiveness of these systems and to help the OeNB develop a modern risk culture, risk policy and risk strategy.

Financial risk

The financial risk categories relevant to the OeNB are market, credit and market liquidity risk. Reserve asset and risk management ­principles are laid down in a rule book adopted by the OeNB’s Governing Board. Reserve ­assets are invested by the OeNB’s Treasury ­Department on the basis of a risk budget that reflects the risk limits designated by the Governing Board, as adopted by the latter on proposal of the OeNB’s Risk Committee. The Risk Committee monitors continuous compliance with the risk budget based on specific risk measurement ­systems and methods. These systems and ­methods serve to quantify market and credit risk, accounting for balances on revaluation ­accounts to the extent they may be used to ­absorb losses. The Risk Committee receives regular reports on risk management and in turn reports to the Governing Board. Strategies for broadening diversification to include new ­currencies and asset classes as well as the ­methods and limits used in risk measurement must be authorized by the Governing Board. The consideration of climate-related financial risks is becoming an increasingly important ­focus as well.

Market risk

Market risk is the risk of exposure arising from changes in financial market prices, as driven in particular by exchange rate and interest rate changes. To account for risk budget constraints, the OeNB’s Investment Committee defines a strategic asset allocation framework subject to the conditions endorsed by the Governing Board, which include concentration limits for each currency and a standard conservative ­investment policy in line with central bank ­requirements. The risk budget also provides benchmarks for managing exchange rate risk and interest rate risk. Compliance with the Treasury Department’s risk budget is monitored with value at risk (VaR) calculations for market risk. The ECB uses the expected shortfall (ES) to calculate market risk arising from Euro­system monetary policy operations. VaR and ES calculations are consistently based on a one-year horizon and a confidence interval of 99%. Moreover, a three-month risk horizon is calculated to identify the risk range.

The actual risk exposure depends on the amount of assets invested, including gold and unhedged Special Drawing Rights (SDRs), as well as on the amount of own funds and ­earmarked funds invested.

In addition, the OeNB makes provision commensurate to its relative share in the ECB’s paid-up capital for ECB investment risk and for risks arising for the ECB from conducting ­Eurosystem monetary policy operations.

The OeNB calculates the risk involved in real estate holdings using an index for real ­estate stocks that is also based on VaR calculations with a one-year horizon and a confidence interval of 99%.

Credit risk

Credit risk is the risk that a counterparty will fail to meet some or all of its obligations. In principle, the OeNB manages the credit risk arising from its own funds portfolio and related investment activities with a limit system which provides up-to-date information on all risk ­limits and exposures.

Credit risk arising from Eurosystem monetary policy operations is calculated by the ECB and accounted for on a pro rata basis in OeNB risk reporting. Credit risk arising from holdings for own account and investments of own funds is calculated by the OeNB and taken into account when monitoring the use of the risk budget. VaR and ES calculations of ECB and OeNB risk are consistently based on a one-year horizon and a confidence interval of 99%.

Market liquidity risk

Market liquidity risk is the risk that a market may be too thin or may not be able to fully ­accommodate all trades, so that the securities trading volume is lower than desired and ­securities cannot be traded quickly enough or perhaps only at a discount. To prevent incurring market liquidity risk, the OeNB analyzes the market liquidity of financial products, ­adjusts holdings to issuing volumes and limits the maximum residual maturities of trans­actions. Security and liquidity considerations take precedence over yield in managing the OeNB’s assets.

Operational risk

Operational risk is the risk of incurring losses due to deficiencies or inadequacies in internal processes or systems, human errors or dis­ruptions from external events. It may impair the achievement of corporate objectives, ­damage corporate reputation or cause financial damage. Management of operational risk at the OeNB is governed by the rules laid down in its handbook on operational risk management, business continuity and crisis management. The OeNB is aware of its responsibility as an operator of critical infrastructure and has therefore identified current security requirements in the event of failure (in particular, relocating one of the data centers and a backup data site to more ­distant locations). These requirements are ­reflected in the OeNB’s contingency plans to minimize the impact resulting from disruptive events on the OeNB’s business activities.

Information security risk

The OeNB’s IT department operates an information security management system certified to ISO 27001, examining and dealing with ­information security risks on a systematic basis. Technical and organizational vulnerabilities are identified in line with protection requirements defined by the OeNB to ascertain whether they present a confidentiality, an integrity or availability risk. In this context, protection and ­security of information need to be balanced with costs and usability.

Environmental Statement 2020 – the OeNB as an ecological organization

Updated Environmental Statement in line with EMAS Regulation (EC)
No 1221/2009

The OeNB has been certified under environmental protection standards for more than 20 years. Following a Governing Board decision in 1996, the OeNB had applied for the certification of its former Securities Printing Works under the international environmental standard ISO 14001. In 1999, the OeNB joined the European Eco Management and Audit Scheme (EMAS), which has been defined and revised in a series of EU regulations. EMAS was developed to distinguish and award companies that have voluntarily committed themselves to continually improving environmental protection within their organization on the basis of strict criteria. As an EMAS certificate holder, the OeNB has documented its effort to improve its environmental performance beyond statutory requirements. In recognition of their pioneering role and of 20 years of successful and exemplary eco management under EMAS, the OeNB and its subsidiary OeBS received an “EMAS ­pioneer” award from the Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation and Technology, which was presented to representatives of both institutions in a special ceremony on October 27, 2020.

Over the last two decades, the OeNB’s ­environmental protection team (EPT) has made major achievements in implementing the OeNB’s environmental policy. The OeNB’s ­energy and waste management experts and ­environmental controllers in the individual business areas have contributed significantly to these achievements, not least by performing regular environmental audits and coordinating their efforts in regular meetings. Key accomplishments include the reduction of heat consumption, which went down by some 40% against the base year of 2001, and of paper consumption, which even declined by around 75%. Despite these successes, there is still room for further improvement in the OeNB’s environmental program. The importance of the implemented environmental measures becomes evident in particular when considered in connection with the European Green Deal that was adopted by the European Commission in 2019. The European Green Deal defines the objective of reducing net greenhouse gas emissions in the EU to zero by 2050, thus making Europe the first continent to achieve climate neutrality.

The member of the OeNB’s Governing Board responsible for EMAS, together with the other members of the Governing Board, signed a slightly revised declaration on the OeNB’s ­environmental policy in 2020. The revised version places greater emphasis on climate protection, naming 2040 as the year in which the OeNB plans to achieve actual climate neutrality in all its activities. The annual EMAS management review found the OeNB to have clearly delivered on its commitments as defined under the EMAS Regulation (compliance with environmental laws, establishment and pursuit of environmental objectives, continuous improvements, etc.).

In 2020, the OeNB also received another recognition for its socioecological commitment: AfB social & green IT, one of the major nonprofit IT enterprises in Europe, acknowledged that in its almost five-year cooperation with the OeNB, more than 53 tons of CO2 have been saved by reusing and recycling notebooks, computers and display devices.

Events and publications

The OeNB has cooperated with the Austrian Chapter of the Club of Rome for many years. On June 16, 2020, at a symposium on the potential of green finance to help us overcome the crisis, OeNB representatives entered into a discussion with participants from the world of ­finance and academia. One of the questions up for debate was how to reconcile expenses for economic support programs launched in response to the COVID-19 crisis with climate goals. The OeNB also sent high-level representatives to the annual conference of the Austrian Chapter of the Club of Rome on November 24, 2020, to discuss ways toward a climate-neutral future. What met with particular interest in this context was the Eurosystem debate on the potential contributions the ECB and national central banks might make to fighting climate change. The Eurosystem – with input from the OeNB – has been examining climate-related risks to the economy and the financial system. The chances and risks climate change and climate politics pose to the Austrian financial sector were analyzed and communicated in the OeNB’s Financial Stability Report. Both the OeNB and the ECB have been contributing to related expert publications of the Network for Greening the Financial System (NGFS). In addition, OeNB staff made numerous contributions on green finance at a series of national and international events and courses, most of which took place online in 2020.

Environmental database relaunch bears fruit

Following a relaunch in 2019, the OeNB’s revised environmental database completed its first year of full operation in 2020. The new database facilitates monitoring compliance with new requirements under EMAS and ISO standards as well as the fulfillment of tasks under environmental law, documenting internal audits and creating balance sheets of consumption. In the reporting year, the OeNB met all the relevant deadlines as scheduled; the latest EMAS management review gives evidence of the OeNB’s compliance with legal provisions in this field.

Certified ISO 50001 energy management reduces energy costs and promotes the use of renewable energy

Reported data indicate that in the reporting year, the OeNB’s consumption of electricity and district cooling went down by 15% against 2019, while water consumption declined by even 30%. This reduction is primarily attributable to the fact that in 2020, most of our staff worked remotely because of the pandemic. Heat consumption did not go down, however, but actually even increased in some periods owing to low outside temperatures.

The OeNB continued to exclusively procure electricity from renewable sources certified with the Austrian Ecolabel. The fact that the OeNB has been certified under energy management standard ISO 50001 since 2014 underlines its commitment to energy efficiency. Further measures to reduce greenhouse gas emissions include continued heat recovery, a photovoltaic system integrated into the building facade, ­improved technical facilities (pump and sunblind controls, conversion to LED lighting and movement-sensitive lighting) as well as support for green outreach activities such as financial education projects raising public awareness for sustainable investment.

Promoting environmentally friendly ­mobility

To help prevent the spreading of the corona­virus, most of the OeNB’s staff worked from home in 2020 and many business trips were canceled. This fact is reflected in the OeNB’s CO2 footprint and the recorded transport mileage (tables 7 and 8). Moreover, a new framework was set up for business trips and the staff agreement on business trips was revised to promote green mobility. The OeNB provides incentives for staff to opt for using trains, public transport or bicycles, or for walking to work, and for making use of eco-friendly means of transport also on business trips. Articles published in the OeNB’s staff magazine and on the intranet also help enhance the environmental awareness among our staff.

Ecological indicators

The OeNB’s waste balance shows that in 2020, as staff presence on the OeNB’s premises was exceptionally low due to the COVID-19 containment measures, waste generation even remained below the low waste generation levels that had been achieved in previous years by careful waste separation and the recycling of wood and used metal. The high value reported in 2019 for “hazardous materials” was attributable to the replacement of a used battery in the uninterruptible power supply (UPS) system, which required special disposal. Paper consumption at the OeNB also declined in 2020, mostly because of the pandemic, but also because staff awareness was raised by information campaigns promoting double-sided printing and copying. In addition, the electronic filing system was taken one step further by rolling out an integrated document management system. The OeNB’s cleaning contractor is EMAS-certified and uses only ­environmentally friendly cleaning agents.

Table 6: The OeNB’s ecological indicators  
Unit 2018 2019 2020
Energy
Electricity consumption per FTE2 MWh 6.66 6.50 5.57
Heat consumption kWh per m2 43 37 38
District cooling kWh per m2 47 43 39
Total energy consumption (buildlings)3 MWh 15,380 14,249 13,143
of which: renewable energy4 MWh 8,026 7,837 9,427
Total energy consumption including business travel MWh 19,664 16,411 13,842
Water
Water consumption per FTE5 liters per day 93 87 59
Consumption of materials and products
Total paper consumption per FTE6 kg 50 44 24
Consumption of printing/copying paper per FTE sheets 6,318 4,967 4,072
Share of recycled copying paper % 54 38 53
Consumption of cleaning agents7 g per m2 26 16 7
Total CO2 emissions per FTE8 tons 3.0 2.8 0.7
Source: OeNB.
1 Number of employees (full-time equivalents – FTEs): 2018 = 1,079.3; 2019 = 1,069.6; 2020 = 1,087.5.
The OeNB’s environmental management system according to EMAS covers the following locations: Vienna
(main building, Otto-Wagner-Platz 3; northern office building, Rotenhausgasse 4; and the areas in the
Money Center that are assigned to the OeNB, Garnisongasse 15; all 1090 Vienna) and OeNB –
Western Austria (Adamgasse 2, 6020 Innsbruck).

2 From 2018, all energy data on buildings include the Money Center but exclude the location OeNB –
Western Austria and the Brussels Representative Office (around 20 FTEs).

3 Lower energy consumption in 2020 due to COVID-19 containment measures.

4 Since 2010, the OeNB has purchased green electricity from certified providers.

5 Excluding the location OeNB – Western Austria and the Brussels Representative Office; lower water
consumption in 2020 due to COVID-19 containment measures.

6 Total consumption in 2020: 26.124 kg, based on paper purchased (i.e. including stocks).

7 Total consumption in 2020: 697 liters; lower consumption due to COVID-19 containment measures.

8 Operation of facilities (including emergency generators) and business travel and transport; total in 2020:
742 tons; lower emissions due to COVID-19 containment measures; conversion factors according to the
Environment Agency Austria, including indirect greenhouse gas emissions.

Note: Land used: 20,758 m2, sealed surface: 17,860 m2, green area: 4,520 m2 (including green roof areas).
The following indicators required by EMAS are not provided in this ­table because of negligible values:
greenhouse gases and air pollutants such as CH4, N2O, HFC, PFC, SF6 or SO2, NOx a­nd fine dust.

Environmental program

The general environmental measures the OeNB plans for the near future are listed in table 10, The OeNB’s environmental performance up to 2020 and environmental program for 2021 .

Table 7: Sources of greenhouse gas emissions at the OeNB in 2020  
CO
equivalents
Tons1
Scope 1 emissions
Vehicle fleet 60.6
Cooling agents 0.0
Emergency generator tests 11.7
Subtotal 72.3
Scope 2 emissions
Electricity 107.9
District heating 91.0
District cooling 151.2
Subtotal 350.1
Scope 3 emissions
Business travel by airplane 282.7
Business travel by car 29.2
Business travel by train 0.7
Subtotal 312.6
Total 734.9
Source: OeNB.
1 Greenhouse gas emissions including indirect effects.
Table 8: Transport mileage  
2018 2019 2020
Business travel by airplane, km 2,791,800 2,609,057 676,192
Business travel by car, km 350,200 356,642 117,300
Business travel by train, km 288,600 250,200 83,400
Fuels for transport, liters 31,028 34,879 20,123
Source: OeNB.
Table 9: Waste generation by the OeNB (2018–2020)  
2018 2019 2020
kg
Nonhazardous materials 66,444 72,396 44,390
Nonhazardous waste per FTE1 62 68 40
Hazardous materials 2,965 28,611 9,322
Hazardous waste per FTE2 3 27 8
Recyclables 116,653 102,210 90,990
Recyclables per FTE 108 96 83
Total waste 186,062 203,217 144,702
Source: OeNB.
1 Waste volumes lower in 2020 due to COVID-19 containment measures.
2 Waste volumes higher in 2019 due to the replacement of accumulators.
Accumulators are essential for safeguarding uninterruptible power supply.
Table 10: The OeNB’s environmental performance up to 2020 and environmental program for 2021  
Year Status Action
Further greening of procurement
Hiring a new cleaning contractor with EMAS certification 2021 to be continued business area
Procuring office material according to ecological criteria 2021 to be continued business area
Implementing a document management system, aimed i.a. at saving paper 2020 implemented business area
Responsible resource use, reduction of emissions, further reduction of
electricity consumption by 2% against 2014
Implementing occupancy-based lighting at the workplace 2021 to be continued business area
Developing the mobility strategy further 2021 to be continued EPT
Evaluating the cooling agents used in facility management 2021 implemented business area
Electricity saving projects
Switching to LED lighting on service floors (main building, northern office building) 2021 to be continued business area
Modernizing plumbing, cooling and heating installations 2021 to be continued business area
Deactivating lighting in unused elevator cars 2020 implemented business area
Replacing lighting in sanitary facilities (main building) 2021 planned business area
Replacing lighting on printing office and ground floors (northern office building) 2022 planned business area
Promoting environmental awareness, training
Promoting green mobility (bicycle use, including Citybike rental system) 2021 to be continued business area
Training new staff 2021 planned EPT
Urban gardening, information: plants in the city 2021 to be continued business area
Networking and communication
Membership in the Central Banks and Supervisors Network for Greening the
Financial System (NGFS)
2021 to be continued EPT
Information campaign, including lectures, more information on the intranet 2021 to be continued EPT
Cooperating with partners such as the Club of Rome, the WWF (World Wide Fund
for Nature) and OEGUT (Austrian Society for Environment and Technology)
2021 to be continued EPT
Auditing the waste disposal contractor 2021 planned waste management officer
Greening the food offered at the OeNB further, reducing plastic material 2021 to be continued EPT
Source: OeNB.
Note: EPT = environmental protection team.

EMAS validation

This updated Environmental Statement published by the Oesterreichische Nationalbank, Otto-Wagner-Platz 3, 1090 Vienna, has been validated in accordance with the EMAS Regulation by TÜV SÜD Landesgesellschaft ­Österreich GmbH, Franz-Grill-Straße 1, Arsenal Objekt 207, 1030 Vienna, Austria, AT-V-0003.

The Lead Verifier of TÜV SÜD herewith confirms that the OeNB’s environmental policy, its environmental program and environmental management system, its environmental review and its environmental audit procedures conform to Regulation (EC) No 1221/2009 of the European Parliament and of the Council of 25 November 2009 (EMAS Regulation), as amended by Commission Regulation (EU) 2026/2018, and validates the relevant information for the Environmental Statement in accordance with Annex IV section B points (a) to (h).

Vienna, January 2021

Unterschrift Dipl.-Ing. Dr. Kurt Kefer, Leitender Umweltgutachter

Kurt Kefer, Lead Verifyer

End of EMAS validation

The OeNB’s next Environmental Statement will be published as part of the OeNB’s sustainability report in spring 2022.

Direct and indirect equity interests

Table 11 shows the OeNB’s direct and indirect equity interests in line with Article 68 paragraph 4 Nationalbank Act.

Table 11: Direct and indirect equity interests of the OeNB as on December 31, 2020  
Share in % Company Capital issued
100 Münze Österreich Aktiengesellschaft, Vienna (Austria) EUR 6,000,000.00
100 Schoeller Münzhandel GmbH, Vienna (Austria) EUR 1,017,420.00
(100) 100 Schoeller Münzhandel Deutschland GmbH, Hamburg (Germany) EUR 6,000,000.00
50 PRINT and MINT SERVICES GmbH, Vienna (Austria) EUR 35,000.00
16.67 World Money Fair Holding GmbH, Berlin (Germany) EUR 30,000.00
(16.67) 100 World Money Fair Berlin GmbH, Berlin (Germany) EUR 25,000.00
(16.67) 100 World Money Fair AG, Basel (Switzerland) CHF 300,000.00
100 Oesterreichische Banknoten- und Sicherheitsdruck GmbH, Vienna (Austria) EUR 10,000,000.00
50 PRINT and MINT SERVICES GmbH, Vienna (Austria) EUR 35,000.00
0.25 Europafi S.A.S., Vic-le-Comte (France) EUR 133,000,000.00
100 GELDSERVICE AUSTRIA Logistik für Wertgestionierung und Transportkoordination G.m.b.H., Vienna (Austria) EUR 3,336,336.14
100 OeNPAY Financial Innovation HUB GmbH, Vienna (Austria) EUR 35,000.00
100 IG Immobilien Invest GmbH, Vienna (Austria) EUR 40,000.00
100 Austrian House S.A., Brussels (Belgium) EUR 5,841,610.91
100 City Center Amstetten GmbH, Vienna (Austria) EUR 72,000.00
100 EKZ Tulln Errichtungs GmbH, Vienna (Austria) EUR 36,000.00
100 HW Hohe Warte Projektentwicklungs- und ErrichtungsgmbH, Vienna (Austria) EUR 35,000.00
100 IG Belgium S.A., Brussels (Belgium) EUR 19,360,309.87
100 IG Hungary Irodaközpont Kft., Budapest (Hungary) EUR 11,852.00
100 IG Immobilien Beteiligungs GmbH, Vienna (Austria) EUR 40,000.00
100 IG Immobilien M97 GmbH, Vienna (Austria) EUR 120,000.00
100 IG Immobilien Management GmbH, Vienna (Austria) EUR 40,000.00
100 IG Immobilien Mariahilfer Straße 99 GmbH, Vienna (Austria) EUR 72,000.00
100 IG Immobilien O20-H22 GmbH, Vienna (Austria) EUR 110,000.00
100 IG Netherlands N1 and N2 B.V., Uithoorn (Netherlands) EUR 91,000.00
100 BLM Betriebs-Liegenschafts-Management GmbH, Vienna (Austria) EUR 40,000.00
100 BLM-IG Bauträger GmbH, Vienna (Austria) EUR 35,000.00
(100) 100 OWP5 Betriebs-Liegenschafts-Management GmbH, Vienna (Austria) EUR 35,000.00
100 BLM New York 43 West 61st Street LLC, New York (USA) USD 10.00
Source: OeNB, subsidiaries.
Note: The OeNB’s share of the paid-up capital of the European Central Bank (ECB), Frankfurt (Germany), which totals
EUR 10,825,007,069.61, amounted to 2.3804% as at December 31, 2020. The OeNB also holds 8,000 shares
(at SDR 5,000 each) and 564 nonvoting shares in the Bank for International Settlements (BIS), Basel (Switzerland), as well as 56 shares
(at EUR 125.00 each) in S.W.I.F.T. (Society for Worldwide Interbank Financial Telecommunication), La Hulpe (Belgium).
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