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

The OeNB’s ownership structure and decision-­making bodies

The OeNB’s owner

The General Council of the OeNB

Functions

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

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

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 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