Annual Report 2021
Foreword by the President
Harald Mahrer
Dear reader,
Also in 2021, social and economic life in Austria continued to be overshadowed by the COVID-19 pandemic. As the Austrian government sustained comprehensive support measures and vaccines became available, the economic recovery gained a firmer footing. Having grown by a robust 4.7% in 2021, Austria’s economy is also forecast to fare well in 2022. What may put this year’s outlook at risk are the Omicron wave and the specter of new coronavirus variants. Also, in some industries the pandemic has triggered worker shortages. And it has led to a growing mismatch of supply and demand on Austria’s job market. In ensuring price stability, the Eurosystem and the Oesterreichische Nationalbank faced a daunting task in 2021. Inflation in the euro area surged given the release of pent-up demand following lockdowns, bottlenecks in global supply chains and soaring energy prices. In Austria, inflation surpassed 4% at year-end.
Austrian banks’ profits improved visibly in 2021. This was due to the economic recovery, broad-based support to cushion the impact of pandemic-related effects and sustained credit growth. Leading indicators suggest that the quality of loans in banks’ balance sheets, while having remained sound, might deteriorate in some segments. In 2021, residential property prices in Austria, which we monitor regularly, continued to grow markedly. Warning about a potential negative impact on financial stability in this context, we have repeatedly urged banks to apply sustainable lending standards.
Providing households and businesses in Austria with euro cash is one of our core tasks, which we have reliably fulfilled also during the pandemic. As usual, we have relied on the support of our three subsidiaries that produce banknotes and coins and engage in cash logistics: Oesterreichische Banknoten- und Sicherheitsdruck GmbH, Münze Österreich AG and GELDSERVICE AUSTRIA. In Austria, cash is the most popular means of payment: accessible to everyone, it is safe and preserves anonymity. As euro banknotes and coins turned 20 in early 2022, we have started to undertake a broad range of communication activities to highlight the benefits of the common currency. At the same time, digital payments are gaining ground fast at both the European and national level. Embracing change and innovation in this area, we established a new subsidiary, the OeNPAY Financial Innovation HUB GmbH, and came up with a new cash and payments strategy in the year under review.
In 2021, we also completely overhauled our investment strategy to respond to financial market developments. We have been considering specific sustainability criteria in our risk management for many years. Together with our partner central banks in the Eurosystem, we are committed to advancing joint measures that address climate change. What is more, we aim to become a climate-neutral enterprise by 2040. In addition to fulfilling our core tasks, we accept our corporate social responsibility by supporting research and business development and by promoting the arts and culture in Austria. In 2021, we replaced our previous core funding scheme for Austrian economic research institutions by a new system with enhanced transparency.
In closing, let me express my gratitude to the entire staff working at the OeNB and at our subsidiaries as well as to the members of the Governing Board and of the General Council of the OeNB for their excellent cooperation in 2021.
Vienna, March 2022
Harald Mahrer, President
Foreword by the Governor
Robert Holzmann
Dear reader,
In 2021, the real gross domestic product (GDP) of the euro area grew by a notable 5.2%, which was largely due to private consumption recovering again after the coronavirus pandemic had dealt a blow to the economy in 2020. Inflation likewise started to increase rapidly in the second half of 2021. For the reporting year as a whole, consumer price growth as measured by the Harmonised Index of Consumer Prices (HICP) came to 2.6% in the euro area. For Austria the picture is similar, with GDP and HICP inflation having grown by 4.7% and 2.8%.
In light of the recent price growth, the Eurosystem decided to discontinue as planned net asset purchases under its pandemic emergency purchase programme (PEPP) at the end of March 2022. The Eurosystem moreover decided to recalibrate the pace of purchases under the expanded asset purchase programme (APP). As the PEPP expires, the monthly net purchase pace under the APP is set to increase to EUR 40 billion in the second quarter of 2022, before being gradually reduced to EUR 20 billion per month from October 2022 onward.
In December 2021, the ECB forecast inflation in the euro area to run to 3.2% in 2022, to drop to slightly below 2% at end-2022 and to remain at that level in both 2023 and 2024. In other words, inflation would continue to fall somewhat short of our 2% price stability target for another two years. Should higher-level inflation persist for a longer period despite the fading of one-off effects, the Eurosystem may, however, avail itself of a broad set of monetary policy instruments. It also stands ready to adjust all of its instruments as appropriate.
In addition, we are pleased to report that several strategic decisions were made last year. First, the ECB adopted a symmetric 2% inflation target over the medium term as one of the main outcomes of its monetary policy strategy review, 18 years after the previous review. Second, we devoted greater attention to understanding the impact of climate change – a challenge that is set to keep our experts busy in the years to come. For instance, we added to our wealth of expertise in this area by hosting a high-level international conference with one of the leading experts on climate change, Lord Nicholas Stern.
And third, what is also key in the near future, next to maintaining price stability and battling climate change, is to achieve higher productivity growth. To this end, the economic conditions will have to improve. Here, innovative, climate-friendly technologies are the way forward. Higher productivity is likely to drive up the equilibrium real interest rate, which would provide monetary policymakers with more room for maneuver.
All in all, I have great hopes, even if there are still a few bumps – the pandemic and inflation – in the road for the time being. Putting their outstanding knowledge to good use, our experts are helping pave the way to sustainable economic developments.
To conclude, let me express my heartfelt gratitude to all our staff members, the President and Vice President, the General Council as well as the other members of the Governing Board for their excellent cooperation and outstanding commitment during the pandemic. 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 pandemic.
Vienna, March 2022
Robert Holzmann, Governor
Members of the OeNB’s General Council
December 31, 2021
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,
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
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. Its nominal capital of EUR 12 million has been held in its entirety by the Austrian central government since July 2010. The shareholder rights of the central government are exercised by the Federal Minister of Finance.
The General Council of the OeNB
Functions
The General Council is charged with supervising all business functions not falling within the remit of the European System of Central Banks (ESCB). The General Council shall advise the Governing Board in the conduct of the OeNB’s business and in matters of monetary policy. As a rule, it is convened once a month by the President. Joint meetings of the General Council and the Governing Board must take place at least once every quarter (Article 20 paragraph 2 Nationalbank Act).
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 (Article 21 paragraph 1 Nationalbank Act).
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 the second executive tier of the OeNB itself must likewise be approved by the General Council. Moreover, the General Council has the exclusive right of decision on e.g. submitting to the Austrian federal government a short list of three candidates for appointments to the OeNB’s Governing Board by the Federal President, defining general operational principles in matters outside the remit of the ESCB, approving the annual accounts (financial statements) for submission to the General Meeting, and approving the cost account and investment plan for the next financial year (Article 21 paragraph 2 Nationalbank Act).
Composition
The General Council consists of the President, the Vice President and eight other members. Only Austrian citizens 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.
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 that the OeNB fulfills 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 is composed of the Governor, the Vice Governor and two other members, all of whom are appointed by the Federal President acting on 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 Governing Board of the OeNB.