Organizational structure and functions of the ESCB divisions

The European System of Central Banks (ESCB) is an international banking system consisting of the supranational European Central Bank (ECB) and the National Central Banks (NCBs) of the member states of the European Economic Community. The existence of this system is an integral part of the process of establishing the European Economic and Monetary Union.

In its structure, the ESCB is partly similar to the Federal Reserve System in the United States, consisting of 13 banks headed by The Bank of New-York and generally performing the role of a central bank. At the same time, the national central banks of Great Britain, Denmark, Greece and Sweden are members of the European System of Central Banks with a special status: they are not allowed to take part in decisions regarding the implementation of a common monetary policy for the euro area and implement such decisions.

The European system of central banks includes the European Central Bank and the National Central Banks of the countries participating in the euro area. The statutes of the ESCB and the ECB proclaim the independence of these organizations from other bodies of the Union, from the governments of the member countries of the EMU and any other institutions. This is quite consistent with the normal status of a central bank within a single country. At the same time, the “general principle” enshrined in a special article of the charter is of significant importance, according to which the European System of Central Banks is governed by the leadership (“decision-making bodies”) of the European Central Bank, and, above all, by the Governing Council.

The Governing Council, the supreme governing body, includes all members of the Executive Directorate and managers of the national securities of the member countries of the European Economic and Monetary Union only.

The main functions of the Board of Governors include:

• adapting instructions and making decisions to ensure the achievement of the objectives of the creation of the European System of Central Banks;
• determination of key elements of the EEMS monetary policy, such as interest rates, the size of the minimum reserves of National Central Banks, and the development of specific instructions for its implementation.

In addition, the Governing Council approves the rules for the internal organization of the European Central Bank and its governing bodies, acts as an adviser to the ECB and determines the manner in which it represents the European System of Central Banks in the field of international cooperation.

The Executive Directorate includes the President, Vice President and four members selected from among candidates with extensive professional experience in the financial or banking field. They are appointed from among the citizens of the EMEA member countries at a meeting of the heads of government of these countries on a proposal from the Council of Europe after consultation with the European Parliament and the Governing Council of the ECB (for subsequent elections). The Executive Directorate shall conduct monetary policy in accordance with the instructions and rules adopted by the Governing Council of the European Central Bank and thus direct the actions of the NCB, adopting departmental instructions as necessary.

The General Council, the third governing body of the European System of Central Banks, includes the President and Vice-President of the European Central Bank and the Governors of the National Central Banks of all countries of the European Economic Community, regardless of their participation in the EEAS. The General Council carries out functions that were previously carried out by the European Monetary Institute and which need to be continued in the third stage of the EMEA plan. The main tasks of the General Council include the following:

• implementation of advisory functions of the ESCB;
• collection and processing of statistical information;
• preparation of quarterly and annual reports on the activities of the ECB, as well as weekly consolidated financial statements;
• development and adoption of the necessary rules for standardization of accounting and reporting on operations carried out by the National Central Bank;
• taking measures related to the payment of the Authorized Capital of the European Central Bank to the extent not regulated by the General Agreement of the EEC;
• development of job descriptions and recruitment rules at the ECB;
• organizational preparation for the procedure for establishing the final fixed exchange rate of national currencies to the euro.

The President of the European Central Bank is simultaneously the chairman of all three of its governing bodies: the Board of Governors, the Executive Directorate and the General Council; Moreover, in the first two cases, he has a casting vote in the event of an equal distribution of votes. In addition, the President represents the ECB in external organizations or appoints a proxy for this role. In relation to third parties, he, by law, represents the ECB.

The national central banks of the member countries are an integral part of the European System of Central Banks and act in accordance with the directions and instructions of the ECB.

In organizing the activities of the European Central Bank, the institution of curators is widely and successfully used, in which each of the six members of the Executive Directorate oversees a specific area of ​​activity of the European Central Bank.

The Governing Council of the ECB is empowered to develop monetary policy, and the Executive Directorate is responsible for implementing it. To the extent possible and appropriate, the European Central Bank shall make use of the capabilities of National Central Banks.

During the development and creation of the ESCB, preparatory work was carried out, in particular, by three committees and six specialized working groups, bringing together representatives of National Central Banks and the European Monetary Institute. This experience of close cooperation continues within the ESCB with necessary modifications.

Thirteen Committees operate under the leadership of the Board of Governors:

• Committee of Internal Auditors;
• Banknote Committee;
• Budget Committee;
• External Communications Committee;
• Accounting and Cash Revenue Committee;
• Legal Committee;
• Market Operations Committee;
• Monetary Policy Committee;
• International Relations Committee;
• Statistics Committee;
• Banking Supervision Committee;
• Information Systems Committee;
• Payment and Settlement Systems Committee.

The intermediaries that allow the European Central Bank to implement a common monetary policy in the countries participating in the EMU are its authorized counterparties. Credit institutions selected for this purpose must meet a number of criteria:

• under the conditions of mandatory reserves, the circle of authorized counterparties is limited only to those credit institutions that have created minimum reserves;
• otherwise, the range of possible authorized counterparties extends to all credit institutions located in the euro area. The ECB has the right, on a non-discriminatory basis, to deny access to credit institutions which, by the nature of their activities, cannot be useful in the conduct of monetary policy;
• the financial position of authorized counterparties must be checked by national authorities and found to be satisfactory (this provision does not apply to branches of organizations whose headquarters are located outside the European Economic Area);
• counterparties must meet any specific operational criteria established by National Central Banks or the ECB.

Authorized counterparties have access to the capabilities of the European System of Central Banks only through the National Central Bank of the EEAS member state in which they are located. NCBs collect applications to participate in the operations of the European Central Bank and transmit this data to the ECB's central computer in Frankfurt. Based on the collected applications, the ECB determines the market price of resources and issues appropriate instructions to the National Central Banks, which distribute transactions among counterparties. Taking into account the capabilities of modern information technologies, even relatively small organizations can participate in the operations of the ESCB. If necessary, tenders can be carried out within an hour based on electronic information exchange.

The European System of Central Banks has the right to deny access to monetary policy instruments for reasons of reliability or in the event of a gross or repeated violation of its obligations by a counterparty. When selecting participants in specialized operations, some additional criteria are applied.

Goals and principles of organizing the activities of the ESCB

The main purpose of the creation of the European System of Central Banks, in accordance with Article 2 of the Statute of the ESCB and the ECB, is to maintain price stability.

In October 1998, the Governing Council of the ECB clarified the main goal of the EMEA monetary policy, indicating that the concept of “price stability” provides for the possibility of growth of the harmonized price index for consumer goods by up to 2% per year, while simultaneously defining its structure in relation to consumer goods and services .

It has been established that price stability must be maintained in the medium term, and price increases above the established value and deflation, i.e., a long-term decrease in their level, reflected by the harmonized price index for consumer goods, are unacceptable. The establishment of price stability within the framework of the EEAS corresponds to the principles that guided the National Central Banks of most countries before their unification into the Union, which ensures continuity in the conduct of monetary policy. To achieve its main goal, the ESCB undertakes the following specific tasks, defined in Article 3 of its Statute:

1. Determination and implementation of a unified monetary policy.

The Governing Council of the ECB determines the single monetary policy, which the National Central Banks implement in a decentralized and harmonious manner. The operational framework for a single monetary policy should satisfy the following principles: conformity with market principles, equal treatment for all, simplicity, search for the best balance between efficiency and cost, decentralization, continuity, harmonization and compliance with the management decisions of the ESCB. Basically, the procedures and instruments used by most central banks before the establishment of the European Economic and Monetary Union are used to conduct monetary policy.

2. Storage and management of official foreign exchange reserves of participating countries, as well as carrying out foreign exchange transactions.

The European System of Central Banks stores and manages the official gold and foreign exchange reserves of the EEMS member countries. The contribution of each National Central Bank is determined in accordance with its share in the capital of the European Central Bank.

According to the ECB's statute, central banks must transfer to it (on a credit basis) foreign exchange reserves totaling the equivalent of 50 billion euros (this amount may be increased in the future by decision of the Governing Council). The volume of reserves transferred by eleven central banks of the EMU member countries on January 1, 1999. to the European Central Bank amounted to 39.46 billion euros. Of these, 85% of the amount is in foreign currency, the remaining 15% is in gold.

Foreign exchange reserves remaining at the disposal of national banks are used by them to fulfill their obligations towards international organizations. Carrying out other operations with these reserves, in excess of the limit established by the Governing Council, must be agreed upon with the ECB. This is considered necessary to ensure a coherent exchange rate and monetary policy within the EMU.

Foreign exchange reserves can be used by the European Central Bank to carry out foreign exchange interventions, and it is given the right to independently decide on such interventions. This does not mean, however, that the ECB intends to seek to establish any exchange rate benchmarks in relation to any foreign currency, since such an approach could lead to conflict with the priority objective of ensuring price stability. However, the European System of Central Banks is equipped with the technical capacity to intervene in foreign exchange markets to counter excessive or erratic fluctuations in the value of the euro against the currencies of major countries outside the European Economic Community.

3. Ensuring the proper functioning of payment and settlement systems.

To ensure the success of the new currency at the third stage of the development of the Unified Economic Community, it is extremely important to have an effective technical base for payments and settlements. In particular, such a framework is useful for facilitating the formation of common short-term interbank interest rates throughout the euro area. This, in turn, involves the creation of a system whereby major large-scale cross-border transactions could be processed within the same day. To make payments within Europe, from the very first day of 1999, two pan-European banking settlement systems have been used: TARGET (Trans-European Automated Real-time Gross settlement Express Transfer system) with domestic clearing settlement systems - RTGS (Real Time Gross Settlements) and EBA ( system of the European Banking Association).

In addition to solving the above tasks, the European System of Central Banks in the course of its activities also performs the following functions:

1. issue of banknotes and coins. The ECB is the only organization that has the power to authorize the issue of banknotes denominated in euros. The ESCB will issue these banknotes, which will become the only legal tender in the EMEA countries.
2. cooperation in the field of banking supervision. The role of the ESCB in banking supervision is quite limited. The system should only contribute to the orderly conduct of relevant activities, and can offer recommendations on the scope of applicable legislation and the manner in which it should be applied. The ESCB's charter includes provisions giving it the right to more direct participation in banking supervision, but such a transfer of powers would require a unanimous decision of the EEC Council.
3. advisory functions. The ECB advises the Council of Europe or the governments of the EEC member countries on all projects within its competence: on issues of monetary circulation, means of payment, national central banks, statistics, payment and settlement systems, stability of credit institutions, financial markets and etc.
4. collection of statistical data. To properly use monetary policy instruments, they must be based on reliable and comparable statistics. This applies in particular to financial and banking data needed, for example, to calculate the reserve requirement base, as well as price statistics, as long as they are related to the fulfillment of the aforementioned ultimate goal of the ESCB's monetary policy. In particular, partially harmonized consumer price indices have already appeared in the system.

   To the extent that it does not damage the main purpose of its existence - maintaining price stability, the European System of Central Banks is called upon to support the general economic policy within the European Economic and Monetary Union.

   The ESCB is an independent banking system. In carrying out their activities, members of its management bodies do not have the right to use instructions or regulations of governments and public authorities of the countries of the European Economic Community or external countries. In turn, the institutions of the European Economic Community and the governments of the EMU member states do not have the right to interfere in the activities of the European System of Central Banks.

   The Statute of the ESCB presents the following measures that determine the security of the policies pursued and the independence of the governors of the National Central Banks from external influence:

   • the minimum term of office as a manager of the national securities market is five years;
   • The minimum (non-renewable) term of office for members of the ECB Executive Directorate is eight years. At the same time, the procedure for approving the President and Vice-President for the first Executive Directorate is different from the procedure for approving its other members;
   • termination of the term of office is possible only in connection with physical inability or serious errors in the performance of activities by officials;
   • all disputes and disagreements regarding the implementation of activities are within the competence of the European Court.

   The responsibility of the European System of Central Banks and the rules of dialogue between the ESCB and the European international institutions also meet the requirements of independence.

   Members of the Executive Directorate are appointed by mutual agreement by the heads of state or government of the EMEA member countries, taking into account the recommendations of the Council of the European Union. Approval by the European Parliament is a necessary condition for the appointment of members of the Executive Directorate.

   The Chairman of ECOFIN and members of the Commission of the European Council can take part in meetings of the Executive Directorate without the right of a deciding head, while the Chairman of ECOFIN can submit proposals for consideration by the Board of Governors.

   The ECB must submit its annual report to the bodies of the European Community, to the European Parliament, and members of its Executive Directorate are required to appear when summoned before the competent Committees of the European Parliament. Quarterly reports on the activities of the ESCB serve as the basis for quarterly negotiations with the European Parliament in the presence of the President of the ECB or, if necessary, members of the Executive Directorate.

   Two representatives of the ECB and representatives of the NCBs are members of the Economic and Financial Committee, which brings together representatives of the ministers of economy and finance and the central banks of the EEC member countries and prepares the ECOFIN meeting.

   The President of the ECB or other members of the Executive Directorate may be heard by the European Parliament on its own initiative or at the request of Parliament. In addition, national laws generally provide that the heads of NCBs will also be heard by national parliaments. The Court of Justice of the European Community has powers to review acts or omissions of the ECB.

   The activities of the ECB include:

   1. providing loans, including pawn loans, to financial institutions;
   2. open market transactions with various financial instruments;
   3. establishing minimum reserve requirements for credit institutions of the EEMS member countries.

   A characteristic feature of the ECB’s activities is that all fundamental decisions taken by a simple or qualified (2/3 votes) majority provide for a “weighted” vote of the heads of central banks, in which the “weight” (i.e. the number of votes of each of them) determined in accordance with the share of the relevant country (its central bank) in the total capital of the ECB. This does not apply to members of the Executive Directorate, each of whom has only one vote.

   The ECB can engage in the usual operations of central banks: providing loans, including pawn loans (secured by securities), to financial institutions and open market operations with various financial instruments denominated in any currency, including in the currencies of countries outside the ECB. EEBC, as well as with precious metals. The same operations can be carried out by National Central Banks, guided by the general principles developed by the ECB.

   The ECB's Statute provides for significant decentralization of the activities of the European System of Central Banks, so that operations such as repos and foreign exchange interventions are independently carried out by the National Central Banks. Each of them can also independently determine which commercial bank assets are acceptable as collateral.

   The European Central Bank and National Central Banks do not have the right to lend (in any form) to interstate (in the EEC system), state, regional and local authorities and organizations operating on the basis of state law. This, however, does not apply to state credit institutions, which in this case are treated in the same way as private credit institutions.

   The ECB and NCBs can establish links with central banks and financial institutions of other countries and international organizations and carry out all types of banking activities with them, using any financial assets and currencies.

   The equity capital of the ECB at the beginning of its activities was determined in the amount of 5 billion ECU (i.e. 5 billion euros starting from January 1, 1999). in the future, by decision of the Board of Governors, it may increase. Only National Central Banks can be shareholders of the ECB. The ECB's capital is formed in proportion to the comparative demographic and economic weight of the national central banks. The key indicator is the average weighted share of each country in the population and GDP of the “euro area”, which is determined by the following formula:

   • 50% of this share - in accordance with the share of each country in the total population of the European Economic Community;
   • 50% - in accordance with its share in the total gross domestic product of the EEC.

   These data will be adjusted every 5 years.

   According to the constituent documents, the net profit of the ECB should be distributed in the following order:

   • part of it, which is determined by the Board of Governors (but not more than 20% of all net profit), is transferred to the general reserve fund (the volume of which should not exceed 100% of the authorized capital);
   • the remaining part is distributed among the bank's shareholders in the appropriate proportion.

   Monetary policy instruments and ESCB operations

   The Statute of the ESCB (Articles 17 to 24) defines monetary policy instruments and operations, the implementation of which will allow the system to solve the tasks assigned to it. The main instruments of the ESCB's monetary policy are: conducting open market operations, regulating the discount rate through deposit and loan transactions and establishing minimum reserve requirements for credit institutions.

   The main object of regulation during these operations is the liquidity of credit institutions, which directly affects the demand and supply of money in the economy, thereby significantly affecting the rate of inflation.

   The conditions for conducting these operations, which are the same for all countries participating in the euro area, provide information to money market participants about the main directions of the monetary policy of the European Economic and Monetary Union and ensure its unity.

   Credit institutions that meet the following qualification requirements are allowed to operate in the UEMS: stability, effective management, and broad operational capabilities. The list of credit institutions that must meet minimum reserve requirements includes more than 8 thousand credit institutions in the Eurozone, more than 4 thousand of them have access to deposit and loan operations, and about 3 thousand participate in refinancing operations.

   Open market operations play an important role in the monetary policy of the ESCB in order to influence the interest rate, manage the overall liquidity of the money market and anticipate possible difficulties in the conduct of monetary policy. To conduct open market operations, the ESCB has four financial instruments at its disposal. The most important of these are refinancing transactions applied on the basis of appropriate agreements for the resale of loans or mortgaged loans. The ESCB may also issue debt certificates, carry out foreign exchange operations and attract deposits for a limited period. It is also possible to carry out operations on the basis of standard tenders, urgent tenders or bilateral procedures.

   Depending on the purpose, repetition and steps taken, open market operations carried out by the ESCB can be divided into four main categories:

   1. Major refinancing operations play a central role in regulating interest rates, managing the amount of liquidity in the market and clarifying the rationale for the ECB's monetary policy. It is these transactions that provide the bulk of private sector refinancing.

   The distinctive features of the main refinancing operations are as follows:

   • “work” only in one direction, towards the transfer of additional liquid funds to the private sector;
   • are held regularly, every week;
   • usually have a maturity of two weeks;
   • operations are carried out decentralized through National Central Banks;
   • access to them is provided on the basis of standard tenders;
   • all counterparties that meet the general criteria for participation in tenders can submit applications for participation in them;
   • Assets of both the first and second categories are accepted as collateral.

   2. Long-term refinancing operations are designed to provide the required level of refinancing of long-term operations. They do not serve as a means of adjusting interest rates and are provided on the basis of current market rates, so tenders are usually conducted on the basis of variable interest rates. Only in exceptional circumstances may the ESCB carry out tenders on the basis of fixed interest rates. By using these operations, the ESCB does not intend to exert any pressure on the money market, and will act as a normal recipient of loan interest. The scope of these operations is limited and relatively small.

   Distinctive features of long-term refinancing operations:

   • serve as a means of providing liquidity;
   • are held regularly, every month;
   • usually have a maturity of three months;
   • carried out in a decentralized manner, through National Central Banks;
   • all counterparties that meet the general criteria for participation in tenders can submit applications to participate in them;
   • In principle, assets of both the first and second categories can be accepted as collateral. However, with the consent of the Governing Council of the ECB, National Central Banks have the right to impose certain restrictions regarding both the size and composition of the collateral.

   3. Reverse “fine-tuning” transactions are carried out using a reverse transaction instrument (by conducting additional reverse transactions, selling and purchasing assets under simple forward transactions), in addition, the ESCB can accept deposits and conduct currency swap transactions. The purpose of these operations is to influence the liquidity position in the market and interest rates, in particular to smooth out the impact of unexpected changes in the amount of liquidity in the market on interest rates. The potential importance of rapid action determines the ESCB's desire to maintain a high degree of flexibility in the choice of procedures and specific forms of this type of operation.

   Reverse “fine tuning” operations have the following features:

   • can be used both for the provision and withdrawal of liquid funds;
   • can be either regular or irregular;
   • have a priori repayment period that is not regulated;
   • operations aimed at providing liquidity are usually carried out on the basis of quick tenders, although the possibility of using bilateral procedures is not excluded;
   • operations aimed at absorbing liquidity are usually carried out through bilateral procedures;
   • usually carried out in a decentralized manner, through National Central Banks (in exceptional circumstances, the Governing Council of the ECB may decide to conduct bilateral exchange operations directly by the ECB);
   • The ESCB may select a limited number of counterparties to carry out this type of operation;

   4. Structural reverse transactions are the prerogative of the ESCB and are carried out through the issue of debt certificates, reverse transactions, purchase and sale of assets on simple forward terms. These operations are carried out on the open market with the aim of adjusting the structural position of the ESCB in relation to the private sector.

   They are characterized by the following points:

   • carried out for the purpose of providing liquidity;
   • carried out regularly or not regularly;
   • have a repayment period that is not a priori regulated;
   • are carried out on the basis of standard tenders;
   • carried out in a decentralized manner, through National Central Banks;
   • all counterparties that meet the general criteria can submit applications to participate in this type of transaction;
   • Assets of both the first and second categories are accepted as collateral.

   First class assets include marketable debt instruments that meet the general reliability criteria established by the ECB for the entire euro area. Second class assets are marketable and non-marketable debt instruments, securities and non-marketable financial instruments, the reliability criteria of which are established by National Central Banks in accordance with the requirements of the ECB.

   From the point of view of reliability in conducting monetary policy, there are no differences between instruments of both classes (except that assets of the second class are not used by the EMU in simple forward transactions). The bulk of the assets (75%) used in EEAS operations are represented by government securities; securities issued by credit institutions account for 18%, by the corporate sector – 4%; the remaining 3% is issued by national central banks.

   The rate for the first main refinancing transaction was set at 3%. Currently (since October 11, 2000) this value is 4.75%.

   The deposit and lending operations of the ESCB also have specific features, which play an important role in regulating the liquidity of banking institutions. The ESCB offers two permanent types of operations:

   • “additional credit operations”, allowing credit institutions to attract a maximum overnight CS loan in order to achieve the required level of daily liquidity against collateral of their own assets with a predetermined interest rate (the interest rate in this case will be the maximum possible for a given overnight loan market);
   • “deposit operations”, which enable banking institutions to place overnight deposits on securities accounts with interest accrued at a predetermined interest rate (it should be noted that they will be able to earn little money from this - the interest rate will drop to the minimum possible for the given market).

   These operations should be considered in conjunction, as a single system through which credit institutions can replenish their liquidity or, conversely, reduce it in the short term on an overnight basis.

   Deposit and lending operations of the ECB are carried out at the initiative of banking institutions.

   When carrying out anti-inflationary policy, the ESCB also relies on such an instrument as minimum reserve requirements for credit institutions. These requirements perform two interrelated functions: stabilizing money market interest rates and influencing the liquidity structure of the banking system. The mechanism of minimum reserve requirements leaves significant opportunities for regulating the liquid position of banks using market methods on a daily basis, allows for short-term arbitrage operations and maintaining the required level of profitability. This is achieved by the fact that the ESCB's reserve requirements for credit institutions must be met on the basis of a monthly average rather than a daily position. In this case, the corresponding month begins on the 24th calendar day of each month and ends on the 23rd day of the next month.

   The system of minimum reserve requirements operating in the euro area countries is based on the following principles:

   First, reserve requirements apply to all lending institutions.

   Secondly, the reserve requirement for each specific credit institution is established by applying the reserve rate (currently 2%) to obligations in the forms of: 1) overnight deposits; 2) deposits with agreed maturities or redeemable upon notice with a period of up to two years; 3) similar in terms of maturity of debt securities; 4) money market securities.

   Thirdly, when establishing the amount of reserve requirements, the following calculation procedure is provided. If a credit institution is unable to provide confirmation of the amount of obligations in the form of debt securities with a maturity of up to two years and money market securities, it is permitted to apply a standard calculation based on 10% of the amount of the above obligations. When calculating the final reserve requirement, each credit institution can make a deduction from the result obtained by law in the amount of 100 thousand euros. The required reserves held in the accounts of the ESCB are accrued interest at the average rate for main refinancing operations, i.e. in accordance with market conditions.

   Fourthly, a credit institution has the right to apply to the National Central Bank of the ESCB member country for which it is a resident for permission to meet reserve requirements through an intermediary.

   The implementation of a comprehensive anti-inflationary policy by the ESCB made it possible to ensure price stability during the transition to a single currency. From January to May 1999 In the euro area countries, the growth rate of prices for consumer goods was 1% on an annualized basis, while in the USA - 2.1%, in Canada - 1.5%, and on average for the group of industrial countries - 1.2%. A significant increase in the role of transactions with securities within the system, especially their active use as collateral, indicates that when conducting transactions, primary attention is paid to reliability. This creates a psychological climate of confidence in the money and financial markets, which objectively reduces inflation expectations in the economy.

In the Middle Ages, novice bankers and money changers had to enjoy a certain degree of public trust. Therefore, they were usually required to obtain permission from the government to carry on their business. In addition, an oath, guarantors or cash collateral were often required.

All this could not continue indefinitely and ultimately led to legislative restrictions on the trade operations of bankers (for example, in Venice, laws of 1374 and 1403), and then to the gradual decline of the money exchange industry in Italy

One of the first public banks was the one in Venice (Banko delta Piaza de Rialto), founded in 1584 to revitalize trade and industry. The bank was run by officials appointed by the government. Soon, however, the inexperienced officials had to be replaced by private bankers, who put up significant collateral to secure their operations. At first, the Venetian bank enjoyed a monopoly, and private individuals were prohibited from opening banking offices. In order to avoid the well-known troubles mentioned above, the bank was prohibited from carrying out any transactions with the invested money. The bank did not pay any interest on deposits.

In 1619, another public bank, the so-called Girobank, was founded in Venice on identical principles. After some time, the first bank was closed and only one giro bank remained. All payments of the two Venetian banks were carried out in a special “bank coin”, which was recognized as the best coin circulating in Venice - dukati d'argento. In relation to it, other money received at the bank's cash desk was counted. The value of this coin was 20% higher than the value the usual coin circulating in Venice. According to historians, the girobank did not always adhere to the rules on the inviolability of deposits; often the board secretly gave large sums to the Venetian government, as a result of which it was necessary to suspend payments in specie twice, in 1640 and 1717.

Similar operations were carried out by the Genoese bank of St. George (Casa di S. Giorgio), which received its final organization in 1407. Its origin dates back to the middle of the 12th century and is due to a number of government loans from private individuals, and in payment of interest and repayment they were provided with the collection of certain taxes and customs duties in Genoa. To collect taxes and make payments, the state's creditors formed special partnerships, which merged in 1407 into one society called the Society of St. George. The leadership of the society, consisting of several members, was completely independent of state power, and the rulers of the republic, upon taking office, swore an oath to preserve inviolable the rights and freedom of this institution. Already in 1408, the society was allowed to accept private deposits, and, as in the Venetian bank, a special conventional coin was accepted as the basis for all payments. Later the Bank of St. Georgia lends large sums to the Genoese government, to cover which she receives the right to manage the colonial lands of Genoa (in particular, the island of Corsica and the city of Caffa) and levy many taxes.

Similar banks also appeared in Barcelona, ​​Milan, Naples and some other European cities. Somewhat later, a number of public banks appeared in the Netherlands, England and Germany. The first bank was founded in Amsterdam in 1609, in Hamburg - in 1619, in Nuremberg in 1621, in Rotterdam - in 1635, in Stockholm - in 1657. Those who made a deposit were given money from the bank a certificate of deposit that he received a certain amount of money, which he can always get back, and in the books of the bank a special account was opened for him, and his deposits and payments to him from other depositors were recorded in the receipt, and the disbursements that were given at his request to him or other investors.

Initially, girobanks were limited to only accepting deposits for storage, for which they charged a certain small fee. But gradually, from their own experience, bank management became convinced that demands for the return of deposits are always limited to only a certain part of them, which can be determined, but never extend to the entire amount. Since a significant part of the deposits lay in banks completely unproductively, in the form of dead capital, the administration came up with the idea of ​​​​using them for banking operations, mainly for issuing short-term loans.

From then on, banking institutions stopped charging fees for storing deposits, but instead acquired the right to use deposits for lending operations, although at the same time the bank always remained obliged to return time deposits upon expiration, and perpetual deposits upon demand.

Thus, a fundamental change has occurred in banking: banks, which were simple custodians of valuables, become intermediaries between persons with free capital and persons in need of credit. Girobanks are turning into so-called deposit banks.

The benefits of this transformation are obvious. For depositors, it consisted of exemption from fees for storing funds, and for the bank - in receiving income from issuing money as loans. In an effort to expand operations and income, banks began to artificially attract deposits over time, agreeing to pay a certain interest on the amounts invested and receiving income from the difference between the interest charged on loans and paid on deposits.

The certificate, which was issued by the bank to certify the acceptance of a certain amount of money for storage, and by which it was possible to get this money back, was often circulated among merchants as a means of payment when making transactions. Gradually, these certificates turned into bank notes. These notes were issued by the bank to bearer. They represented the bank's obligation to pay the bearer the amount of money indicated on the ticket. Depositors, depositing money into the bank's cash desk, received from it bank notes for the amount of the deposit and thus could always claim the entire deposit or part of it by presenting notes for payment.

At first, the value of notes issued by the bank, like previous certificates of deposit, strictly corresponded to the amount of the value of deposits. However, the case in question with the Amsterdam bank suggested that it was possible to issue bank notes for a larger amount than there were deposits in cash. When, as the French approached Amsterdam (during the war between Holland and France, in 1672), the bank gave back the deposits, many coins showed traces of the fire that had occurred in the bank 50 years earlier. This circumstance confirmed that the value of the issued tickets should not necessarily be equal to the value of cash, since, despite the fact that the tickets were issued for the entire amount of money lying in the bank’s storerooms, only part of the tickets were presented to the bank for exchange for money, while the rest remained in treatment, I don’t return to the bank.

That is why it was not necessary to touch some of the money lying around for half a century or more. This discovery prompted banks to issue notes worth more than the specie they had in their storerooms.

This innovation had extremely important consequences for the development of banking. It allowed banks to increase their working capital and thus gave a great impetus to the development of credit. But it also created opportunities for abuse by bank management, which has repeatedly led to monetary crises.

J. Low argued that money should not be metal, but credit, created by banks in accordance with the needs of the economy, in other words, paper: “The use of banks is the best method that has been used so far to increase the amount of money.

Developing his idea, J. Law announced two more principles, the importance of which even today can hardly be overestimated:

firstly, for banks it provided for a policy of credit expansion, i.e. providing loans many times greater than the stock of metallic money stored in the bank;

secondly, he demanded that the bank be state-owned and carry out the economic policy of the state.

J. Law was one of the first to understand the vital role of credit in the development of capitalist production. However, as it became clear later, this also poses a danger to the stability of the banking system.

Another danger, or another aspect of the same danger, is the exploitation of the amazing abilities of banks by the state.

At that time, the word “inflation” did not yet exist, but it was precisely this that threatened not only J. Law’s bank, but also the country as a whole where this bank would operate.

In December 1715, J. Law gave the regent a letter in which he once again explained his idea. There is one mysterious place in the letter. “But the bank,” wrote J. Law, “is not the only and not the greatest of my ideas, I will create an institution that will amaze Europe with the changes it brought about in favor of France. These changes will be more significant than those changes that occurred from the discovery of the Indies or the introduction of credit..."

At the end of 1717, J. Law founded a gigantic enterprise - the Company of the Indies. Since it was originally created to settle the Mississippi River basin that then belonged to France, contemporaries most often called it the Mississippi Company.

By this time, the East India Company was flourishing in England, and there was a similar society in Holland. But the company organized by J. Law was different from them. First of all, it was not an association of a narrow group of merchants who distributed shares among themselves. The shares of the Mississippi Company were intended for active circulation on the stock exchange. The company was closely connected with the state, not only in the sense that it received enormous privileges from the state, a monopoly in many areas.

On the board of the company, next to the “imperturbable Scot” J. Lowe, Philip of Orleans himself, the regent of France, sat. The company was merged with the General Bank, which from the beginning of 1719 came under the jurisdiction of the state and became known as the Royal Bank. The latter lent capitalists money to buy shares in the company and managed its financial affairs. All threads of management of both institutions were concentrated by J. Law.

Thus, the second “great idea” of J. Low was the idea of ​​centralization, association of capitals.

Here J. Law again “emerged as a prophet ahead of his time.” Only in the middle of the 19th century. In Western Europe and America, the rapid growth of joint stock companies began. At the end of the 20th century. they covered almost the entire economy in economically developed countries, especially large-scale production.

Features of the formation of the European banking system.

The European Union is an international organization of a special type, which has a number of unique features that clearly distinguish the EU from all international organizations existing in the modern world. There is an opinion that the European Union has ceased to be an exclusively international organization, in the traditional meaning of this concept, and has acquired some features of statehood. However, the EU continues to demonstrate the main features of an international organization and, from the point of view of the science of international law, cannot be considered as anything else. The uniqueness of the European Union lies in the formation on its territory of a single legal space based on the implementation of general principles of law. Legal regulation of banking activities in a particular state is carried out within the framework of a special branch of the national legal system - banking law. Banking law, as a rule, is understood as a complex branch of law of a particular state, and in relation to the EU. The basis for the development of cooperation between EU member states in the field of legal regulation of banking activities should be sought, first of all, in the Rome Treaty on the European Community of 1957 and the Single European Act of 1986. These documents defined the main directions and principles of cooperation between member states in the field of economics and finance, as well as in the field of administrative and legal regulation of economic relations, incl. and banking activities. The creation of a system of uniform banking regulation in Europe was carried out within the framework of the institutional structure of the economic community. Due to the principle of mutual recognition of licenses, credit institutions that have a license from one of the Member States to carry out banking activities have the right to freely provide banking services throughout the EU to any legal entities and individuals and establish branches and representative offices throughout the EU without any restrictions. Freedom of banking throughout the EU contributes to the complete liberalization of the banking services market and stimulates competition, which provides the client with a wide choice, both when choosing the bank itself and when choosing the required banking product. Due to the principle of consolidated supervision, banking supervisory authorities (national central banks or specialized supervisory authorities) are responsible for exercising full and comprehensive control over the activities of national credit institutions, including extraterritorial supervision over their activities outside the state of origin, as well as over the activities of their branches, representative offices and subsidiaries. Supervision of the activities of credit institutions is carried out in the manner prescribed by the national legislation of the member states. In studies on EU banking law, this principle is often referred to as the “home country control principle.”

In the course of historical development, segmented and universal banking systems emerged.

With a universal structure, the law does not contain restrictions regarding certain types of transactions and areas of financial services. All financial institutions can carry out any types of transactions and provide clients with a full range of services. This type of universal banks has developed in Europe. A large role in the functioning of the banking sector is played by the high degree of self-control of financial institutions and their strict adherence to customs and traditions developed by the banking community.

The intertwining of the functions of various types of credit institutions and the popularity of the universal type of bank creates certain difficulties in defining the concepts of “bank” and “banking activity”. Most often, the main feature of banking activity is considered to be accepting deposits and issuing loans as a professional activity. This is the practice adopted in the banking legislation of Belgium, Italy, Spain, Greece, Luxembourg and other countries. In some other countries (Germany, France), the term “bank” or “credit institution” is associated with a wider range of services and is not limited only to accepting savings and issuing loans. In some countries, such as the UK, it is sufficient to merely perform a deposit-taking function to qualify as a credit institution. This allows us to equate some types of specialized institutions with banks.

In European countries, there is a model of the banking system that allows banks to combine short-term lending with investments in corporate securities. A significant turnover of stock values ​​passes through such banks in these countries, primarily with regard to the placement of securities of private corporations.

Currently, the main model of organization of European banks is a universal bank, which carries out all types of banking operations, including operations with securities.

Now let's move directly to the European System of Central Banks (ESCB).

The creation of the European Union (EU) required closer coordination of the monetary and exchange rate policies of these states and the creation of a collective mechanism for currency regulation, firstly, in order to minimize transaction costs in the process of mutual trade and economic cooperation and, secondly, to increase efficiency in the territory of the integrated economic space, money performs the functions of a measure of value, a medium of exchange and a means of payment.
Providing the necessary conditions for the transition to a single monetary and exchange rate policy and a single currency based on the merging of national economic complexes occurs in accordance with certain objective laws.
At the same time, along with the general patterns of monetary integration, each stage has its own specific patterns. In modern conditions, monetary integration, carried out on the basis of a single European currency, creates a powerful incentive for further socio-economic unity of the EU countries. It speeds up capital flow processes and makes the banking and credit system more mobile and efficient.
Monetary integration in the EU has a particularly strong impact on the banking system of the member countries. Here are the consequences:
1) a clearer division of service areas between monetary systems of various types;
2) change in the role of the dominant of the monetary system - the Central
jar;
3) implementation of a joint fight against banking risks on the basis of standardization of methods for recognizing risk factors, their systematic standardized accounting, analysis, control and forecasting.
The structure of the banking systems of the euro area countries began to change already in the first half of the 90s. XX century These changes occurred not only under the influence of the formation of a common currency, but also under the influence of economic globalization processes.
The main areas of change in the banking systems of the euro area countries include the following:
unification of requirements for participants in the credit and financial market;
unification of methods for regulating commercial banks and other participants in the credit and financial market;
unification of reporting and forms of used documents;
unification of operating conditions for commercial banks in different countries;
processes of bank mergers at the national level and interpenetration of banks from different countries.
The growing capitalization of European banks and increasing cash flows create favorable conditions for the development of bank mergers and acquisitions. An analysis of bank mergers and acquisitions carried out over the last five years in European countries allows us to come to the following conclusions.
The restructuring of banking systems in European countries was mainly of a “defensive” nature, i.e. was aimed more at preventing the threats associated with financial deregulation and globalization, rather than at taking advantage of the opportunities this created.
Strengthening the positions of banks in national markets in most European countries inevitably requires increased internationalization of their activities.
The international activities of European banks are also focused on the United States and the rapidly developing countries of Central and Eastern Europe, Latin America and Southeast Asia.
One of the factors complicating the formation of a unified “banking Europe” is the insufficient development of legal norms for regulating banking systems and financial markets. The European Central Bank, which seeks to operate in all European countries, must contend with thirty national laws and banking regulators. In such conditions, it is especially difficult for retail banks, whose activities are subject to the most stringent regulation.
Currently, European banks are multifunctional institutions that carry out different types of activities in a wide variety of combinations. At the same time, the prospects for internationalization are more favorable for some types of activities than for other types. For technical and other reasons (including those related to less stringent regulation of such banks), wholesale banks can more easily conduct international mergers and acquisitions, while retail banks face significant difficulties in conducting such transactions.
In general, the strategy of banks in the coming years will be influenced by the introduction of new rules of the game associated with the entry into force of the new capital adequacy agreement (“Basel-P”).
The European banking system in the process of integration acquires new qualitative features. In the context of globalization, it is increasingly turned into the world economy. In order to meet new realities, European banks are working to improve operational efficiency, increase the capital base, expand financial instruments, strengthen liquidity, and concentrate banking capital.
An important feature of the development of European banks in recent years is the leadership of relatively small banks in the share of foreign assets, as well as in the share of profits earned abroad. Their leadership, among other things, is explained by a strategy aimed at developing activities outside the national market. This strategy is due to the fact that these banks do not have competitive advantages over giant banks for development within the country. A striking example is the activities of Austrian banks in Central and Eastern Europe. The rapid advance of Austrian banks (Raiffeisen Bank,
Bank Austria Creditanstalt and Erste Bank) in the countries of Central and Eastern Europe is explained by their relative weakness in the EU market, where they cannot compete with banking giants (Deutsche Bank, HSBC, UBS, Societe Generale, etc.).
Within the EU, in recent years, much work has been done to create a single financial space in which banks, investment funds, and financial companies could freely sell their services and products. One of the measures to deepen and expand banking and financial integration was the implementation of the Financial Services Action Plan (FSAP). It was adopted in December 1998 in Vienna by the EU Ministers of Economy and Finance, and was designed for five years (2000-2005). It contained three main directions:
1) measures to create an integrated wholesale market for financial and banking
services;
2) creation of a single retail market for financial services and efficient payment systems;
3) development of common rules and structures for prudential supervision at the EU level.
European organizations, after implementing most of the measures provided for
FSAP, today the banking community is faced with the following tasks aimed at further deepening the banking integration of EU countries:
completion of the transition to International Financial Reporting Standards (IFRS);
measures to harmonize post-market activities related to accounting for deliveries of financial instruments and final settlements for transactions with securities;
measures to create a single retail banking market across the EU.
For a number of years, work has been underway aimed at creating a single European payment system (Single European Payment Area - SEPA). This work is coordinated and directed by the European Payments Council. A project for the functioning of SEPA has already been developed, which will operate on the principle of self-regulation.
The development needs of the EU necessitated the creation of a qualitatively new payment system with the participation of the euro. Currently, settlements in euros are carried out by the TARGET payment system (Trans-European Automated Express Gross Settlement System in real time), the EBPOl wholesale settlement system (EURO 1) and the STEP1 retail settlement system of the European Banking Association (EBA).
Thus, cross-border integration, on the one hand, leads to the consolidation and interweaving of national markets for banking services, the emergence of new formal and informal institutional forms at the mesoeconomic (regional) and megaeconomic (international) levels, and on the other hand, it means the dominance of international institutions over national ones.
Self-test questions
What is the International Monetary Fund, when and for what purposes was it created?
Features of the modern IMF organization.
What is the International Bank for Reconstruction and Development, when and for what purposes was it created?
Features of the modern organization of the IBRD.
How is the IMF different from the IBRD?
What are the distinctive features of the US banking system?
What processes characterize the integration of the EU banking system?

The payment systems of the European System of Central Banks and the European Banking Association are very important elements of the single euro area payments system. In connection with the increasingly close cooperation between Russian and European business organizations, in our opinion, a review of the formation and development of pan-European payment systems is of interest. The article examines the main components of the euro area payment systems, as well as the immediate prospects for their development. In addition, issues of legal support for European payment systems and the process of forming a common legal framework for the effective and uniform functioning of pan-European payment systems are touched upon.

History of the creation of the European Union and the European System of Central Banks

The history of the creation of the European Union goes back several decades. In 1952, several European countries agreed to combine their coal and steel production activities. One of the most important economic agreements of the 50s was the Rome Agreement (March 1957), according to which the European Economic Community (EEC) was created in 1958, of which six countries (Germany, France, the Netherlands, Belgium, Luxembourg and Italy) became members. . In 1973, the EEC was replenished with three more members - Denmark, Ireland and Great Britain; Greece joined the Community in 1981, and Spain and Portugal in 1987. In 1992, the treaty establishing the European Union (EU), transformed from the EEC, was signed in Maastricht. In 1995, after the conclusion of the Maastricht Treaty, three more countries joined the EU - Austria, Finland and Sweden.

The Maastricht Treaty states that any citizen of an EU member state is a European citizen and holder of a European passport. All EU citizens enjoy the same rights.

The EU has created common interstate structures (organizations). These organizations include: Council of the EU, European Commission (EC), European Parliament, Economic and Social Affairs Committee, European Court of Justice.

However, not all countries that signed the Maastricht Agreement and joined the EU became members of the European Economic and Monetary Union (EEMU). The fact is that in order to join the EMU, applicants must meet the convergence criteria established by the Maastricht Treaty, as well as express a desire to join this union.

When the Maastricht Treaty was signed, it was decided to transfer powers in the field of implementing a single monetary policy from the national central banks of the EEMS member countries to the European Central Bank (ECB), which was established on June 1, 1998. The ECB is the youngest central bank in the world, but it has inherited the reliability and experience of all national central banks in the euro area. The ECB and national central banks formed the European System of Central Banks.

EU countries that want to join the euro area will only be able to do so if they achieve convergence criteria. The ECB is required to provide an opinion on the level of convergence achieved by a country in its development indicators before it joins the euro area.

The highest decision-making body is the Council of the ECB. It consists of the Directorate of the ECB and the presidents of the national banks of issue of the member states of the euro area. The ECB Council makes decisions on the course of monetary policy, monetary policy instruments, financial infrastructure, the basic principles of cash issue, as well as on other issues of the common European monetary policy.

When voting in the ECB Council, the principle of “one participant, one vote” applies. The votes of all participants are equal, regardless of how large the economy of the country they represent is. The ECB acts as the “lead supervisor” for supranational payment systems and also as a supervisory partner for systems outside the eurozone.

The European System of Central Banks has the following objectives:

• development and implementation of a unified monetary policy;
• carrying out currency transactions;
• storage and management of official foreign exchange reserves of the EMU member countries;
• ensuring the proper functioning of payment and settlement systems.

In 1985, eighteen commercial banks and the European Investment Bank, with the support of the European Commission and the Bank for International Settlements, formed the European Banking Association (EBA - Euro Banking Association).

Over the years of its existence, the European Banking Association, in cooperation with the ECB, the Bank for International Settlements and the central banks of European countries, has made a significant contribution to improving the payment infrastructure and financial markets of the European area, improving the clearing settlement system.

In addition to the above banking organizations, the following banking unions operate in Europe:

Federation of European Banks (European Banking Federation);

Association of European Savings Banks (European Savings Banks Group);

European Association of Cooperative Banks.

In 1992, the European Committee for Banking Standards (ECBS) and the Standardization Commission were created by the Federation of European Banks, the purpose of which is to improve the technical infrastructure of banks.

Work on unifying European payment systems began in 1993, when the European Monetary Institute (predecessor of the ECB) prepared a report on minimum common conditions.

This document outlined the basic principles necessary for organizing a general system of settlements and payments. They were intended to create the same conditions for all participants (access to the system, risk prevention, legal issues, price standards for services, operating hours).

Pan-European payment systems

Currently, the pan-European settlements and payments system consists of the ECB's gross settlements system and several settlement systems that operate under the auspices of the EBA. These systems represent the most dynamically developing market for payment and settlement services 1 .

On January 1, 1999, the ECB created the TARGET system (TARGET - Trans-European Automated Real-Time Gross Settlement Express Transfer System) - a transnational automatic settlement system for large payments in real time.

TARGET is a decentralized system that is based on national real-time gross settlement systems of countries that use eurocurrency for settlements. TARGET is one of the largest and most important projects to unify the euro area.

The main goals of the TARGET system are:

• creation of a reliable and secure mechanism for cross-border payments;
• increasing the efficiency of payments between EU countries;
• assisting the ECB in pursuing a unified monetary policy.

Three fundamental principles of the TARGET system:

1) minimalist approach;

2) decentralization;

3) market orientation.

A minimalist approach involves making maximum use of the systems and infrastructure that already exist in each EU country.

Decentralization stems from the fact that it was necessary to maintain existing banking practices in each country. The main reason for decentralization is that settlements are carried out through accounts that each of the commercial banks maintains with its national central bank, since commercial banks do not have accounts with the ECB.

Market orientation means that mandatory use of the TARGET system is required only for settlements of transactions related to monetary policy. Other payments can be made both through TARGET and through other payment systems.

The payment infrastructure in the euro area is characterized by the parallel existence of various European payment systems. Each member state of the European Union maintains a Real-Time Gross Settlement (RTGS) system for making payments in euros. The 16 national RTGS systems are interconnected by technical communication lines and together form the payment mechanism supported by the ECB. One of the main tasks was to create common conditions for all participating countries, so all credit institutions received the right of access to make payments through TARGET.

The TARGET system uses connecting interfaces and a connecting network between national systems and the main central network. This connecting system is built on the basis of the financial messaging system of the Society for Worldwide Interbank Financial Telecommunications - SWIFT (Society for Worldwide Interbank Financial Telecommunication).

The general technical features of the TARGET system are:

• use of SWIFT message formats;
• combined interface between the national network and the interconnection network;
• minimum requirements for ensuring system security;
• general performance characteristics.

The TARGET system provides for its participants to receive additional liquid funds that can be used to make payments. Liquidity is a necessary condition for the normal functioning of the settlement system. Central banks provide all participants with interest-free intraday loans in unlimited quantities against appropriate collateral. Moreover, the loan can be used several times during the working day.

All assets used in refinancing operations are accepted as collateral. In order to unify the conditions for obtaining such loans for all countries in the euro area, a list of assets that can serve as collateral has been prepared.

Types of settlement transactions processed by TARGET:

Payments directly related to central bank operations in which the Eurosystem is involved, either on the recipient's side or on the sender's side;

Settlement operations of netting systems for large transfers operating in euros;

Payments in euros between clearing banks;

Interbank and client payments in euros.

During normal processing, all payments are treated equally, that is, there is no upper or lower limit on the amount of payments.

At the end of 1998, the European Banking Association (EBA) developed a settlement system (EURO1) based on the SWIFT technical platform. The EURO1 system is designed for transferring large payments. In addition to EURO1, the EBA developed the STEP1 payment system, which was intended for the transfer of small retail payments. This system was developed as part of the overall S.T.E.P.S. program. (Straight Through Euro Payment System), which aims to provide a full range of payment services in the European and pan-European payment environment. At the end of 2000, the EBA transferred the STEP1 system to its clearing organization.

The clearing organization EBA (EBA CLEARING) was formed in June 1998, its founders were 52 of the largest European and international banks. The initial purpose of this organization was to operate the EURO1 system.

S.T.E.P.S. program continued the development of the STEP2 payment system as a pan-European automated clearing system for international and domestic mass payments in euros. At the beginning of 2003, the EBA transferred STEP2 to the EBA Clearing Organization.

These systems were developed to become the main elements for the creation of a single payment area for the euro area (SEPA - Single Euro Payments Area).

Currently, the EBA clearing organization has 70 bank shareholders. It powers the EURO1, STEP1 and STEP2 systems, which offer large and small payment transfer and clearing services to the banking community in the European Union. EBA CLEARING is constantly improving its technical and technological offerings for the provision of payment services to meet the needs of banks in a unified payment space.

Legal basis for the functioning of European payment systems

The complex of legal norms in the system of payment and settlement relations of European countries consists of the following categories:

• international standards;
• private law provisions;
• provisions of public law.

International standards are determined by EU directives and other regulatory documents governing cross-border settlement relationships, which address:

Issues of coordination of banking law;

Services for conducting payment transactions;

Protecting the interests of payment system participants;

Functional characteristics of mutual settlements and safety of settlement funds;

Creating legal protection for participants and clients of payment systems;

Common European standards for foreign transfers;

Legal norms of final mutual settlements in payment systems;

Acceleration of foreign transfers;

Improving the transparency of payment transactions for clients;

Equality when paying for foreign transactions with the same transactions within the country;

Issues of general rules of circulation of the euro;

Securities settlement rules;

International agreements regulating the rules of bill and check circulation.

The provisions of private law are national norms that define general civil legal relations.

These may include legislation such as:

• civil Code;
• law on transfers;
• commercial code;
• check circulation law;
• law on the circulation of bills;
• law on general rules of economic activity.

In addition to the above legislative documents, private law also includes documents governing contracts and agreements between participants in settlements and payments, as well as general and special rules for conducting business activities.

Public law provisions are generally represented by:

Laws on the country's central bank or other body that regulates and supervises banking and financial activities in the country;

Laws on credit institutions, banking operations, financial services and transactions;

Anti-Money Laundering Law;

Various tax and payment provisions.

The rules and laws of private and public law may vary depending on the country that is part of the European Union, so special international European regulations are being developed. These documents establish the objectives of national legislation in the field of payments.

The Treaty establishing the European Union defines the main tasks of the European System of Central Banks, which are to facilitate the smooth functioning of the payments system. The Statute of the European System of Central Banks (ESCB) and the European Central Bank establishes that the ECB has the power to issue regulations with the aim of ensuring the efficiency and reliability of settlement and payment systems within the Community and in transactions with third countries.

The Charter of the ESCB defines one of its main tasks as ensuring the smooth functioning of payment circulation. The Governing Council of the ECB, which includes the governors of national central banks and members of the ECB's board of directors, develops a common payment policy, without making any distinction between high-value settlement systems and retail payment systems.

The technology for the functioning of pan-European payment systems is based on the document “Key Principles for Systemically Important Payment Systems” 2 . EU regulations, directives and laws governing the operation of payment systems are aimed at creating a unified system of legal relations in the EU area and implementing the principles of organizing settlements and payments set out in the documents of the Bank for International Settlements.

The operation of payment systems based on “electronic money” is regulated in special EU regulatory documents, which cover issues of terminology, operating requirements, issuer control, security and technical reliability, legal agreements, as well as other functional characteristics of electronic payment instruments.

Development of European payment systems

In May 2002, the European Payments Council (EPC) set the goal of creating a single European settlement system by 2010. In September 2005, the EPS approved uniform principles for payments using payment cards and introduced standards for credit transfers and direct debits. In December 2005, the EC adopted a directive on the provision of payment services, which eliminates legal differences in the implementation of payments.

The Directive allows payment service providers to operate across the eurozone and also streamlines the operation of payment systems. In addition, access to payment markets is opened for non-credit institutions. The Directive does not affect existing electronic settlements and payment services of post offices, as well as foreign exchange transactions, traveler's checks and collection services. Payment service providers may offer alternative payment methods and will compete with credit institutions to make payments by any means, including mobile phones and the Internet. A key element of the directive is to limit the duration of payment transactions in the eurozone to one day.

However, the directive itself will not be able to reduce the period of payment transactions even to three days without a uniform settlement standard and adequate payment infrastructure. These objectives are planned to be implemented in 2006–2007 in order to have a pan-European settlement system by 2008 and create a single European payments area (SEPA) by 2010.

Currently, European cross-border payments are based on correspondent banking relationships. Banks negotiate bilateral transactions. They strive to send payments at the lowest cost and at the same time receive as many payments as possible, thereby increasing commissions. A bank's income typically includes settlement funds, interbank commissions, currency conversion income, customer fees, and sometimes intermediary compensation.

The creation of a single European payments area is intended to change the situation in the following way. Payments under SEPA will become internal with corresponding pricing. New legislation limits the ability to generate revenue from settlement transactions and interbank commissions, so banks will now have to focus on processing payments in the most efficient and reliable way to reduce costs.

Until recently, the global correspondent banking network has undergone only minor changes. Under SEPA the situation will look significantly different. First, SEPA could encourage the global community, including governments and banks themselves, to look for ways to reduce the cost of international transfers. Secondly, for many European banks, most payments will become domestic. Thirdly, the creation of SEPA can serve as an impetus for the development of innovative business models.

Since October 2002, the TARGET system environment has been experiencing a turning point in development due to the fact that the ECB Council approved the main points of the updated version of the TARGET system. The decision of the ECB Council provides that the TARGET2 system (new version of the system) will consist of several separate and one common platform (Single Shared Platform - SSP). The European banking community also clearly spoke in favor of introducing a common platform. The start of operation of TARGET2 by the pilot group is scheduled for January 1, 2007, the transition of the remaining EU member countries to the new version of the system will be carried out during 2007.

The basis for the development of TARGET2 is determined by the task of creating a single European payment space, which involves harmonization of infrastructure, interfaces and functionality, uniformity of the management system, a common liquidity management system, as well as uniform prices. In addition, the development of the system is influenced by the expansion of the EU, which involves the use of a common platform for payment transactions for countries - new EU members 3 instead of a decentralized structure that includes national payment systems.

The modular design of TARGET2 assumes the presence of mandatory and additional modules. Mandatory modules provide a full range of services for settlements and information support for payment transactions. Additional modules allow you to conduct operations with an account at the national central bank, manage a client database, use a data warehouse (warehouse), and also provide the ability to manage minimum reserves.

Operating principles of TARGET2:

Contacts with clients are decentralized (between the lending institution and its home central bank);

Accounting, reserve management and operations related to monetary policy are carried out at the level of the national central bank.

The development of the European clearing settlement system is associated with the implementation of the Pan-European Automated Clearing House (PE-ACH) project.

When considering the different architectural models that could be installed to process bulk payments, given the needs of banks operating in the European Union and potentially using local automated clearing houses in their countries, the PE-ACH model was chosen to implement the clearing settlement system. According to the ENP definition, it was selected based on the following six criteria.

1. Speed ​​and Reliability of Payment Processing: The centralized model provides similar domestic and international payment processing, while eliminating separation in quality (level) of service and allowing unprofitable but efficient transactions. Such a model would also be more suitable for future upgrades (redesigns) of its systems (faster sales, greater flexibility).

2. Liquidity efficiency: An efficient model allows financial institutions to optimize their use of liquidity.

3. Levels of operating expenses: the centralized model allows you to achieve the lowest costs through the highest savings measures.

4. Level of Investment and Ease of Implementation: The PE-ACH model is expected to be the cheapest, have the least complexity, and can be implemented in the shortest amount of time.

5. Potential for Integration: The PE-ACH model is best positioned to facilitate the progressive integration of local systems into a single future-proof structure, while preserving the capital investments already made by local automated clearinghouses.

6. Degree of openness: the right approach to corporate governance guarantees open legal access to all financial institutions of the European Union.

The ECB constantly monitors new technological developments in the field of payment systems in order to build the European settlements and payments system in accordance with the most advanced scientific and technological advances. For research purposes, a special unit has been created within the ECB - the Center for Observation of Electronic Payment Systems (ePSO - e-PAYMENT SYSTEMS OBSERVATORY) 4 .

The objectives of the ePSO are:

Development of information exchanges in the field of electronic payment systems;

Monitoring developments in this area;

Using the information obtained as a basis for monetary policy.

1 Information on the development and functioning of EU payment systems is presented on the basis of materials and publications posted on the official websites of the ECB (www.ecb.int) and EBA (www.abe.org). This article does not cover systems based on payment cards, currency exchange and securities settlements.

2 See: Report of the working group on the principles and practical aspects of payment systems of the Committee on Payment and Settlement Systems at the Bank for International Settlements “Key principles for systemically important payment systems” // Bulletin of the Bank of Russia, 2002, No. 18–19.

3 The enlargement of the European Union continued until May 2004, with 10 new countries becoming members: the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Romania, Malta, Poland, Slovenia and Slovakia. The last one to join the TARGET system was the RTGS system of the Central Bank of Poland (SORBNET-EURO) in March 2005.

4 More details about the functioning of the ESB Electronic Payment Systems Observation Center can be found on its official website (www.e-pso.info).

FINANCIAL PROBLEMS

QUALITATIVE AND QUANTITATIVE INDICATORS

BANKING SECTORS OF RUSSIA AND THE EUROPEAN UNION

D.P. Valko

Academy of Labor and Social Relations st. Lobachevskogo, 90, Moscow, Russia, 119454

This article presents in a comparative analysis the characteristics of the banking systems of Russia and Europe. A brief prerequisite for the formation of the banking systems of Russia and Europe is given. The structural features of the banking systems of Russia and the EU and indicators that track differences in scale (the number of financial institutions and their employees; capital and reserves, as well as bank assets compared to GDP), the profitability of banking sectors (return on capital and assets ratios, and so on) are presented. the same marginal profit from the employee), the quality of the financial mechanism and banking service (the quality of the credit mechanism and the number of people served by one bank). As a result, it was revealed that the Russian banking sector lags behind the European banking sector in many indicators.

Key words: Russia and the Eurozone, Russia and the EU, characteristics of the banking sector, quantitative indicators, qualitative indicators, structure of the banking sector, profitability of the banking sector.

Historically, the banking profession was associated with currency exchange. In the period from V to XI centuries. Money changers were very important players in the economy due to the large number of currencies that existed during this period. The European banking system, as we know it, began to emerge in the 12th-13th centuries. From this period, legal fictions arose that made it possible to carry out debt transactions. But, of course, the main impetus for the development of the banking sector was the John Law system, created in the 18th century. and introduced paper money into circulation along with metal coins. Since then, the banking system around the world has gone through many changes. For more than three centuries, banking concerns and monetary unions have been formed all over the world, and banks have acquired new roles.

The Russian banking system, in contrast to the European banking system, is less developed. The foundations of Russian banks were laid only in the 18th century. In 1733, the first state loan bank was created. Today, the Russian banking system has a market nature, but is qualitatively different from the banking system of the European Union (EU) in many respects.

The research presented in this article is qualitatively new, since many sources provide only individual elements indicating the characteristics of the banking sectors and their condition. The results of the study should reveal which properties of the financial systems of Russia and the EU are qualitatively different in order to indicate their development paths.

European Union banking system

Today, the EU banking system includes banks from 27 EU countries (EU-27). The banking system of each country has its own specifics. For example, in Germany there is a “three pillars” system, which consists of dividing banks into private, public and cooperative. In France, there are general credit organizations (COs), specialized credit organizations and organizations providing investment services. But all countries have their own Central Banks (CBs), united in the European System of Central Banks. Banks of EU member countries, in turn, are united by a single European Central Bank (ECB), which sets monetary policy.

The EU banking system has different types of banking institutions. Commonwealth law distinguishes several subgroups of banking institutions.

1. Monetary financial institutions (MFIs) - credit institutions and other financial institutions resident in the EU, whose task is to receive deposits and (or) other contributions that, by their characteristics, act as deposits from entities other than MFIs into their account; issue loans and (or) invest in securities.

MFIs include the following institutions: Central banks; depository banks (commercial banks); credit card companies; financial companies; other MFIs; electronic money institutions; money market funds.

2. Credit institutions - organizations that receive deposits or other repayable funds from the population and issue loans at their own expense, as well as electronic monetary institutions (in accordance with Directive 2000/46/EC of the European Parliament and Council of September 18, 2000).

Credit institutions include the following institutions: depository banks (the so-called commercial banks); credit card companies; financial companies; other MFIs; electronic money institutions.

3. Central banks - include the National Banks of EU member countries and the European Central Bank.

4. Money market funds are collective investment enterprises in which the liquidity of shares is close to deposit shares. The objective of money market funds is to invest in money market instruments and/or other debt instruments with maturities of one year or less, and/or bank deposits, and/or pursue rates of return that approximate interest rates on money market instruments.

5. Other institutions - other financial institutions - EU residents that meet the definition of an MFI, regardless of the nature of their activities.

The majority of EU financial institutions are credit institutions (84.1%), of which 84.7% are commercial banks (Fig. 1).

□ Central Banks: 0.3%

Money market funds: 14.9%

Other institutions: 0.7%

Credit institutions -Commercial banks: 84.7%

□ Credit institutions - Other credit institutions: 15.3%

Source: .

Banking system of the Russian Federation

The Russian banking system consists of credit institutions, non-bank credit institutions (organizations that have the right to carry out certain banking operations) and the Central Bank of the Russian Federation. Non-banking credit institutions can be organizations that carry out settlement operations (opening and maintaining bank accounts of legal entities, making settlements on behalf of legal entities on their bank accounts); carrying out deposit and credit operations provided for by law; be collection organizations (have the right to collect funds, bills, payment and settlement documents). The leading role in the Russian banking system is played by the Central Bank of the Russian Federation.

In addition to differences in the organization of the banking systems of Russia and the EU, there are differences in the quantitative and qualitative characteristics of the financial sectors.

Number of banks and their employees

The first difference between the structure of the banking sectors of Russia and the EU is the difference between the number of banks existing in Russia and in the EU (Fig. 2). As described above, there are more types of banking organizations in the EU than in Russia. This is partly the reason for the large number of credit institutions in the EU. As of December 1, 2011, there were 10,071 MFIs registered in the EU (of which 28 were Central Banks). There are 982 banks in Russia.

Banks and non-banking credit institutions of Russia

EU-27 MFIs, excluding Central Banks

Rice. 2. Number of MFIs excluding the Central Banks of member countries and the ECB, banks and non-bank credit institutions of Russia as of December 1 Source:

The main reason that there are such a large number of banks in the EU-27 probably lies in the historical characteristics of the region and each country individually. The EU legal framework is in a developing stage, and therefore many EU member countries have not yet had time to transform their economies in such a way as to bring the number of banks in their country closer to the optimal one. Many banks were created and operated only on the territory of their own state, without opening branches abroad. The US banking industry retained the same features as the EU-27 banking industry even after the adoption of acts that softened the process of opening branches in different states. The difference in the number of banks generates a difference in the number of employees in the banking sector (Fig. 3).

employees

□ Russia EU-27 3,264

But despite the tenfold difference in the number of banks, the EU financial sector employs only three times as many employees as the Russian financial sector (3,078,687 people in the EU-27 financial sector and 1,020,700 people in the Russian financial sector as of January 1, 2010 G.).

□ Russia SHES-27

Rice. 4. Average profit per employee, rub. in 2007. Source: author's calculations, .

Each employee brings in an average of 380 thousand rubles. in Russian banks and 555 thousand rubles. in European banks. Lower income from employees may be associated both with the territorial features of Russia (the area of ​​the Russian Federation is almost 4 times larger than the area of ​​the EU-27, which requires more employees to service bank branches), and with the widespread electronic banking in the EU, which reduces the need for personnel .

The quantitative difference in the size of the financial sectors of Russia and the EU is also reflected in the coefficients measuring profitability, stability, quality of enterprises, level of banking services, the role and scale of the banking sector in the economy of the country/union.

The scale of the banking sector

To determine how large the banking sector is in the economy, it is worth comparing some characteristics of banks with the GDP of countries.

The size of the Russian financial sector is noticeably smaller than the European financial sector (Fig. 5). In December 2011, the value of assets of EU-27 IFIs (not including the central banks of countries and the ECB) amounted to 46.3 trillion euros. In Russia, the same figure was equal to 1 trillion euros. GDP, in turn, was equal to 12.6 trillion euros in the EU-27, and in Russia - 1.3 trillion euros. Even in comparison with the assets of credit institutions in the Eurozone, the assets of credit institutions in Russia are very small.

„ Russia EU-27 Eurozone B Credit institutions of the Eurozone

In percentages

2007 2008 2009 2010 2011

Rice. 5. Assets of financial institutions with the exception of the Central Bank as a percentage of the country/region’s GDP Source: author’s calculations, .

As a percentage of GDP

□ Russia Ш EU-27 □ Eurozone ■ Credit institutions of the Eurozone

20% 19% 19% 20% 19% 19%

Rice. 6. Capital and reserves of financial institutions with the exception of the Central Banks of countries and the ECB in relation to GDP Source: author’s calculations, .

The capital and reserves of Russian banks are lower than the capital and reserves of European banks (see Figure 6). The low level of assets and capital in the Russian banking sector is associated with the low level of supply of banking services to the population and organizations. The Russian banking sector is developing primarily according to an extensive model.

The goal of the development of the Russian banking system is an intensive model, which “is characterized by a high level of competition in the banking market; provision of diverse and modern banking services; the level of capitalization of the banking sector, corresponding to the tasks of development, increasing the competitiveness and efficiency of the banking business; development of the corporate governance and risk management system; high degree of transparency and market discipline of credit institutions; responsibility of bank managers and owners for the balanced conduct of business, as well as for the reliability of information published and submitted to control and supervisory authorities."

The quality of banking service and its role in the economy

The quality of banking services within a country/region can be determined in several ways. One indicator is the number of banks per capita.

In 2011, one bank in Russia served an average of 144,598 people. The same indicator in the EU-27 and the Eurozone was significantly different: one bank served on average 62,326 people in the EU-27, and 53,465 people in the Eurozone (Figure 7). The figures given reflect only part of the reality. As shown above, the number of branches is also important in measuring the quality of service provided to the public by the banking sector. In 2009, in the EU-27, 2,131 people were served by one branch, and in Russia - 43,962 (author's calculations, ).

□ Russia EU-27 Eurozone

Rice. 7. Number of people served by one bank (credit institution) Source: author’s calculations, .

There are two opinions about the optimal number of banks per capita. On the one hand, it is believed that a larger number of banks contributes to the development of the economy, since small credit institutions often exist in places where there are no branches of giant banks. Their main task is to issue microloans to the population, which, in turn, contributes to the

movement of small and medium-sized businesses. On the other hand, managers of large banks argue that reducing the number of banks promotes the concentration of information among several participants and, therefore, greater accuracy and thoughtfulness in decision-making, for example, on issuing loans. In addition, fewer banks reduce production costs, which helps the economy grow more.

Russian reality, with three times the number of people per bank served compared to the Eurozone, is more like a monopoly in the banking sector. This phenomenon can have a number of negative consequences. For example, in the event of a credit institution's default, a bank client may lose most of his deposit, since he had no alternative in choosing between the credit institutions available to him for carrying out financial transactions. In the event of a bank default, the Russian deposit insurance system guarantees individuals a refund in the amount of 700,000 rubles. In 2012, more than 75% of the deposits of all individuals were placed in the 30 largest banks in Russia.

The ratio of the number of loans issued to GDP allows us to judge the efficiency of the banking sector. This ratio indicates the quality of the lending mechanism. In Fig. 8 shows how many eurocents of loans issued per 1 euro of produced GDP. In 2011, 1 euro of GDP was financed by 0.32 cents in Russia and 0.46 cents in the EU-27.

□ Russia VES-27 0.47 0.46

Rice. 8. Quality of the credit mechanism (euro). Ratio of loans issued to non-financial corporations to the GDP of the country/region