The purpose of the consolidated weekly financial statement of the Eurosystem (WFS) is to provide users with a source of information in relation to monetary policy operations, foreign exchange operations and investment activities. It also provides information on the liquidity flows.
In accordance with the Article 284 of the Treaty establishing the European Union and the Article 15.2 of the Statute of the ESCB that lay down precise reporting obligations of the ECB, a consolidated financial statement of the Eurosystem is published each week. The weekly financial statement shows the assets and liabilities held by the Eurosystem vis-à-vis third parties as they arise in the accounts of the euro area national central banks (NCBs) and the ECB. Claims and liabilities between Eurosystem central banks (so-called intra-Eurosystem claims and liabilities) cancel each other out and are therefore not shown.
The format and the content of the WFS are specified in the Annex IV and Annex V of the guideline of the ECB of 11 November 2010 on the legal framework for accounting and financial reporting in the European System of Central Banks (ECB/2010/20). This guideline is available in the section Legal Framework.
The consolidated weekly financial statements of the Eurosystem are published on the ECB’s website by date, for each calendar year. As a general rule, they are published on a Tuesday and relate to the preceding Friday. The publication dates that differ from this general rule (for example in respect of the first financial statement of each quarter and whenever the TARGET2 system is closed) are also published on the ECB’s website. The WFS is published together with an accompanying explanatory note which provides information on the movements in key balance sheet positions, for those distinguishing between items not related to monetary policy operations and separately for items related to monetary policy operations.
The weekly financial statement and the accompanying explanatory note are available on the ECB’s website from 15:00 CET, on the relevant publication date, in all official EU languages.
The consolidated weekly financial statement shows balances as at close of business on the reporting day and changes (due to transactions or quarterly revaluation effects as applicable) compared with the previous week. All items in the balance sheet are expressed in millions of euro; whereas items in the explanatory note are presented in billions of euro, except in the case of gold and gold receivables, which are expressed in millions of euro. Most of the data included in the weekly financial statement are also available as long time series in the ECB's Statistical Data Warehouse (Reports > Monthly Bulletin > 1 Monetary policy statistics > 1.1 Consolidated financial statement of the Eurosystem).
As the data contained in the weekly financial statement refers to fixed reporting days (namely Fridays), they may be distorted by random incidents. In addition, the weekly changes are to a considerable extent the result of recurrent fluctuations within a year and especially within a month. Therefore, no immediate conclusions should be drawn from the weekly financial statement concerning medium or longer-term monetary trends. For such assessment, users are advised to refer to the ECB announcements (see the Press section) or to publications (Publications section) such as the Monthly Bulletin.
The consolidated weekly financial statement of the Eurosystem distinguishes between euro area residents and non-euro area residents. This distinction is made according to the statistical rules of the European Union and of the International Monetary Fund. Further distinctions are made between foreign currency-denominated and euro-denominated items. Within the euro area, credit institutions, general government and euro area residents are shown in detail. The consolidated weekly financial statement shows all assets and liabilities of the ECB and of the euro area national central banks (NCBs), including all their branches. It does not contain the assets and liabilities of investments in subsidiaries or companies in which the euro area NCBs hold participating interests.
This section provides an overview of the composition of the main balance sheet items commented on in the WFS. It incorporates changes that have arisen due to developments in the implementation of monetary policy and foreign exchange operations, which have taken place since the publication of the Consolidated opening financial statement of the Eurosystem. Users can also find an explanation of the composition of each individual balance sheet item by clicking on the relevant item within the weekly financial statement template.
Gold and gold receivables (asset item 1) show the gold holdings (both physical and non-physical gold) of the Eurosystem central banks at previous quarter-end market value and the value of the transactions (purchases and sales) settled since the previous quarter-end. Gold forms part of the Eurosystem official foreign reserves portfolio, although it is not actively managed.
The net position of the Eurosystem in foreign currency (asset items 2 and 3 minus liability items 7, 8 and 9) includes all customer and portfolio transactions in foreign currency (including SDRs) with both euro and non-euro area residents and foreign exchange liquidity-providing operations conducted for the benefit of euro-area residents.
The foreign exchange liquidity-providing operations, whereby the Eurosystem provides domestic counterparties with foreign currency in exchange for euro, were first introduced in December 2007 in order to address tensions in the euro-area money markets. The initial operation was a joint action with the Federal Reserve by offering US dollar funding to Eurosystem counterparties under the USD Term Auction Facility. The US dollars were provided by the Federal Reserve to the ECB, by means of a temporary reciprocal currency arrangement (swap line). Swap lines with the Bank of Canada, Swiss National Bank, Bank of Japan and Bank of England may also be used to provide liquidity in Canadian dollar, Swiss franc, Japanese yen and GBP respectively. The foreign exchange liquidity-providing operations are reported on separately in the explanatory note accompanying the WFS.
Detailed information on the foreign exchange liquidity-providing operations conducted by the Eurosystem can be found in the section: Monetary Policy > Instruments > Open market operations.
Finally, under the net position of the Eurosystem in foreign currency the Eurosystem’s foreign reserves portfolio is held which is primarily needed to support possible interventions in the foreign exchange market. The Eurosystem’s foreign reserves portfolio was originally set up via transfers of foreign reserve assets from the euro area NCB’s whereby assets and liabilities transferred were transformed into domestic positions through the transition to Stage Three. Over time the composition of the portfolio changes due to: a) the transfers of foreign reserves from euro area NCB’s when they join the Eurosystem, b) the interventions in the foreign exchange market, c) the reinvestment of the proceeds coming from the management of foreign reserves portfolio and d) the changes in the market value of the invested assets as well as the foreign exchange and gold of the Eurosystem. The foreign reserves portfolio consists of US dollars, Japanese yen, gold and SDR holdings.
Asset item 2.2 Balances with banks and security investments, external loans and other external assets represents the bulk of the official foreign reserves holdings of the Eurosystem and shows deposits and security investments with counterparties outside the euro area other than those held under asset item 11.3 Other financial assets. Asset item 2.1 Receivables from the IMF shows the member state’s claims resulting from their IMF subscription, their holdings of special drawing rights (SDRs) and their participation in the Fund’s programmes. A related balance sheet item is Liability 9 Counterpart of special drawing rights allocated by the IMF, which represents the amount of SDRs that were originally allocated to the respective member states.
The Eurosystem’s netlending to credit institutions (asset item 5 minus liability items 2.2, 2.3, 2.4, 2.5 and 4) shows the use of the Eurosytem’s liquidity providing operations by counterparties net of the liquidity absorbing instruments.
Lending to euro area credit institutions related to monetary policy denominated in euro (asset item 5) shows the Eurosystem's core liquidity-providing monetary policy operations. This position is broken down into 6 sub-items all of which appear of the face of the WFS. These monetary policy instruments comprise open market operations, such as main refinancing operations (MROs) (item 5.1), longer term refinancing operations (LTROs) (item 5.2), fine-tuning reverse operations (item 5.3) and structural reverse operations (item 5.4), as well as the marginal lending facility (MLF) (item 5.5). In addition, item 5.6 shows Credits related to margin calls which may arise from value increases in underlying assets regarding other credit to counterparties. In such cases, central banks may return excess cash to the counterparty.
Liabilities to euro area credit institutions related to monetary policy operations denominated in euro (liabilities item 2) show the amounts of liquidity-absorbing monetary policy instruments. This item is broken down into 5 sub-items which also appear on the face of the WFS. Item 2.1 Current accounts (covering the minimum reserve system), consists primarily of holdings which relate to the credit institutions requirement to hold deposits on accounts with their national central banks. The Eurosystem's minimum reserve system includes averaging provisions, implying that credit institutions have to comply with the reserve requirement on average over a specific maintenance period. Item 2.2 shows the use of the deposit facility whereby overnight deposits earn a pre-specified interest rate. Item 2.3 relates to fixed-term deposits. The collection of fixed-term deposits is a monetary policy instrument envisaged for fine-tuning purposes in order to absorb liquidity in the market. It is used, for example, to sterilise the liquidity provided through the Securities Markets Programme (SMP), or to counter liquidity imbalances on the last day of a reserve maintenance period. Item 2.4 relates to fine-tuning reverse operations – an instrument also envisaged for liquidity-absorption purposes. Finally, item 2.5 displays deposits relating to margin calls which encompass deposits of credits institutions arising from value decreases of the underlying assets.
The Eurosystem’s regular open market operations are used to steer short-term interest rates, to manage the liquidity situation in the market, and to signal the stance of monetary policy in the euro area. Since the escalation of the financial crisis in 2008, the regular liquidity-providing operations have been complemented by a range of non-standard measures collectively known as the “enhanced credit support” policy that includes among other measures: fixed-rate tenders with full allotment and the introduction of additional refinancing operations (operations with maturity of one maintenance period, supplementary three-month LTROs) including those with longer maturities (six-month, twelve-month and 36 month LTROs). These non-standard liquidity operations are reflected in the relevant balance sheet items as described above.
Further information on the open market operations conducted by the Eurosystem is available in the section: Monetary Policy > Instruments > Open market operations.
Securities of euro area residents denominated in euro (asset item 7) is divided into 2 sub-items for presentational reasons. As announced by the ECB on 7 May 2009 asset item 7 was split in order to separately identify securities held for monetary policy purposes (asset item 7.1) from marketable securities other than those held for monetary policy purposes (asset item 7.2).
Item 7.1 Securities held for monetary policy purposes reflects the Eurosystem holdings of the securities purchased by the Eurosystem within the scope of the covered bond purchases programme (CBPP), which began in July 2009. Purchases under the first CBPP scheme were fully implemented by June 2010. A new covered bond purchases programme (CBPP2) was announced on 6 October 2011 and began in November 2011. This item further reflects Eurosystem’s purchases of euro-area public and private debt securities under the securities markets programme (SMP) which began in May 2010. Both portfolios are classified as held-to maturity and are accounted for at amortised cost subject to impairment. The covered bond purchases programmes and the securities markets programme were also introduced as part of the enhanced credit support operations referred to above.
Further information on the covered bond purchase programme and the securities markets programme is available in the section: Monetary Policy > Liquidity analysis.
Asset item 7.2 Other securities reflects the holdings by the Eurosystem of marketable securities other than those held for monetary policy purposes, i.e. securities denominated in euro which are held outright by euro area central banks for investment purposes at their own risk (including government securities stemming from before EMU). At the end of 2008 an accounting reclassification took place which changed the composition of the WFS. As a result, part of the euro area central banks’ investment portfolios was moved from Other assets (asset item 9) to Other securities (asset item 7.2).
The consolidated financial statement of the Eurosystem reflects the valuation of the assets and liabilities of the Eurosystem. According to the harmonised accounting rules for the Eurosystem, gold, foreign exchange, security holdings and financial instruments of the Eurosystem are revalued at current market rates and prices at the end of each quarter. The revaluation takes place on an item-by-item basis for securities, interest rate swaps, futures, forward rate agreements and other interest rate instruments. Foreign exchange holdings (including special drawing rights) are revalued on a currency-by-currency basis.
Securities classified as held-to-maturity are treated as separate holdings, valued at amortised cost and subject to impairment.
The net effect of the quarterly revaluation is shown separately for each balance sheet item in the consolidated weekly financial statement of the Eurosystem after quarter-end. During the quarter, all transactions conducted by the Eurosystem are recorded at transaction rates and prices. The quarterly revaluation is intended to eliminate potential effects resulting from fluctuations in foreign exchange rates, gold and security prices which influence the size of the respective balance sheet items over time.
Unrealised gains arising from the quarterly revaluation are not recognised as income, but are recorded directly in a revaluation account. Unrealised losses are taken to the profit and loss account at the year-end if they exceed previous revaluation gains registered in the corresponding revaluation account. Such losses are not reversed in subsequent years against new unrealised gains. Unrealised losses resulting from the revaluation of a given security, or a foreign currency or holding of gold are not netted against unrealised gains in other securities or currencies. These principles combine transparency with the prudent recognition of income.
Pursuant to Article 26.4 of the Statute of the ESCB, the Governing Council of the ECB has approved an ECB guideline on the legal framework for accounting and financial reporting of 11 November 2010 (ECB/2010/20) which contains all substantive rules for the accounting and financial reporting of the Eurosystem. Application of these accounting principles is mandatory for all items material to the operations of the Eurosystem. This guideline is available on the ECB’s website, the link to which can be found at the beginning of this article.
For ease of reference an overview of the definitions of the individual balance sheet items is provided in this document. Users can also find the definitions of the individual balance sheet items by clicking on the relevant balance sheet item text in the weekly financial statement template. For further detail on the composition of the individual balance sheet items users are advised to consult the guideline.
1. Gold and gold receivables forms part of the foreign reserves of the Eurosystem. It consists of physical gold and non-physical gold.
2. Claims on non-euro area residents denominated in foreign currency represent the main foreign exchange reserve assets of the Eurosystem.
2.1 Receivables from the IMF consists of drawing rights within the reserve tranche (net), i.e. national quota minus balances in euro at the disposal of the IMF, holdings of Special Drawing Rights (SDRs) (gross) and other claims such as the General arrangements to borrow (GAB), loans under special borrowing arrangements or deposits made to trusts under the management of the IMF. A related balance sheet item is the liability item 9 Counterpart of special drawing rights allocated by the IMF, which shows the amount of SDRs that were originally allocated to the respective country/NCB.
The sub-item 2.2 Balances with banks and security investments, external loans and other external assets consists of foreign currency assets other than gold and SDR holdings with non-euro area residents. This contains, inter alia, current accounts, deposits and reverse repo transactions as well as investments in notes and bonds, bills, zero bonds, money market paper, equity instruments and cash deposits.
3. Claims on euro area residents denominated in foreign currency include foreign currency assets held with euro area residents, other than those under asset item 11.3 ‘Other financial assets’, such as investments in notes and bonds, bills, zero bonds, money market paper, equity instruments, deposits and sundry lending.
4. Claims on non-euro area residents denominated in euro has two sub-items. The sub-item 4.1 Balances with banks, security investments and loans contains current accounts, fixed-term deposits, day-to-day money, securities and loans other than those under asset item 11.3 ‘Other financial assets’. Sub-item 4.2 Claims arising from the credit facility under ERM II, shows lending according to the ERM II conditions. The counterpart of this balance sheet position is shown under Liability item 8.2 Liabilities arising from the credit facility under ERM II.
5. Lending to euro area credit institutions related to monetary policy operations denominated in euro is broken down into six sub-items and reflects the liquidity-providing monetary policy instruments used by the Eurosystem to support its primary objective.
5.1 Main refinancing operations are a regular liquidity-providing open market operation executed by the Eurosystem in the form of reverse transactions. Main refinancing operations are conducted through weekly standard tenders in the form of reverse transactions and normally have a maturity of one week. 5.2 Longer-term refinancing operations are liquidity providing reverse transactions with a monthly frequency and a maturity of normally three months. 5.3 Fine-tuning reverse operations are executed on an ad-hoc basis with the aim of managing the liquidity situation in the market and steering interest rates, in particular in order to smooth the effects on interest rates caused by unexpected liquidity fluctuations in the market. 5.4 Structural reverse operations are liquidity-providing open market reverse operations executed by the Eurosystem mainly in order to adjust the structural liquidity position of the financial sector vis-à-vis the Eurosystem. 5.5 The Marginal lending facility is a standing facility of the Eurosystem which counterparties may use to obtain overnight liquidity from a national central bank at a pre-specified interest rate against eligible assets. 5.6 Credits related to margin calls may arise from value increases in underlying assets regarding other credit to counterparties. In such cases, central banks may return excess cash to the counterparty.
6. Other claims on euro area credit institutions denominated in euro shows, inter alia, current accounts, fixed-term deposits, day-to-day money and reverse repo transactions in connection with the management of security portfolios held under asset item 7 and Emergency Liquidity Assistance (ELA) provided by Eurosystem central banks to domestic credit institutions (see also paragraph on "Other issues" in the press release of 24 April 2012).
7. Securities of euro area residents denominated in euro is split into two sub-items. Item 7.1 Securities held for monetary policy purposes reflects securities issued in the euro area held for monetary policy purposes and ECB debt certificates purchased for fine tuning purposes. Sub-item asset 7.2 Other securities, shows holdings of securities and government debt other than those under asset item 7.1 and under asset item 9 Other assets and contains certain categories of marketable securities and equity instruments.
8. General government debt denominated in euro shows outstanding non-marketable claims on euro area governments stemming from before 1 January 1994, from which date onwards Eurosystem NCBs were no longer allowed to provide credit facilities to governments or make direct purchases of debt instruments from governments. This debt will be redeemed by governments in due course.
9. The position Other assets is a collective item that includes items in the course of settlement, coins of the euro area if an NCB is not the legal issuer, tangible and intangible fixed assets and other financial assets. Other financial assets comprises participating interests and investments in subsidiaries; equities held for strategic/policy reasons, securities, including equities, and other financial instruments and balances (e.g. fixed-term deposits and current accounts), held as an earmarked portfolio: reverse repo transactions with credit institutions in connection with the management of securities portfolios. This item also contains revaluation differences arising on off-balance-sheet instruments and accruals and prepaid expenditure.
1. Banknotes in circulation reflect the nominal value of euro banknotes and the nominal value, in euro, of banknotes denominated in national euro area currency units during the cash changeover year.
2. Liabilities to euro area credit institutions related to monetary policy operations denominated in euro is broken down into five sub-items. The sub-item 2.1 Current accounts (covering the minimum reserve system) shows the euro accounts of those financial sector counterparties that have access to monetary policy operations of the Eurosystem, including their accounts used to hold minimum reserves according to the framework of the minimum reserve system of the Eurosystem. Item 2.2 Deposit facility is a standing facility of the Eurosystem which counterparties may use to hold overnight deposits remunerated at the pre-specified interest rate. (This sub-item has to be seen in connection with the assets sub-item marginal lending facility. While the former instrument may be used for the short-term investment of excess liquidity, the latter instrument may serve to cover short-term liquidity shortages.) 2.3 Fixed-term deposits is an instrument used by the Eurosystem for absorbing liquidity. 2.4 Fine-tuning reverse operations reflects irregular open market operations executed by the Eurosystem mainly in order to absorb unexpected liquidity inflows to the market. 2.5 Deposits related to margin calls may arise from value decreases in underlying assets provided against credit to counterparties. The Eurosystem may in this case require counterparties to supply additional cash or assets. Equivalents to the latter two balance sheet sub-items are shown on the assets side, namely the sub-item of the same name, fine-tuning reverse operations (asset item 5.3), and the sub-item credits related to margin calls (asset item 5.6 ).
3. Other liabilities to euro area credit institutions denominated in euro comprises repo transactions in connection with simultaneous reverse repo transactions for the management of securities portfolios under asset item 7 and other operations unrelated to Eurosystem monetary policy operations and any liabilities/deposits stemming from monetary policy operations initiated by a central bank prior to joining the Eurosystem.
4. Debt certificates issued are discount papers, issued by the ECB with the aim of absorbing liquidity. In future, such debt certificates, if any, will be issued by the ECB through euro area NCBs and will have a maturity of less than twelve months.
For item 5 Liabilities to other euro area residents denominated in euro a breakdown is provided between 5.1 General government and 5.2 Other liabilities.
6. Liabilities to non-euro area residents denominated in euro consist of current accounts and deposits with the Eurosystem held by central banks, other banks, international/supranational institutions and other depositors. The balances of the TARGET2 accounts of central banks of Member States whose currency is not the euro are also shown under this item.
7. Liabilities to euro area residents denominated in foreign currency show current accounts and liabilities under repo transactions which are usually investment transactions using foreign currency or gold.
8. Liabilities to non-euro area residents denominated in foreign currency consist of sub items 8.1 Deposits, balances and other liabilities, and 8.2 Liabilities arising from the credit facility under the ERM II (cross-referenced to asset item 4).
9. Counterpart of special drawing rights allocated by the IMF – shows the amount of SDRs that were originally allocated to the respective country/NCB (cross-referenced to asset item 2).
10. Other liabilities is a collective item including items in the course of settlement, the revaluation differences of off-balance-sheet instruments, accruals and income collected in advance. This position also includes provisions and profit for the year.
11. Revaluation accounts, unrealised gains related to price movements, foreign exchange rate movements and market valuation differences related to interest rate risk derivatives are disclosed. This item also includes the unrealised gains of euro area NCBs that have arisen due to the change from national accounting rules to harmonised accounting rules for the Eurosystem.
12. Capital and reserves consists of paid-up capital, legal reserves, other reserves and retained earnings.