Statistical Notices to Reporting Banks 2003/08
Statistical Notices should be received by all those responsible for the completion of Bank of England returns. To add names to the circulation list please contact Irene Coleman (Tel. 020 7601 3644).
This Statistical Notice covers the changes necessary to banks' reporting in the event of the UK adopting the single currency (the euro) under the following headings:
- Revised preparation for possible UK participation in the euro area
- Changes to the Bank of England's powers to obtain information
- New forms and reporting requirements
- Changes to forms ER, P1, CC and other returns
- Minimum reserves and changes to form BT
- Classification of accounts of counterparties resident in the (non-UK) euro area
- Implementation
- Possible future changes
- Queries
1. Revised preparation for possible UK participation
in the euro area
This Statistical Notice replaces the guidance and forms issued
in April 2000 (Statistical
Notice 2000/03). It covers the additional
reporting requirements that Monetary Financial Institutions
(MFIs) in the UK would have to meet in the event of the UK's
participation in the euro area. These updated requirements
relate
to the sectoral details of counterparties resident in the euro
area (which would, if the UK joined EMU, include the UK); a
breakdown by major currencies of these items; changes to forms
ER, P1 and CC; and amendments to form BT that would be needed
to implement the application of minimum reserves by the European
Central Bank (ECB). The new replacement forms (EMA and EQD),
which would replace the seven EMU forms previously issued,
and
complement the existing suite of forms, are described briefly
in section 3 of this Notice. The Notes
and Definitions pages
describe the reporting format in greater detail.
Details of the changes to other forms are described in sections 4 and 5 of this Notice. Amended forms ER, P1 and CC and a draft revised Form BT are also included. These versions of the forms ER, P1, CC and BT must not be used until requested to do in a future Statistical Notice at which time the electronic technical specification would be amended. Guidance on the classification of accounts of residents of the (non-UK) euro area is contained in section 6. Section 7 outlines a provisional procedure for implementation; this would be discussed further with representatives of reporting institutions as and when more information becomes available.
2. Changes to the Bank of England's powers to obtain
information
The existing powers of the Bank of England to obtain information
are described in section 2 of the General
Notes and Definitions in the Banking Statistics
Folder [the 'Yellow Folder']. The legal basis within which
the Bank of England collects statistical
information, including meeting the needs of the minimum reserves
scheme, would change if the United Kingdom enters the euro
area.
EU Council Regulation (EC No 2533/98) lays down the overall
framework applicable to the collection of statistical information
for ESCB (European System of Central Banks) purposes. Within
the framework of this EU Council Regulation, the ECB itself
has issued a Regulation that is addressed to the actual reporting
population and covers the reporting of the statistics comprising
the consolidated balance sheet of the monetary financial institutions
sector (ECB Regulations 2423/2001, 993/2002 and 2174/2002).
Under these Regulations, for statistical purposes, the ECB
maintains the EU List of MFIs, which may be viewed here
3. New forms and reporting requirements
The additional reporting requirement should the UK join the
euro area comprises two 'EMU forms' (previously seven). The
Form EMA provides the monthly sectoral information, needed by
the ECB, of business with UK residents, residents of the other
member countries of the euro area, and with residents of all
other countries of the world. This would be required within
11 days of the reporting date for electronic returns (or 10
for paper). The Form EQD covers the currency breakdown that
is needed by the ECB on a quarterly basis. This would be required
within 17 working days for electronic returns (or 15 days for
paper). Both forms would need to be completed by banks that
are required to report the form BT on a monthly basis. This
meets the ECB minimum requirement of 95% coverage.
Copies of the forms, validations and defintions can be found here
Form
EMA, definitions, internal
validations, x-form validations
Form
EQD, definitions, internal
validations, x-form validations
4. Changes to existing forms ER, P1, CC and other returns
If the UK joins the euro area, all forms would eventually be
amended to remove the sterling column and to clarify that reporting
is denominated in euro (€000s). Also, the instruction that
items for 'Monetary Financial Institutions other than banks
and building societies' operating in the UK (for example BT2D,
BT3D etc) should be zero would be removed. If the UK joins the
euro area, positions with Money Market Funds (MMFs) would be
reported in these boxes. For a definition of MMFs, see the Classification
of Accounts Guide. In addition, Forms ER, P1 and CC would require
further changes. The sectoral coverage of the revised form ER would be expanded to cover residents of the euro area. Form
P1 would include a euro area/rest of the world split and the
reporting frequency would be monthly. Form CC would have additional
maturity splits at individual country level for countries in
the European Union and for 'acceding countries'.
Revised versions of forms (ER, P1) and definitions (ER, P1) plus the additional section only for form CC and definitions. These must not be used until requested to do in a future Statistical Notice.
5. Minimum reserves and changes to form BT
If the UK joins the euro area, all banks and building societies
(credit institutions) in the UK would be subject to the application
of minimum reserves by the ECB. The application of minimum reserves
by the ECB is established in Council Regulation (EC) No 2531/98.
The reserve base is defined within Regulation (EC) No 2818/98
[as amended by Council Regulations (EC) 1921/2000 and (EC) 690/2002]
on the application of minimum reserves. The reserve base of
a credit institution would be calculated using information derived
from an amended Form
BT. A draft of this form is attached to
help clarify the changes. This version of the Form BT must
not be used until requested to do in a future Statistical
Notice. The Financial Services Authority would review the compilation
of Modified Eligible Liabilities nearer possible entry as necessary.
Draft definitions to the entire Form BT are not being issued
at this stage. Amended and/or new definitions are set out below.
BT5B Bonds and all other instruments of up to and including five years' original maturity
Item 5B would be split into:
- 5BA Of which: All instruments other than CDs and commercial paper of up to and including one years' original maturity
- 5BB All instruments other than CDs and commercial paper of more than one years' and up to and including two years' original maturity
- 5BC All instruments other than CDs and commercial paper of more than two years' and up to and including five years' original maturity
BT45A Deposit liabilities of greater than two years' original maturity
The existing item would be replaced with the following amended item plus two new items:
- BT45A Deposit liabilities (in items 3D-3J but excluding 3HA,
3HB and 3HC) of greater than two years original maturity excluding
those to the ECB, to non-UK euro area central banks and to non-UK
euro area credit institutions
This item is compulsory. Include deposits over 2 years' original maturity, but exclude any liabilities owed to the ECB, to non-UK euro area central banks or to non-UK euro area credit institutions. Deposits over 2 years' original maturity may include deposits with an agreed original maturity of over two years but where earlier redemption is allowed after prior notification, or where redemption on demand is permitted but subject to certain penalties. TESSAs, SAYE, Sharesave contracts and ISAs must be excluded from this item as these are removed from the reserve base by reference to their individual items. - BT45AB Total deposit liabilities to the ECB, central banks
and credit institutions in the (non-UK) euro area
This item is compulsory. Include any deposit liabilities included within 2J and 3J that are to the ECB, central banks and credit institutions in the (non-UK) euro area. The EU List of MFIs is on the ECB website - BT45AC Total liabilities under repo with the ECB, central banks
and credit institutions in the (non-UK) euro area
This item is compulsory. Include any deposit liabilities included within 6J and 7J that are to the ECB, central banks and credit institutions in the (non-UK) euro area. The EU List of MFIs is on the ECB website
BT46 Total eligible liabilities
The existing item would be replaced with the following:
- BT46C Reserve base
The reserve base consists of euro and foreign currency deposit liabilities (including repo albeit at 0% weighting currently), debt securities issued and money market paper issued, excluding any liabilities owed to the ECB, to participating national central banks or to any other credit institution subject to the ECB's minimum reserve requirement. Liabilities over 2 years' original maturity have 0% weighting currently. The Reserve Base is calculated as follows:
100% of (2D + 2E + 2F + 2G + 2H + 2J + 3D + 3E + 3F + 3G + 3H - 3HA - 3HB - 3HC + 3J + 10 - 45A - 45AB)
plus
70% of (4 + 5A + 5BA + 5BB)
plus
0% of (5BC + 5C + 6D + 6E + 6F + 6G + 6H + 6J + 7D + 7E + 7F + 7G + 7H + 7J - 45AC + 45A + 3HA + 3HB + 3HC)
The weighting of 70% above allows for an assumed 30% of these items to be held by other MFIs in the euro area. A ratio of 2% is applied to the Reserve Base to calculate the minimum reserve less a lump sum allowance of €100,000. The Minimum Reserve is held with the Bank of England and reported in item 21C.
BT21C Minimum reserves held at the Bank of England
This is a new item. See definitions for item 46C
6. Classification of accounts of counterparties resident
in the (non-UK) euro area
The ECB Regulation that applies to the consolidated balance
sheet of the Monetary Financial Institutions sector [EC No
2423/2001
(ECB/2001/13)] follows classification principles that are consistent
with the European System of National and Regional Accounts
in
the Community ['ESA 95'], as far as possible. UK resident MFIs
already report in line with ESA 95 with regard to UK banking
statistics and should be familiar with the principles that
are currently set out in the Classification
of Accounts guide in
the 'Yellow Folder'. With regard to counterparties resident
in the euro area, reporting MFIs are in a position to identify
counterparties that are also defined as MFIs by reference to
the EU
List of MFIs. Other counterparties in the euro area are
identified according to their sector of economic activity,
based
on their principal activity and function. Guidance is available
in the ECB's Money and Banking Statistics Sector Manual -
Guidance
for the statistical classification of customers, available
here (within the "other publications" section).
7. Implementation
If the timing of a decision on UK entry allows, the Bank of
England would wish to begin the collection of the two 'EMU Forms'
3 months before UK entry to the euro area, to enable the ECB
to compile and analyse the new, UK-in, series and to calculate
accurate break adjustments to their existing (pre-UK entry)
series. Because of the importance of these data for monetary
policy decisions, it is hoped that a lead-time of six months
would be sufficient for MFIs to make the final preparations
for the new reporting. The exact date for implementation and
the precise requirements for reporting in advance of entry would
be discussed further with the British Bankers' Association if
a date for UK entry is set. For clarity, the 'date of entry'
here refers to the adoption of the single monetary policy; it
is not affected by any timetable for the conversion of accounts
or the substitution of notes and coin.
The changes to Forms ER, P1, CC and BT would be made from the
date of UK entry at which time the sterling entries on all forms
would become obsolete and all reporting would switch to being
denominated in euro (€000s).
As outlined in HM Treasury's Third National Changeover Plan,
the minimum time between a government decision to recommend
UK entry and the date of a referendum is estimated as four months.
No decision has yet been taken by the Government about the period
of time between a positive referendum vote and the date of UK
entry, but participants in wholesale financial markets have
so far assumed that this would be around eight months. Reporting
MFIs will draw their own conclusions, based on competing priorities
within their own institutions, about the start date required
for meeting these potential statistical obligations.
8. Possible future changes
The requirements outlined in this Notice cover the ECB's statistical
reporting requirements at the current date which were last amended
in November and December 2001 for monetary and interest rate
statistics respectively. At that time, the ECB announced its
intention to keep these requirements stable for at least 5 years
from January 2003, which was the implementation date for euro
area countries.
9. Queries
If you have any queries relating to this notice, please contact
the Monetary Statistics group via e-mail
Bank of England
Monetary & Financial Statistics Division
15 December 2003
