2017年-ECB欧洲央行_Annual_Accounts_2016_61页_1000kb

Summary of the ECB's Annual Accounts for the Year Ending 31 December 2016

Core Content

The European Central Bank (ECB) Annual Accounts for the year ending 31 December 2016 provide an overview of the ECB's financial activities, risk management, and the impact of its key operations on its financial statements. The report is structured to reflect the ECB's role within the Eurosystem, which is primarily focused on maintaining price stability, conducting monetary policy, and ensuring the safety and soundness of the financial system.

Main Tasks of the ECB

• Implementation of the monetary policy of the European Union.
• Conduct of foreign exchange operations.
• Management of the official foreign reserves of the euro area countries.
• Promotion of the smooth operation of payment systems.
• Supervision of the banking system through the Single Supervisory Mechanism (SSM).

Key Processes and Functions

2.1 Controls within organisational units

• Each business area is responsible for managing its own operational risks and ensuring the accuracy of financial statements.
• Budget implementation is primarily the responsibility of individual business areas.

2.2 Budgetary processes

• The Budgeting and Controlling Office (BCO) develops and monitors the budget in line with the strategic priorities of the Governing Council and Executive Board.
• The Budget Committee (BUCOM) assists the Governing Council in evaluating budget proposals and supplementary funding requests.

2.3 Portfolio management

• The ECB manages various portfolios including:
  • Monetary policy securities (SMP, ABSPP, PSPP, CBPPs).
  • Foreign reserves (USD, JPY, gold, and SDRs).
  • Own funds investment portfolio (euro-denominated assets).
• Foreign reserves are managed with a focus on liquidity, safety, and return.
• The ECB's own funds portfolio aims to maximise returns while preserving capital.

2.4 Financial risk oversight functions

• The Directorate Risk Management and the Risk Management Committee (RMC) oversee financial risks.
• The RMC ensures the appropriate level of financial risk protection for the Eurosystem and ECB, including monitoring and reporting on financial risks.

2.5 Production of financial statements

• Financial statements are prepared in accordance with the principles established by the Governing Council.
• The Financial Reporting Division produces financial statements in cooperation with other business areas.
• Financial statements are audited by independent external auditors recommended by the Governing Council and approved by the EU Council.
• The Audit Committee reviews the financial statements before their approval by the Governing Council.

Financial Risks

3.1 Financial risks

• The ECB uses Value at Risk (VaR) and Expected Shortfall (ES) to quantify financial risks.
• As of 31 December 2016, the total financial risk (VaR at 95% confidence level) was €10.6 billion, an increase of €0.6 billion from 2015, mainly due to the rise in gold prices.

3.1.1 Credit risk

• Credit risk is managed through tailored frameworks for different portfolios.
• Credit risk in foreign reserves is low due to high credit quality assets.
• The ECB's own funds portfolio has a higher but still limited credit risk.

3.1.2 Market risk

• The ECB is exposed to currency, commodity (gold), and interest rate risks.
• Currency and commodity risks are mitigated through diversification of holdings.
• Interest rate risk is managed through asset allocation and market risk limits.

3.1.3 Liquidity risk

• Liquidity risk is primarily related to the ECB's foreign reserves due to the potential for rapid liquidation.
• The ECB maintains a low level of liquidity risk in 2016.

3.2 Operational risk

• Operational risk management (ORM) is aimed at ensuring mission success and protecting reputation and assets.
• ORM is managed through a risk matrix based on impact and likelihood grading scales.
• The ORM/BCM Section provides support to business areas and the decision-making bodies in risk management and business continuity.

Financial Resources

• The ECB's financial resources include:
  • Paid-up capital: €7,740 million as of 31 December 2016.
  • Risk provision: €7,620 million, equal to the paid-up capital of NCBs.
  • Revaluation accounts: €28.8 billion as of 31 December 2016.
  • Net income: Contributed to the ECB's net equity.

Impact of Key Activities on Financial Statements

Financial Result for 2016

• The ECB's net profit for 2016 was €1,193 million, compared to €1,082 million in 2015.
• Key highlights include:
  • Interest income on foreign reserve assets increased by €87 million.
  • Interest income on monetary policy securities increased to €1,044 million from €890 million in 2015.
  • Interest income on banknotes and interest expense on foreign reserves decreased by €33 million and €14 million respectively due to lower average rates.
  • Net other interest income decreased due to the low-yield environment in the euro area.

Conclusion

The ECB's financial management is closely aligned with its monetary policy objectives and risk management strategies. The report provides detailed information on the ECB's financial resources, risk exposure, and the impact of its operations on financial statements, ensuring transparency and accountability in its financial reporting process.