Circular BCL 2008/219 of 5 September 2008 — Adoption of the euro by Slovakia

1 / 6
Luxembourg, 5 September 2008
To all credit institutions

CIRCULAR BCL 2008/219
Adoption of the euro by Slovakia

Dear Madam, Dear Sir,

At the European Council meeting held in Brussels on 19 and 20 June 2008, the Heads of State and Government of the European Union decided that, effective 1 January 2009, Slovakia will adopt the single currency, the euro.

The objective of this circular is to describe the impact of Slovakia's adoption of the euro on the preparation of monthly and quarterly statistical reports.

1. Impact on the BCL's statistical collection

Slovakia's accession to the euro area effective 1 January 2009 will not only impact the preparation of monthly and quarterly statistical reports, but also the calculation of mandatory reserves to which credit institutions are subject.

2 / 6

1.1 Impact on monthly statistical collection

The monthly statistical reports S 1.1 "Monthly Statistical Balance Sheet", S 1.4 "Adjustments related to valuation effects" and S 1.5 "Information on interest rates in EUR" require an allocation of amounts by country of residence or registered office of the counterparty, i.e., the country in which the center of economic interests of the counterparty in question is located, distinguishing the following three allocations:

• All countries: this class groups all operations regardless of the country of residence or registered office of the counterparty
• Luxembourg (LU)
• Other EMU Member States: i.e., Other Member States of the Monetary Union
• Rest of the world: i.e., countries that do not fall into the categories "Luxembourg" and "Other EMU Member States"

From 1 January 2009, the category "Other Member States of the Monetary Union" (Other EMU Member States) will also include Slovakia, which currently, and until 31 December 2008 inclusive, falls under the category "Rest of the world".

Furthermore, credit institutions are reminded that the inclusion of Slovakia under the category "Other Member States of the Monetary Union" implies a more detailed sectoral allocation of assets and liabilities toward counterparties residing in Slovakia. The details of this sectoral allocation can be consulted in Part III – S 1.1 "Monthly Statistical Balance Sheet" (pp. 4 to 15), Part III – S 1.4 "Adjustments related to valuation effects" (pp. 4 to 14) as well as Part III – S 1.5 "Information on interest rates in EUR" (pp. 6 to 9) of the Collection of Instructions to Banks.

Credit institutions are therefore invited to modify their reporting systems to include assets and liabilities toward a counterparty residing in Slovakia under the category "Other EMU Member States" while ensuring appropriate sectoral allocation.

3 / 6

1.2 Impact on the S 2.5 "Quarterly Statistical Balance Sheet" report

The quarterly statistical report S 2.5 "Quarterly Statistical Balance Sheet" requires an allocation of amounts by country of residence or registered office of the counterparty, identifying the country in question by a two-character ISO code.

In this context, credit institutions are also reminded that Slovakia's accession to the monetary union implies a much more detailed sectoral allocation of assets and liabilities toward residents of Slovakia. The details of this sectoral allocation can be consulted in Part III – S 2.5 "Quarterly Statistical Balance Sheet" (pp. 4 to 16) of the Collection of Instructions to Banks.

2. Impact on the calculation of mandatory reserves

Since liabilities to the European Central Bank, national central banks (NCBs) members of the Eurosystem, and credit institutions (CIs) subject to the Eurosystem's mandatory reserve system are excluded from the reserve base, it is necessary to reduce the volume of liabilities included in the reserve base for liabilities to Slovak credit institutions subject to the Eurosystem's mandatory reserve system effective from the reference period of January 2009.

For the maintenance periods from December 2009 to January 2009, from January 2009 to February 2009, and from February 2009 to March 2009 1, liabilities to Slovak credit institutions subject to the Eurosystem's mandatory reserve system may already be deducted from the reserve base of credit institutions.

Luxembourg credit institutions wishing to take advantage of this possibility must report for the months of October 2008, November 2008, and December 2008 the table in the annex to the Central Bank of Luxembourg, considering Slovak credit institutions as already subject to the Eurosystem's reserve system. In this case, the amount of mandatory reserve reported based on the statistical report S 1.1 "Monthly Statistical Balance Sheet" will be amended taking into account the information provided based on the aforementioned annex.

4 / 6

Reporting credit institutions are reminded that the monthly statistical reports S 1.1, S 1.4, S 1.5 as well as the quarterly report S 2.5 must obviously be filled out to consider Slovakia as not included in the monetary union until 31 December 2008 inclusive.

3. Quality of transmitted data

Concerned institutions are reminded to carefully ensure the correct identification of their counterparties and to use, for this purpose, the official table of credit institutions published by the Commission de Surveillance du Secteur Financier as well as the official list of monetary financial institutions made available to reporting institutions on the website of the European Central Bank.

We therefore consider it necessary to re-emphasize the importance of the quality of data transmitted to the BCL and the necessity to submit data before transmission to the verification rules detailed in the technical documentation. Only rigorous control performed as soon as the data is produced will allow meeting both quality requirements and imposed deadlines. This point is all the more important as the data thus collected will be controlled by the ECB services before being aggregated with data from other Member States. Any significant error or negligence will have damaging repercussions on the reputation of the entire national financial community.

1 The precise start and end dates of the maintenance periods during the year 2009 will be communicated by BCL circular.

5 / 6

4. Entry into force of the new provisions

The new classification of assets and liabilities toward residents of Slovakia is to be performed for the first time when preparing monthly statistical reports relating to the period of January 2009 as well as when preparing quarterly statistical reports relating to the period of March 2009.

The annexed table relating to the calculation of mandatory reserves relates to the periods of October 2008, November 2008, and December 2008.

Please accept, Madam, Sir, the assurance of our very distinguished sentiments.

CENTRAL BANK OF LUXEMBOURG
The Management

Serge KOLB Andrée BILLON Yves MERSCH

Annex

Annex. Information to be provided to the Central Bank of Luxembourg for the purpose of reducing the reserve base for the periods of October 2008, November 2008, and December 2008

Item	Currency	Country	Economic Sector	Initial Maturity <= 2 years	> 2 years	Not allocated
Demand liabilities	EUR	Slovakia	NCB + CIs subject
	Other currencies	Slovakia	NCB + CIs subject
Term liabilities	EUR	Slovakia	NCB + CIs subject
	Other currencies	Slovakia	NCB + CIs subject
Notice liabilities	EUR	Slovakia	NCB + CIs subject
	Other currencies	Slovakia	NCB + CIs subject
Firm purchase and sale operations	EUR	Slovakia	NCB + CIs subject
	Other currencies	Slovakia	NCB + CIs subject
Issued debt securities	EUR	Slovakia	NCB + CIs subject
	Other currencies	Slovakia	NCB + CIs subject

NCB + CIs subject: Slovak national central bank and credit institutions subject to the Eurosystem's mandatory reserve system

The labels of the rows and columns of this table correspond to those used for report S 1.1 to be submitted monthly to the Central Bank of Luxembourg. Affected credit institutions can therefore rely on the definitions of the Collection of Instructions to Banks to establish this table.