Circular Letter C2.09-0926 — Modification of Statistical Reports for the Statistical Classification of the European Investment Bank

2, boulevard Royal L-2983 Luxembourg Fax (+352) 4774-4920 E-mail: reporting.banques@bcl.lu Ref.: C2.09-0926 Luxembourg, December 4, 2009 Circular Letter To all credit institutions To all providers of banking reporting software

Madam, Sir,

We have the honor to refer to Circular BCL 2009/225 concerning the modification of statistical collection from credit institutions as well as to Circular Letter C2.09-0600 concerning the statistical classification of the European Investment Bank (EIB) to inform you of a modification of the statistical reports, the purpose of which is to harmonize the statistical classification of the European Investment Bank across all statistical reporting.

1. Statistical reports with zero values

In this context, we wish to clarify that credit institutions are required to submit all required reports (cf. our Circular Letter C2.09-0729 of August 14, 2009) even if these contain only zero values.

We wish to emphasize that this basic rule will allow the BCL to know with certainty that a credit institution has no position to report. Indeed, the absence of a report can be interpreted in different ways; on the one hand, the report may contain only zero values, and on the other hand, the institution in question may have forgotten to submit the report. Thus, the systematic submission of all statistical reports, even with zero values, will avoid any misinterpretation as well as the sending of reminder letters.

The only exception to this rule is the title-by-title report containing data relating to the balance sheet of credit institutions (TPT-BBS); indeed, zero values

2, boulevard Royal L-2983 Luxembourg Fax (+352) 4774-4920 E-mail: reporting.banques@bcl.lu in the sections of report S 1.1 will allow the BCL to know that a credit institution has no position to report.

2. Statistical classification of the EIB

At the meeting of the Governing Council of the European Central Bank on May 8, 2009, in Frankfurt, it decided that the European Investment Bank (EIB) will become an eligible counterparty in the monetary policy operations of the Eurosystem as of July 8, 2009. Thus, from this date, the EIB will comply with all eligibility criteria and will deposit mandatory reserves with the Banque Centrale du Luxembourg (BCL).

In this context, we wish to revisit the initial decision (cf. our Circular Letter C2.09-0600 of July 14, 2009) regarding the classification of the European Investment Bank in the BCL's statistical reporting. Indeed, this initial decision was based on the assumption that the EIB's participation in monetary policy operations was limited to three years. However, it currently appears that this participation is rather of a durable nature. Thus, we wish to propose a slight modification of certain statistical reports to capture all the information necessary for banking and monetary statistics as well as for national accounts aggregates.

The objective of this circular letter is to describe the impact of this new decision at the level of the preparation of monthly and quarterly statistical reports as well as at the level of the mandatory reserve.

2.1 Impact on mandatory reserves

Since liabilities towards the European Central Bank (ECB), national central banks (NCBs) members of the Eurosystem, and credit institutions (CIs) that are 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 towards the EIB, which will be subject to the Eurosystem's mandatory reserve system starting from the maintenance period that began in July 2009.

2.2 Impact on BCL statistical collection

While reporting the EIB as a credit institution resident in the Eurozone for the purposes of calculating the reserve base and requirement seems obvious, its treatment at the level of Eurozone statistics is less so. Indeed, in accordance with applicable statistical standards, supranational institutions are to be reported as residents of the "Rest of the World" with the sector code "Public Administrations".

2.3 Statistical reporting to the ECB

During its meeting of June 24 and 25, 2009, the ECB Statistical Committee decided that, during an initial phase, National Central Banks (NCBs) are called upon to provide statistical series to the ECB by reporting the EIB as a resident of the "Rest of the World" in the "Public Administrations" sector.

This classification is consistent with current practice as well as international statistical standards which require such classification for supranational institutions.

However, since the EIB's participation in monetary policy operations is likely to extend beyond the initial three-year phase, this position will probably be reviewed, and the ECB will likely ask NCBs to classify the EIB as a resident of the Eurozone.

2.4 BCL statistical reporting

Since the data collected based on monthly statistical reports also serve to calculate the reserve base and to establish statistical series such as national accounts and the balance of payments, the classification of the EIB poses a problem. Indeed, it is not possible to report it simultaneously

2, boulevard Royal L-2983 Luxembourg Fax (+352) 4774-4920 E-mail: reporting.banques@bcl.lu as a resident counterparty of the Eurozone and as a resident counterparty of the rest of the world.

Thus, we wish to separately identify positions towards the EIB in reports S 1.1, S 1.4, and S 1.8 using code XE rather than placing them under the Eurozone (X3) and/or the rest of the world (X4).

We are aware that this modification implies additional work, but it offers the advantage that the BCL will be able to classify the EIB either in the Eurozone or in the rest of the world depending on the specific needs of monetary policy and/or national accounts aggregates. Furthermore, this classification will avoid additional changes to reporting if the requests regarding supranational institutions were to change again in the future.

Please accept, Ladies and Gentlemen, the assurance of our perfect consideration.

BANQUE CENTRALE DU LUXEMBOURG
Volkert Behr Roland Nockels
Section Banking and Monetary Statistics Department Statistics

Attachments: Instructions and modified statistical reports