CHAPTER 4: MONETARY FUNCTIONS AND OPERATIONS OF THE EUROPEAN SYSTEM OF CENTRAL BANKS

Article 17

Accounts with the European Central Bank and the national central banks In order to conduct their operations, the European Central Bank and the national central banks may open accounts for credit institutions, public entities and other market participants, and accept assets, including book entry securities, as collateral.

Article 18

Open market and credit operations

1. In order to achieve the objectives of the European System of Central Banks and to carry out its tasks, the European Central Bank and the national central banks may: (a) operate in the financial markets by buying and selling outright (spot and forward) or under repurchase agreement and by lending or borrowing claims and marketable instruments, whether in euro or other currencies, as well as precious metals; (b) conduct credit operations with credit institutions and other market participants, with lending being based on adequate collateral.
2. The European Central Bank shall establish general principles for open market and credit operations carried out by itself or the national central banks, including for the announcement of conditions under which they stand ready to enter into such transactions.

Article 19

Minimum reserves

1. Subject to Article 2, the European Central Bank may require credit institutions established in Member States to hold minimum reserves on accounts with the European Central Bank and national central banks in pursuance of monetary policy objectives. Detailed rules concerning the calculation and determination of the required minimum reserves may be established by the Governing Council. In cases of non‑compliance the European Central Bank shall be entitled to levy penalty interest and to impose other sanctions with comparable effect.
2. For the application of this Article, the Council shall, in accordance with the procedure laid down in Article 41, define the basis for minimum reserves and the maximum permissible ratios between those reserves and their basis, as well as the appropriate sanctions in cases of non-compliance.

Article 20

Other instruments of monetary control The Governing Council may, by a majority of two thirds of the votes cast, decide upon the use of such other operational methods of monetary control as it sees fit, respecting Article 2. The Council shall, in accordance with the procedure laid down in Article 41, define the scope of such methods if they impose obligations on third parties.

Article 21

Operations with public entities

1. In accordance with Article 3-181 of the Constitution, overdrafts or any other type of credit facility with the European Central Bank or with the national central banks in favour of Union institutions, bodies, offices or agencies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the European Central Bank or national central banks of debt instruments.
2. The European Central Bank and national central banks may act as fiscal agents for the entities referred to in paragraph 1.
3. The provisions of this Article shall not apply to publicly owned credit institutions which, in the context of the supply of reserves by central banks, shall be given the same treatment by national central banks and the European Central Bank as private credit institutions. Article 22 Clearing and payment systems The European Central Bank and national central banks may provide facilities, and the European Central Bank may make regulations, to ensure efficient and sound clearing and payment systems within the Union and with other countries.

Article 23

External operations The European Central Bank and national central banks may: (a) establish relations with central banks and financial institutions in other countries and, where appropriate, with international organisations; (b) acquire and sell spot and forward all types of foreign exchange assets and precious metals; the term ‘foreign exchange asset’ shall include securities and all other assets in the currency of any country or units of account and in whatever form held; (c) hold and manage the assets referred to in this Article; (d) conduct all types of banking transactions in relations with third countries and international organisations, including borrowing and lending operations.

Article 24 Other operations In addition to operations arising from their tasks, the European Central Bank and national central banks may enter into operations for their administrative purposes or for their staff.