ECB adopts new capital key

The European Central Bank has made its regular five-yearly change to its capital key, which decides the size of the shares in its capital held by the European Union’s national central banks.

The shares held by NCBs are calculated on the basis of eurozone member states’ proportions of the EU’s population and GDP “in equal measure”, the ECB said. The calculations also adjust the amount NCBs must contribute to the ECB’s capital.

The data for this calculation is provided by the European Commission. Total capital for the ECB will remain unchanged at approximately €10.8 billion ($12.2 billion), the ECB said.

The eurozone’s national central banks will transfer capital shares among themselves “to ensure that the distribution of the shares corresponds to the adjusted key”, the ECB said. The changes will take effect from January 1 next year.

All 28 EU member countries hold stakes in the bank, including the 19 eurozone members and the nine non-members. Of the 28, 16 will have a higher share in the capital key, while 12 countries’ stakes will shrink.

Germany’s share rises

The shares held by Germany and France were among those to rise, from approximately 17.99% to 18.37% and from around 14.18% to 14.2% respectively. Ireland, which has made a strong recovery from its housing crisis, also saw its share rise, from around 1.16% to about 1.18%.

Those with smaller capital shares include Italy, the eurozone’s third-largest economy, as well as most of the bloc’s other Mediterranean economies: Cyprus, Greece, Portugal and Spain. The shares held by Latvia, Lithuania and Slovenia will also shrink.

Despite these changes, there will be no alterations to the relative strength of position of different governors on the ECB’s governing council. NCB governors from the eurozone are divided into two groups determined by the size of their countries’ economies and populations.

These groups determine when they hold voting rights on the governing council. The new calculations mean the governors remain allocated to the same groups as they were previously, the ECB said.

Post-Brexit outcome unsure

Five of the nine non-eurozone EU members saw their share of the capital key rise. They included the UK, which is currently due to formally leave the EU on March 29 next year.

The Bank of England’s share for subscription to the capital key rose from 13.67% to 14.34%. It is not yet clear what will happen to the UK’s share of the capital key if the UK leaves the EU.

The shares of non-eurozone members the Czech Republic, Denmark, Poland and Sweden also rose, while those of Bulgaria, Croatia, Hungary and Romania fell.