Monetary policy of the Eurosystem and the OeNB’s balance sheet

Monetary policy in the euro area is decided by the Governing Council of the European Central Bank (ECB) but implemented through the balance sheets of the 19 national central banks (NCBs) of the Eurosystem. While the consolidated financial statement of the Eurosystem is the primary source of information for monetary policy in the euro area, this article takes the Oesterreichische Nationalbank as an example and argues that a disaggregated view offers additional perspectives. During the financial crisis, the balance sheets of the NCBs reflected to what extent and through which channels national banking systems were affected by the crisis. At the same time, however, NCBs’ balance sheets are driven by structural factors and contingencies completely unrelated to monetary policy. In Austria’s case, for example, the country’s special position in international banknote logistics is the key driving force behind the OeNB’s large liabilities in TARGET2. Overall, we conclude that the NCBs’ balance sheets contain valuable information on both the implementation of monetary policy as well as the operations of the financial and payment system more broadly; nevertheless, the NCBs’ balance sheets must be read with due care.