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ECB to stick with 1 country, 1 vote for now-sources

Published 11/27/2008, 10:07 AM
Updated 11/27/2008, 10:10 AM

(This story has no dateline to protect sources' anonymity)

Nov 27 (Reuters) - The European Central Bank plans to delay bringing in vote-sharing on its policymaking Governing Council from January and wait until 19 countries have adopted the euro, government and central bank sources told Reuters.

It means that the ECB will stick to its current system of one country, one vote when Slovakia joins at the start of next year and probably not switch to a rotational voting system until 2012-2013 at the earliest.

Under the ECB's legal framework, the new system is due to start when Slovakia becomes the 16th country to adopt the euro on Jan. 1, but policymakers also have the option of delaying the switch until membership hits 19.

No formal decision has yet been taken on rotational voting, which aims to prevent decision making on the Governing Council from becoming too unwieldy as the euro zone expands.

But sources told Reuters that there was agreement in principle to defer a move to the complex multi-layer voting system until three further countries adopt the common currency.

The ECB had been due to discuss the matter at the Governing Council's last mid-month meeting on Nov. 20, when administrative matters are normally discussed, but a packed agenda forced policymakers to delay the decision.

Details such as who misses out on voting first and for how long have also still to be decided.

"The rotation system will not start until there are 19 members in the euro zone," one euro zone central bank source told Reuters. "The decision was postponed the last time. There was no time," the source said of the last Council meeting.

A source from another European Union central bank confirmed that the new voting system was to be delayed. "We don't expect any changes in the voting system in January," the source said.

An EU diplomat close to the negotiations said policymakers did not want to make Slovakia's entry the trigger for the new system, which would initially have excluded only one country from voting.

"During negotiations on Slovakia's accession to the euro zone, a solution was found so as not to upset the status quo," the EU source said.

An ECB spokesman had no comment.

When the rotational system eventually comes in, it will split euro zone countries into two, and then three groups, with countries in each group taking turns to sit out of voting. Still, all can take part in the discussions and ECB decisions are usually made by consensus rather than a formal vote.

Under the ECB's statute, once there are 19 euro zone countries, voting will be split into two groups. The five biggest countries, currently Germany, France, Italy, Spain and the Netherlands, would share 4 votes and the remaining 14 would share 11 votes.

Once the number reaches 22, countries are divided into three groups: the big five with 4 votes, a second group of 11-14 countries sharing 8 votes and third group of 6-8 countries sharing 3 votes.

The new system borrows from the U.S. Federal Reserve, where the Federal Open Market Committee comprises the seven members of the Board of Governors of the Federal Reserve System, the president of the New York Fed, and four of the remaining 11 regional central bank presidents, who serve one-year terms on a rotating basis.

Under the U.S. system, the voting rights of the Board are permanent, whereas those for the Reserve Bank presidents rotate on an annual basis.

(Reporting by EU bureaux, editing by David Stamp)

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