[Draft and Discussion] Amendment to the European Central Bank Act

Istkalen

PREAMBLE

NOTING that the Constitution of the European Union (henceforth referred to as ?the Constitution?) is the supreme law of the land.

EXPRESSING concern that not all constitutional requirements are being met by the current Office of Economics.

EXPRESSING concern that the monetary policy of the European Union is the euro, and that all supranational transactions are conducted in this currency.

NOTING that there is no place for euros to be printed, despite it being a mandate in the constitution.

This proposal looks to bring into action the European Central Bank.

SECTION I

This Act shall establish the European Central Bank.
The European Central Bank will be located in the ~~Duchy~~ Free City of Europolis
The European Central Bank will be a part of the Office of Economics, as expressed in the Constitution.
The European Central Bank will be held responsible to the Commissioner of Economics and the European Council.
The European Central Bank will be capitalized by the member nations of the European Union at a rate of .001% of GDP in a one-time transaction. The European Central Bank will return the investment at a rate of 5% interest per year.
As such, the European Council will represent the shareholders.

7. Shareholding is restricted to the central banks or, in the absence of a central bank, the highest state-controlled monetary authority, of member-states.

SECTION II.

The European Central Bank will be headed by the President of the European Central Bank (referred to as 'the President').
The President will be elected to his office by members of the shareholders of the European Central Bank every 12 months.

3. The responsibility of initiating an election to the Presidency of the European Central Bank falls on the incumbent President; in their absence, the Internal Affairs Commissioner; in their absence, the Premier Commissioner.

~~3. The President will have the authority to set monetary policy of the Eurozone.~~

4. This includes the ability to define and implement the monetary policy for the Eurozone, to conduct foreign exchange operations, to promote smooth operation of the financial market infrastructure, authorise the issue of euro banknotes and coins by national banks, purchase national bonds.

~~5. The President also has the authority to carry out orders that pertain to the aforementioned duties, known as explicit authority.~~

~~6. The actions of the President of the European Central Bank must be approved by the shareholders of the European Central Bank. The actions must be approved by a simple majority.~~

4. The European Central Bank has the responsibility of maintaining confidence in and issuing the Euro.

5. The European Central Bank must ensure that the Euro is convertible into all the currencies of the European Union at all times. It may set limits and regulation on conversion as to maintain confidence and the stability of the Euro. Convertibility may be suspended for up to a calendar year if the European Central Bank has insufficient funds, extendable only by act of the European Council.

6. The President of the European Central Bank has the responsibility of carrying out the duties of the European Central Bank itself, and has the authority to issue such orders that pertain to said duties.

7. Actions of the President of the European Central Bank must be approved by the shareholders of the European Central Bank. The actions must be approved by a simple majority.

SECTION III

1. Member-states may petition the European Central Bank to extend a loan as for the purpose of augmenting national foreign-exchange reserves or for the prevention of financial collapse.

2. Loan requests are not to be denied except in the following scenarios:

there is a high risk that the provided loan will be mismanaged
the foreign-exchange reserves, other reserves, or capital of the requesting member-state are deemed adequate, whichever is appropriate for the request
the European Central Bank does not have the funds necessary to extend the loan

3. The President of the European Central Bank is tasked with determining whether a loan request is to be denied based upon the criteria set out by this Act. Their decision is subject to approval, by majority vote, by the shareholders of the European Central Bank.

4. If a loan request is approved, it is then the responsibility of the President to, in coordination with the requesting member-state, set an interest rate and schedule for repayment, subject to the approval of the shareholders of the European Central Bank by majority vote.

5. Loans for the purpose of augmenting foreign exchange are made in Euros alone, but may be repaid in national currency. Loans for other purposes are to be made and repaid solely in the national currency of the requesting state.

6. In the case of a default, the European Central Bank is to, alongside the defaulting state, develop a plan for repayment, with the approval of a majority of shareholders. Austerity may be imposed, but it may only be imposed in such a scenario.

7. The European Central Bank cannot at any time demand economic restructuring of a member-state in return for the extension of a loan except in the scenario described by clause 6.

SECTION IV

1. The European Central Bank is to investigate the possibility of establishing a digital form of the Euro for the primary usage of citizens of member-states of the European Union.

2. A four year period shall be established for the development of a digital Euro. Upon the end of the four-year period, no more funding will be provided for the project, and the European Central Bank shall be compelled to halt all development. The period may be extended or shortened by act of the European Council

3. If the development of a digital Euro succeeds, the digital Euro shall enter a one-year long pilot period, the details of which are to be expounded upon by the European Central Bank itself at that time.

4. If the pilot fails, the project is to be discontinued; if it succeeds, the digital Euro shall enter general use.

5. The hypothetical digital Euro is to be pegged to the value of the Euro. National central banks, through the European Central Bank, must be able to convert it into Euro, and vice versa.

6. National central banks must be able to convert the hypothetical digital Euro into national currency, and vice versa, but may impose limitations on conversion, or suspend conversion entirely for up to a year, with permission from the European Council required for suspension beyond a year. They must also guarantee the ability of private banks and related financial institutions to do so.

7. To prevent the introduction of instability, a limit must exist on the amount of digital Euro an individual or organization may possess at a given time. This limit will not exist for the Euro itself.

SECTION V

**1. The European Central Bank be funded through:

funds provided through the central budget of the European Union
loans that it itself applies for
investment that it itself makes
interest accrued from loans
the issuing of bonds

This is but a draft. This is not about to go for vote; it is still quite primitive and undeveloped. The reason why I I have submitted it for discussion in this Council is because I am not an expert in these matters, and am merely requesting discussion regarding potential amendments and changes before it is genuinely submitted for a vote. Regardless, let me provide my reasoning behind it:

The European Central Bank remains a woefully underdeveloped institution. Its President theoretically has extremely broad powers that someone like Dr. Iskiris Koline would salivate over; but they are poorly defined, and in any case there is not a President anyways. By limiting the power of the Central Bank to matters involving only the Euro, while placing the Euro itself in a significantly stronger role, my intention is to create a level of accountability while retaining necessary powers in the ECB. There is certainly a great level of room for improvement here, as there are certainly many functions which the ECB may have to carry out which it would not be able to do so with such restrictions, although I myself do not have the knowledge required to specifically define these functions.

The purpose of the "digital Euro" is merely to create a more transparent system of payments independent from the current financial system, which is volatile in nature. By pegging a necessarily international retail currency, so to speak, to a wholesale currency unaffected by national policy, a new, more stable currency would be made available to the citizens of Europe, coupled with automatic transfer that, unlike with cash or other existing mediums of transfer, remains accounted for in a hypothetical ledger maintained by the ECB, and thus visible to national governments.

Iras Tilkanas
Councillor for the Republic of Istkalen

Istkalen

I have privately received complaints regarding the issue of the digital currency to be established. Some do not like that their nations are not in control of it; others argue that because they have a national currency, they cannot have another currency alongside it because they are somehow compromised, and thus all that can be gained from this is through the hoarding of digital currency and the later selling of it for inflated prices.

The first is a complaint I am willing to address; the second not at all, for what it implies is entirely against the purpose of this legislation - a reform of the European monetary and financial system in favor of sovereignty, the independence of the people from instability, and the end of partisanship in these matters.

Primarily, control could be given to member-states over the supply of digital currency in their country, as well as perhaps limitations on conversion between currencies and exchange between countries. I am less comfortable with dislinking the digital Euro from the physical Euro; this would introduce extreme instability. Issues with taxes are nil; the structure of the digital Euro, even as rudimentarily as it is outlined here, would allow for all transactions to be known to while being decentralized in nature, allowing for tax evaulation and collection.

If you have other concerns, feel free to bring them up.

Iras Tilkanas
*Councillor for the Republic of Istkalne

Istkalen

As there appear to be few complaints, I will be submitting this amendment, with the exception of Section iV, which perhaps belongs in a separate act and must be elaborated more upon.

Iras Tilkanas
Councillor for the Republic of Istkalen