Intereconomics 2017 | 4
Arne Hansen, Dirk Meyer
ANFA – National Money Creation as an
Existential Threat to the Currency Union?
The recent publication of the previously secret Agreement on Net Financial Assets (ANFA)
directed the public’s attention to the possibility that national central banks could create money
through purchases of securities on their own account. This paper provides an overview of the
legal foundations for ANFA and shows the varying extent to which the member countries use
these regulations. What are the interests, risks and consequences for the countries in crisis
and the currency union as a whole? Is the ECB properly monitoring ANFA purchases? Could
money creation via ANFA act as an explosive device for the currency union?
Arne Hansen, Helmut Schmidt University, Universi-
ty of the Federal Armed Forces Hamburg, Germany.
Dirk Meyer, Helmut Schmidt University, University
of the Federal Armed Forces Hamburg, Germany.
An important characteristic of the Economic and Mon-
tary Union (EMU) in terms of regulatory policy is its de-
centralised federal structure in the presence of central-
ised executive authority. As the highest decision-making
body, the Governing Council of the European Central
Bank (ECB) consists of the Executive Board and the gov-
ernor of each national central bank (NCB). Many tasks
are shared between the ECB and the NCBs, for exam-
ple banking supervision, ensuring ﬁ nancial stability and
statistical data collection. The distinction between the
common monetary policy measures of the Eurosystem,
which are implemented by the ECB and which fall under
its responsibility, and the non-monetary policy operations
conducted by the national central banks of the euro mem-
ber states at their own initiative and on their own behalf, is
also a special feature of the EMU.
The publication of the (previously secret) Agreement on
Net Financial Assets (ANFA) protocol drew the public’s
attention to the possibility for national central banks to
create money through purchases of securities on their
own behalf, a practice of which little notice had hitherto
1 See, for example Deutsche Bundesbank: Zur Bedeutung und Wirkung
des Agreement on Net Financial Assets (ANFA) für die Implemen-
tierung der Geldpolitik, in: Monatsbericht März 2016, Vol. 68, No. 3,
2016, pp. 87-97; and P. König, K. Bernoth: The Eurosystem’s
Agreement on Net Financial Assets (ANFA): Covert Monetary Financ-
ing or Legitimate Portfolio Management?, in: DIW Economic Bulletin,
No. 12+13, 2016, pp. 141-150.
been taken. This paper provides an overview of the legal
foundations and shows the varying extent to which these
regulations are used by the member states. What are the
interests, risks and consequences for the countries in cri-
sis and the currency union as a whole? Could this quasi-
national additional money act as an explosive device for
the EMU by violating the principle of congruence between
the money-receiving and money-emitting communities?
Agreement on Net Financial Assets (ANFA)
The secret ANFA protocol is a contractual agreement
overning net ﬁ nancial assets (NFA) between the 19 na-
tional central banks and the ECB.
It contains rules and
determines ceilings for securities holdings which the na-
tional central banks may independently acquire. Article
14.4 of ECB Protocol No. 4 provides the legal basis for
such equity investment activities. It permits the national
central banks to exercise “other functions” on their own
responsibility and at their own cost and risk in the scope
of the securities purchases under ANFA. These can in-
clude investments related to currency reserves and em-
ployee pension funds/pension reserves of the national
central bank, the counterpart item to statutory capital and
reserves, as well as serving general investment purposes.
Deposits by governments and international institutions
are also included. By providing central bank money, the
national central bank concerned creates money on its
2 European Central Bank: Agreement of 19 November 2014 on net ﬁ -
nancial assets, available at http://www.ecb.europa.eu/ecb/legal/pdf/
en_anfa_agreement_19nov2014_f_sign.pdf. Prior to its publication on
5 February 2016, only a few senior individuals in the ESCB system
seemed to have had access to the protocol. The authors approached
the Bundesbank on 4 January 2016 with the request to consult this
ECB document in accordance with the Freedom of Information Act.
On expiry of the statutory response deadline on 3 February, the ECB
published the wording of the protocol on 5 February following a unan-
imous decision taken on 3 February.