The Key Characteristics of Financial Reporting in the European System of Central Banks

Against the backdrop of the financial crisis, operations of central banks and their balance sheets are in particular focus. Thus, the effective communication on the results of the central banks’ actions is of particular importance. This is due to at least two reasons. First, central banks are accountable to the society for the use of the entrusted resources. However, financial performance of central banks is not always a good indicator of effective striving to achieve defined goals. The so-called “accounting returns” or realized income, as well as risks in the balance sheets of central banks may be associated with the operations undertaken by central banks. Actual losses or benefits for society do not derive only from these results, but depend on the effective or non-effective achievement of defined goals. The other reason why the external communication of central banks is very important is associated with the effectiveness of taken activities because it is less likely that any taken action will be successful unless it is combined with appropriate channels of communication that will enable stakeholders to understand the nature, objectives and results of this operation. Financial reporting of central banks is an important channel of communication. The European Central Bank (ECB) has developed its own set of accounting rules specific to the operations of the central banks. These rules and operations have changed over time, while analytical work and continuing intention to improve these rules contributed to their harmonization and implementation in all Eurosystem central banks.