Annual Report 2004

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In 2004 the global economy expanded by more than 4% in real terms. The euro area also saw an economic recovery, recording a growth rate of 1.8% (seasonally and working-day adjusted), which was well above the levels of previous years. However, from the spring of 2004 the global upturn lost momentum, mainly because of a surge in oil and commodity prices, a slowdown in export activity and monetary policy tightening in several countries induced by inflationary pressures. As in the previous year, inflation in the euro area as measured by the Harmonised Index of Consumer Prices (HICP) stood at 2.1% in 2004, driven largely by energy prices. In view of a favorable medium-term outlook for price developments, however, the Governing Council of the ECB decided to leave key interest rates unchanged at their historically low level. Inflation expectations in 2004 were stable and in line with the Governing CouncilÕs medium-term HICP inflation target for the euro area of below, but close to, 2%. The EurosystemÕs monetary policy continued to enjoy a high degree of credibility. By contrast, the credibility of the sustainability and soundness of fiscal policy in the euro area was put to the test in 2004. Half of the euro area countries recorded deficit ratios of around or above 3%, and debt ratios exceeded 60% in eight countries. In March 2005 the reform of the Stability and Growth Pact led to changes in, and a weakening of, EMUÕs fiscal policy framework, the consequences of which are not yet foreseeable. Greater scope for discretionary decision-making entails an even higher degree of responsibility for policymakers in safeguarding the sustainability and long-term growth orientation of fiscal policy. The Governing Council of the ECB is firmly convinced that sound public finances are indispensable for sustainable economic development in the euro area. 2004 was also marked by the mid-term review of the Lisbon strategy, which revealed that — while some progress has been made with regard to employment, the network industries and the financial services sector — European research, innovation and education systems still require reform. Member States should swiftly implement further reforms at the national level within the framework of national growth strategies or action plans. Economic policymaking in Austria was characterized by further reforms in 2004: The reform of the Austrian pension system will render pension schemes more sustainable and will contribute to safeguarding their long-term financing. The corporate tax and income tax reforms will strengthen both AustriaÕs position as a business location and real disposable income. The IMF and the OECD have acknowledged these reform efforts. The reform process needs to be continued to guarantee AustriaÕs competitiveness and prosperity. AustriaÕs economy gathered considerable steam in the first half of 2004, mainly driven by booming external trade. At 2%, economic growth in 2004 clearly exceeded the levels of the previous two years and was also slightly higher than the euro area average. While the deceleration of economic growth in the euro area toward the end of 2004 also affected Austria, investment remained lively. At 2%, AustriaÕs inflation rate stood slightly below the euro area average in the reporting year. AustriaÕs deficit ratio according to the Maastricht definition came to 1.3% of GDP in 2004, which was less than half of the euro area average. The governmentÕs 2005 tax reform is going to raise the deficit ratio to 1.9%. Under its stability program, Austria is to achieve a balanced budget and a debt ratio of below 60% of GDP by 2008. The OeNB welcomes the plans to reduce the tax-to-GDP ratio to around 40% as early as in 2006; at the same time, however, the reduction of the government spending ratio should be speeded up. The accession of ten new Member States to the European Union on May 1 was a landmark achievement in 2004. EU enlargement fosters AustriaÕs economic potential, as Austrian businesses have already been actively expanding into, and cooperating with, AustriaÕs neighboring countries in Eastern Europe. Enlargement has validated the OeNBÕs decision to put a special focus on Eastern European issues, which was taken many years ago. The IMFÕs Financial Sector Assessment Program confirmed the high resilience of the Austrian financial system to shocks and the excellent cooperation between the OeNB and the Austrian Financial Market Authority (FMA). The OeNB has redesigned its website (www.oenb.at) and relaunched several of its macroeconomic and statistical publications, namely Monetary Policy & the Economy, the Workshop series, Focus on European Economic Integration as well as its exclusively German publication Statistiken — Daten & Analysen to further improve the quality, scope and accessibility of the analyses and data it provides in the service of economic policy and the Austrian public. Klaus Liebscher Governor Statement Annual Report 2004 × 5
Contents General Council (Generalrat), State Commissioner, Governing Board (Direktorium) and Personnel Changes, Organizational Structure of the Bank General Council (Generalrat), State Commissioner 10 Governing Board (Direktorium), Personnel Changes 11 Organization Chart 12 Report of the Governing Board (Direktorium) on the Financial Year 2004 The Eurosystem Secures Price Stability 17 Euro Area Key Interest Rates Unchanged in 2004 17 Austria — Export-Led Recovery 22 Powerful Global Economic Growth in 2004 24 The Stability and Growth Pact — A Key Pillar of EMUÕs Stability Architecture 28 Mid-Term Review — Further Massive Reforms Required to Implement Lisbon Strategy 31 European Integration Makes Headway 34 The OeNB as a Competent Partner in Ensuring Financial Stability 37 Austrian Financial Sector Posts Improved Results 37 IMF Gives Positive Assessment of Austrian Financial Market 40 The OeNB Supports Implementation of Basel II 42 The OeNB Organizes a Wide Range of Activities to Promote Financial Stability 43 Close Cooperation between OeNB and FMA 45 Guidelines for the Austrian Banking Industry 46 Integration of Payment Services in Europe and Consolidation of Cash Distribution Structures in Austria 48 New European Structures for Cashless Payment Services 48 The OeNBÕs Regional Network Ensures Smooth Cash Supply and Cash Handling 54 Cash Services and Cashless Payment Solutions Provided by the OeNB through Its Associated Companies 59 The OeNBÕs Information Policy — Conveying Stability and Security 62 Communicating Monetary Policy Objectives — A Prerequisite for Credibility and Trust 62 The OeNB as a National and International Forum for Dialogue 66 The OeNB — An Innovative, Dynamic and Cost-Efficient Enterprise 68 Structures Aligned to the OeNBÕs Strategy 69 Innovative Projects Pave the Way for Future-Oriented Management and Top Performance 71 Sound Expert Knowledge — A Major Success Factor 73 OeNB Shows Commitment to Research, Science and Culture 74 6 × Annual Report 2004
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Page 4 and 5: ˆ Report on the Financial Year 200
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Integration of Payment Services in
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ÒStability and SecurityÓ — the
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The OeNBÕs Information Policy —
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The OeNBÕs Information Policy —
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The OeNB — An Innovative, Dynamic
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ˆ Financial Statements of the Oest
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Liabilities December 31, 2004 Decem
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Notes to the Financial Statements 2
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Future market developments, especia
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The strategic measures are compleme
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Development of the OeNBÕs Currency
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SDRs equivalent to EUR 38.831 milli
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4 Claims on non-euro area residents
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such credit is provided not by the
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9.1 Participating interest in the E
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9.2 Claims equivalent to the transf
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Equipment developed as follows: Cos
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11.6 Sundry Sundry assets comprise
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The table below shows the annual av
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11 Items in course of settlement Cl
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13 Provisions Under the OeNBÕs ini
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15 Capital and reserves A summary o
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Notes to the Profit and Loss Accoun
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ance with Article 69 paragraph 1 of
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Governing Board (Direktorium) Gover
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Profit for the Year and Proposed Pr
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ˆ Notes
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x = No data can be indicated techni
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Core inflation: inflation measure t
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Primary balance: government net bor
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Periodical Publications of the Oest
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Artwork All artwork featured in thi
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The Annual Report of the OeNB provi
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Annual Report 2004

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