Thursday, 19 February 2015

ECB 2014 Financial Statements: "Austerity" in Eurozone, Indulgence at the ECB

The ECB today published its financial accounts for year ending December 2014

While "austerity" is imposed on many eurozone members by the troika, of which the unelected and "independent" ECB belongs, prudence is an unknown word when it comes to the costs of running the Frankfurt ivory tower. Not only has the ECB now moved into its extravagant new head quarters which cost north of €1.4 billion


but the central bank also added another €150 million to its running costs bringing total administrative expenses to more than €677 million for the year, and increase of 28.5% compared to 2013. As costs surged in 2013 as well, total costs have now increased more than €213.5 million, or 46.0%, during the last two years alone. These are real costs which all people living in the eurozone pay for in one way or another. 

A €60.7 million increase in staff costs during 2014 partly explains the increase in overall costs. According to the ECB, 
Staff costs rose to €301 million in 2014 (2013: €241 million) as staff numbers gradually increased over the year owing to the preparations for the launch of the SSM in November 2014.
This is of course the Single Supervisory Mechanism. And I can assure you member countries certainly will not cut their domestic supervisory expenses as a result. If anything, each member country will likely have to hire more people to follow up demands from the SSM. This doubling up of costs in all areas related to regulations is a key feature of the eurozone and the EU. Again, these costs are very real and are paid for by eurozone members, some of which already are impoverished while others are well on their way to becoming poorer. Increased regulatory costs are the last thing all members needed. At the end of the year, 2,577 staff (full-time equivalent) were employed by the ECB, an increase of 787 employees, or 44%, on 2013. Such a waste of so many clever minds that could have made a difference in the real world.

Administrative expenses, which forms part of total costs, increased more than €93.5 million for the year, up 36.0% on 2013 and up more than €133.1 million, or 60.4%, since 2012. This mammoth increase is not explained other than in this paragraph in footnote 32 Administrative expenses,
These cover all other current expenses relating to the renting and maintenance of premises, goods and equipment of a non-capital nature, professional fees and other services and supplies, together with staff-related expenses including recruitment, relocation, installation, training and resettlement expenses. The preparations for the launch of the Single Supervisory Mechanism contributed to the increase in administrative expenses in 2014.
It is not only ironic, but it's also a great injustice committed by imprudent, to put it mildly, political leadership, that in today's Europe where citizens are increasingly becoming impoverished, where unemployment remains exceedingly high and budget deficits and debt to GDP ratios are way out of control, that the very central bank imposing cost cutting measures on others is doing the exact opposite with its own operations. Indulgence indeed, all paid for by the eurozone taxpayers. Something not only for the new Greek government to ponder.