Nowotny: Decision Needed on ECB Stake of the BoE After Brexit

By Franz Johann Morgenbesser from Vienna, Austria (Ewald Nowotny-4417) via Wikimedia Commons

On Tuesday, Ewald Nowotny, a policymaker of the European Central Bank said that the governments that are within the Eurozone would have to decide whether they cover the small hole that is left in the finances of the European Central Bank if, as expected, the Bank of England returns its stake following Brexit.

The Bank of England is one of the nine non-euro area central banks that contribute to the operational costs of the European Central Bank. The central bank of the United Kingdom has ‘paid-up’ capital amounting to approximately 55.5 million euros, which is more than seven of the 19 countries in the eurozone.

During an interview with Reuters, Nowotny stated: “I guess this will be part of the general Brexit discussions.”  He was talking about the stake of the BoE.

He continued: “I would imagine they (the BoE) will end this participation and then there could be a discussion whether we keep the former capital of the ECB at the same level or whether it would be reduced.”

He added that it was largely a “symbolic” issue.

The subscribed capital of the European Central Bank has edged up to just under 10.9 billion ($13.3 billion) since Lithuania and Estonia joined the currency bloc.