UPDATE 1-Germany doesn't want ECB reform to give Bundesbank permanent vote

Mon Jun 16, 2014 9:26am EDT

Related Topics

* ECB votes start to rotate once euro zone members exceed 18

* Lithuania to become 19th euro zone member in January 2015

* Bundesbank will have to sit out once every five months

* Amending ECB rotation system would require treaty change (Adds quotes, comments German politicians)

By Stephen Brown and Eva Taylor

BERLIN/FRANKFURT, June 16 (Reuters) - Germany sees no reason to change the new voting system at the European Central Bank that takes effect when Lithuania joins the euro next year, despite a potential loss of influence for the Bundesbank, the finance ministry said on Monday.

Once Lithuania becomes the 19th state to adopt the European Union's single currency next January, the national central bank governors who sit on the ECB's Governing Council will take turns voting, to speed up decision-making

The Bundesbank will have to sit out once every five months. Critics - mostly German conservative politicians - argue that Germany, which provides just over a quarter of the ECB's overall capital, should keep its permanent vote. But there is no support from Berlin for such a move.

"We see no reason to make any changes at the moment," said German finance ministry spokeswoman Marianne Kothe. "The reasons for this principle are still valid."

National central bank governors who do not get to vote can still take part in the session with the right to speak, "so they can always join in the discussion", Kothe told reporters. "The European Central Bank is a European institution which looks after European interests, not national ones."

Once Lithuania joins, the five largest economies with the biggest financial sectors will share four votes. On current rankings that means Germany, France, Italy, Spain and the Netherlands. The remaining 14 countries will get 11 votes.

The system was set by the ECB and the EU in 2003, but so far the number of member countries has not increased enough to trigger the rotation system.

Altering the new rules would require an EU treaty change, which needs a unanimous vote. Lack of support from the German government makes that unlikely.

UNCHARTED WATERS

Taking turns to vote will affect all euro zone members, but will be more keenly felt in Germany, whose central bank served as a blueprint for the ECB. Its influence has since shrunk and support for its stern views on monetary policy has diminished during the euro zone debt crisis.

But as the ECB moves deeper into uncharted waters, some non-German central bankers also believe the bloc's largest economy should maintain a constant level of influence, particularly as monetary policy decisions could move closer to the fiscal realm.

The ECB could ultimately start buying sovereign or private debt in the market to keep the euro zone from entering a spiral of weak or falling prices, which would slow growth and curb consumption, though such a step has not been needed so far.

The Alternative for Germany (AfD), a small Eurosceptic party founded last year which threatens to steal right-wing votes from Chancellor Angela Merkel's Christian Democrats (CDU), is pushing to preserve the Bundesbank's influence.

AfD leader Bernd Lucke wants to annul the agreed rotation of votes "to ensure that stability-oriented central banks like the German Bundesbank always have a voting right appropriate to their status", he told Handelsblatt newspaper's online edition.

Voting rights should depend on the share of ECB capital, to which Germany contributes around 27 percent, Lucke said.

Conservative German lawmaker Klaus-Peter Willsch from the CDU also called for a rule change. "It must not be accepted that (Bundesbank President Jens) Weidmann will be temporarily without a voting right," he told Die Welt newspaper.

So far, the Bundesbank has taken a pragmatic view, stressing that all countries will still have a voice in ECB discussions and that governors are not meant to represent their country's interests on the council but those of the whole bloc. (Additional reporting by Gernot Heller; Editing by Larry King)

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