The role of net financial assets in the euro area in the scope of Agreement on Net Financial Assets (ANFA)

The Agreement on Net Financial Assets (ANFA) is an important element of the European Economic and Monetary Union (EMU) and is supposed to grant national central banks a large degree of autonomy in the management of some of its assets and liabilities. Until the turn of 2015 and 2016, very little was known about both this agreement and the way it works. It was not until the eruption of the last phase of the Greek crisis in 2015 when certain rumours started to circulate, according to which the ANFA was to become an instrument aimed to alleviate fiscal tensions. This kind of claims incentivized the ECB in February 2016 to disclose the content of the ANFA. If all the rumours concerning the possibilities of financing debt proved to be unfounded, the ANFA seems not only to grant autonomy in the management of a given national central bank’s assets and liabilities, it also offers room for these banks to manage their liquidity needs. This paper is aimed at presenting the importance of the net financial assets (NFAs which are the subject of the ANFA) for the Eurosystem from two different perspectives. The first one focuses on the NFA perception from the point of view of the balance sheet of different national central banks which are part of the Eurosystem. The second scrutinises the link involving net financial assets and liquidity management. The conclusions drawn upon the content of this paper indicate that thanks to the ANFA, national central banks enjoy a large degree of autonomy within the Eurosystem, and its use helps to preserve integrity of the EMU.