title: Opinion of the European Central Bank at the request of the French Ministry of the Economy, Finance and Industry under Articles 109l (2) and 109f (6) of the Treaty establishing the European Community and Article 1.1, fourth indent, of the EU Council Decision 93/717/EC on a draft Title VIII of the General Regulation of the Financial Markets Council (CON/98/52)

text: 1. On 10 October 1998 the European Central Bank (ECB) received a request from the French Ministry of the Economy, Finance and Industry for an ECB Opinion on a draft Title VIII of the General Regulation of the Financial Markets Council (hereinafter referred to as the “Draft Regulation”).

text: 2. In accordance with Article 1091 (2) of the Treaty establishing the European Community (hereinafter referred to as the “Treaty”), the ECB has taken over the advisory functions of the European Monetary Institute (EMI), which went into liquidation upon the establishment of the ECB on 1 June 1998. The ECB’s competence to deliver an opinion is based on Article 1.1, fourth indent, of the Council Decision (

text: ) of 22 November 1993 on the consultation of the EMI by the authorities of the Member States on draft legislative provisions, as the Draft Regulation contains provisions concerning central securities depositories and securities settlement systems. In accordance with

text: Article 17.5

text: 3. The ECB notes that the Draft Regulation supplements the legislative provisions of Article 22 of Law 98-546 of 2 July 1998. In its Opinion (CON/98/09) dated 19 February 1998, the EMI stated that it welcomed the provisions of the said Law as they “will improve the smooth and efficient functioning of payment systems and securities settlement systems”. The same Law vested the Financial Markets Council with regulatory powers in the fields of central depositories and systems for settlement and for the delivery of financial instruments.

text: 4. The ECB’s opinion is only requested on Chapter 4 of Title VIII, which contains provisions relating to (i) the central depository (“dépositaire central”) and (ii) the systems for settlement and for the delivery of financial instruments (“systèmes de règlement et de livraison d’instruments financiers”).

text: 5. With regard to the provisions of Section 1 concerning the central depository, Article 8-4-1 of the Draft Regulation lists the functions which the central depository notably performs. The ECB notes that these functions are explicitly stated as carried out “within the scope of the provisions of (…) decrees 49-1105 of 4 August 1949 and 83-359 of 2 May 1983”. Given the fact that the two decrees only refer to the role of one specific French central depository, Sicovam S.A., the ECB questions whether other depositories could be bound by these decrees. Moreover, having regard to the provisions of the Law of 2 July 1998, the ECB notes that the Law vested the Financial Markets Council with the power to define the conditions of authorisation of central depositories, whereas the Draft Regulation only refers to the central depository (as opposed to Section 2 of the same Chapter 4, where reference is made to systems for settlement and delivery). Having regard to the fact that there are at least, for the time being, two central depositories in France (the Banque de France being the central depository for Treasury bills, according to Ordonnance 45-679 of 13 April 1945, although it has delegated the account holding to Sicovam S.A.), the ECB understands that the function of a central depository is not legally restricted to one single commercial firm. If the purpose of the Draft Regulation is to make it possible for other central depositories to operate under French jurisdiction, one could question the need to maintain provisions relating to only one specific depository, such as the two above-mentioned decrees.

text: 6. According to the list of functions provided by Article

text: , the function of the central depository entails, by definition, the management of a system for the delivery of financial instruments between the accounts it holds in the name of its members (see indents 2 and 3 of the list). As a consequence, the ECB suggests the following drafting for Article

text: , last paragraph: ‘The central depository may organise and manage any system the aim of which is the delivery of financial instruments amongst its members and, moreover, if appropriate, make the settlement of the corresponding cash in compliance with the provisions of Section 2 of this Chapter’.

text: 7. The ECB would also suggest the Financial Markets Council to develop the articulation between Article

text: º (according to which the function of the central depository consists in:‘recording in a specific account all the financial instruments making up each issue admitted to its operations’) and Article

text: § 2 (‘A central depository may admits to its operations financial instruments not falling within the remit referred to in the previous paragraph, first indent’).

text: 8. The ECB notes that, according to Article

text: , Chapter 3, a central depository can be subject to more obligations than those stated in Chapter 4, when sub-delegated in the tasks of a ‘registrar’. Under the Draft Regulation, a ‘registrar’ (“domiciliataire de titres de créance négociables”) is a credit institution responsible for the bookkeeping of an issue of negotiable bills – or certificates of deposit – and for the matching of the amount of the issue and the total amount registered in its books (Article

text: ). ‘Registrars’ can also perform the function of transferring the rights on the bills by transfers between accounts opened in their books. Article

text: provides the possibility for the issuer of negotiable bills to transfer the responsibility of account holding of its issue to a central depository and to delegate the registrar the power to give instructions to the central depository. In that case, the central depository becomes responsible for the matching between the number of instruments issued and the number registered in its books (Art 8-3-11). Although the provisions of Chapter 3 do not fall within the scope of the present consultation, the ECB questions whether this transfer of account holding of an issue preserves a direct link between the issuer and the central depository and if adequate procedures for safeguarding against any possible custody risk are considered. The ECB also takes note that despite the fact that credit institutions acting as ‘registrars’ perform functions that could be considered as contained in the list of functions performed by a central depository, they will not be submitted to the procedure imposed to central depositories by Chapter 4 of the Draft Regulation.

text: 9. The ECB welcomes the other provisions of Chapter 4, Section 1, of the Draft Regulation, which specifically purport to strengthen technical security in the performance of the functions of a central depository (management of risks) and to improve the supervisory role of the Financial Markets Council (right of communication of data). The ECB invites the Financial Markets Council, when assessing applications for the status of central depository in France, to take into account Standard 9 (backup facilities) formulated by the ESCB in the document ‘Assessment of EU securities settlement systems against the standards for their use in ESCB credit operations’, published in September 1998.

text: 10. With regard to the provisions of Section 2 concerning systems for settlement and for the delivery of financial instruments, the ECB welcomes the publication by the Financial Markets Council of the procedure which it will apply in order to declare that the rules of a system are covered by the definition given by the Law of 2 July 1998. Indeed, approval by the Financial Markets Council is a prerequisite for a system to benefit from the provisions of the said Law prohibiting the bankruptcy administrator or liquidator from challenging payments and deliveries made (Article

text: §3) and ordered (Article

text: ) by a participant on the day on which the reorganisation or winding up procedures commence.

text: 11. With regard to Article

text: , the ECB welcomes the fact that the competences of the Financial Markets Council are recognised as being conducted without prejudice to the powers of the Banque de France concerning payment systems. This flows from the fact that systems for the delivery of securities may also provide payment (settlement) facilities. As previously expressed in the EMI Opinion on the draft law, the ECB considers it appropriate for a reference to Article 22 of the Statute of the European System of Central Banks and of the European Central Bank to be included in Article 8-4-5 of the Draft Regulation. The ECB notes that, according to the French Banking Law of 1984, any firm that operates a system for the delivery of financial instruments and that wishes to provide cash settlement facilities must rely on a credit institution or on the central bank for the settlement of cash, if it is not itself authorised to operate as a credit institution. The ECB welcomes this rule as improving the security of the relevant systems.

text: 12. The ECB understands that Chapter 4, Section 2, is especially dedicated to deal with systems for settlement and for the delivery of financial instruments that are not managed by a central depository. A definition of system for settlement and for the delivery of financial instruments or a list of functions performed by such system, like what is done in Article

text: for the central depository, seems necessary to clarify for future applicants to chose if they want to apply for the status of central depository or of system for settlement and for the delivery of financial instruments.

text: 13. With regard to Article

text: , as compared with Article

text: , the ECB notes that the application dossier of a central depository appears to be much more detailed than the application dossier of a system for settlement and for the delivery of financial instruments. Given the fact that the central depository is submitted to ongoing supervision and regulatory oversight whereas only a regulatory oversight by the Financial Markets Council is stated for systems for settlement and for the delivery of financial instruments and, given the fact that any kind of commercial firm can manage a system, the ECB wonders if this difference intends to reflect a different approach in the level of risks between the functions of central depository and of system for settlement and for the delivery of financial instruments. For example, the system for settlement and for the delivery of financial instruments should be asked to justify to the Financial Markets Council how the function of the central depository is performed for the securities admitted to its operations.

text: 14. As mentioned with regard to central depositories, the ECB welcomes the provisions of Article

text: , which specifically purport to strengthen technical security in the performance of the functions of a system for settlement and for the delivery of financial instruments (management of risks) and to improve the supervisory role of the Financial Markets Council (right of communication of data). Once again, the ECB invites the Financial Markets Council, when assessing applications for the status of a system for settlement and for the delivery of financial instruments, to take into account Standard 9 (backup facilities) elaborated in the publication referred to in paragraph 9.

text: 15. In Article

text: (agreement between participants and securities settlement systems), the ECB suggests using the words participation agreement (“convention de participation”) instead of membership agreement (“convention d’adhésion”), to clarify the distinction with the agreement signed between the central depository and its members.

text: 16. The ECB particularly welcomes Article

text: , which provides that the manager of a system for settlement and for the delivery of financial instruments shall not engage in any other activity that could create conflicts of interest with the management of the said system. The ECB considers this provision ensures a level of security that goes beyond the one to be met by securities settlement systems used in ESCB credit operations.

text: 17. Article

text: requires any system to set up risk control measures in order to protect the rights of the participants in the system in case of default in delivery or settlement by one or more other participants. The ECB understands that the only system currently operating in France that do not fulfil this requirement will not be used for ESCB credit operations. Since the said system does not currently benefit from such risk control measures in the event of the default of a participant, the ECB understands that the adoption of the General Regulation will require the manager of the system to set up such measures as soon as possible in order to decrease the systemic risk.

text: 18. The ECB confirms that it has no objection to this ECB Opinion being made public by the competent national authorities at their discretion. Done at Frankfurt am Main on 18 November 1998. The President of the ECB [signed] Willem F. Duisenberg


publisher: Europeiska centralbanken

sprak: en

title: Opinion of the European Central Bank at the request of the Ministry of Finance of the Republic of Austria under Article 109l (2) and 109f (6) of the Treaty establishing the European Community and Article 5.3 of the Statute of the European Monetary Institute on a draft regulation of the Federal Minister of Finance on the implementation of certain provisions of the Austrian Banking Act (Fourth Liquidity Regulation) (CON/98/58)

serie: con

text: 1. On 27 November 1998, the European Central Bank (ECB) received a request from the Ministry of Finance of the Republic of Austria for an ECB Opinion on a draft regulation of the Federal Minister of Finance on the implementation certain provisions of the Austrian Banking Act (Fourth Liquidity Regulation) (hereinafter referred to as the “draft legislative proposal”)

type: stycke

text: 2. In accordance with Article 109l (2) of the Treaty establishing the European Community (hereinafter referred to as the “Treaty”), the ECB has taken over the advisory functions of the European Monetary Institute (EMI), which went into liquidation upon the establishment of the ECB on 1 June 1998. The ECB’s competence to deliver an opinion is based on Article 1.1, fourth indent, of the Council Decision (

text: ) of 22 November 1993 on the consultation of the EMI by authorities of Member States on draft legislative provisions, as the draft legislative proposal contains provisions concerning rules applicable to financial institutions insofar as they influence the stability of financial institutions and markets. In accordance with

text: Article 17.5

text: , first sentence, of the Rules of Procedure of the ECB, the ECB Opinion has been adopted by the Governing Council of the ECB.

text: 3. The ECB notes that the draft legislative proposal is intended to lower the minimum percentage of required holdings of funds in line with

text: Article 25 (7)

text: and (12) of the Austrian Banking Act. From the perspective of the influence on the stability of financial institutions and markets, the ECB has no further comments on the draft legislative proposal.

text: 4. The ECB confirms that it has no objection to this ECB Opinion being made public by the competent national authorities at their discretion. Done at Frankfurt am Main on 16 December 1998. The President of the ECB [signed] Willem F. Duisenberg

type: vagledning

utgivare: ecb


title: Opinion of the European Central Bank at the request of the Ministry of Justice of the Republic of Austria under Articles 109l (2) and 109f (6) of the Treaty establishing the European Community and Article 5.3 of the Statute of the European Monetary Institute on a draft legislative proposal concerning a Regulation of the Federal Government on the use of the monetary policy instruments of the European Central Bank as a basis for determining changes in the base and reference interest rates (Regulation on the base and reference interest rates) (CON/98/59)

text: 1. On 27 November 1998 the European Central Bank (ECB) received a request from the Ministry of Justice of the Republic of Austria for an ECB Opinion on a draft legislative proposal concerning a Regulation of the Federal Government on the use of the monetary policy instruments of the European Central Bank as a basis for determining changes in the base and reference interest rates (Regulation on the base and reference interest rates) (hereinafter referred to as the “draft legislative proposal”).

text: 2. In accordance with Article 109l (2) of the Treaty establishing the European Community (hereinafter referred to as the “Treaty”), the ECB has taken over the advisory functions of the European Monetary Institute (EMI), which went into liquidation upon the establishment of the ECB on 1 June 1998. The ECB’s competence to deliver an opinion is based on Article 1.1, first indent, of the Council Decision (

text: ) of 22 November 1993 on the consultation of the EMI by the authorities of the Member States on draft legislative provisions, as the draft legislative proposal contains provisions concerning currency legislation. In accordance with

text: Article 17.5

text: 3. The ECB notes that the draft legislative proposal is an implementing regulation for Article 1 of the Austrian Federal Law, dated 14 August 1998, changing certain provisions in the Austrian legislation as ancillary measures for the introduction of the euro (Erstes Euro-Justiz- Begleitgesetz), on which the EMI was consulted and delivered an Opinion on 13 February 1998 (hereinafter referred to as the “Austrian Federal Law”). Article 1 (1) of the Austrian Federal Law stipulates that references in national laws and regulations to the discount rate, which is currently announced by the Oesterreichische Nationalbank, shall be replaced by a base interest rate on 1 January 1999. Article 1 (2) of the Austrian Federal Law specifies that references in national laws and regulations to the lombard rate, which is currently announced by the Oesterreichische Nationalbank, shall be replaced by a reference interest rate on 1 January 1999. The first base interest rate on 1 January 1999 shall be identical to the discount rate of 31 December 1998, whereas the first reference interest rate on 1 January 1999 shall be identical to the lombard rate of 31 December 1998. Under Article 1 (3) of the Austrian Federal Law, the Federal Government is required, by means of a Regulation, to determine, and, respectively, to adjust such base and reference interest rates after having consulted the Oesterreichische Nationalbank.

text: 4. The ECB notes that Section 1 (1) of the draft legislative proposal provides for the interest rate on the deposit facility of the ECB to be the rate used to determine the basis for calculating changes in the base interest rate. According to Section 1 (2) of the draft legislative proposal, the interest rate on the marginal lending facility of the ECB shall be the rate used as a basis for determining changes in the reference interest rate.

text: 5. The ECB notes that, according to the Explanatory Memorandum to the draft legislative proposal, the Oesterreichische Nationalbank has recommended the solution set out in the draft legislative proposal on the basis of the following considerations: first, the discount and lombard rates, as currently announced by the Oesterreichische Nationalbank, mark the lower and upper limits of the short-term money market rates in Austria and this function will be fulfilled by the interest rates on the deposit facility (lower limit of the money market rate) and on the marginal lending facility (upper limit of the money market rate) in Stage Three of Economic and Monetary Union (EMU). Second, viewed in terms of their stability and the frequency of changes, the facilities mentioned were also closer to the discount and lombard rates than the interest rates on the regular two-week or three-month tenders of the European System of Central Banks (ESCB).

text: 6. The ECB welcomes the fact that the Oesterreichische Nationalbank was consulted on the draft legislative proposal and that the draft legislative proposal takes the form of a Regulation of the Federal Government, which will enter into force on 1 January 1999.

text: 7. The ECB does not have any objections to the draft legislative proposal.

text: 8. The ECB confirms that it has no objections to this ECB Opinion being made public by the competent national authorities at their discretion. Done at Frankfurt am Main on 16 December 1998. The President of the ECB [signed] Willem F. Duisenberg


title: Opinion of the European Central Bank at the request of the Ministry of the Economy, Finance and Industry of the French Republic under Articles 109l (2) and 109f (6) of the Treaty establishing the European Community and Article 1.1, second indent, of the Council Decision 93/717/EC on a draft Decree modifying the Decree of 3 December 1993 on the Banque de France (CON/98/62)

text: 1. On 14 December 1998 the European Central Bank (ECB) received a request from the Ministry of the Economy, Finance and Industry of the French Republic for an ECB Opinion on a draft Decree modifying the Decree of 3 December 1998 on the Banque de France (hereinafter referred to as the “Draft Decree”).

text: 2. In accordance with Article 1091 (2) of the Treaty establishing the European Community (hereinafter referred to as the “Treaty”), the ECB has taken over the advisory functions of the European Monetary Institute (EMI), which went into liquidation upon the establishment of the ECB on 1 June 1998. The ECB’s competence to deliver an opinion is based on Article 1.1, second indent, of the Council Decision (

text: ) of 22 November 1993 on the consultation of the EMI by the authorities of the Member States on draft legislative provisions, as the Draft Decree contains provisions concerning the status and powers of the Banque de France and the instruments of monetary policy. In accordance with

text: Article 17.5

text: , first sentence, of the Rules of Procedure of the ECB, this ECB Opinion has been adopted by the Governing Council of the ECB.

text: 3. The ECB understands that the Draft Decree is intended to change the provisions of Decree No. 93-1278 of 3 December 1993, implementing the Law on the Statute of the Banque de France, and, more precisely, the provisions of Title III – Budgetary and Internal Finance and Title IV – Accounting regime of the Banque de France. The modifications introduced by the Draft Decree are essentially of a technical nature (accounting regime) or repeal legal acts which will no longer be valid after the start of the third stage of Economic and Monetary Union.

text: 4. The ECB welcomes the Draft Decree, which will establish the legal regime for a modified accounting regime of the Banque de France, taking into account general accounting and reporting regime of the European System of Central Banks (ESCB).

text: 5. The ECB understands that Articles 1 and 4 of the Draft Decree involve only changes in references made in the Decree of 3 December 1993 to the Article of the Law on the Statute of the Banque de France referring to the agreement signed between the Banque de France and the State for the management of the foreign reserves of the State. These modifications are the result of amendments made in the articles of the Statute of the Banque de France concerning this agreement (Law of 12 May 1998). They do not entail any modifications to the substance of the previous text.

text: 6. The ECB welcomes Article 2 of the Draft Decree, which (i) deletes the reference previously made to

text: Article 16

text: , first indent, of the French Code of Commerce, which states that French companies shall produce their financial statements in French francs and in French language; (ii) states the obligation for the Banque de France to establish its financial statements in euro and in French language; and (iii) deletes any reference to sub-divisions of the item “own funds” in the balance sheet of the Banque de France.

text: 7. The ECB welcomes Article 3 of the Draft Decree, which explicitly takes into account the submission of the accounting regime of the Banque de France to the mandatory accounting and valuation rules of the ESCB. Operations other than those which are regulated by mandatory rules adopted by the ECB will still be regulated according to the new legal regime implemented in France in the field of accounting (Law of 6 April 1998, which created the Committee for Accounting Regulations, vested with regulatory powers). The Banque de France also has the option of deciding upon adopting non-mandatory accounting rules of the ESCB.

text: 8. The ECB understands that Article 5 of the Draft Decree is a purely technical provision deleting the provision contained in the previous Decree concerning the date of its entry into force.

text: 9. The ECB welcomes Article 6 of the Draft Decree, which states that the independent external auditors of the Banque de France shall be appointed by the General Council of the Banque de France in accordance with the relevant provisions of Article 27.1 of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter referred to as the “Statute”).

text: 10. The ECB takes note that Article 7 of the Draft Decree is not related to accounting matters.

text: Article 7

text: repeals Article 13 of the Decree of 24 July 1984, which vested the Banque de France with the power to enter into an agreement to delegate to the Institut d’émission des départements d’outre-mer (IEDOM) and to the Institut d’émission d’outre-mer (IEOM) the power to define a system of minimum reserves. The ECB recalls that, according to the Treaty, for those territories which are part of the Community, the Banque de France will no longer have any power to delegate to the IEDOM, given the fact that the power to impose a minimum reserves system will have been transferred to the Community in accordance with the Treaty. The ECB takes note that, for those territories which are not part of the Community, the Banque de France will no longer be vested with the power to delegate to the IEOM the power to impose a minimum reserve system. The ECB concludes that, from 1 January 1999, the imposition of the minimum reserve system defined by the Governing Council of the ECB, in accordance with the Treaty, will be implemented by the Banque de France in those territories of the French Republic in which the IEDOM was previously delegated by the Banque de France the power to define and implement a minimum reserve system. The ECB takes note that the definition and implementation of a minimum reserves system to credit institutions located outside the Community, which was previously delegated to the IEOM, does not fall within the field of competence of the ECB, as long as it does not conflict with the provisions of the Statute.

text: 11. The ECB understands that Article 8 of the Draft Decree is a purely technical provision deleting the provision of the previous Decree on the publication in the Official Journal of the French Republic of decisions of the governing bodies of the Banque de France concerning the minimum reserve system and the features of new banknotes issued by the Banque de France.

text: 12. The ECB confirms that it has no objection to this ECB Opinion being made public by the competent national authorities at their discretion. Done at Frankfurt am Main on 30 December 1998. The President of the ECB [signed] Willem F. Duisenberg


title: Opinion of the European Central Bank at the request of the Director-General of the Treasury and Financial Policy of Spain, on a voluntary basis, concerning a draft law on the Payment and Securities Settlement Systems which constitutes the Spanish Implementation of Directive 98/26/EC of 19 May 1998 on Settlement Finality in Payment and Securities Settlement Systems (CON/99/01)

text: 1. On 13 January 1999 the European Central Bank (ECB) received a request from the Director- General of the Treasury and Financial Policy of Spain for an ECB Opinion on a draft law on the Payment and Securities Settlement Systems (the “draft law”) which is intended to constitute the Spanish implementation of Directive

text: of the European Parliament and of the Council of 19 May 1998 on Settlement Finality in Payment and Securities Settlement Systems (the “Finality Directive” or the “Directive”). The draft law was submitted in the Spanish nd language only. A further revised Spanish text of the draft law dated 22 March 1999 was subsequently received by the ECB. The ECB has produced an unofficial translation of the draft th law into English for the purposes of the present consultation. On May 6 the ECB has received the final version adopted by the Spanish Government which has subsequently been sent to Parliament.

text: 2. The purpose of the draft law is the implementation of the Finality Directive in the Spanish legal system and, consequently, the Spanish authorities were not legally obliged to consult the ECB under Article 1.2 of the

text: Council Decision 98/415/EC of 29 June 1998

text: . The ECB seeks to proactively promote a harmonised EU-wide implementation of the Finality Directive in the legislation of the Member States, in order to foster maximum transparency and legal certainty for the closely connected payment and securities settlement systems and to ensure a level playing field throughout the European Union. In view thereof, the ECB very much welcomes the opportunity to give advice on the draft law, which addresses matters pertaining directly to the core fields of competence of the ESCB, considering that the draft law contains provisions purported to ensure the smooth operation of payment systems, and the rights of central banks in relation to collateral provided to them.

text: 3. Article 8 of the draft law enumerates the Spanish systems falling within the scope of the draft law, pursuant to

text: Articles 2

text: (a) and 10 of the Finality Directive, which enumeration includes the Spanish national RTGS system connected to TARGET. Accordingly, this provision clarifies that the Spanish RTGS system will be a “designated system”, as defined in Article 1 of the Finality Directive, and benefit from the provisions of the draft law. However, the Spanish component of the TARGET system is linked with other components of the TARGET system outside Spain (through the “Interlinking” component), and payments effected through the Interlinking ought to fall also within the scope of the provisions of the draft law. Hence, the Spanish authorities are encouraged, in that respect, to ensure that Interlinking payments to and from the Spanish component of TARGET do indeed fall within the protection of the draft law. For instance, the fact that the Spanish RTGS system forms an integral part of TARGET may be clarified when the system is notified to the Commission. In addition, the ECB would like to make the following further comments concerning the scope of application of the draft law: (i) the reference to the interbank wholesale net clearing system “Servicio Español de Pagos Interbancarios” (SEPI) in

text: Article 8

text: should mention as its currency unit the “euro”, and not its temporary non-decimal sub-division of the euro, i.e. the “peseta”; (ii) the definition of “participants” in

text: Article 2

text: (c) of the draft law seems to exclude “indirect participants” in a system; whilst this exclusion is possible under the Finality Directive, inclusion of “indirect participants” (as defined in the Directive) is also an option under the Directive which, to the extent it is followed, would contribute to the objective of avoiding systemic risk in the integrated financial markets of Europe;

text: Articles 2

text: (b), 2(d), 14(2), 15(1), 15(2) of the draft law refer to “monetary policy transactions” and to “those [transactions] associated with the settlement of a system carried out by the Bank of Spain, the ECB and other central banks of the European Union”. The Finality Directive, however, envisages more generally “operations of the central banks of the Member States functioning as central banks, including monetary policy operations” (Recital 10 and

text: Article 1

text: (c) of the Directive) and, therefore, the language of the draft law seems to be unduly restrictive. Moreover, in Article 15.1 of the draft law the ECB has been omitted from the constellation of central banks without justification.

text: Article 11.1

text: , first sentence, concerning the irrevocability of transfer orders, covers irrevocability vis-à-vis the issuer of the transfer order in question, but should also address any third party along the lines of Article 5 of the Finality Directive. The drafting of Article

text: (a) of the draft law would suggest the following comment: Article

text: as well as Recital (13) of the Directive specifically mention that actions relating to the underlying transactions may in no way lead “to the unwinding of netting [or] to the revocation of the transfer order in the system”; this important element does not appear in the current drafting of Article

text: (a) of the draft law and should be expressly added.

text: 6. The scope of finality is addressed in Articles 11, 13, 14 and 16 of the draft law. In this connection, the following comments are warranted. (i) Article 13 of the draft law should ensure that finality is not only effective inter partes, but also erga omnes; provided that transfer orders were entered into the system before the moment of opening of insolvency proceedings (or the provisions of

text: Article 3.1

text: , second paragraph, of the Finality Directive apply), insolvency proceedings should have no effect whatsoever, neither on the legal position of the insolvent participant (and this is foreseen in the first paragraph of Article 13 of the draft law), nor as regards any other participant or third party (e.g. the liquidator or administrator of the insolvent entity). This latter aspect (which in Article 3.1 of the Directive is provided through the stipulation that “transfer orders and netting shall be legally enforceable and […] binding on third parties”) should be clearly set out in the draft law. The broad wording of

text: Article 11.1

text: , second sentence of the draft law may be taken as a useful parallel to expressly broaden and clarify the scope of finality in the context of

text: Article 13

text: . (ii) Article 14.1 of the draft law states the main effect of finality as a right to segregate collateral from the insolvency proceedings. However, Article 9.1 of the Finality Directive contains a more general formulation: the right of not being affected by the insolvency. The ECB notes that repurchase operations are already insulated from insolvency proceedings under Law 37/1998 amending the Securities Markets Law of 1988, and therefore Article 14.1 of the draft law basically addresses other kinds of collateral. It is for the Spanish authorities to consider whether the regime resulting from the two Spanish legal acts is equivalent to the Directive’s rule of “not being affected” by the insolvency.

text: 7. Article 15 of the draft law implements Articles 8 and 9.2 of the Finality Directive. Here, the ECB would like to make the following comments: (i) The first sentence of Article 15.1 of the draft law stipulates that “When insolvency proceedings are initiated against a Spanish organisation which is a member of a system recognised in another member State of the European Union as provided for under Directive

text: , the rights and obligations which accompany its membership of said system shall be defined by the national legislation governing said system”. However, it is also necessary to stipulate in the draft law that, conversely, in case of insolvency proceedings against a foreign entity participating in a Spanish system, the rights and obligations of such a participant within the system will be governed by Spanish law. This is of particular importance regarding non-EU foreign participants. (ii) Article 15.1 of the draft law seems to only apply “in the event of the opening of insolvency proceedings”. It is not clear whether the second sentence of that paragraph falls within the same proviso, and if this was not the case such second sentence might usefully be set as a different paragraph. It is clear that Article 9.2 of the Finality Directive stipulates a general conflict-of-law rule which shall apply in all cases, and not only in the event of commencement of insolvency proceedings. There are no legal reasons to limit the scope of the Directive’s rules in the field of private international law to situations of insolvency: the legal regime for collateral should be the same both before any insolvency occurs and after the opening of insolvency proceedings. The opening of insolvency proceedings, which is basically a procedural event, does not and cannot change the content and substance of the iura in rem. From a policy perspective, the achievement of the internal market in the area of securities following the introduction of the euro, would be better served by clear rules harmonising the private international law rules in relation to the taking of collateral; if such rules were only applicable in the case of insolvency proceedings, this policy objective of the Community would not be properly served. (iii) Article 15.1 of the draft law would only apply to collateral “constituted in favour of a system” in relation “with the settlement of said systems”; such language would provide an overly narrow approach to Article 9 of the Directive, and, instead, the protection provided by Article 15.1 of the draft law should cover in general terms any form of security interest in favour of participants irrespective of the purpose underlying the creation of such security interest. The conflict-of-law rule in Article 9 of the Directive makes no distinctions whatsoever, neither with regard to the purposes of collateralisation nor with regard to the quality of the beneficiary of the collateral. (iv) The rules, as stated in the draft law, are limited to the effects in rem (paragraphs 1 and 2 of Article 15 of the draft law read “en cuanto a sus efectos juridicos reales”). There seems to be no legal reason to limit the scope of the rule, and Article 9.2 of the Finality Directive does not demand such limitation. The contractual aspects of taking collateral are also paramount: the regulation of the formalities involved (iura in personam vis-à-vis counterparts, proper forum for disputes, etc.) requires a clear rule determining which national laws govern such aspects of taking collateral. It is to be borne in mind that the concept of collateral is not limited to pledges but encompasses also the technique of repurchase transactions. Article 9.2 of the Finality Directive is not limited in this respect. It is worth mentioning that the conflict-of-law rules in the Finality Directive are consistent with (i) the rule of Article 8 of the U.S.A.’s Uniform Commercial Code, (ii) the national laws already in place in several Member States, and (iii) the current trend of academic authority on the complex matter of cross-border trading of securities. (v) The rule enshrined in Article 15.2 of the draft law should be reciprocal, in the sense that it ought to apply, mutatis mutandis, to collateral registered in Spain in favour of foreign systems. (vi) The additional formalities required by

text: Article 15.3

text: may increase the bureaucratic burden and hinder the rapidity of the collateral-taking process without any justification. Modern rules of evidence and means of communication would not appear to require the approach envisaged by this provision. Similar remarks in favour of a more stream-lined procedure, including less formalities, can be made also in respect of Article 14.5 of the draft law concerning the realisation of collateral.

text: 8. The ECB confirms that it has no objection to this ECB Opinion being made public by the competent national authorities at their discretion. In the light of the general application of the observations made, and the importance to the international financial markets of a uniform application of Community law in this field, the ECB is arranging for this Opinion to be copied to the competent national authorities of Member States responsible for implementing Directive

text: of 19 May 1998 on Settlement Finality in Payment and Securities Settlement Systems. Done at Frankfurt am Main on 26 May 1999. The President of the ECB [signed] Willem F. Duisenberg


title: Opinion of the European Central Bank of 21 April 1999 at the request of the Italian Ministry of the Treasury under Article 105 (4), second indent, of the Treaty establishing the European Community, Article 4(a), second indent, of the Statute of the European System of Central Banks and of the European Central Bank and Article 2.1 of Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft legislative provisions on a draft Legislative Decree containing amendments to Legislative Decree 213 of 24 June 1998 regarding the introduction of the euro (the "draft Legislative Decree") (CON/99/02)

text: 1. On 22 March 1999 the European Central Bank (ECB) received a request for an opinion on the draft Legislative Decree from the Italian Ministry of the Treasury. This ECB Opinion is based on the English translation of the draft submitted to the ECB by the consulting authority.

text: 2. The ECB’s competence to deliver an opinion is based on Article 2.1, first indent, of the

text: on the consultation of the ECB by national authorities regarding draft legislative provisions, as the draft Legislative Decree contains provisions concerning the introduction of the euro. In accordance with

text: Article 17.5

text: , first sentence, of the Rules of Procedure of the ECB, this ECB Opinion has been adopted by the Governing Council of the ECB.

text: 3. The purpose of the draft Legislative Decree is to adopt provisions in order to amend and integrate, where necessary, the provisions of Legislative Decree 213 of 24 June 1998 in the light of experience. This possibility of further amendments was provided for in Law 433 of 17 December 1997, which delegates to the Italian Government the authority to adopt rules concerning the changeover and on which the European Monetary Institute (EMI) gave an Opinion. The need for some further changes in the Italian legislation in order to ensure a smooth changeover to the euro has become apparent in the light of the experience of the past few months. In addition, new legislation has been adopted which requires implementation: in particular, Recommendation

text: of 13 January 1999 of the Commission of the European Communities concerning collector coins, medals and tokens. - 2 -

text: 4. The ECB takes note of the intention to introduce new provisions which, by introducing small amendments, clarify the existing Italian legislation dealing with the ceilings for quotas and shares in co-operatives and their expression in euro, the possibility of choosing the procedure for converting share capital into euro and which simplify the procedures for the conversion of share capital into euro while exempting such conversions from fees and stamp duties. Since clarity of the legal texts increases the confidence of the citizens and their understanding of such a complex operation as the changeover to the euro, the ECB supports and welcomes such clarifications and simplifications.

text: 5. A change of substance is introduced in the new Article 1.3 of the draft Legislative Decree, which makes it clear to the citizens that the old procedure for observing reference exchange rates for individual currencies is now obsolete: in 1999, the reference rates are no longer rates against the Italian lira, but rather rates against the euro. While confirming the practice already followed since the beginning of 1999 by the Italian Ministry of the Treasury of publishing reference exchange rates in the “Gazzetta Ufficiale della Repubblica italiana”, (Italian Official Journal) “according to the procedures established within the framework of the ESCB”, the explicit change in the legislation enhances the certainty of the law and is therefore welcomed by the ECB.

text: 6. The ECB welcomes the implementation of the

text: Commission Recommendation 1999/63/EC

text: . The introduction into the Italian law of the prohibition to produce, issue, stock, import and distribute collector coins, medals and tokens bearing the words “euro” or “euro cent” and of administrative sanctions in the event of a violation of the prohibition should prevent confusion among citizens of the European Union, especially during the transitional period in which there are no euro coins in circulation. The ECB, however, suggests that “eurocent” should be written as two words (“euro cent”), as in the European Commission recommendation, since the word “cent” is not a suffix according to the conclusions of the Madrid European Council. The ECB confirms that it has no objection to this Opinion being made public by the competent Italian authorities at their discretion. Done at Frankfurt am Main on 21 April 1999. The President of the ECB [signed] Willem F. Duisenberg


title: Opinion of the European Central Bank of 30 April 1999 at the request of the Italian Ministry of Treasury Finance under Article 105 (4), second indent, of the Treaty establishing the European Community, Article 4(a), second indent, of the Statute of the European System of Central Banks and of the European Central Bank and Article 2.1 of Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft legislative provisions, on a draft Presidential Decree containing "Regulations for the production and issue of coins" (the "draft Presidential Decree") (CON/99/03)

text: 1. On 9 April 1999 the European Central Bank (ECB) received a request for an opinion on the draft Presidential Decree from the Italian Ministry of Treasury. This ECB Opinion is based on the English translation of the draft submitted to the ECB by the consulting authority.

text: 2. The ECB’s competence to deliver an opinion is based on Article 2.1, first and second indent, of the

text: on the consultation of the ECB by national authorities regarding draft legislative provisions, as the draft Presidential Decree contains provisions concerning the minting and issuance of state coins. In accordance with

text: Article 17.5

text: 3. The purpose of the draft Presidential Decree is to adopt provisions in order to amend and integrate, where necessary, the provisions of Ministerial Decree of 30 July 1983, taking into account the relevant provisions of Community law in the field of issuance of both national and euro coins. The draft Presidential Decree covers both the issuance of state coins and euro coins and accommodates in

text: Article 1

text: , first and second paragraphs, the powers of the ECB granted by

text: Article 105

text: a(2) of the EC Treaty. The ECB notes that the recognition in the Italian legislation of the need for ECB approval of the volume of coins to be issued makes such approval a legal condition for the issuance. However, concerning in particular the second paragraph of

text: Article 1

text: , the ECB recommends to make it more clear that the approval by the ECB of the volume of coin issuance is not required to initiate production. In fact, while the production of euro coins can start already in 1999 without the need for approval of the ECB, it - 2 - is only starting from 1 January 2002 that euro coins can be issued subject to the approval by the ECB of the volume of euro coins issuance.

text: 4. The ECB notes that

text: Article 1

text: , second and third paragraphs, correctly require compliance with “the measures adopted by the Council of the European Union pursuant to

text: Article 105

text: a, paragraph 2 of the Treaty” and with “relevant Community provisions” in the field of “the technical and artistic characteristics of each denomination”.

text: Articles 2

text: to 15 of the draft Presidential Decree deal mainly, in a very detailed way, with the organisation of production of coins, including, inter alia, supervision and control and security st measures. In Article

text: paragraph, the ECB suggests to make clear that the reference to “the characteristic design specified in the measure of the Ministry of the Treasury” is without prejudice to the applicable Community legislation adopted by the Council of the European Union pursuant to

text: Article 105

text: a, paragraph 2 of the Treaty. Moreover, the ECB understands the wording “without prejudice to any measures issued by European Community bodies” in

text: Article 14

text: as referring also to the need of ECB approval for the issue of gold and silver euro coins.

text: Articles 16

text: to 28 of the draft Presidential Decree deal with the issuance of coins, specifying the distribution channels and establishing a set of rules dealing with transport, delivery and receipt of coins. While most Articles do not require any comments from the ECB, concerning

text: Article 28

text: the ECB suggests to clarify that, in connection with the euro coins intended for circulation, the competence of the permanent and artistic committee are limited to the “national side” of the coins. The ECB confirms that it has no objection to this Opinion being made public by the competent Italian authorities at their discretion. Done at Frankfurt am Main on 30 April 1999. The President of the ECB [signed] Willem F. Duisenberg


title: Opinion of the European Central Bank at the request of the Bank of Greece under Article 105 (4), first and second indents, of the Treaty establishing the European Community and Article 4 (a) of the Statute of the European System of Central Banks and of the European Central Bank on a draft amendment of the Articles of incorporation of the Bank of Greece (CON/99/04)

text: OPINION OF THE EUROPEAN CENTRAL BANK the Treaty establishing the European Community and Article 4 (a) of the Statute of the European System of Central Banks and of the European Central Bank on a draft amendment of the Articles of incorporation of the Bank of Greece CON/99/04

type: rubrik

text: 1. On 4 May 1999 the European Central Bank (ECB) received a request from Bank of Greece for an ECB Opinion on a draft amendment of the Articles of incorporation of the Bank of Greece.

text: 2. The cases in which the ECB is competent to deliver an opinion are laid down in Article 2 of the Council Decision (

text: ) of 29 June 1998 on the consultation of the ECB by national authorities regarding draft legislative provisions. These cases include draft legislative proposals concerning national central banks. Although it is acknowledged that the above amendment is not in itself a draft legislative proposal in the sense of the above Council Decision, it is at the same time acknowledged that the above amendment requires a ratification by law and can, thus, be regarded as a step in the legislative process, which for reasons of efficiency would merit to provide for an opinion already at this stage of such a process. In accordance with

text: Article 17.5

text: , first sentence, of the Rules of Procedure of the ECB, this ECB Opinion has been adopted by the Governing Council of the ECB.

text: 3. The shareholder structure of the Bank of Greece has the legal form of a corporation, as already pointed out at the EMI’s Convergence Report of March 1998 “Converge Report – Report Required by

text: Article 109

text: j of the Treaty establishing the European Community”. The registered shares are listed in the Athens Stock Exchange. Pursuant to law 2396/1996,

text: Article 39

text: thereof, shares, already listed or to be listed in the Athens Stock Exchange, have to be dematerialised.

text: 4. The amendment of the Articles of incorporation of the Bank is the first step towards the dematerialization of the registered shares quoted at the Athens Stock Exchange of the Bank of Greece. The requirements for the dematerialization of shares are laid down in the above referenced law 2396/1996. The authority, entrusted by law with the administration of the dematerialised shares, may plan when the dematerialization of shares occurs. With the draft amendment the Bank of Greece, explicitly provides for the dematerialization and addresses related issues, thus, updating the Articles of incorporation of the Bank.

text: 5. The ECB understands the legislation to be of a merely technical nature in the sense that it intends to adapt the Articles of incorporation of the Bank of Greece to the more general legislation on dematerialization of securities listed in the Athens Stock Exchange. The ECB understands that the proposed amendment of the Articles of incorporation does not change, nor does it purport to facilitate any change of the existing composition of the shareholding of the Bank of Greece. From the ECB’s perspective, the proposed amendment does not give rise to any particular observations.

text: 6. The ECB confirms that it has no objection to this ECB Opinion being made public by the competent national authorities at their discretion. Done at Frankfurt am Main on 1 June 1999. The President of the ECB [signed] Willem F. Duisenberg


title: Opinion of the European Central Bank at the request of the Austrian Federal Ministry of Finance under Article 105 (4), second indent, of the Treaty establishing the European Community and Article 4 (a) of the Statute of the European System of Central Banks and of the European Central Bank on a draft Federal Act amending the Bankwesengesetz (Banking Act), the Wertpapieraufsichtsgesetz (Securities Supervision Act), the Investmentfondgesetz (Investment Fund Act), the Beteiligungsgesetz (Equity Fund Act), the Sparkassengesetz (Savings Bank Act), the Bausparkassengesetz (Building Society Act), the Hypothekenbankengesetz (Mortgage Bank Act), the Pfandbriefgesetz (the Mortgage Bond Act), the Postsparkassengesetz (Postal Savings Bank Act), the Nationalbankgesetz 1984 (Central Bank Act), the Gewerbeordnung 1994 (Industrial Code) (Bankenaufsichtsbehördengesetz - BABG (Banking Supervisory Authority Act)) (hereinafter referred to as the "Draft Law") (CON/99/05)

text: OPINION OF THE EUROPEAN CENTRAL BANK of the Treaty establishing the European Community and Article 4 (a) of the Statute of the European System of Central Banks and of the European Central Bank on a draft Federal Act amending the Bankwesengesetz (Banking Act), the Wertpapieraufsichtsgesetz (Securities Supervision Act), the Investmentfondgesetz (Investment Fund Act), the Beteiligungsgesetz (Equity Fund Act), the Sparkassengesetz (Savings Bank Act), the Bausparkassengesetz (Building Society Act), the Hypothekenbankengesetz (Mortgage Bank Act), the Pfandbriefgesetz (the Mortgage Bond Act), the Postsparkassengesetz (Postal Savings Bank Act), the Nationalbankgesetz 1984 (Central Bank Act), the Gewerbeordnung 1994 (Industrial Code) (Bankenaufsichtsbehördengesetz – BABG (Banking Supervisory Authority Act)) (hereinafter referred to as the “Draft Law”). CON/99/05

text: 1. On 12 May 1999 the European Central Bank (ECB) received a request from the Austrian Federal Ministry of Finance for an ECB Opinion on the Draft Law.

text: 2. The ECB’s competence to deliver an Opinion is based on Article 2 of Council Decision (

text: ) of 29 June 1998 on the consultation of the ECB by national authorities regarding draft legislative provisions, as the Draft Law contains provisions on the Oesterreichische Nationalbank and rules applicable to financial institutions which have a significant influence on the stability of financial institutions and markets. In accordance with

text: Article 17.5

text: 3. The Draft Law addresses the organisational structure of banking supervision and combines the banking supervision powers of the Austrian Federal Ministry of Finance and the assisting supervisory functions of the Oesterreichische Nationalbank. The latter becomes the sole banking supervisory authority and takes over the existing resources from the Austrian Ministry of Finance, particularly in terms of staff. The objective of the Draft Law is, inter alia, to increase the speed and the enforceability of statutory supervision measures. In this respect, the Draft Law stipulates, for example, that supervisory measures may be taken as soon as dangerous business practices are identified, rather than waiting until creditors are actually at risk. Furthermore, the Draft Law is aimed at enhancing the effectiveness of the contribution of external auditors to the supervision of credit institutions by defining more stringent requirements for auditors than this was previously the case.

text: 4. The ECB notes that, according to Section I, Article 141 of the Draft Law (new Article 79 (1) of the Austrian Banking Act), the Oesterreichische Nationalbank shall become the sole banking supervisory authority in Austria. The performance of this function by a central bank forming part of the Eurosystem does not interfere with the objectives and tasks of the ESCB. In this context the ECB notes that Article 105 (5) of the Treaty obliges the ESCB to contribute to the smooth conduct of policies relating to the prudential supervision of credit institutions and other financial institutions and the stability of the financial system. The ECB furthermore welcomes the fact that the Oesterreichische Nationalbank also in its capacity as supervisory authority shall have full autonomy in the execution of these duties and shall not be bound by any directives or instructions in this respect. The ECB notes that the Oesterreichische Nationalbank will be authorised to issue both orders and decisions in fulfilling its banking supervisory tasks. The new authoritative powers of the Oesterreichische Nationalbank cover all operational and analytical activities undertaken by authorities, which are presently undertaken by the Austrian Federal Ministry of Finance (sometimes in co-operation with the Oesterreichische Nationalbank). These also include all supervision functions, in particular the granting of licences to credit institutions as well as their revocation.

text: 5. The ECB notes that according to Section I, Article 141 of the Draft Law (new Article 79 (2) of the Austrian Banking Act), the Oesterreichische Nationalbank will also be responsible for enforcing the decisions issued in the fulfilment of its banking supervisory tasks, except for administrative penal decisions. In administrative penal proceedings the parties will have the right to appeal against decisions by the Oesterreichische Nationalbank at the Vienna Independent Administrative Senate. Apart from that, the decisions of the Oesterreichische Nationalbank will not be subject to reversal or amendment through administrative proceedings.

text: 6. The ECB notes that Section I, Article 142 of the Draft Law (new

text: Article 79

text: a of the Austrian Banking Act) stipulates that civil servants presently engaged in banking supervision at the Federal Ministry of Finance will be seconded by official notice to the personnel office set up at the Oesterreichische Nationalbank. The civil servants concerned will have the option of entering into a contract of employment with the Oesterreichische Nationalbank. Contractual employees presently engaged in banking supervision at the Federal Ministry of Finance will be assigned on permanent service to the Oesterreichische Nationalbank on the basis of an employer’s declaration, thereby becoming employees of the Oesterreichische Nationalbank. The personnel office to be set up at the Oesterreichische Nationalbank shall be directly subordinate to the Austrian Federal Ministry of Finance and will be managed by the member of the Executive Board of the Oesterreichische Nationalbank in charge of banking supervision matters. In this capacity this member of the Executive Board will be bound by the instructions of the Austrian Federal Minister of Finance. The ECB recommends to state in the explanatory memorandum such power of the Austrian Minister of Finance to issue instructions is limited to matters in the context of the personnel office. This would avoid giving the impression that the proposed new

text: Article 79

text: a (2) of the Austrian Banking Act is in contradiction of Section I, Article 141 of the Draft Law (new

text: Article 79 (1)

text: , last sentence, of the Austrian Banking Act), where it is stated that the Oesterreichische Nationalbank shall not be bound by any instruction in fulfilling its banking supervisory tasks. However, the ECB acknowledges that Section I, Article 141 of the Draft Law is intended to be adopted as constitutional provision and will therefore prevail Section I, Article 142 of the Draft Law (new

text: Article 79

text: a of the Austrian Banking Act).

text: 7. The ECB suggests that the possibility for an unlimited regress against the Oesterreichische Nationalbank granted to the Federal Republic, stipulated in Section I, Article 141 of the Draft Law (new Article 79 (3) of the Austrian Banking Act) be reconsidered since this could potentially endanger the fulfilment of the functions of Oesterreichische Nationalbank as defined in the Treaty and the ESCB Statute.

text: 8. The ECB welcomes the fact that the Draft Law is also aimed at enhancing the effectiveness of the contribution of external auditors to the supervisory process by defining more stringent requirements for auditors than was previously the case. This includes both the personal qualifications required of bank auditors and the introduction of a rotation principle to ensure that auditors are reliable.

text: 9. The ECB notes that the position of the supervisory board of credit institutions will be reinforced by the Draft Law. In this respect the Draft Law states that, as a backup to its supervisory duties, the supervisory board of credit institutions will have the right to initiate audits. Furthermore, the exchange of information is made easier for all institutions engaged in the monitoring and supervision of credit institutions, whilst procedural responsibility for statutory supervision is to be borne by the Oesterreichische Nationalbank as the banking supervisory authority.

text: 10. The ECB takes note that Draft Law states in Section I,

text: Article 118

text: (new Article 71 (1) of the Austrian Banking Act) that the banking supervisory authority shall notify to the institution concerned the audits only when the audit operation starts. Unless it is anticipated that advance notice will defeat the objective of the audit, and if advance notice is advisable in order to perform the audit more easily and quickly on the basis of organisational preparations, the audit may be notified at most one week before it commences.

text: 11. The ECB notes that Section I, Article 120 of the Draft Law (new

text: Article 71

text: a of the Austrian Banking Act) stipulates that the Oesterreichische Nationalbank is, as the banking supervisory authority, also obliged to supervise payment systems. The supervisory tasks cover not only conventional payment systems (large amounts and bulk payment transactions), but also other payment systems and means of payment, such as points of sale, credit cards and electronic money (e-money). Not only credit institutions are governed by the standards of this provision, but also corporate bodies or companies operating a payment system commercially. This provision supplements the national implementation of Directive

text: of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems by transferring “the supervision” of payment systems to the Oesterreichische Nationalbank. In the explanatory memorandum to the Draft Law reference is made only to

text: Article 22

text: ESCB Statute, whereas, no reference is made to Article 105 (2) of the Treaty and Article 3 of the ESCB Statute, where it is stated that one of the basic tasks of the ESCB shall be “to promote the smooth operation of payment systems”. Thus, Section I, Article 120 of the Draft Law (new

text: Article 71

text: a of the Austrian Banking Act) gives the impression that the oversight of payment systems is within the exclusive competence of the Austrian legislator and is allocated by the Draft Law as part of banking supervision to the Oesterreichische Nationalbank. The ECB recommends therefore, (i) to identify and to refer explicitly to the different nature of the oversight of payment systems, on the one hand, and banking supervision, on the other hand, and (ii) to make explicit reference to the basic task of the ESCB to promote the smooth operation of payments system as determined by Article 105 (2) of the Treaty and Article 3 of the ESCB Statute. This could be done in the explanatory memorandum to the Draft Law.

text: 12. The ECB takes note that Section I, Article 139 of the Draft Law (new

text: Article 77

text: a of the Austrian Banking Act) makes it easier for the Oesterreichische Nationalbank as banking supervisory authority to enter into agreements with the competent authorities of other states outside the European Economic Area concerning collaboration in questions of banking supervision. In the explanatory memorandum it is stated in this respect that this provision is aimed at following recommendations of the Basle Committee.

text: 13. The ECB welcomes the fact that Section X, Article 7 of the Draft Law (new Article 81 of the Austrian Central Bank Act) provides that the issue and use for payment purposes of banknotetype documents denominated in euro and intended for circulation constitute an administrative violation and are punishable by the competent district administrative authority with a fine of up to E3,000.00. This provision is aimed at transposing a recommendation of the ECB of 7 July 1998 on the adoption of certain measures to enhance the legal protection of euro banknotes and coins (ECB/1998/7), Official Gazette C No. 11 of 15 January 1999, stating that Member States shall, in particular, render more difficult and strictly monitor the issue of euro banknotes and coins which do not constitute legal tender.

text: 14. The ECB notes that the Draft Law refers partly to Austrian Schillings (e.g. in Section I,

text: Article 133

text: ) and partly to Euro (e.g. in Section X,

text: Article 7

text: ) as the denomination of thresholds expressed in monetary amounts. A consistent denomination may be considered.

text: 15. In conclusion, the ECB welcomes the Draft Law and is of the opinion that the Draft Law enhances the effectiveness of banking supervision in Austria, as it is aimed, inter alia, at increasing the speed and the enforceability of statutory supervision measures.

text: 16. The ECB confirms that it has no objections to this Opinion being made public by the competent national authorities at their discretion. Done at Frankfurt am Main on 14 July 1999. The President of the ECB [signed] Willem F. Duisenberg


title: Opinion of the European Central Bank at the request of the Austrian Federal Ministry of Finance on a Draft Law constituting the Austrian implementation of Directive 97/5/EC of the European Parliament and of the Council of 27 January 1997 on cross-border credit transfers and Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and security settlement systems (CON/99/07)

text: 1. On 21 May 1999 the European Central Bank (ECB) received a request from the Austrian Federal Ministry of Finance for an ECB Opinion on a draft Federal Act by which a Federal Act on cross-border credit transfers (Überweisungsgesetz) and a Federal Act on payment and securities settlement systems (Finalitätsgesetz) shall be enacted and by which the Bankruptcy Act (Konkursordnung), the Settlement Act (Ausgleichsordnung), the Stock Exchange Act (Börsegesetz) the Securities Supervision Act (Wertpapieraufsichtsgesetz), and the Banking Act (Bankwesengesetz) shall be amended (hereinafter referred to as the “Draft Law”). The Draft Law is intended to constitute the Austrian implementation of Directive

text: of the European Parliament and of the Council of 27 January 1997 on cross-border credit transfers (hereinafter referred to as the “Cross-border Credit Transfers Directive”) and Directive

text: of the European Parliament and the Council of 19 May 1998 on settlement finality in payment and security settlement systems (hereinafter referred to as the “Settlement Finality Directive”). The Draft Law was submitted in the German language only.

text: 2. The purpose of the Draft Law is to provide for the implementation of the Cross-border Credit Transfers Directive and the Settlement Finality Directive in the Austrian legal system. Consequently, the Austrian authorities were not legally obliged to consult the ECB under

text: Article 1.2 of Council Decision 98/415/EC of 29 June 1998

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions. However, the ECB seeks to proactively promote harmonised implementation of the Settlement Finality Directive, in particular, in the legislation of the Member States, in order to foster maximum transparency and legal certainty for the closely connected payment and securities settlement systems and to ensure a level playing-field throughout the European Union. In view thereof, the ECB very much welcomes the opportunity to issue its opinion on the Draft Law, which addresses matters pertaining directly to the core fields of competence of the European System of Central Banks (ESCB), since the Draft Law contains provisions purported to ensure the smooth conduct of cross-border credit transfers and the smooth operation of payment and securities settlement systems.

text: (A) Section I of the Draft Law – implementation of the Cross-border Credit Transfers Directive

text: 3. The ECB notes that Section I, Article 1 of the Draft Law aims at providing for a guarantee, in particular for private persons and companies (particularly small and medium-sized enterprises), that their credit transfers from one part of the Community to another will be transacted swiftly, reliably and at reasonable costs. As a consequence, the Cross-border Credit Transfers Directive shall not be applicable to credit institutions, other institutions and financial institutions which normally act as “executors” of credit transfers if the institutions themselves act as mandators. The reason for this given in the explanatory memorandum is that a need to protect these institutions is not assumed.

text: 4. The Draft Law states in Section I,

text: Article 2

text: that credit institutions or other institutions are obliged to notify their customers with regard to the information on the conditions of crossborder transfers contained in Article 3 of the Cross-border Credit Transfers Directive, either in writing or by electronic means. The ECB welcomes this provision as it implements an essential objective, namely to make the cross-border credit transfers sector more transparent. However, the ECB is of the opinion that whenever Member States are implementing Directives, it is neither sufficient nor necessary to make reference to the relevant Community provisions; rather, there should be explicit exposition of the contents of the Community provision in national legislation.

text: (B) Section II of the Draft Law – implementation of the Settlement Finality Directive

text: 5. The ECB notes that Section II, Article 1 of the Draft Law defines the systems to which the Draft Law shall be applicable. Both national and cross-border payment and securities settlement systems are included. All systems of the European Union, including any securities offered in connection with participation in the systems, can be affected by the Draft Law. It is of no importance in this context whether participants in the system are from within the European Union or from third countries. Furthermore, it is of no importance which currency or currencies are used in the systems, or whether the operation of the systems requires conversion from one currency to another. Any securities which are used by the Oesterreichische Nationalbank in the context of its special role as a central bank, above all in the area of monetary policy, shall also be covered by the Draft Law.

text: 6. The ECB takes note of the provision of Section II, Article 7 (3) of the Draft Law stating that, on a case-by-case basis, the Oesterreichische Nationalbank may, for a system governed by national law and on application by a participant, agree that an indirect participant is regarded as a participant if this is justified on grounds of systemic risk and if the indirect participant is a credit institution (cf.

text: Article 8

text: ) and is known to the system. The ECB welcomes this provision to the extent that concerns about systemic risk are taken into consideration in the rules and functioning of the system. Moreover, consideration may be given to widening the scope of application to indirect participants by making this a general rule without limitations, thus increasing legal certainty and consistency with respect to the holding and transfer of securities in a multi-layered chain of holding.

text: 7. The ECB welcomes the fact that the Draft Law contains – in Section II,

text: Article 12

text: – a clear definition of netting.

text: 8. The ECB welcomes the broad definition of securities in Section II, Article 14 of the Draft Law. This provision determines that securities shall be understood as marketable assets (inclusive of a credit balance) made available for securing obligations deriving in the context of the participation in a system, in the form of pledge, as a repurchase transaction, as a comparable agreement or in any other form or which are made available to the central bank of a signatory state of the European Economic Area agreement.

text: 9. The ECB takes note that Section II, Article 15 of the Draft Law implements Article 3.1 of the Settlement Finality Directive. This provision states that payment and transfer orders received prior to the opening of insolvency proceedings against the assets of a participant of the system shall not cease to be valid with the commencement of the insolvency proceedings. In Section II, Article 15 (3) of the Draft Law it is stated that any claims under civil law with regard to legal transactions outside the systems, including an appeal in accordance with the Bankruptcy Act (Konkursordnung), shall remain unprejudiced. In this respect the ECB notes that Recital 13 of the Settlement Finality Directive states that actions relating to underlying transactions may not lead to “the unwinding of netting [or] to the revocation of the transfer order in the system”. The ECB recommends that this requirement be addressed explicitly in the Draft Law.

text: 10. Section II, Article 17 of the Draft Law implements Article 9.1 of the Settlement Finality Directive. In the last sentence of this provision it is stated that any claims under civil law with regard to legal transactions outside the system, including an appeal in accordance with the Bankruptcy Act (Konkursordnung), shall remain unprejudiced. In this respect the ECB notes that Recital (13) of the Settlement Finality Directive states that actions related to underlying transactions may not lead to “the unwinding of netting [or] to the revocation of the transfer order in the system.” The ECB recommends that this requirement be addressed explicitly in the Draft Law.

text: 11. The ECB takes note that Section III, Article 18 of the Draft Law aims at implementing Article 9.2 of the Settlement Finality Directive. The ECB welcomes the fact that the Draft Law aims at establishing a general rule of conflict law which is in principle not limited in its application. However, the ECB recommends reconsidering the limitation of the scope of this provision to “participants”, which does not seem to include “indirect participants” as defined in Section II, Article 8 of the Draft Law.

text: 12. The ECB confirms that it has no objections to this ECB Opinion being made public by the competent national authorities at their discretion. In the light of the general observations made, and the importance to the international financial markets of a uniform application of Community Law in this field, the ECB is arranging for this Opinion to be copied to the competent national authorities of Member States responsible for implementing the Settlement Finality Directive. Done at Frankfurt am Main on 23 July 1999. The President of the ECB [signed] Willem F. Duisenberg


title: Opinion of the European Central Bank at the request of the Swedish Ministry of Finance concerning a legislative proposal for the implementation in Sweden of Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems (CON/99/09)

text: 1. On 19 July 1999 the European Central Bank (ECB) received a request from the Swedish Ministry of Finance for comments from the ECB concerning a legislative proposal entitled “Promemoria om Finalitydirektivets införlivande med svensk rätt” (the “legislative proposal”). The intention in respect of the legislative proposal is to implement in the Swedish legal system Directive

text: of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems (the “Finality Directive” or the “Directive”). The legislative proposal contains a proposed new draft law on settlement systems (the “draft law”) and certain proposed amendments to existing Swedish legislation (the “legislative amendments”), as well as an explanatory memorandum concerning the Finality Directive and the suggested additions and amendments to Swedish law (the “explanatory memorandum”).

text: 2. Since the purpose of the legislative proposal is the implementation of the Finality Directive, the Swedish authorities were not legally obliged to consult the ECB under

text: . The ECB, however, seeks to promote proactively a harmonised EU-wide implementation of the Finality Directive in the legislation of the Member States in order to foster maximum transparency and legal certainty for the closely connected payment and securities settlement systems and to ensure a level playing-field throughout the European Union. Therefore, the ECB very much welcomes the opportunity to give its opinion with regard to the legislative proposal, considering that it addresses matters pertaining directly to the core fields of competence of the European System of Central Banks (ESCB). In particular, the draft law is closely related to the basic task of the ESCB to promote the smooth operation of payment systems, as set out in

text: Article 105 (2)

text: , fourth indent, of the Treaty establishing the European Community, as amended (the “Treaty”), and

text: Article 3.1

text: , fourth indent, of the Statute of the European System of Central Banks and of the European Central Bank (the “Statute of the ESCB” or the “Statute”). In view thereof, and as a general remark, it may be useful for the consulting authority to consider the implications of the legislative proposal from the perspective of future Swedish participation in the third stage of Economic and Monetary Union (EMU). Accordingly, the Governing Council of the ECB has adopted this ECB Opinion in accordance with

text: Article 17.5

text: , first sentence, of the Rules of Procedure of the European Central Bank.

text: 3. The legislative proposal indicates the Swedish systems which will fall within the scope of application of the draft law pursuant to

text: Articles 2

text: (a) and 10 of the Finality Directive (Sections 1-7 of the draft law and Part 5.2 of the explanatory memorandum). 3.1 The explanatory memorandum contains an analysis and general description of the settlement systems that would be eligible for designation as “systems” and a notification to the European Commission under the draft law. In this respect, the ECB notes the references to the stability of the financial system (in Section 4, second paragraph, and Section 5, second paragraph, of the draft law and in the explanatory memorandum) and to systemic risk (in the explanatory memorandum). The ECB welcomes the general intention to cover all systems that can be said to be of importance for the stability of the financial system and the attention paid to systemic risk. 3.2 In addition, Section 2 of the draft law makes explicit reference to the national real-time gross settlement (RTGS) system operated by Sveriges Riksbank (RIX). Accordingly, this Section clarifies that RIX will be notified to the European Commission as a “system”, as defined in Article 1 of the Finality Directive, and benefit from the provisions of the draft law and the legislative amendments. The explanatory memorandum also refers to the RTGS payment arrangement of the ESCB for EU-wide fund transfers (TARGET). In this connection, it may be noted that the separate Swedish arrangement within RIX for the settlement of fund transfers in euro (euro-RIX) is linked with the other national RTGS systems of TARGET outside Sweden (through the “Interlinking” component). Fund transfers effectuated to and from Sweden through euro-RIX and the Interlinking should also fall within the scope of the provisions of the draft law. Accordingly, the Swedish authorities are encouraged in this respect to clarify the fact that euro-RIX forms an integral part of TARGET, which may be explained when notification of RIX, including euro-RIX, is given to the European Commission.

text: 4. The ECB notes the proposed role of the Financial Supervisory Authority (“Finansinspektionen”) under the draft law, and would like to make some comments. In this connection, Sweden’s present status as a Member State with a derogation under the Treaty is duly recognised (cf.

text: Article 122

text: (ex

text: Article 109

text: k) of the Treaty). The exclusion of such a Member State and its national central bank (NCB) from rights and obligations within the ESCB is laid down in Chapter IX of the Statute of the ESCB. The exclusion covers, among other provisions, Article 105 (2) of the Treaty and Article 3 of the Statute of the ESCB and, therefore, the basic ESCB task “to promote the smooth operation of payment systems” (

text: Article 105 (2)

text: , fourth indent, and

text: Article 3.1

text: , fourth indent). With reference to the general remark (in item 2 above) concerning the future participation of Sweden in EMU, however, the following observations are intended to clarify certain general concepts in relation to the ESCB’s conduct of this basic task. Whereas prudential supervision has as its subject financial institutions (which may participate in settlement systems as indicated in Section 7 of the draft law), the subject for payment systems oversight is the settlement systems themselves. There are several shared objectives between the supervisory activity in respect of individual financial institutions and the oversight of payment systems. For instance, an institution subject to supervision may act as the operator of a payment system, and supervision and oversight activities will have certain shared objectives in relation to such an institution, thus calling for co-operation between the authorities involved. As reflected in the explanatory memorandum, the general focus of payment systems oversight is the avoidance of systemic risk within or between systems. 4.1 It is true, as noted in the explanatory memorandum (in Part 5.2.4 on page 56), that the Finality Directive does not regulate the manner in which the Member States may arrange their respective oversight regimes in relation to domestic settlement systems. On the other hand, the explanatory memorandum refers to the many reports concerning the oversight of settlement systems, notably the reports by central banks prepared under the auspices of the Bank for International Settlements (BIS). In particular, the adoption of the so-called Lamfalussy standards for oversight contained in the Report of the Committee on Interbank Netting Schemes of the Central Bank of the Group of Ten Countries, Basel (1990), provided a framework for the traditional central bank function of oversight in relation to payment systems. 4.2 In addition to the stipulation in the Treaty and the Statute of the ESCB that the promotion of the smooth operation of payment systems shall be one of “the basic tasks to be carried out through the ESCB” (item 4 above), and the central bank reports concerning oversight (item 4.1 above), Article 22 of the Statute may be noted. According to the latter provision, “the ECB may make regulations, to ensure efficient and sound clearing and payment systems within the Community and with other countries”. 4.3 In Sweden, Section 2 of Chapter 1 of the amended Act on Sveriges Riksbank (“lagen (1988:1385) om Sveriges Riksbank”) which, in its revised version, entered into effect on 1 January 1999 (the “Riksbank Act”), stipulates that Sveriges Riksbank “shall […] promote a safe and efficient payment system”. Prior to 1 January 1999 this task was laid down in Section 4 of the previous version of the Riksbank Act, as well as in Article 12 of Chapter 9 of the Constitution Act (“regeringsformen”). The governmental report of 2 October 1997 concerning the proposal for the new Riksbank Act (“Lagrådsremiss – Riksbankens ställning”) states (on page 69) that the promotion of a safe and efficient payment system “is a basic duty of the Riksbank” and that an “equivalent task applies for the ESCB”. This equivalent ESCB task is the oversight function. 4.4 In view of the above, the ECB suggests that the legislative proposal should identify and refer explicitly to the specific nature of the oversight of payment systems, on the one hand, and the supervision of financial institutions, on the other hand. The Swedish Financial Supervisory Authority should maintain responsibility for the prudential supervision of the financial institutions involved as system operators or participants in relation to systems under the draft law. Furthermore, the ECB recommends that the role of Sveriges Riksbank as regards oversight (addressing the settlement systems as opposed to the entities involved) should be explicitly referred to in the draft law, whereby any oversight activity should be allocated to the Riksbank. Hence, the arrangements for oversight should make reference to the basic task of Sveriges Riksbank to promote the safety and efficiency of payment systems (which corresponds to the ESCB’s equivalent task as determined by Article 105 (2) of the Treaty and Article 3 of the Statute of the ESCB). As a consequence, and although the Financial Supervisory Authority may be assigned the task of giving notification of systems to the European Commission, the envisaged approval of systems before notification should, in the ECB’s view, be undertaken by the Riksbank in co-ordination and co-operation with the Financial Supervisory Authority.

text: 5. The definitions of “participants” and “indirect participants” in

text: Article 2

text: (f)-(g) of the Finality Directive allow the Member States to accommodate the participation of “indirect participants” in systems. While the exclusion of indirect participants is also possible under the Directive, the inclusion of indirect participants (as defined in the Directive) is an option which, to the extent that it is followed, would contribute to the objective of avoiding systemic risk in the integrated financial markets of Europe. However, the legislative proposal does not include indirect participants and the ECB notes that it is stated in the explanatory memorandum (on page 55) that there is no such need in Sweden at the moment.

text: 6. Articles 3 and 5 of the Finality Directive concern the legal enforceability, binding effect and irrevocability of transfer orders. In this connection, it is possible to distinguish between the legal situation between contractual parties, on the one hand, and in relation to any third party, including a liquidator in the case of insolvency, on the other hand (cf. Part 5.3.2 of the explanatory memorandum). 6.1 Between the parties, and from the perspective of a sending (or receiving) participant, irrevocability means that a sending participant cannot revoke a transfer order, at least not beyond the time foreseen in the operating rules of a payment system. The ECB notes the conclusions of the explanatory memorandum in this respect (on page 64) and agrees that, between the parties in relation to a system, Swedish law already complies with the requirements of

text: Article 3.1

text: , first paragraph, and Article 5 of the Directive. 6.2 From the perspective of the receiving participant, irrevocability between the parties would not be sufficient, however, as a means to address systemic risk. The transfer of funds or securities, or the interest in securities, covered by a transfer order, should be settled through the system to the benefit of the receiving participant without the possibility for any third party, including in particular a liquidator, to hinder such settlement. Recital 9 of the Directive states, inter alia, that “the reduction of systemic risk requires in particular the finality of settlement.” Such finality vis-à-vis third parties shall be ensured by the respective legal system in each Member State and, in particular, in relation to any disruption to a system that could otherwise be caused by insolvency proceedings against a participant. Moreover,

text: Article 5

text: concerning irrevocability also addresses third parties, including any liquidator. In this respect, the conclusion of the analysis of the explanatory memorandum (on page 65) that there is no need for specific rules in order to implement the Directive, may be further considered. Unless it is already clear under existing Swedish law, a statutory provision should be added, clarifying that transfer orders are legally enforceable and binding (Article 3 of the Directive), as well as irrevocable (in accordance with Article 5 of the Directive), also vis-à-vis a liquidator or any other third party. 6.3 In addition, Article 7 of the Directive stipulates that insolvency proceedings shall not have retroactive effect and the ECB notes that Swedish law does not provide for retroactive effects of insolvency proceedings through any so-called zero-hour rule. The ECB also notes the reference in the explanatory memorandum to Recital 13 and the interpretation of this provision (on pages 38-39 of the explanatory memorandum) concerning the possibility of recovery or restitution of any transfer order “outside the system”. The ECB would favour an approach in this respect (as indicated by the reference to “fraud or technical error” in Recital 13) which upholds the objective of avoiding any revocation of a transfer order (or any unwinding of netting) in the system.

text: 7. The ECB notes and appreciates the very thorough Swedish analysis in relation to netting and welcomes the legislative amendment proposed for Section 1 of Chapter 5 of the Act on trading with financial instruments (“lagen (1991:980) om handel med finansiella instrument”). In particular, the ECB welcomes the stipulation concerning the validity and effectiveness of multilateral netting, and notes the coverage also of closeout netting, within systems.

text: 8. The ECB notes the proposed Section 12 of the draft law concerning applicable law for systems and welcomes the clarification that the law governing the system shall also be binding vis-à-vis a bankruptcy estate (and, it is assumed, its liquidator) and the creditors in any insolvency proceedings. The ECB also notes the reflection in the explanatory memorandum (on page 56) concerning the risk of “forum shopping” by system operators with a view to applying the most favourable legal regime to its system, which again highlights the oversight aspect in relation to systems of which notification has been given under the Directive.

text: 9. The ECB also welcomes the legislative amendment to Section 10 of Chapter 8 of the Swedish Bankruptcy Code (“konkurslagen (1987:672)”) in order to allow for the immediate realisation of certain collateral security by the security holder.

text: 10. The ECB shares the view (expressed on page 93 of the explanatory memorandum) that Article 9.2 of the Directive concerning the applicable law in relation to dematerialised or immobilised securities ought to be given a general application. Accordingly, the ECB welcomes the corresponding proposed legislative amendment of Section 1 of Chapter 6 of the Act on trading with financial instruments.

text: 11. The ECB confirms that it has no objection to this ECB Opinion being made public by the competent national authorities at their discretion. In the light of the importance to the international financial markets of a harmonised implementation of Community law in this field, the ECB is arranging for this Opinion to be copied to the competent national authorities of the Member States responsible for implementing the Finality Directive. Done at Frankfurt am Main on 26 August 1999. The Vice-President of the ECB [signed] Christian Noyer