text: OJ L 334, 11.12.2002, p. 24. 3 See in this respect ECB Opinion

text: of 14 November 2007 at the request of the Council of the European Union on a proposal for a regulation of the European Parliament and of the Council on European statistics.

text: Under Guideline ECB/2004/15 of 16 July 2004 on the statistical reporting requirements of the ECB in the field of balance of payments and international investment position statistics, and the international reserves template, OJ L 354, 30.11.2004, p. 34.

text: Under Guideline ECB/2002/7.

text: See ECB Opinion

text: of 15 April 2008 at the request of the Luxembourg Minister for the Treasury and the Budget on a draft law improving the legislative framework for Luxembourg as a financial centre and on a draft law relating to social insurance contributions, in particular, paragraph 4.3.

text: See in this respect, ECB Opinion

text: of 1 February 2008 at the request of the Portuguese Parliament on a draft law on the principles, rules and structure of the National Statistical System.

text: See ECB Opinion

text: , in particular paragraph 4.3, and paragraph 4.2 of ECB Opinion

title: Opinion of the European Central Bank of 27 January 2009 at the request of the Banque centrale du Luxembourg on the legal framework for the compilation of statistics and the role of the Banque centrale du Luxembourg in the fields of balance of payments and quarterly financial accounts statistics (CON/2009/7)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 27 January 2009 at the request of the Banque centrale du Luxembourg on the legal framework for the compilation of statistics and the role of the Banque centrale du Luxembourg in the fields of balance of payments and quarterly financial accounts statistics (

text: ) Introduction and legal basis

text: On 3 December 2008 the European Central Bank (ECB) received a request from the Banque centrale du Luxembourg (BCL) for an opinion on a draft law on the organisation of the National Institute for Statistics and Economic Studies (Institut national de la statistique et des études économiques, referred to by the acronym STATEC) (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Article 105(4) of the Treaty establishing the European Community and the third and fourth indents of

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , since the draft law contains both provisions on the BCL and on the collection, compilation and distribution of monetary, financial, banking and balance of payments statistics. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft law

text: The draft law sets up a comprehensive legal framework for STATEC, to replace the Law of 9 July 1962, which it repeals. Primarily, it lists the tasks of STATEC, among which are the coordination and production of Community statistics as a partner of Eurostat and the European Statistical System. Furthermore, it reinforces the obligations of public authorities, public bodies, legal and natural persons to provide statistical information requested by STATEC, which may, in case of non-compliance with such obligations, use its rights to investigate and impose sanctions. Finally, the draft law sets up a comprehensive regime on statistical confidentiality, also providing for the circumstances in which access to individual statistical data may be granted for scientific purposes. More particularly, by virtue of Article 3 of the draft law, one of STATEC’s tasks is to ‘compile, jointly with the BCL, the balance of payments and the financial accounts’; the methods of cooperation being laid down in an agreement between STATEC and the BCL. This provision complements but does not

text: repeal the Law of 28 June 2000 amending the grand-ducal Regulation of 10 November 1944 relating to exchange control (hereinafter the ‘Law of 28 June 2000’), which already provided for the distribution of powers between STATEC and the BCL in relation to balance of payments statistics. In this respect, the additional costs incurred by the BCL are covered by a multi-year, renegotiable agreement between the BCL and the Luxembourg Government. While Guideline ECB/2002/7 of 21 November 2002 on the statistical reporting requirements of the ECB in the field of quarterly financial accounts requires the BCL to submit quarterly financial accounts statistics to the ECB, the ECB understands that under the draft law this task will be allocated to the BCL for the first time at national level. This opinion focuses on those aspects of the draft law that are directly relevant to the BCL.

text: 2. General observations

text: In general, the ECB welcomes the draft law to the extent that it optimises the reliability and efficiency of the statistical production process, in line with the recent proposal for a regulation of the European Parliament and of the Council on European Statistics . In view of the BCL’s statistical reporting 4 5 obligations in the fields of balance of payments and quarterly financial accounts , the ECB takes particular note that the draft law is in line with its previous recommendation and organises the cooperation between STATEC and the BCL in these areas. Ensuring effective cooperation between the national central bank (NCB) as a producer of statistics and other statistical authorities is often vital to ensure the availability, quality and cost-effectiveness of the statistics required by the ECB. Specific national cooperation arrangements should also fully preserve the NCB’s independence, which derives from the NCB’s participation in the European System of Central Banks (ESCB) in general and from its duty to collaborate with the ECB on statistical matters in particular .

text: 3. Specific remarks

text: 3.1 Adaptation of the Law of 23 December 1998 on monetary status and on the Banque centrale du Luxembourg (hereinafter the ‘BCL Law’) and the Law of 28 June 2000 to strengthen the reliability and efficiency of the statistical production process The draft law aims to set up a comprehensive framework fostering the production of reliable and efficient statistics. However, rules governing the production of statistics in Luxembourg remain

text: dispersed between the draft law, the BCL Law and the Law of 28 June 2000. There is also a partial overlap between the draft law and the Law of 28 June 2000 as both provide for the joint compilation of balance of payments statistics by STATEC and the BCL. Furthermore, there is a risk of inconsistency between these two texts, since the financial aspects of the cooperation appear to be governed not only by an agreement between STATEC and the BCL but also by an agreement between the BCL and the Luxembourg Government . The ECB recommends that the draft law should address this overlap and inconsistency and that the Law of 28 June 2000 should be amended accordingly. Another issue to be resolved is how the new provisions of the draft law stipulating the BCL’s power to compile financial accounts statistics together with the STATEC will fit into the current legal framework governing the BCL’s activities. To ensure that the BCL may fulfil its regulatory powers and responsibilities in the fields of balance of payments and financial accounts statistics, and, as already recommended on the occasion of recent extensions of the BCL’s powers , the legislator should consider expressly listing the BCL’s tasks in the BCL Law, along the lines of Article 3 of the draft law. 3.2 Preservation of the BCL’s independence The ECB has emphasised that the principle of independence of NCBs is of utmost importance for the quality and integrity of statistics, which must not be subject to political considerations . The statistical framework set up by the draft law should be scrutinised carefully in the light of the principle of independence. Institutional independence prohibits NCBs from seeking, taking or receiving instructions from any government body which may affect the fulfilment of the NCB’s ESCB-related tasks. The ECB notes that under the current draft law the BCL’s institutional independence may be affected. For that reason, the ECB suggests amending Article 3 of the draft law in such a way that STATEC fulfils its statistical tasks without prejudice to the BCL’s independence. A comparable safeguard should be introduced into

text: Article 10

text: (obligation to provide statistical information),

text: Article 11(1)

text: (right of investigation) and

text: Article 12

text: (sanctions) of the draft law. Against the above background, it should also be ensured that all cooperation mechanisms between STATEC and the BCL, including the overall coordination, centralisation and consultation prerogatives and with the possible participation of the BCL in the ‘Coordination Commission’ (Commission de coordination des statistiques publiques) , and the joint power to compile balance of payments and financial accounts statistics, may in no way impair the BCL’s independence, as enshrined in Article 108 of the Treaty and reflected in Article 5(2) of the BCL Law. The particular stipulation in Article 7(2) of the draft law that prior notification to STATEC 8 Under

text: Article 3.3

text: . of the draft law. 9 Under

text: Article 1

text: bis (4) of the grand-ducal regulation of 10 November 1944 relating to exchange control, as amended by the Law of 28 June 2000. 10 See paragraphs 4.2 and 4.8 of ECB Opinion

text: of 10 September 2008 at the request of the Banque centrale du Luxembourg on amendments to the draft law improving the legislative framework for Luxembourg as a financial centre and amending the Law of 23 December 1998 on monetary status and on the Banque centrale du Luxembourg. 11 See the ECB’s Convergence Report, May 2008, p. 5. 12 See Article 6(2) of the draft law.

text: of ‘any statistical survey in the general interest carried out by a public or private body’ is ‘without prejudice to the application of statistical powers conferred upon national or international public bodies’ is, in the ECB’s view, insufficient to ensure due compliance with the principle of the BCL’s independence. Moreover, the draft law as currently worded does not make it clear in connection with the BCL’s new joint prerogatives for balance of payments and financial accounts statistics whether the BCL will benefit from the specific regime set up under the BCL Law, in particular in relation to its independence and regulatory powers. In this context, the ECB recommends that the draft law should provide that all the abovementioned cooperation mechanisms between the BCL and STATEC are without prejudice to the principle of the BCL’s independence. Moreover, the BCL’s overall independence would be jeopardised if it could not autonomously avail itself of sufficient financial resources to fulfil its mandate. 3.3 Reciprocity in the exchange of information between STATEC and the BCL The ECB notes that by virtue of Article 33(2) of the BCL Law, statistical confidentiality provisions do not prevent the exchange of information with STATEC, ‘subject to reciprocity to the extent necessary to the performance of the BCL’s tasks’. For consistency in the mechanism of statistical information exchange, the ECB recommends that a similar provision should be inserted in Article 13 of the draft law which sets up STATEC’s statistical confidentiality regime. 3.4 Right of investigation and sanctions The ECB notes that the draft law gives STATEC rights to investigate and impose sanctions to ensure due compliance by public authorities and public bodies as well as by natural or legal persons to provide the requested statistical information. In line with its previous opinions , the ECB reiterates its recommendation that the BCL Law should be amended to give the BCL similar powers to impose sanctions.

text: This opinion will be published on the ECB’s website.

text: Done at Frankfurt am Main, 27 January 2009.

text: [signed]

text: The Vice-President of the ECB

text: Lucas D. PAPADEMOS


text: EGT L 189, 3.7.1998, s. 42.

text: Se ECB:s yttrande

text: av den 17 maj 2004 på begäran av Sveriges riksbank över två lagförslag om vissa äldre sedlar och mynt som upphör att vara lagliga betalningsmedel. 3 Se Riksbankens rapport Behovsprövning av 50-öresmyntet, DNR 2008-903-ADM.

publisher: Europeiska centralbanken

sprak: sv

title: Europeiska centralbankens yttrande av den 4 februari 2009 på begäran av Sveriges riksbank om ett lagförslag om femtioöresmyntets upphörande som lagligt betalningsmedel (CON/2009/8)

serie: con

text: EUROPEISKA CENTRALBANKENS YTTRANDE av den 4 februari 2009 på begäran av Sveriges riksbank om ett lagförslag om femtioöresmyntets upphörande som lagligt betalningsmedel (

text: ) Inledning och rättslig grund

type: rubrik

text: Den 29 december 2008 mottog Europeiska centralbanken (ECB) en begäran från Sveriges riksbank om ett yttrande över ett lagförslag om femtioöresmyntets upphörande som lagligt betalningsmedel (nedan kallat lagförslaget). ECB:s behörighet att avge ett yttrande grundas på artikel 105.4 i fördraget om upprättandet av Europeiska gemenskapen och artikel 2.1 andra strecksatsen i

text: rådets beslut 98/415/EG av den 29 juni 1998

text: om nationella myndigheters samråd med Europeiska centralbanken rörande förslag till rättsregler , eftersom lagförslaget rör betalningsmedel. I enlighet med

text: artikel 17.5

text: första meningen i arbetsordningen för Europeiska centralbanken har detta yttrande antagits av ECB-rådet.

type: stycke

text: 1. Syftet med utkastet till föreskrifter

text: Enligt lagförslaget ska 50-öresmyntet upphöra att vara lagligt betalningsmedel efter den 30 september 2010. Bakgrunden till förslaget är att det finns tydliga indikationer på att användningen av myntet minskat och att det har låg cirkulation. Denna förändring nödvändiggör även en ändring av lag (1970:1029) om avrundning av vissa öresbelopp så att avrundning i framtiden måste ske till närmaste krontal.

text: 2. Allmänna kommentarer

text: Enligt 9 kap. 14 § regeringsformen har Sveriges riksbank ensamrätt att ge ut sedlar och mynt. Av 5 kap. 1 § lagen (1988:1385) om Sveriges riksbank framgår att sedlar och mynt som ges ut av Sveriges riksbank är lagliga betalningsmedel. Allmänna regler om penning- och betalningsväsendet, såsom beslut om att vissa svenska sedlar och mynt ska upphöra att vara lagliga betalningsmedel ska däremot meddelas genom lag som antagits av Sveriges riksdag.

text: Tioöresmyntet demonetariserades genom lag (1991:1190) om tioöresmyntets upphörande som lagligt betalningsmedel. Äldre femtioöresmynt som präglats med stöd av lagar och föreskrifter före den 1 oktober 1992 demonetariserades genom lag (2004:863) om äldre femtioöresmynts upphörande som lagligt betalningsmedel . Sveriges riksbank har nu, förutsatt att riksdagen antar lagförslaget om femtioöresmyntets upphörande som lagligt betalningsmedel, fattat ett principbeslut om att femtioöresmynt inte längre ska vara lagligt betalningsmedel. ECB noterar att Riksbanken gjort en omfattande utredning av huruvida femtioöresmyntets behövs samt undersökt hur myntet används, om det behövs och vilka kostnader myntet medför. Man har även tagit hänsyn till synpunkter från allmänheten, större banker, handelns intresseorganisationer samt värdetransportföretagen. Riksbanken har beskrivit vilka konsekvenser ett ogiltigförklarande av myntet skulle få, hur efterfrågan på andra mynt skulle påverkas samt vilka följder detta skulle få för den allmänna prisnivån. Riksbanken diskuterar huruvida konsumentprisindex kan påverkas om femtioöresmyntet inte finns kvar . ECB anser det viktigt att den föreslagna ändringen blir känd för allmänheten i god tid, och att man har en tillräckligt lång tidsperiod mellan den dag då ett lagförslag om femtioöresmyntets upphörande som lagligt betalningsmedel antas och den dag då myntet faktiskt upphör att vara lagligt betalningsmedel. Man bör även ha en tillräckligt lång tidsperiod under vilken allmänheten kostnadsfritt kan lämna in femtioöresmynt.

text: Detta yttrande kommer att offentliggöras på ECB:s webbplats.

text: Utfärdat i Frankfurt am Main den 4 februari 2009.

text: [Namnteckning]

text: Jean-Claude TRICHET

text: ECB:s ordförande

type: vagledning

utgivare: ecb


text: OJ L 189, 3.7.1998, p. 42. 2 Assessment of accession countries’ securities settlement systems, January 2004. Available on the ECB’s website at www.ecb.europa.eu.

sprak: en

title: Opinion of the European Central Bank of 4 February 2009 at the request of Magyar Nemzeti Bank on three draft regulations on the terms and conditions and the operating rules of organisations providing central securities depository, clearing house and central counterparty activities (CON/2009/9)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 4 February 2009 at the request of Magyar Nemzeti Bank on three draft regulations on the terms and conditions and the operating rules of organisations providing central securities depository, clearing house and central counterparty activities (

text: ) Introduction and legal basis

text: On 7 January 2009 the European Central Bank (ECB) received a request from Magyar Nemzeti Bank (MNB) for an opinion on three draft MNB regulations: the draft regulation on the central securities depository’s terms and conditions and operating rules, the draft regulation on the terms and conditions and operating rules for organisations providing clearing house activities under the Law on the capital market, and the draft regulation on the terms and conditions and operating rules of organisations providing central counterparty activities under the Law on the capital market (hereinafter together ‘the draft regulations’). The ECB’s competence to deliver an opinion is based on Article 105(4) of the Treaty establishing the European Community and the fifth indent of

text: Article 2(1) 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 , as the draft regulations relate to payment and settlement systems. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft regulations

text: Until its very recent re-structuring on 1 January 2009, as a specialised credit institution KELER Zrt. acted not only as a clearing house (CH) and a central securities depository (CSD) operating the securities settlement system in Hungary, but also as a central counterparty (CCP). In the course of 2002 and 2003, the ECB prepared a comprehensive assessment of KELER Zrt. along with assessments of the central securities depositories and settlement systems of all other countries joining the European Union in 2004 . According to the assessment published in 2004, the performance of the CSD function and the CCP function by a single legal entity presented certain risks, in particular if a CCP were to take a principal risk equal to or exceeding its capital base, using up its own funds if this risk were to be crystallised. The

text: consequent insolvency of the CCP could also disrupt the CSD’s functioning. Consequently, the ECB recommended allocating the CSD and CCP functions to independent legal entities. Furthermore, in its Opinion

text: of 4 January 2006 at the request of Magyar Nemzeti Bank on a draft regulation on the general terms and conditions and operating rules of organisations providing clearing house activities, the ECB drew the consulting authority’s attention to its recommendation for creating for KELER ‘a legal structure which prevents any spillover of risks from the entity providing CCP services to the entity providing securities settlement services’. Hence the ECB suggested amending the draft regulation to take account of this recommendation, among other things by separating the legal provisions governing the general terms and conditions and operating rules for CCP and for CSD functions. In view of the risks involved and at the ECB’s recommendation, the MNB supported the idea of separating KELER Zrt.’s CCP and CSD functions into legally independent companies. Under the new regime, a newly established company, KELER KSZF Kft., acts as the CCP, while KELER Zrt. retains its CSD and CH functions. The amendments to Law CXX of 2001 on the capital market in 2007 served as the basis for separating these functions. The sound and smooth operation of the Hungarian securities clearing and settlement system is of utmost importance for ensuring the efficient implementation of monetary policy, the smooth operation of payment systems and financial markets, and thus financial stability, and the draft regulations will regulate the terms and conditions and the operating rules for the organisations performing CSD, CH and CCP functions. According to the general provisions of the draft regulations, the Rules ‘shall define the parties’ rights and obligations as well the procedures in such a way that the legal, financial and operational risks … are clear and unambiguous’. The draft regulations include certain definitions, such as those for a securities settlement system, liquid assets, etc. The draft regulations lay down various general rules, such as rules for granting access and terminating business relationships and the financial and technical requirements for participation, etc. They also govern certain risk management measures, such as the management of principal risk related to securities transactions, securities lending, the market, futures and options, and the clearing members and the emergency-handling rules, etc. The draft regulations also lay down the basic principles for determining fees. It is proposed that the draft regulations should enter into force on 28 February 2009.

text: 2. General observations

text: 2.1 The ECB welcomes the allocation of the CSD and the CCP functions to independent legal entities to avoid spill-over risks. It understands that the allocation process has been completed and the new scheme started operating on 1 January 2009.

text: 2.2 In the opinion of the ECB, the draft regulations follow, as far as possible, the legal rules and standards established by the Eurosystem for payment and settlement systems. This opinion will be published on the ECB’s website.

text: Done at Frankfurt am Main, 4 February 2009. [signed]

text: The President of the ECB

text: Jean-Claude TRICHET


text: OJ L 189, 3.7.1998, p. 42.

text: The Declaration is available on the French Presidency’s website at www.ue2008.fr

text: See, for example, paragraph 3.3 of Opinion

text: of 21 October 2008 at the request of the German Ministry of Finance on a Law on the implementation of a package of measures to stabilise the financial market and an order on its implementation.

text: See ‘Communication from the Commission – The application of State aid rules to measures taken in relation to financial institutions in the context of the current global financial crisis’ (OJ C 208 of 25.10.2008, p. 8). Also ‘Communication from the Commission – The recapitalisation of financial institutions in the current financial crisis: limitation of aid to the minimum necessary and safeguards against undue distortions of competition’, available on the Commission’s website at www.ec.europa.eu 5 See paragraph 8 of ECB Opinion

text: of 1 December 2005 at the request of Národná banka Slovenska on a draft law amending the Act No 118/1996 Coll. on the protection of bank deposits and on amendments to certain laws, as last amended; also paragraph 2.5 of ECB Opinion

text: of 27 August 2007 at the request of the Polish Minister for Finance on a draft law amending the Law on the Bank Guarantee Fund. 6 OJ L 135, 31.5.1994, p. 5. 7 See ECB Opinion

text: of 18 November 2008 at the request of the Council of the European Union on a proposal for a Directive of the European Parliament and of the Council amending Directive

text: on deposit-guarantee schemes as regards the coverage level and the payout delay (OJ L 314, 9.12.2008, p. 1).

text: Financial Stability Forum, ‘Guidance for Developing Effective Deposit Insurance Systems’, September 2001, point V.4 (‘Funding’), p. 26. International Association of Deposit Insurers, Core Principles for Effective Deposit Insurance Systems, 29 February 2008. 9 See the twenty-third recital to Directive

text: . The proposed amending Directive calls for the Commission to submit a report on a harmonisation of the funding mechanisms of deposit-guarantee schemes by 31 December 2009 to the European Parliament and the Council (see Article 1(6) of the proposed amending Directive, introducing changes to

text: Article 12 of Directive 94/19/EC

text: ). 10 Interpreted in line with

text: Council Regulation (EC) No 3603/93 of 13 December 1993

text: specifying definitions for the application of the prohibitions referred to in Articles

text: and

text: b(1) of the Treaty (OJ L 332, 31.12.1993, p. 1). 11 See paragraph 1.2 of ECB Opinion

text: ; see also paragraph 3.1 of ECB Opinion

text: ; as well as paragraph 3.2 of ECB Opinion

text: of 24 October 2008 at the request of the Swedish Ministry of Finance on a draft proposal on stabilising measures for the Swedish financial system. 12 See, for example, the ECB’s Convergence Report December 2006, p. 30. 13 As also expressed in Article 13(2) of the Law on Latvijas Banka.

title: Opinion of the European Central Bank of 4 February 2009 at the request of the Latvian Financial and Capital Market Commission on draft amendments to certain legal acts in connection with the financial turmoil (CON/2009/10)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 4 February 2009 at the request of the Latvian Financial and Capital Market Commission on draft amendments to certain legal acts in connection with the financial turmoil (

text: ) Introduction and legal basis

text: On 2 February 2009 the European Central Bank (ECB) received a request from the Latvian Financial and Capital Market Commission (FCMC) for an opinion on draft amendments to the following legal acts (hereinafter the ‘draft amendments’): (a) the Law on deposit guarantees; (b) the Law on credit institutions; (c) the Law on civil procedure; and (d) the Law on the Financial and Capital Market Commission. The ECB’s competence to deliver an opinion is based on Article 105(4) of the Treaty establishing the European Community and the sixth indent of

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft amendments relate to rules applicable to financial institutions insofar as they materially influence the stability of financial institutions and markets. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft amendments

text: 1.1 The main objectives of the draft amendments to the Law on deposit guarantees are: (a) to clarify further the definition of the ‘unavailability’ of deposits; (b) to provide that compensation will be paid within a maximum period of twenty working days; and (c) to provide that if the resources of the Latvian Deposit Guarantee Fund are insufficient, compensation will be paid to depositors from the State budget. 1.2 The main objective of the draft amendments to the Law on credit institutions is to extend the FCMC’s powers to allow it to deal more effectively with troubled banks. In particular, the FCMC is authorised to take measures in any of the following circumstances: (a) if a credit institution fails to comply with national or EU laws and regulations; (b) if a credit

text: institution’s operations threaten its own stability or solvency, the security or stability of the banking sector in Latvia, or to cause significant losses to the economy of the State: (c) if a there is an excessive outflow of deposits or other secured funds from a credit institution. The measures that the FCMC may take include: (a) requiring the credit institution to take the necessary steps to remedy such situation or submit a plan of action to the FCMC by a set deadline; (b) issuing a warning to the credit institution; (c) giving the credit institution’s decision-making bodies, managers and members binding written orders necessary to remedy such situation; (d) establishing restrictions on the rights and actions of the credit institution, including entirely or partially suspending its authority to provide financial services, as well as restrictions on fulfilment of its obligations; (e) imposing restrictions on the credit institution in relation to execution of deposit obligations; (f) appointing one or more authorised representatives from the FCMC to the credit institution; (g) imposing on the credit institution the responsibility to reduce the level of risk in relation to its transactions, services and systems; (h) requesting Latvijas Banka to suspend the provision of credit to the credit institution; (i) imposing fines. Under the draft amendments, an authorised representative of the FCMC may be appointed to take over the management of the credit institution with a wide range of powers to administer it. The operations of the credit institution’s shareholders in general meeting, its council, board and other executive institutions, as well as the persons authorised to bind the credit institution, will be suspended. The authorised representative will be authorised to call and participate in meetings of the credit institution’s shareholders, council or board with the right to propose issues to be reviewed. No decision may be adopted if it is opposed by the authorised representative. 1.3 The main objective of the draft amendments to the Law on civil procedure is to reduce the period for the Court to decide on an insolvency from 15 days to five days. 1.4 The main objective of the draft amendments to the Law on the Financial and Capital Market Commission is to provide for the FCMC’s rights to take decisions to restrict the rights, obligations and operations of market participants.

text: 2. General observations

text: 2.1 In line with the ‘Declaration on a concerted European action plan of the euro area countries’ issued by the Heads of State of the euro area on 12 October 2008 (hereinafter the ‘Declaration’) , the ECB notes that Member States must act in a coordinated manner to avoid significant differences in national implementation having a counter-productive effect and creating distortions in global banking markets. This coordinated approach includes initiatives aimed at ensuring appropriate liquidity, facilitating the funding of banks by various means, providing additional capital resources to financial institutions and recapitalising distressed banks. These principles were also endorsed for

text: all Member States by the European Council on 16 October 2008. The Declaration also acknowledges the need to work in cooperation with the ECB. 2.2 As a general remark and in line with its previous opinions , the ECB reiterates the importance of ensuring that the regulatory practice under the draft amendments will be conducted in full compliance with the relevant Community law provisions, including EU single market principles and financial services legislation, as well as competition and State aid rules. In the latter respect, the ECB draws the consulting authority’s attention to the Commission’s recently adopted guidance on compliance by financial sector support schemes with EU State aid rules .

text: 3. Specific observations

text: 3.1 Draft amendments to the Law on deposit guarantees

text: As noted in past ECB opinions, deposit protection is an important element of the financial safety net and contributes to safeguarding financial stability . The ECB notes, with reference to the proposed shortening of the payout periods for the guaranteed deposits, that this is also the objective of the amendments currently proposed to Directive

text: of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes . In line with its opinion on the proposed amendments to Directive

text: , the ECB welcomes the Latvian authorities’ intention to significantly reduce delays in payouts of guaranteed deposits and thereby strengthen depositors’ confidence. At the same time, a pragmatic approach should be taken to introducing the necessary reduction in payout delays, thereby preserving the credibility of the deposit-guarantee scheme. This implies, inter alia, establishing efficient operational processes for verifying claims and paying depositors. Further, and as confirmed also by international standards, sound funding arrangements are critical to the effectiveness of deposit-guarantee schemes and to the maintenance of public confidence in

text: the banking system . Directive

text: does not currently prescribe a method for financing deposit-guarantee schemes, provided that all of the following conditions are satisfied: (a) the costs of financing are borne, in principle, by credit institutions themselves; (b) the financing capacity of the scheme is in proportion to credit institutions’ liabilities; (c) the stability of the banking system of the Member State concerned is not jeopardised . The arrangements adopted in the case of the Latvian Deposit Guarantee Fund should therefore be consistent with these broad principles. Finally, the ECB underlines that the Latvian Deposit Guarantee Fund’s funding arrangements must, inter alia, comply with the monetary financing prohibition laid down in the Treaty, and in particular with the prohibition on national central banks providing overdraft facilities or any other type of facility within the meaning of Article 101 of the Treaty , as more specifically considered in 11 12 past ECB opinions and in the ECB’s Convergence Reports .

text: 3.2 Draft amendments to the Law on credit institutions

text: The ECB welcomes the draft amendments to the Law on credit institutions to the extent that they will strengthen the FCMC’s powers to intervene when the stability of either individual credit institutions or the financial system as a whole is jeopardised. Moreover, the ECB notes that in certain cases the FCMC may adopt decisions provided that the Cabinet of Ministers does not object. The ECB emphasises that operational independence of supervisory authorities vis-à-vis the political authorities is an essential and internationally recognised standard for supervision of financial markets. In this respect, the ECB notes that the draft amendments to the Law on credit institutions could give rise to concerns regarding the operational independence of the Latvian supervisory authorities, which should be addressed by introducing appropriate legislative safeguards. The ECB understands that the proposed provision giving the FCMC the power to request Latvijas Banka to suspend providing credit to a specific credit institution in view of its worsening financial situation should be without prejudice to the principle of central bank independence, as established by Article 108 of the Treaty and repeated in Article 7 of the Statute of the European System of Central Banks and of the European Central Bank . These provisions, inter alia, require that Latvijas Banka does not seek or take any instructions from other bodies of the Latvian

text: administration and that such bodies undertake to respect this principle and do not seek to influence Latvijas Banka’s decision-making bodies in the performance of their tasks. The ECB therefore recommends redrafting the provision in question to make it clear that while the FCMC may provide a negative assessment of the creditworthiness of a credit institution to Latvijas Banka, it may not request the suspension of credit to that credit institution. This would emphasise that the FCMC’s power is without prejudice to Latvijas Banka’s independence to decide whether credit should be provided to a credit institution.

text: This opinion will be published on the ECB’s website.

text: Done at Frankfurt am Main, 4 February 2009.

text: [signed]

text: The President of the ECB

text: Jean-Claude TRICHET


text: Zakon o članstvu Republike Slovenije v Mednarodnem denarnem skladu, published in Uradni list Republike Slovenije Nos 2/93 and 70/98.

text: It is noted that Article 25(2) of the Law on Banka Slovenije (Zakon o Banki Slovenije, published in Uradni list Republike Slovenije No 72/06) provides that financing of the Republic of Slovenia’s liabilities to the IMF is deemed to be an exemption from the prohibition of financing of the public sector.

title: Opinion of the European Central Bank of 15 December 2009 on the competences of Banka Slovenije related to Slovenia’s membership of the International Monetary Fund (CON/2009/100)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 15 December 2009 on the competences of Banka Slovenije related to Slovenia’s membership of the International Monetary Fund (

text: ) Introduction and legal basis

text: On 1 December 2009, the European Central Bank (ECB) received a request from the Slovenian Ministry of Finance (hereinafter the ‘Ministry’) for an opinion on a draft Law amending the Law on the membership of the Republic of Slovenia of the International Monetary Fund (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third indent of

text: Article 2(1) 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 , as the draft law relates to Banka Slovenije. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft law

text: The main purpose of the draft law is to amend the Law on the membership of the Republic of Slovenia of the International Monetary Fund (hereinafter the ‘Law’) to provide a legal basis for bilateral agreements between Slovenia and the International Monetary Fund (IMF). These agreements will be concluded in line with the Presidency Conclusions of the European Council meeting of 19 and 20 March 2009 to provide additional funds for the IMF from the Member States in the context of a joint Union response to the global financial crisis. As the provision of such additional funds to the IMF is neither part of the regular IMF quota nor the allocated special drawing rights, and the Member States will provide these funds on the basis of bilateral agreements with the IMF, new legislation is needed for Slovenia’s provision of additional funds for the IMF’s activities and to define the scope and content of the obligations of Banka Slovenije and of the State towards the IMF. According to Article 2 of the draft law amending Article 7 of the Law, the State provides funds to meet Slovenia’s obligations to the IMF arising from the special drawing rights under the first and the second allocations, and Banka Slovenije provides funds to meet all Slovenia’s other obligations to the IMF (this

text: refers to Slovenia’s IMF quota and any additional payments). In order to neutralise the risks associated with such payments by Banka Slovenije, the State will reimburse Banka Slovenije for all non-recovered funds provided under bilateral agreements with the IMF, and for any costs arising from differences in interest payments, exchange rate differences and measures taken to protect against the exchange rate risk, as well as any transaction costs incurred by Banka Slovenije in the fulfilment of its obligations vis-à-vis the IMF. In addition, the State will reimburse Banka Slovenije for 50 % of the costs referred to above arising in connection with the payment of the quota and participation in the financial transactions plan. In its representation in the IMF, Slovenia’s choice of its Alternate is no longer limited to the Deputy Governor of Banka Slovenije. Accordingly, under Article 3 of the draft law amending Article 8 of the Law, any other person duly authorised by the Governor of Banka Slovenije may act as the Alternate. Finally, Article 4 of the draft law introduces changes to Article 9 of the Law, pursuant to which the Slovenian Government can lay down more detailed conditions concerning rights and obligations vis-à-vis the IMF, taking into account the Law and the IMF’s Articles of Agreement. The draft law now proposes that an agreement should be made between the Ministry and Banka Slovenije stipulating the conduct of operations and the fulfilment of obligations arising from Slovenia’s membership in the IMF and repealing the Government Decision currently in force governing these issues.

text: 2. General observations

text: The ECB reminds the Ministry that the tasks performed by Banka Slovenije must comply with the monetary financing prohibition under Article 123(1) of the Treaty which prohibits, among other things, overdraft facilities or any other type of credit facility with the national central banks in favour of central governments. However,

text: Article 7 of Council Regulation (EC) No 3603/93 of 13 December 1993

text: specifying definitions for the application of the prohibitions referred to in

text: Articles 104

text: [now 123] and 104b(1) [now 125(1)] of the Treaty states that the financing by the national central banks of obligations falling upon the public sector vis-à-vis the IMF is not regarded as a credit facility within the meaning of Article 123 of the Treaty . The payment by Banka Slovenije of the additional obligations of the State to the IMF provided for in Article 2 of the draft law falls within the scope of

text: Article 7 of Regulation (EC) No 3603/93

text: This opinion will be published on the ECB’s website. Done at Frankfurt am Main, 15 December 2009. [signed]

text: The President of the ECB

text: Jean-Claude TRICHET


text: The Declaration is available on the French Presidency’s website at www.ue2008.fr. 4 See the Recommendations of the Governing Council of the European Central Bank on the pricing of recapitalisations issued on 20 November 2008, available on the ECB’s website at www.ecb.europa.eu. See also ECB Opinion

text: of 27 November 2008 at the request of the Greek Ministry of Economy and Finance on a draft law on enhancing liquidity of the economy to address the impact of the international financial crisis and on a draft decision on its implementation, as well as ECB Opinion

text: of 8 January 2009 at the request of the Slovenian Ministry of Finance on a draft decree laying down criteria and conditions for the implementation of State capital investments and for the conversion of State claims into capital shares under

text: Article 81

text: .a of the Law on public finance. 5 See e.g. paragraph 3.8 of ECB Opinion

text: of 13 November 2008 at the request of the Finnish Ministry of Finance on a draft government proposal for laws amending the Law on the Government Guarantee Fund and the Law on credit institutions. 6 See ‘Communication from the Commission – The application of State aid rules to measures taken in relation to financial institutions in the context of the current global financial crisis’ (OJ C 208 of 25.10.2008, p. 8). Also ‘Communication from the Commission – The recapitalisation of financial institutions in the current financial crisis: limitation of aid to the minimum necessary and safeguards against undue distortions of competition’, available on the Commission’s website at www.ec.europa.eu.

title: Opinion of the European Central Bank of 9 February 2009 at the request of the Latvian Ministry of Finance on a draft regulation on fair compensation granted to a bank or its shareholders (CON/2009/11)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 9 February 2009 at the request of the Latvian Ministry of Finance on a draft regulation on fair compensation granted to a bank or its shareholders (

text: ) Introduction and legal basis

text: On 5 February 2009 the European Central Bank (ECB) received a request from the Latvian Ministry of Finance for an opinion on a draft regulation establishing procedures for determining the amount, offer and payment of fair compensation granted to a bank or its shareholders (hereinafter the ‘draft regulation’). The ECB’s competence to deliver an opinion is based on Article 105(4) of the Treaty establishing the European Community and the sixth indent of

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft regulation relates to rules applicable to financial institutions insofar as they materially influence the stability of financial institutions and markets. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft regulation

text: The main objective of the draft regulation is to lay down procedures according to which the Latvian Cabinet of Ministers calculates the amount of compensation to be paid to banks that are being taken over by the State or to those banks’ shareholders. The draft regulation also provides for procedures for offering and paying compensation.

text: 2. General observations

text: 2.1 The legal basis for the adoption of the draft regulation is the Law on bank takeovers of 18 December 2008 on which the ECB was consulted, albeit after its adoption. As a consequence, the ECB’s views could not be duly taken into account in the Latvian legislative process.

text: 2.2 In this context, the ECB notes that the recapitalisation measures considered in Member States are aimed at strengthening the capital position of fundamentally sound financial institutions, in order to improve the functioning and stability of the banking system and to ensure the proper financing of the economy. In line with the ‘Declaration on a concerted European action plan of the euro area countries’ issued by the Heads of State of the euro area on 12 October 2008 (hereinafter the ‘Declaration’) , the ECB has highlighted in its opinions that close coordination at the EU level of Government measures intended to alleviate tensions in the financial markets is of crucial importance . This coordinated approach includes initiatives aimed at ensuring appropriate liquidity, facilitating the funding of banks by various means, providing additional capital resources to financial institutions and recapitalising distressed banks. In line with the Declaration, the ECB emphasises that the support measures brought in by Member States should be temporary in nature and that the duration of such measures should be harmonised throughout the EU. Furthermore, and in line with previous ECB opinions , it should be ensured that such measures are in accordance with the requirements of Community competition law, in particular State aid rules, and that the State’s role as shareholder is limited in time . 2.3 In the absence of further details, the ECB has no observations on the specific provisions of the draft regulation. It notes, however, that pricing conditions for compensation granted should be risk-based and market-oriented, as they should not lead to differences in the treatment of financial institutions.

text: This opinion will be published on the ECB’s website. Done at Frankfurt am Main, 11 February 2009. [signed]

text: The President of the ECB

text: Jean-Claude TRICHET


text: Law 112(I)/2002, Official Gazette of the Republic No 3621, 12.7.2002, as amended (hereinafter the ‘basic law’).

text: OJ L 189, 3.7.1998, p. 42.

text: The draft law nevertheless provides for the submission by the competent Minister of ad hoc and periodic reports to the House of Representatives, informing the House of any measures adopted in support of the domestic financial sector (see Section 2 of the draft law).

text: Law 30(I)/2001, Official Gazette of the Republic No 3481, 16.3.2001, as amended. The Laws on State aid control transposed into the Cypriot legal order the acquis in the area of State aid law, entrusting the Office of the Commissioner for State aid control with the task of monitoring its correct implementation in Cyprus.

text: All ECB opinions are available on the ECB’s website at www.ecb.europa.eu.

text: See ‘Immediate Responses to Financial Turmoil’, Ecofin Council Conclusions of 7 October 2008, available on the former French Presidency’s website at www.ue2008.fr. The Ecofin Council recommended that: (i) interventions should be timely and the support should in principle be temporary; (ii) the interests of taxpayers should be protected; (iii) existing shareholders should bear the due consequences of the intervention; (iv) the Government should be in a position to bring about a change of management; (v) management should not retain undue benefits; (vi) governments

text: may have, inter alia, the power to intervene in remuneration; (vii) legitimate interests of competitors must be protected, in particular through the State aid rules; and (viii) negative spill-over effects should be avoided.

text: The text of the Declaration is available on the former French Presidency’s website at www.ue2008.fr. The Member States agreed to: (i) ensure appropriate liquidity conditions for financial institutions: (ii) facilitate the funding of banks; (iii) provide financial institutions with additional capital resources to continue to ensure the proper financing of the economy; (iv) allow for an efficient recapitalisation of distressed banks, (v) ensure sufficient flexibility in the implementation of accounting rules; and (vi) enhance cooperation procedures among European countries.

text: See Brussels European Council of 15 to 16 October, paragraph 3 of the Presidency Conclusions.

text: See, for instance, paragraph 3.2 of ECB Opinion

text: of 17 October 2008 at the request of the Spanish State Secretary for Economic Affairs on a Royal Decree-Law creating a Fund for the acquisition of financial assets and on a Royal Decree-Law adopting urgent financial and economic measures in relation to the concerted European action plan of the euro area countries and paragraph 3.7 of ECB Opinion

text: of 1 December 2008 at the request of the Hungarian Ministry of Finance on a draft law on strengthening the financial intermediary system.

text: of 28 October 2008 at the request of the Belgian Minister for Finance on a draft royal decree implementing the Law of 15 October 2008 on measures promoting financial stability and in particular establishing a State guarantee for the provision of credit in the context of financial stability, in relation to the protection of deposits and life insurance and amending the Law of 2 August 2002 on the supervision of the financial sector and on financial services, and paragraph 3.3 of ECB Opinion

text: of 7 January 2009 at the request of the Latvian Ministry of Finance on a draft regulation establishing procedures for issue and supervision of bank loan guarantees. 11 See paragraph 3.4 of ECB Opinion

text: of 15 October 2008 at the request of the Irish Minister for Finance on a draft Credit Institutions (Financial Support) Scheme 2008. 12 See Communication from the Commission, - The Application of State Aid Rules to Measures Taken in Relation to Financial Institutions in the context of the current global financial crisis, paragraph 18.

text: See the Recommendations of the Governing Council of the European Central Bank on the pricing of State guarantees, issued on 20 November 2008, available on the ECB’s website at www.ecb.europa.eu

text: ‘… In all cases, these actions will be designed in order to avoid any distortion in the level playing field and possible abuse at the expense of non beneficiaries of these arrangements. As a consequence the scheme will be limited in amount, temporary (emphasis is ours) and will be applied under close scrutiny of financial authorities …’ (Declaration, supra fn. 7). Also see Communication from the Commission, supra fn. 12, paragraph 24. 15 Recommendations of the Governing Council of the European Central Bank on the pricing of recapitalisations of 20 November 2008 (hereinafter the ‘Recommendations’), available on the ECB’s website at www.ecb.europa.eu.

text: See, for instance, paragraph 3.8 of ECB Opinion

text: of 13 November 2008 at the request of the Finnish Ministry of Finance on a draft government proposal for laws amending the Law on the Government Guarantee Fund and the Law on credit institutions.

text: OJ L 332, 31.12.1993, p.1. 18 In this regard see, for instance, paragraph 3.3 of ECB Opinion

text: of 19 December 2008 at the request of the Slovenian Ministry of Finance on a draft decree laying down criteria and conditions for granting guarantees under

text: Article 86

text: .a of the Law on public finance, paragraph 3.2.3 of ECB Opinion

text: of 22 December 2008 at the request of the Slovenian Ministry of Finance on a draft decree laying down criteria and conditions for granting loans under

text: Article 81

text: .a of the Law on public finance and paragraph 3.2.3 of ECB Opinion

text: Article 81

text: .a of the Law on public finance.

title: Opinion of the European Central Bank of 9 February 2009 at the request of the Cypriot Ministry of Finance on a draft law amending the Laws of 2002 and 2004 on the management of revenues and expenditure and on the accounting system of the Republic and other related matters (CON/2009/12)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 9 February 2009 at the request of the Cypriot Ministry of Finance on a draft law amending the Laws of 2002 and 2004 on the management of revenues and expenditure and on the accounting system of the Republic and other related matters (

text: ) Introduction and legal basis

text: On 16 January 2009, the European Central Bank (ECB) received a request from the Cypriot Ministry of Finance for an opinion on a draft law amending the Laws of 2002 and 2004 on the management of revenues and expenditure and on the accounting system of the Republic and other related matters (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Article 105(4) of the Treaty establishing the European Community and on the sixth indent of

text: Article 2(1) 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 , as the draft law relates to rules applicable to financial institutions insofar as they materially influence the stability of financial institutions and markets. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose and main features of the draft law

text: 1.1 The draft law is motivated by the ongoing turbulence in the global financial markets and by the Cypriot authorities’ wish to place themselves in a position where they can take any necessary measures to support financial institutions without delay, helping preserve confidence in the financial system. According to the explanatory memorandum accompanying the draft law, its purpose is to establish a framework to enable the Cypriot Ministerial Council, following a proposal of the Minister for Finance and taking into account the opinion of the Governor of the Central Bank of Cyprus (CBC), to take, ‘in a period of financial crisis’, now or in the future, measures intended to address liquidity or insolvency problems affecting financial institutions based in Cyprus and to enhance their capital base or balance sheets ‘under conditions that [the

text: Ministerial Council] itself shall determine’, without the need for any ratification of these measures by the House of Representatives. 1.2 Under Section 2 of the draft law, which inserts a new Section 30A into the basic law, the Ministerial Council could take any of the following support measures in relation to troubled financial institutions: (i) a Government loan to a financial institution; (ii) a Government guarantee to a financial institution; (iii) the recapitalisation of a financial institution in return for a corresponding participation in its ownership structure; (iv) the purchase of a financial institution’s assets; (v) a Government loan or guarantee for an appropriate price and/or a grant paid to deposit-guarantee or investor protection schemes. As the draft law provides no more than the broad outline of what is to be a general Government support framework for the domestic financial system, the ECB understands that the actual terms and conditions subject to which support measures are to be taken by the Ministerial Council will only be determined on an ad hoc basis and that the new Section 30A will be activated without the adoption of any formal implementing measures involving Parliamentary assent . The draft law, which does not provide for an expiry date for the powers conferred on the Ministerial Council stipulates that, ‘prior to the implementation of a scheme to support the financial sector, the provisions of the 4. Laws on State aid control shall be complied with’

text: 2. General observations

text: 2.1 The ECB has issued a number of opinions at the request of the competent Member States’ authorities on national measures adopted in response to the global financial crisis . Given the broad scope of the support measures envisaged in the draft law and the fact that it may not have an opportunity to comment on any formal implementing measures in the future, the ECB invites the consulting authority to take into account the relevant observations made in its recent opinions on similar draft legislative provisions in other Member States, some of which are expressly repeated below. 2.2 The ECB also draws attention to the guidance provided by the Ecofin Council to the Member States in the conclusions of its Meeting of 7 October 2008 as well as the Declaration issued by

text: the Heads of State of the euro area on 12 October 2008 (hereinafter the ‘Declaration’) . In particular, the ECB stresses that any initiatives put in place by the competent national authorities to restore confidence in the financial markets should be coordinated and should aim to implement the common principles in question, in a spirit of close cooperation with other Member States and the Community institutions. The principles contained in the Declaration as well as the conclusions raised by the Ecofin Council were endorsed by the European Council of 15 to 16 October 2008 . 2.3 The ECB also stresses that it is of the utmost importance that support operations conducted by the national authorities do not interfere with the conduct of euro area monetary policy and/or with the Eurosystem’s refinancing operations . Given the interdependencies of the Member States’ policy responses to the financial crisis, the ECB’s opinions have also drawn attention to the importance of a concerted approach throughout the EU, aimed at restoring confidence in financial markets. 2.4 With these general observations in mind, and against the background of the guidance previously given by the ECB and the Community institutions in this regard, the ECB has the following observations to make on the draft law.

text: 3. Specific observations

text: 3.1 Scope, detailed rules and conditions for the activation of the national support measures 3.1.1 The ECB notes that Section 2 of the draft law does not define any conditions, rules or limitations subject to which Government support measures are to be provided. Instead, these are to be determined on an ad hoc basis if and when recourse is to be had to the Ministerial Council’s powers. 3.1.2 In the light of the above, the ECB strongly recommends that the consulting authority clarifies the coverage of the proposed Government support measures. It also draws attention to the importance of putting a transparent, predictable framework in place. This can only be done by defining expressly in the draft law both the terms and conditions for domestic financial

text: institutions to have recourse to such framework in cases of emergency only, and the parameters of and limitations to the exercise by the Ministerial Council of its powers when deciding whether or not and subject to which conditions to activate the new Section 30A . As regards the definition of ‘financial crisis’, the ECB understands that financial difficulties faced by individual institutions qualify as a financial crisis under the draft law only when potential systemic disorders can be foreseen and would welcome a clarification in this respect.

text: 3.2 Selection of beneficiary institutions

text: 3.2.1 The ECB draws the consulting authority’s attention to the Declaration which states, inter alia, that Member States’ actions should ‘be designed in order to avoid any distortion in the level playing field’ and that ‘all the financial institutions incorporated and operating in [euro area] countries and subsidiaries of foreign institutions with substantial operations [should] be eligible’ to benefit from the actions in question. The ECB has previously stated that ‘arrangements that may be seen as providing preferential treatment to specified institutions should be avoided’ . 3.2.2 Pursuant to Article 2 of the draft law, its provisions are to apply to the ‘financial institutions’ listed in it, provided that these are licensed by the competent national authorities in Cyprus. The ECB understands that, with the exception of branches of banks and other financial institutions registered outside Cyprus, which are ineligible to benefit, the draft law applies to all Cypriot financial institutions, including the Cyprus-based subsidiaries of foreign financial institutions. The ECB welcomes the non-discriminatory application of the draft law, which is conducive to maintaining a level playing field in the treatment of domestic and foreign financial institutions in Cyprus. Moreover, the ECB notes that the draft law is, in that respect, also in line with the Commission’s guidance on the eligibility criteria for beneficiary institutions . 3.3 The proposed support measures and the single monetary policy of the euro area 3.3.1 In line with the Declaration, Member States have to act in a coordinated manner to avoid the risk of significant national differences, apt to create distortions in the European financial markets. The euro area Heads of State also acknowledged the need to work in cooperation with the ECB to ensure consistency with the management of liquidity by the Eurosystem and compatibility with the Eurosystem’s operational framework. In this respect, the ECB notes that uncoordinated decisions by Member States should be avoided as they may lead to a

text: fragmentation of the euro area money market. Against this background, the ECB has the following specific remarks to make on the possible use, in the future, of the powers granted by the draft law. 3.3.2 First, it follows from the new Section 30A that State guarantees may be issued to cover all types of liabilities of domestic financial institutions and national guarantee schemes. The ECB therefore understands that the draft law does not exclude from its material scope of application, expressly or by implication, interbank deposits, subordinated or collateralised liabilities (such as covered bonds). The ECB repeats its view that State guarantees should not cover interbank deposits, in particular, as this could: (i) entail a substantial distortion in the various national segments of the euro area money market by potentially increasing short-term debt issuance activity across Member States, thus impairing the implementation of the single monetary policy which is an exclusive competence of the Eurosystem under Article 105(2) of the Treaty; and (ii) affect the transmission of monetary policy decisions. The ECB recommends that the draft law be amended to expressly exclude the abovementioned liabilities. 3.3.3 Second, the ECB understands that the Cypriot Government may issue State guarantees for loans taken out by banks. The ECB reminds the consulting authority that the aims of arrangements for granting government guarantees of bank debt should be to: (i) address the funding problems of liquidity-constrained solvent banks by improving the functioning of the market for bank debt of longer term maturity; (ii) preserve the level-playing field amongst financial institutions and avoid market distortions and (iii) ensure consistency with the management of liquidity by the CBC. In line with the Declaration, the ECB notes, moreover, that the euro area Governments should make available a Government guarantee of new medium term (up to five years) bank senior debt issuance, which should be limited in time. The ECB recommends that the draft law be amended to reflect the above. 3.3.4 Third, regarding the pricing of State guarantees, the ECB notes that, in the interests of ensuring a level-playing-field, it is crucial to ensure harmonisation of the price determination of such guarantees, both within the euro area and the EU. In particular, it is important to ensure that the price of State guarantees is risk-based and market-oriented and that it is determined on the basis of the costs of a corresponding guarantee in the market. In this regard, it is recalled that the Governing Council of the ECB has considered the appropriate framework for the granting of government guarantees on bank debt issuance and agreed on some recommendations to which the attention of the consulting authority is drawn . 3.3.5 Fourth, the ECB reminds the consulting authority that it is important to ensure that the beneficiary financial institutions do not profit from the undue use of their guaranteed status to engage in a heightened level of activities, distorting the market and facilitating abnormal

text: balance sheet growth. In this regard, the ECB reiterates the importance of establishing appropriate safeguards such as limits on the marketing of financial products or on the expansion of their activities on the basis of State guarantees. The ECB recommends that the draft law be amended to include such safeguards. 3.3.6 Fifth, concerning the possible acquisition, under the draft law, of the assets of financial institutions by the Cypriot Government, the ECB has the following observations of relevance from a monetary policy perspective. Although such measures should have a positive impact in restoring confidence in the Cypriot banking system, it is important that the price applied for the acquisition of financial institutions’ assets by the Cypriot Government should be determined in a coordinated manner within the euro area and the EU so as not to interfere with the transmission of single monetary policy decisions. This remark also applies to the loans that the Cypriot Government may provide to financial institutions under the draft law. 3.3.7 Sixth, as noted above, the draft law is not expressed to be a temporary measure, nor is there any indication in its text that any actual support measures adopted by the competent national authorities in Cyprus will be of limited duration. The ECB recalls that so open-ended a scheme as the one envisaged under the draft law is not in line with the Declaration and should be avoided. In particular, the Declaration clearly draws attention to the need for any domestic support schemes to be temporary in nature, even if they can be extended or renewed . The ECB recommends that a provision on the temporary nature of the support measures is inserted in the draft law. 3.4 Conditions for State capital investments within the euro area 3.4.1 In line with the Declaration, the ECB reiterates that uncoordinated decisions amongst Member States should be avoided, as they may have a negative impact on the integrity of the euro area and lead to significant differences in the treatment of financial institutions across Member States. This remark also applies to measures related to State capital investments. 3.4.2 The ECB takes the opportunity to restate the points made in its previous opinions. In particular, the ECB draws the consulting authority’s attention to the specific recommendations made by the Governing Council of the ECB in the matter of recapitalisations . In this respect, the ECB notes that the aim of any recapitalisation measures should be to strengthen the capital position of fundamentally sound financial institutions in order to improve the functioning and stability of the banking system and to ensure the proper financing of the economy. In particular, a consistent approach should be used in defining the conditions for recapitalisations and the

text: pricing of the instruments intended to provide Tier 1 capital to financial institutions. The ECB underlines the importance of appropriate pricing for recapitalisations in terms of the goals of enhancing the stability of the financial system, facilitating a return to normal market conditions and ensuring the proper financing of the economy. In its Recommendations, the ECB stresses that the pricing conditions for capital support should be risk-based and market-oriented, determined by taking into consideration the specific risk of both the specific instrument chosen for injecting capital and the institution concerned. Specific features of the instruments for capital injections (such as preference shares) should be appropriately chosen so that, while encouraging an early end to the State’s capital support of banks, they do not result in an excessive increase in the cost of capital. 3.4.3 In line with the Declaration, the ECB also emphasises that harmonisation regarding the expiry of national financial support schemes across the EU and in particular within the euro area is of crucial importance, including for State capital investments in financial institutions. In this context, it is important that the draft law should expressly provide for the temporary nature of the Cypriot Government’s intervention. More generally, concerning the issue of the application of State aid rules to measures taken by the Member States in connection with financial institutions in the context of the ongoing financial crisis, the ECB draws the consulting authority’s attention to the importance of ensuring that the proposed arrangements comply with the relevant Community law provisions and with the criteria recently laid down by the Commission in its guidance on compliance by financial sector support schemes with EU State aid rules and to the need to ensure that the State’s shareholder role as a result of a possible future recapitalisation under the draft law is limited in time. In this respect, and in accordance with the Recommendations, the Cypriot authorities should consider setting out terms for the redemption or conversion of the instruments either on the basis of a fixed period of time or depending on the development of market conditions, so as to preserve the temporary nature of the State’s involvement and discourage financial institutions from relying on such involvement for an extensive period of time.

text: 3.5 Central bank involvement in the support measures

text: 3.5.1 The ECB notes that, pursuant to Section 2 of the draft law, the Ministry of Finance proposes to consult the Governor of the CBC prior to deciding whether or not to support a domestic financial institution or to exercise any of the other powers conferred. While appreciating the draft law’s recognition of the CBC’s expertise in this field, the ECB also expects the CBC’s involvement in the procedure not to extend beyond the provision of advice and otherwise to comply fully with the prohibition on monetary financing laid down in Article 101(1) of the Treaty, read in conjunction with

text: Council Regulation (EC) No 3603/93 of 13 December 1993

text: specifying definitions for the application of the prohibitions referred to in Articles

text: and

text: b(1) of the Treaty . In particular, the ECB expects that the support measures envisaged in the draft law will be exclusively financed from the State budget and that, to the extent that their funding may require State borrowing, this will not include pre-financing or refinancing of the State budget by the CBC . 3.5.2 The ECB also expects that the Council of Ministers will use its powers in connection with State support measures in a manner fully compatible with the CBC’s institutional and financial independence thereby safeguarding the proper performance of the CBC’s tasks under the Treaty and the Statute of the European System of Central Banks and of the European Central Bank. The reference, in the new Section 30A to Section 6 of the Laws of 2002 to 2007 on the Central Bank of Cyprus is, in this respect, welcome.

text: 3.6 Funding of deposit-guarantee schemes

text: The ECB notes that deposit-guarantee schemes have been included in the scope of application of the draft law. The ECB welcomes the intention to make available an emergency funding mechanism to ensure the effectiveness of deposit-guarantee schemes, an important element contributing to financial stability. However, it has reservations whether the emergency funding of a deposit-guarantee scheme should be provided for via a discretionary mechanism such as the one to be established under the draft law. The ECB understands, however, that the rules subject to which the Cypriot deposit-guarantee scheme operates are currently in the process of being amended and the ECB will comment further on the relevant aspects in due course, particularly concerning the funding of the Cypriot deposit-guarantee scheme.

text: This opinion will be published on the ECB’s website.

text: Done at Frankfurt am Main, 9 February 2009. [signed]

text: The President of the ECB

text: Jean-Claude TRICHET


text: Published in Darjaven vestnik No 94, 31.10.2008 (in force as of 1.1.2009).

text: Published in Darjaven vestnik No 46, 10.6.1997.

text: OJ L 189, 3.7.1998, p. 42.

text: Available on the ECB’s website at www.ecb.europa.eu. 6 See the ECB’s Convergence Report of May 2008, p. 19, which specifies that ‘NCB statutes must ensure that Governors may not be dismissed for reasons other than those mentioned in Article 14.2 of the Statute. The purpose of this requirement is to prevent the authorities involved in the appointment of Governors, particularly the government or parliament, from exercising their discretion to dismiss them as Governor. The NCB statutes should either contain grounds for dismissal which are compatible with those laid down in Article 14.2 of the Statute, or omit any mention of grounds for dismissal (since

text: Article 14.2

text: is directly applicable).’

text: See paragraph 1 of § 13 of the draft law proposing the insertion of subparagraph 4 in Article 11(4) of the Law on BNB. 8 See paragraph 1 of § 13 of the draft law proposing the insertion of subparagraph 5 in Article 11(4) of the Law on BNB. 9 See the ECB’s Convergence Report of May 2008, p. 229, paragraph 3.2 of ECB Opinion

text: of 21 November 2008 at the request of Българска народна банка (Bulgarian National Bank) on a draft law amending the Law on Българска народна банка (Bulgarian National Bank), and paragraph 3.2.1 of ECB Opinion

text: of 21 May 2008 at the request of Česká národní banka on a draft law on Česká národní banka.

title: Opinion of the European Central Bank of 16 February 2009 at the request of the Bulgarian Ministry of Justice on a draft law supplementing the Law on Administration (CON/2009/13)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 16 February 2009 at the request of the Bulgarian Ministry of Justice on a draft law supplementing the Law on Administration (

text: ) Introduction and legal basis

text: On 19 January 2009 the European Central Bank (ECB) received a request from the Bulgarian Minister for Justice for an opinion on a draft law supplementing the Law on Administration and amending, inter alia, the Law on the prevention and disclosure of conflicts of interests (hereinafter the ‘Law on conflicts of interests’) and the Law on Българска народна банка (Bulgarian National Bank) (BNB) (hereinafter the ‘Law on BNB’) (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Article 105(4) of the Treaty establishing the European Community and the third indent of

text: Article 2(1) 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 , as the draft law relates to Българска народна банка (Bulgarian National Bank) (BNB). In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft law

text: 1.1 The draft law supplements the Law on Administration and brings all relevant Bulgarian legislation in line with the Law on conflicts of interests. In this latter regard, the draft law amends, inter alia, the Law on the BNB by (i) introducing additional eligibility criteria for membership in BNB’s Governing Council, and (ii) providing details as to the competent authority to which information to be disclosed under

text: Article 12(1)

text: to (4) of the Law on conflicts of interests should be provided. 1.2 According to the provisions of the draft law amending the Law on conflicts of interests, BNB’s Governor, Deputy Governors and Governing Council members are exempt from the prohibition on entering into an employment or any other agreement with certain business entities or cooperatives or becoming a partner in, holding interests or shares in, and acting as a manager or

text: management/supervisory body member of such business entities and cooperatives for a period of one year following their tenure of office .

text: 2. General observations

text: 2.1 The ECB welcomes the Bulgarian authorities’ efforts to align the Law on BNB and the Law on conflicts of interests with the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘ESCB Statute’) and with the conclusions contained in the ECB’s May 2008 Convergence Report . 2.2 However, it is important to note that the Bulgarian authorities failed to comply with their obligation to consult the ECB prior to adopting the Law on conflicts of interests on 16 October 2008. The ECB should have been consulted on the Law on conflicts of interests, since it sets additional grounds for the dismissal of BNB’s Governing Council members and, therefore, clearly falls within the scope of the third indent of

text: Article 2(1) of Decision 98/415/EC

text: as it relates to national central banks, which is expressly listed among the areas in which the ECB is competent.

text: 3. Specific observations

text: Law on conflicts of interests

text: 3.1 The Law on conflicts of interests provides a definition of ‘conflicts of interests’ and regulates the prevention and disclosure of conflicts of interests of public office holders. It also establishes a procedure for identifying the existence of conflicts of interests and the consequences resulting from such situations. Under the Law on conflicts of interests, non-compliance with its provisions and the fact that a conflict of interests exists are sufficient grounds for dismissal and could lead to the termination of the affected person’s appointment/mandate. According to Article 3(13) of the Law on conflicts of interests, BNB’s Governor, Deputy Governors and Governing Council members fall within the definition of public office holders. As a result, the Law on conflicts of interests specifies grounds for their dismissal that are in addition to the two grounds contained in the ESCB Statute. 3.2 Governors and other members of the NCBs’ decision-making bodies who are involved in the performance of ESCB-related tasks may not be dismissed for reasons other than those mentioned in Article 14.2 of the ESCB Statute . The draft law does not remove these additional grounds of dismissal. Therefore, the Law on conflicts of interests is still incompatible with ESCB Statute and Treaty requirements on central bank independence. The ECB urges the Bulgarian authorities to

text: Law on BNB

text: 3.3 The proposed amendment to Article 11(4) of the Law on BNB sets out additional eligibility criteria related to the appointment and election of BNB’s Governing Council members. Specifically, a person may not be appointed or elected as a member of BNB’s Governing Council if, at the time of their appointment or election they (i) are pursuing a business activity under any legal form whatsoever or are acting as a manager, procurator, liquidator, receiver or member of the management or a supervisory body of a company or cooperative , or (ii) are a spouse of, are living with, are a relative in direct lineage or lateral lineage up to and including fourth degree, or are connected by marriage up to the and including the second degree to a member of BNB’s Governing Council . 3.4 The ECB notes that the first ground for removal in Article 14.2 of the ESCB Statute states that a Governor may be relieved from office only if he no longer fulfils the conditions required for the performance of his duties. The ECB acknowledges that Member States are free to set the conditions required for the appointment of the NCB Governing Council members. However, Article 14(1) of the Law on BNB, which regulates the grounds for dismissal for appointed or elected members of the BNB’s Governing Council, contains grounds for dismissal in addition to Article 14.2 of the ESCB Statute by cross-referencing to the appointment and election conditions set out in Article 11(4) of the Law on BNB . Article 14(1) of the Law on BNB should, therefore, be fully aligned with the wording of Article 14.2 of the ESCB Statute.

text: Done at Frankfurt am Main, 16 February 2009.

text: [signed]

text: The President of the ECB

text: Jean-Claude TRICHET


text: Text markerad med fet stil anger ECB:s förslag till ny text.

title: Europeiska centralbankens yttrande av den 23 februari 2009 om ett förslag till förordning om närmare tillämpningsföreskrifter för rådets förordning (EG) nr 2494/95 när det gäller miniminormer för behandling av säsongsbundna produkter i det harmoniserade konsumentprisindexet (HIKP) (CON/2009/14)

text: Inledning och rättslig grund

text: Den 5 januari 2009 mottog Europeiska centralbanken (ECB) en begäran från Europeiska gemenskapernas kommission om ett yttrande över ett förslag till kommissionens förordning om närmare tillämpningsföreskrifter för

text: rådets förordning (EG) nr 2494/95

text: när det gäller miniminormer för behandling av säsongsbundna produkter i det harmoniserade konsumentprisindexet (HIKP) (nedan kallat förslaget till förordning).

text: ECB:s behörighet att avge ett yttrande grundas på

text: artikel 105.4

text: första strecksatsen i fördraget om upprättandet av Europeiska gemenskapen. I enlighet med

text: artikel 17.5

text: första meningen i arbetsordningen för Europeiska centralbanken har detta yttrande antagits av ECB-rådet.

text: 1. Allmänna kommentarer

text: Generellt sett välkomnar ECB förslaget till förordning som kommer att öka HIKP:s jämförbarhet. Hur säsongsbundna produkter ska behandlas är ett av de äldsta harmoniseringsproblemen som har diskuterats vid utvecklingen av HIKP. För närvarande skiljer sig de metoder som tillämpas i medlemsstaterna för säsongsbundna produkter väsentligt åt, vilket medför att konsumentprisindexen inte är tillräckligt jämförbara. Detta medför i sin tur svårigheter att tolka euroområdets index för vissa produktgrupper och kan till och med medföra snedvridningar i det fullständiga HIKP.

text: 2. Specifika kommentarer

text: 2.1 Förslaget till förordning tillåter emellertid två olika metoder när man behandlar säsongsbundna produkter, antingen rent årsvägt index eller säsongsbundet undergruppsvägt index. För att öka jämförbarheten av resultaten mellan länderna inför förslaget till förordning vissa restriktioner för hur dessa två typer av index genomförs, dock har simuleringar visat att de två metoderna under vissa förhållanden medför helt olika resultat. För att behandlingen av säsongsbundna produkter ska bli mer jämförbar skulle ECB därför gärna se en strängare regel, som endast tillåter att en av de två olika metoderna tillämpas. Om valet mellan de två metoderna inte förväntas påverka det fullständiga HIKP i någon större utsträckning, och en strykning ur förordningen av en av metoderna skulle leda till att förordningens antagande försenas avsevärt, föredrar ECB att behandlingen av säsongsbundna produkter begränsas till en av metoderna genom en framtida ändring av förordningen.

text: 2.2 Effekten på de delindex som omfattas av förslaget till förordning kan bli stor i de medlemsstater vars nuvarande praxis väsentligen skiljer sig från miniminormerna i artikel 4 i förslaget. Detta kommer att leda till brott i statistiken vilket kan resultera i en förvanskning av de årsvisa förändringarna i det fullständiga HIKP. ECB är medveten om att det kan vara omöjligt för medlemsstater att revidera alla tidigare publicerade HIKP. ECB fäster dock stor betydelse vid att HIKP är jämförbara och konsekventa under året efter det att förslaget till förordning har börjat tillämpas. ECB välkomnar därför att medlemsstaterna reviderar sina nationella HIKP för en tidsperiod av minst ett år innan förslaget till förordning börjar tillämpas.

text: 2.3 Eftersom ECB enligt fördraget ska höras om förslaget till förordning bör en hänvisning med detta innehåll tas med i förslaget i linje med artikel 253 i fördraget.

text: 2.4 Eftersom Europeiska centralbankssystemet använder HIKP inte bara för de syften som framgår av artikel 121 i fördraget utan även för sitt beslutsfattande i samband med den monetära politiken enligt artikel 105.2 i fördraget, rekommenderar ECB att ett skäl införs i förslaget.

text: 3. Ändringsförslag

text: 3.1 De ändringsförslag av förordningen som blir resultatet av rekommendationerna ovan framgår av bilagan.

text: BILAGA

text: Kommissionens förslag | ECB:s ändringsförslag

text: med beaktande av Fördraget om upprättandet av Europeiska gemenskapen, | med beaktande av fördraget om upprättandet av Europeiska gemenskapen,

text: med beaktande av

text: rådets förordning (EG) nr 2494/95 av den 23 oktober 1995

text: avseende harmoniserade konsumentprisindex, särskilt

text: artikel 4 tredje stycket

text: och artikel 5.3 i denna, | med beaktande av

text: artikel 4 tredje stycket

text: och artikel 5.3 i denna, med beaktande av Europeiska centralbankens yttrande,

text: Motivering – se punkt 2.3 i yttrandet

text: | (5) HIKP är en viktig indikator som Europeiska centralbankssystemet använder i sitt analysarbete inför beslut om den monetära politiken enligt artikel 105.2 i fördraget

text: Motivering – se punkt 2.4 i yttrandet


text: OJ L 189, 3.7.1998, p. 42. 2 Section 2(3) of the draft law. Where the amount of remuneration of a public servant from 1 March to 31 December 2009 or any year beginning in 2010 is over €20 000, the rate of deduction is 10 %. The rate of deduction is 3 % where the amount of remuneration is up to €15 000 and 6 % where the amount is in excess of €15 000 but not over €20 000.

text: Section 1(a) of the draft law. 4 Section 1(d) of the draft law. 5 Section 2(3) of the draft law. 6 Section 2(4) and Section 3 of the draft law. 7 Section 4(1) of the draft law. 8 Available on the Department of Finances’ website at www.finance.gov.ie. 9 Section 2(1) of the draft law. 10 Section 1 of the draft law. The Central Bank and Financial Services Authority of Ireland Superannuation Scheme received approval of the Minister on 8 April 2008 under S.I. No. 99 of 2008. 11 Section 33AG(2) of the Central Bank Act 1942. A superannuation scheme established by the Central Bank is required to be embodied in rules made by the Central Bank. Such rules are required to be laid before each House of the Oireachtas (National Parliament) as soon as practicable after they are made, and if either House, within the 21 days on which it has sat after the rules are laid before it, passes a resolution annulling the rules, the rules are accordingly annulled, but without affecting the validity of anything previously done under them. See Section 33AG(3) and (7) of the Central Bank Act 1942. 12 See the Schedule to the draft law.

text: Explanatory Memorandum to Financial Emergency Measures in the Public Interest Bill 2009, p. 1. 14 ECB Convergence Report May 2008, p. 22. 15 See paragraph 2.2 of ECB Opinion

text: of 21 February 2008 at the request of the German Ministry of Finance on a draft law amending the Law on the Deutsche Bundesbank. 16 See paragraph 3.2.2 of ECB Opinion

text: of 21 February 2008 at the request of the Italian Ministry of Economic Affairs and Finance on some provisions of the Law on the State annual and pluriannual budget (2008 budget law). 17 See Section 6D(5) of the Central Bank Act 1942.

text: Compliance with the monetary financing prohibition requires that, in connection with the way the proposed arrangements between the Central Bank and the Exchequer are legally regulated and executed, no element of provision of Central Bank credit to the Exchequer arises in the form of Central Bank financing of public sector obligations vis-à-vis third parties or otherwise. See

text: Article 1(1)

text: (b)(ii) of

text: Council Regulation (EC) No 3603/93 of 13 December 1993

text: specifying definitions for the application of the prohibitions referred to in

text: Articles 104

text: [now 101] and 104b(1) [now 103(1)] of the Treaty (OJ L 332, 31.12.1993, p. 1); See also the eleventh recital of

text: Regulation (EC) No 3603/93

text: , indicating the need to ensure that central bank transactions ‘do not result overall in a credit for the public sector'.

title: Opinion of the European Central Bank of 24 February 2009 on a draft Financial Emergency Measures in the Public Interest Bill 2009 (CON/2009/15)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 24 February 2009 on a draft Financial Emergency Measures in the Public Interest Bill 2009 (

text: ) Introduction and legal basis

text: On 18 February 2009 a draft ‘Financial Emergency Measures in the Public Interest Bill 2009’ (hereinafter the ‘draft law’) was published by the Irish Minister for Finance (hereinafter ‘the Minister’) for its first stage reading before the Dáil Éireann, the lower house of the Oireachtas (the National Parliament). The second stage debate on the draft law took place in the Dáil Éireann on 19 February 2009. Specific amendments are due to be considered by the relevant committee of the Houses of the Oireachtas (Dáil Éireann and Seaned Éireann) on 24 February 2009 with final adoption expected by both Houses the following day. The competence of the European Central Bank (ECB) to deliver an opinion is based on Article 105(4) of the Treaty establishing the European Community and the third indent of

text: Article 2(1) 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 , as the draft law relates to the Central Bank and Financial Services Authority of Ireland (hereinafter ‘the Central Bank’). In particular, the draft law proposes to deduct up to 10% from the remuneration of public servants accruing from 1 March 2009 , including employees of the Central Bank. In the light of the above and considering the direct implications of the abovementioned provisions for the Central Bank, the ECB has decided to submit this own-initiative opinion, with a view to assisting in the ongoing legislative procedure by commenting on specific provisions. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft law

text: 1.1 The draft law proposes to deduct up to 10 % from the remuneration of public servants accruing from 1 March 2009. For the purposes of the draft law, a public servant is defined, inter alia, as a

text: person who is employed by, or who holds any office or other position in, a public service body . The draft law includes the Central Bank within its list of public service bodies . Under the draft law, the deduction is to be made by the person responsible for, or who authorises, the payment of remuneration , which in the case of the Central Bank’s officers and employees is the Central Bank. In addition, the deductions are to be made in accordance with regulations to be issued by the Minister for the purposes of the calculation, making, collection, disposal and recovery of such deductions (including, for instance, regulations addressing the manner in which and the periods within which deductions are to be made and paid into or disposed of for the benefit of the Exchequer) . The draft law further requires the deductions made to be paid into or disposed of for the benefit of the Exchequer in accordance with the directions of the Minister or otherwise paid or disposed of as the Minister may direct . 1.2 The draft law has been introduced in the context of the priority being given to the stabilisation of public finances in Ireland. To that effect, the Minister has announced that the draft law introduces provisions to give effect to a pension related deduction for the public service . The deductions under the draft law therefore apply to public servants who on 1 March 2009 or any time afterwards are a member of a public service pension scheme, are entitled to a benefit under such a scheme, or receive a payment in lieu of membership in such a scheme . For this purpose, a public service pension scheme is defined to include an occupational pension scheme or pension arrangement for any part of the public service which is made by a relevant Minister or has been approved or requires the approval or consent of a relevant Minister . Under the Central Bank Acts, the Central Bank may establish and operate one or more superannuation schemes under which superannuation benefits are payable on the retirement or death of persons. However, such a scheme does not take effect until it has been approved by the Minister . 1.3 The draft law exempts from the definition of ‘public service bodies’ 22 bodies whose officers and employees are subject to the deductions . The Explanatory Memorandum to the draft law indicates

text: that the public service bodies whose officers and employees are subject to the deductions include non-commercial semi-state bodies where a public service pension scheme exists or may be made .

text: 2. General observations

text: 2.1 The ECB recognises the very difficult economic circumstances, both in Ireland and internationally, that have led to the current efforts being made by the Irish Government to stabilise public finances. 2.2 As noted in the ECB Convergence Report 2008 under the sub-chapter ‘Autonomy in staff matters’, ‘Member States may not impair an NCB’s ability to employ and retain the qualified staff necessary for the NCB to perform independently the tasks conferred on it by the Treaty and the Statute’ of the European System of Central Banks and of the European Central Bank (hereinafter the ‘ESCB Statute’). ‘In addition, an NCB may not be put into a position where it has limited or no control over its staff, or where the government of a Member State is in a position to influence its policy on staff matters’ . This point has been stressed in a recent ECB opinion on draft German legislation regulating certain matters concerning the national central bank staff . The ECB also stated in its opinion on draft Italian legislation establishing a threshold for the overall remuneration of the national central bank staff ‘that the ECB defines autonomously its staff’s conditions of employment and that this autonomy forms part of the ECB’s independence as guaranteed by Article 108 of the Treaty and Article 36 of the [ESCB Statute]’ .

text: 3. Specific observations

text: 3.1 The proposed deductions are conceived as pension-related deductions for the public service. However, while the Minister formally approves the Central Bank’s superannuation scheme, the Central Bank’s scheme is not funded through the Exchequer, but is established, operated and financed by the Central Bank independently. In this regard, the proposed deductions do not appear to reflect the distinctive features of the Central Bank’s superannuation scheme, and might therefore be regarded as a form of taxation on the Central Bank’s officers and employees. 3.2 Under the Central Bank Acts, the employees of the Central Bank are to be employed on such conditions (including conditions as to remuneration and allowances) as the Central Bank’s Board of Directors fixes from time to time . In order to protect the Central Bank’s autonomy in staff matters, which is a particular aspect of the principle of central bank independence under Article 108 of the Treaty, any pension-related deductions applicable to the officers and employees of the Central Bank in view of the current difficult economic circumstances should be decided in

text: cooperation with the appropriate decision-making bodies of the Central Bank. Such cooperation with the Central Bank should also ensure compliance with the Treaty provisions on the prohibition of monetary financing established by

text: Article 101

text: This opinion will be published on the ECB’s website.

text: Done at Frankfurt am Main, 24 February 2009.

text: [signed]

text: The President of the ECB

text: Jean-Claude TRICHET