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

text: MNB Decree 45/2016 (XI.23.) on the reserve ratio, published in Magyar Közlöny 2016/180. 3 All ECB Opinions are available on EUR-Lex.

text: MNB Decree 10/2005.(VI.11.) on the calculation, method of allocation and placement of minimum reserves, published in Magyar Közlöny 78. 5 MNB Decree 43/2018. (XI.21.) on the amendment of MNB Decree 10/2005. (VI.11.) on the calculation, method of allocation and placement of minimum reserves, published in Magyar Közlöny 182. 6 Opinion

text: , Opinion

text: , Opinion

text: and Opinion

text: . 7 Credit institutions should therefore be familiar with the requirements that will apply to them once the single monetary policy is implemented in Hungary. 8 See

text: recital 3

text: of

text: Regulation (EU) 2021/378

text: of the European Central Bank of 22 January 2021 on the application of minimum reserve requirements (ECB/2021/1) (OJ l 73, 3.3.2021, p. 1). 9 See

text: Article 2

text: , points (1) and (9), of

text: Regulation (EU) 2021/378

text: (ECB/2021/1). 10 The term ‘minimum central bank reserves’ should be replaced with the term ‘minimum reserves’.

title: Opinion of the European Central Bank of 12 September 2022 on the reserve ratio and minimum reserves (CON/2022/33)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 12 September 2022 on the reserve ratio and minimum reserves (

text: ) Introduction and legal basis

text: On 11 August 2022 the European Central Bank (ECB) received a request from the Magyar Nemzeti Bank (MNB) for an opinion on the draft decree of the Governor of the Magyar Nemzeti Bank on the reserve ratio (hereinafter the ‘draft decree on the reserve ratio’) and the draft decree on the calculation, the method of allocation and placement of minimum reserves (hereinafter the ‘draft decree on minimum reserves’) (hereinafter, collectively the ‘draft decrees’). 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

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

text: , as the draft decrees relate to the instruments of monetary policy. 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. Background and purpose of the draft Decrees

text: 1.1 In 2016 the Governor of the MNB adopted Decree 45/2016 on the reserve ratio, in relation to which the ECB adopted Opinion

text: . Decree 45/2016 provided that a reserve ratio of 0 % would apply to: (a) deposits and loans received with a remaining maturity of over two years at the time they are entered into the balance sheet of the credit institution; (b) debt securities issued with an agreed maturity over two years; and (c) repos. Further, a reserve ratio of 1% would apply to all other liabilities included in the reserve base of a credit institution subject to reserve requirements. The draft decree on the reserve ratio proposes to increase the reserve ratio referred to above from 1% to 5 %, 6 %, 7 %, 8 %, 9 % or 10 %, depending on the declaration of the credit institution that is subject to reserve requirements. In the absence of a declaration, the reserve ratio will be 5 %. The draft decree on the reserve ratio proposes to retain the 0% reserve ratio regarding the liability categories listed above under (a)-(c).

text: 1.2 In 2005 the Governor of the MNB adopted Decree 10/2005 on the calculation, the method of allocation and placement of minimum reserves. That Decree was amended in 2018 , in which connection the ECB adopted Opinion

text: on the proposed draft amendments. Decree 10/2005 provided that the credit institutions subject to minimum reserve requirements must comply with the reserve requirement once a month, on the last calendar day of the maintenance period, by applying the average calculation for the calendar days of the maintenance period. The draft decree on minimum reserves proposes to amend the method of calculation by introducing a partial averaging mechanism according to which credit institutions must hold the lowest level of minimum reserves applicable to that institution on each calendar day of the maintenance period. Credit institutions must also comply with the additional reserve requirements applicable to them depending on their declaration on a monthly basis, on the last calendar day of the maintenance period. 1.3 The draft decree on minimum reserves proposes the introduction of a new kind of penalty for cases of reserve deficiencies: the MNB may debit the forint settlement account of the credit institution with an amount proportional to the shortfall of the reserve holding amount, with an interest rate corresponding to twice the prevailing central bank policy rate effective on the day of the shortfall.

text: 2. Observations

text: 2.1 The ECB takes note of the draft decrees. As noted in earlier opinions , Member States whose currency is not the euro retain their powers in the field of monetary policy. Once the euro is introduced, Hungary’s monetary policy will be the single monetary policy and will need to be the consistent with the Eurosystem’s operational framework . 2.2 The ECB supports legal clarity . In that regard, and to increase consistency with the Eurosystem’s 9 10 operational framework , the term ‘minimum reserves’ should be used in both draft decrees .

text: This opinion will be published on EUR-Lex.

text: Done at Frankfurt am Main, 12 September 2022. [signed]

text: The President of the ECB

text: Christine LAGARDE


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

text: Law on Retirement Benefits of Employees in the Public Sector and Employees in the Wider Public Sector, including the Local Authorities (Provisions of General Implementation) of 2012, as amended. Law 216(I)/2012 applies to employees of the public sector and the wider public sector, including employees of the CBC.

text: Section 4 of Law 216(I)/2012.

text: See ECB Convergence Report, June 2022, p. 28-29, available on the ECB’s website at www.ecb.europa.eu; paragraph 2 of ECB Opinion

text: ; paragraphs 2.3 and 2.4 of ECB Opinion

text: . All ECB opinions are available on EUR-Lex.

text: See paragraph 3.2 of ECB Opinion

publisher: Europeiska centralbanken

sprak: en

title: Opinion of the European Central Bank of 16 September 2022 on the new occupational retirement benefits plan for state service employees and employees of the wider public sector (CON/2022/34)

serie: con

text: OPINION OF THE EUROPEAN CENTRAL BANK of 16 September 2022 on the new occupational retirement benefits plan for state service employees and employees of the wider public sector (

text: ) Introduction and legal basis

type: rubrik

text: On 20 July 2022 the European Central Bank (ECB) received a request from the Minister for Finance of the Republic of Cyprus for an opinion on a draft law on the Occupational Retirement Benefits Plan for employees of the State service and of the wider public sector, including local Government Authorities (General Implementation Provisions) (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

text: , as the draft law relates to the Central Bank of Cyprus (CBC). 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.

type: stycke

text: 1. Purpose of the draft law

text: 1.1 The purpose of the draft law is to establish a new single occupational pension benefits plan for newly recruited public sector servants as well as employees of the wider public sector, which includes also newly recruited staff of the CBC. 1.2 In particular, the draft law provides that certain employees will become members of the new plan. These categories of employees are: (1) all permanent employees serving on the date of entry into force of the draft law who were appointed for the first time on or after 1 October 2011, as well as those permanent employees who are appointed for the first time on or after the date of entry into force of the draft law, both in the public sector and in the wider public sector, including the CBC (such employees will be included in the plan from the date of their appointment to a permanent position); (2) all employees with employment contracts of indefinite duration on the date of entry into force of the draft law in the State service and in the wider public sector, including the CBC (such employees will be included in the plan from 1 January 2021); and (3) all employees with employment contracts who, on or after the effective date of the draft law become employees with employment contracts of indefinite duration in the State service and in the wider public sector, including the CBC (such

text: employees will be included in the plan on the date of conversion of their employment contract to an indefinite period). 1.3 A new Special Fund for the payment of retirement benefits will be created which will be financed by both the employer (including the CBC) and the employees. Specifically, the employer and each member of the plan will both pay an amount corresponding to 5% of the member's monthly pensionable benefits (hereinafter the ‘funding ratio’). This ratio may be adjusted in the future based on the results of actuarial studies conducted for this purpose. The Special Fund will not be a separate entity and will be managed by the Minister for Finance on behalf of the Republic of Cyprus. The draft law provides that the Minister for Finance may invest the assets of the Special Fund in the best interests of the plan’s members, the members’ dependents and the retirees. The draft law states that where it is found that the Special Fund has insufficient funds to cover its technical reserves, the funding ratio may be adjusted so that the Special Fund has sufficient assets to cover its technical reserves in full. The Minister for Finance may adopt a decree establishing the funding ratio from time to time. The draft law further provides that charges calculated using a specific methodology determined by the Minister for Finance will be imposed for the services provided to organisations by the Treasury of the Republic of Cyprus for the purpose of processing the work of the Special Fund.

text: 2. General observations

text: 2.1 The ECB understands that the new single occupational benefits plan will not affect public servants appointed to a permanent position prior to 1 October 2011, including staff of the CBC, and that these public servants will remain members of their current sector-specific pension plan. The ECB also understands that the draft law stipulates that newly recruited CBC staff may only be members of the plan to the extent provided for in the draft law. 2.2 The ECB notes that currently the CBC enjoys statutory autonomy in determining its staff policy with the employees of the CBC, subject to the CBC Employee Directives, individual employment contracts and collective bargaining agreements entered into between the CBC and the banking sector union. The ECB also understands that for employees appointed prior to 1 October 2011, certain matters such as the percentage of the employees’ contributions, the calculations for pension and one-off lump sum benefits for any service after 1 January 2013 are determined by Law 216(I)/2012 . The contributions of the employees of the CBC to the CBC pension plan are paid and held by the CBC . The measures provided for in the draft law seem to represent a departure from the current pension plan arrangements insofar as some of the provisions in the draft law are to be imposed unilaterally by the Minister for Finance on CBC employees without consultation of the CBC. Under the draft law, the contributions of all employees to whom it is applicable will be held in the Special Fund that is to be managed by the Minister for Finance, who may, inter alia, invest the assets thereof and adjust the funding ratio so that the Special Fund has sufficient assets to cover its technical reserves in full.

text: 2.3 The ECB notes that the draft law has potential implications for the CBC’s financial independence, in particular its autonomy in staff matters, which is an element of the principle of central bank independence under Article 130 of the Treaty. Autonomy in staff matters extends to issues relating to staff pensions. As previously stated by the ECB on issues concerning autonomy in staff matters, the principle of financial independence requires that a Member State does not impair the ability of its national central bank (NCB) to employ and retain the qualified staff necessary to perform independently the tasks conferred on it by the Treaty, the Statute of the European System of Central Banks and of the European Central Bank (hereinafter, the ‘Statute of the ESCB’) and national legislation. In addition, a Member State may not put its NCB in a position where it has limited or no control over its staff, or where the government of that Member State can influence that NCB’s policy on staff matters. Any amendment to the legislative provisions on the remuneration for members of an NCB’s decision-making bodies and its employees should be decided in close and effective cooperation with the NCB, taking due account of its views, to ensure the ongoing ability of the NCB to independently carry out its tasks. Autonomy in staff matters extends to issues relating to staff pensions. 2.4 As previously stated by the ECB , to protect the CBC’s financial independence and its autonomy in staff matters, the Cypriot authorities are under an obligation to ensure that the application of the draft law to CBC staff is decided by the Cypriot authorities in cooperation with the CBC, taking due account of the CBC’s views, and such cooperation must ensure the ongoing ability of the CBC to perform independently the tasks conferred on it by the Treaty, the Statute of the ESCB and national legislation. 2.5 A good example of effective cooperation between a government of a Member State and its NCB is one in which the relevant national legislative provisions provide that the public service pension plan is only applicable to the NCB with its consent. This would allow the CBC to take into account the particularities of its own legal framework and special legal regime as well as any other relevant considerations – in particular, obligations arising under the Treaty – in formulating the form and extent of its consent or objection to the application of the plan to CBC staff. Moreover, where the CBC’s consent has been given, a fresh consent should be required to any subsequent significant change to the plan, to ensure the ongoing ability of the CBC to perform independently the tasks conferred on it by the Treaty, the Statute of the ESCB and national legislation. 2.6 Therefore, the ECB would welcome an amendment to the draft law accordingly. This would allow the CBC to take into account the particularities of its own legal framework and special legal regime as well as any other relevant considerations, in particular, obligations arising under the Treaty, so as to

text: safeguard central bank independence and the obligation to comply with the prohibition of monetary financing under Article 123 of the Treaty. This opinion will be published on EUR-Lex. Done at Frankfurt am Main, 16 September 2022. [signed]

text: The President of the ECB

text: Christine LAGARDE

type: vagledning

utgivare: ecb


text: Although the ECB understands that Latvijas Banka does not have a formal right of legislative initiative in this respect, the explanatory memorandum accompanying the draft law states that the draft law has been drawn up at the initiative of Latvijas Banka. The ECB understands that Latvijas Banka intends to present the draft law to the competent committee of the Latvian Parliament for further consideration. 2

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 3 3 4 See Paragraph 5 of

text: Article 4

text: and Part 1 of Article 34 of the Law on Latvijas Banka. 5 3

text: See Section 10 of the Law On Prevention of the Squandering of the Financial Resources and Property of a Public Person. 7 3 8 See Paragraph 5 of

text: Article 4

text: and Part 1 of Article 34 of the Law on Latvijas Banka. 9 Decision

text: (EU) 2015/2332

text: of the European Central Bank of 4 December 2015 on the procedural framework for the approval of the volume of euro coin issuance (ECB/2015/43) (OJ L 328, 12.12.2015, p. 123).

text: Regulation (EU) No 651/2012

text: of the European Parliament and of the Council of 4 July 2012 on the issuance of euro coins (OJ L 201, 27.7.2012, p. 135). 11 See, mutatis mutandis, judgment of the Court of Justice of 16 June 2015, Gauweiler and Others,

text: , EU:C:2015:400, paragraphs 97, 102 and 111; judgment of the Court of Justice of 11 December 2018, Weiss and Others,

text: , EU:C:2018:1000, paragraphs 106 to 108. 12

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). 13 NCBs giving donations to trusts administered by the International Monetary Fund or carrying out scientific analyses for the benefit of Member States cannot be considered part of an NCB’s public outreach and constitute financing of the public sector’s obligation vis-à-vis third parties. See ECB Opinions

text: and

text: , respectively. All ECB opinions are available on EUR-Lex.

title: Opinion of the European Central Bank of 19 September 2022 on the donation of the proceeds of the issuance of numismatic coins for the general support of Ukrainian society (CON/2022/35)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 19 September 2022 on the donation of the proceeds of the issuance of numismatic coins for the general support of Ukrainian society (

text: ) Introduction and legal basis

text: On 8 September 2022, the European Central Bank (ECB) received a request from Latvijas Banka for an opinion on amendments to the Law on Assistance to Ukrainian Civilians (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 first and third indents of

text: , as the draft law relates to currency matters and Latvijas Banka. 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 enables Latvijas Banka, on the basis of an independent decision of the Council of Latvijas Banka, to donate some of the proceeds of the sale of Ukrainian-specific euro collector and commemorative coins issued by Latvijas Banka for the general support of Ukrainian society . As noted in the explanatory memorandum accompanying the draft law, Latvijas Banka will organise and implement the design, manufacture, delivery and issuance of these coins in accordance with its existing tasks as the legal issuer of all coins in Latvia . Latvijas Banka, when deciding on the amount of the donation, will be bound by the limit set by the draft law. Accordingly, Latvijas Banka may, from the income generated from the sale of the euro coins, donate no more than that part of the income exceeding the direct expenditure related to the production of the coins in question . 1.2 As noted in the explanatory memorandum, the 2022-23 programme for the issuance of numismatic coins approved by the Council of Latvijas Banka foresees, as an expression of solidarity with Ukraine and the Ukrainian people, the issuance of two numismatic coins whose design is dedicated to Ukraine: (i) a 5-euro collector coin dedicated to the theme of responsibility, planned to be issued

text: at the end of 2022; and (ii) a 2-euro commemorative coin dedicated to the Ukrainian sunflower, planned to be issued in March/April 2023. 1.3 As noted in the explanatory memorandum, the possibility for Latvijas Banka to donate part of the proceeds from the sale of these coins to the general support of Ukrainian society is not allowed by existing Latvian legislation. In particular, the Law On Prevention of Squandering of the Financial Resources and Property of a Public Person prohibits a public person, including Latvijas Banka, from donating financial resources or property to other persons, except in cases specifically provided for by law or Government regulations . 1.4 The draft law provides that Latvijas Banka will be obliged to respect the limits laid down in the Law On Prevention of Squandering of the Financial Resources and Property of a Public Person, insofar as the draft law does not provide otherwise . As noted in the explanatory memorandum, this implies an obligation for Latvijas Banka to, as far as possible, follow the use of the donation in accordance with its purpose. The explanatory memorandum further specifies that the donation’s purpose will be selected by the Council of Latvijas Banka in close consultation and cooperation with the National Bank of Ukraine. 1.5 As noted in the explanatory memorandum, according to estimates made by Latvijas Banka, the maximum amount donated, as set out in the draft law, is estimated to range from EUR 200,000 to EUR 250,000. It is not possible to predict the exact amount of the donation as the exact amount of direct expenditure related to the production of these coins, including the price of precious metals and the cost of minting, and the volume and selling prices of the coins have not yet been confirmed.

text: 2. General observations

text: 2.1 Given that Latvijas Banka is the legal issuer of all coins in Latvia , no new task to issue numismatic coins dedicated to Ukraine is attributed to Latvijas Banka by the draft law. In this respect, and in view of the existing prohibition under Latvian law on Latvijas Banka donating financial resources to any person, absent specific authorisation by law, the ECB understands that the main motivation of the draft law is to authorise Latvijas Banka, as part of its public outreach task, to donate some of the proceeds of the issuance of the numismatic coins dedicated to Ukraine. 2.2 The draft law does not specify the total volume of Ukraine-specific coins that Latvijas Banka will issue. Article 128(2) of the TFEU establishes that Member States may issue coins subject to approval by the ECB of the volume of the issue. Decision

text: (EU) 2015/2332

text: of the European Central Bank (ECB/2015/43) establishes that the ECB adopts a decision on the approval of the annual volume of coin issuance for the euro area before the end of the calendar year preceding the year for which the requests for approval by euro area Member States are made. The ECB understands

text: that the issuance of Ukraine-specific collector and commemorative coins will remain within the volume of coin issuance approved by the ECB for Latvia for 2022 and (to be approved) for 2023, respectively. 2.3 Furthermore, the ECB would like to draw attention to the limitations relating to the total volume of commemorative coins put into circulation for each individual issue (as provided for in Article 4 of the

text: Regulation (EU) No 651/2012

text: of the European Parliament and of the Council ) and the proportion of circulation coins (including commemorative coins) that may be put on the market above face value (in accordance with

text: Article 3(2) of Regulation (EU) 651/2012

text: ). The ECB understands that the Ukraine-specific euro collector and commemorative coins will be issued (and sold) within the aforementioned limits.

text: 3. Compliance with monetary financing prohibition

text: 3.1. Article 123(1) of the TFEU prohibits national central banks (hereinafter the ‘NCBs’) from granting overdraft facilities or any other type of credit facility in favour of the Member States. It also prohibits measures that circumvent the objective of the prohibition and undermine its effectiveness by either having an effect equivalent to that of such facilities or, although they do not have such an effect, by reducing the impetus of Member States to follow a sound budgetary policy . 3.2

text: Article 1(1)

text: (b)(ii) of

text: Council Regulation (EC) No 3603/93

text: defines, for the purposes of Article 123(1) of the TFEU, ‘any other type of credit facility’, inter alia, as ‘any financing of the public sector’s obligations vis-à-vis third parties’. As Article 14.4 of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB’) allows NCBs to perform functions other than those specified in the Statute of the ESCB, the exercise of non-European System of Central Banks (ESCB) tasks does not necessarily constitute financing of the public sector’s obligations vis-à-vis third parties. Rather, a case-by-case assessment is required as to whether this exercise has an equivalent effect to such financing or reduces the impetus of Member States to follow a sound budgetary policy. 3.3 The exercise of the non-ESCB task of giving donations to cultural, scientific, and charitable activities and initiatives as part of an NCB’s public outreach does not constitute financing of the public sector’s obligations vis-à-vis third parties, provided that sufficient safeguards are established to ensure that such exercise does not have an equivalent effect to this financing or reduces the impetus of Member States to follow a sound budgetary policy. While the specific set-up of such safeguards may vary, they typically include that those donations are of a temporary nature and a limited

text: volume to guarantee that NCBs do not de facto take over the public sector’s cultural, scientific, or charitable obligations vis-à-vis third parties. 3.4. The ECB considers that, based on this standard, the draft law complies with the monetary financing prohibition. By donating the income exceeding the direct expenditure related to the production of the numismatic coins dedicated to Ukraine to Ukrainian society, Latvijas Banka is exercising the non-ESCB task of giving donations to charitable activities and initiatives as part of its public outreach. Among others, Latvijas Banka informs the public that the selling price of the numismatic coins dedicated to Ukraine exceeds the respective face value of euro coins to provide general support to Ukrainian society. 3.5 The ECB also considers that sufficient safeguards are established to ensure that the exercise of the non-ESCB task of giving donations to charitable activities and initiatives as part of Latvijas Banka’s public outreach does not circumvent the objective of the monetary financing prohibition. The donation by Latvijas Banka to Ukrainian society is of a one-off and therefore temporary nature, as Latvian law generally prohibits a public person, including Latvijas Banka, from donating financial resources to other persons. Hence, the main motivation of the draft law is to authorise Latvijas Banka to donate in this specific case. 3.6 The donation to be made by Latvijas Banka to Ukrainian society are also limited in volume. First, as Latvijas Banka only intends to issue numismatic coins dedicated to Ukraine in order to donate the resulting income exceeding the direct expenditure related to the production of these coins to Ukrainian society, and since the Latvian public will be aware of this, Latvijas Banka is de facto transferring money from the public to Ukrainian society, rather than using its own resources. Second, the issuance volume of the numismatic coins dedicated to Ukraine will neither exceed the volume approved by the ECB for 2022 and 2023, nor involve an ad hoc request to the ECB for approval of any additional volume of coin issuance. Finally, the maximum amount of donation is estimated to range from EUR 200,000 to EUR 250,000.

text: Done at Frankfurt am Main, 19 September 2022.

text: [signed]

text: The President of the ECB

text: Christine LAGARDE


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

text: Affected credit and financial institutions with a total reported interest income and commission income lower than EUR 800 million for 2019 are exempt from paying the temporary levy.

text: See Opinion

text: , Opinion

text: , Opinion

text: , Opinion

text: and Opinion

text: . All ECB opinions are published on EUR-Lex.

text: See paragraph 2.1 of Opinion

text: and paragraph 3.2.1 of Opinion

text: See paragraph 2.1 of Opinion

text: and paragraph 3.2.2 of Opinion

text: The Banco de España’s Spring 2022 Financial Stability Report not only identified the effect of higher rate scenarios on net interest income, but also explored the net effects on profitability and solvency of the overall, potentially adverse scenarios, in which those rises can take place. These net effects can be negative if the scenarios are adverse enough. See pp. 89-90 and 105-108.

text: On this topic see for example, speech by Governor Pablo Hernandez de Cos (2022), “The Spanish banking industry and the economic challenges ahead”, Meeting with the Spanish Financial Press Association / Menéndez Pelayo.

text: For instance,

text: , Guidelines on loan origination and monitoring, states as follows in paragraph 202 (e): “Institutions should consider, and reflect in loan pricing, all relevant costs until the next repricing date or maturity, including, among others, any other real costs associated with the loan in question, including tax considerations, when relevant”.

text: Article 2.1 of the draft law.

text: Article 2.4 of the draft law.

title: Opinion of the European Central Bank of 2 November 2022 on the imposition of temporary levies on certain credit institutions (CON/2022/36)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 2 November 2022 on the imposition of temporary levies on certain credit institutions (

text: ) Introduction and legal basis

text: On 23 September 2022 the European Central Bank (ECB) received a request from the Banco de España, on behalf of the Spanish Parliament, for an opinion on a draft law on the imposition of temporary levies on operators in the energy sector, credit institutions and financial credit establishments (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 and sixth indents of

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

text: , as the draft law concerns the Banco de España, rules applicable to financial institutions insofar as they materially influence the stability of financial institutions and markets, and the ECB’s tasks concerning the prudential supervision of credit institutions pursuant to Article 127(6) of the Treaty. 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 imposes an obligation on certain credit institutions and financial credit establishments, as well as operators in the energy sector, to pay temporary levies. The statement of reasons accompanying the draft law identifies the banking and energy sectors as sectors where inflation may further increase profits. However, for wages the situation is different as they are increasing below the rate of inflation, which reduces the purchasing power of households. In this regard, and in relation to the banking sector, reference is made to the Banco de España’s Spring 2022 Financial Stability Report, which states that a possible increase in interest rates could have a positive impact on banks’ interest margins. It is intended that the proceeds from these temporary levies should contribute to the national income pact (pacto de rentas) to ensure an equitable distribution of the burden of inflation across Spanish society. The national income pact is considered a key element in enabling public authorities to adopt measures to sustain the population, particularly certain vulnerable citizens, in a climate of substantial inflation.

text: 1.2 As concerns credit institutions and financial credit establishments, the draft law provides that credit institutions and financial credit establishments, including consolidated tax groups that encompass credit institutions and financial credit establishments (‘affected credit and financial institutions’), whose total reported interest income and commission income for 2019 equals or exceeds EUR 800 million, are required to pay a temporary levy . For the affected credit and financial institutions, the levy would be paid in 2023 and 2024. The amount of the temporary levy is 4.8 % of the sum of the net interest income and the net fees and commission income shown in the relevant institution’s profit and loss account corresponding to the calendar year prior to the date on which the obligation to pay arises. 1.3 The obligation imposed by the draft law arises on the first day of the relevant calendar years. Without prejudice to an advance payment to be made during the first twenty calendar days of February, which amounts to 50 % of the total levy for the given year, the levy must be paid in full by the end of the twentieth calendar day of September. 1.4 The draft law provides that the amount of the temporary levy and its advance payment will not have any direct or indirect financial impact, meaning that the levy may not be passed on to the clients of the affected credit and financial institutions. A breach of this requirement is considered a serious infringement subject to a proportional pecuniary fine of 150 % of the amount passed on to the institution’s clients. The Comisión Nacional de los Mercados y la Competencia (National Markets and Competition Commission, CNMC) is responsible for ensuring compliance with this obligation, without prejudice to the competences of the Banco de España and its duty to cooperate in this respect. 1.5 The proceeds from the temporary levy are to be paid to the State Treasury.

text: 2. Monetary policy context

text: 2.1 The current surge in euro area inflation in relation to the Harmonised Index of Consumer Prices has reached record levels and poses significant challenges for the conduct of monetary policy. Energy price inflation continues to be the dominant component of overall inflation. However, inflation has become broad-based. In view of these developments, and guided by the ECB’s primary objective to maintain price stability over the medium term , determined action has been taken to ensure a timely return of inflation to the target of 2 %. Net purchases of assets have ended, policy rates have been raised, and further rate increases are expected along this normalisation path, with the intention of dampening demand and guarding against the risk of a persistent upward shift in inflation expectations. 2.2 As the normalisation of the ECB’s monetary policy continues, it is important to recall that monetary policy operations always have distributional implications. Naturally, they have effects on incomes and the profitability of credit institutions. From a monetary policy perspective, credit institutions play

text: a special role for ensuring the smooth transmission of monetary policy measures to the wider economy. In this context, an adequate capital position helps credit institutions to avoid abrupt adjustments to their lending to the real economy. Evidence shows that net interest income typically tends to expand on impact as policy rates increase, and this effect is higher the lower the weight of long-term loans and, among these, the lower the proportion of fixed interest rate operations. However, this effect can be offset by lower lending volumes, by losses recorded in the securities portfolio and by an increase in provisions resulting from a deterioration of the quality of the credit portfolio. The realisation of downside risks in the current environment may significantly reduce the repayment capacity of debtors. The net effect of monetary policy normalisation on bank profitability might therefore be less positive, or even negative, possibly over an extended horizon. As the determination of the addressees of the temporary levy is based on total reported interest and fee commission income in 2019, it may be that these institutions record low profits or losses at the point in time when the levy will actually be collected. If the ability of credit institutions to attain adequate capital positions is damaged, this could endanger a smooth bank-based transmission of monetary policy measures to the wider economy. 2.3 The strong rise of energy prices is reducing the incomes of households and companies with diverse implications for different sectors and activities. Low-income households are hit harder as they typically spend a higher proportion of their budget on energy-related goods. Concerns about an equitable income and profit distribution need to be addressed by appropriate fiscal measures. From a monetary policy perspective, these measures – depending on their design – may entail different implications for macroeconomic stabilisation and sustainability. For a good policy mix, fiscal support measures to cushion the impact of higher energy prices should be temporary and targeted at the most vulnerable households and companies to limit the risk of fuelling inflationary pressures, to enhance the efficiency of public spending and to preserve debt sustainability.

text: 3. Financial stability context

text: 3.1 The ECB has previously opined on draft legislation introducing levies for credit institutions in several Member States . In this respect the ECB has stated that it would be undesirable to use the proceeds from taxes levied against credit institutions for general budgetary purposes if and to the extent that doing so would make credit institutions less resilient to economic shocks and, as a result, limit their ability to provide credit, pushing them to offer less favourable terms to customers when providing loans and other services and reducing certain activities. This would create uncertainty and adversely affect real economic growth . In line with these considerations, the ECB has recommended in the past that a clear separation is necessary between the extraordinary account created out of the levy proceeds and the general budgetary resources of a government to avoid their use for general fiscal consolidation purposes .

text: 3.2 Imposing any ad hoc taxes or levies on credit institutions for general budgetary purposes should be preceded by a thorough analysis of potential negative consequences for the banking sector to ensure that such taxes do not pose risks to financial stability, banking sector resilience and to the provision of credit, which could eventually adversely affect real economic growth. Hence, the levy should be carefully considered with regard to its impact on the profitability of affected credit institutions, and thereby on their internal capital generation and lending. 3.3 Furthermore, in the event that an affected credit institution might qualify as a temporary levy payer while it is recording net losses, such a situation would be significantly distorting and would further damage the resilience of a loss-making bank. Moreover, the application of the levy only to certain Spanish credit institutions could distort market competition and impair the level playing field both within the country and across the banking union. 3.4 In light of the above, the ECB recommends that the legislative proposal be accompanied by a thorough analysis of potential negative consequences for the banking sector, detailing in particular the specific impact of the temporary levy on the profitability of the affected credit and financial institutions and on the competition conditions in the market to ensure that its application does not pose risks to financial stability, banking sector resilience and the provision of credit. This request is particularly relevant in the current economic and financial environment, which features high uncertainty, and credit institutions’ loan loss provisions are expected to increase due to a foreseen marked slow-down in real economic activity . In this context, it should be taken into consideration that credit institutions have already had to record higher provisions with respect to their exposure to non-financial corporates active in high energy-intensive sectors .

text: 4. Considerations relating to the prudential supervision of credit institutions

text: 4.1 The ECB understands that the temporary levy would, as a practical matter, only apply to credit institutions directly supervised by the ECB within the framework of the Single Supervisory Mechanism (SSM). 4.2 The basis on which the temporary levy would be established does not take into consideration the full business cycle and does not include, inter alia, operational expenses and the cost of credit risk. As a result, as already stated, the amount of the temporary levy might not be commensurate with the profitability of a credit institution. Thus, as a result of the general application of the temporary levy, credit institutions that are not necessarily benefitting from current market conditions could become less able to absorb the potential downside risks of an economic downturn. 4.3 A generic provision stating that the temporary levy may not be passed on to the clients of credit institutions might generate uncertainty, as well as related operational and reputational risks for those institutions. It is appropriate to clarify that increases in prices to be applicable to customers

text: due to: (i) increases in costs other than the temporary levy, such as operational, funding and capital costs; (ii) increases in costs relating to covering risks; and (iii) adjustments of commercial margins, are all legitimate increases. Moreover, the ECB generally expects credit institutions, in accordance with international best practices, to consider and reflect in loan pricing all relevant costs, including tax considerations, when relevant . In addition, it should be clarified which verification mechanisms will be implemented by the CNMC to ensure compliance with this requirement. Considering all the different circumstances that may cause an increase in prices in the current context of interest rate rises, inflation or deteriorating risk premia, it appears to be difficult to differentiate whether the temporary levy would actually be passed on to clients or not.

text: 5. Miscellaneous

text: 5.1 There is a discrepancy between the wording used in the draft law in order to establish the criterion to determine those credit and financial institutions affected by the temporary levy, which makes reference to “the total interest income and commission income, as determined in accordance with the applicable accounting legislation” , and the wording for determining the base to which the 4.8 % temporary levy is applied, which refers to “the sum of the interest margin and commission income and expenses shown in its profits and loss account for the preceding calendar year” . In this respect, and as concerns the determination of the base to which the temporary levy is applied, the ECB understands that the temporary levy is applicable to the net interest income and net fee and commission income. A clearer terminology in the final text in the criterion to determine the affected credit and financial institutions for the purpose of legal certainty may be desirable in this context. 5.2 It is not clear what the cooperation role of the Banco de España will be as regards ensuring compliance by credit institutions with the requirement established in the draft law of not passing on the amount of the temporary levy to their clients. In this respect, the ECB underlines that this matter could be further clarified, in particular, that this does not amount to the conferral of any new task on the Banco de España.

text: This opinion will be published on EUR-Lex.

text: Done at Frankfurt am Main, 2 November 2022. [signed]

text: The President of the ECB

text: Christine LAGARDE


text: A Magyar Nemzeti Bankról szóló 2013. évi CXXXIX. törvény. 2

text: 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 (OJ L 189, 3.7.1998, p. 42). 4 Pursuant to Article 147(5) of the Law on the MNB. 5 Pursuant to

text: Article 12(4)

text: , point b), of the Law on the MNB.

text: In accordance with Article 6(2) of the Law on the MNB. 8 Pursuant to Article 6(2) of the Law on the MNB. 9 See

text: Article 147(4)

text: and (5) of the Law on the MNB. 10 In accordance with Article 6(2) of the Law on the MNB.

text: See Annex I. of the Decree on the MNB’s accounts. 12 See Article 5(5) of the Law on the MNB. 13 See

text: Article 131

text: TFEU. 14 See, e.g., paragraph 3.4 of ECB Opinion

text: and paragraph 2.1 of ECB Opinion

text: . All ECB opinions are published on EUR-Lex. 15 See, e.g., judgment of 26 February 2019, Rimšēvičs and ECB v Latvia, Joined Cases

text: and

text: , EU:C:2019:139, paragraph 47. 16 Judgment of 13 September 2022, Banka Slovenije,

text: Case C-45/21

text: , EU:C:2022:670, paragraphs 97 and 104. 17 Judgment in Banka Slovenije,

text: Case C-45/21

text: , cited above, paragraphs 98 and 99. 18 ECB Convergence Report 2022, Chapter 2.2.3, first paragraph of the section on ‘Financial independence’.

text: Judgment in Banka Slovenije,

text: Case C-45/21

text: , cited above, paragraph 104. 20 Judgment in Banka Slovenije,

text: Case C-45/21

text: , cited above, paragraph 100. 21 ECB Convergence Report 2022, Chapter 2.2.3, fourth paragraph of the section on ‘Financial independence’. 22 ECB Convergence Report 2022, Chapter 2.2.3, first paragraph of the section on ‘Distribution of profits, NCBs’ capital and financial provisions’’. 23 See paragraph 3.4.3 of ECB Opinion

title: Opinion of the European Central Bank of 10 November 2022 on the dividend payments, recapitalisation and reimbursement of the Magyar Nemzeti Bank (CON/2022/37)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 10 November 2022 on the dividend payments, recapitalisation and reimbursement of the Magyar Nemzeti Bank (

text: ) Introduction and legal basis

text: On 7 October 2022, the European Central Bank (ECB) received a request from the Hungarian Ministry of Finance for an opinion on a draft law amending the Law on the Magyar Nemzeti Bank and Decree 221/2000, (XII.19.) of the Government on the special reporting and accounting requirements of the Magyar Nemzeti Bank (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 (TFEU) and the third indent of

text: , as the draft law concerns the Magyar Nemzeti Bank (MNB). 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 main purpose of the draft law is to modify the provisions of the Law on the Magyar Nemzeti Bank (hereinafter the ‘Law on the MNB’) and the Decree 221/2000, (XII.19.) of the Government on the special reporting and accounting requirements of the Magyar Nemzeti Bank (hereinafter the ‘Decree on the MNB’s accounts’) that relate to the MNB’s dividend payments and the MNB’s recapitalisation and reimbursement by the State at the MNB’s initiative.

text: Dividend payments. 1.2. Under the current provisions of the Law on the MNB , the MNB shall pay a dividend from the portion of its retained earnings that are not used to offset any negative amount in the MNB’s revaluation reserves , supplemented by the MNB’s profits from the year under review, in accordance with a decision of the MNB’s Executive Board . 1.3. As noted in the explanatory memorandum accompanying the draft law, the draft law would

text: introduce a rule-based dividend payment practice, in line with common practices at Union central banks. Under the draft law the new dividend payment regime provides for automatic and discretionary dividend payments. In particular, the draft law provides that if the amount of the MNB’s equity exceeds its subscribed capital at the end of the year under review, the MNB will pay 50 % of its profit for the year under review as a dividend (automatic dividend payment). In addition, the draft law provides that the MNB will pay dividends, based on a decision of its Executive Board, from the positive amount of its retained earnings supplemented by the loss or 50 % of its profit from the year under review, up to the amount of the equity exceeding the subscribed capital (discretionary dividend payment). The dividend payment is due within 30 days of the MNB sending the notification of the report for the year under review to the shareholders.

text: Recapitalisation and reimbursement. 1.4. Under the current provisions of the Law on the MNB , where the amount of loss incurred in the year under review exceeds the retained earnings, the difference shall be reimbursed from the central budget directly to the retained earnings within eight days of the shareholder’s receipt of the notification of the annual financial statements for the year under review . In addition, under the current provisions of the Law on the MNB , if the balance of the revaluation reserves is negative, and this negative balance exceeds the sum of the retained earnings and the result for the year under review, a direct cash disbursement must be made from the central budget to the retained earnings up to the level of the negative balance that exceeds the sum of the retained earnings and the result of the year under review. 1.5. As noted in the explanatory memorandum accompanying the draft law, the current recapitalisation and reimbursement rule may require reimbursement from the central budget, regardless of the needs of the central bank. However, according to the explanatory memorandum, although there is sufficient net equity to allow the MNB to perform its fundamental tasks, the current rules may require a significant lumpsum reimbursement from the central budget that could lead to a sub-optimal policy mix. In a stagflationary environment, monetary policy needs to tighten conditions to bring inflation down, while fiscal policy may implement targeted programmes to support the real economy. However, immediate fiscal pressure stemming from a significant lump-sum reimbursement limits fiscal policy’s room for manoeuvre. The MNB’s room for manoeuvre may be increased by giving a longer period of time to the State to fulfil the reimbursement obligation. 1.6. Against this backdrop, the draft law proposes to replace the existing recapitalisation and reimbursement regime by a new regime. In particular, the draft law provides that where the amount of equity falls below the subscribed capital at the end of the year under review, the difference will be reimbursed from the central budget directly to the retained earnings over a period of five years, with equal instalments being paid every year, within 30 days of the shareholder’s receipt of the notification of the report for the year under review . For this purpose, the ‘equity’ consists of the following elements: (1) subscribed capital; (2) retained earnings; (3) valuation reserve; (4) revaluation reserve due to exchange rate change; (5)

text: revaluation reserve of foreign currency securities; and (6) the result of the financial year under review . The ‘subscribed capital’ of the MNB is ten billion forints . If the amount of the equity exceeds the subscribed capital, all outstanding repayment obligations cease. If, within the five-year period, the central budget incurs a new reimbursement obligation, the new provisions of the draft law will apply to fulfilling this obligation.

text: 2. General observation

text: 2.1. The ECB would like to emphasise that, although Member States with a derogation, like Hungary, do not yet participate in the third stage of economic and monetary union, they have a legal duty to adapt the statutes of their national central banks (NCBs) to ensure compatibility with the TFEU and the Statute of the European System of Central Banks (ESCB) and of the ECB (hereinafter the ‘Statute of the ESCB’). Any legislative reform in non-participating Member States should aim to gradually achieve consistency with Eurosystem standards .

text: 3. Specific observations

text: Article 130

text: TFEU and Article 7 of the Statute of the ESCB expressly prohibit the ECB, the NCBs, and the members of their decision-making bodies from seeking or taking instructions from Union institutions, bodies, offices or agencies, from any government of a Member State or from any other body, on the one hand, and prohibits those Union institutions, bodies, offices or agencies and any government of a Member State from seeking to influence the members of the decision-making bodies of the ECB and the NCBs in the performance of their tasks, on the other. The intention of these provisions is to shield the ESCB from all political pressure in order to enable it effectively to pursue the objectives ascribed to its tasks, through the independent exercise of the specific powers conferred on it for that purpose by primary law . National rules therefore cannot, without infringing

text: Article 130

text: TFEU and Article 7 of the Statute of the ESCB, place the NCB concerned in a situation where it is potentially exposed to political pressure or which in any way undermines its ability to carry out independently a task falling within the scope of the ESCB . 3.2. In that regard, in order to ensure the independence of the ECB, the authors of the TFEU provided, inter alia, in the third sentence of

text: Article 282(3)

text: TFEU, that it is to be independent in the management of its finances. While it is true that neither the TFEU nor the Statute of the ESCB lay down an equivalent rule in respect of the NCBs, the fact remains that the basic tasks of the ESCB fall, through the ESCB, not only on the ECB but also on the NCBs . The ECB has consistently held that the overall independence of the NCB concerned would be jeopardised if it could not autonomously avail itself of sufficient financial resources to perform the ESCB-related tasks required of it under the Treaty and the Statute of the ESCB . In order to

text: have at its disposal the funds necessary to carry out its tasks within the ESCB, national rules may not place the NCB concerned in a situation where it is forced to seek the consent of those political authorities in order to obtain funding or recapitalisation . In order to participate in the implementation of the EU’s monetary policy, the establishment of reserves by the NCBs is essential . 3.3. The ECB has consistently held that, in particular, any situation should be avoided whereby for a prolonged period of time an NCB’s net equity is below the level of its statutory capital or is even negative, including where losses beyond the capital and the reserves are carried over. Therefore, the event of an NCB’s net equity becoming less than its statutory capital or even negative would require that the respective Member State provides the NCB with an appropriate amount of capital at least up to the level of the statutory capital within a reasonable period of time so as to comply with the principle of financial independence . It is unclear to what extent the draft law would ensure that the MNB’s equity would be restored up to the level of the MNB’s subscribed capital within a reasonable period of time, given that the amounts to be reimbursed from the central budget are to be reimbursed in equal instalments over a period of five years. Moreover, to the extent that the amount of the MNB’s equity falls below its subscribed capital over a period of two or more successive years, this could further exacerbate an inadequate or even negative capital position over a prolonged period of time in excess of five years. The ECB therefore suggests introducing a safeguard clause into the draft law to the effect that in the event of an inadequate or even negative capital position during a prolonged period, it should be ensured in the medium-term that the MNB's net equity capital does not remain below the subscribed capital for a prolonged period. 3.4. With regard to profit allocation, an NCB’s statutes may prescribe how its profits are to be allocated, as is proposed by the draft law. Profits may be distributed to the State budget only after any accumulated losses from previous years have been covered and financial provisions deemed necessary to safeguard 22 23 the real value of the NCB’s capital and assets have been created . As previously noted by the ECB , the NCB is best placed to assess independently what level of reserves is necessary to enable it to perform its tasks, and such a decision should not be the subject of a third party’s decision.

text: Done at Frankfurt am Main, 10 November 2022. [signed]

text: The President of the ECB

text: Christine LAGARDE


text: 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 (OJ L 189, 3.7.1998, p. 42). 2 Article 2(1) of the draft law. 3 Banks do not include credit unions. The term ‘credit institutions’, under Polish law, only refers to credit institutions registered in Member States of the European Economic Area (EEA) other than Poland. Non-EEA credit institutions are referred to under Polish law as ‘foreign banks’ (

text: Article 2

text: Article 4(3)

text: and

text: Article 4(1)

text: (17) to (20) of the Law of 29 August 1997 on banking (Ustawa z dnia 29 sierpnia 1997 r. – Prawo bankowe, consolidated text: Dziennik Ustaw z 2021 r., poz. 2439)). 4 Law of 29 August 1997 on banking (Ustawa z dnia 29 sierpnia 1997 r. – Prawo bankowe (consolidated text: Dziennik Ustaw z 2021 r., poz. 2439)). 5 Pursuant to the definition contained in Article 1(1) of the Law on cooperatives, a cooperative is a voluntary association comprising an unlimited number of persons, with variable membership and variable share fund, which conducts joint economic activity in the interests of its members. 6 Law of 16 September 1982 on cooperatives (Ustawa z dnia 16 września 1982 r. Prawo spółdzielcze (consolidated text: Dziennik Ustaw z 2021 r., poz. 648)). 7 See the Law of 5 June 1997 on building societies and State support for home savings schemes (Ustawa z dnia 5 czerwca 1997 r. o kasach oszczędnościowo-budowlanych i wspieraniu przez państwo oszczędzania na cele mieszkaniowe (Dziennik Ustaw z 1997 r., Nr 85, poz. 538)), repealed on 1 January 2002.

text: See the explanatory memorandum accompanying the draft law, p. 15. 9 Articles 3 and 4 of the draft law. 10 Article 4(2) of the draft law. 11 Article 4(3) of the draft law. 12 Articles 7(5) and 7(6) of the draft law. 13 Articles 6 and 12 of the draft law.

text: Article 14(1) of the draft law. 19 Article 6(2) of the draft law. 20 Article 13(1) of the draft law. 21 Article 13(2) of the draft law. 22 Article 16 of the draft law. 23 Ustawa z dnia 26 października 1995 r. o społecznych formach rozwoju mieszkalnictwa (consolidated text: Dziennik Ustaw z 2021 r., poz. 2224). In the draft law, this law is referred to as the Law on certain forms of support for housing construction, as the name of the law was changed after the draft law was prepared, on August 10, 2022, under the law of July 7, 2022. 25 Ustawa z dnia 29 sierpnia 1997 r. o Narodowym Banku Polskim (consolidated text: Dziennik Ustaw z 2022 r., poz. 492). 27 See Opinion

text: . All ECB Opinions are available on EUR-Lex.

text: See paragraphs 2.1 and 2.2. of ECB Opinion

text: . 29

text: Regulation (EU) No 575/2013

text: of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and amending

text: Regulation (EU) No 648/2012

text: (OJ L 176 27.6.2013, p. 1). 30 Directive

text: of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions, amending Directive

text: and repealing Directives

text: and

text: (OJ L 176, 27.6.2013, p. 338). 31 See

text: Article 1 of Regulation (EU) No 575/2013

text: in conjunction with

text: Article 2(5)

text: , point (19), of Directive

text: . 32 See Article 4(2) of the draft law. 33 See Parts Three and Six and Part Seven A of

text: Regulation (EU) No 575/2013

text: Directive

text: of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending

text: Council Directive 82/891/EEC

text: , and Directives

text: and

text: , and Regulations

text: (EU) No 1093/2010

text: and

text: (EU) No 648/2012

text: , of the European Parliament and of the Council (OJ L 173, 12.6.2014, p. 190). 39 Article 6(2) of the draft law. 40 See

text: Article 45

text: b(1), point (c), of Directive

text: . 41 See, e.g., paragraph 2 of Opinion

text: , paragraph 2.2 of Opinion

text: and paragraph 3.1 of Opinion

text: . 42 See

text: Article 2(4) of Regulation (EU) 2021/378

text: of the European Central Bank of 22 January 2021 on the application of minimum reserve requirements (ECB/2021/1) (OJ L 73, 3.3.2021, p. 1). 43 See

text: Article 7 of Council Regulation (EC) No 2531/98 of 23 November 1998

text: concerning the application of minimum reserves by the European Central Bank (OJ L 318, 27.11.1998, p. 1) and European Central Bank

text: Regulation (EC) No 2157/1999 of 23 September 1999

text: on the powers of the European Central Bank to impose sanctions (ECB/1999/4) (OJ L 264, 12.10.1999, p. 21). 45 Directive

text: of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes (OJ L 173, 12.6.2014, p. 149).

text: See

text: Article 4(1)

text: , point (1), of

text: Regulation (EU) No 575/2013

text: . 47 See the letter from the Governor of NBP addressed to the head of the chancellery of the Sejm of 8 July 2022, p. 5. 48 See

text: Article 2(41)

text: and Articles 17 and 18 of the Law on the Bank Guarantee Fund, the deposit guarantee scheme and resolution (Ustawa z dnia 10 czerwca 2016 r. o Bankowym Funduszu Gwarancyjnym, systemie gwarantowania depozytów oraz przymusowej restrukturyzacji (consolidated text: Dziennik Ustaw z 2022 r., poz. 793)). 49 See

text: Article 124

text: and

text: Articles 146

text: b-169 of the Law on banking and Articles 96-102 and 113-137 of the Law on cooperatives. 50 See Articles 96-102 of the Law on cooperatives.

title: Opinion of the European Central Bank of 10 November 2022 on building societies (CON/2022/38)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 10 November 2022 on building societies (

text: ) Introduction and legal basis

text: On 21 July 2022 the European Central Bank (ECB) received a request from the Marshal of the Polish Parliament for an opinion on a draft law on building societies (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 sixth indent of

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

text: , as the draft law contains 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 law

text: 1.1 The draft law provides a legal framework for the establishment and operation of building societies (kasy oszczędnościowo-budowlane) in Poland, enabling them to operate in one of two different legal 2 3 forms , either as (i) banks in the form of joint-stock companies to which the provisions of the Polish Law 4 5 on banking would apply, to the extent not regulated in the draft law; or (ii) cooperatives to which the provisions of the Polish Law on cooperatives would apply, to the extent not regulated in the draft law. 1.2 As noted in the explanatory memorandum, the draft law represents an attempt to re-establish the system of building societies that was first introduced in Polish law in 1997 but was never put into practice.

text: The legal framework for the operation of building societies is based on similar solutions already in place in other Member States . 1.3 The draft law requires building societies to operate on the basis of an authorisation granted by Komisja Nadzoru Finansowego (KNF, Polish Financial Supervision Authority), which would also supervise building societies . The draft law specifies the conditions for obtaining such authorisation. These include, inter alia, possession of share capital or own funds in an amount not lower than the Polish zloty (PLN) equivalent of EUR 5 million, and adoption, in order to define the basic principles of a building society’s activity, of the general terms and conditions of business, general terms and conditions of targeted savings agreements, as well as appropriate internal regulations and instruments for the management, supervision and control of risks related to the activities of a building society. Moreover, the draft law empowers KNF to issue resolutions specifying detailed rules regarding the size of a building society’s share capital or own funds, precise liquidity and risk requirements as regards its activity and specific reporting requirements . It also authorises and obliges KNF to issue orders and recommendations to ensure that the activity of building societies complies with the general terms and conditions of targeted savings agreements . The draft law obliges building societies to allocate at least 3 % of the total savings deposits (or an increased amount as indicated by KNF) to a reserve fund. Funds from the reserve would only be invested in safe assets specified in the draft law and would only be drawn upon if mortgage loans could not be paid out from the building society’s available funds within the timescales specified in the mortgage loan agreements . 1.4 The activities of building societies comprise, in particular, accepting savings deposits from natural persons to an interest-bearing account and granting mortgage loans to such savers, from funds so collected, with the aim of financing housing-related investments specifically enumerated in the draft law . For these purposes, building societies will conclude with savers targeted savings agreements that conform with the general terms of business and the general terms of targeted savings agreements, defining, inter alia, the housing purpose, the targeted savings agreement amount, the period of saving, the amounts and timescales of savings deposits, the interest payable on the savings deposit, a building society’s obligation to enter into a mortgage loan agreement with a description of the terms and rules for issuing the loan, the amount of the mortgage loan and the interest payable, along with the manner and timescale in which it 14 15 would be paid out . The saving period may not be less than four years and the amount of the loan may not exceed the sum of the savings deposits with due interest and the housing bonus . The loan interest rate may not exceed the interest rate of the savings deposit by more than three nominal percentage points and would remain unchanged throughout the loan repayment period . A housing loan granted to a saver by a building society is to be secured with a mortgage, and its amount may not exceed 80 % of the value

text: of the real estate securing the loan . To fund their activities building societies are entitled to take out loans with a term of up to one year and issue bank securities with a maturity of no more than one year . 1.5 In the event that a building society needs to suspend its obligations due to temporary financial difficulties, the draft law empowers KNF to order the building society to suspend payments for a period of three months with the exception of payments of reasonable costs for day-to-day operations. If the building society’s financial situation does not improve within this period, KNF may decide to merge the building society with another building society or to liquidate it. With regard to such a decision, the draft law refers to the application of the provisions of the Law on banking . 1.6 KNF, after seeking the opinion of the building society, may appoint a trustee and a deputy trustee for the building society. The functions of a trustee include continuously monitoring the observance by the building society of the targeted savings agreements concluded between the building society and savers for housing purposes, and in particular of the order of issuing loans . 1.7 The draft law also establishes the principles of saving for housing purposes. In this respect, the draft law amends the Polish Law on social forms of housing development by introducing an entitlement for natural persons with full legal capacity and with savings in building societies and who are subject to unlimited tax obligations in the Republic of Poland to receive a savings bonus, granted annually from the State budget, for the amount of 20 % of the cash deposits accumulated in a given year (or PLN 12,000 if the cash deposits would exceed this level) . Should the sum of savings accumulated on the savings account in a given year exceed this sum, then the surplus savings would be the basis for obtaining a savings bonus in the following years, up to that amount. If the saver concludes more agreements with building societies and the accumulated savings deposits exceed the amount in question, the saver would be obliged to indicate under which agreement he wants to receive the savings bonus. However, the bonus would be applied in the first instance to savings made under the earliest dated agreements. 1.8 The draft law proposes an arrangement under which the minimum reserves referred to in the Law on Narodowy Bank Polski (hereinafter the ‘Law on NBP’) is paid from savings deposits collected in building societies in accordance with targeted savings agreements for housing purposes .

text: 2. Observations

text: 2.1 The ECB recalls its opinion on an earlier draft law aimed at regulating the legal framework of building societies in Poland, which was, however, not adopted . In that opinion the ECB made observations on the

text: proposed exclusion, under the earlier draft law, of building societies from the obligation to maintain minimum reserves with Narodowy Bank Polski (NBP), as well as on the calculation of the building societies’ proposed contributions to the Polish deposit guarantee scheme . This draft law does, however, not replicate the solutions provided for in the earlier draft law. 2.2 The ECB understands that under the draft law building societies qualify as credit institutions within the meaning of

text: Article 4(1)

text: , point (1), of

text: Regulation (EU) No 575/2013

text: of the European Parliament and of the Council . There credit institutions are defined as undertakings the business of which consists of, inter alia, taking deposits or other repayable funds from the public and granting credits for its own account. Building societies would fulfil both of these functional criteria of a ‘credit institution’, as they would: (i) receive deposits from natural persons, i.e. deposits ‘from the public’; and (ii) grant credit for their own account. In this respect the ECB notes that the only entities in Poland that fulfil the functional criteria of credit institutions but are exempted from the scope of both

text: Regulation (EU) No 575/2013

text: as well as Directive

text: of the European Parliament and of the Council are cooperative savings and credit unions (spółdzielcze kasy oszczędnościowo – kredytowe) . As a result,

text: Regulation (EU) No 575/2013

text: , which applies directly in Poland without transposition, would be applicable to building societies operating either as banks in the form of joint-stock companies or as cooperatives. 2.3 The ECB notes that the draft law would authorise KNF to issue specific resolutions that only apply to building societies. However, as

text: Regulation (EU) No 575/2013

text: largely harmonises capital, liquidity and reporting at Union level, it is not clear what specific requirements are meant, and how they would interact with Union ones. In addition, the requirement that building societies set aside 3 % of their savings deposits as a reserve provides a specific example where the interaction between the draft law and Union law requirements is complex. Moreover, the draft law allows building societies to invest that reserve in specific high-quality assets . This might interfere with the leverage, risk-weighted capital, liquidity and funding requirements laid down in

text: Regulation (EU) No 575/2013

text: . The ECB invites the Polish legislator to reflect on how this matter can be clarified in the draft law. 2.4 In the context of liquidity, the ECB notes that the draft law restricts the ability of building societies to issue debt securities, by imposing a maximum original maturity of one year on any such external debt used to fund mortgage loans . From a financial stability perspective, such a restriction may not be desirable as mortgage loans tend to have long maturities and this restriction may unduly limit the scope for managing the funding liquidity risks.

text: 2.5 Moreover, given that Directive

text: of the European Parliament and of the Council , regulating the recovery and resolution of credit institutions, applies to credit institutions within the meaning of

text: Article 4(1)

text: , point (1), of

text: Regulation (EU) No 575/2013

text: , the possible implications of the application of such a framework to building societies need to be taken into account. In this context, for example, the draft law’s restrictions on the ability of building societies to issue debt securities, imposing a maximum original maturity of one year on any such external debt used to fund mortgage loans , might have an impact on building societies’ capacity to comply with the minimum requirements for own funds and eligible liabilities (MREL), as only eligible liabilities instruments with a residual maturity of at least one year qualify fully as MREL . 2.6 In earlier opinions the ECB noted that Member States whose currency is not the euro retain their powers in the field of monetary policy according to national law. As and when the euro is introduced, Poland’s monetary policy will need to be consistent with the Eurosystem’s operational framework. Therefore, credit institutions should be familiar with the requirements that would apply to them once the single monetary policy is implemented in Poland. In view of the foregoing, the ECB notes that the Eurosystem’s minimum reserves obligations apply to entities that fulfil the functional criteria of ‘credit institution’ according to the definition contained in the Eurosystem’s minimum reserves rules , which crossrefers to the definition in

text: Article 4(1)

text: , point (1) of

text: Regulation (EU) No 575/2013

text: . As building societies would fulfil both of the functional criteria of ‘credit institution’, they would be subject to the Eurosystem’s minimum reserves requirements when Poland adopts the euro. Such requirements, and the sanctions related to them , would apply directly under Union law. 2.7 The draft law appears to propose an arrangement under which building societies would be obliged to hold minimum reserves with NBP . However, the wording of the draft law is not fully clear in this respect and does not exclude an interpretation whereby building societies operating in the form of cooperatives would be excluded from the obligation to maintain minimum reserves. This is because the draft law’s provision refers to the Law on NBP, which only regulates minimum reserve requirements in relation to banks and cooperative savings and credit unions, but does not explicitly impose minimum reserve requirements on cooperatives. The ECB suggests that, to ensure legal certainty, the Polish legislator clarifies this matter including, eventually, through an appropriate amendment to the Law on NBP. 2.8 Based on Directive

text: of the European Parliament and of the Council , it seems that

text: savings deposits in building societies would be covered by the national deposit guarantee scheme, as building societies fulfil the criteria of ‘credit institution’ under Union law . This would be the case for both building societies operating in the form of banks, as well as in the form of cooperatives, as the latter also receive deposits from the public and grant credit for their own account. The ECB understands, however, that this interpretation may be questioned under Polish law , as the matter is not regulated in the draft law, and the entities covered by the Law on the Bank Guarantee Fund comprise banks established in the territory of the Republic of Poland (except for mortgage banks), branches of foreign banks based outside the Union and cooperative savings and credit unions. Therefore, while it would seem that the deposit guarantee scheme covers building societies operating in the form of banks, it is more difficult to conclude that this scheme covers building societies operating in the form of cooperatives. For this reason, the draft law could be amended in order to bring it in line with Union law. The merger, liquidation and bankruptcy regimes of banks in the form of joint-stock companies and cooperatives are different . The possibility of building societies conducting business activities under two such different legal forms may make it impossible in practice to apply the solutions provided for in the draft law concerning, e.g., the takeover of a building society that is a cooperative by another building society as a result of a decision of KNF, issued in connection with the poor financial situation of the acquired building society. This is because, as concerns decisions of KNF, the draft law only refers to the application of certain provisions of the Law on banking, while the Law on cooperatives contains separate provisions regarding the merger of cooperatives . To ensure legal certainty, the ECB suggests that these issues be remedied in the draft law.

text: This opinion will be published on EUR-Lex.

text: Done at Frankfurt am Main, 10 November 2022.

text: [signed]

text: The President of the ECB

text: Christine LAGARDE


text: 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 (OJ L 189, 3.7.1998, p. 42). 2 Council Recommendation 2022/C 166/01 of 19 April 2022 on the conversion of hryvnia banknotes into the currency of the host Member States for the benefit of displaced persons from Ukraine (OJ C 166, 20.4.2022, p. 1).

text: paragraph 57.

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

text: specifying definitions for the application of the prohibitions referred to in Article [123 TFEU] and [

text: Article 125(1)

text: TFEU] (OJ L 332, 31.12.1993, p. 1). paragraphs 67 to 75 and 84.

title: Opinion of the European Central Bank of 3 November 2022 on the Slovenian scheme for the conversion into euro of hryvnia banknotes held by displaced persons from Ukraine (CON/2022/39)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 3 November 2022 on the Slovenian scheme for the conversion into euro of hryvnia banknotes held by displaced persons from Ukraine (

text: ) Introduction and legal basis

text: On 16 September 2022 the European Central Bank (ECB) received a request from the National Assembly of the Republic of Slovenia for an opinion on a draft law on intervention measures for the comprehensive regulation of the situation of displaced persons from Ukraine and for assistance to the Slovenian economy due to the consequences of the current crisis in Ukraine (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 (TFEU) and the third indent of

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

text: , 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: 1.1 The aim of the draft law is to mitigate the consequences of the humanitarian crisis resulting from the military invasion of Ukraine and the associated mass influx into Slovenia of displaced persons from Ukraine. The draft law amends various national laws concerning the temporary protection of displaced persons and introduces additional rights and protections for displaced persons in the fields of education, accommodation, health and social security. The draft law also aims to mitigate the consequences of the crisis in Ukraine for the Slovenian economy, in particular by facilitating the provision of convenient loans to local companies via the competent public fund. 1.2 In consideration of Council Recommendation 2022/C 166/01 , the draft law provides for the establishment of a national scheme enabling displaced persons from Ukraine who are entitled to temporary protection (hereinafter ‘displaced persons from Ukraine’) to convert their (Ukrainian) hryvnia banknotes into euro. Under the draft law, Banka Slovenije is required to set up and implement such a scheme . For that purpose, Banka Slovenije is to purchase hryvnia banknotes either directly from displaced persons from Ukraine, or from the individual local banks and branches of banks (hereinafter the ‘banks’) that agree to

text: exchange hryvnia banknotes for such displaced persons. In the latter case, Banka Slovenije and those banks are to enter into an agreement whereby the banks undertake to conduct the currency exchange transactions with the displaced persons from Ukraine and Banka Slovenije undertakes to buy the hryvnia banknotes from the banks. The agreement is to provide that: (a) the banks may exchange banknotes up to the limit of 10 000 hryvnia per displaced person; (b) the rate to be used in currency exchange transactions is to be the official exchange rate published by the National Bank of Ukraine, or the exchange rate agreed between Banka Slovenije and the National Bank of Ukraine; (c) the currency exchange transactions are to be free of commission and other charges; (d) the identity of displaced persons from Ukraine is to be verified in the manner agreed between the parties, in order to ensure compliance with the exchange limit of 10 000 hryvnia per displaced person; and (e) the currency exchange transactions of hryvnia for euro are to be carried out during the period of three months following the conclusion of the agreement between Banka Slovenije and the banks. The Slovenian government may extend this period for a further three months. 1.3 Under the draft law, Banka Slovenije is also to conclude an agreement with the National Bank of Ukraine, or another central bank, for the purchase by the National Bank of Ukraine or such other central bank from Banka Slovenije, of the hryvnia banknotes obtained in the course of the implementation of the national scheme for their conversion into euro .

text: 2. General observations

text: 2.1 The establishment and implementation of a national scheme to facilitate the conversion into euro of hryvnia banknotes by displaced persons from Ukraine entitled to temporary protection or adequate protection under national law, such as the scheme provided for in the draft law, does not constitute a task incumbent on the European System of Central Banks. The provisions of the draft law regarding the national scheme enabling displaced persons from Ukraine in Slovenia to convert their Ukrainian banknotes into euro implement the protection measure laid down in Council Recommendation 2022/C 166/01 which was adopted on the basis of

text: Article 78(2)

text: (c) TFEU and the competences of the Union in the field of asylum, with a view to offering appropriate protection to war refugees. 2.2 Where the legislature of a Member State chooses to assign the implementation of the protection measure laid down in Council Recommendation 2022/C 166/01 to its national central bank (NCB) in accordance with Article 14.4 of the Statute of the European System of Central Banks and of the European Central Bank, that function is performed on the responsibility and liability of that NCB. Nevertheless, when defining the responsibility and liability of NCBs in relation to the implementation of such a measure, Member States are required to comply with their obligations that derive from Union law and, in particular,

text: Article 123(1)

text: TFEU .

text: 3. Prohibition of monetary financing

text: Article 123(1)

text: TFEU prohibits the NCBs from granting overdraft facilities or any other type of credit facility to public authorities and bodies of the Member States.

text: Article 1(1)

text: (b) of Council Regulation No

text: 3603/93 defines the term ‘other type of credit facility’ for the purposes of

text: Article 123

text: TFEU as meaning, amongst others, any financing of the public sector’s obligations vis-à-vis third parties. Accordingly, for the draft law to be compatible with

text: Article 123(1)

text: TFEU, Banka Slovenije must not assume obligations vis-àvis third parties which could be incumbent on the public sector. This means not only that Banka Slovenije must not assume pre-existing obligations vis-à-vis third parties incumbent on other public authorities, but also that the effective financing of the obligations vis-à-vis third parties by Banka Slovenije must not result directly from the measures adopted by, or from the policy choices made by, other public authorities . 3.2 Under the draft law, Banka Slovenije is to purchase, from its own funds, hryvnia banknotes either directly from displaced persons from Ukraine or from banks which have acquired hryvnia banknotes from such persons. The financial obligations attached to the purchase of hryvnia banknotes are inherent in the implementation of the protection measure consisting of the national scheme for the conversion of hryvnia banknotes into euro, with which Banka Slovenije is entrusted, and do not arise from the specific choices that Banka Slovenije would make in that context or the manner in which it carries out the task assigned to it. It follows, therefore, that the effective financing by Banka Slovenije of the obligations vis-à-vis displaced persons from Ukraine results directly from the protection measure and from the policy choices made by the Slovenian legislature. Consequently, the draft law is not compatible with

text: Article 123(1)

text: TFEU, as it requires Banka Slovenije to assume obligations vis-à-vis third parties incumbent on the public sector. To ensure compatibility with the prohibition of monetary financing, the draft law should be amended to ensure that the purchase of hryvnia banknotes is financed from budgetary resources, and not from Banka Slovenije’s own funds.

text: 4. Practical implementation of the draft law

text: 4.1 In addition to the above observations, the ECB understands that in the current circumstances the National Bank of Ukraine does not intend to enter into new agreements with foreign central banks for the exchange of hryvnia banknotes obtained from war refugees, beyond those agreements that it has already concluded with certain foreign central banks. This stance seems highly relevant to the practical implementation of the draft law, which provides that Banka Slovenije is to conclude an agreement with the National Bank of Ukraine, or another central bank, which would then purchase the hryvnia banknotes obtained by Banka Slovenije in the course of the implementation of the national scheme for their conversion into euro. The impact that the National Bank of Ukraine’s current stance on new agreements with foreign central banks has on the implementation of the national conversion scheme should therefore be considered by the Slovenian legislator.

text: This opinion will be published on EUR-Lex. Done at Frankfurt am Main, 3 November 2022. [signed]

text: The President of the ECB

text: Christine LAGARDE