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 Directive

text: and repealing Directives

text: and

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

text: Council Regulation (EU) No 1024/2013 of 15 October 2013

text: conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63).

text: Regulation (EU) No 468/2014

text: of the European Central Bank of 16 April 2014 establishing the framework for cooperation within the Single Supervisory Mechanism between the European Central Bank and national competent authorities and with national designated authorities (SSM Framework Regulation) (ECB/2014/17) (OJ L 141, 14.5. 2014, p. 1). 5 Proposal for a Directive of the European Parliament and of the Council on Deposit Guarantee Schemes. This proposal was approved by the European Parliament on 15 April 2014 but has not yet been published in the Official Journal. 6 Directive

text: of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes (OJ L 135 , 31.5.1994, p. 5). 7 See paragraph 3.5 of Opinion

text: . All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 8 See paragraph 2.1 of Opinion

text: Directive 2014XX/EU of the European Parliament and of the Council 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. Not yet published in the Official Journal. 10 Proposal for a regulation of the European Parliament and of the Council establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Bank Resolution Fund (COM (2013) 520 final).

title: Opinion of the European Central Bank of 30 May 2014 on the organisation, supervision and solvency of credit institutions (CON/2014/40)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 30 May 2014 on the organisation, supervision and solvency of credit institutions (

text: ) Introduction and legal basis

text: On 30 April 2014, the European Central Bank (ECB) received a request from the Spanish Secretary of State for Economic Affairs and Business Support for an opinion on a draft law on the organisation, supervision and solvency of credit institutions (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Article 127(4) and Article 282(5) of the Treaty on the Functioning of the European Union and on the third and sixth indents of

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

text: , as the draft law relates to the prudential supervision of credit institutions, the Banco de España, and 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 law

text: 1.1 The draft law finishes the transposition of Directive

text: of the European Parliament and of the Council into Spanish legislation that first took place on 29 November 2013 with the adoption of Royal Decree-Law 14/2013, which implemented the most urgent provisions of Directive

text: . 1.2. Although the draft law is mainly a transposition of Directive

text: , it also recasts current Spanish legislation on the organisation, supervision and solvency of credit institutions, and includes a number of new provisions. (a) The Banco de España, in its capacity as national competent authority for the banking sector and as an integral part of the Single Supervisory Mechanism (SSM) together with the ECB and other national competent authorities, is to exercise its supervisory powers in cooperation

text: with the ECB and subject to the powers assigned to the ECB by

text: Council Regulation (EU) No 1024/2013

text: (hereinafter the ‘SSM Regulation’). (b) The Banco de España’s comprehensive assessment of credit institutions under Article 33(4) of the SSM Regulation is to be subject to a new, one-time fee. (c) The aggregate results of the annual stress tests to be conducted on credit institutions subject to the Banco de España’s supervision are to be sent to the Spanish Parliament. (d) The Banco de España will have the power to withdraw banking authorisations, a task that was previously the responsibility of the Ministry for Economic Affairs and Competitiveness, as well as the power to authorise the establishment of branches and the free provision of services by non-Union credit institutions. (e) The Banco de España will be able to intervene in a credit institution and temporarily replace its management where it determines that shareholders’ actions could be seriously detrimental to the credit institution’s financial situation. (f) The remuneration policies concerning the members of boards of directors of credit institutions are submitted to the shareholders meeting or an equivalent body for approval subject to the same conditions as those applicable to listed companies under Spanish mercantile law. (g) The administrative liability of members of the control committee (comisión de control) of savings banks is clearly defined and will consider the following to be very serious infractions: (i) serious and persistent negligence in fulfilling statutory duties; or (ii) failure to propose the suspension of board of directors’ agreements that are manifestly illegal or seriously detrimental to the financial situation of the savings bank or its depositors or clients. (h) The composition of the Steering Committee of the Deposit Guarantee Fund of Credit Institutions (DGF) will be changed to include a representative from the Ministry for Economic Affairs and Competitiveness and a representative from the Ministry of Finance and Public Administration.

text: 2. General observations

text: The ECB welcomes the use of the draft law to recast the current, basic provisions governing the organisation, supervision and solvency of credit institutions into a single, comprehensive law, in order to improve the efficiency of the Spanish financial legal framework. Such consolidation may, inter alia, assist in smoothly integrating the Spanish national banking supervisory structure into the SSM and ensuring that there are no legal obstacles under national law to the ECB’s performance of banking supervisory tasks with the assistance of the national competent authority under the SSM Regulation. The ECB also

text: understands that the rules are not intended to narrow or amend the scope of the SSM Regulation, which is directly applicable. In particular, it should be noted that a number of provisions under Spanish law with regard to banking supervision may become outdated when, pursuant to the SSM Regulation, some of the tasks presently assigned to the Banco de España are assumed by the ECB on 4 November 2014. The ECB will then be the competent authority to authorise credit institutions, to withdraw authorisations and to assess the acquisition and disposal of qualifying holdings for both significant and less significant credit institutions. The ECB will also conduct direct supervision over significant credit institutions, which will have an impact on most of the tasks allocated by the draft law to the Banco de España in respect of such credit institutions. Relevant procedures for conducting those tasks were provided for in

text: Regulation (EU) No 468/2014

text: (ECB/2014/17) of the European Central Bank (hereinafter the ‘SSM Framework Regulation’), which applies to public authorities and credit institutions. Both the SSM Regulation and the SSM Framework Regulation will have primacy over the draft law (once enacted) and therefore the draft law must be read and applied in conjunction with these regulations.

text: 3. Governance of the Deposit Guarantee Fund

text: According to the draft law, the two new members of the Steering Committee of the DGF are to be representatives of the Ministry for Economic Affairs and Competitiveness and the Ministry of Finance and Public Administration, respectively. In this regard, the ECB draws attention to recital 8 and Article 4(12) of the recent proposal of the European Parliament and the Council to recast Directive

text: of the European Parliament and of the Council , which will require Member States to ensure that their Deposit Guarantee Schemes have sound governance practices in place. Despite the fact that having only two government members on the Steering Committee of the DGF implies that government influence on the decisions to be taken by that committee will be limited, the ECB emphasises that providing for politically appointed persons to sit on the DGF’s governing body should not compromise its efficient functioning, and should not lead to any increase in political intervention in the resolution of credit institutions . As previously pointed out, the DGF may have a role in banking resolution procedures through the provision of finance for such resolution, as long as it does not in any way compromise its core function of protecting insured deposits .

text: In any case, the entire matter should soon be subject to a detailed review, in order to comply with the upcoming Union banking resolution framework (including the Banking Recovery and Resolution

text: Directive and the Single Resolution Mechanism Regulation ).

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

text: Done at Frankfurt am Main, 30 May 2014.

text: [signed]

text: The President of the ECB

text: Mario DRAGHI


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: See Law CXXXIX of 2013 on the Magyar Nemzeti Bank.

text: See Government Decree No 366/2011 (XII. 30.) determining the liquidity requirements and regulating the provisions applicable to foreign currency maturity mismatch. The ECB was not consulted on this Government Decree, therefore it did not have the opportunity to issue an opinion as regards its provisions.

text: See paragraph 2 of Opinion

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

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 investment firms and amending

text: Regulation (EU) No 648/2012

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

text: 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 and investment firms (OJ L 176, 27.6.2013, p. 338). See, in particular, recitals 76, 77, 101 and 102, and

text: Articles 51(1)

text: (b), 86 and 105 thereof.

text: See, in particular,

text: Articles 411

text: to 428.

publisher: Europeiska centralbanken

sprak: en

title: Opinion of the European Central Bank of 6 June 2014 on the short-term liquidity requirements of credit institutions (CON/2014/41)

serie: con

text: OPINION OF THE EUROPEAN CENTRAL BANK of 6 June 2014 on the short-term liquidity requirements of credit institutions (

text: ) Introduction and legal basis

type: rubrik

text: On 7 May 2014, the European Central Bank (ECB) received a request from the Magyar Nemzeti Bank (MNB) for an opinion on a draft MNB Decree on the short-term liquidity requirements of credit institutions (hereinafter the ‘draft decree’). 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 decree 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.

type: stycke

text: 1 Purpose of the draft decree

text: 1.1 From 1 October 2013, the MNB became the entity not only responsible for macro-prudential policy, but also for the micro-prudential supervision of the entire financial market. As a result of changes in legislative competence brought about by the new Law on the Magyar Nemzeti Bank , the Governor of the MNB is now exclusively authorised to, inter alia, adopt legislation aimed at reducing systemic liquidity risk. Prior to these changes, the competence was shared between the MNB and the Hungarian Government. In the exercise of its powers, the MNB conducted a review of existing legislation defining the liquidity requirements applicable to credit institutions, an area which is currently regulated by Government Decree No 366/2011 (hereinafter the ‘Government Decree’). 1.2 As a result of the review, the MNB plans to adopt legislation mirroring the content of the Government Decree. In effect, this will result in the current short-term liquidity requirements being maintained, which are applicable to the balance sheet coverage ratio and the deposit coverage ratio of credit institutions.

text: 1.3 According to the definition provided by the Government Decree, the purpose of the short-term liquidity requirements applicable to credit institutions was to ensure that credit institutions hold a sufficient liquidity buffer to manage any stress scenario. Credit institutions have been required to hold liquidity reserves over a 30-day horizon, covering either 20 per cent of their retail and corporate deposits, i.e. deposit coverage ratio or, alternatively, 10 per cent of their total balance sheet (total liabilities) i.e. balance sheet coverage ratio. Mortgage credit institutions have been required to meet a minimum balance sheet coverage ratio of 5 per cent. Based on the explanatory memorandum attached to the consultation request, the MNB does not intend to change the applicable level of coverage at this point in time.

text: 2 General observations

text: 2.1 The draft decree overlaps with some specific provisions of the Government Decree in terms of the liquidity requirements applicable to credit institutions. As the ECB has previously pointed out , the draft decree cannot repeal the Government Decree. Since the regulation of liquidity requirements now falls within the competence of the Governor of the MNB, the ECB would like to once again draw the Hungarian authorities’ attention to the need to avoid duplication of relevant legislation by repealing the Government Decree in accordance with the procedural rules applicable to Hungarian legislation. 2.2 According to the explanatory memorandum, the MNB plans to review the provisions of the draft decree following the adoption of detailed requirements relating to a liquidity coverage ratio (LCR) in a delegated act of the Commission under

text: Regulation (EU) No 575/2013

text: of the European Parliament and of the Council (hereinafter the ‘CRR’) .

text: 3. Specific observations

text: 3.1 National implementation of Directive

text: of the European Parliament and of the Council 6 7 (hereinafter the ‘CRD IV’) and Part VI of the CRR specifies liquidity requirements in the Member States. The LCR and the Net Stable Funding Ratio (NSFR) have been developed by the Basel Committee on Banking Supervision under the Basel III framework. As indicated above, the CRR mandates the European Commission to adopt a delegated act specifying the LCR , the adoption of which is currently pending. Further specifications include the Implementing Technical Standards and Regulatory Technical Standards provided by the European Banking Authority (EBA).

text: 3.2 The LCR will become binding from 2015 and will be phased in gradually, with full implementation 9 10 required by January 2018 . The NSFR will become binding from 2018. According to the CRR , Member States may introduce or maintain national provisions relating to liquidity coverage requirements until binding standards are specified and in full effect at Union level. Hence, at the present time, there is no legal requirement to bring the draft decree in line with the CRD IV or the CRR. It is however suggested, that the MNB assess whether the deposit coverage ratio and the balance sheet coverage ratio specified in the draft decree adequately address national liquidity risks to be covered by the LCR in the future. 3.3 Furthermore, since the CRR provides ‘minimum’ standards for liquidity coverage during the grandfathering period stipulated in the CRR , national rules requiring higher standards to be met, e.g. up to 100 per cent of the LCR, could remain in place until the LCR becomes fully binding in 2018. The benchmark for liquidity coverage by 2015 is 60 per cent of the liquidity coverage requirement and will rise by 10 per cent each year until it reaches 100 per cent in 2018. The deposit coverage ratio and the balance sheet coverage ratio in the draft decree have similarities with the LCR, notably in being 30-day, forward-looking measures. The MNB should ensure that the deposit coverage ratio and the balance sheet coverage ratio are in line with the general principle stipulated by the CRR, according to which it is appropriate to promote a diversified and high-quality liquidity buffer consisting of different asset categories . It should also be ensured that the assets defined by the draft decree as operative liquidity reserves fall under the definition of liquid assets in the CRR . Moreover, the ECB is of the opinion that careful attention should be paid to the use of stress parameters should the draft decree be updated in the future, in view of the delegated act to be adopted by the Commission. 3.4 The CRR already requires banks to report the components of their liquidity positions, as specified in the EBA’s Implementing Technical Standards on supervisory reporting. There are also differences in the draft decree and the Implementing Technical Standards with respect to the treatment of transactions between entities belonging to the same group. The ECB recommends further clarity relating to the calculation of the funding position referred to in Article 4 of the draft decree, in particular as regards the issue of whether only contractual cash-flows can be considered or whether the expected behaviour of counterparties can also be taken into account. This would enhance the common understanding among supervisors. 3.5 The ECB sees limited value in maintaining the measures of the draft decree after the LCR has been specified at Union level by the Commission. The ECB welcomes the intention expressed by the MNB to review, and should any collision be detected, repeal the draft decree once the Commission’s delegated act has entered into force.

text: 3.6 As regards the foreign funding adequacy ratio, all observations made in Opinion

text: still apply. This opinion will be published on the ECB’s website. Done at Frankfurt am Main, 6 June 2014. [signed]

text: The President of the ECB

text: Mario DRAGHI

type: vagledning

utgivare: ecb


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: See paragraph 2.1 of Opinion

text: . All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 3 See paragraph 6 of Opinion

text: . 4

text: Regulation (EC) No 1745/2003

text: of the European Central Bank of 12 September 2003 on the application of minimum reserves (ECB/2003/9) (OJ L 250, 2.10.2003, p. 10).

title: Opinion of the European Central Bank of 11 June 2014 on remuneration of minimum reserves (CON/2014/42)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 11 June 2014 on remuneration of minimum reserves (

text: ) Introduction and legal basis

text: On 5 June 2014, the European Central Bank (ECB) received a request from Lietuvos bankas for an opinion on a draft resolution amending the Rules on reserve requirements for credit institutions (hereinafter the ‘draft resolution’). 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 resolution relates to the instruments of monetary policy of a non-euro area Member State. 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 resolution

text: 1.1 Under the current rules, the minimum reserves held by credit institutions in Lietuvos bankas are remunerated at the ECB deposit facility rate, and not at the ECB rate for the main refinancing operations. 1.2 Lietuvos bankas wishes to ensure that credit institutions that hold minimum reserves with it are not under an obligation to pay Lietuvos bankas for their holdings in circumstances where a negative deposit facility rate is introduced. Therefore, the main purpose of the draft resolution is to amend the formula for calculating remuneration on minimum reserves held by a credit institution in Lietuvos bankas. 1.3 The draft resolution provides that the reference rate for the calculation of remuneration on minimum reserves shall be either the ECB’s deposit facility rate or zero per cent, whichever is higher. 1.4 The formula reflecting the new calculation of remuneration on minimum reserves will first apply in relation to the current Lithuanian minimum reserves maintenance period ending on 23 June 2014.

text: 2. General observations

text: Member States that have not adopted the euro retain their monetary policy powers, including in connection with their minimum reserves frameworks. Nevertheless, it is beneficial for them to achieve consistency with the Eurosystem minimum reserves framework so that their credit institutions become acquainted with the reserves requirements that will apply to them following the adoption of the euro by the Member State where they are established .

text: 3. Remuneration of minimum reserves

text: The ECB noted in an earlier opinion that, under the Lithuanian minimum reserves regime, the holdings of required reserves are remunerated not by reference to the ECB rate for the main refinancing operations, as specified in

text: Article 8 of Regulation (EC) No 1745/2003

text: (ECB/2003/9) of the European Central Bank , but by reference to the ECB deposit facility rate.

text: The ECB has no comments on the draft resolution.

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

text: Done at Frankfurt am Main, 11 June 2014.

text: [signed]

text: The President of the ECB

text: Mario DRAGHI


title: Opinion of the European Central Bank of 23 June 2014 on measures accompanying the SSM Regulation (CON/2014/43)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 23 June 2014 on measures accompanying the SSM Regulation (

text: ) Introduction and legal basis

text: On 15 April 2014, the European Central Bank (ECB) received a request from the Austrian Ministry of Finance for an opinion on a draft law amending several legal acts including the Law on banking , the Law 2 3 on financial conglomerates and the Law on the Financial Market Authority (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 relates to the Oesterreichische Nationalbank (OeNB), to the prudential supervision of credit institutions and 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 law

text: 1.1 The draft law implements legal provisions on macroprudential tasks and tools, procedural and federal state liability issues relating to

text: Council Regulation (EU) No 1024/2013

text: (hereinafter the ‘SSM Regulation’), and aims to smoothly integrate the Austrian national banking supervisory system into the Single Supervisory Mechanism (SSM). Although the Austrian Financial Market Authority (FMA) is established as an integrated supervisory institution, supervising all significant financial service providers in Austria, the FMA shares responsibilities with the OeNB in connection with banking supervision. For instance, while the OeNB is tasked with fact-finding,

text: 1 Bundesgesetz über das Bankwesen (Bankwesengesetz), BGBl 532/1993, as amended.

text: 2 Bundesgesetz über die zusätzliche Beaufsichtigung der Kreditinstitute, Versicherungsunternehmen und Wertpapierfirmen eines Finanzkonglomerats (Finanzkonglomerategesetz), BGBl I 70/2004, as amended.

text: 3 Bundesgesetz über die Errichtung und Organisation der Finanzmarktaufsichtsbehörde (Finanzmarktaufsichtsbehördengesetz), BGBl I 97/2001, as amended.

text: Council Regulation (EU) No 1024/2013

text: of October 15 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63). including on-site and off-site analysis of banks, the FMA is tasked with decision-making and has therefore been designated as the competent authority in the area of banking supervision. The FMA is the national competent authority (NCA) within the SSM framework and the addressee of instructions issued by the ECB under Article 6(3) of the SSM Regulation. 1.2 In connection with the macroprudential tasks and tools under Article 5 of the SSM Regulation, the draft law obliges the FMA to notify the Austrian Financial Market Stability Board (FMSB) prior to proposing, to the ECB, the application of higher requirements for capital buffers under

text: Article 5(2)

text: and (3) of the SSM Regulation. The FMA is to give the FMSB the opportunity to make a recommendation within a reasonable period of time. If the FMA does not comply with this recommendation, it must provide reasons to the FMSB. A similar obligation to notify arises if the ECB informs the FMA of its intention to apply higher requirements for capital buffers in accordance with Article 5(2) of the SSM Regulation. Moreover, the FMA is to notify the FMSB if, under Article 5(4) of the SSM Regulation, the ECB raises objections to planned decisions by the FMA to apply higher requirements for capital buffers, including countercyclical buffer rates and any other measures aimed at addressing systemic or macroprudential risks. 1.3 The draft law clarifies the division of tasks within the SSM between the FMA and the OeNB, on the one hand, and the ECB on the other hand. To this end, the draft law provides that the FMA and the OeNB are only required to execute tasks, powers and duties assigned to them under the Law on banking to the extent that the execution of same is not reserved for the ECB under the SSM Regulation . Furthermore, the draft law clarifies that the procedures outlined by the Law on banking shall not apply to the ECB in connection with the application of national legislation by the ECB in the area of banking supervision, as provided for by Article 4(3) of the SSM Regulation . In order to effectively carry out the tasks and powers assigned to them within the scope of the SSM, the FMA and the OeNB must also coordinate their activities within the SSM and provide each other with all information, applications and requests without delay . 1.4. The draft law also sets out the partial discontinuation of the obligation on both the FMA and the OeNB to input data into a shared national supervisory database established by the OeNB under the Law on banking . Within the scope of the SSM, the ECB will also operate a database for banking supervision purposes. According to the explanatory memorandum to the draft law, the data to be entered into the ECB database will overlap with the data to be entered into the national database. The Austrian Ministry of Finance considers that, with the commencement of the SSM, there will no longer be any need to input data into the national database if it has already been entered into the ECB database. Accordingly, the draft law provides that the FMA and the OeNB are no longer obliged to input overlapping data into the national database, provided that the data stored in the ECB database is accessible by both the FMA and the OeNB at any time. 1.5 The SSM Regulation provides for the ECB’s participation in supplementary supervision of a financial conglomerate in relation to the credit institutions included therein . Accordingly, Article 4 of the draft law clarifies that the scope of the tasks and powers assigned to the FMA by the Law on financial conglomerates is to be confined within the scope of the SSM Regulation. The FMA is only required to carry out the tasks, powers and duties that are assigned to it under the Law on financial conglomerates to the extent that the execution of same is not reserved to the ECB under the SSM Regulation. 1.6 The draft law restricts federal state liability for damage caused by the FMA when cooperating with, exchanging information with and supporting the ECB in relation to the SSM Regulation. This also applies to the FMA’s involvement in the ECB’s decision-making process and in the ECB’s preparations under the SSM Regulation. In the Austrian Ministry of Finance’s opinion, as expressed in the explanatory memorandum to the draft law, the transfer of special tasks to the ECB under Article 127(6) of the Treaty and under the SSM Regulation represents an objective reason for the express exemption from liability for damage caused by national authorities, to the extent that this may arise at all, as well as the fact that the ECB has a specific liability under Article 340 of the Treaty. The ECB notes that, in accordance with the wording of draft Article 3(6) of the Law on the Financial Market Authority (as introduced by Article 5 of the draft law and as amended by a draft bill tabled in Parliament on 3 June 2014 ), a claim for compensation is to be excluded in respect of damage caused by acts of the FMA, including its executive bodies and employees, when implementing or fulfilling an instruction of the ECB, preparing or executing decisions of the ECB, and when cooperating with, exchanging information with and providing other support for the ECB. For the OeNB, its executive bodies and employees, an identical exemption from liability has been included in draft Article 79(7) of the Law on banking, as introduced by Article 1(114) of the draft law. The ECB understands that according to Article 3 of the Law on the Financial Market Authority, the Austrian Federation is currently liable, pursuant to the provisions of the Law on public liability , for damage caused by bodies within the FMA and by FMA employees when enforcing, inter alia, the Law on banking and the Law on financial conglomerates. Such liability only exists in relation to supervised institutions and third parties, e.g. depositors may not claim any compensation from the Austrian Federation . However, federal state liability is not limited to intent or gross negligence. The Austrian Federation is entitled to claim reimbursement from those persons acting as agents of the FMA in committing or causing a violation of the law with intent or gross negligence, provided it has indemnified the injured person under the provisions of the Law on

text: 11 See

text: Article 12

text: a of the Law on financial conglomerates.

text: 12 Regierungsvorlage 162 der Beilagen zu den Stenographischen Protokollen des Nationalrates XXV. GP.

text: 13 Bundesgesetz über die Haftung der Gebietskörperschaften und der sonstigen Körperschaften und Anstalten des öffentlichen Rechts für in Vollziehung der Gesetze zugefügte Schäden (Amtshaftungsgesetz), BGBl 20/1949, as amended. public liability .

text: 2. General observations

text: The ECB takes note that the draft law aims to smoothly integrate the Austrian national banking supervisory structure into the SSM and to ensure that no legal obstacles arise under national law in relation to the performance by the ECB, with the assistance of the NCA, of its banking supervisory tasks under the SSM Regulation . The ECB understands that the rules are not intended to narrow or amend the scope of the SSM Regulation, which is directly applicable.

text: 3. Macroprudential tasks and tools

text: 3.1 Article 1(31) of the draft law which, inter alia, inserts a new

text: Article 24

text: b(3) into the Law on banking, contains two incorrect references. The reference to

text: Article 5(4)

text: seems erroneous; reference should be made to Article 5(1) of the SSM Regulation as only this provision provides the ECB with the right to object to an intended national macroprudential decision under Article 5(1) of the SSM Regulation. Furthermore, the second reference to

text: Article 23

text: c appears to be in error and should be replaced by Article ‘23d’. 3.2 In addition to the FMA (in its role as NCA), the FMSB is also involved in the application of macroprudential tasks and tools pursuant to Article 5 of the SSM Regulation. The ECB understands that the FMSB has been established within the Austrian Ministry of Finance to promote financial market stability, reduce systemic threat and lower systemic and pro-cyclical risks . While the FMSB is involved in macroprudential oversight issues under the SSM Regulation due to the FMSB’s national tasks, the ECB also highlights the tight time frame under Article 5(4) of the SSM Regulation. If the ECB intends to apply higher national capital buffers and duly notifies the FMA ten working days prior to taking such action, the FMA may provide a reasoned written objection to the ECB within five working days. The ECB takes note of the amendment made by the draft law to

text: Article 24

text: b(2) of the Law on banking according to which the FMSB is to provide its recommendation to the FMA ‘in compliance with the time limit indicated in

text: Article 5(4) of Regulation (EU) No 1024/2013

text: ’. The ECB understands that the time limit for the FMA’s response to the ECB’s notification under Article 5(2) of the SSM Regulation will not be delayed by the FMA’s consultation with the FMSB.

text: 16 See Article 6 of the SSM Regulation.

text: 17 See Article 13 of the Law on the Financial Market Authority.

text: 4. Procedural issues

text: It is essential for the smooth functioning of the SSM that there is full cooperation between the ECB and the NCAs and that they exchange all information that may have an impact on their respective tasks, in particular all information that the NCAs avail of regarding procedures that may have an impact on the safety and soundness of a supervised entity or that interact with the supervisory procedures in relation to such entities . Against this background, the ECB welcomes that the consulting authority aims to clarify the extent of the NCA’s competence under the SSM Regulation. The ECB also supports the fact that the draft law excludes the ECB from the application of procedural laws when applying national legislation exercising Member State options under Union law . Due to the dual banking supervisory structure in Austria, it is important to ensure that the FMA and the OeNB coordinate their activities within the SSM and provide each other with all information, applications and requests without delay.

text: 5. Restrictions on federal state liability

text: 5.1 The ECB understands that it is in principle a matter for Austrian national law to determine the scope of the federal state liability of the FMA and the OeNB for damage caused by their acts and omissions, including the acts and omissions of their executive bodies and employees. The ECB recognises that the liability of NCAs is not harmonised across the Union and that different supervisory liability regimes may presently exist at national level. The ECB, itself, is liable for the acts of its servants pursuant to Article 340 of the Treaty. Moreover, existing decisions of the Court of Justice of the European Union (CJEU) appear to provide scope for a restriction of national liability where the NCA is merely required to implement a binding instruction of a Union institution without any margin of discretion . On the other hand, NCAs may be liable for their actions within the SSM framework where an available margin of discretion is in fact exercised . Accordingly, the Union legislator has clarified in recital 61 of the SSM Regulation that the ECB’s liability in relation to actions undertaken within the SSM framework ‘should be without prejudice to the liability of national competent authorities to make good any damage caused by them or by their servants in the performance of their duties in accordance with national legislation’. 5.2 The wording of draft Article 3(6) of the Law on the Financial Market Authority and draft Article 79(7) of the Law on banking could be understood as effectively placing liability for damage caused by the acts and omissions of the FMA and the OeNB, including their executive bodies and employees, occurring within the SSM framework, exclusively and categorically on the ECB in all

text: 18 See

text: recital 11

text: of

text: Regulation (EU) No 468/2014

text: of the European Central Bank of 16 April 2014 establishing the framework for cooperation within the Single Supervisory Mechanism between the European Central Bank and national competent authorities and with national designated authorities (SSM Framework Regulation) (ECB/2014/17) (OJ L 141, 14.5.2014, p. 1).

text: 20 See, for example,

text: Case 175/84

text: Krohn v Commission [1986] ECR 753, paragraph 23.

text: 21 See

text: Case T-146/01

text: DLD Trading v Council [2003] ECR II-6005, paragraphs 79 to 80. cases. This could lead to an unclear legal situation with the potential of negatively impacting on the efficient and effective functioning of the SSM, in particular having regard to the direct applicability of the SSM Regulation. Therefore, it would be advisable to amend the part of Article 5 of the draft law that introduces the new

text: Article 3(6)

text: to the Law on the Financial Market Authority, as well as draft Article 79(7) of the Law on banking, in order to ensure that the proposed exemptions from the national liability framework are in compliance with Union law and are without prejudice to the allocation of liability under the SSM framework. This opinion will be published on the ECB’s website. Done at Frankfurt am Main, 23 June 2014. [signed] The President of the ECB Mario DRAGHI


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: See Government Decree 361/2009 (XII. 30.) on the conditions of prudent retail lending and the examination of creditworthiness, published in Magyar Közlöny No. 196 of 2009. As the ECB was not consulted on this Government Decree, it did not have the opportunity to issue an opinion as regards its provisions.

text: See the ECB’s periodical Financial Stability Reviews available on its website at www.ecb.europa.eu.

text: See Opinions

text: , and

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

text: See Opinions

text: , and

text: Recommendation of the European Systemic Risk Board of 21 September 2011 on lending in foreign currencies,

text: (OJ C 342, 22.11.2011, p. 1).

text: See Opinion

text: See the ECB’s June 2014 Convergence Report, in particular Chapter 5.5 on the examination of the state of Hungary’s economic convergence.

text: Directive

text: of the European Parliament and the Council of 4 February 2014 on credit agreements for consumers relating to residential immovable property and amending Directives

text: and

text: and

text: Regulation (EU) No 1093/2010

text: (OJ L 60, 28.2.2014, p. 34).

text: See

text: Article 18 of Directive 2014/17/EU

text: See

text: Article 19 of Directive 2014/17/EU

text: See

text: Article 23 of Directive 2014/17/EU

text: See paragraph 2 of Opinion

title: Opinion of the European Central Bank of 23 June 2014 on responsible lending requirements (CON/2014/44)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 23 June 2014 on responsible lending requirements (

text: ) Introduction and legal basis

text: On 28 May 2014, the European Central Bank (ECB) received a request from the Magyar Nemzeti Bank (MNB) for an opinion on a draft MNB decree setting the maximum payment-to-income and loan-to-value ratios permitted in respect of consumer credit transactions (hereinafter the ‘draft decree’). 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 decree 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 decree

text: 1.1 This subject matter is regulated under Hungarian law by Government Decree 361/2009 (hereinafter referred to as ‘Government Decree’). As a result of the integration of the Hungarian Financial Supervisory Authority into the MNB on 1 October 2013, the MNB became the authority responsible for setting macro-prudential policy and for micro-prudential supervision of the entire financial market. Having obtained the competence to regulate this subject matter, the MNB has drawn up new regulations based on the provisions of the Government Decree. 1.2 The draft decree aims to reduce (a) consumer indebtedness by preventing excessive credit growth, and subsequently (b) the potential systemic risk that may arise from foreign currency lending for real estate investments and consumer credit, thus contributing to the overall stability of the financial system. According to the explanatory memorandum, the draft decree would not excessively constrain lending, but could help prevent the build-up of non-performing loans in the future, while at the same time supporting sustainable growth. The draft decree will apply to all consumer credit agreements concluded in the territory of Hungary. Therefore, the scope of the draft

text: decree covers all credit institutions, foreign branches and leasing companies operating in Hungary, and all consumers applying for credit. The new measures are expected to enter into force on 15 September 2014. 1.3 Building on the provisions of the Government Decree, the MNB has decided to update, clarify and adjust the existing rules relating to the maximum payment-to-income (PTI) and loan-to-value (LTV) ratios permitted. The draft decree sets out comprehensive rules for the assessment of a consumer’s ability to service the loan requested, and sets caps on the LTV and PTI ratios in order to establish the creditworthiness of consumers and their capacity to withstand adverse shocks due to exchange and interest rate movements. 1.4 The main changes introduced by the draft decree can be summarised as follows. (a) As regards the PTI ratio, the draft decree sets caps on this ratio aimed at limiting the level of consumer indebtedness. These caps will cover all types of loans (mortgages, consumer credit, financial leases). In contrast to the currently applicable provisions, the PTI ratio will be established taking into account the certified income, and all existing debts of the consumer. Accordingly, the ratio will be more favourable for consumers with higher incomes. (b) The caps on the LTV ratio will only apply to residential mortgages and car loans. The rules capping the PTI and LTV ratios will be stricter for loans denominated in euro than for loans denominated in Hungarian forint, and much stricter for all loans denominated in currencies other than forint or euro.

text: 2 General observations

text: 2.1 The ECB has highlighted the risks associated with foreign currency lending on several occasions . Such lending represents a major risk to financial stability in several Member States in central and eastern Europe, particularly in Hungary where the proportion of foreign currency loans is among the highest in the Union. 2.2 In recent years, several European countries have implemented macro-prudential policies aimed at mitigating risks related to foreign currency lending. In particular, they have adopted measures to increase the resilience of the financial system and prevent or mitigate the further build-up of risks related to housing markets and household indebtedness in a low interest rate environment . 2.3 From a financial stability perspective, the ECB welcomes and supports the measures contained in the draft decree, as they are aimed at promoting responsible borrowing and lending, enforcing market discipline, and increasing the transparency of credit institutions’ activities.

text: 2.4 In September 2011, the European Systemic Risk Board (ESRB) issued a Recommendation to Member States with a view to increasing the effectiveness of macro-prudential policies directed at addressing the risks to financial stability associated with excessive foreign currency lending. The Union-wide application of this Recommendation is necessary to reduce incentives to engage in regulatory arbitrage, and make it more costly. The ECB has already advised the Hungarian authorities in its 2014 Convergence Report that ‘financial sector policies should be geared towards ensuring that the financial sector makes a sound contribution to economic growth, while at the same time preventing excessive credit growth in the future. In order to minimise the potential risks to financial stability associated with a high proportion of foreign currency loans, it is necessary for Hungary to fully apply the recommendation of the ESRB on lending in foreign currencies, with which it was considered to be largely compliant in the follow-up report published by the ESRB in November 2013’. 2.5 The ECB also recommends that the MNB take note of the recently adopted Directive

text: of the European Parliament and the Council , which aims to promote responsible lending and borrowing and ensure that borrowers are offered affordable loans, thus reducing the need for recourse to foreclosure of properties. National implementation of Directive

text: must be completed by 21 March 2016; hence, there is no legal requirement to bring the draft decree in line with its provisions at the present time. Directive

text: sets out provisions applicable to the 10 11 assessment of the creditworthiness of consumers , requirements as regards property valuations and foreign currency loans , and allows Member States to introduce further regulation of foreign currency loans, provided that it does not have retrospective effect. The MNB is invited to consider whether the provisions of the draft decree concerning the LTV ratio fully address the future requirements of Directive

text: . 2.6 The draft decree overlaps with the provisions of the Government Decree. As the ECB has previously pointed out , and as the explanatory memorandum also states, the draft decree cannot repeal the Government Decree. Since the regulation of the PTI and the LTV ratios now fall within the competence of the Governor of the MNB, the ECB would once again draw the Hungarian authorities’ attention to the need to avoid duplication of relevant legislation by repealing the Government decree in accordance with the procedural rules applicable to Hungarian legislation.

text: 3. Specific observations

text: 3.1 The ECB welcomes the stricter caps on LTV and PTI ratios where the credit and income currencies are different, which take into account potential foreign exchange risk. However, the regulatory framework could be further amended to provide incentives for credit institutions to offer domestic currency loans to customers for the same purposes as foreign currency loans. High levels of foreign currency loans to unhedged borrowers may constitute a significant vulnerability in Member States, as such lending transforms the direct exposure of the banking system to exchange rate risk into credit risk and exposes the economy to significant macro-financial risks. Furthermore, a high level of foreign currency debt may restrict the room for monetary policy manoeuvre and its effectiveness. As a general principle, to contain foreign currency lending, policy makers are encouraged to create an overall operating environment for economic agents that encourages prudent and well-informed decision-making by lenders and borrowers.

text: 3.2 The ECB welcomes the introduction of quantitative limits, in particular the caps on the PTI ratio, as it should contribute to strengthening credit institutions’ lending practices, whilst also ensuring consistency in assessing consumers’ creditworthiness. The ECB agrees with the observations of the MNB, as set out in the explanatory memorandum, as regards the need for constant monitoring and updating of the LTV and PTI ratios, and recommends subjecting these ratios to a thorough impact assessment study of their appropriateness and regularly reviewing them to take into account the implications of changes in macroeconomic and financial conditions.

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

text: Done at Frankfurt am Main, 23 June 2014.

text: [signed]

text: The President of the ECB

text: Mario DRAGHI


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).

title: Opinion of the European Central Bank of 24 June 2014 on non-bank financial institutions that provide loans to consumers (CON/2014/45)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 24 June 2014 on non-bank financial institutions that provide loans to consumers (

text: ) Introduction and legal basis

text: On 22 May 2014, the European Central Bank (ECB) received a request from Българска народна банка (the Bulgarian National Bank (BNB)) for an opinion on a draft law on non-bank financial institutions that provide loans to consumers (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: , as the draft law contains provisions related to the BNB and 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 law

text: 1.1 The draft law aims at regulating the licensing, supervision and activities of non-bank financial institutions that provide loans to consumers. It also aims at enhancing their transparency and stability, as well as ensuring confidence in their activities and the protection of consumers’ rights and interests. 1.2 Furthermore, the draft law aims at achieving a clearer distinction between the BNB’s competence for the supervision of banks, and the Financial Supervision Commission’s (FSC) competence for the supervision of other institutions in the financial sector, including those that provide loans to consumers.

text: 2. General observations

text: 2.1 The ECB welcomes the draft law in view of its aims referred to in paragraphs 1.1-1.2 above. 2.2 The ECB notes that, at present, non-bank financial institutions that provide loans to consumers are subject to registration with the BNB. Following the adoption of the draft law, these institutions will be licensed and supervised by the FSC. However, no change is made to the existing legal

text: provisions regarding non-bank financial institutions that provide loans to legal entities, which will continue to be subject to registration with the BNB. 2.3 The ECB understands that the new legal framework for the licensing and supervision by the FSC of non-bank financial institutions that provide loans to consumers does not entail any transfer of assets or existing legal obligations from the BNB to the FSC. The ECB further understands that the FSC will use its own resources and procedures for the licensing and supervision of non-bank financial institutions that provide loans to consumers.

text: Done at Frankfurt am Main, 24 June 2014.

text: [signed]

text: The President of the ECB

text: Mario DRAGHI


text: 4 1.1 In order to implement Recommendations

text: and

text: , the first draft law establishes a systemic risk committee (hereinafter the ‘committee’) with four members: (a) the member of the government responsible for the financial sector, who shall be the chair; (b) the director general of the BCL, who replaces the chair in case of absence; (c) the director general of the Financial Sector Supervisory Commission (‘CSSF’); and (d) the director of the Insurance

text: 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 and investment firms, amending Directive

text: and repealing Directives

text: and

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

text: of the European Systemic Risk Board of 22 December 2011 on the macro-prudential mandate of national authorities (OJ C 41, 14.2.2012, p. 1). Available on the European Systemic Risk Board’s website at www.esrb.europa.eu. 4 Recommendation ESRB 2013/1 of the European Systemic Risk Board of 4 April 2013 on intermediary objectives and instruments of macro-prudential policy (OJ C 170, 15.6.2013, p. 1).

text: Article 3(1) of the first draft law. 6 Article 3(6) of the first draft law. 7 Article 1(1) of the first draft law. 8 Law of 23 December 1998 concerning the monetary status and the Central Bank of Luxembourg, as modified by the Law of 13 July 2007, the Law of 24 October 2008 and the Law of 10 November 2009. 9 Article 1(2) of the first draft law. 10 Article 1(4) of the first draft law. 11 Article 4 of the first draft law. 12 Ibid. 13 Article 5 of the first draft law.

text: Directive

text: and repealing Directives

text: and

text: (OJ, L 176, 27.6.2013, p. 338). 15

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 investment firms and amending

text: Regulation (EU) 648/2012

text: (OJ L 176, 27.6.2013, p. 1). 16 Law of 23 December 1998 establishing a financial sector supervisory commission (‘Commission de surveillance du secteur financier’), as amended.

text: Council Regulation (EU) No 1024/2013 of 15 October 2013

text: conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63). 18 See the International Monetary Fund (IMF)’s ‘Key Aspects of Macroprudential Policy’ of 10 June 2013, in particular paragraphs 71 and 87; and the IMF’s ‘Implementing Macroprudential Policy - Selected Legal Issues’ of 17 June 2013, in particular paragraph 35. Available on the IMF’s website at www.imf.org.

text: See paragraph 2.3 of Opinion

text: . All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 20 See Article 2(4) of the Organic Law. 21 See Article 2(6) of the Organic Law. 22 See page 8 of the preparatory work for the first draft law. 23 See page 70 of the preparatory work for the second draft law. 24 See Article 3(12) of the first draft law. The committee shall meet every six months, or when required, upon request of its President or two of its members. 25 Directive

text: and repealing Directives

text: and

text: (OJ L 176, 27.6.2013, p. 338). 26

text: Regulation (EU) No 575/2013

text: Regulation (EU) No 648/2012

text: (OJ L 176, 27.6.2013, p. 1). 27 See Opinion

text: and Opinion

text: . 28 See paragraph 1.3 and paragraph 5 of Opinion

text: . 29 See paragraph 1.2.2 of Opinion

text: See paragraph 2.2 of Opinion

text: . 31 See

text: Article 27(3)

text: (on information provided by payment and securities settlement systems as well as issuers of payment instruments to assess their efficiency and safety) and

text: Article 33(2)

text: (organising the exchange of information with the CSSF, the National Institute for Statistic and Economic Studies (STATEC) and the IC ‘to the extent necessary for the performance of its tasks’) of the Organic Law; and Article 15(4) of the Law of 6 December 1991 on the insurance sector (as amended).

text: See the IMF’s ‘Implementing Macroprudential Policy - Selected Legal Issues’, of 17 June 2013. See in particular paragraph 36. 33 See Article 60 of the second draft law. 34 See the IMF’s ‘Implementing Macroprudential Policy- Selected Legal Issues’ of 17 June 2013. See in particular paragraphs 16 and 17.

text: Opinion of the Luxembourg State Council No. 50.541, available on the State Council’s website at www.conseilétat.public.lu. The Luxembourg State Council has not yet issued its opinion on the second draft law.

text: Regulation (EU) No 1092/2010

text: of the European Parliament and of the Council of 24 November 2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board (OJ L 331, 15.12.2010, p. 1).

title: Opinion of the European Central Bank of 26 June 2014 on a systemic risk committee (CON/2014/46)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 26 June 2014 on a systemic risk committee (

text: ) Introduction and legal basis

text: On 28 March 2014, the European Central Bank (ECB) received two requests from the Luxembourg Ministry of Finance: one for an opinion on a draft law establishing a systemic risk committee (hereinafter the ‘first draft law’) and another for an opinion on a draft law implementing Directive

text: of the European Parliament and of the Council (hereinafter the ‘second draft law’). The ECB’s competence to deliver an opinion on the first and second draft laws is based on Article 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third, fourth and sixth indents of

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

text: , since the two draft laws relate to the Banque centrale du Luxembourg (BCL) and to statistics and 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 first draft law

text: Commission (IC) . The BCL, subject to the authority of its director general, acts as secretary to the committee and is supported in this capacity by one person designated by each of the members of the committee. All decisions of the committee are adopted by unanimous vote . 1.2 The first draft law entrusts to the committee the task of coordinating the implementation of macroprudential policy, with a view to safeguarding the stability of Luxembourg’s financial system . By virtue of Article 1(2) of the first draft law, this objective is without prejudice to the powers vested in the ECB and in the BCL as members of the European System of Central Banks (ESCB) and the Eurosystem, and those vested in the BCL pursuant to the Law of 23 December 1998 concerning the 8 9 monetary status and the Central Bank of Luxembourg (hereinafter ‘the Organic Law’) . To this end, the committee pursues intermediate objectives and periodically assesses the suitability of these objectives, as well as the effectiveness and efficiency of the macro-prudential instruments chosen . 1.3 In order to accomplish its mission, the committee may, inter alia, carry out the following tasks: (a) identify, assess and monitor risks to financial stability; (b) designate systemically important financial institutions and structures in Luxembourg; (c) issue notices, warnings regarding high risks to financial stability, and recommendations addressed to the CSSF, IC, BCL and other players within the financial sector, including credit institutions, insurance and reinsurance companies, investment funds, payment systems, and securities settlement systems, that are capable, either collectively or individually, of having a negative impact on the financial system or one of its components ; (d) assess and monitor responses made by recipients referred to under item (c) above in accordance with the ‘comply or explain’ principle ; and (e) support cooperation and information exchange at national and international level, especially with the European Systemic Risk Board (ESRB). 1.4 The committee may request the authorities represented on the committee and any other national entities to provide all economic and financial information necessary for it to fulfil its tasks, including macroeconomic data and prudential information regarding individual financial institutions or market infrastructures .

text: 2. Purpose of the second draft law

text: 2.1 The second draft law implements Directive

text: of the European Parliament and of the Council into Luxembourg law. It also designates the CSSF as the competent authority in the context of the Single Supervisory Mechanism (SSM). 2.2 The second draft law appoints the CSSF as the ‘designated authority’ within the meaning of Articles

text: and

text: of Directive 2013/36/EU and

text: Article 458 of Regulation (EU) No 575/2013

text: of the European Parliament and of the Council . When the CSSF acts in this capacity with respect to capital conservation buffers, countercyclical capital buffers, buffers for systemically important institutions, systemic risk buffers and macro-prudential risks identified at national level, it makes its decisions following negotiation with the BCL in order to reach a common position and, depending on the case at hand, after seeking the opinion of the committee or taking into account its recommendations. 2.3 The second draft law also amends the Law of 23 December 1998 establishing a financial sector supervisory commission , in order to authorise the exchange of information with the committee.

text: 3. General observations

text: 3.1 The ECB welcomes that the first draft law establishes the committee, ensures that all the relevant authorities and institutions involved in macro-prudential policy are represented on the committee, and defines its objectives, mission and powers in line with the guiding principles expressed in Recommendation

text: and Recommendation

text: . 3.2 The ECB also welcomes that the second draft law implements Directive

text: in Luxembourg law, including its optional provisions. In particular, it provides the CSSF, when acting in its capacity as designated authority, in close coordination with the BCL, on the one hand, and the ECB, on the other hand, with the broadest possible range of macro-prudential tools, including the capital conservation buffer, the countercyclical capital buffer, the global systemically important institution (G-SII) buffer, the other systemically important institution (O-SII) buffer and a systemic risk buffer. 3.3 The establishment of the committee and the cooperation arrangement between the CSSF, the BCL and the committee established pursuant to the second draft law are without prejudice to the

text: procedures provided for in

text: Article 5 of Council Regulation (EU) No 1024/2013

text: for close cooperation between the CSSF, in continuous close coordination with the BCL, and the ECB in respect of macro-prudential tasks and tools. This national institutional framework is also without prejudice to the ECB’s power to act in the CSSF’s stead and to apply higher requirements and more stringent measures, in accordance with Articles

text: and

text: of Council Regulation (EU) No 1024/2013, on the basis of close coordination with the CSSF.

text: 4. Effective macro-prudential policy framework

text: An effective macro-prudential policy framework must be designed in such a way as to foster the ability and willingness of the authority entrusted with macro-prudential policy to act. The framework needs to foster, in particular, the authority’s ability to act in the face of evolving systemic threats, ensuring the authority has access to information and that the authority has an appropriate range of macro-prudential instruments. It also needs to give assurances that it will act if necessary and offset any biases occurring due to its inaction or insufficiently timely action arising from difficulties in quantifying the benefits of macro-prudential action, and that are often exacerbated by financial industry lobbying, political pressures, and the need for coordination among agencies . The following shortcomings should be addressed with a view to ensure that the institutional framework provided for in the first and second draft laws would entail effective macro-prudential policies in Luxembourg: (a) the limited role of the BCL in the field of macroprudential policy; (b) the limited powers of the committee, including its power to collect information; (c) the voting arrangements; (d) the lack of clarity as regards the committee’s functions; and (e) the committee’s disclosure policy. These issues are discussed in the sections below.

text: 5. Leading role of the BCL

text: 5.1 The first draft law provides that the BCL shall act as secretariat to the committee, but shall not receive any other preferential treatment as compared to the other institutions represented on the committee, whether in terms of representation, voting arrangements, the power to put forward proposals or the allocation of specific macro-prudential tasks. The second draft law endows the BCL with an insufficient role as regards countercyclical capital buffers, buffers for systemically important institutions, systemic risk buffers and other macro-prudential measures described under

text: . 5.2 In principle, the ECB and the national central banks (NCBs) should play a leading role in macroprudential oversight, given their expertise and existing responsibilities in the area of financial

text: stability . This is particularly the case for the BCL, which is tasked with the supervision of market 20 21 liquidity and has a general mandate to contribute to financial stability . 22 23 5.3 The preparatory work for the first and second draft laws explain that the BCL’s leading role would come about as a result of: (a) the BCL acting as chair in the absence of the chairman; (b) the BCL acting as the secretariat of the committee; and (c) the BCL being a party to the cooperative arrangement under the second draft law. However, these arguments are not convincing. First of all, since the committee only meets a few times a year , the likelihood that the chair will be absent is limited. Second, the central bank’s leading role in the field of macro-prudential policy may not result from the (ancillary) role played by the NCB in the implementation of some of the provisions of Directive

text: of the European Parliament and of the Council and

text: Regulation (EU) No 575/2013

text: of the European Parliament and of the Council . Third, as echoed in the ECB’s previous opinions issued in respect of systemic risk committees chaired by ministers of finance with the NCB acting as secretariat , the allocation of the secretariat function to the BCL does not in itself amount to a leading role on the part of the NCB as recommended by the ESRB. In France, the leading macro-prudential role of the Banque de France results from its additional tasks in this field. These comprise identifying and monitoring systemic risks, contributing to the implementation of the committee’s decisions and making proposals to the committee on the use of specific macroprudential instruments . In Germany, the leading role of the Deutsche Bundesbank results from its tasks in identifying and analysing risks and providing analytical support to the committee. The Deutsche Bundesbank also has a right of veto as regards the adoption and publication of warnings and recommendations and the adoption of the annual report . In the light of the above, the ECB strongly recommends that the Luxembourg legislator revisits the extent of the tasks entrusted to the BCL in order to effectively bolster its leading role in macro-prudential policy. 5.4 From an operational and financial point of view, the allocation of new tasks to an NCB should not affect its ability to carry out its existing tasks. It is thus important that the BCL’s involvement in the performance of the committee’s mandate or the discharge of any additional tasks that may be

text: entrusted to the BCL with regard to macro-prudential policy does not affect the BCL’s institutional, functional and financial independence, or that of its governor, or the performance by the ESCB of its tasks under the Treaty and the Statute of the European System of Central Banks and of the European Central Bank. Financial independence, which is an element of the principle of central bank independence referred to in Article 130 of the Treaty, requires that an NCB must have sufficient means to carry out its national tasks as well as its ESCB-related tasks. The ECB has consistently expressed its concern that, when allocating additional tasks to NCBs, it must be ensured that the NCB is able to fulfil its mandate, both operationally, in terms of manpower, and financially, in terms of appropriate financial resources . The ECB welcomes that Article 1(2) of the first draft law provides that the committee’s macro-prudential objective is without prejudice to the powers of the BCL and the ECB with respect to this objective. However, for reasons of legal certainty, the abovementioned provision should be accompanied by an explicit provision stating that the committee’s recommendations addressed to the BCL are without prejudice to the principle of central bank independence under Article 130 of the Treaty.

text: 6. Powers of the committee

text: 6.1 In order to achieve its objectives, the committee only has the right to issue opinions and warnings and address recommendations, either to the authorities represented on the committee or to specific financial players. Accordingly, the committee exclusively relies on the enforcement powers of the authorities represented on it. Such an approach, without any enforcement powers for the committee itself, undermines the committee’s ability to influence the scope of regulation or create new macroprudential instruments in reaction to changing circumstances, thus also restricting its ability to act in the field of macro-prudential policy. 6.2 In the same vein, the committee may only obtain information and statistics collected by the institutions represented on the committee and other domestic institutions in accordance with the existing institutional framework, but may not request information from agents falling outside the scope of the reporting requirements. This limits the committee’s access to information, which may be of relevance with regard to its policy formulation. 6.3 Furthermore, based on the restrictions currently laid down in the laws governing the BCL and the IC , information and statistics may only be collected, used and shared in the context of the BCL’s and the IC’s respective tasks. It is therefore not entirely clear whether such information and data, in particular those concerning individual entities overseen by the BCL, may be legally passed on only

text: to the committee in the context of the latter’s macro-prudential policy mandate or whether it may also be subsequently circulated to other institutions active in this field. The ECB therefore recommends that the Luxembourg legislator should clarify this point in the laws governing the BCL and the IC and ensure that information concerning individual entities overseen by the BCL is shared only with the committee. As noted in paragraph 1.2 above, the requirement for exchange of information stipulated in the first draft law does not prejudice the tasks performed by BCL as an integral part of the Eurosystem. 6.4 However, the issue described above does not apply to the CSSF, since the second draft law formally authorises the CSSF to exchange information with the committee .

text: 7. Voting arrangements

text: The committee’s decisions are to be taken unanimously. In practice, this voting arrangement gives each member of the committee a right of veto, which could cause a risk of paralysis in macro-prudential policy. This risk may materialise if the committee, which has exclusive competence in respect of macroprudential policy, is unable to reach a unanimous decision. In such circumstances, the authorities represented on the committee regain the ability to act individually on the basis of their shared competence with regard to financial stability.

text: 8. Lack of clarity as regards the functions of the committee

text: In accordance with best practice, the functions necessary to implement macro-prudential policy fall into three broad categories: (a) identification of systemic risks; (b) formulation of a policy response; and (c) mitigation of systemic risk, or implementation of the policy response, through rule-making, supervision and enforcement . However, these functions are contained in various different provisions in the first draft law: the enforcement function is contained in the committee’s mission statement in

text: Article 1(1)

text: ; the formulation of policy response is contained in

text: Article 1(3)

text: , which mentions ‘the pursuit of intermediary objectives’; and the identification and monitoring of risks is enumerated among the committee’s powers in

text: Article 2

text: . For the sake of clarity, the ECB recommends consolidating all aspects of the committee’s functions in one provision. Contrary to what the mission statement seems to imply, these functions are not restricted to coordinating the implementation of the macro-prudential policy by the authorities represented on the committee.

text: 9. Transparency of macro-prudential policy

text: 9.1 Section 1, Recommendation D of Recommendation

text: stipulates that macro-prudential decisions and the reasons for making them should be made public in a timely manner, unless there are risks to financial stability in doing so. Such transparency, which supports accountability mechanisms, is of the utmost importance since it also ensures that authorities’ policies and actions are fully explained to and understood by stakeholders. 9.2 Article 3(6) of the first draft law merely stipulates that ‘the systemic risk committee shall take decisions on whether to publish notices, alerts and recommendations by unanimous vote’. The ECB recommends that this provision should be amended in order to create greater transparency as regards macro-prudential policy decisions, which should not be left entirely to the discretion of the authorities.

text: 10. Strengthening the institutional framework

text: 10.1 In view of the shortcomings described above, the ECB urges the Luxembourg legislator to thoroughly review the first draft law in order to strengthen the overall effectiveness of the institutional framework for macro-prudential policy in Luxembourg. For this purpose, the ECB strongly recommends that: (a) the BCL’s leading role in macro-prudential policy should be bolstered; (b) either the BCL, in its leading role in respect of the macro-prudential policy or the committee, should be endowed with direct enforcement powers, including those relating to collecting information and statistics; (c) voting and disclosure arrangements should be more flexible; and (d) the overall clarity with regard to the committee’s role should be improved. Unless such amendments aim to accommodate the view expressed by the ECB in this opinion, a further consultation with the ECB on the revised first draft law will be required. 10.2 It is noteworthy that in its opinion issued on the first draft law , the State Council of Luxembourg also discusses: (a) the overall weakness of the committee, which has no regulatory and enforcement powers of its own; (b) the lack of a clear legal basis for the exchange of aggregated and individual information between the committee and its members; and (c) the ability of the committee to address recommendations to individual institutions, including with regard to shadow banking. In view of these concerns, the State Council of Luxembourg recommends limiting the scope of the committee’s action to mere recommendations exclusively addressed to the existing institutions in the context of the sector-specific approach to financial sector oversight. In addition, the ECB considers that the State Council’s proposal aiming at removing any mention of the Governor’s hierarchical power in relation to the secretariat of the committee is not compatible with the independence of the BCL and its Governor.

text: The ECB advises the Luxembourg legislator to proceed with caution as regards these recommendations, which would unduly weaken the adopted macro-prudential policy framework, resulting, inter alia, in an inappropriate shift towards micro-prudential policy. 10.3 This opinion is without prejudice to the conclusions of the ESRB’s follow-up assessment, which will be prepared pursuant to

text: Article 17 of Regulation (EU) No 1092/2010

text: Done at Frankfurt am Main, 26 June 2014.

text: [signed]

text: The President of the ECB

text: Mario DRAGHI


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: Dziennik Ustaw (Dz. U.) of 2011 No 199, item 1175.

text: The three ordinances were issued under the Law on electronic payment instruments, which was repealed with effect from 7 October 2013 as part of the consolidation of payment services-related provisions in the Law on payment services. On that consolidation, see Opinion

text: . All ECB Opinions are published on the ECB’s website at www.ecb.europa.eu. 4

text: Regulation (EU) No 1409/2013

text: of the European Central Bank of 28 November 2013 on payments statistics (ECB/2013/43) (OJ L 352, 24.12.2013, p. 18). 5 Recommendation of the European Central Bank of 28 November 2013 on payments statistics (ECB/2013/44) (OJ C 5, 9.1.2014, p. 1). 6 See recital 17 in the preamble to

text: Council Regulation (EC) No 2533/98 of 23 November 1998

text: concerning the collection of statistical information by the European Central Bank (OJ L 318, 27.11.1998, p. 8).

text: The relevant provisions are Article 16 of the Law on settlement finality in payment systems and securities settlement systems and the rules for the supervision of such systems (Dz. U. of 2010 No 112, item 743) and

text: Article 23

text: (2a) of the Law on Narodowy Bank Polski (consolidated text: Dz. U. of 2013, item 908).

title: Opinion of the European Central Bank of 27 June 2014 on statistical reporting requirements in the field of payment statistics (CON/2014/47)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 27 June 2014 on statistical reporting requirements in the field of payment statistics (

text: ) Introduction and legal basis

text: On 4 April 2014, the European Central Bank (ECB) received a request from the Polish Minister for Finance for an opinion on a draft ordinance of the Minister for Finance on detailed scope of information referred to in Article 14a-14c of the Law on payment services which is to be transferred to Narodowy Bank Polski and the procedure for complying with the reporting obligation (hereinafter the ‘draft ordinance’). 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, fourth and sixth indents of

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

text: , as the draft law relates to Narodowy Bank Polski (NBP), the collection, compilation and distribution of monetary, financial, banking, payment systems and balance of payments statistics, and 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 ordinance

text: 1.1 The draft ordinance implements

text: Article 14

text: d of the Law of 19 August 2011 on payment services , which authorises the Minister for Finance to impose on acquirers, electronic money institutions and payment instrument issuers obligations to report data to NBP, which NBP uses for the purposes of making periodic assessments of monetary clearing as part of its role as overseer of payment systems. 1.2 The draft ordinance will replace and consolidate three implementing ordinances which currently regulate the reporting obligations of acquirers, payment card issuers and electronic money

text: institutions . Additionally, the draft ordinance expands the scope of reporting to include payment instruments other than payment cards. 1.3 The draft ordinance also aims to update the relevant reporting templates to take account of

text: Regulation (EU) No 1409/2013

text: (ECB/2013/43) of the European Central Bank and Recommendation ECB/2013/44 .

text: 2. General observations

text: 2.1 Article 5.2 of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB’) provides that ‘national central banks shall carry out, to the extent possible, the tasks described in

text: Article 5.1

text: ’. These are the tasks of the European System of Central Banks (ESCB) defined in the Treaty and the Statute of the ESCB. Although regulations adopted under Article 34.1 of the Statute of the ESCB do not confer any rights or impose any obligations on Member States that have not adopted the euro (hereinafter the ‘non-euro area Member States’), Article 5 of the Statute of the ESCB applies to all Member States, whether or not they have adopted the euro . In addition,

text: Article 4 of Council Regulation (EC) No 2533/98

text: requires all Member States to ‘organise themselves in the field of statistics and … fully cooperate with the ESCB in order to ensure the fulfilment of the obligations arising out of Article 5 of the Statute’. These provisions therefore mean that non-euro area Member States are under an obligation to design and implement at national level all measures they consider appropriate to carry out the collection of statistical information needed to fulfil the ECB’s statistical reporting requirements and to make timely preparations in the field of statistics in order for them to become participating Member States. 2.2 In this context, it is primarily the task of the national authorities of non-euro area Member States to determine which detailed reporting requirements and collection methods are the most efficient and effective at the national level and the least burdensome for the reporting population concerned. The ECB does not comment in detail on national reporting provisions as they may differ considerably between Member States, depending on various national and external factors. The ECB’s comments are therefore of a general nature only and are meant to serve as a guide, enabling Polish authorities to shape its reporting requirements in line with those of the Eurosystem in preparation for Poland’s adoption of the euro.

text: 3. Specific observations and technical comments

text: 3.1 The ECB welcomes the consolidation of the implementing provisions on reporting obligations in the field of payment statistics for a certain part of the reporting population in a single act, as it will increase the clarity and consistency of interpretation and application of the reporting obligations. 3.2 The ECB also welcomes the statement by the Polish authorities that the draft ordinance aims to align the statistical reporting requirements in Poland in the field of payment statistics with relevant parts of the ECB’s requirements, in particular as laid down in

text: Regulation (EU) No 1409/2013

text: (ECB/2013/43) and Recommendation ECB/2013/44. Achieving consistency with the ECB’s statistical standards and requirements will enable the reporting population to become familiar with the statistical reporting regime that will apply once Poland adopts the euro. With this in mind, the ECB takes the view that further alignments with

text: Regulation (EU) No 1409/2013

text: (ECB/2013/43) might be considered worthwhile as regards: (i) the adoption in template FN.19 of a geographical breakdown similar to Table 3 in Annex III to that Regulation; (ii) a possible distinction between point-of-sale (POS) and non-POS terminals in template ST.03; and (iii) a possible inclusion of information on the general structure of payment statistics and data definitions similar to Annexes I and II to that Regulation. In addition, the ECB notes that the reporting of payment statistics by payment system operators does not fall within the scope of the draft ordinance, as this information is collected under different national provisions . 3.3. The ECB welcomes the fact that the draft ordinance includes provisions for collecting detailed information on payment instruments for oversight purposes which is in most aspects very similar to, or even more detailed than (e.g. in respect of EMV, e-money and mobile payments), the corresponding Eurosystem scheme of data collection. The ECB observes that no breakdown per country of foreign fraudulent transactions appears to be included. As a result, in this respect, the Polish authorities would have no detailed information on the geographical origin of the fraud. In addition, the draft ordinance appears not to include a breakdown of ATM cash withdrawal fraud into categories (‘lost and stolen’, ‘card not received’, ‘counterfeit’, ‘other’), whereas this breakdown is included in relation to e-money. The ECB recommends introducing a differentiation in the data collection distinguishing fraudulent transactions resulting from mail or telephone order from transactions of that kind made via the Internet. Such differentiation would be advantageous as Internet fraud, in particular, is increasing substantially. Admittedly, however, this also remains an optional breakdown under the current Eurosystem scheme for data collection.

text: 3.4 The above comments do not prejudice any future ECB assessment relating to the reporting scheme for payment statistics in Poland. This opinion will be published on the ECB’s website. Done at Frankfurt am Main, 27 June 2014. [signed]

text: The President of the ECB

text: Mario DRAGHI


title: Opinion of the European Central Bank of 27 June 2014 on the processing, distribution and protection against counterfeiting of banknotes and coins in Hungary (CON/2014/48)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 27 June 2014 on the processing, distribution and protection against counterfeiting of banknotes and coins in Hungary (

text: ) Introduction and legal basis

text: On 4 June 2014, the European Central Bank (ECB) received a request from the Magyar Nemzeti Bank (MNB) for an opinion on two draft MNB decrees: (i) on the amendment of rules on the processing and distribution of banknotes, and on technical tasks relating to the protection of banknotes against counterfeiting (hereinafter the ‘draft banknote decree’); and (ii) on the amendment of rules on the processing and distribution of coins, and on technical tasks relating to the protection of coins against counterfeiting (hereinafter the ‘draft coin decree’; the draft banknote decree and the draft coin decree are hereinafter jointly referred to as 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 the second indent of

text: , as the draft decrees relate to means of payment. 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 decrees

text: 1.1 According to the explanatory memorandum to the draft decrees, the MNB has reviewed its decree 2 3 on banknotes and its decree on coins and proposes several amendments for the purposes of: (i) ensuring the sound functioning of banknote handling machines used by credit institutions, the postal service and other entities processing cash (hereinafter collectively referred to as ‘cash processors’) in verifying the authenticity and fitness of Hungarian forint banknotes; (ii) enhancing the protection of banknotes against counterfeiting; (iii) ensuring the quality of banknotes recirculated by cash processors; (iv) improving the security of banknotes and coins in circulation; and (v) ensuring the availability for retail customers of certain cash distribution activities carried

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: 2 MNB Decree 11/2011 (IX. 6.) on the processing and distribution of banknotes and on technical tasks relating to the protection of banknotes against counterfeiting (hereinafter the ‘decree on banknotes’).

text: 3 MNB Decree 12/2011 (IX. 6.) on the processing and distribution of coins and on technical tasks relating to the protection of coins against counterfeiting (hereinafter the ‘decree on coins’). out by credit institutions and the postal service. The explanatory memorandum also outlines that amendment of the decree on banknotes and the decree on coins has become necessary in the light of the recently adopted Law on the Magyar Nemzeti Bank , which, inter alia, governs the MNB’s authority to issue banknotes and coins, as well as its competence to protect the Hungarian forint against counterfeiting. 1.2 The specific amendments effected by the draft decrees include: (i) an increase to 100 per cent in the ratio of forint banknotes to be checked by cash processors using banknote handling machines successfully tested by the MNB, with an exception for banknotes that are damaged, difficult to identify, or withdrawn from circulation; (ii) the introduction of stricter rules for operators of banknote handling machines; (iii) the extension of the scope of the data reporting requirements for entities wishing to operate banknote handling machines, in order to provide the MNB with more information for monitoring purposes; (iv) the introduction of data reporting requirements for manufacturers of banknote handling machines in Hungary and distributors of banknote handling machines manufactured outside Hungary; (v) further updates to the recently amended rules applicable to the business contingency plans of credit institutions and post offices; (vi) the introduction of new rules on the exchange of banknotes and coins withdrawn from, or unfit for, circulation; and (vii) amendments necessary to reflect the amendments introduced by Decision ECB/2012/19 . The draft decrees also update references to applicable Hungarian legislation.

text: 2. General observations

text: 2.1 The ECB welcomes the aim of the draft decrees to facilitate the improvement of the security of banknotes and coins in circulation in Hungary, as well as the efforts of the MNB to enhance the identification of counterfeit Hungarian forint banknotes and coins, and Hungarian forint banknotes and coins unfit for circulation. Nevertheless, having regard to the fact that an amendment to the decree on banknotes was adopted earlier this year , the need for a stable legal framework governing banknotes and coins must be emphasised. 2.2 As previously observed , Hungary is a Member State with a derogation pursuant to Article 139 of the Treaty and the ECB’s requirements regarding the recirculation of euro banknotes in Member States that have adopted the euro do not apply to the MNB . These requirements will apply once Hungary adopts the euro and the MNB becomes a fully integrated member of the Eurosystem. In this respect, the ECB welcomes the MNB’s proposed alignment of the decree on banknotes with

text: 4 Law CXXXIX of 2013 on the Magyar Nemzeti Bank.

text: 5 Decision ECB/2012/19 of 7 September 2012 amending Decision ECB/2010/14 on the authenticity and fitness checking and recirculation of euro banknotes (OJ L 253, 20.9.2012, p. 19).

text: 6 See MNB Decree 2/2014 (II. 14.).

text: 7 See Opinions

text: and

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

text: 8 See, in particular, Opinions

text: and

text: . Decision ECB/2012/9 and notes that this is in accordance with a suggestion made by the ECB in a previous opinion on Hungarian banknotes. 2.3 The ECB reiterates its previous observations on the MNB’s currency-issuing operations and urges the Hungarian legislator to consider addressing observations made in past ECB opinions and in the Convergence Report which remain outstanding. This includes the avoidance of frequent changes to Hungarian legislation relating to the MNB .

text: 3. Specific observations

text: 3.1 Several provisions in the draft coin decree and certain provisions in the decree on coins which have not been amended relate to banknotes . In a similar manner, certain provisions of the draft banknote decree relate to coins . For the purposes of consistency and legal certainty, all provisions in the draft coin decree and in the decree on coins which solely relate to banknotes should, insofar as possible, be exclusively contained in the decree on banknotes, and all provisions in the draft banknote decree which solely relate to coins should be exclusively contained in the decree on coins. 3.2 Furthermore, the definition of ‘legal tender’ in the draft coin decree is misleading as it only makes reference to coins, whereas banknotes are also legal tender. This definition would benefit from further clarification. The corresponding definition in the decree on banknotes would also benefit from clarification for the similar reason that it only makes reference to banknotes.

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

text: Done at Frankfurt am Main, 27 June 2014.

text: [signed]

text: The President of the ECB

text: Mario DRAGHI

text: 9 See paragraph 3.3 of Opinion

text: 10 See paragraph 3.2.5 of Opinion

text: and paragraph 2.3 of

text: 11 See Opinions

text: and

text: , as well as the ECB’s Convergence Report of June 2014, in particular the assessment made under ‘Issue of banknotes’, p. 329.

text: 12 See, for example, Opinions

text: , CON2008/83 and

text: 13 See points 8, 9, 11 and 14 of Article 1 of the draft coin decree.

text: 14 See, for example, point 10 of Article 1 of the decree on coins.

text: 15 See points 11b, 11c, 11d and 16 of Article 1 of the draft banknote decree.

text: 16 See point 19 of Article 1 of the draft coin decree.

text: 17 See point 23 of Article 1 of the decree on banknotes.