text: Law CCVIII of 2011. 2 OJ L 189, 3.7.1998, p. 42.

text: OJ C 41, 14.2.2012, p. 1. 4 See also paragraph 4 of Opinion

text: . All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 5 Opinion

text: . 6 See paragraph 2.3 of Opinion

text: See, for example, Opinions

text: , CON2008/83,

text: . 8 See Chapter 6.6 of the ECB’s Convergence Report 2010, and Chapter 6.5 of the ECB’s Convergence Report 2012. 9 See Opinions

text: , and

text: . 10 See pages 243 to 248. 11 See Article 12(4) of the Law on the MNB,which has changed in the draft law without taking into account the ECB’s Convergence Report 2012.

text: See paragraph 2.3 of Opinion

text: . 13 See paragraph 3.2.3 of Opinion

text: . 14 OJ L 332, 31.12.1993, p. 1. 15 See the ECB’ Convergence Reports and paragraph 3. of Opinion

text: and paragraph 2.3 of Opinion

text: . 16 See Articles 174 and 177 of the draft law.

text: See Article 175 of the draft law. 18 See also paragraph 15 of Opinion

text: , paragraph 8 of Opinion

text: , paragraph 3.2.3 of Opinion

text: and paragraph 4.2(d) of Opinion

text: . 19 See, for example, paragraph 3.2 of Opinion

text: , paragraphs 3.1 to 3.4 of Opinion

text: , paragraph 2.2.5 of Opinion

text: . 20 See, for example, paragraph 3.2 of Opinion

text: , paragraphs 3.1 to 3.4 of Opinion

text: , paragraph 2.2.5 of Opinion

text: . 21 The HFSA Financial Conciliation Board is an independent body without legal personality. The HFSA provides funding for its operation.

text: See paragraph 3.2.5 of Opinion

text: . 23 See, for example paragraph 6.3 of Opinion

text: , paragraph 3.2.4 of Opinion

text: and paragraph 3.5 of Opinion

text: . 24 See, for example, paragraph 3 of Opinion

text: and paragraph 3.3 of Opinion

text: . 25 Article 180 of the draft law. 26 See paragraph 3.2.4 of Opinion

text: Article 13(8) of the draft law. 28 See Article 42(2) of the draft law. 29 See the amendment to Article 11(1) of the Law on the HFSA incorporated in Law XCVIII of 2013 on the amendment of financial-related legal acts.

text: OJ L 318, 27.11.1998, p. 8. 31 See the decree defined in Article 169(1) of the draft law. 32 Article 172 of the draft law. 33 See also paragraph 3.2.5 of Opinion

text: and paragraph 3.2.6 of Opinion

text: See paragraph 2.1 of Opinion

text: . 35 OJ L 176, 27.6.2013, p. 338. 36 See

text: Article 131 of Directive 2013/36/EU

text: . 37 See

text: Article 133 of Directive 2013/36/EU

text: . 38 OJ L 331, 15.12.2010, p. 1.

text: See ECB’s Convergence Report of May 2012, country summary, p. 57-58. 40 Article 4(8) of the draft law. 41 See, for example, paragraph 3.4 of Opinion

text: and paragraph 2.4 of Opinion

text: . 42 See, for example, Opinions

text: and

text: . 43 See

text: Articles 80

text: to 90 of the draft law.

text: See Opinions

text: and

text: . 45 See Opinion

text: 46 OJ L 201, 27.7.2012, p. 1, Articles

text: . 47 OJ L 94, 30.3.2012, p. 22,

text: Article 10

title: Opinion of the European Central Bank of 26 July 2013 on the new integrated Hungarian supervisory framework (CON/2013/56)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 26 July 2013 on the new integrated Hungarian supervisory framework (

text: ) Introduction and legal basis

text: On 7 June 2013, the European Central Bank (ECB) received a request from the Hungarian Ministry of National Economy (hereinafter the ‘consulting authority’) for an opinion on the draft law replacing the Law on the Magyar Nemzeti Bank (hereinafter the ‘draft law’). On 28 June 2013, the consulting authority informed the ECB about a further substantial amendment to the draft law (hereinafter referred to as the ‘amendment to the draft law’), submitted during the Parliamentary procedure and of an amendment of the Hungarian Constitution to expand the Magyar Nemzeti Bank’s (MNB) role as defined in the Constitution to provide for the new institutional framework of financial supervision that will be created by 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 of 29 June 1998

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

text: 1. Purpose of the draft law

text: 1.1 The draft law changes the MNB’s competence and institutional framework by establishing a legal framework for integrated supervision of the Hungarian financial market. Currently, the Hungarian Financial Supervisory Authority (HFSA) supervises credit institutions, capital markets, insurance markets and financial funds. 1.2 Pursuant to the explanatory memorandum attached to the draft law (hereinafter referred to as the ‘explanatory memorandum’), the new provisions are expected to strengthen the macro-prudential

text: framework in Hungary, to promote the coordination of macro- and micro-prudential policies, and to significantly contribute to ensuring financial stability. 1.3 Pursuant to the draft law, the HFSA will be dissolved and its functions and responsibilities will be transferred to the MNB on 1 October 2013. In the future, the MNB’s responsibilities will also include financial market supervision. In addition, the draft law provides that the MNB will furthermore be entrusted with consumer protection and conducting the alternative dispute resolution procedure currently operated by the HFSA for disputes between consumers and financial service providers or entities participating in the financial market. 1.4 The amendment to the draft law makes the MNB the general legal successor to all of the HFSA’s rights and obligations. 1.5 The draft law names the MNB as the entity responsible for macro-prudential policy and microprudential supervision. Pursuant to the draft law, the new macro-prudential instruments available to the MNB will be: (a) preventing and mitigating excessive credit growth by defining rules applicable to the loan-to-value and the payment-to-income ratios (for loan contracts with private individuals), as well as to the risk weights for residential and commercial real estate lending; (b) regulating the countercyclical capital buffer; (c) preventing and mitigating systemic risks by defining rules applicable to the limit of maturity mismatches between assets and liabilities, limiting FX mismatches between assets and liabilities, and short term liquidity requirements; and (d) setting up a systemic risk buffer to reduce the probability of default by systemically important financial institutions. 1.6 After 1 October 2013, the MNB will be exclusively authorised to take administrative decisions pertaining to the prudential supervision of the financial markets. 1.7 The draft law also states that the MNB will be the resolution authority in Hungary, once the applicable domestic resolution regime is adopted. As noted in the explanatory memorandum, the Hungarian resolution framework is still under development, and the government wants to ensure that the framework provides for adequate separation between the MNB’s supervisory duties and its anticipated resolution functions. 1.8 As acknowledged by the consulting authority and the MNB, significant organisational restructuring will be required to transfer these new functions to the MNB. While the Monetary Council remains the MNB’s main decision-making body, responsible not only for strategic decisions in regard to the tasks relating to its membership in the European System of Central Banks (ESCB), but also for supervisory and macro-prudential functions, the draft law provides for separate operational decision-making by establishing a new body of the MNB, the Financial Stability Council (FSC). This body will be responsible for macro-prudential implementing the Monetary Council’s strategic decisions related to the MNB’s supervisory and macro-prudential tasks, as well as for taking the operational decisions related to these tasks. The Executive Board will remain the decision-making body responsible for the direction of the MNB’s operations.

text: 1.9 Hungary intends to comply with the Recommendation of the European Systemic Risk Board of 22 December 2011 on the macro-prudential mandate of national authorities (

text: ) by adopting the draft law, although the actual implementation date will take place well after the reporting deadline of 30 June 2013 prescribed by the European Systemic Risk Board (ESRB).

text: 2. General observations

text: In the context of Article 127(5) of the Treaty, the ECB has welcomed on several occasions institutional frameworks established in Member States that recognise the essential role of central banks in promoting the safety and soundness of financial institutions and the stability of the financial system as a whole. Against this background, the ECB welcomes the integration of the HFSA into the MNB, as this integrated institutional framework will improve the MNB’s ability to safeguard financial stability and prevent or mitigate systemic risks. In Member States with a relatively small financial market, such as Hungary, there are strong arguments for concentrating supervisory and macro-prudential responsibilities within a single authority . The ECB considers entrusting the MNB with supervisory tasks as compatible with its ESCB tasks. Moreover, given the Hungarian banking sector’s structural connection to that of the euro area, the ECB encourages the Hungarian national legislator to follow developments in European Union legislation closely as regards the planned Banking Union. However, the ECB notes that the assumption of new tasks by a national central bank (NCB) in the ESCB should generally not infringe upon the NCB’s independent execution of tasks within the ESCB framework and the MNB’s existing tasks . Accordingly, the MNB’s performance of macroprudential tasks should not affect: (a) the MNB’s functional and financial independence; or (b) the MNB’s performance of its ESCB-related tasks under the Treaty and the Statute of the European System of Central Banks and of the European Central Bank (hereinafter referred to as the ‘Statute of the ESCB’) . This should be given due consideration when formulating the provisions applicable to the HFSA’s integration into the MNB. The ECB also notes that Article 4(12) of the draft law does not specify that the MNB’s new tasks fall under its exclusive competence. This is inconsistent with the provisions of

text: Articles 4(8)

text: and (9), which, in the ECB’s view, are drafted to confer exclusive tasks on the MNB.

text: 3. Specific observations 3.1 Transfer of new responsibilities to the MNB and the MNB’s new governance structure

text: 3.1.1 Frequent changes to the legal framework of the MNB; incompatibility with the Treaties The Law on the MNB has been subject to frequent changes over recent years. The currently applicable Law on the MNB took effect on 1 January 2012, and it has already been amended on several occasions. Moreover, the draft law will be the second recast of the Law on the MNB since 2010. The frequency of amendments to the Law on the MNB, which the ECB has criticised already 7 8 in its previous Opinions and in its Convergence Reports , creates instability in the MNB’s operations. A legal framework that provides a stable basis for the central bank’s functioning is essential for central bank independence. The Hungarian legislator has decided to address the latest changes to the MNB’s legal framework in respect of its new tasks by preparing a new law governing its legal status. Therefore a number of outstanding issues that have been raised in previous ECB opinions and Convergence Reports should be addressed as a part of the current legislative process. The Law on the MNB should be compatible with the Treaties and strengthen the MNB’s institutional framework. In particular, the views expressed in paragraphs 3.2, 3.3 and 4 of Opinion

text: continue to apply as regards additional checks and balances in the procedure for appointing Monetary Council members, the rules on dismissal of Monetary Council members, including the Governor and the Deputy Governors, and the text of the oath taken by the MNB’s Governor and the Deputy Governors. In addition, the ECB’s Convergence Report of May 2012 recommended introducing additional safeguards to the Law on the MNB (Articles 35(1) and 36 of the draft law) in relation to the monetary financing prohibition and the requirements for the MNB’s legal integration into the Eurosystem. Legal integration of the NCBs into the Eurosystem requires that national legislation be adapted to allow for the performance of Eurosystem-related tasks and compliance with the ECB’s decisions, once the Member State concerned has adopted the euro. The ECB’s 2012 Convergence Report identifies several Hungarian legislative provisions that are incompatible with Treaty requirements, in particular provisions included in the Law on the MNB relating to the economic policy objectives, monetary policy, collection of statistics, official foreign reserves management, payment systems, issue of banknotes, appointment of auditors, financial reporting, exchange rate policy, international cooperation and the recognition of the ECB’s power to impose sanctions. The ECB draws the Hungarian authorities’ attention to the fact that, for compliance with Article 131 of the Treaty,

text: which requires that Hungarian legislation be compatible with the Treaty and the Statute of the ESCB , relevant Hungarian legislation had to be adjusted by the date of Hungarian accession to the Union. Hence, adjustments necessary to ensure full integration of the MNB into the Eurosystem should also be adopted as soon as possible, while they must enter into force on the date Hungary adopts the euro. 3.1.2 Central bank independence and the monetary financing prohibition The provisions under which an NCB becomes the legal successor to any liabilities of a specific supervisory authority may raise issues in regard to financial independence and compliance with the 13 prohibition of monetary financing laid down in Article 123(1) of the Treaty , read in conjunction with

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

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

text: and

text: b (1) of the Treaty . The principle of central bank independence requires Member States to ensure that NCBs have sufficient financial resources to perform ESCB or Eurosystem-related tasks as well as their own national tasks . The tasks transferred to the MNB should not affect its ability to carry out its ESCB-related tasks from an operational and financial point of view. In this respect, the new MNB functions should be performed in a manner that is fully compatible with the MNB’s institutional and financial independence and consequently should not impede the proper performance of its ESCB-related tasks. 3.1.3 Devolution of the HFSA’s assets to the MNB The draft law provides for the transfer of assets managed by the HFSA to the MNB on 1 October 2013 . The ECB notes that these assets include all property, such as shares in business undertakings and account balances, but it does not include real property of the HFSA which is owned by the Hungarian State, for which the MNB will only acquire property management rights. The balance of the HFSA’s accounts will be transferred to the MNB for use at the MNB’s sole discretion. 3.1.4 General succession of the HFSA’s and Financial Conciliation Board’s obligations and pending

text: legal proceedings

text: The amendment to the draft law provides that the MNB will become a general legal successor of all HFSA obligations, including, inter alia, its contractual relationships, pending procurement procedures, out-of-court redress procedures, tax-related administrative procedures as well as any other type of legal procedure. The amendment to the draft law provides further details that all rights and liabilities of the HFSA resulting from pending administrative legal procedures will devolve to

text: the MNB . As a consequence, any payment obligation from a legal relationship or a requirement to pay compensation in regard to any judgment handed down by Hungarian courts granting compensation to an individual or entity challenging the HFSA’s prior decisions will be borne by the MNB, without subsequent recourse to the Hungarian State for reimbursement. This raises issues of financial independence and compliance with the prohibition on monetary financing laid down in Article 123 of the Treaty . In order for the MNB to be able to perform its new supervisory tasks without adversely affecting its performance of other existing tasks, sufficient resources should be made available to it, and the HFSA liabilities, including those related to any HFSA’s supervisory activities undertaken prior to the effective date of the transfer of responsibilities to the MNB should not be transferred to the MNB. In addition, the MNB should not have to bear any financial costs or liabilities related to any HFSA activities undertaken prior to the effective date of transfer of responsibilities to the MNB . The ECB would expect the assignment of the HFSA’s tasks and powers to the MNB to be accompanied by measures that fully insulate the MNB from all financial obligations resulting from any HSFA activities and contractual relationships in the period prior to the transfer of tasks. This should include, for example, the cost of legal representation in any pending or future legal proceedings in relation to the HFSA, as well as all financial obligations arising out of other legal relationships, including employment relations between any new MNB staff member and the HFSA . It should also include any costs related to the operations of the HFSA’s Financial Conciliation Board . In order to comply with the monetary financing prohibition, the MNB must be insulated from all financial obligations resulting from the HFSA’s prior activities or legal relationships. Failure to amend the draft law along these lines would make the proposed arrangements in the draft law and the amendment to the draft law incompatible with Articles 123 and 130 of the Treaty. 3.1.5 Financial contributions of supervised entities The amount of supervisory fees is defined in the respective law applicable to the supervised entities. The procedural rules and methodology for payment of financial contributions to the HFSA’s supervisory tasks are currently defined in decrees adopted by the President of the HFSA. Up until now, financial supervision in Hungary has been fully funded by market participants and this financing system is to be maintained after the reform, insofar as the draft law provides for financing the supervisory tasks transferred to the MNB by contributions from supervised entities

text: and funds transferred from the HFSA . The ECB understands that the concrete terms applicable for financing the HFSA’s supervisory tasks that are defined in decrees adopted by the HFSA’s President will continue to apply in order to finance the conduct of these tasks carried out by the MNB after 1 October 2013. In order to ensure the MNB’s financial independence, the performance of its new supervisory functions should be financed by contributions received from supervised entities. This should cover all the costs involved with the transfer and fulfilment of the MNB’s new tasks. For this reason, in the future the MNB should be involved in determining the amount of financial contribution payable by supervised entities, and furthermore, the methods for calculating such contributions should be defined independently by the MNB, taking into account its actual costs. Moreover, the MNB’s operational costs for its new supervisory tasks should be separately identified in its accounting books, and monitored by the MNB’s internal and external auditors. 3.1.6 The MNB’s right to hire and retain qualified staff As pointed out in previous ECB opinions , when allocating specific non-ESCB related tasks to an NCB, e.g. tasks related to financial supervision or consumer protection, an adequate amount of human and financial resources must also be allocated for these tasks, which should be carried out in a manner which will not affect the NCB’s operational capacity to perform its ESCB-related tasks . The draft law expressly provides that, on the effective date, the HFSA will be dissolved, all employment relationships established by the HFSA will cease to exist , i.e. no employees of the HFSA will be automatically transferred to be employed by the MNB. The amendment to the draft law however provides that all employees of the HFSA will become employees of the MNB on 1 October 2013. This provision breaches the MNB’s right to autonomy in staff matters, as it does not enable the central bank to make an exclusive and independent decision on whether to employ any former HFSA staff members . At the same time, in order to provide for the smooth transfer of responsibilities and tasks from the HFSA to the MNB, the MNB should be allowed sufficient time from the entry into force of the draft law to recruit specialised staff of its own choice, where appropriate, for the proper implementation of its new responsibilities. In line with paragraph 3.1.4 above, it should be ensured that, as regards staff recruited according to the principle of autonomy in staff matters, the MNB will not bear any financial obligations arising from employment relations that any new staff recruited by the MNB may have had with the HFSA in the past.

text: 3.1.7 The FSC The draft law establishes a new body within the MNB that will take decisions as regards macroprudential policy, the supervision of the financial market as well as decisions related to the MNB’s new role as a resolution authority, within the strategic framework set by the Monetary Council. The Monetary Council will be entrusted with new tasks in this respect, i.e. to determine the strategic framework in relation to the MNB’s macro- and micro-prudential tasks and in relation to the tasks as resolution authority. The Executive Board will implement the decisions of the FSC through the Governor and in particular through the Governor’s decrees. The draft law provides for the following composition of the Financial Stability Council: the MNB’s Governor as chair, the Deputy Governors supervising the fundamental tasks of the MNB related to macro-prudential policy and financial supervision, and managers appointed by the Governor. A representative of the Minister for National Economy may participate in meetings and additional experts may also attend the meetings of the FSC upon invitation from the MNB Governor. The ECB welcomes that the right of external participants to engage in discussions does not confer voting rights to these participants. In addition, this right should not be used to constrain the independence of the FSC members. 3.1.8 Legislation adopted by the HFSA President The Law on the HFSA currently gives the HFSA President the power to adopt secondary legislation to regulate matters falling within his competence. For reasons of legal certainty, this legislation should continue to apply after the transfer of supervisory tasks from the HFSA to the MNB. The ECB understands that there is no provision in the draft law that would prevent the MNB from repealing the decrees adopted by theHFSA President and replacing them with decrees adopted independently by the MNB Governor in regard to the MNB’s new tasks. The ECB expects to be consulted on any draft national legislation prepared by the MNB Governor that falls within the ECB’s competence, in accordance with the provisions of

text: Council Decision 98/415/EC

text: . 3.1.9 The MNB’s cooperation with other bodies The draft law provides that, as regards its supervisory tasks described under

text: Article 4(9)

text: , the MNB will cooperate with international organisations to the extent detailed in bilateral agreements. The MNB will provide international organisations with information, if Hungarian legislation allows for the transfer of information to such organisations. Contrary to a recent amendment to the Law on the HFSA, Article 139 of the draft law does not list the ECB and the ESCB amongst the organisations with which the MNB cooperates. Furthermore, the draft law should also be amended to reflect the legal obligation to cooperate with the ESCB and the ECB in the field of

text: statistics. Such cooperation is provided for in the first indent of Article 46.2 of the Statute of the ESCB. Although Regulations adopted under Article 34.1 of the Statute of the ESCB in the field of statistics do not confer any rights or impose any obligations on Member States that have not adopted the euro, Article 5 of the Statute of the ESCB (Collection of statistical information) applies to all Member States, whether or not they have adopted the euro. Furthermore,

text: Article 4 of Council Regulation (EC) No 2533/98 of 23 November 1998

text: concerning the collection of statistical information by the European Central Bank , that implements Article 5.4 of the Statute of the ESCB, 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’. Accordingly, Member States whose currency is not the euro are under an obligation to design and implement, at a national level, all measures they consider appropriate to collect the 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. 3.1.10 Obligation to inform the Government about the adoption of decrees Performance by the MNB of macro-prudential tasks should not affect: (a) the MNB’s functional, institutional and financial independence; or (b) the MNB’s performance of its ESCB tasks under the Treaty and the Statute of the ESCB. Article 169(4) of the draft law requires the MNB’s Governor to inform the Government with respect to a decree that restricts certain market activities, prior to adopting that decree. The MNB should also give reasons for the adoption. The draft law does not provide a reason why MNB’s Governor has to inform the Government in advance, and this raises concerns as to possible undue governmental influence on the adoption of such decrees. This would constitute a breach of the MNB’s independence in performing its macro-prudential tasks, which should be ensured in line with Article 1(2) of the draft law. 3.1.11 The proposed timeline for the MNB to assume its new tasks Pursuant to the draft law, the MNB is to be fully functional as regards its new supervisory tasks on 1 October 2013 . Taking into consideration that the planned adoption of the draft law will take place in late September 2013, the draft law does not provide for a sufficient period of time between the adoption of the draft law and the actual dissolution of the HFSA, which is also the commencement date for the MNB to perform its new tasks . As acknowledged by the consulting authority and the MNB, taking over supervision is a significantly complex task, requiring serious organisational restructuring on behalf of the MNB, particularly with regard to the establishment of applicable internal regulations, the provision of the

text: human and financial resources necessary to carry out the new tasks, and the taking up of the practical activities in supervising the financial markets. However, the time frame available between the adoption of the draft law and its entry into force may not make it feasible for the MNB to prepare for its new tasks and ensure the continuity of efficient supervision of the entire financial market from 1 October 2013. Continuity of supervision is necessary to ensure financial stability and it is essential that there is no lack of supervision for any time period due to the reorganisation of the supervisory structure. The ECB therefore suggests that the consulting authority sets a date after 1 October 2013 for the MNB to assume its new tasks.

text: 3.2 Performance of specific functions by MNB

text: 3.2.1 The macro-prudential aspects of the MNB’s new tasks The ECB welcomes that the draft law entrusts the MNB with fundamental tasks related to the exploration and management of systemic risks. The ECB supports the design of effective macroprudential policy frameworks within Member States, in line with the guiding principles set out in Recommendation

text: . Moreover, the ECB considers that the ECB and NCBs should play a leading role in macro-prudential oversight, given their expertise and existing responsibilities in the area of financial stability . Concerning the envisaged measures to reduce the probability of bankruptcy of systemically important institutions, Directive

text: on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms includes separate provisions on capital charges for ‘global and other systemically important institutions’ as well as for a ‘systemic risk buffer’ . In order to improve clarity and ensure legal certainty, the ECB proposes that the provisions set out in Article 34 of the draft law are brought fully in line with the relevant provisions of Directive

text: , clearly separating these two types of instruments. Furthermore, the Hungarian legislator is recommended to consider adding additional instruments in the draft law that are at the disposal of national macro-prudential authorities pursuant to Directive

text: The above observations are without prejudice to the conclusions of the follow-up assessment of Recommendation

text: , which the ESRB will prepare in accordance with

text: Article 17 of 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 .

text: In this context, the ECB first notes that Article 4(7) of the draft law provides not only for new tasks, but also for a new objective for the MNB to improve the resilience of the financial intermediation system and to ensure its sustainable contribution to economic growth through its macro-prudential policy. In line with Article 127(1) of the Treaty and Article 2 of the Statute of the ESCB, this objective should not prejudice the primary objective of price stability defined in Article 3(1) of the draft law. The draft law should be adapted to reflect this. Moreover, in line with Article 127(1) of the Treaty and Article 2 of the Statute of the ESCB, the MNB’s secondary objectives should not prejudice the ESCB’s primary and secondary objectives. This is required for full legal integration of the MNB into the Eurosystem, and therefore a legislative provision to this effect will need to enter into force on the date on which Hungary adopts the euro. 3.2.2 The MNB’s resolution authority function The draft law provides that the MNB will be designated as the resolution authority. In this respect the ECB understands that the detailed rules are to be defined in separate legislation. Appropriate resources will have to be made available to ensure the MNB’s performance of this new task. As legislation detailing this new function of the MNB has not yet been prepared, the ECB is not in a position to assess the MNB’s ability to take on the role of a resolution authority. To ensure legal certainty, national legislation providing for this new function of the MNB should be adopted in a timely manner. Furthermore, any performance by the MNB of tasks as resolution authority should not affect: (a) the MNB’s functional and financial independence; or (b) the MNB’s performance of its ESCBrelated tasks under the Treaty and the Statute of the ESCB. Moreover, the ECB notes that draft national legislation pertaining to NCB tasks falls within the ECB’s competence and is therefore subject to the consultation requirement in accordance with the provisions of

text: Council Decision 98/145/EC

text: . 3.2.3 The MNB’s new consumer protection function As previously noted by the ECB , consumer protection is not included in the tasks of NCBs specified in the Treaty and the Statute of the ESCB. However, as pointed out on previous occasions , the ECB does not consider that this task would interfere with the ESCB’s objectives and tasks. Pursuant to the last sentence of Article 14.4 of the Statute of the ESCB, this task would have to be the MNB’s responsibility, for which it would be liable. It would not be regarded as being part of the ESCB’s functions. The ECB understands that this task has been allocated to the MNB due to its overall supervisory responsibility for the entire financial market. The task may

text: supplement MNB’s supervisory powers and thus contribute to the soundness of the financial market and preserve confidence in the market. The allocation of new powers to the MNB aims to ensure the transparency of financial services transactions and products offered by entities subject to its supervision. This allocation could improve the clarity and efficiency of the national regulatory framework while ensuring adequate consumer protection and a level playing field. Prudential supervision and investor/consumer protection are intended to safeguard the soundness of the financial market and preserve confidence in the marketplace. However, as previously stated by the ECB in relation to other NCBs, it is important to ensure that prudential supervision and investor/consumer protection are adequately and equally emphasised and that appropriate resources are available to ensure their performance . When granting these additional powers to the MNB, care must be taken to ensure that the MNB’s operational capacity to carry out ESCB-related tasks will not be affected from an operational as well as financial point of view, due to any additional tasks introduced by the draft law. 3.2.4 The MNB’s responsibilities in the area of EMIR, SEPA and the supervision of negotiable vouchers The ECB has recently been consulted by the Hungarian authorities as regards the amendment of the current Law on the MNB that needed to take place in order to implement

text: Regulation (EU) No 648/2012

text: of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (EMIR) , as well as with

text: Regulation (EU) No 260/2012

text: of the European Parliament and of the Council of 14 March 2012 establishing technical and business requirements for credit transfers and direct debits in euro (SEPA) . This latest amendment of the Law on the MNB also introduced provisions as regards the supervision of the activities and enterprises that issue and redeem negotiable vouchers not constituting legal tender. Consequently, the Hungarian legislators should consider including in the draft law also provisions on the MNB’s role as the competent authority for the above EMIR and SEPA provisions, including for registering and supervising entities issuing such negotiable vouchers. 3.2.5 Provisions of the draft law on banknotes and coins

text: Article 4(2)

text: and

text: Articles 23

text: to 26 of the draft law establishing the MNB’s exclusive right to issue banknotes and coins do not recognise the Council’s and the ECB’s powers in this field. In addition, the draft law should indicate whether the references to ‘banknotes and coins’, ‘Hungarian and foreign means of payment’ and ‘legal tender in circulation’ also cover euro banknotes and coins. In general, these references should mainly encompass Hungarian currency with legal tender status. If foreign means of payment are also meant to cover euro banknotes and

text: coins, the ECB suggests specifying in the draft law that the relevant provisions of Union law apply and no national legislation can substitute for them. For legal certainty and consistency reasons, all of the above references should be defined. Article 23(9) of the draft law would benefit from an amendment clarifying that applicants seeking exchange of banknotes denominated in Hungarian currency, which are damaged due to the activation of security devices must prove that they are the owners or otherwise authorised applicants acting in good faith, who have been victims of attempted or actual criminal activity leading to damage to these banknotes. This amendment would avoid the risk of allowing the actual criminal to request the MNB to exchange such damaged banknotes by simply presenting an official document certifying the cause of the damage, as required under Article 23(9) of the draft law. To ensure a level playing field for means of payment denominated in all currencies, the phrase ‘including means of payment denominated in euro’ should be inserted into

text: Article 24(4)

text: and (5) of the draft law after the words ‘foreign means of payment’. This insertion is necessary as it is understood that the reference to ‘foreign means of payment’ does not always include euro banknotes and coins in its scope . Finally, the ECB recommends modifying Article 26(2) of the draft law to clarify that reproductions of euro banknotes and coins, including medals and tokens similar to euro coins, must comply with the relevant requirements of Union law, instead of referring to alterative reproduction requirements laid down by the MNB’s Governor.

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

text: Done at Frankfurt am Main, 26 July 2013.

text: [signed]

text: The President of the ECB

text: Mario DRAGHI


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

text: The special liquidation framework contains the relevant provisions of Law 3601/2007 on the taking up and pursuit of the business of credit institutions, capital adequacy of credit institutions and investment firms and other provisions, the relevant provisions of the Law on bankruptcy (Law 3588/2007) and the relevant acts of the Bank of Greece’s Credit and Insurance Committee No 21/4.11.2011 and No 77/30.5.2013.

text: FEK A 178/1.8.2007.

text: Annex V to Law No 4046/2012 on the approval of the draft financing agreements between the European Financial Stability Fund, the Hellenic Republic and the Bank of Greece and of the draft Memorandum of Understanding between the Hellenic Republic, the European Commission and the Bank of Greece and other provisions of utmost importance for reducing the public debt and saving the national economy (FEK A 28/14.12.2012).

text: See, in particular, Opinion

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

text: Law 3588/2007, FEK A 153/10.7.2007.

text: Acts of the Bank of Greece’s Credit and Insurance Committee No 21/4.11.2011 and No 77/30.5.2013.

text: See in particular Opinions

text: and

publisher: Europeiska centralbanken

sprak: en

title: Opinion of the European Central Bank of 6 August 2013 on the special liquidation of credit institutions (CON/2013/57)

serie: con

text: OPINION OF THE EUROPEAN CENTRAL BANK of 6 August 2013 on the special liquidation of credit institutions (

text: ) Introduction and legal basis

type: rubrik

text: On 3 July 2013 the European Central Bank (ECB) received a request from the Greek Ministry of Finance for an opinion on draft legislative provisions on the special liquidation of credit institutions (hereinafter the ‘draft provisions’). 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 of 29 June 1998

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft provisions relate to the Bank of Greece 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.

type: stycke

text: 1. Purpose of the draft provisions

text: 1.1 The draft provisions amend the legal framework governing the special liquidation of credit institutions , in line with the commitment to improve the management of assets in liquidation undertaken by the Greek government during the second review of the Second Economic Adjustment Programme for Greece. To this end, the draft provisions introduce amendments to Law 3601/2007 on the taking up and pursuit of the business of credit institutions, capital adequacy of credit institutions and investment firms and other provisions and authorise the Bank of Greece to adopt implementing measures, as necessary. 1.2 The draft provisions specify that the special liquidator appointed by the Bank of Greece may be a natural or a legal person and may liquidate several credit institutions, if this proves necessary to better serve the purposes of the special liquidation. 1.3 In addition, the draft provisions create an advisory Special Liquidation Committee (SLC) with five members, who are appointed by the Bank of Greece for a three-year term of office. The special liquidator is required to request the SLC’s consent to carry out specific liquidation tasks, namely

text: settlement of claims and debt restructuring as well as sales of immovable property and debt instruments, where the amount of the claim or the value of the asset concerned exceeds certain thresholds. 1.4 Finally, the draft provisions: (a) specify the Bank of Greece’s scope of supervision over the special liquidator; (b) limit the special liquidator’s and the SLC’s liability for debts incurred by the credit institution under liquidation with regard to the time period prior to their appointment (c) specify the means of notification for certain cases in special liquidation proceedings.

text: 2. Appropriate time to consult the ECB

text: 2.1 According to

text: Article 4 of Decision 98/415/EC

text: , the ECB must be consulted at an appropriate stage in the legislative process, which gives the ECB sufficient time to adopt its opinion and also enables the consulting authority to take the ECB’s opinion into consideration before the draft provisions are adopted. In this case, the ECB was consulted at a point in the legislative process that did not give the consulting authority enough time to introduce substantive amendments to the draft provisions. Furthermore, the Greek Parliament adopted the draft provisions shortly after the submission of the request for the ECB’s opinion. 2.2 The ECB understands that the framework for the special liquidation of credit institutions in Greece is evolving, particularly due to the framework’s relevance for restructuring the Greek banking sector. Therefore, the ECB considers that this opinion, despite being published following adoption of the draft provisions, can serve as guidance for future amendments to this framework. However, the ECB stresses that even cases of particular urgency do not relieve national authorities of their duty to consult the ECB at an appropriate stage in the legislative process and to allow sufficient time to take into account its views in accordance with Decision

text: 3. General observations

text: 3.1 The ECB welcomes the draft provisions to the extent that they seek to amend the current framework on the special liquidation of credit institutions in line with the financial sector objectives outlined by the Greek authorities in the Memorandum of Economic and Financial Policies . In relation to the development of the abovementioned framework, the ECB refers to its previous relevant opinions . 3.2 The ECB understands that the main purpose of the draft provisions is to ensure timely and costeffective disposal of and/or restructuring of assets in liquidation and to also take advantage of synergies by centralising the administration of assets. Given the high financial stakes involved in the liquidation of credit institutions, the ECB notes that establishing sound, efficient and orderly liquidation procedures based on international practices is essential. Therefore, the ECB considers

text: that further developing the Greek legal and supervisory framework governing the special liquidation of credit institutions is an important step towards increasing the protection of the value of assets in liquidation and, ultimately, of creditors’ interests. Furthermore, when significant public sector claims are involved in the special liquidation procedure, a well-designed framework is necessary in order to minimise taxpayer exposure to costs. 3.3 The ECB notes that proper and swift implementation of the envisaged framework by the special liquidator, the SLC and other competent authorities is of crucial importance for achieving the abovementioned objectives. Proper implementation of the envisaged framework involves, inter alia, ensuring compliance with the principles of legal certainty, transparency and predictability regarding the treatment of creditors, as well as with the principle of equal treatment of creditors.

text: 4. Interaction of the draft provisions with other provisions of the special liquidation framework

text: The ECB notes that the interaction between the draft provisions, the Law on bankruptcy and secondary legislation governing the special liquidation of credit institutions should be clear and ensure that the framework as a whole is consistent, comprehensive and, thus, enforceable. The ECB recommends that the interaction between these provisions be clarified, e.g. in an explanatory note to the draft provisions.

text: 5. Development of the framework to support and oversee the special liquidator

text: 5.1 The ECB welcomes that the draft provisions develop the framework to support and oversee the special liquidator appointed by the Bank of Greece. There is merit in appointing the same special liquidator for more than one credit institution under liquidation. At the same time, the ECB stresses that the draft provisions should include safeguards to avoid conflicts of interests, to ensure that control over the special liquidator is neither arbitrary nor excessive and to specify that this appointment for multiple credit institutions should be based on specific objective criteria, such as the size of the institutions concerned. Furthermore, the ECB understands that, under the draft provisions, allowing the special liquidator to carry out liquidation of several entities does not affect the insolvency estate of each entity and that each respective procedure remains separate. 5.2 It would be beneficial to provide more detailed guidance to the special liquidator and the SLC for the performance of their tasks in the draft provisions. The special liquidator and the SLC should be supported by specialised and impartial advisers when assessing the value of assets under liquidation, e.g. by providing non-binding evaluations from independent evaluators. As regards the thresholds that trigger the SLC’s involvement, the ECB stresses the need for their adequate justification, taking into consideration the inherent aim of maximising the proceeds of the liquidation.

text: 5.3 It would be useful to further specify the scope of the control exercised over the special liquidator. In line with its previous opinions, the ECB welcomes the Bank of Greece playing the central role in the special liquidation procedure, as a means to reinforce the financial stability framework . At the same time, it is equally crucial to ensure clarity and legal certainty as regards the procedure for judicial review of the decisions made by the special liquidator and the SLC.

text: 6. The SLC and Bank of Greece’s role

text: 6.1 The ECB welcomes the creation of the SLC as a means to reinforce the framework to oversee the special liquidation of credit institutions and to enhance the smooth and efficient conduct of the special liquidation procedure. At the same time, in order to enable the SLC to fulfil its role in a satisfactory manner, the draft provisions should ensure that there is no ambiguity in the SLC’s status, role and powers under Greek law. 6.2 The ECB recommends that the draft provisions clarify whether the SLC is considered an internal body of the Bank of Greece or whether it has the same status as the special liquidator. This is also relevant with respect to who should be held accountable for SLC decisions. The Greek legislator should set up an appropriate accountability framework.

text: 7. Relationship between the Bank of Greece and the SLC

text: The draft provisions provide that the Bank of Greece is to provide secretarial support to the SLC, decide on the qualifications and the selection criteria for SLC members, and nominate and remunerate SLC members. The ECB understands that these rights and obligations relate to the Bank of Greece’s mandate in the special liquidation process for credit institutions, which is already controlled by the Bank of Greece, i.e. opening of the liquidation process, appointment of the special liquidator, and control of the liquidator’s activities. In this regard, the draft provisions do not breach the monetary financing prohibition which prevents central bank financing of the public sector. At the same time, the draft provisions should clarify that the SLC’s tasks are related to the Bank of Greece’s competences in the process of special liquidation of credit institutions.

text: 8. Independence

text: The ECB has consistently noted that the principle of central bank independence requires Member States to ensure that NCBs have sufficient financial resources to perform their Eurosystem-related tasks as well as their own national tasks. In this respect, any remuneration paid to the SLC members by the Bank of Greece should be determined in a manner that is fully compatible with the Bank of Greece’s institutional and financial independence.

text: Done at Frankfurt am Main, 6 August 2013. [signed]

text: The President of the ECB

text: Mario DRAGHI

type: vagledning

utgivare: ecb


text: OJ L 189, 3.7.1998, p. 42. 2 See the third bullet point of the second paragraph of the general part of the explanatory memorandum. 3 Article I (19) of the draft law. 4 Article IX (2) and (6), Article X (2) and (5), Article XIV (1) and Article XXVIII (1) of the draft law. 5 Article IX (1),

text: Article 10 (1)

text: , (2) and (4), Article XIV (3), Article XXVIII (4), Article XXXIV (1) and (2), Article XL (1) and (7) of the draft law. 6 Article I (22) of the draft law. 7 Article I (35) of the draft law. 8 Article I (19) of the draft law. 9 Article XXII (1), Article IX (3) and (4), Article XL (2) and (4) of the draft law.

title: Opinion of the European Central Bank of 7 August 2013 on the financial statements register (CON/2013/58)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 7 August 2013 on the financial statements register (

text: ) Introduction and legal basis

text: On 4 July 2013, the European Central Bank (ECB) received a request from the Slovak Ministry of Finance for an opinion on a draft law amending Law No 431/2002 on accounting and amending some laws (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third indent of

text: Article 2(1) of Council Decision 98/415/EC of 29 June 1998

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft law relates to Národná banka Slovenska (NBS). In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft law

text: The draft law, inter alia, continues the legislative process of finalising and improving the financial statements register . The draft law provides that the financial statements register will also include annual reports . As a consequence, entities supervised by NBS will register their annual reports centrally, instead 4 5 of submitting them to NBS . Some of these entities will also register their auditors’ reports centrally . The non-public section of the register will include documents of supervised branches of foreign entities ; NBS will have access to them . The supervised entities’ interim financial statements will no longer be 8 9 registered , but submitted to NBS .

text: 2. Interim financial reporting

text: The ECB considers that the consulting authority should ensure that investors have direct access to information regarding interim financial statements, both individual and consolidated, prepared by listed entities. The ECB believes that, as regards listed entities, periodic financial reporting is an important data source that assists investors in making more informed investment decisions and supports efficient capital allocation.

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

text: Done at Frankfurt am Main, 7 August 2013.

text: [signed]

text: The Vice-President of the ECB

text: Vítor CONSTÂNCIO


text: OJ L 201, 27.7.2012, p. 1. The full title of the draft law is ‘Law amending the law of 22 February 1998 establishing the organic statute of the National Bank of Belgium, the law of 2 August 2002 on the supervision of the financial sector and on financial services, the law of 22 March 1993 on the status and control of credit institutions, the law of 9 July 1975 on the control of insurance undertakings, the law of 21 December 2009 on the status of payment undertakings and electronic money undertakings, on the access to the activity of payment service providers, to the activity of issuance of electronic money and to the access to payment systems, the law of 28 April 1999 implementing the Directive

text: of 19 May 1998 on the finality of settlement in payment and securities settlement systems and the law of 15 December 2004 on financial collateral and providing for various tax provisions for arrangements establishing collateral arrangements and loans with respect to financial instruments’. 2 OJ L 189, 3.7.1998, p. 42.

text: Article 2 of the

text: Regulation (EU) No. 648/2012

text: defines ‘CCP’ as ‘a legal person that interposes itself between the counterparties to the contracts traded on one or more financial markets, becoming the buyer to every seller and the seller to every buyer’. 4 Section 13 of

text: Article 36

text: /1 of the Organic Statute of the National Bank of Belgium defines ‘clearing institution’ as ‘any institution that undertakes conversion into net debt by means of novation or of the clearing of mutual claims arising from transactions on financial instruments or forward exchange transactions’. 5 As amended in paragraph 2 of

text: Article 36

text: /25 of the Organic Statute of the National Bank of Belgium. 6 All ECB opinions are published on the ECB’s website at www.ecb.europa.eu.

text: Article 8 of the Organic Statute of the NBB. 8 Article 12 of the Organic Statute of the NBB.

title: Opinion of the European Central Bank of 12 August 2013 on OTC derivatives, central counterparties and trade repositories (CON/2013/59)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 12 August 2013 on OTC derivatives, central counterparties and trade repositories (

text: ) Introduction and legal basis

text: On 5 July 2013, the European Central Bank (ECB) received a request from the Nationale Bank van België/Banque Nationale de Belgique (NBB), acting on behalf of the Belgian Ministry of Finance, for an opinion on Articles 2 to 13 of a draft law implementing

text: Regulation (EU) No 648/2012

text: of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (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, fifth and sixth indents of

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , since

text: Articles 2

text: to 13 of the draft law relate to the NBB, payment and settlement systems and the 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 purpose of

text: Articles 2

text: to 13 of the draft law is to allocate responsibilities to the NBB and the Financial Services and Markets Authority (FSMA) with regard to the authorisation and supervision of central counterparties (CCPs) established in Belgium pursuant to

text: Article 22 of Regulation (EU) No 648/2012

text: 1.2 To this end, the draft law introduces the definition of ‘CCP’ in the Organic Statute of the National Bank of Belgium as a replacement for the existing concept of ‘clearing institution’ . With this change, CCPs become subject to the NBB’s overall prudential supervision under

text: Article 36

text: /2 of the Organic Statute of the National Bank of Belgium. In parallel, the draft law designates the NBB as the competent authority for the authorisation and supervision of CCPs within the context of

text: Regulation (EU) No 648/2012

text: . This designation is without prejudice to the powers conferred on the FSMA by Article 22 of the Law of 2 August 2002 on the supervision of the financial sector and on financial services, as amended by the draft law. 1.3 As the responsible authority for carrying out the duties for the authorisation and supervision of CCPs established in Belgium pursuant to

text: Regulation (EU) No 648/2012

text: , the NBB also becomes responsible, in accordance with

text: Article 22(2)

text: and (3) of the above-mentioned Regulation as implemented in the draft law, for: (a) coordinating cooperation and the exchange of information with the European Commission, the European Securities and Market Authority, the competent authorities of other Member States, the European Banking Authority, and the relevant members of the European System of Central Banks; and (b) taking administrative measures and imposing administrative fines and penalties where CCPs breach their obligation under

text: Regulation (EU) No 648/2012

text: . On the other hand, FSMA’s responsibility is to: (a) issue recommendations to NBB as regards granting authorisation to institutions established in Belgium that plan to provide CCP services; (b) deal with the conflicts of interest involving CCPs; (c) be consulted by NBB when assessing the professional integrity of the directors and senior management.

text: 2. General observations

text: 2.1 In accordance with Decision

text: , this opinion is limited to those provisions of the draft law that relate to the NBB and that go beyond harmonisation of national law with

text: Regulation (EU) No 648/2012

text: . 2.2 The ECB notes that the allocation of responsibilities between the NBB and FSMA with respect to CCPs reflects the ‘twin-peaks’ type model of financial supervisory structures. The ECB commented on the allocation of responsibilities between the NBB and FSMA (including with respect to clearing institutions) in Opinion

text: . 2.3 The ECB welcomes the draft law, as the NBB’s new tasks complement the NBB’s existing objective to promote the smooth operation of payment and securities settlement systems and ensure

text: their efficiency and soundness , in accordance with Article 127(2) of the Treaty and the fourth indent of

text: Article 3.1

text: and Article 22 of the Statute of the European Systems of Central Banks and the European Central Bank (hereinafter ‘Statute of the ESCB’), as well as the NBB’s tasks of contributing to the stability of the financial system , in accordance with Article 127(5) of the Treaty, as mirrored in Article 3.3 of the Statute of the ESCB.

text: Done at Frankfurt am Main, 12 August 2013.

text: [signed]

text: The Vice-President of the ECB

text: Vítor CONSTÂNCIO


text: The draft law amends the Law on financial business, the Law on securities trading, the Criminal Act, the Law on administration of justice, the Law on alternative investment fund managers and other laws and is expected to be submitted to Parliament in the autumn session of 2013. 2 OJ L 189, 3.7.1998, p. 42. 3 This is to be done by establishing an improved framework for developing the corporate bond market. 4 See Section 2(7) of the draft law and part 2.8 of the explanatory memorandum of the draft law.

text: See Section 1(55) of the draft law and part 2.4 of the explanatory memorandum. 6 See Sections 2(10), 6(7), 7(5), 10(5), 11(4), 12(1), 13(1), 14(5), 15(3), 16(3), 17(2) and 18(3) of the draft law as well as part 2.14 of the explanatory memorandum. 7 See Section 2(11) and (12) of the draft law, which amend Section 88 of the Law on securities trading, and part 2.11 of the explanatory memorandum. 8 See part 2.11 of the explanatory memorandum.

text: See paragraph 3.2 of Opinion

text: . All ECB opinions are published on the ECB's website at www.ecb.europa.eu. 10 See paragraph 3.10 of Opinion

title: Opinion of the European Central Bank of 13 August 2013 on the provision of collateral to Danmarks Nationalbank through automatic collateralisation (CON/2013/60)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 13 August 2013 on the provision of collateral to Danmarks Nationalbank through automatic collateralisation (

text: ) Introduction and legal basis

text: On 12 July 2013, the European Central Bank (ECB) received a request from the Danish Financial Supervisory Authority (Finanstilsynet) (FSA) for an opinion on a draft law amending the financial legislation (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, fifth and sixth indents of

text: Article 2(1) of Council Decision 98/415/EC of 29 June 1998

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft law relates to Danmarks Nationalbank, payment and settlement systems 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 law

text: 1.1 The draft law introduces a number of amendments to the Danish financial legislation, of which the main purpose is to improve private enterprises’ access to funding . The following issues covered by the draft law fall within the ECB’s competence. 1.2 The draft law amends the rules on automatic collateralisation , which is a special procedure for the provision of collateral to Danmarks Nationalbank. Established pursuant to Section 55 of the Law on securities trading, automatic collateralisation is an intraday credit operation in central bank money which the buyer may choose when settling payments or securities transactions. Intraday credit provision is collateralised with securities already held by the debtor (collateral-on-stock), or through the eligible securities that are being purchased (collateral-on-flow).

text: 1.3 Automatic collateralisation cannot currently be used for loans outside the scope of Section 55 of the Law on securities trading, i.e. monetary-policy loans, intraday-credit granted by Danmarks Nationalbank not used for settlement or loans for cash depots. The draft law extends the application of the rules on automatic collateralisation to all intraday-credit granted by Danmarks Nationalbank to participants with a current account at Danmarks Nationalbank. The amendment is motivated by the need to ensure that retail payments and large payments made by consumers and retailers can be settled considerably faster than at present. It is also envisaged that this more flexible settlement model will be needed to facilitate future use of TARGET2-Securities for settlement of financial transactions. 1.4 The draft law also introduces further measures to strengthen the financial sector and ensure efficient enforcement by the FSA: (a) In order to avoid conflicts of interest and to ensure the independence of the board of directors of a foundation or an association owning a mortgage-credit limited company, the procedure for appointing the members for the board of directors of these foundations or associations is made more transparent . (b) The FSA may publish the orders it has given a financial entity to correct misleading information that the entity has published about itself . This will be done by extending the scope of this rule to financial entities not already covered in the Law on financial business. (c) The procedures used for appeals to the FSA with regard to decisions taken by operators of regulated markets, multilateral trading facilities, clearing depositories and central securities depositories in accordance with such entities' own rules are amended . Consequently, it will no longer be possible to appeal to the FSA against decisions made in accordance with these entities' own rules, which are of a private law character. Instead, their rules will be interpreted in accordance with standard private law rules of interpretation and disputes arising from those decisions will be decided by the courts. The FSA’s competence will continue to cover decisions made by these entities taken in accordance with the law or rules issued pursuant to the law .

text: 2. General observations

text: 2.1 The ECB welcomes the proposed amendments to the Danish financial legislation, which provide for the modernisation of the Danish payment and settlement infrastructures, better use of available collateral and enhanced transparency of the financial sector.

text: 2.2 In line with Opinion

text: , the ECB notes the increased openness regarding the work of the FSA, which aims to bring about greater transparency, as well as efficient enforcement in the financial area. When considering measures aimed to achieve increased openness and informationsharing, it is however necessary to ensure that confidential information is adequately protected .

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

text: Done at Frankfurt am Main, 13 August 2013.

text: [signed]

text: The Vice-President of the ECB

text: Vítor CONSTÂNCIO


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

text: See Opinion

text: , paragraph 6. All ECB opinions are published on the ECB's website at www.ecb.europa.eu. 3

text: Article 6

text: bis of Law 13/1994 reads as follows: ‘Without prejudice to its autonomy in matters of staff policy, the Banco de España shall apply to its staff costs-related measures equivalent to those generally established, principally by the State budget laws for each year, and may not, under any circumstances, agree remuneration increases that involve an increase in the overall wage the limits set for such workers.’ (Unofficial translation) 4 See Opinion

text: , paragraph 7.

text: See, for example, the ECB’s Convergence Report 2012, p. 24.

title: Opinion of the European Central Bank of 16 August 2013 on the autonomy of the Banco de España in staff matters and on termination of the office of the Governor (CON/2013/61)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 16 August 2013 on the autonomy of the Banco de España in staff matters and on termination of the office of the Governor (

text: ) Introduction and legal basis

text: On 25 July 2013, the European Central Bank (ECB) received a request from the Banco de España for an opinion on a partial draft Resolution of the Banco de España’s Governing Council (hereinafter the ‘draft resolution’) which will amend the Banco de España’s Internal Rules of 28 March 2000 (hereinafter the ‘Internal Rules’). The ECB’s competence to deliver an opinion is based on the last paragraph of Article 127(4) and the Article 282(5) of the Treaty on the Functioning of the European Union and the third indent of

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft resolution relates to the Banco de España. 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: The draft resolution updates the Internal Rules to incorporate several amendments made to Law 13/1994 on the autonomy of the Banco de España (hereinafter ‘Law 13/1994’). The most relevant amendments include: (a) the introduction of staff cost-cutting measures equivalent to those generally established for public sector employees, provided that the Banco de España’s ability to carry out its functions on an independent basis is not impaired, although the Banco de España may not, in any event, agree wage increases or decreases beyond the limits generally set for public sector employees; and (b) the deletion of the ground for dismissal of the Governor and/or Deputy Governor on the basis that either has reached the age of 70 years. The other grounds for dismissal remain unaffected.

text: 2. General observations

text: When Law 13/1994 was first amended, through Law 17/2012 on the State General Budget for 2013 (hereinafter ‘Law 17/2012’), the ECB was consulted and issued Opinion

text: . The draft

text: resolution implements the amendments of Law 13/1994 and takes into account some, but not all, of the ECB’s comments.

text: 3. Staffing policy of the Banco de España

text: The ECB recommended in its Opinion

text: that the Sixth Final Provision of the Law 17/2012 (which amended

text: Article 6

text: bis of Law 13/1994) should state that the Banco de España will not be obliged to take measures if these interfere with its ability to independently carry out its tasks. The ECB also stated that, based on the understanding that the Banco de España will not be obliged to take measures if these interfere with its ability to independently carry out its tasks,

text: Article 22

text: and the Sixth Final Provision of Law 17/2012 are compatible with the principle of central bank independence. However, the recommendation made in Opinion

text: was not taken into account in this respect as the above mentioned confirmation was neither made in the Sixth Final Provision of Law 17/2012, nor in

text: Article 6

text: bis of Law 13/1994 . The ECB notes that the draft resolution incorporates this recommendation in the second paragraph of Article 18 of the Internal Rules. However, the third paragraph of Article 18 of the Internal Rules, which mirrors the second sentence of

text: Article 6

text: bis of Law 13/1994, establishes an absolute limit for remuneration changes, but does not expressly safeguard the Banco de España’s ability to carry out its tasks independently. Thus, the concerns expressed by the ECB in Opinion

text: relating to

text: Article 6

text: bis of Law 13/1994 are also valid with respect to Article 18 of the Internal Rules. The ECB therefore recommends an express provision in the third paragraph of Article 18 of the Internal Rules that the Banco de España will not be obliged to take measures if these interfere with its ability to independently carry out its tasks.

text: 4. Termination of the office of the Governor and/or Deputy Governor

text: 4.1 The ECB welcomes the deletion of the age limit applicable to the term of office of the Governor and/or Deputy Governor from both Law 13/1994 and the draft resolution. 4.2 The draft resolution still includes the following wording in the context of the grounds for dismissal of the Governor and the Deputy Governor: ‘due to permanent incapacity to exercise his/her role, serious failure to comply with his/her obligations, professional disqualification or proceedings for a wilful offence’. The concerns expressed in Opinion

text: relating to Article 25(4) of Law 13/1994 are also valid with respect to Articles 42 and 50 of the Internal Rules, which mirror the Law. As consistently stated in the ECB’s convergence reports and opinions, the statutes of national central banks should either contain grounds for dismissal compatible with those laid down in

text: Article 14.2 of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB’), or omit any mention of grounds for dismissal, since

text: Article 14.2

text: is directly applicable . Accordingly, Articles 42.3 and 50.3 of the Internal Rules should be aligned with Article 14.2 of the Statute of the ESCB, or the grounds for dismissal should be deleted. This opinion will be published on the ECB’s website. Done at Frankfurt am Main, 16 August 2013. [signed]

text: The Vice-President of the ECB

text: Vítor CONSTÂNCIO


text: OJ L 189, 3.7.1998, p. 42. 2 Zakon o opravljanju plačilnih storitev za proračunske uporabnike (ZOPSPU) (Ur.l. RS No 59/2010). 3 ‘Budget users’ include the State, municipal authorities, administrations and organisations, public funds, institutes and agencies established by the State or a municipality. See Article 1 of the Law in connection with Article 3 of the Law on public finance (Zakon o javnih financah (ZJF)) (Ur.l. RS No 11/2011, as amended). 4 See Article 61 of the Law on public finance. 5 The PPA maintains (a) treasury sub-accounts of the State and of municipalities, intended for the management of funds of each single treasury account system; (b) sub-accounts to which fiscal revenues are paid in; (c) sub-accounts maintained for the provision of payment services to budget users, (d) other types of accounts provided for by laws and other regulations. See Article 22(1) of the Law.

text: See Article 25 of the Law. 7 See Article 4 of the Law. 8 See amended

text: Articles 4(1)

text: (16) and 4(1)(7) of the Law and new

text: Article 26

text: .a and new Article 6(2) of the Law. 9 See new

text: Article 4

text: .a of the Law. 10 See amendments to

text: Articles 10

text: to 18 of the Law. 11 See amended Article 26 of the Law. 12 See amended

text: Articles 22

text: to 25 of the Law. 13 See amended Articles 31 and 32 of the Law. 14 Zakon o Banki Slovenije (ZBS-1) (Ur.l. RS No 72/2006, as amended). 15 All ECB opinions are published on the ECB’s website at www.ecb.europa.eu.

text: See paragraphs 3.1.1 and 3.1.2 of Opinion

text: in connection with

text: Article 22(3)

text: and third indent of Article 22(5) of the Law. 17 See also the third indent of amended Article 22(7) of the Law. 18 See paragraphs 3.2.1 and 3.2.2 of Opinion

text: . 19 See, in particular, Opinions

text: and

text: . 20 E.g. the provision of direct, non-reimbursable funding to the public sector.

title: Opinion of the European Central Bank of 19 August 2013 on the provision of payment services by Banka Slovenije for budget users (CON/2013/62)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 19 August 2013 on the provision of payment services by Banka Slovenije for budget users (

text: ) Introduction and legal basis

text: On 5 July 2013, the European Central Bank (ECB) received a request from the Slovenian Ministry of Finance for an opinion on a draft law amending the Law on the provision of payment services to budget users (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third indent of

text: Article 2(1) of Council Decision 98/415/EC of 29 June 1998

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft law relates to Banka Slovenije. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft law

text: 1.1 The Law on the provision of payment services to budget users (hereinafter the ‘Law’) governs the tasks and organisation of the Public Payments Administration of the Republic of Slovenia (hereinafter the ‘PPA’) and the provision of payment services to ‘budget users’ . 1.2 Within this framework, the Law regulates certain aspects of the functioning of the single treasury account system as one of the characteristics of the public finance system in Slovenia. There is one single treasury account system for the State and one for each municipality, and each system has an account with Banka Slovenije . In order to carry out and record public finance monetary flows and to provide payment services to budget users, the PPA maintains several types of sub-accounts within each single State and municipal treasury account system . In addition, the Law provides that budget users may open special-purpose transaction accounts with Banka Slovenije for the separate

text: management of funds allocated to a specific programme or project. For cash withdrawals and cash lodgements, budget users may open special zero balance accounts with commercial banks. Budget users may not open accounts with other payment service providers outside the single treasury account system, unless explicitly provided for by the Law or other laws and regulations . The PPA collects and distributes all relevant information on payments to and from the abovementioned accounts, maintains a register of budget users and performs other tasks assigned by law . Further detailed rules regarding the PPA and its tasks are laid down in other laws and regulations. Pursuant to the explanatory memorandum to the draft law, the existing arrangements have been effective for managing budget liquidity and establishing a comprehensive system for, inter alia, processing relevant data for budget, tax, statistical, analytical and other purposes, as well as supervising monetary flow to and from the budget. 1.3 The Law is now being amended to: (a) incorporate new services and tasks entrusted to the PPA ; (b) define urgent tasks of the PPA which shall be performed during a strike ; (c) lay down further requirements with respect to maintaining the budget users register ; (d) provide for the mandatory use of electronic invoices in public administration ; (e) further specify certain rules regarding the accounts of budget users and how payment services are provided to them ; (f) align the sanctions regime with other amendments to the Law .

text: 2. General observations

text: In the single treasury account system, Banka Slovenije acts as a payment services provider to budget users. It also maintains special-purpose transaction accounts for them. The provision of such services is in line with Article 21.2 of the Statute of the European System of Central Banks and of the European Central Bank, which provides that the ECB and national central banks (NCBs) may act as fiscal agents for Union institutions, bodies, offices or agencies, central governments, regional local or other public authorities, other bodies governed by public law, or public undertakings of Member States. This is reflected in Article 12 of the Law on Banka Slovenije , pursuant to which Banka Slovenije may act as a payment and/or fiscal agent for the State and maintains accounts for the Republic of Slovenia, State bodies and public entities. The ECB was previously consulted on the Law and issued Opinion

text: . With regard to the relevant provisions of the Law which (a) require Banka Slovenije to provide to the PPA information on

text: payments debited and credited to accounts opened with Banka Slovenije and on account balances free of charge, and (b) authorise the Minister of Finance to independently prescribe the method and deadlines for such provision of information, the ECB drew attention to the principle of central bank independence and the right of Banka Slovenije to charge appropriate fees for opening these accounts pursuant to Article 53 of the Law on Banka Slovenije . The ECB welcomes that the draft law takes into account the ECB’s observations in this respect. Amended

text: Article 22(6)

text: explicitly provides that the Ministry of Finance and Banka Slovenije will agree, in a contract or another legal act, the manner in which the PPA and Banka Slovenije exchange information with respect to the maintenance of treasury single accounts and special-purpose transaction accounts and the provision of payment services through these accounts. This separate agreement will need to ensure that the financial independence of Banka Slovenije is safeguarded. The ECB also welcomes that the sanctions regime in amended Article 31 of the Law does not apply to Banka Slovenije.

text: 3. Specific observations

text: Pursuant to the draft law, Article 22(7) of the Law provides that the Minister of Finance shall prescribe, inter alia, the procedures and methods for maintaining the accounts of budget users, the obligatory content of instructions for the payment of fiscal revenues as well as rules on the provision of other information in connection with the relevant payment transactions. In Opinion

text: , the ECB noted that it is not clear whether these rules would also apply to the accounts maintained by Banka Slovenije or otherwise impose additional obligations on the latter and that it would be unusual for the Minister of Finance, as a customer, to define the terms and conditions for the accounts and services provided by Banka Slovenije. In this connection it was also highlighted that provision by central banks of fiscal agency services should comply with the monetary financing prohibition laid down in Article 123 of the Treaty by not constituting central bank financing of public sector obligations in regard to third parties or central bank crediting of the public. Any remuneration of the account held by the budget users with Banka Slovenije should thus reflect market parameters . In particular, it is important to correlate the remuneration rate of the deposits with their maturity. As noted in past ECB opinions , the prohibition on monetary financing by central banks of government activities is independent of its form, i.e. loans or other direct financial means are covered by the prohibition. Interest payments above market rates constitute a de facto advance distribution of profits. This, in turn, implies a de facto provision of intrayear credit, contrary to the objective of the monetary financing prohibition. Therefore, the remuneration of deposits of public entities should not go beyond the remuneration applied to a similar deposit made by market counterparties. If the remuneration mechanism for deposits of public entities allows the Government to systematically steer the remuneration by a NCB at a rate above the rate at which a similar

text: deposit would be remunerated by market counterparties, this would contravene the objectives of the monetary financing prohibition under the Treaty. While the amendments to the Law do not seem to reflect these observations, which remain valid with regard to the draft law, the explanatory memorandum to the draft law states that the amendments take into account Banka Slovenije’s independence and observations from Opinion

text: . Pursuant to the explanatory memorandum, all of Banka Slovenije’s rights and obligations with respect to: (a) maintaining single treasury accounts for the State and municipalities and special-purpose transaction accounts, and (b) providing payment services through these accounts, may be regulated with a contract or another legal act between the Ministry of Finance and Banka Slovenije. In line with its previous observations in Opinion

text: , the ECB advises the Slovenian authorities to appropriately incorporate this explanation from the explanatory memorandum into the draft law.

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

text: Done at Frankfurt am Main, 19 August 2013.

text: [signed]

text: The Vice-President of the ECB

text: Vítor CONSTÂNCIO


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

text: Lietuvos bankas’ Financial Stability Review for 2013, available on Lietuvos bankas’ website at www.lb.lt. 3 See Opinion

text: , paragraph 7. All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 4 Resolution No 38 of the Board of Lietuvos bankas of 14 March 2002 on the approval of rules on reserve requirements for credit institutions. Valstybės žinios, 2002, No 31-1201. 5 See Opinion

text: , paragraph 14; Opinion

text: , paragraph 2.2; Opinion

text: , paragraph 2.

title: Opinion of the European Central Bank of 19 August 2013 on credit unions (CON/2013/63)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 19 August 2013 on credit unions (

text: ) Introduction and legal basis

text: On 26 July 2013, the European Central Bank (ECB) received a request from the Lithuanian Ministry of Finance for an opinion on a draft law on an amendment and a supplement to the law on credit unions (hereinafter the ‘draft law’). On 30 July 2013 the ECB received an updated draft law, which forms the basis of this opinion. 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: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft law relates to Lietuvos bankas 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 aim of the draft law is to ensure the sustainable growth of credit unions and to strengthen the regulatory framework for credit unions, including more effective governance, risk management, regulatory and resolution requirements. 1.2 More particularly, the draft law provides for: (a) a streamlined licencing process for credit unions; (b) enhanced capital requirements for credit unions, including the requirement to replenish capital if it falls below a specified threshold; (c) restrictions on risk-taking, including requirements in respect of borrowing, lending, investment and risk management; (d) more robust governance rules for credit unions, including more stringent requirements for managers and more active involvement of members in the management of credit unions; (e) an expansion of credit unions’ potential membership base and of the customer base for the financial services that may be provided by credit unions; and (f) reinforced supervision of credit unions by Lietuvos bankas, including a new measure allowing Lietuvos bankas to require, in the event of distress, the transfer of a credit union’s assets, rights and liabilities to another credit institution.

text: 2. General observations

text: 2.1 Credit unions currently account for 2.2% of the total assets of the Lithuanian national financial 2, system and their activities and asset volume have expanded very rapidly over the past few years. 2.2 The ECB welcomes the substantial enhancement of the regulatory and supervisory framework for credit unions, which aims at improving the protection of credit union members and strengthening the safety net for the credit union system . 2.3 The ECB notes that the proposed amendments to the legislation on credit unions do not envisage the possibility of a credit union becoming a commercial bank. The ECB takes the view that the enactment of legal provisions designed to ensure the workability of such conversion may help enhance the stability and integration of the national financial system.

text: 3. Minimum reserve requirements

text: 3.1 The draft law does not address minimum reserve requirements applicable to credit unions, since such requirements have been laid down by Lietuvos bankas in its Rules on reserve requirements for credit institutions . 3.2 The ECB notes that, although Member States that have not adopted the euro retain competence in the field of monetary policy, it is nevertheless beneficial for them to achieve consistency with Eurosystem standards so that credit institutions in those Member States can become familiar with the reserve requirements that will apply to them once the euro is introduced. 3.3 In its Opinions

text: and

text: on the Lithuanian minimum reserves regime, the ECB emphasised the need for further harmonisation of the Lithuanian minimum reserves regime with Eurosystem standards. In particular, it noted that Lithuanian credit unions, as monetary financial institutions, will be subject to Eurosystem reserve requirements when Lithuania adopts the euro . Consequently, the comments made by the ECB on previous occasions concerning the Lithuanian minimum reserves regime remain valid.

text: Done at Frankfurt am Main, 19 August 2013. [signed]

text: The Vice-President of the ECB

text: Vítor CONSTÂNCIO


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

text: Dziennik Urzędowy Narodowego Banku Polskiego (Dz. Urz. NBP) of 17 January 2003 No 1, item 1.

text: As defined in NBP President Ordinance No 19/2007 of 24 October 2007 on the method and procedure for counting, sorting, packaging and labelling packaging units of banknotes and coins, and on conducting activities related to the supply of banknotes and coins to banks (Dz. Urz. NBP of 29 October 2007 No 14, item 28).

text: See in particular paragraphs 2.2 and 3.3 of Opinion

text: and paragraph 2.1 of Opinion

text: . All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 5 Paragraph 9(2) of the draft ordinance provides that the fee will not apply if banknotes and coins presented for exchange have been damaged due to actual or attempted robbery and the entity or person presenting them for exchange is the victim of such actual or attempted robbery. 6 Article 4(2) of Decision ECB/2013/10 of 19 April 2013 on the denominations, specifications, reproduction, exchange and withdrawal of euro banknotes (OJ L 118, 30.4.2013, p. 37) provides that the fee for exchanging genuine euro banknotes that have been damaged by anti-theft devices amounts to 10 euro cent per damaged euro banknote.

title: Opinion of the European Central Bank of 20 August 2013 on the principles and procedure for exchanging banknotes and coins (CON/2013/64)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 20 August 2013 on the principles and procedure for exchanging banknotes and coins (

text: ) Introduction and legal basis

text: On 18 July 2013, the European Central Bank (ECB) received a request from the President of Narodowy Bank Polski (NBP) for an opinion on a draft ordinance on detailed principles and procedure concerning the exchange of banknotes and coins that have ceased to be legal tender within the territory of the Republic of Poland as a result of wear and tear or damage (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 first, second and third indents of

text: Article 2(1) of Council Decision 98/415/EC of 29 June 1998

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft ordinance relates to currency matters, means of payment and NBP. 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 recasts the provisions of NBP President’s Ordinance No 1/2003 of 15 January 2003 on the detailed principles and procedure for replacing banknotes and coins which have ceased to be legal tender within the territory of the Republic of Poland as a result of wear and tear or damage (hereinafter the ‘existing ordinance’) . The main aim of the recast is to align the principles for exchanging coins with the principles for sorting coins . This includes aligning the respective definitions used in the two legal acts, to ensure the uniform treatment of coins unfit for circulation. 1.2 In addition to aligning the principles for exchanging coins with the principles for sorting coins, the draft ordinance introduces the following main new elements: (a) rules for exchanging banknotes and coins contaminated with various substances; (b) rules for exchanging banknotes and coins presented for exchange by prosecuting authorities; (c) fees payable for exchanging banknotes and coins accidentally damaged by anti-theft devices.

text: 2. General comments

text: The ECB has already been consulted and commented on a previous amendment to the existing ordinance, as well as on NBP President’s Ordinance No 19/2007. To the extent the draft ordinance repeats the provisions of the existing ordinance, or redrafts these provisions without materially changing their content, the ECB reiterates its comments made in past ECB opinions .

text: 3. Specific comments

text: Fee for exchanging banknotes and coins accidentally damaged by anti-theft devices Paragraph 9(1) of the draft ordinance provides that the exchange of banknotes and coins that have been accidentally damaged by anti-theft devices will be subject to a fee charged by NBP to the entities or persons presenting the damaged banknotes for exchange . The level of the fee, set at 3% of the nominal value of the damaged banknotes and coins to be exchanged, seems to be substantially higher than the equivalent fee charged by the Eurosystem national central banks .

text: Done at Frankfurt am Main, 20 August 2013.

text: [signed]

text: The Vice-President of the ECB

text: Vítor CONSTÂNCIO


text: Paragraph 2.4 of Opinion

title: Opinion of the European Central Bank of 21 August 2013 on the handling and recirculation of euro banknotes and coins (CON/2013/65)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 21 August 2013 on the handling and recirculation of euro banknotes and coins (

text: ) Introduction and legal basis

text: On 16 July 2013, the European Central Bank (ECB) received a request from Latvijas Banka for an opinion on a Regulation on the handling and recirculation of euro banknotes and coins (hereinafter the ‘draft regulation’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the first, second and third indents of

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft regulation relates to currency matters, means of payment and Latvijas Banka. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft regulation

text: 1.1 The main objective of the draft regulation is to implement the requirements of

text: Regulation (EC) No 1338/2001

text: of the Council of 28 June 2001 laying down measures necessary for the protection of the euro against counterfeiting ,

text: Regulation (EU) No 1210/2010

text: of the European Parliament and of the Council of 15 December 2010 concerning authentication of euro coins and handling of euro coins unfit for circulation , and Decision ECB/2010/14 of 16 September 2010 on the authenticity and fitness checking and recirculation of euro banknotes . 1.2 To that end, the draft regulation lays down, inter alia, the procedure for the registration and control of the activities of companies engaged in the handling and recirculation of euro banknotes and coins, the requirements relating to machines used to process euro banknotes and coins and relating to the quality of the processing of euro banknotes, and the procedures for reporting data concerning the machines used to process euro banknotes and coins and the volumes of processed euro banknotes and coins.

text: 2. General observations

text: 2.1 The draft regulation imposes obligations on cash handlers and seeks to safeguard the integrity of euro banknotes and coins as a means of payment. The ECB generally welcomes the draft regulation and is confident that its provisions will ensure the preservation of euro banknotes and coins in circulation and therefore maintain the general public’s confidence in euro banknotes and coins. 2.2 The ECB considers it essential that any draft legislation should clarify the primacy and direct application of Union law on the authentication of euro banknotes and coins and the handling of euro banknotes and coins unfit for circulation. For consistency reasons, the ECB favours the use of direct references to

text: Regulation (EC) No 1338/2001

text: Regulation (EU) No 1210/2010

text: and Decision ECB/2010/14 or, alternatively, reproduction of their provisions without any alterations or additions. 2.3 In addition, although national authorities are not formally obliged to consult the ECB on the implementation of the Member States’ obligation to take the necessary measures to ensure that breaches of

text: Article 6(1) of Regulation (EC) No 1338/2001

text: are subject to effective, proportionate and deterrent sanctions, the ECB believes it is beneficial to harmonise throughout the Union the national measures implementing the abovementioned obligation to the extent possible, subject to national peculiarities .

text: 3. Specific observations

text: 3.1 Annexes 2 to 4 to the draft regulation are drafted based on Annex I, Annex III and Appendix 1 to Decision ECB/2010/14. The ECB notes that Decision ECB/2010/14, including its annexes and appendices, is amended by Decision ECB/2012/19 of 7 September 2012 amending Decision ECB/2010/14 on the authenticity and fitness checking and recirculation of euro banknotes , and these amendments need to be reflected in the draft regulation and its annexes in particular. The ECB further notes that the draft regulation does not mirror Annexes IIa and IIb of Decision ECB/2010/14, which should be implemented to provide for criteria for classification and treatment of euro banknotes by customer-operated machines and by staff-operated machines. 3.2 Paragraphs 29 and 30 of the draft regulation make specific reference to cash management IT systems (CashSSP and One Gate), thus appearing to limit the choice of technology that may be used. These paragraphs should be redrafted to avoid reference to specific tools.

text: This opinion will be published on the ECB’s website. Done at Frankfurt am Main, 21 August 2013. [signed]

text: The Vice-President of the ECB

text: Vítor CONSTÂNCIO