title: Opinion of the European Central Bank of 3 September 1999 at the request of the German Federal Ministry of Finance on a bill amending currency-related provisions with respect to the introduction of the euro (Drittes Euro-Einführungsgesetz - Drittes EuroEG (Third Act on the introduction of the euro)) (CON/99/10)

text: 1. On 19 July 1999 the European Central Bank (ECB) received a request from the German Federal Ministry of Finance for an ECB Opinion concerning a legislative proposal entitled “Bill amending currency-related provisions with respect to the introduction of the euro (Drittes Euro- Einführungsgesetz – Drittes EuroEG)”.

text: 2. The ECB’s competence to deliver an opinion is based on Article 105 (4) of the Treaty and Article 2 (1), first and second indents, of

text: Council Decision (EC) No. 98/415 of 29 June 1998

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions, as the legislative proposal deals with currency matters and means of payment. In accordance with

text: Article 17.5

text: , first sentence, of the Rules of Procedure of the European Central Bank, this opinion has been adopted by the Governing Council of the ECB. The legislative proposal and an explanatory memorandum were submitted to the ECB in the German language only. The present opinion is based on an unofficial English translation of the official German bill. The legislative proposal is intended to amend German currency-related provisions in view of the physical introduction of euro banknotes and coins on 1 January 2002, as stipulated by Council Regulation EC/974/98 of 3 May 1998 on the introduction of the euro. The bill complements the First Act on the introduction of the euro (Erstes Euro-Einführungsgesetz), which dealt with the necessary adaptations to German legislation with a view to the national implementation of the regulatory framework for the introduction of the euro on 1 January 1999, on which the EMI rendered its opinion CON/97/24. The ECB welcomes the submission of this legislative proposal at a relatively early stage, thus allowing for transparency and legal certainty for the general public and other parties with regard to the physical introduction of euro banknotes and coins on 1 January 2002.

text: 3. The draft law consists of eight articles, replacing or amending the existing currency legislation.

text: Article 1

text: consists of a draft “Act abolishing the legal tender status of banknotes denominated in Deutsche Mark (DM) and Federal coins denominated in DM or pfennig” (DM- Beendigungsgesetz). It deals with the termination of the status of DM banknotes and coins as legal tender as well as with the obligation of the Bundesbank to exchange DM cash against euro cash without fees in accordance with

text: Article 16 of Council Regulation (EC) No 974/98 of 3 May 1998

text: on the introduction of the euro. In addition, there are some provisions specifying the extent of that obligation. The final provisions of this article deal with the prolongation of penal law protection against counterfeits and forgeries of DM banknotes and coins after 31 December 2001. These provisions are complemented by an agreement dated 22 October 1998 between associations representing various economic sectors such as credit and finance, trade and similar services including vending machines, which are the most important catalysts for exchange of monetary tokens, on the one hand, and the Federal Ministry of Finance and the Deutsche Bundesbank, on the other. By means of this agreement, the aforementioned associations undertake to use their influence with their member companies to ensure a so-called “modified deadline for the introduction of euro banknotes and coins”. According to this “modified deadline”, the members of the associations are expected, on a voluntary basis, to accept DM banknotes and coins until 28 February 2002, while at the same time allowing for some flexibility in their dealings beyond that date.

text: Article 2

text: contains a new Coinage Act (Münzgesetz), replacing the previous law on coins. By reference to

text: Council Regulation (EC) No. 975/98 of 3 May 1998

text: on the denomination and technical specification of euro coins, it contains provisions on the legal protection of coins, on the allocation of responsibilities for the design of the national side of the German euro coins, on the distribution of the numbers to be minted with respect to the various denominations and on the production as well as, without prejudice to

text: Article 106 (2)

text: , first sentence, of the Treaty, the issuance and withdrawal of the German euro coins. In addition, a number of provisions deal with the protection of special edition German euro coins and commemorative euro coins.

text: Article 3

text: contains an amendment to Article 14 of the Bundesbank Act, by which the Deutsche Bundesbank is endowed, without prejudice to Article 106 (1) of the Treaty, with the exclusive right to issue banknotes in Germany. At the same time the Deutsche Bundesbank is obliged to publish the denominations and the different characteristics of euro banknotes. It also contains provisions on the right of the Deutsche Bundesbank to withdraw banknotes.

text: Article 4

text: amends the existing regulation on the production and the sale of medals and badges.

text: Articles 5

text: to 8 contain a number of provisions which are intended to harmonise and consolidate other laws which may have a bearing on banknotes and coins (mainly provisions on the German monetary union as well as special provisions relating to the special status of Berlin and the Saar region, which have meanwhile been abolished).

text: 4. As regards

text: Article 1

text: , the ECB notes that Section 1 of the bill establishes a “legal big bang”, by which the legal tender status of DM banknotes and coins is abolished with effect from 1 January 2002.

text: Article 15 of Council Regulation (EC) No. 974/98 of 3 May 1998

text: on the introduction of the euro stipulates that banknotes and coins denominated in a national currency unit shall remain legal tender within their territorial limits until six months after the end of the transitional period (i.e. 31 December 2001), which period may be shortened by national law, and each participating Member State may, for a period of up to six months after the end of the transitional period, lay down rules for the use of the banknotes and coins denominated in its currency unit and take any measure to facilitate their withdrawal. In order to not prejudge the discussion of the informal meeting of the Ecofin to be held in Turku on 10-12 September 1999, inter alia on a possible need to “working towards closer intentions among Member States on the length of the dual circulation period”, the ECB abstains from commenting on the approach taken by the German Government in this respect..

text: Article 1

text: , Section 4, in conjunction with

text: Article 8 (3)

text: , stipulates that the penal provisions applying to counterfeiting of legal tender banknotes and coins will be extended to apply to DM banknotes and coins for a period of one year after the termination of their legal tender status on 1 January 2002. The ECB notes that this extension of penal protection would not apply to other national denominations of the euro, which would only benefit from penal protection under German laws against counterfeiting up to the moment of the termination of their legal tender status.

text: 5. With regard to

text: Article 2

text: , Section 3 (1) regulates the obligation of the German public to accept German commemorative euro coins that have been given legal tender status in Germany up to an amount of EUR 100 for a single payment. This reflects

text: Article 11 of Council Regulation (EC) No. 974/98 of 3 May 1998

text: , according to which nobody is under an obligation to accept more than 50 euro coins (whereby the maximum possible amount payable with euro coins is EUR 100). Nevertheless, Section 3 (1), second sentence, refers to single payments made both in euro coins and in German commemorative euro coins, stipulating that “no one is obliged to accept more than 50 coins amounting to more than EUR 100”. This wording might lead to uncertainties on whether there would be an obligation to accept a payment of up to 50 coins, for instance, even if the accumulated value were to amount to more than EUR 100, due to the inclusion of German commemorative euro coins of a value higher than EUR 2 or to accept payments of more than 50 coins, if the accumulated value will fall short of EUR 100. The ECB suggests to consider that this ambiguity be clarified. The ECB also notes with regard to the possible holding of coins by the Deutsche Bundesbank that, through the insertion of the words “notwithstanding

text: Article 101

text: Sub-section 1” in Section 3 (2), it is ensured that the 10% limit of

text: Article 6 of 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 is respected. Section 8 deals with the acceptance of coins which have decreased in weight or have become unidentifiable due to extensive circulation or wear. In this context, it might be useful also to specify the conditions under which the Federal Cash Offices and the Bundesbank will have to accept bicolour coins, where the inner and outer sections have been separated.

text: Article 3

text: , which will enter into force on 1 January 2002, will amend Section 14 of the Bundesbank Act. The compliance of this article with the Treaty requirement of legal integration of the NCBs into the ESCB has already been approved in the EMI convergence report dated March 1998. By replacing the second, third and fourth sentence of section 14 (1) (“Its notes are denominated in Deutsche Mark. They alone are unrestricted legal tender. Notes in denominations smaller than ten Deutsche Mark may be issued only by agreement with the Federal Cabinet”) by a new second sentence (“Banknotes denominated in euro are the only unrestricted legal tender.”) and by deleting section 14 (3), the final adaptations which are necessary to reflect the end of the transitional period are implemented. However, it is reminded that Article 106 of the Treaty states that the ECB shall have the exclusive right to authorise the issue of banknotes within the Community and that (both) the ECB and the national central banks - in this case the Bundesbank as the national central bank of Germany (in accordance with the Bundesbank Act) – may issue such notes. It is an exclusive competence of the ECB to decide on the application and protection of this Treaty based prerogative. Therefore, in order to properly reflect the wording and meaning of Article 106 of the Treaty, the ECB recommends to redraft the explanatory memorandum on

text: Article 3

text: , especially the passage presently reading as “

text: Article 106

text: subsection 1 EU Treaty stipulates that the ECB has a sole right to approve the issue of banknotes, and that the national central banks are authorised to issue banknotes.”, accordingly. In relation to Section 14 (2), which relates to the withdrawal of banknotes for collection by the Deutsche Bundesbank, the ECB acknowledges that the wording has remained unchanged. Yet, to avoid misinterpretations when comparing Section 14 (1) (containing a reference to Article 106 (1) of the Treaty) and Section 14 (2) (which does not include that reference), the ECB recommends either that both sub-sections of Section 14 of the Bundesbank Act be merged or that an explicit reference to Article 106 (1) of the Treaty be made in Section 14 (2) so as to mirror the wording of Section 14 (1).

text: 7. In relation to

text: Article 4

text: , regulating the production and the sale of medals and badges, the ECB notes that the scope of application of the regulation, as amended by this law, will apply to euro coins and German commemorative euro coins. In view of a harmonised protection, it might be worthwhile to consider extending the application to elements of non-German commemorative euro coins which have legal tender status in another Member State of the euro area.

text: 8. The ECB confirms that it has no objections to this ECB Opinion being made public by the competent national authorities at their discretion. Done at Frankfurt am Main on 3 September 1999. The Vice-President of the ECB [signed] C. Noyer


publisher: Europeiska centralbanken

sprak: en

title: Opinion of the European Central Bank of 15 September 1999 at the request of the Euro Changeover Board of Ireland on a draft legislative proposal for a Copyright and Related Rights Bill, 1999 (CON/99/12)

serie: con

text: 1. On 3 August 1999 the European Central Bank (ECB) received a request from the Euro Changeover Board of Ireland for an ECB Opinion on a draft legislative proposal entitled “Copyright and Related Rights Bill, 1999” and in particular on Section 189 thereof.

type: stycke

text: 2. The ECB’s competence to deliver an opinion is based on Article 105 (4), second indent, of the Treaty establishing the European Community and Article 2 (1), first indent, of the Council Decision (

text: ) of 29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft legislative provisions, as the legislative proposal contains provisions concerning currency matters. In accordance with

text: Article 17.5

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

text: 3. The draft legislative proposal represents a comprehensive restatement and amendment of the Irish law on copyright. Of particular relevance to the ECB are the provisions contained in the draft legislative proposal concerning the copyright in legal tender banknotes denominated in the euro unit, the common face and national face of coins denominated in euro or in cent and commemorative coins issued by the Minister for Finance. The draft legislative proposal complements and amends the Economic and Monetary Union Act, 1998, which contained provisions relating to the issuance of such coins and the copyright in euro banknotes and coins, and on which the European Monetary Institute rendered its Opinion CON/98/18.

text: 4. Section 189 of the draft legislative proposal on which the ECB is being consulted contains nine sub-sections replacing the existing copyright legislation. Section 189(2) provides that copyright in legal tender notes denominated in the euro unit shall be perpetual and vests in the ECB. Section 189(5)(a) provides that notwithstanding anything contained in the relevant part of the draft legislative proposal, the copyright in the common face of coins denominated in euro or in cent and issued by the Minister for Finance under the Economic and Monetary Union Act, 1998, and the copyright in the artistic work defining the design of any such face shall be perpetual and vest in the European Community and may be assigned by the Commission of the European Communities on behalf of the European Community. Sections 189(5)(b) and (c) provide that notwithstanding anything contained in the relevant part of the draft legislative proposal, the copyright in any national face of such coins denominated in euro or in cent and the copyright in all commemorative coins issued by the Minister for Finance under the Economic and Monetary Union Act, 1998, and the copyright in the artistic work defining the design of any such face or coin shall be perpetual and vest in the Minister for Finance.

text: 5. The ECB notes that the draft legislative proposal provides for copyright in both legal tender and non-legal tender banknotes and coins. It might be worth considering whether this point should be expressly clarified in the draft legislative proposal.

text: 6. The ECB recalls that in its Recommendation of 7 July 1998 regarding the adoption of certain measures to enhance the legal protection of euro banknotes and coins (ECB/1998/7), the ECB recommended that Member States should ensure that banknote designs may legally benefit from copyright protection. The ECB therefore recognises the desirability of explicitly confirming in Irish legislation the existence of the ECB’s copyright in legal tender banknotes denominated in the euro unit. However, the ECB questions whether, as a matter of Irish law, it is necessary to achieve such legislative clarity by providing that the copyright in legal tender banknotes denominated in the euro unit shall be perpetual and vest in the ECB. Any intellectual property rights enjoyed by the ECB with regard to such banknotes are not directly established under Irish legislation. Similarly, any intellectual property rights enjoyed by the European Community in the common face of coins denominated in euro or in cent, and the copyright in the artistic work defining the design of any such face, are not directly established under Irish legislation. By extension, the right of the Commission of the European Communities to assign such copyright on behalf of the European Community does not arise directly under Irish legislation.

text: 7. The ECB confirms that it has no objection to this ECB Opinion being made public by the competent national authorities at their discretion. OJ C 11, 15.1.98, p. 1ff. Done at Frankfurt am Main on 15 September 1999. The President of the ECB [signed] Willem F. Duisenberg

type: vagledning

utgivare: ecb


title: Opinion of the European Central Bank at the request of the Ministry of Finance of the Netherlands on a draft legislative proposal concerning the protection of credit institutions and other financial institutions against liabilities resulting from the closure of payment and security settlement systems on 31 December 1999 (CON/99/13)

text: 1. On 23 August 1999 the European Central Bank (ECB) received a request from the Ministry of Finance of the Netherlands on a draft legislative proposal concerning the protection of credit institutions and other financial institutions against liabilities resulting from the closure of payment and security settlement systems on 31 December 1999.

text: 2. The ECB’s competence to deliver an opinion is based on Article 105 (4), second indent, of the Treaty establishing the European Community and Article 2 (1), fifth and sixth indents, of

text: Council Decision (EC) No. 98/415 of 29 June 1998

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions, as the legislative proposal deals with payment systems and settlement systems, as well as with the stability of financial institutions and markets. In accordance with

text: Article 17.5

text: , first sentence, of the Rules of Procedure of the European Central Bank, this opinion has been adopted by the Governing Council of the ECB.

text: 3. Following the conclusions of the informal meeting of the ECOFIN Council of Ministers on 16 to 18 April 1999 on ways of dealing with possible problems during the changeover to the year 2000, the Ministry of Finance of the Netherlands has prepared a draft legislative decree. This draft takes as given that the TARGET payment system of the ESCB and TOP, the national giro gross payment system of De Nederlandsche Bank N.V., will be closed on 31 December 1999. Other payment systems and security settlement systems linked to TARGET and TOP will also be closed on 31 December 1999. These closures might have legal consequences for credit and other financial institutions participating in payment or security settlement systems as obligations due on 31 December 1999 cannot be performed. The obligations concern instructions given by clients to credit and other financial institutions, as well as obligations of the said institutions themselves to transfer money or securities by way of payment or security settlement systems on 31 December 1999.

text: 4. The draft legislative provisions address these legal consequences by holding credit and other financial institutions harmless from failure to transfer money or securities via payment or security settlement systems on 31 December 1999. Specifically, Section 1 of the draft legislative provisions clarifies that the transfer of money or securities by credit institutions and other financial institutions on 30 December 1999, instead of on 31 December 1999, is neither a breach of contract, nor a wrongful act on the part of the clients, credit institutions and other financial institutions involved. This protection means, for transactions governed by Dutch law, that neither the clients, nor the credit institutions and other financial institutions are liable for possible losses suffered by creditors on account of this earlier performance. Contractual parties are, of course, free to agree on other solutions inter se. The draft legislative provisions will enter into force on the day after the date of publication. According to Section 2 of the draft, the legislative provisions will, however, apply retroactively as from 30 December 1999 in the event of it entering into force on a later date.

text: 5. The ECB welcomes the effort made by the authorities of the Netherlands to reduce the legal uncertainty which might result under Dutch law from the closure of payment and securities settlement systems on 31 December 1999. The legislative proposal takes into account the communiqué of the central bank governors, endorsed by ECOFIN ministers at their informal meeting in Dresden on 17 April 1999, which urged the Member States to take appropriate means ensuring that the performance of any contractual obligations of credit institutions or other agents in the financial markets shall neither become due nor enforceable on 31 December 1999. The ECB also notes that in shifting the performance of the said obligations to 30 December 1999, the draft legislative provisions limit the number of transactions on the first days of the year 2000. This is in line with internationally given advice. In doing so, the ECB finds that the draft legislative provisions could contribute to maintaining the stability of financial institutions and markets during the changeover to the year 2000.

text: 6. The ECB has one drafting comment regarding the draft legislative proposal. In its opinion, the words “Section 212 A, sub a of the Insolvency Act” in the fifth line of Section 1, paragraph 2 should read: “Section 212 A, sub b of the Insolvency Act”.

text: 7. The ECB confirms that it has no objections to this ECB Opinion being made public by competent national authorities at their discretion. Done at Frankfurt am Main on 14 September 1999. The President of the ECB [signed] Willem F. Duisenberg


text: THE VICE-PRESIDENT

title: Opinion of the European Central Bank at the request of the Portuguese Ministry of Finance on a Decree-Law dealing with the production of paper money (CON/99/14)

text: 1. On 2 September 1999 the European Central Bank (ECB) received a request from the Portuguese Ministry of Finance for an ECB Opinion concerning a legislative act which endows to the Portuguese Central Bank the competence (i) to produce and print paper money and other security documents, (iii) to perform the distribution of banknotes and (iii) to develop services related to the pursuance of such activities.

text: 2. The ECB’s competence to deliver an opinion is based on Article 105 (4) of the Treaty and Article 2 (1), first, second and third indents, of

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions, as the legislative act deals with currency matters, means of payment and national central banks. In accordance with

text: Article 17.5

text: , first sentence, of the Rules of Procedure of the European Central Bank, this opinion has been adopted by the Governing Council of the ECB. The legislative act was submitted to the ECB in its official original version in Portuguese accompanied by a courtesy translation in English.

text: 3. In general, the adoption of national legislative provisions within the field of competence of the ECB before opening the consultation procedure laid down in the Council Decision of 29 June 1998 (

text: ), does not allow for due consideration of the ECB's opinion as foreseen in Article 4 of such Council Decision. In the present consultation, the Portuguese Government, adopted the legislative act submitted for consultation before initiating this consultation procedure. However, in the meanwhile, it suspended the national legislative procedure by not publishing the legal act and by consulting the ECB. It is understood that this actions of the Portuguese Government would allow the Portuguese Authorities to take due consideration of the ECB opinion should it gave rise to the need of introducing any changes in the legislative act.

text: 4. The legislative act is intended to clarify the role of the Portuguese Central Bank (Banco de Portugal) in the field of production of paper money taking into account its integration in the European System of Central Banks (ESCB) and its responsibilities in ensuring the authenticity and security of monetary circulation. The ECB has no substantive comments to the Decree-Law submitted for consultation, which is deemed to be in conformity with the relevant provisions of community law.

text: 5. The ECB confirms that it has no objections to this ECB Opinion being made public by the competent national authorities at their discretion. Done at Frankfurt am Main on 24 September 1999. The Vice-President of the ECB (Signed) C. Noyer


text: THE PRESIDENT

title: Opinion of the European Central Bank at the request of the Portuguese Ministry of Finance on two draft legislative provisions amending (i) the legal framework of credit institutions and financial companies concerning the Deposit Guarantee Fund and (ii) the executive order governing the activities of the Deposit Guarantee Fund (CON/99/15)

text: 1. On 23 September 1999, the European Central Bank (ECB) received a request from the Portuguese Ministry of Finance for an ECB Opinion concerning (i) a draft legislative act which amends the legal framework of credit institutions and financial companies, approved by Decree Law No. 298/92 of 31 December (‘Regime Geral das Instituições de Crédito e das Sociedades Financeiras’), concerning the Deposit Guarantee Fund and (ii) a draft executive order that amends the Executive Order No. 285-B/95 (Series II) of 19 September, which lays down detailed rules governing the activities of the Deposit Guarantee Fund.

text: 2. The ECB’s competence to deliver an opinion is based on Article 105 (4), second indent of the EC Treaty and on Article 2 (1), third and last indents, of

text: , on the consultation of the European Central Bank by national authorities regarding draft legislative provisions, as the legislative act deals with national central banks and with rules applicable to financial institutions which can have a material influence on the stability of financial institutions and financial markets. In accordance with

text: Article 17.5

text: first sentence of the Rules of Procedure of the European Central Bank, the Governing Council of the ECB has adopted this opinion. The draft legislative provisions were submitted to the ECB in its official original version in Portuguese accompanied by a courtesy translation in English.

text: 3. The main purpose of the draft legislative act is, on the one hand, to enlarge the scope of activities of the Deposit Guarantee Fund, allowing for its intervention in situations of financial reorganisation of credit institutions and, on the other hand, to encourage the co-operation between Banco de Portugal and the Deposit Guarantee Fund in the aforementioned situations. This is particularly relevant for the legal framework of credit institutions and financial companies in Portugal, since the general law relating to preventive bankruptcy measures and to measures of reorganisation of undertakings and protection of creditors does not apply to credit institutions.

text: 4. According to the ‘Regime Geral das Instituições de Crédito e das Sociedades Financeiras’, Banco de Portugal, as the banking supervision authority, may decide to take exceptional measures whenever the interests of depositors, investors and other creditors or the safeguard of the normal functioning of the money, financial and foreign exchange markets, are threatened. Among these measures, Banco de Portugal may require the institution concerned to prepare a reorganisation plan, whose acceptance by Banco de Portugal may be made conditional upon capital reduction or increase, disposal of shareholdings and other assets or upon any other conditions as deemed appropriate by Banco de Portugal. The draft legislative act allows Banco de Portugal, in the context of its intervention in the institution concerned, to invite the Deposit Guarantee Fund to co-operate in the reorganisation process, particularly by granting monetary or financial support or by participating in possible capital increases. The amendments introduced in Article 142 of the legal framework of credit institutions and financial companies, approved by Decree Law No. 298/92 of 31 December, achieve this objective.

text: 5. The ECB notes that the remaining provisions of the draft legislative have the purpose of adapting the Deposit Guarantee Fund to its new function of co-operating in actions intended to re-establish the solvency and liquidity of credit institutions (see amendments introduced in Articles 155, 158 and 163 of the legal framework of credit institutions and financial companies, approved by Decree Law No. 298/92 of 31 December and the new

text: Article 167

text: -A added to the same Decree Law).

text: 6. The ECB notes that, in relation to the amendments to

text: Article 142

text: , Banco de Portugal will have an extended role over the financial reorganisation of a troubled institution. Namely, Banco de Portugal reserves the right to decide on aa capital increase and to further decide that the capital increase is preceded by the absorption of the institution’s losses by the relevant ‘positive’ items of own funds. Banco de Portugal may also invite the Deposit Guarantee Fund or other institutions to co-operate in the reorganisation process, in particular, through the granting of adequate monetary or financial support, or through their participation in the capital increase decided by Banco de Portugal, who shall be also responsible for guiding and defining such cooperation in terms of the timeframe. In this regard, the ECB would like to suggest that some further clarification be given to the possibility of Banco de Portugal to decide on a capital increase of a troubled institution, as foreseen in the proposed paragraph 4 of

text: Article 142

text: . It could be made clearer, in the context of the other provisions of

text: Article 142

text: , that this decision of Banco de Portugal relates to the appropriateness of a capital increase so that the troubled institution is able to fulfil its commitments. The ECB understands that a decision of Banco de Portugal on a capital increase would not, however, involve the obligation for the shareholders of the institution or for any other investors and institutions, including the Deposit Guarantee Fund, to indeed subscribe the capital increase. These remain free to subscribe or not the capital increase. The ECB would therefore welcome a clarification of this point in order to avoid the impression that Banco de Portugal could enforce a capital increase on unwilling shareholders or other investors and institutions. In this context, the ECB would like to draw the attention of the Portuguese authorities to the jurisprudence of the European Court of Justice in the "Karella and Syndesmos" line of cases (cases

text: and

text: and

text: , and

text: ) on the compatibility with Community law of national rules providing for an increase, by administrative measures, of the capital of a company in financial difficulties.

text: 7. The ECB notes, in relation to the new paragraph 2 of

text: Article 159

text: , that Banco de Portugal will be able, in an urgent situation and under the conditions laid down in its Organic Law, to grant temporarily to the Deposit Guarantee Fund the financial resources required to meet the latter’s immediate needs. The ECB would like to note that the financial resources granted by Banco de Portugal to the Fund under this provision are lent without prejudice to its obligations as part of the ESCB and based on adequate collateral (see

text: Articles 24.1

text: (c) and 25 (b) of the Organic Law of Banco de Portugal) and cannot be used for the special intervention of the Fund in the situations foreseen under the proposed new

text: Article 167

text: -A, which relate to specific cases of financial distress involving member credit institutions. This interpretation results from paragraph 2 of the proposed

text: Article 167

text: -A, which states that the Fund shall confine its financial support operations to situations which, among other criteria, do not involve the recourse of the Fund to loans or to special contributions from member credit institutions. In this context, it should also be mentioned that according to Article 14.4 of the ESCB Statute, national central banks may perform functions other than those specified in the ESCB Statute unless the Governing Council of the ECB finds, by a majority of two-thirds of the votes cast, that these interfere with the objectives and tasks of the ESCB. The ECB does not anticipate that the tasks of Banco de Portugal as described in the draft legislative act under consultation would interfere with the objectives and tasks of the ESCB.

text: 8. The ECB notes, in relation to the new

text: Article 167

text: -A, relating to financial support rules, that the Deposit Guarantee Fund will be able to participate in operations deemed adequate to put an end to situations of financial distress involving member credit institutions. Moreover, it is stipulated that the Fund shall confine its financial support operations to the cases in which financial distress situations are most likely to come to an end within a short period of time, the objectives are clearly outlined and defined, the way how the Fund’s support will end is ensured, and a recourse to loans or to special contributions from member credit institutions is not involved. The ECB notes therefore that the Deposit Guarantee Fund may have, in certain situations, a prominent role in crisis management of credit institutions in Portugal. The ECB welcomes in this regard that the execution of any financial support operation by the Deposit Guarantee Fund is made dependent upon an opinion of Banco de Portugal that the operation is adequate to the resolution of the situation in question. This provision is appropriate taking into account the competencies of Banco de Portugal as overseer of financial stability, in accordance with

text: Article 12

text: (c) of the Organic Law of Banco de Portugal.

text: 9. The proposed amendments to the Executive Order No. 285-B/95 (Series II) of 19 September, which lays down detailed rules governing the activities of the Deposit Guarantee Fund, are a mere consequence of the new functions of the Deposit Guarantee Fund in the field of financial reorganisation of credit institutions, in particular of the amendments introduced in Articles 142, 155 and 158 of the legal framework of credit institutions and financial companies, approved by Decree Law No. 298/92 of 31 December. The ECB welcomes in this regard that any decision concerning the types of support to a troubled institution should be made in close co-operation with Banco de Portugal.

text: 10. The ECB confirms that it has no objections to this ECB Opinion being made public by the competent national authorities at their discretion. Done at Frankfurt am Main on 27 October 1999. The President of the ECB [signed] Willem F. Duisenberg


text: th Done at Frankfurt am Main on 28 October 1999.

title: Opinion of the European Central Bank at the request of the Banco de España on a draft Royal Decree on the arrangements for the payment of the Banco de España's profits to the Treasury (CON/99/16)

text: 1. On 28 September 1999 the European Central Bank (ECB) received a request from the Deputy Governor of the Banco de España to give its opinion on a draft Royal Decree on the arrangements for the payment of the Banco de España’s profits to the Treasury (the “Draft”). The Draft was forwarded both in Spanish and English.

text: 2. The Draft is based on the legal authorisation (Second Final Provision of Law 12/1998 of 28 April amending the Act of Autonomy of the Banco de España) to determine, by way of governmental regulation, the regime for the payment of the Banco de España’s profits to the Treasury. The said Law of 1998 was subject to consultation with the European Monetary Institute (CON/98/05), and no comments were given to the aspects envisaged by the Draft. The content of the Draft, in summary, consists of laying down the following calendar for payment to the Treasury of profits generated and accounted for by the Banco de España, which does not substantially differ from the practice that existed before the legal reform of 1998: - in November each year, 70% of the profits recorded up to the end of September of the same financial year; - in February each year, 90% of the profits recorded in the preceding financial year, discounting the instalment paid in November; - the remainder, following the formal approval of the accounts for the financial year by the Central Government.

text: 3. The ECB’s competence to deliver an opinion is based on Article 105 (4), second indent of the EC Treaty and on Article 2 (1), third indent, of

text: Council Decision (EC) No. 98/415 of 29 June 1998

text: , on the consultation of the European Central Bank by national authorities regarding draft legislative provisions, as the Draft deals with a national central bank. In accordance with

text: Article 17.5

text: first sentence of the Rules of Procedure of the European Central Bank, the Governing Council of the ECB has adopted this opinion.

text: 4. The legal possibility for Member States of the European Union to legislate on areas that are not subject to Community provisions or are only partially subject thereto, is extensively recognized in the case law of the Court of Justice, even in areas of exclusive Community competence (joined cases 3,4 & 6/76 Kramer [1976] ECR 1279; joined cases 141 to 143/81 Holdijk & others [1982] ECR 1299; case

text: The Queen v MAFF, ex p. Compassion in World Farming Ltd. [1998] ECR I-1252; etc.). Consequently, there is nothing in theory to prevent the Spanish State from laying down arrangements for allocation of the Banco de España’s profits provided that such arrangements are not incompatible with the relevant provisions in Community law or that they do not unduly hinder the achievement of Community objectives. It is relevant to point out that other Member States have similar provisions with regard thereto that have not been deemed to be in conflict with the Community order. It is appropriate here, furthermore, to recall that, since the reform of 1962 (Decree-Law 18/1962 of Nationalization and Reorganization of the Banco de España), the Banco de España is a public entity of the State, and therefore the State has a primary competence to determine the regime for the allocation of the Bank’s profits within the perimeters allowed by Community law.

text: 5. The Draft is expressly stated to be provisional in nature, until such time as the ECB adopts decisions on the application of monetary income in the European System of Central Banks (ESCB) under Article 32 of the Statute thereof. Given the primacy of Community law, it would be obvious to state that the application of Article 32 of the Statute of the ECB and the ESCB cannot be conditional on what the provisions of national Law might provide. However, on this point it is necessary to stress that the ECB has exercised Article 32 of its Statute to lay down the arrangements applicable to the monetary income of the ESCB during the transitional period of monetary union, that is to say, for the financial years 1999, 2000 and 2001. These arrangements are laid down in the Decision of 3 November 1998 (ECB/1998/NP12) notified to the national central banks in their capacity as shareholders in the ECB. Consequently, it is suggested that the Draft specifies that the amount of distributable profit is conditioned by the monetary income amounts attributable to the Banco de España after due application of the ESCB’s arrangements for monetary income allocation that may be from time to time in force, so as to cover the current situation, and that the Governing Board of the Banco de España is to verify before allowing a pay-out of profits that such payments do not hamper the due application of the ESCB regime adopted under Article 32 of the Statute. For the sole purpose of information to the Spanish Treasury, in its capacity as sole final recipient of the distributable profits of the Banco de España, the Decision of 3 November 1998 (ECB/1998/NP12) is annexed hereto; such Decision has neither been subject to official publication nor made public.

text: 6. In this area, the limitations laid down by the Treaty are two-pronged: (i) The financial independence of the central banks (Article 108 of the Treaty), the safeguard of which would require not leaving to the sole discretion of the political authorities the possibility of requiring advance pay-outs of NCB’s profits, and therefore warrants the convenience of pre-established detailed arrangements for such payments; this aspect is sufficiently covered by the Draft, since it regulates in detail the calendar and amount of the advance payments, without affording any ad hoc discretion to the political authorities. (ii) The prohibition on monetary financing to the public sector (Article 101 of the Treaty), which would require that advance payments of profits to the Treasury be only from profits that are fully realised, accounted for and verified, which in turn would require some kind of formal approval of the profit and loss account for the considered period. Although by setting a ceiling of 70 % of the current profits a prudent criteria is established in this regard, it could theoretically not be sufficient if, for instance, heavy losses at year end would exceed 30 % of the profits realised in the first nine months of the financial year. The Draft would better satisfy this concern by providing for a formal approval by the Governing Council of Banco de España of the profits and loss account which serves as a basis for the calculation of the advance pay outs, and the pay out be conditioned to an assessment by that body that expected economic developments for the final quarter of the year would not give rise to such a risk. The Vice-President of the ECB [signed] C. Noyer

text: Annex

type: rubrik

text: DECISION OF THE EUROPEAN CENTRAL BANK of 3 November 1998

text: ON THE ALLOCATION OF MONETARY INCOME OF THE NATIONAL CENTRAL BANKS OF PARTICIPATING MEMBER STATES AND LOSSES OF THE ECB FOR THE FINANCIAL YEARS 1999 TO 2001

text: THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL BANK,

text: Having regard to the Statute of the European System of Central Banks and of the European Central Bank (hereinafter referred to as the “Statute”) and in particular to

text: Article 32

text: thereof;

text: (1) Whereas, according to Article 32.2 of the Statute, the amount of monetary income of each participating national central bank shall be equal to its annual income derived from its assets held against notes in circulation and deposit liabilities to credit institutions; whereas, according to Article 32.3 of the Statute, if the balance sheet structures of participating NCBs after the start of the third stage do not permit the application of the method foreseen in Article 32.2 of the Statute for the allocation of monetary income of participating NCBs, the Governing Council may temporarily adopt an alternative method;

text: (2) Whereas, according to Article 32.4 of the Statute, the amount of each participating NCB’s monetary income shall be reduced by an amount equivalent to any interest paid by that NCB on its deposit liabilities to credit institutions in accordance with Article 19 of the Statute; whereas, according to Article 32.5 of the Statute, the sum of the participating NCBs monetary income shall be allocated to the participating NCBs in proportion to their paid-up shares in the capital of the ECB;

text: (3) Whereas, according to Article 32.6 and 32.7 of the Statute, it is for the Governing Council of the ECB to arrange for the clearing and settlement at the ECB of the balances arising from the allocation of monetary income and to take all other measures necessary for the application of Article 32 of the Statute;

text: (4) Whereas Article 10.3 of the Statute stipulates that for any decision taken under Article 32 of the Statute, the votes of the Governing Council of the ECB shall be weighted according to the NCBs’ shares in the subscribed capital of the ECB;

text: (5) Whereas

text: Council Regulation (EC) No. 974/98 of 3 May 1998

text: on the introduction of the euro, in particular Articles

text: and

text: thereof, has provided for a continuation, during the transition period (i.e. the period between 1 January 1999 and 31 December 2001), of the territorial limits for the legal tender status of banknotes denominated in a national currency unit; whereas such national banknotes are issued by the participating NCBs; whereas banknotes denominated in euro will only be put into circulation as from 1 January 2002; whereas during the transition period the ESCB’s monetary policy function is unlikely to have any material impact on banknotes in circulation;

text: HAS ADOPTED THIS DECISION:

text: Article 1

text: Definitions

text: For the purposes of this Decision: - “equivalent claims” shall mean the claims of the participating NCBs against the ECB arising from the transfer of foreign reserve assets from the NCBs to the ECB under Article 30 of the Statute;

text: - “euro area financial sector counterparties” shall mean (i) credit institutions as defined in the first indent of

text: Article 1 of Council Directive 77/780/EEC

text: , other than participating NCBs, the registered or head office of which is located in a participating Member State and (ii) branches of credit institutions, as defined in the first indent of

text: , in a participating Member State, which have neither their registered nor their head office in a participating Member State;

text: 3 - “HBS” shall mean the harmonised balance sheet as structured in Annex 4 of the Guideline of the European Central Bank of 1 December 1998 on the legal framework of accounting and reporting in the European System of Central Banks (ECB/1998/NP22); - “liability base” shall be the amount of qualifying liabilities, within the balance sheet of each participating NCB, specified in accordance with the Annex to this Decision; - “participating NCB” shall mean a national central bank of a Member State which has adopted the single currency in accordance with the Treaty establishing the European Community; - “reference rate” shall be the latest available interest rate used by the ESCB in its main refinancing operations under paragraph 3.1.2 of Annex 1 of the Guideline of the European Central Bank of 11 September 1998 on monetary policy instruments and procedures of the ESCB - ECB-GL/1998/02 (ECB/1998/NP16); - “transition period” shall mean the period between 1 January 1999 and 31 December 2001.

text: Article 2

text: Method for measuring monetary income

text: 1. During the transition period the amount of each participating NCB’s monetary income shall be determined in accordance with the following formula: MI = [LB x RR] Where: MI is the amount of each participating NCB’s monetary income to be pooled; LB is the liability base of each participating NCB; RR is the reference rate.

text: 2. The amount of each participating NCB’s monetary income shall be reduced by an amount equivalent to any interest paid on liabilities included within the liability base. 4

text: Article 3

text: Calculation and allocation of monetary income

text: 1. The calculation of each participating NCB’s monetary income shall be effected by the ECB on a daily basis. The calculation shall be based on accounting data reported by participating NCBs to the ECB under the Guideline of the European Central Bank of 1 December 1999 on the legal framework for accounting and reporting in the European System of Central Banks (ECB/1998/NP22).

text: 2. The sum of each participating NCB’s monetary income shall be allocated to the participating NCBs in proportion to their paid-up shares in the capital of the ECB. Such allocation of monetary income shall take place at the end of each financial year. The ECB shall inform the NCBs of the cumulative amounts on a quarterly basis.

text: 3. The amount of monetary income to be allocated to each participating NCB shall be adjusted in accordance with any decision by the Governing Council of the ECB made in relation to

text: Article 32.4

text: , second paragraph, of the Statute or to the risk-sharing provisions contained in the Decision of the European Central Bank of 22 December 1998 on the allocation of risks in relation to losses arising in ESCB credit operations (ECB/1998/NP29).

text: 4. The amount of monetary income to be allocated to each participating NCB shall be offset against the amounts due by the same participating NCB as calculated in accordance with

text: Article 2

text: above. The net balances arising from the allocation of monetary income shall be settled at the ECB.

text: Article 4

text: Transitional direct charge on income accruing to participating NCBs

text: from national banknotes in circulation

text: 1. There shall be a charge on income accruing to each participating NCB from assets held against national banknotes in circulation (hereinafter referred to as the NCB’s “seigniorage”). Such charge shall give the ECB the right to access an NCB’s seigniorage with the exclusive purpose of covering those losses of the ECB that cannot be funded during the financial years 1999, 2000 and 2001 either (i) in the manner outlined under Article 33.2 of the Statute, or (ii) against that portion of the 5 equivalent claims which can be partially offset against foreign exchange losses under the ECB Guideline (ECB/1998/NP8) of 3 November 1998 on the composition, valuation and modalities for the initial transfer of foreign reserve assets, and the denomination and remuneration of equivalent claims.

text: 2. The Governing Council of the ECB, in addition to approving the annual accounts of the ECB each financial year, will decide the amount of the charge and establish the modalities for settlement of unfunded losses.

text: 3. The amount of the charge shall have a maximum upper limit equivalent to the increase in the total monetary income of the ESCB that would have arisen if banknotes denominated in national currency units had been included in the liability base. The amount of the charge of each participating NCB shall be in proportion to its key for subscription to the capital of the ECB. This limit shall be reduced to the extent necessary to ensure that no participating NCB shall be liable for more than the total of its seigniorage income from national banknotes in circulation for the relevant financial year. For the purposes of this paragraph, national seigniorage shall be calculated by applying the reference rate to the amount of national banknotes in circulation.

text: Article 5

text: Final provision

text: This Decision applies to the financial years of 1999, 2000 and 2001.

text: Done at Frankfurt am Main on 3 November 1998.

text: The President of the ECB

text: [signed]

text: Willem F. Duisenberg

text: COMPOSITION OF THE LIABILITY BASE

text: A The liability base shall include, with the exclusion of any other item:

text: 1. Liabilities to euro area financial sector counterparties denominated in euro, including: (a) current accounts (item 2.1 of the HBS); (b) reserve requirements under Article 19.1 of the Statute (item 2.1 of the HBS); (c) amounts in deposit under the ESCB deposit facility (item 2.2 of the HBS); (d) fixed-term deposits (item 2.3 of the HBS); (e) deposits related to margin calls arising from ESCB monetary policy operations (item 2.4 of the HBS); (f) liabilities arising from liquidity-absorbing repurchase operations (reverse repos) under Chapter 3.1 of Annex 1 of the ECB Guideline of 11 September 1998 on monetary policy instruments and procedures of the ESCB.

text: 2. Liabilities of participating NCBs arising from the issuance to the ECB of promissory notes in connection with the issuance by the ECB of debt certificates under Chapter 3.3 of Annex 1 of the ECB Guideline of 11 September 1998 on monetary policy instruments and procedures of the ESCB (item 10.2 of the HBS). B The amount of each participating NCB’s liability base shall be calculated in accordance with the harmonised accounting principles and rules established in the Guideline of the European Central Bank of 1 December 1998 on the legal framework for accounting and reporting in the European System of Central Banks (ECB/1998/NP22).


title: Opinion of the European Central Bank of 25 November 1999 at the request of the Ministry of Finance of the Grand Duchy of Luxembourg on a draft legislative proposal concerning the contractual obligations of the financial sector which are due on 31 December 1999 (CON/99/17)

text: 1. On 26 October 1999 the European Central Bank (ECB) received a request from the Ministry of Finance of the Grand Duchy of Luxembourg for an ECB Opinion on a draft legislative proposal concerning the contractual obligations of the financial sector which are due on 31 December 1999.

text: 2. The ECB’s competence to deliver an opinion is based on Article 105 (4), second indent, of the Treaty establishing the European Community and Article 2 (1), fifth and sixth indents, of the Council Decision of 29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft legislative provisions (

text: ), as the legislative proposal deals with payment and settlement systems, as well as with the stability of financial institutions and markets. In accordance with

text: Article 17.5

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

text: 3. Following the conclusions of the informal meeting of the ECOFIN Council on 16 to 18 April 1999 on ways of dealing with possible problems during the changeover to the year 2000, the Ministry of Finance has prepared a draft legislative proposal. The purpose of this draft legislative proposal is to facilitate the transition to the year 2000 for the financial sector. The scope of application of the draft legislative proposal is broadly defined. The obligations covered by the draft legislative proposal include obligations of the financial sector, as well as of other obligors which use financial intermediaries, falling due on 31 December 1999. The draft legislative proposal takes into consideration the fact that TARGET will be closed on 31 December 1999 in order to facilitate the end-of-year activities of the financial sector in relation to the transition to the year 2000.

text: 4. In order to address these legal consequences, the draft legislative proposal stipulates that principal and accessory contractual obligations of the financial sector falling due on 31 December 1999 shall be performed on 30 December 1999. In addition,

text: Article 1

text: , section 2, of the draft legislative proposal clarifies that other obligors whose contractual obligations are performed by means of a financial institution shall not be in breach of contract because such obligations cannot be performed on 31 December 1999. Such obligors may discharge their responsibilities on the first working day after 31 December 1999. This protection means, for transactions subject to the legislation of Luxembourg, that neither the clients, the credit institutions nor other financial intermediaries shall be liable for possible losses suffered by creditors on account of this late performance. Contractual parties are, however, free to agree on other solutions inter se. First, the draft legislative proposal declares valid those contracts concluded by counterparties to execute performances due on 31 December 1999 on a day other than 30 December 1999. Second, counterparties may, after the introduction of the legislative proposal, opt to maintain 31 December 1999 as a performance day, provided that the financial intermediary which is to be used consents to such performance.

text: 5. The ECB welcomes the effort made by the authorities of the Grand Duchy of Luxembourg to reduce the legal uncertainty which might result, under the legislation of Luxembourg, from the closure of payment and securities settlement systems on 31 December 1999. The legislative proposal takes into account the “Communiqué of the central bank governors, endorsed by ECOFIN Ministers at their informal meeting”, issued after the informal meeting in Dresden on 17 April 1999, which urged the Member States to take appropriate measures to ensure that the performance of any contractual obligations of credit institutions or other agents in the financial markets shall neither become due nor be enforceable on 31 December 1999. The ECB also notes that by shifting the performance of the said obligations to 30 December 1999, the draft legislative proposal limits the number of transactions in the first week of the year 2000. This is in line with international advice. In doing so, the ECB finds that the draft legislative proposal could contribute to maintaining the stability of financial institutions and markets during the changeover to the year 2000.

text: 6. Banque centrale du Luxembourg has one comment suggesting that with respect to overnight credits the settlement date be postponed until 3 January 2000. The ECB has no objection to that suggestion.

text: 7. The ECB confirms that it has no objection to this ECB Opinion being made public by the competent national authorities at their discretion. Done at Frankfurt am Main on 25 November 1999. The President of the ECB [signed by C. Noyer] Willem F. Duisenberg


title: Opinion of the European Central Bank of 19 November 1999 at the request of the Bank of Greece on a draft legislative proposal amending Article 8, paragraph 5, and Articles 9 and 13 of the Statute of the Bank of Greece (CON/99/18)

text: 1. On 9 November 1999 the European Central Bank (ECB) received a request from the Bank of Greece for an ECB Opinion on a draft legislative proposal amending Article 8, paragraph 5, and Articles 9 and 13 of the Statute of the Bank of Greece.

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

text: ) of 29 June 1998 on the consultation of the ECB by national authorities regarding draft legislative provisions, as the draft legislative proposal contains provisions concerning a national central bank. In accordance with

text: Article 17.5

text: Article 8

text: , paragraph 5, of the draft legislative proposal stipulates that the State may increase its participation in the share capital of the Bank of Greece from 10% to 35%. There are no objections to such a provision from the ECB’s point of view.

text: 4. Article 9 of the draft legislative proposal empowers the General Council of the Bank of Greece to decide upon the stock split and determine the nominal value of the new shares. As the Bank of Greece is a public company limited by shares, it is subject to the provisions of law 2190/1920, as amended, with regard to the division of competence concerning matters of company law. According to the provisions of the above-mentioned law on public companies limited by shares, the shareholders’ meeting is competent to decide upon the stock split. The draft legislative proposal empowers the General Council of the Bank of Greece to decide upon such split. Given the need for immediate action in the event of rapid financial changes, it is understood that the delegation of the power to decide upon the split to the more flexible General Council is a matter of convenience and practicality. Furthermore, there are no objections to this provision from the ECB’s perspective.

text: 5. Article 13 of the draft legislative proposal empowers the General Council of the Bank of Greece to decide upon the minimum number of shares that entitles shareholders to participate in the meeting at which the split is decided. The ECB has no objection to this provision. 4. The ECB confirms that it has no objection to this ECB Opinion being made public by the competent national authorities at their discretion. Done at Frankfurt am Main on 19 November 1999. The President of the ECB [signed] Willem F. Duisenberg


text: “The basic tasks to be carried out through the ESCB shall be: […] to promote the smooth operation of payment systems.”

text: “In accordance with Article 105 (2) of the Treaty, the basic tasks to be carried out through the ESCB shall be: […] to promote the smooth operation of payment systems.” See Article 34.2 of the Statute: “A regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States.” 4 “The Central Bank may provide facilities to ensure efficient and sound clearing and payment systems.” 5 “The Governing Council shall adopt the guidelines and take the decisions necessary to ensure the performance of the tasks entrusted to the ESCB under this Treaty and this Statute.” 6 “To the extent deemed possible and appropriate and without prejudice to the provisions of this Article, the ECB shall have recourse to the national central banks to carry out operations which form part of the tasks of the ESCB.”

title: Opinion of the European Central Bank of 20 January 2000 at the request of the Luxembourg Ministry for the Treasury and the Budget on a draft legislative proposal implementing Directive 98/26/EC on settlement finality in payment and securities settlement systems in the law of 5 April 1993, as amended, relating to the financial sector and completing the law of 23 December 1998 creating a commission in charge of the prudential supervision of the financial sector (CON/99/19)

text: 1. On 19 November 1999 the European Central Bank (ECB) received a request from the Luxembourg Ministry for the Treasury and the Budget for an ECB Opinion on a draft legislative proposal implementing Directive

text: on settlement finality in payment and securities settlement systems (hereinafter referred to as the “Directive”) in the law of 5 April 1993, as amended, relating to the financial sector and completing the law of 23 December 1998 creating a commission in charge of the prudential supervision of the financial sector (hereinafter referred to as the “Draft Law”).

text: 2. To the extent that the Draft Law represents the implementation of the Directive in the Luxembourg legal system, the Luxembourg authorities were not, strictly speaking, legally obliged to consult the ECB under

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

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions. The ECB is seeking to promote proactively a harmonised EU-wide implementation of the Directive in the legislation of the Member States, in order to foster maximum transparency and legal certainty for the closely connected payment and securities settlement systems, and to ensure a level playingfield throughout the European Union. In view thereof, the ECB very much welcomes the opportunity to give its opinion on the Draft Law.

text: 3. In addition, the Draft Law addresses matters pertaining directly to the core fields of competence of the European System of Central Banks (ESCB) and introduces elements which go beyond the scope of the Directive. In this respect, the ECB’s competence to deliver an opinion is based on Article 105 (4) of the Treaty establishing the European Community (hereinafter referred to as the “Treaty”) and

text: Article 2 (1) of Council Decision (EC) No. 98/415 of 29 June 1998

text: , as the Draft Law deals with clearing and payment systems. In accordance with

text: Article 17.5

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

text: A. General observations on the competence of the Eurosystem in the field of oversight and on the concept of central bank oversight of clearing and payment systems as distinct from the prudential supervision of financial institutions

text: 4. The Draft Law proposes entrusting the national prudential supervisory authority (the “Commission de surveillance du secteur financier” – “CSSF”) with the oversight (including the prior authorisation) of payment and securities settlement systems to the exclusion of the Banque centrale du Luxembourg (the “BcL”). Indeed, the Draft Law strictly confines the role of the BcL to the provision of settlement facilities to some systems, and excludes it from the oversight function. Moreover, the Draft Law intends to entrust the CSSF with the “prudential supervision” of payment and settlement systems, with the “prudential supervision” of systems as envisaged in the Draft Law corresponding to the usual oversight tasks performed by central banks.

text: 5. First, this proposal would directly infringe the payment system oversight competence of the ECB and the national central banks of the Member States participating in Monetary Union (the “Eurosystem”), which is one of the core competences attributed to it by the Treaty. Second, if not reconsidered, the Draft Law would create a situation of conflict between the BcL and the CSSF in relation to the oversight function, since the BcL would continue to conduct oversight within the framework of the Eurosystem. Third, the Draft Law would fail to make an adequate distinction between the functions of prudential supervision, on the one hand, and those of payment systems oversight, on the other.

text: 6. Prior to the adoption of the Treaty, the oversight of payment systems had already been recognised as one of the main functions of the national central banks, although this was not always based on a specific and clearly formulated legal basis. The framework for this function, although informal, was effective and successful, since it was based on the technical experience and on the moral authority of the national central banks. Moreover, international consistency and effectiveness were ensured through co-ordinated action among central banks on the basis of principles established either at the G-10 or at the EU level.

text: 7. Article 105 (2) of the Treaty and Article 3.1 of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter referred to as the “Statute”) now provide the legal basis for the oversight activities of the Eurosystem. In addition, the competence of the Eurosystem for systems oversight results from Article 22 of the Statute, which reads: “the ECB and national central banks may provide facilities, and the ECB may make regulations , to ensure efficient and sound clearing and payment systems within the Community and with other countries”. Within the Eurosystem oversight activities are generally performed at the level of the national central banks, in line with the common oversight policy stance defined for the Eurosystem by the Governing Council of the ECB. The aim of the oversight of clearing and payment systems is the maintenance of systemic stability, the promotion of efficiency and the safeguarding of the transmission channel for monetary policy. In particular, payment arrangements are of crucial importance for the conduct of monetary policy in both the strategic and the operational sense. The above excludes the interference in the field of the Eurosystem’s oversight competence by any Community or national body other than a central bank acting within the framework of the ESCB/Eurosystem. Article 25 of the Luxembourg law of 23 December 1998 concerning the monetary status and the BcL is the national reflection of the framework created at the European level.

text: 8. On the basis of the Articles of the Treaty and of the Statute referred to above, read together with

text: Article 12.1

text: , first indent, of the Statute, the Governing Council of the ECB is the decision-making body responsible for the performance of the tasks of the Eurosystem in the field of oversight. According to

text: Article 12.1

text: , third indent, of the Statute, within the Eurosystem, the national central banks shall be available, and the ECB shall have recourse to them to the extent deemed possible and appropriate, for the implementation of the oversight policy stance. Against this background, the Draft Law cannot entrust the oversight function to any authority other than the BcL, as part of the Eurosystem.

text: 9. The payment system put in place by the Eurosystem and through which the Eurosystem’s operations are carried out is the TARGET system, the Luxembourg component of which is LIPS- Gross. The Governing Council is responsible for the direction, management and control of TARGET. The basic principle of independence, as enshrined in Article 7 of the Statute, would be hindered if the Governing Council were subject, in this capacity, to the authority of the CSSF.

text: 10. The “prudential supervision” of systems, as defined in the “Exposé des motifs” (the “Explanatory Memorandum”) and in the Draft Law itself, with regard to the CSSF in fact encompasses activities which are traditional oversight tasks, and refers to some of the principles defined by the central banks for the conduct of their oversight activities as indicated under point 6 above. Moreover, the notion of “prudential supervision” of systems (as such) is unknown in the developed world, where it is standard practice that payment systems are “overseen” by central banks. Should the CSSF nonetheless be entrusted with competence for the “prudential supervision” of clearing and payment systems under Luxembourg law, the Eurosystem will, for its part, remain entrusted with, and will have to perform, these oversight functions as prescribed by the Treaty and the Statute. In Luxembourg this would result, in practice, in an unusual, complex and potentially conflicting situation in which the oversight of clearing and payment systems would be carried out by both the BcL and the CSSF at the same time.

text: 11. The Explanatory Memorandum reasons that the CSSF would be in an appropriate position to assume prudential functions in relation to Luxembourg’s payment systems because it does not itself operate systems and therefore cannot be subject to a conflict of interest between its operational and prudential functions. It should be noted that Article 22 of the Statute itself states that national central banks and the ECB may operate systems while at the same time being entrusted with oversight functions within the framework of the Eurosystem. This possibility expressly afforded by the very legal basis of the Eurosystem should be seen as an indication of confidence in the ability of the Eurosystem to avoid a possible conflict of interest between the operational and oversight activities of central banks.

text: 12. In the same vein, and more specifically in relation to securities settlement systems (SSSs), the ECB notes that the Draft Law does not mention any need for collaboration between the CSSF and the BcL in the oversight of SSSs in Luxembourg, despite the international tendency to consider that the oversight of SSSs also requires the expertise of central banks. At least, whenever part of the service provided by the SSSs in Luxembourg has a direct impact on the smooth functioning of TARGET, the CSSF cannot be granted exclusive oversight competence. Indeed, Cedelbank provides services for the delivery of collateral securing intraday liquidity credit in TARGET and will soon provide facilities to settle in central bank money. With regard to these two aspects at least, the BcL should be directly involved in the oversight of that SSS. In addition, the “partnership” of the German SSS – Deutsche Börse Clearing AG – with Cedelbank leaves at present two national SSSs held by the same Luxembourg holding company, New Cedel International. Therefore, the attribution of oversight competence by the Draft Law can initially relate only to the system operated by Cedelbank and not address the oversight of any other system operated outside Luxembourg or of any system that would have a “multi-country” dimension.

text: 13. As indicated under point 5 above, the Draft Law does not make an adequate distinction between supervisory and oversight functions. Although drawing the dividing line between prudential supervision and payment systems oversight may be complex, a basic element of the distinction lies in the different subjects of the respective activities, which can clearly be separated. Prudential supervision aims to promote the stability of financial institutions (which may participate in and/or operate clearing and payment systems), while oversight pursues the promotion of the smooth operation of clearing and payment systems themselves. Both functions thus certainly have partially shared objectives, the clearest one of these being the stability of the financial system as a whole. The main focus of prudential supervision is, however, upon the safety and soundness of individual financial institutions, whereas the primary focus of oversight is the clearing and payment systems themselves in order to ensure their smooth operation, to avoid systemic risk within or between such systems and to ensure the efficient and sound transmission of monetary policy impulses. Hence, the objectives of prudential supervision and of oversight are conceptually distinct and are pursued with different viewpoints and tools. They need not therefore be combined and entrusted to a single authority. When the central bank is not also the banking supervisory authority, the shared objectives, the links between the systems and their participants, and the impact of failures in one area on the other call for close and extensive co-operation between the two functions in order to achieve the shared objectives in an optimal manner. With regard to this last point, the ECB would welcome the inclusion in the Draft Law of a specific provision governing the co-operation and exchange of information between the CSSF and the BcL.

text: 14. In this respect, the ECB also notes that the consulting authority is not required to combine the implementation of the Directive with the modification of the Luxembourg law on the organisation of the prudential supervision of the financial sector. If, however, such is the preferred choice, then it will be important for the respective competence in the areas of prudential supervision and oversight to be clearly defined.

text: B. Comments on the articles of the Draft Law

text: - With regard to Article I of the Draft Law:

text: 15. (A), (C), (G), (H), (I), (J): The ECB notes the proposed role of the CSSF under the Draft Law and would like, in addition to the observations made under Part A above, to make a number of comments in this regard. The ECB suggests that the Draft Law – including the Explanatory Memorandum – should identify and refer explicitly to the specific nature of the oversight of clearing and payment systems, on the one hand, and the prudential supervision of financial institutions, on the other. In this regard, the CSSF should maintain responsibility for the prudential supervision of the financial institutions involved in systems under the Draft Law, while the ECB recommends that the role of BcL, as part of the Eurosystem, as regards oversight (addressing clearing and payment systems as opposed to the entities involved) should be explicitly referred to in the Draft Law.

text: 16. (A): Article

text: : “Les opérateurs de systèmes de paiement ou de systèmes de règlement des

text: opérations sur titres”

text: (1) As also indicated below with reference to other articles, in Article

text: 2 (1)

text: the reference to the CSSF should be replaced by a reference to the BcL. (2) The ECB would favour clarification that this paragraph does not apply to the BcL.

text: 17. (C): Article

text: : “Définitions” provides a variety of definitions, including the following: a) “système”: Again, the arrangements for oversight should make reference to the basic task of the BcL, which is to promote the safety and efficiency of payment systems (which corresponds to the equivalent task of the ESCB as determined by Article 105 (2) of the Treaty and Article 3 of the Statute). It should be noted that the Directive does not, as such, require that Member States establish a systems authorisation procedure. Should several Member States participating in the euro area find it necessary to implement such a procedure in a formal manner, the Eurosystem may at some point have to ensure that the level playing-field is maintained among the systems within the euro area. At a local level, this will involve the participation of the BcL. As a consequence, and although the CSSF may be assigned the task of formally designating the systems (as “systems”) and giving notification of such systems to the Commission of the European Communities, the verification (e.g. checking against principles which belong to the oversight activities) and approval of systems (as “systems”) should, in the ECB’s view, be undertaken by the BcL, possibly in co- ordination and co-operation with the CSSF for all payment systems; with regard to SSSs, this should at least be the case for all aspects relating to the settlement of Eurosystem credit operations and settlement in central bank money. Finally, the ECB would welcome an acknowledgement in the Draft Law that all payment systems for which the BcL acts as settlement agent are automatically designated as systems to be notified to the Commission of the European Communities. l) “moment d’ouverture d’une procédure d’insolvabilité”. In this respect, the Draft Law has inserted an addition to the definition provided in

text: Article 6.1

text: . of the Directive, this addition reading “or any other moment defined by the national law applicable to the insolvency of a participant as being the moment of opening of an insolvency procedure”. This addition should be deleted. The Directive does not provide for this alternative, but determines, in an imperative manner, the moment of opening of the insolvency proceedings as the moment at which a competent authority hands down its decision. This second part of the definition poses material risks and uncertainty which should be avoided. In the Draft Law it is important that the terms chosen for the definition in question be clear in relation to the Luxembourg legal system and that they do not depart from the definition stated in the Directive, since this is the point at which significant legal consequences arising from other parts of the Directive would be entailed.

text: 18. 34-3: “Champ d’application”: The ECB notes that the new Chapter 5 on the authorisation of payment systems and securities settlement systems “shall apply to all payment systems and/or all securities settlement systems authorised in Luxembourg”. The ECB notes the intention to cover all payment and securities settlement systems authorised under the Draft Law, and considers that such authorisation should be processed along the lines indicated under point 17 above. As for Lux Clear, to which reference is made in the Explanatory Memorandum as a system in itself, it is the ECB’s understanding that Lux Clear refers only to certain services of another existing system and not to a system or legally separate entity as such.

text: 19. Article

text: : “La demande d’agrément”: (1) The ECB notes that the Draft Law implements the possibility to cover “a formal arrangement between two participants”, which is allowed under

text: Article 2

text: (a), final paragraph, of the Directive, provided that such a designation is warranted on the grounds of systemic risk. The ECB would welcome an express reference to systemic risk in the Draft Law, to be evaluated within the framework of the ESCB (including BcL). (2) The ECB would like to propose that the sentence “La Commission est l’autorité compétente pour accorder l’agrément aux systèmes” be amended along the lines indicated under point 17 above.

text: 20. Article

text: : “La procédure d’agrément”: The Draft Law subjects any amendment to the agreement, which forms the basis for the system, to prior authorisation. If it is the case that an “amendment” is also to be understood as the event of a new member joining, this request would appear to be too restrictive for the operation of the system. Moreover, the time-limits for a decision to be taken would appear to be unduly long.

text: 21. (H): Article

text: : “La surveillance prudentielle des systèmes de paiement et des systèmes de règlement des opérations sur titres agréés au Luxembourg”: The ECB proposes that the reference to “prudentielle” in the title of Chapter 2bis and Article

text: be deleted. It also proposes replacing the reference to “La Commission” with a reference to “La Banque centrale du Luxembourg” and deleting the references to “prudentielle” and to the “systèmes de règlement des opérations sur titres” in the sentence “La Commission est l’autorité compétente pour la surveillance prudentielle des systèmes de paiement et des systèmes de règlement des opérations sur titres qu’elle a agréés”. The ECB also proposes replacing “La Commission” with “La Banque centrale du Luxembourg” in the sentence “A ce titre, la Commission veille à l’application des règles de fonctionnement dont sont dotés les systèmes qu’elle a agréés”. Paragraph (G) of the Draft Law would also need to be adapted along these lines.

text: 22. (I): Again, the ECB proposes that the reference to “La Commission” be replaced with a reference to “La Banque centrale du Luxembourg” in the sentence “La Commission tient en outre le tableau officiel des systèmes de paiement et des systèmes de règlement des opérations sur titres agréés au Luxembourg”.

text: 23. (J) Article

text: : “Les dispositions spécifiques au caractère définitif du règlement dans les

text: systèmes de paiement et de règlement des opérations sur titres agréés au Luxembourg.”

text: (1): The Draft Law does not incorporate the text of Article 3 (2) of the Directive concerning the rules relating to the “suspect period”. Given the general nature of the wording used in Article

text: 2 (1)

text: , these provisions would not call into question the operations performed, at least not within the system. Nevertheless, legal certainty would be reinforced if the text of Article

text: explicitly referred to the rules concerning fraudulent operations.

text: (2): Paragraph 2 of Article

text: to a very large extent incorporates the wording of Article 3 (1) of the Directive. The following major differences should be noted and given further consideration: 1) the Draft Law inserts “between parties” after the words “shall be legally enforceable”; 2) the Draft Law adds the operator of the system to the list of persons who should not have been aware of the insolvency; 3) the text uses the conjunctive “and” instead of the disjunctive “or” in the list of persons mentioned.

text: (3): The ECB notes that, according to the Explanatory Memorandum (pages 12 and 20), the abolition of the “zero-hour rule” in Luxembourg is confirmed by the first indent of Article 61-2 (2) of the Draft Law. In this respect, the position adopted in the Explanatory Memorandum, namely that the above provision in the Draft Law is sufficient, should be further considered since Article 7 of the Directive, which relates to the disqualification of any “zero-hour rule”, is a key provision. Unless the abolition of the “zero-hour rule” is already clear and extensive enough under existing provisions of Luxembourg law as further specified by the Draft Law, an explicit statutory provision should be added to the Draft Law in order to reflect

text: Article 7

text: . Moreover, as was pointed out above, under the current wording of Article

text: (l) of the Draft Law, and contrary to

text: Article 6.1

text: . of the Directive, the moment of opening of the insolvency proceedings (which leaves it up to the national law applicable to the insolvency of the participant to determine otherwise) is not necessarily the moment at which the relevant authority hands down its decision, but could, for instance, be before. In the context of Article 7 of the Directive, this could lead to an indirect reintroduction of a retroactive effect of insolvency in spite of the provision contained in Article 61-2 (2) of the Draft Law.

text: (4): This provision is not part of the implementation of the Directive. It provides for the exemption from attachment of settlement accounts in respect of the operator of the system or the settlement agent. The provision seems to have been inspired by Article 9 of the Belgian law of 28 April 1999. The ECB notes, however, that this provision applies to any settlement account, whereas the corresponding Belgian provision is limited to cash settlement accounts. The ECB is pleased with the introduction of this rule, which would enhance the safeguarding of the systems, thus eliminating the danger that untimely attachments, or even improper attachments, could completely paralyse the settlement of a payment or securities settlement system.

text: 24. Article

text: : “Les dispositions spécifiques à la préservation des droits du titulaire de

text: garanties constituées dans le cadre de systèmes communautaires de paiement ou de règlement des opérations sur titres ou dans le cadre d’opérations des banques centrales des Etats Membres ou de la Banque centrale européenne contre les effets de l’insolvabilité de la

text: partie ayant constitué les garanties.” This provision implements Article 9 of the Directive. The

text: ECB is of the view that the protection provided for by Article 61-3 (2) of the Draft Law should be interpreted in general terms as covering any form of security interest in favour of participants, irrespective of the purpose underlying the creation of such security interest (i.e. it should not be limited to securing the obligations of participants vis-à-vis the operator or other participants in a system, these obligations arising from participation in such a system). It is worth mentioning that the conflict of law rules in the Directive are consistent with (i) the rule contained in Article 8 of the US Uniform Commercial Code, (ii) the national laws already in place in several Member States, and (iii) the current trend of academic authority on the complex matter of the cross-border trading of securities.

text: 25. Article

text: 4 (2)

text: and (3): The ECB proposes that the reference to “la Commission” be replaced by “la Banque centrale du Luxembourg” in this Article. - With regard to Article II of the Draft Law:

text: 26. The ECB refers to the developments contained in Part A of this Opinion and proposes that the envisaged addition of a new paragraph 3 to Article 2 of “la loi du 23 décembre 1998 portant création d’une commission de surveillance du secteur financier” be deleted.

text: 27. The ECB confirms that it has no objection to this ECB Opinion being made public by the competent national authorities at their discretion. In the light of the general application of the observations made, and the importance to the international financial markets of a uniform application of Community law in this field, the ECB will arrange for this Opinion to be copied to the competent national authorities of Member States responsible for implementing the Directive. Done at Frankfurt am Main on 20 January 2000. The President of the ECB [signed] Willem F. Duisenberg


title: Opinion of the European Central Bank of 17 February 2000 at the request of the French Ministry of Economics, Finance and Industry on two draft laws on the statute and role of the Institut d'émission des départements d'outre-mer (IEDOM) (CON/99/20)

text: 1. On 24 November 1999 the European Central Bank (ECB) received a request from the French Ministry of Economics, Finance and Industry for an ECB Opinion on two draft laws entitled the “Decree fixing the methods of application of Order No. 99 of 1999 relating to the status and activities of the Institut d’Émission des Départements d’Outre-Mer (IEDOM)” and “Order No. 99 ... of …. 1999 relating to the status and activities of the Institut d’Émission des Départements d’Outre-Mer”. Following informal comments made by the ECB, the French Ministry of Economics, Finance and Industry submitted two revised draft laws with a request for an ECB Opinion.

text: 2. The ECB’s competence to deliver an opinion is based on Article 105 (4) of the Treaty establishing the European Community (hereinafter referred to as the “Treaty”) and on Article 2 (1), in particular the first and third indents, of

text: Council Decision (EC) No. 98/415 of 29 June 1998

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions, as the draft laws deal with currency matters and the national central bank. In accordance with

text: Article 17.5

text: , first sentence, of the Rules of Procedure of the European Central Bank, this ECB Opinion has been adopted by the Governing Council of the ECB. This ECB Opinion is based on an unofficial English translation of the official French proposal.

text: 3. The draft laws are intended to revise the regulations regarding the functioning and organisation of the Institut d’Émission des Départements d’Outre-Mer (IEDOM) in order to reflect the transfer of national monetary powers to the ECB which came into force on 1 January 1999. The proposed modifications to the Statute of the IEDOM refer in particular to the relationship between the IEDOM and the Banque de France following the integration of the latter into the European System of Central Banks (ESCB), the composition of the Supervisory Board and the management of the IEDOM, the holding of accounts and the flow of payments between the Banque de France and the IEDOM concerning the latter’s profits and possible losses. Since 1 January 1999 the IEDOM has been conducting monetary policy operations of the ESCB in the French overseas departments of Guadeloupe, Guyana, Martinique and Réunion and the French territorial communities of Saint-Pierre-et-Miquelon and Mayotte (hereinafter referred to as “the geographical zone of activity”), with the latter two representing an integral part of France, but not forming part of the European Community and therefore not being subject to Community law. According to the proposed reform, it is fully recognised that the implementation of ESCB tasks in the geographical zone of activity pertains to the Banque de France under Chapter 1 of Law No. 93-980 of 4 August 1993, while the IEDOM becomes an agency of the Banque de France to carry out those tasks in the name of and on behalf of the Banque de France, with the exclusion of the holding and management of foreign reserve assets. For the purposes of carrying out these tasks, credit institutions established as branches or based in the geographical zone of activity have to open accounts at the Banque de France. These accounts are to be held by the IEDOM as an agent acting in the name of and on behalf of the Banque de France. At the same time, the IEDOM will also carry out its own tasks in the geographical zone of activity, such as putting coins into circulation and other tasks of general interest entrusted to it by the State.

text: 4. The ECB welcomes the intention of France to reform the IEDOM. The Statute of the European System of Central Banks and of the European Central Bank does not allow for ESCB tasks to be carried out by bodies other than the ECB and the 15 national central banks forming the ESCB, so in that respect the current situation needed to be amended. The ECB notes that a special regime may be admitted for the French overseas departments under Article 299.2 of the Treaty, based on their remoteness, insularity, small size, difficult topography and climate and economic dependence on few products, as is also reflected in Declaration No. 26 on the outermost regions of the Community, annexed to the Final Act of the Treaty on European Union (the “Maastricht Treaty”). However, it is also noted that the draft laws are not based on any specific decision of the Council under that Article. By applying the proposed agency status it can be ensured that it will be the Banque de France as an integral part of the ESCB and not the IEDOM which will perform ESCB-related monetary policy operations in the geographical zone of activity. The role of the IEDOM will become purely instrumental and will consist in putting its organisation at the disposal of the Banque de France in the relevant territories. All corresponding regulatory and contractual arrangements with counterparties located in the geographical zone of activity will be entered into exclusively with the Banque de France and will be identical to those applied to counterparties located in metropolitan France. The counterparties will open accounts in the books of the Banque de France and, therefore, all ESCB-related financial transactions will be recorded immediately in the accounts and in the financial statements of the Banque de France. Consequently, as far as ESCB-related tasks are concerned, the ECB has been ensured by the Banque de France that

text: Articles 6

text: to 8 of the draft Government Order will not apply as this would otherwise be inconsistent with the agency status of the IEDOM. These provisions deal with the settlement of losses and profits, the legal nature of the operations entered into by the IEDOM on its own account, the methods for the presentation and settlement of accounts of the IEDOM and their consolidation with the accounts of the Banque de France, and are linked to the IEDOM’s own tasks.

text: 5. The ECB welcomes the fact that the new draft laws provide for a clear allocation of competences between the Supervisory Board and the Director General, which take into account the special status of the IEDOM as agent of the Banque de France. The Supervisory Board is only vested with decision-making powers for the IEDOM’s own tasks (

text: Article 1

text: -VII of the draft Decree amending Article 12 of the Decree of 18 October 1986). As far as the IEDOM’s activities as an agent of the Banque de France are concerned, it is the Director General who will manage the IEDOM and who will represent the IEDOM externally (

text: Article 1

text: -VIII of the draft Decree amending Article 13 of the Decree of 18 October 1986). The ECB understands that the reference in

text: Article 1

text: -VIII of the draft Decree to the Director General acting under the control of the Supervisory Board only applies to the management of the IEDOM’s own tasks and that, as far as the IEDOM’s activities as an agent of the Banque de France are concerned, the Director General will act under the instructions of the Governor of the Banque de France.

text: 6. The ECB understands that the IEDOM will not carry out any tasks related to the collection of statistics related to Monetary Financial Institutions necessary for the ESCB to undertake it tasks, as in the geographical zone of activity these activities will be performed within the framework for reporting of statistics to the French Banking Commission.

text: 7. The ECB takes the view that its responsibility for ensuring the integrity of the ESCB requires it to consider the agency status of the IEDOM as a situation which is acceptable only exceptionally, owing to the particular nature of the IEDOM, especially its former status as a central bank in the geographical zone of activity. A permanent IEDOM-based structure would require the approval of the Council in accordance with the procedure laid down in Article 299.2 of the Treaty. The ECB stresses that the particular nature of the IEDOM does not warrant consideration of its status as agent of the Banque de France as a precedent for any future cases.

text: 8. The ECB understands that, should the Banque de France and the IEDOM prepare a joint agreement laying down the details of the operational mechanisms for the implementation of the single monetary policy in the geographical zone of activity, the ECB will be consulted accordingly.

text: 9. The ECB finally notes that the two draft laws do not provide for an application of those parts of Community law including all ECB legal acts which are or will be necessary for the functioning of Economic and Monetary Union in Saint-Pierre-et-Miquelon and Mayotte. The ECB urges France to prepare for the application of such legislation without further delay in order to comply with Article 4 of the

text: Council Decision (EC) No. 1999/95

text: /EC of 31 December 1998 concerning the monetary arrangements in the French territorial communities of Saint-Pierre-et-Miquelon and Mayotte (hereinafter referred to as the Council Decision), which requires that such is made in agreement with the Commission of the European Communities and the ECB.

text: 10. The ECB confirms that it has no objection to this ECB Opinion being made public by the competent national authorities at their discretion. Done at Frankfurt am Main on 17 February 2000. The President of the ECB [signed] Willem F. Duisenberg