text: Council Decision 98/415/EC of 29 June 1998

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

text: Such pilot studies will be carried out by Eurostat on the impact of cross-border restructuring and relocation processes of multinational enterprise groups on the quality and reliability of official economic and business statistics.

text: Regulation (EC) No 1893/2006

text: of the European Parliament and of the Council of 20 December 2006 establishing the statistical classification of economic activities NACE Revision 2 and amending

text: Council Regulation (EEC) No 3037/90

text: as well as certain EC Regulations on specific statistical domains (OJ L 393, 30.12.2006, p. 1).

text: Regulation (EC) No 223/2009

text: of the European Parliament and of the Council of 11 March 2009 on European statistics and repealing Regulation (EC, Euratom) No 1101/2008 of the European Parliament and of the Council on the transmission of data subject to statistical confidentiality to the Statistical Office of the European Communities,

text: Council Regulation (EC) No 322/97

text: on Community Statistics, and

text: Council Decision 89/382/EEC

text: , Euratom establishing a Committee on the Statistical Programmes of the European Communities (OJ L 87, 31.3.2009, p. 164).

text: Regulation (EC) No 295/2008

text: of the European Parliament and of the Council of 11 March 2008 concerning structural business statistics (OJ L 97, 9.4.2008, p. 13). 6

text: Commission Regulation (EC) No 251/2009 of 11 March 2009

text: implementing and amending

text: Regulation (EC) No 295/2008

text: of the European Parliament and of the Council as regards the series of data to be produced for structural business statistics and the adaptations necessary after the revision of the statistical classification of products by activity (CPA) (OJ L 86, 31.3.2009, p. 170). 7

text: Council Regulation (EEC) No 696/93 of 15 March 1993

text: on the statistical units for the observation and analysis of the production system in the Community (OJ L 76, 30.3.1993, p. 1).

text: Directive

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

text: and repealing Directives

text: and

text: (OJ L 176, 27.6.2013, p. 338). 9 Directive

text: of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives

text: and

text: and Directive

text: of the European Parliament and of the Council and repealing

text: Council Directive 93/22/EEC

text: (OJ L 145, 30.4.2004, p. 1). 10 Bundesanstalt für Finanzdienstleistungsaufsicht v Ewald Baumeister,

text: , ECLI:EU:C:2018:464).

title: Opinion of the European Central Bank of 3 September 2018 on the transmission of administrative data for statistical purposes (CON/2018/40)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 3 September 2018 on the transmission of administrative data for statistical purposes (

text: ) Introduction and legal basis

text: On 20 July 2018 the European Central Bank (ECB) received a request from the German Federal Ministry of Economic Affairs and Energy (hereinafter ‘the Ministry’) for an opinion on a draft law governing the statistical use of administrative data and the transmission of detailed information on multinational enterprise groups to statistical authorities (hereinafter the ‘draft law’). On 10 August 2018, the Ministry submitted to the ECB a revised version of the draft law. The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third indent of

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

text: , as the draft law relates to the Deutsche Bundesbank (hereinafter ‘the Bundesbank’), and the specific tasks conferred upon the ECB concerning the prudential supervision of credit institutions under Article 127(6) of the Treaty. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose and content of the draft law

text: 1.1 According to its explanatory memorandum, the draft law is intended to govern aspects of data exchange between authorities for two separate issues. First, the application of the EU concept of ‘enterprise’ for statistical purposes in Germany from the reporting year 2018 onwards requires that data available at the Bundesbank and the Bundesanstalt für Finanzdienstleistungen (BaFin, the Federal Financial Supervisory Authority) can be submitted to the Statistisches Bundesamt (Federal Statistical Office) and the statistical offices of the Federal States. Second, to ensure that Germany can adequately participate in pilot studies of Eurostat on statistical data concerning multinational enterprises, provision has to be made for the exchange of detailed information at the European level. 1.2 The draft law obliges the Bundesbank to provide the Federal Statistical Office with the following data regarding entities belonging to economic activity classes 64.19-Other monetary

text: intermediation and 64.92-Other credit granting as referred to in Annex I of

text: Regulation (EC) No 1893/2006

text: : (1) name and address, (2) legal form, (3) economic activity, (4) place and number of entry in the trade register, (5) Legal Entity Identifier and (6) data from the annual profit and loss account as well as data collected on staff. 1.3 Furthermore, the Federal Statistical Office is required by the draft law to transmit the data received from the Bundesbank to the statistical offices of the Federal States for their respective field of competence. 1.4 The draft law sets out that persons obliged to abide by confidentiality with respect to supervisory data according to section 9 of the German Banking Act (Kreditwesengesetz) are exempt from professional secrecy with respect to the data concerned by the draft law. Furthermore, the draft law sets out that the confidentiality obligations arising from the German Banking Act with respect to, inter alia, Bundesbank staff members shall be applicable accordingly to personnel of the German statistical offices with respect to data concerned by the draft law. 1.5 The draft law authorises the Federal Statistical Office to transmit detailed information, inter alia, to members of the European System of Central Banks (ESCB) insofar as this is necessary to verify and improve the quality of the treatment of multinational enterprise groups in the national accounts and foreign trade statistics of the Member States of the European Union. Such detailed information includes general information on multinational and national enterprise groups as well as quantitative economic statistics data. According to the draft law, the authorisation for the Federal Statistical Office to transmit such data is valid until the end of 2021. 1.6 According to the explanatory memorandum of the draft law, the Federal Statistical Office is, for the purposes of

text: Article 5(1) of Regulation (EC) No 223/2009

text: , the point of contact for Eurostat in statistical matters. As such, it is obliged pursuant to Article 5(1) of Regulation (EC) 5 6 No 295/2008 in conjunction with

text: Commission Regulation (EC) No 251/2009

text: to acquire certain data concerning structural business statistics. For the proper implementation of the EU concept of statistical enterprise in terms of

text: Council Regulation (EEC) No 696/93

text: , the Federal Statistical Office will, from reporting year 2018 onwards, have to fulfil its coordination function and send the required data to Eurostat. In accordance with

text: Article 5(3) of Regulation (EC) No 295/2008

text: and

text: Article 17

text: a(1) of

text: Regulation (EC) No 223/2009

text: , national authorities shall have access to

text: and use available administrative data in order to reduce response burdens. Therefore the Federal Statistical Office should draw on available data from the Bundesbank. 1.7 According to the explanatory memorandum accompanying the draft law, the provisions of the draft law are compatible with Directive

text: (hereinafter ‘CRD IV’). The sharing of data by the Bundesbank with the Federal Statistical Office is required to comply with the EU law on statistics referred to above. Since these EU laws on statistics have equal standing with CRD IV, extending the grounds to share confidential supervisory data is justified.

text: 2. Disclosure of supervisory data to the statistical offices

text: 2.1 The ECB understands that the draft law effectively requires the Bundesbank to disclose data it has collected in the performance of its supervisory function. 2.2 It is questionable whether and to what extent the data submitted by the Bundesbank to the statistical offices under the draft law indeed concerns confidential information in terms of CRD IV. As the Court of Justice of the European Union has ruled with respect to

text: Article 54 of Directive 2004/39/EC

text: , not all information communicated to a competent supervisory authority unconditionally constitutes confidential information. The information to be made available in accordance with the draft law may indeed be publicly available. Taking this into account, the impact of the draft law on confidential supervisory data may be further clarified in this regard. 2.3 Insofar as the draft law concerns confidential supervisory data according to Title VII, Chapter 1, Section II of CRD IV, it is noted that

text: Articles 53

text: to 62 of CRD IV set out conditions under which confidential supervisory information may be shared with third parties, and refer to specific permitted recipients in this respect. 2.4 The ECB takes note of the position reflected in the explanatory memorandum of the draft law that the Federal Statistical Office, in its capacity as the point of contact for Eurostat, is obliged to acquire the necessary data on structural business statistics. The ECB also acknowledges that according to

text: Regulation (EC) No 295/2008

text: and

text: Regulation (EC) No 223/2009

text: the Federal Statistical Office shall have the right to have access to existing administrative records in order to reduce the response burden, and that administrative data be used to meet the requirements of the Regulation. 2.5 However, the ECB takes note that Title VII, Chapter 1, Section II of CRD IV, which is a part of the Single Rulebook and forms the specific legal regime applicable to the competent authorities, explicitly sets out various grounds permitting the competent authorities to disclose confidential supervisory information, none of which refer to the disclosure for the purposes of the draft law, i.e. disclosure for statistical purposes. The justification of the draft law does not address this

text: issue in detail but refers to the concept of access to administrative records for statistical purposes. 2.6 Considering that the definition of ‘administrative data’ is not stipulated in the draft law, making it difficult to define ex ante which type of data could be specified by means of decree of the Federal Government as additional data on economic entities to be transmitted by the Bundesbank, it should be considered whether the authorisation may concern confidential supervisory data. 2.7 In addition, the ECB expects the Federal Government to consult the ECB in accordance with Article 127(4) of the Treaty before adopting a decree under the draft law that would require submission of additional data linked to the ECB’s competence.

text: 3. Submission of statistical data to the ESCB

text: The ECB welcomes the provision of a temporary basis for the Federal Statistical Office to share statistical data with the members of the ESCB for the purpose of verifying and improving the quality of the treatment of multinational enterprise groups in the national accounts and foreign trade statistics of the Member States.

text: Done at Frankfurt am Main, 3 September 2018.

text: [signed]

text: The President of the ECB

text: Mario DRAGHI


text: Council Decision 98/415/EC of 29 June 1998

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

text: See Article VI.7/1, VI.7/2 and VI.7/3 of the “Code de droit économique”/ “Wetboek van economisch recht” (Economic Law Code), as most recently amended by a Law of 15 May 2014.

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

text: on the introduction of the euro (OJ L 139, 11.5.1998, p. 1).

text: See paragraph 2.1 of Opinion

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

text: See

text: Recital 7

text: of

text: Regulation (EU) No 651/2012

text: of the European Parliament and of the Council of 4 July 2012 on the issuance of euro coins (OJ L 201, 27.7.2012, p. 135).

text: This report is available at http/ec.europa.eu/economy_finance/articles/euro/documents/elteg_en.pdf. 7 Commission Recommendation of 22 March 2010 on the scope and effects of legal tender of euro banknotes and coins (OJ L 83, 30.3.2010, p. 70). See in particular the ninth recommendation. 8 See paragraph 6 of Opinion

text: and paragraph 2.3 of Opinion

text: . 9 See paragraph 2.4 of Opinion

publisher: Europeiska centralbanken

sprak: en

title: Opinion of the European Central Bank of 4 September 2018 on new rounding rules for payments denominated in euro (CON/2018/41)

serie: con

text: OPINION OF THE EUROPEAN CENTRAL BANK of 4 September 2018 on new rounding rules for payments denominated in euro (

text: ) Introduction and legal basis

type: rubrik

text: On 8 August 2018 the European Central Bank (ECB) received a request from the Belgian Ministry of Employment, Economy and Consumers for an opinion on a draft law setting out new rounding rules for payments denominated in euro (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Article 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the first and second indents of

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

text: , as the draft law relates to currency matters and means of payment. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

type: stycke

text: 1. Purpose of the draft law

text: 1.1 The main purpose of the draft law is to enhance the efficiency of cash payments in Belgium. 1.2 Under the current legal framework , retailers may round the total price to be paid by consumers to the nearest five euro cent, regardless of whether the relevant payment is made with banknotes, coins, electronic money or comparable means of payment. If retailers decide to round amounts to be paid, they must do so in a consistent manner and duly inform consumers. 1.3 The explanatory memorandum accompanying the draft law mentions a recent survey conducted in Belgium according to which only 30 % of retailers apply the existing optional rule on rounding of payments, although 80 % of retailers are in favour of such rounding. The same survey indicates that eight out of ten consumers have difficulties using coins of one or two euro cent and seven out of ten consumers are in favour of their abolition through the rounding of cash payments. Furthermore, according to the explanatory memorandum, the agence pour la simplification administrative/ Dienst voor de Administratieve Vereenvoudiging (the office for Administrative Simplification) has estimated that the costs related to the delivery, sorting, counting and transport of one and two euro cent coins amount to EUR 44 million. In addition, the explanatory memorandum highlights the high cost to the administration générale de la trésorerie/ Algemene Administratie van de Thesaurie (general administration for treasury) caused by the issuance of one

text: and two euro cent coins, for which there is a continuous need due to the limited circulation thereof. As a consequence, the administration générale du trésor/ Algemene Administratie van de Thesaurie general administration for (treasury) had to put approximately 60 million coins into circulation last year. 1.4 In order to address the limited efficiency of the existing rules on payments and alleviate the costs caused by the minting and circulation of one and two euro cent coins, the draft law provides that, from 1 December 2019, it will be mandatory for retailers to round the total price paid in cash by consumers to the nearest five cent multiple. Total prices ending with one, two, six or seven cents shall be rounded down to the nearest five cent. Total prices ending with three, four, eight or nine cents shall be rounded up to the nearest five cent. Rounding also applies to the amounts paid back in cash by retailers to consumers. 1.5 Furthermore, the draft law authorises retailers on an optional basis to round the total price when the payment is carried out with means of payment other than cash. This option, if used by retailers, must be implemented for all other means of payment and applies to the amounts paid back by retailers to consumers. Furthermore, retailers must inform consumers about the rounding of all payments by openly and clearly displaying on their premises where the payments take place a sign stating that the total amount is always rounded. 1.6 When voluntary rounding is widespread, the draft law empowers the King of Belgium to impose by royal decree the mandatory rounding of payments carried out with other means of payment, including, for example, electronic money or meal vouchers. 1.7 Rounding of all payments – whether on a mandatory basis for cash from 1 December 2019 or on an optional or mandatory basis for other means of payment - may only be implemented if the payment takes place in the physical presence of the consumer of the retailer and if the total amounts due exceed five euro cent. 1.8 According to the explanatory memorandum, the proposed amendments to the rules on payments would not affect the legal tender of the one and two euro cent coins, as consumers and enterprises would still be authorised to use them.

text: 2. General observations

text: 2.1 The draft law is not likely to have real impact on inflation in Belgium, particularly considering that total prices and amounts paid back ending with one, two, six or seven cents would be rounded down to the nearest five cent, while total prices ending with three, four, eight or nine cents would be rounded up to the nearest five cent as equal shares of payments are likely to be rounded upwards or downwards (symmetric rounding). 2.2 In accordance with Article 128(2) of the Treaty, the competence to adopt measures to harmonise the denomination and technical specifications of all euro coins intended for circulation to the extent necessary to permit their smooth circulation within the Union is vested in the Council of the European Union, on a proposal from the European Commission and after consulting the European Parliament and the ECB. The legal tender status of euro cent coins within the euro area is laid

text: down in

text: Article 11 of Council Regulation (EC) No 974/98

text: . In addition,

text: Article 2 of Regulation (EC) No 974/98

text: provides that the euro, as the currency of the euro area, is divided into one hundred cent. The denomination structure of the euro coins (i.e. 1, 2, 5, 10, 50 euro cents, 1 euro and 2 euro coins) has remained unchanged since the introduction of the euro . However, the use of different denominations of euro coins, as currently devised, should be periodically and carefully examined by the competent institutions against the criteria of cost and public acceptability. In particular, the Commission should conduct an impact assessment on the continued issuance of one and two euro cent coins . 2.3 The ECB recalls that the competent authorities have repeatedly expressed their concern as regards rounding rules which undermine not only the legal tender status of one and two euro cent coins but also the existence of these denominations. In particular, making rounding mandatory would in practice endanger the existence of one and two euro cent denominations. Rounding legislation should not prevent the one and two euro cent coins from being used as a means of payment as they are de jure legal tender in the entire euro area. Member States’ legislation should not lead to divergent treatment of the euro. In its ‘Report on the definition, scope and effects of legal tender of euro banknotes and coins’, the Euro Legal Tender Expert Group (ELTEG) advised that ‘rounding rules seem to be contradictory to the notion of legal tender of coins [as] tendering the exact amount due does not extinguish the debt (except in the Netherlands), while the very notion of legal tender implies the possibility to settle the exact amount owed’. In its Recommendation of 22 March 2010 on the scope and effects of legal tender of euro banknotes and coins , the Commission recommended that ‘Member States should […] refrain from adopting new rounding rules since they affect negatively the power to discharge from a payment obligation by tendering the exact amount owed and since it may lead in some circumstances to a surcharge on cash payments’ . 2.4 With a view to preserving the unity and integrity of the single monetary area, the ECB therefore recommends that any rounding rules are established in a harmonised manner at Union, rather than at national level . Accordingly, any mandatory rounding rules on euro coins would appear to call exclusively for Union rather than national legislation given that the euro coins are the only legal tender coins in the Members States whose currency is the euro. 2.5 Notwithstanding this general concern, the ECB nevertheless welcomes that, as emphasised in the preparatory work for the draft law and the consultation letter, the draft law does not alter the legal tender status of one and two euro cent coins in Belgium, which shall still be accepted for payments if the payer wants to use one or two euro cent coins. This may be the case for payments amounting

text: to one, two, three or four euro cent and (ii) payments of rounded prices, if the customer wants to use one and two euro cent coins in this respect. 2.6 As a matter of principle, the ECB is not opposed to the voluntary symmetric rounding of cash payments where it may contribute to the reduction of costs for authorities, banks and retailers in minting, supplying, sorting and handling these coins. Such concerns are, however, irrelevant for cashless payments, in respect of which the need for rounding is hence arguable. In the context of equal treatment of cash and cashless payments, the ECB has a clear preference for voluntary rounding for both types of payment. 2.7 In view of the above, the ECB encourages the Belgian legislator to find alternative methods to promote the more widespread implementation of the current optional rules on rounding, for example by related communication measures, especially as the survey referred to in the preparatory work acknowledges the strong preference of both retailers and consumers for such rounding.

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

text: Done at Frankfurt am Main, 4 September 2018.

text: [signed]

text: The President of the ECB

text: Mario DRAGHI

type: vagledning

utgivare: ecb


text: Council Decision 98/415/EC of 29 June 1998

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

text: Decreto Legge 24 gennaio 2015, no. 3 “Misure urgenti per il sistema bancario e gli investimenti” (GU Serie Generale no 19 of 24-01-2015), converted into law by Legge 24 marzo 2015, no. 33 “Conversione in legge, con modificazioni, del decreto-legge 24 gennaio 2015, n. 3, recante misure urgenti per il sistema bancario e gli investimenti” (GU Serie Generale no 70 of 25-03-2015 – Suppl. Ordinario no 15).

text: Decreto Legge 14 febbraio 2016, no. 18 “Misure urgenti concernenti la riforma delle banche di credito cooperativo, la garanzia sulla cartolarizzazione delle sofferenze, il regime fiscale relativo alle procedure di crisi e la gestione collettiva del risparmio” (GU Serie Generale n.37 of 15-2-2016 ), converted into law by Legge 8 aprile 2016 n. 49 “Conversione in legge, con modificazioni, del decreto-legge 14 febbraio 2016, n. 18, recante misure urgenti concernenti la riforma delle banche di credito cooperativo, la garanzia sulla cartolarizzazione delle sofferenze, il regime fiscale relativo alle procedure di crisi e la gestione collettiva del risparmio” (GU Serie Generale no 87 of 14- 04-2016).

text: Decreto Legislativo 1 settembre 1993, n. 385 “Testo unico delle leggi in materia bancaria e creditizia” (GU Serie Generale n.230 of 30-9-1993 - Suppl. Ordinario n. 92).

text: See European Central Bank, Guide to consultation of the European Central Bank by national authorities regarding draft legislative provisions (October 2015), pp. 21-22, available on the ECB’s website at www.ecb.europa.eu.

text: See paragraph 2 of Opinion

text: Sentenza 99/2018 (ECLI:IT:COST:2018:99).

text: See paragraph 3.1.3 of Opinion

text: See paragraph 3.1.5 of Opinion

title: Opinion of the European Central Bank of 11 September 2018 on amendments to the reform of popolari banks and cooperative banks (CON/2018/42)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 11 September 2018 on amendments to the reform of popolari banks and cooperative banks (

text: ) Introduction and legal basis

text: On 3 August 2018 the European Central Bank (ECB) received a request from the Ministry of Economic Affairs and Finance for an opinion on Article 11 of Decree-Law No 91 of 25 July 2018 on the extension of deadlines for popolari banks and cooperative banking groups (hereinafter the ‘Decree-Law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the sixth indent of

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

text: 1. Purpose of the Decree-Law

text: The Decree-Law introduces amendments to Decree-Law No 3 of 24 January 2015 on the reform of popolari banks (hereinafter ‘Decree-Law 3/2015’) and to Decree-Law No 18 of 14 February 2016 on the reform of cooperative banks (hereinafter ‘Decree-Law 18/2016’), in order to extend the deadlines provided for in those laws. In addition, it introduces amendments to Legislative Decree No 385 of 1 September 1993 (hereinafter the ‘Consolidated Law on Banking’) that seek to (a) increase cooperative banks’ holdings in the capital of their parent companies; (b) enhance the local character and decentralised features of cooperative banking groups; (c) set a mandatory proportion of the board of directors to be appointed by cooperative banks (half plus two of the overall number of directors); and (d) provide cooperative banks that have a lower risk profile with greater autonomy.

text: 1.1 Extension of deadlines for popolari banks and cooperative banking groups 1.1.1 Pursuant to Article 2(1) of Decree-Law 3/2015, popolari banks with assets of more than EUR 8 billion are obliged either to convert to joint-stock companies, wind up, or reduce their assets below that threshold within 18 months from the entry into force of the Banca d’Italia implementing measures adopted pursuant to Article 29 of the Consolidated Law on Banking. The Decree-Law postpones this deadline to 31 December 2018. 1.1.2 Pursuant to

text: Article 2(1)

text: and (2) of Decree-Law 18/2016, a cohesion contract is to be concluded among cooperative banks and the parent company within 90 days from the date on which authorisation is received from the competent authority allowing the creation of a cooperative banking group. Subsequently, within 90 days from entering the cooperative banking group in the Italian company register, additional individual cooperative banks may request to sign the cohesion contract on the same conditions as the initial signatories. The Decree-Law extends both deadlines to 180 days. 1.2 Governance issues The Decree-Law amends

text: Article 37

text: -bis of the Consolidated Law on Banking, with reference to the regime applicable to cooperative banking groups. In particular, it provides for the minimum shareholding in a cooperative parent company held by cooperative banks to be increased to 60 %. In addition, it provides that cooperative banks are to be represented on the board of directors of the parent company of the cooperative banking group being assigned half of the total number of seats available, plus an additional two seats (on the basis of the ‘half plus two’ rule). 1.3 Enhancement of the decentralised features of the cooperative banking group The Decree-Law introduces a new paragraph 3-bis into

text: Article 37

text: -bis of the Consolidated Law on Banking. In particular, it increases the participation of individual cooperative banks in the formulation of the group’s strategic and operational plan by means of compulsory consultations to take place at ‘territorial meetings’, which are held at local level. In addition, it allows cooperative banks with a lower risk profile (a) to autonomously define their strategic and operational plans, in line with objectives and methodologies set by the parent company; and (b) to autonomously nominate members of their boards of directors and, in the event that the parent company disagrees with these nominations, to present a list of three alternative candidates from which the parent company may choose one.

text: 2. The appropriate time to consult the ECB

text: 2.1 The ECB must be consulted at an appropriate stage in the legislative process. This should be a time that enables the ECB to adopt its opinion in all required language versions and that enables the authority initiating the legislative provision to take the ECB’s opinion into account before it decides on the substance . 2.2 In the Italian legal system, a decree-law, adopted by the Government, enters into force following publication in the Gazzetta Ufficiale and must be submitted on the same day to Parliament for

text: conversion into law. If not converted within 60 days of publication, the decree-law is rendered invalid with retroactive application. In the light of the above, the ECB should be consulted before the adoption of a decree-law .

text: 3. Observations

text: 3.1 With reference to the extension of the deadline set under Article 2(1) of Decree-Law 3/2015 for the transformation of popolari banks into joint-stock companies, the ECB understands that the need for this extension is based on the constitutional review of Decree-Law 3/2015, which has now been concluded. In particular, the original deadline was suspended by the Italian Council of State, pending a decision of the Italian Constitutional Court. As a result of the constitutionality of Decree- Law 3/2015 having been upheld by the Italian Constitutional Court in Decision No 99 of 21 March 2018 (Decision 99/2018) , and following an upcoming assessment by the Council of State, time will start running again in relation to the deadline. At that point, popolari banks will have less than two weeks to call an extraordinary general meeting and vote on their transformation into joint-stock companies. 3.2 Against this background, the postponement of the deadline to 31 December 2018 seems reasonable, as this will allow popolari banks that have not yet complied with Article 2(1) of Decree- Law 18/2016 to do so within a feasible timeframe. Nonetheless, it is noted that Decision 99/2018 upheld the constitutionality of Decree-Law 3/2015 in allowing cooperative banks to limit, even in full, the right of shareholders to have their shares redeemed in case of withdrawal from the company when this limitation is necessary to meet the own funds requirements. For this reason, from a prudential perspective, the extension of this deadline should not be construed as allowing the postponement of the adoption by popolari banks of any measures necessary for their transformation into joint-stock companies. 3.3 With reference to the extension of the deadlines set under Article 2(1) of Decree-Law 18/2016 for the conclusion and signature of the cohesion contract, the ECB would like to underscore that the swift adaptation of individual cooperative banks and their integration within cooperative banking groups as one of the foremost objectives of the reform should be preserved. The ECB notes that the establishment of each group has already been authorised by the competent authorities, triggering the start of the 180-day period within which the cooperative banks would be required to sign the cohesion contract. 3.4 With reference to the mandatory proportion of directors on the boards of parent companies that are appointed by individual cooperative banks of the group and the increase in the shareholdings in the parent companies owned by those individual cooperative banks, the ECB understands that these amendments strengthen the position of individual cooperative banks within cooperative banking groups in line with article 45 of the Italian Constitution.

text: 3.5 As previously noted by the ECB , the reform of Italian cooperative banks and the consolidation of individual cooperative banks within banking groups are important to address the vulnerabilities of the Italian cooperative banking sector, in particular its capacity to absorb negative shocks and to provide opportunities for enhanced efficiency and diversification of investments. For this reason, it should be ensured that the fundamental objectives of the reform of the cooperative banking sector, namely modernising and improving the business model utilised in the cooperative sector and enabling parent companies to gain access to capital markets, are not affected. 3.6 Moreover, with regard to the increase to 60 % of the minimum shareholding in cooperative parent companies that must at least be held by cooperative banks, the ECB understands that the power entrusted to the Italian Prime Minister to lower this threshold for the interest of financial stability will be effectively used in case of need. 3.7 As previously noted by the ECB , a parent company’s powers to manage affiliated institutions and coordinate the cooperative banking group is key to the success of the reform. In this regard, it should be ensured that the obligation for parent companies to consult individual cooperative banks on the definition of the group strategic and operational plan does not have an impact on the exercise by the parent companies of the powers of direction and coordination. 3.8 Overall, the ECB is of the opinion that the amendments to the current legislation introduced by the Decree-Law should be consistent with the objectives of the reform of the cooperative banking sector as introduced by Decree-Law 18/2016.

text: Done at Frankfurt am Main, 11 September 2018.

text: [signed]

text: The President of the ECB

text: Mario DRAGHI


title: Opinion of the European Central Bank of 28 September 2018 on the establishment of a national insurance claims database (CON/2018/43)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 28 September 2018 on the establishment of a national insurance claims database (

text: ) Introduction and legal basis

text: On 20 July 2018 the European Central Bank (ECB) received a request from the Irish Minister for Finance (the ‘Minister’) for an opinion on the Central Bank (National Claims Information Database) Bill 2018 (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third and fourth indents of

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

text: , as the draft law relates to the Central Bank of Ireland (CBI) and the collection, compilation and distribution of monetary, financial, banking, payment systems and balance of payments statistics. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft law

text: 1.1 The purpose of the draft law is to improve transparency in relation to non-life insurance claims in Ireland. As noted in the Minister’s letter accompanying the consultation request, the overall purpose of the draft law is to improve the transparency around the causes of premium volatility and pricing in the Irish market for non-life insurance. To this end, the draft law provides the CBI with the additional general function of collecting and studying data from insurance undertakings on the income and expenditure associated with the carrying on of business of certain relevant classes of non-life insurance business. 1.2 The draft law constitutes the legislative response to the first report of the Irish Government’s Cost of Insurance Working Group (the ‘Working Group’). The Working Group’s objective was to identify and examine the drivers of the cost of insurance, and recommend measures to address the increasing cost of insurance, taking account of the need to ensure a financially stable insurance

text: Council Decision 98/415/EC of 29 June 1998

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

text: 2 Letter from the Minister for Finance to President Draghi of 16 July 2018 requesting an opinion of the ECB in accordance with Articles 127(4) and 282(5) of the TFEU. See also the Report on the Cost of Motor Insurance of the Cost of Insurance Working Group (January 2017) (the ‘Report on the Cost of Motor Insurance’) published on the website of the Irish Department of Finance at www.finance.gov.ie.

text: 3 See section 8 of the draft law. sector . One key recommendation of the report was to create a national claims information database in the expectation that greater transparency in the claims environment will allow for the identification of trends and appropriate policy responses. This in turn should lead to greater stability in the pricing of motor insurance and should help prevent cycles both up and down that have occurred regularly in the Irish market in the past. It should also better facilitate potential new entrants to the market . 1.3 The draft law gives the CBI certain responsibilities to specify the scope of application of the draft law. The CBI is tasked with making regulations to specify which classes of non-life insurance should be deemed relevant for the purposes of the draft law. To assist in the exercise of this specification function by the CBI, the draft law provides policy guidance on the draft law’s objectives and principles. In addition, the CBI is also given the function of making regulations to specify when non-life insurance risks should be categorised as being ‘based in the State’. 1.4 The draft law sets out examples of the types of data which the CBI may collect from insurance undertakings. These include data on insurance premiums and other income; the extent of the insurance undertaking's exposure to risks; the insurance undertaking’s costs, such as business expenses and commissions; the number and nature of relevant claims; details of the costs borne and provisions associated with relevant claims; the amount paid to finally resolve or dispose of claims; the costs incurred when using various settlement channels, i.e. the different steps and proceedings to resolve or dispose of claims; and details of large claims with a settlement or award value which is not less than EUR 150,000. When providing this data to the CBI, the draft law requires insurance undertakings to use their best endeavours to transmit it in such a way that no individual is identifiable from it, and provides that, where an individual is identifiable, the CBI shall ensure that individual’s identity is not disclosed. 1.5 The draft law also provides for the CBI to publish a report on the data it collects at least annually. The report should serve certain defined purposes set out in the draft law, which may include the following: increasing the level of information on the relationship between insurance premiums and related costs; identifying current and emerging trends within relevant non-life insurance business; identifying the factors that cause price movements; and presenting a series of statistical analyses of (i) income and costs related to providing relevant non-life insurance business; (ii) information on relevant claims; and (iii) each particular settlement channel used in respect of such claims. The Working Group gave close consideration to the fact that the CBI’s report would present aggregated rather than granular, claim-by-claim data. It was of the view that this would address anticompetitive issues by protecting commercially sensitive proprietary information on claims costs

text: 4 See the Report on the Cost of Motor Insurance, p. 9.

text: 5 See the Report on the Cost of Motor Insurance, p. 11. whilst providing useful information to potential new market entrants without acting as a barrier to entry. The Working Group also recognised that the CBI’s reporting and analysis of collected data would need to be delivered in a way that mitigated the risk of insurance undertakings directly using the report to derive prices. This consideration could detract from the public benefit of such a report . As such, the ECB understands that the CBI’s report under the draft law will enhance transparency regarding claims costs and trends but it is not intended that the CBI would directly address pricing and/or competition issues in the insurance market. 1.6 The draft law makes the necessary adjustments to the CBI’s supervision and enforcement powers to permit it to designate breaches and contraventions of the draft law and to ensure that it can require by notice the information it needs to collect to carry out its functions thereunder. 1.7 The draft law expressly provides that the CBI may not use funds from its own resources to defray expenses it incurs when collecting and studying data from insurance undertakings. Rather, these expenses are to be met, in the first place, by the industry levies to be paid by insurance undertakings and, if necessary, supplemented by monies requested from the Minister. The draft law lays down the process by which the CBI may request additional funding from the Minister, in the event that it is unable to defray all of its expenses from the industry levies. Where the CBI reasonably apprehends that there will be a shortfall between the industry levies and its data collection and analysis expenses or there is an insufficiency of funds for another reason, it may request the Minister to advance the amount of the shortfall. The Minister in turn may advance the sums he or she thinks proper to enable the CBI to defray all of its expenses arising from its function under the draft law. Sums advanced by the Minister can be subject to repayment, interest and other terms set by the Minister after consulting the CBI. 1.8 Finally, the draft law also permits the CBI to disclose data it has collected to persons upon request unless the data would identify an insurance undertaking or individual or where the CBI considers that the legitimate interests of consumers or an undertaking would be prejudiced, where the data is not complete or sufficiently verified or where there are any other exceptional circumstances.

text: 2. Conferral of new task on the CBI

text: 2.1 New task of the CBI 2.1.1 The draft law confers on the CBI the general function of collecting, studying and reporting data from insurance undertakings on the income and expenditure associated with the carrying on of business of certain relevant classes of non-life insurance business . The CBI is the relevant competent authority for the prudential supervision of insurance undertakings as well as for the supervision of their business conduct and collects a range of information from insurance undertakings in the

text: 13 See the Report on the Cost of Motor Insurance, pp. 81-82.

text: 14 See sections 9 and 10 of the draft law.

text: 18 See section 8 of the draft law. exercise of its supervisory functions. It also has a consumer protection mandate with respect to insurance undertakings operating in Ireland. However, the CBI currently has no specific responsibilities to ensure transparency regarding the volatility of non-insurance claims costs and how these relate to insurance premium levels or to collect and analyse this type of data in the nonlife insurance sector. As such, the draft law creates a new responsibility of the CBI in relation to insurance undertakings and the transparency of costs and pricing in the non-life insurance market. The draft law therefore confers a new task upon the CBI. 2.1.2 The ECB underlines that a proposed conferral of new tasks on a national central bank (NCB) in the European System of Central Banks must be assessed against the prohibition on monetary financing under Article 123 of the Treaty. For the purposes of that prohibition,

text: Article 1(1)

text: (b)(ii) of

text: Council Regulation (EC) No 3603/93

text: defines ‘other type of credit facility’, inter alia, as ‘any financing of the public sector’s obligations vis-à-vis third parties’. Ensuring that Member States implement a sound budgetary policy is one of the key objectives of the monetary financing prohibition, which may not be circumvented . Therefore, the task of financing measures, which are normally the responsibility of the Member States, and which are financed from their budgetary sources rather than by the NCBs, must not be entrusted to NCBs. To decide what constitutes financing of the public sector’s obligations vis-à-vis third parties, which can be translated as the provision of central bank financing outside the scope of central bank tasks, it is necessary to carry out, on a case-by-case basis, an assessment of whether the task to be undertaken by an NCB is a central bank task or a government task, i.e. a task within the responsibility of the Member States. In other words, adequate safeguards must be in place to ensure that circumventions of the objective of the monetary financing prohibition of maintaining a sound budgetary policy of Member States do not take place. 2.1.3 As part of its discretion in the exercise of its duty, on the basis of

text: Article 271

text: (d) of the Treaty and Article 35.6 of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB’), to ensure that NCBs honour the obligations laid down by the Treaty, the Governing Council has endorsed safeguards of that kind in the form of criteria for determining what may be seen as falling within the scope of a public sector’s obligation within the meaning of

text: Article 1(1)

text: (b)(ii) of

text: Regulation (EC) No 3603/93

text: or, in other words, what constitutes a government task as follows: First, central bank tasks are in particular those tasks that are related to the tasks that have been conferred upon the ECB and the NCBs by the Treaty and the Statute of the ESCB. These tasks are mainly defined in

text: Article 127(2)

text: , (5) and (6) and Article 128(1) of the Treaty, as well as

text: Article 22

text: and Article 25.1 of the Statute of the ESCB. Second, as Article 14.4 of the Statute of the ESCB allows NCBs to perform ‘other functions’, new tasks, i.e. tasks that are not related to tasks that have been conferred upon the ECB and the NCBs,

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

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

text: and

text: b(1) of the Treaty (OJ L 332, 31.12.1993, p. 1).

text: 20 Article 123 of the Treaty also serves the objective of maintaining price stability and reinforces central bank independence. are not precluded per se. However, new tasks that are undertaken by an NCB and which are atypical of NCB tasks or which are clearly discharged on behalf of, and in the exclusive interest of the government or of other public sector entities should be considered government tasks. Third, an important criterion for qualifying a new task as atypical of an NCB task or as being clearly discharged on behalf of and in the exclusive interest of the government or other public sector entities is the impact of the task on the institutional, financial and personal independence of that NCB. In particular, the following aspects should be taken into account: (a) whether the performance of the new task creates conflicts of interest with existing central bank tasks which are not adequately addressed and does not necessarily complement those existing central bank tasks. If a conflict of interest arises between existing and new tasks, sufficient safeguards to mitigate that conflict should be in place. The complementarity between a new task and the existing central bank tasks should not be interpreted broadly, so as to lead to the creation of an indefinite chain of ancillary tasks. Such complementarity should be examined in relation to the financing of those tasks; (b) whether without new financial resources the performance of the new task is disproportionate to the NCB’s financial or organisational capacity, and may have a negative impact on the capacity to perform properly the existing central bank tasks; (c) whether the performance of the new task fits into the institutional set-up of the NCB in the light of central bank independence and accountability considerations; (d) whether the performance of the new task harbours substantial financial risks; (e) whether the performance of the new task exposes the members of the NCB decision-making bodies to political risks which are disproportionate and may also have an impact on their personal independence and, in particular, on the guarantee of term of office set out in Article 14.2 of the Statute of the ESCB. 2.1.4 On the basis of the criteria set out above, the following paragraphs assess whether the new task of the CBI is in line with the prohibition of monetary financing. 2.2 Tasks related to the tasks conferred upon the ECB and the NCBs by the Treaty and the Statute of the ESCB The collection and analysis of data on the costs and income associated with insurance provision in order to ensure pricing transparency in insurance markets is not expressly mentioned among any of the basic central banking tasks listed in

text: Article 127(2)

text: or (5) of the Treaty or otherwise conferred upon the NCBs by the Statute of the ESCB. Under Article 127(6) of the Treaty, the Council may confer specific tasks upon the ECB concerning policies relating to the prudential supervision of credit institutions and other financial institutions but not insurance undertakings, and the new task proposed to be conferred upon the CBI does not concern the prudential supervision of insurance undertakings. Against this backdrop, the new task conferred on the CBI under the draft law is not directly related to the tasks conferred upon the ECB and the NCBs by the Treaty and the Statute of the ESCB. Consequently, a careful assessment of the conferral of this task on the CBI is required in order to determine whether it constitutes a government task, and whether the related funding gives rise to monetary financing concerns . 2.3 Tasks which are atypical of NCB tasks 2.3.1 The new task conferred on the CBI by the draft law, i.e. to collect and analyse data on the costs and income associated with the non-life insurance sector, is related to the business of non-life insurance undertakings, the transparency and integrity of the non-life insurance market and, perhaps, the protection of consumers of non-life insurance services more broadly. 2.3.2 It is necessary to analyse whether this new task is atypical of NCB tasks. The role of prudential and conduct of business supervision of insurance undertakings is currently fulfilled by numerous ESCB NCBs. In addition, many ESCB NCBs fulfil consumer protection tasks in the area of financial services. The CBI is already responsible for the prudential supervision of insurance undertakings as well as supervision of their business conduct. It also has a broad consumer protection mandate in the field of financial services, including insurance . The Central Bank Acts 1942 – 2015 provide the CBI with investigatory, supervisory and enforcement powers designed to ensure that it can carry out its prudential and consumer protection mandates. In the case of the draft law, it specifically expands the CBI’s existing supervision and enforcement powers to permit it to designate breaches and contraventions of the draft law and to ensure that it can require by notice the information it needs to collect to carry out its function thereunder. 2.3.3 In addition, in the exercise of its supervisory functions, the CBI also collects a range of information from insurance undertakings. Indeed, it is required under Directive

text: of the European Parliament and of the Council (‘Solvency II’) to publish aggregate harmonised data on insurers that is consistent and comparable with other insurance supervisors in the European Union and other ESCB NCBs which act as prudential supervisors of insurance undertakings are necessarily subject to the same obligations under their national laws implementing Solvency II. In addition, the CBI, like all other NCBs in the euro area, is responsible for collecting data under

text: Regulation (EU) No 1374/2014

text: of the ECB on statistical reporting requirements for insurance corporations . In general, however, this data is merely derived from data already collected for supervisory purposes by national competent authorities for insurance undertakings pursuant to Solvency II. The scope of

text: 21 See, for example, paragraph 3.4.1 of Opinion

text: , paragraph 2.2.1 of Opinion

text: , paragraph 3.1 of Opinion

text: and paragraph 3.1 of Opinion

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

text: 22 See for example, paragraph 3.1 of Opinion

text: , paragraph 2.2 of Opinion

text: , paragraph 2 of Opinion

text: , paragraph 2 of Opinion

text: , and paragraphs 6 to 8 of Opinion

text: 23 See also paragraph 3.3.4.2 of Opinion

text: , paragraphs 4.3 and 4.4 of Opinion

text: , paragraphs 3.3 and 3.4 of Opinion

text: and paragraph 3.1 of Opinion

text: 24 See, in particular, sections 5A(1)(f) and 6A(2)(b) of the Central Bank Act 1942 (as amended).

text: 25 Directive

text: of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (OJ L 335, 17.12.2009, p. 1) (‘Solvency II’).

text: 26 The first batch of Solvency II-based data was published by the CBI in August 2017 covering 2016 (Aggregate Statistical Data). The CBI previously published publically available data it collected from the insurance industry under the Solvency I regime, including on branches and individual firms, in the annual ‘Insurance Statistics - Blue Book’ (link).

text: Regulation (EU) No 1374/2014

text: of the ECB of 28 November 2014 on statistical reporting requirements for insurance corporations (ECB/2014/50) (OJ L 366, 20.12.2014, p. 36). data collected and reported in this context is therefore no broader than that required under Solvency II. 2.3.4 However, while the CBI, like other NCBs, already collects data on insurance undertakings supervised by it in the supervisory context and reports it for statistical purposes to the ECB pursuant to

text: Regulation (EU) No 1374/2014

text: , the draft law serves a very different purpose compared to the CBI’s existing prudential supervision of non-life insurance undertakings or statistical reporting under

text: Regulation (EU) No 1374/2014

text: . In contrast to the CBI’s supervisory goals of monitoring insurance undertakings’ capital, governance and risk management, the ultimate goal of the draft law is to improve transparency in relation to pricing and trends in the non-life insurance market. The draft law is therefore related to the integrity of the non-life insurance business, and not the CBI’s prudential supervision of those insurance undertakings or the statistical reporting to support the ECB in carrying out monetary and financial analysis under

text: Regulation (EU) No 1374/2014

text: . Indeed, no other Member State has assigned to an ESCB member a similar mandate for data collection in the non-life insurance sector institutions for the purposes similar to those under the draft law. While the CBI’s new task can, perhaps, be seen as related to its consumer protection mandate, the draft law’s core purpose to improve pricing transparency is not primarily related to consumer protection. Rather, it will necessarily have implications for the operation of the market, including the competitiveness of pricing between non-life insurance undertakings. Although the CBI’s data-collection and analysis tasks under the draft law do not give it any mandate with regard to ensuring or enhancing competition or creating policy on competition in the Irish non-life insurance market, which is welcomed by the ECB , the basic purpose of the draft law to enhance transparency of pricing in the Irish market for non-life insurance diverges from and extends beyond the purpose of the CBI’s existing roles in prudential supervision and consumer protection. 2.3.5 Taking into account the fact that the purpose of the draft law is related neither to the CBI’s role in the prudential supervision of insurance undertakings nor its existing data collection tasks in relation to insurance undertakings, and only partially and indirectly related to the CBI’s role in consumer protection, as well as the fact that no other Member State has assigned to an ESCB central bank a similar task, it appears that, on balance, the new task under the draft law is atypical of NCB tasks. 2.4 Tasks clearly discharged on behalf of and in the exclusive interest of the government For the same reasons, the new task conferred by the draft law appears to be only partially linked to the CBI’s existing tasks and mandates. On balance, the new task under the draft law would therefore be regarded as being discharged primarily in the interest of the government.

text: 28 The Czech National Bank has responsibility for collecting data on non-life insurance claims pursuant to the Act No. 277/2009 Coll., on Insurance, as amended (the ‘Insurance Act’) in certain very specific circumstances. Following an extraordinary natural or other disaster and a declaration of a state of danger or emergency, the Czech National Bank may require insurance undertakings to provide it with general information on the number and amount of claims reported and on the amount of the indemnities paid out for the loss of or damage to property which serves to safeguard vital functions in the state (Section 132 (1) of the Insurance Act). The Czech National Bank passes the information in summary form to the Ministry of Finance. While the process of data collection on claims relating to natural disasters is somewhat similar to that proposed for the CBI under the draft law, the statistical collection on insurance claims in the Czech Republic does not appear to serve the same purpose as the draft law (to enhance transparency in the market), and does not involve the same analysis of the data on claims in the reporting phase.

text: 29 See paragraph 2.2 of Opinion

text: , paragraph 3.3.4.3.1 of Opinion

text: . 2.5 Extent to which performance of the new task creates conflicts of interest with existing central bank tasks As noted in Section 2.3.2, the CBI is the competent authority responsible for the authorisation and prudential supervision of insurance undertakings and therefore already has insurance data collection obligations under the national implementation of Solvency II requirements. In addition, the CBI has a consumer protection mandate with respect to insurance undertakings operating in Ireland. Therefore, it is arguable that the new task partially complements other similar existing supervisory, insurance data collection and consumer protection tasks of the CBI. On the other hand, as noted in Section 2.1.3(a), the complementarity between a new task and existing central bank tasks should not be interpreted broadly, so as to lead to the creation of an indefinite chain of ancillary tasks. The assignment of new, long-term tasks to NCBs, including the CBI, should therefore be approached with a high degree of caution in order to avoid such an indefinite chain of ancillary tasks. In addition, as with other tasks related to consumer protection, sufficient mitigation measures must be put in place to ensure that in the event of a conflict of interest, supervisory considerations prevail . In addition, the draft law’s ultimate purpose to improve pricing transparency has a marketfunctioning focus, including the competitiveness of pricing between non-life insurance undertakings. Given the data-based nature of the CBI’s function under the draft law to collect, analyse and report on data from the Irish non-life insurance sector, the draft law does not, on the face of it, give the CBI any role with regard to ensuring or enhancing competition or creating policy on competition in the Irish non-life insurance market. However, it is important to reiterate that the ECB discourages the concentration of decision-making powers in the areas of competition and banking supervision in one body and the same principles would apply to the promotion of transparency of pricing in the Irish market for non-life insurance products. In fact, the ECB has previously welcomed draft national laws transferring the responsibilities for the enforcement of competition policy in the banking sector away from the NCB to a national competition authority and discouraged the concentration of decision-making powers in the areas of antitrust and banking supervision in one body . In doing so, the ECB highlighted the need to balance the potentially conflicting objectives of market competition and financial stability , which applies equally to the promotion of transparency of pricing for non-life insurance products. While coordination is necessary to avoid an overly complex framework for supervised entities, it would seem appropriate to maintain a clear distinction between procedures that are pursuing distinct public interests, in particular for procedures leading to antitrust and banking or insurance supervision decisions . For

text: 30 See paragraph 3.4.3 of Opinion

text: , paragraph 3.1 of Opinion

text: and paragraph 2.2.2 of Opinion

text: 31 See paragraph 3.3.4.3.1 of Opinion

text: and paragraph 4 of Opinion

text: 32 See paragraph 3.3.4.3.1 of Opinion

text: and paragraph 14 of Opinion

text: 33 See paragraph 3.3.4.3.1 of Opinion

text: and paragraph 4 of Opinion

text: 34 See paragraph 3.3.4.3.1 of Opinion

text: and paragraph 3.3 of Opinion

text: 35 See paragraph 3.3.4.3.1 of Opinion

text: and paragraph 14 of Opinion

text: 36 See paragraph 3.3.4.3.1 of Opinion

text: and paragraph 8 of Opinion

text: . that reason the ECB considers that in these circumstances draft national laws should reflect the principle of allocating powers to authorities in accordance with their respective objectives . 2.6 Extent to which performance of the new task is disproportionate to the financial or organisational capacity of the CBI 2.6.1 The principle of financial independence requires that Member States may not put their NCBs in a position where they have insufficient resources to carry out both their ESCB-related tasks and their national tasks from an operational and financial perspective. In this regard, the ECB welcomes the fact that the draft law specifically addresses the financing of additional expenses resulting from the CBI’s new function under the draft law. However, given that the new task is atypical of NCB tasks and performed primarily in the interest of the government, further clarifications are needed so as to ensure that the CBI is adequately remunerated on a regular and prompt basis as the costs arise from its collection and analysis of data on the costs and income associated with insurance provision. 2.6.2 The draft law expressly provides that the CBI may not use funds from its own resources to defray expenses it incurs when collecting and studying data from insurance undertakings. Rather, these expenses are to be met by the industry levies to be paid by insurance undertakings under the Central Bank Acts 1942-2015 . In addition, if the CBI anticipates that the industry levies will not suffice to defray all of its expenses from the data collection and analysis function under the draft law in any given year, it may request the shortfall from the Minister. The Minister in turn may advance such sums as he or she thinks proper to enable the CBI to defray all of its expenses, arising in that year, associated with the CBI’s functions under the draft law. The draft law therefore retains an element of discretion for the Minister in the advancing of sums requested by the CBI to defray its costs. In addition, the draft law provides that sums advanced by the Minister can be subject to repayment, interest and other terms set by the Minister after consulting with the CBI. It is understood that the provision for repayment terms may be intended to cover circumstances where the CBI anticipated shortfalls which did not materialise, or where levy payments were delayed but subsequently paid in full. These repayment, interest and other terms are, however, not specified further or limited in the draft law. 2.6.3 As the CBI’s new task under the draft law is not a central bank task and is performed primarily in the interest of the government, the ECB invites the consulting authority to clarify through appropriate amendments to the draft law that any anticipated or actual shortfall of funds to defray the CBI’s expenses under the draft law will always be granted by the Minister on a regular and prompt basis as the costs arise to ensure that the CBI does not have to fund the cost of its task under the draft law from its own funds. In addition, it could be helpful to clarify that repayment terms for amounts advanced by the Minister are, in all cases, subject to the overarching principle that the CBI may not use funds from its own resources to defray its expenses arising under the draft law.

text: 37 See paragraph 3.3.4.3.1 of Opinion

text: and paragraph 4 of Opinion

text: . 2.7 Extent to which performance of the new task fits into the institutional set-up of the CBI, in the light of central bank independence and accountability considerations The potential impact of the new task on the institutional, financial and personal independence of the CBI must also be taken into consideration. 2.8 Extent to which the performance of tasks harbours substantial financial risks The draft law does not contain any specific provisions on liability in relation to the exercise of the CBI’s function under the draft law. Nonetheless, section 33AJ(2) of the Central Bank Act 1942 provides that specified officers and employees of the CBI are not liable for damages for anything done or omitted in the performance or purported performance or exercise of any of its functions or powers, unless it is proved that the act or omission was in bad faith. Given the data-based nature of the CBI’s function, to collect, analyse and report on data in the Irish non-life insurance sector, the draft law does not appear to expose the CBI to substantial financial risks. 2.9 Extent to which the performance of the new task exposes members of the decision-making bodies of the CBI to disproportionate political risks and impacts on their personal independence The performance of the function conferred under the draft law does not appear to expose the CBI’s decision-making bodies to any disproportionate political risk or have an impact on their personal independence. As mentioned in paragraph 2.3.2, the CBI is already responsible for the prudential supervision of insurance undertakings, the collection of data from insurance undertakings and has a consumer protection mandate with respect to insurance undertakings in Ireland. In addition, it is understood that the draft law’s allocation of data-collection and analysis tasks does not create any new mandate for the CBI to ensure or enhance competition or to create competition policy for the Irish non-life insurance market. 2.10 Conclusion The new task of the CBI of collecting and studying data from insurance undertakings on the income and expenditure associated with the carrying on of business of certain relevant classes of non-life insurance business cannot be regarded as a central bank task, in the sense that the purpose of the draft law is not related to the CBI’s role in the statistical reporting in relation to insurance undertakings to support the ECB in carrying out monetary and financial analysis, nor to the CBI’s role in the prudential supervision of insurance undertakings, and is only partially and indirectly related to the CBI’s role in consumer protection. The main purpose of the CBI’s new task is to improve the transparency around the causes of premium volatility and pricing in the Irish market for non-life insurance. No other Member State has assigned a similar task to an ESCB central bank. As the CBI’s new task under the draft law is not a central bank task, but rather a task that is related to the proper functioning of pricing in the non-life insurance market in Ireland, and is therefore performed primarily in the interest of the government, the consulting authority is invited to clarify through appropriate amendments to the draft law that any anticipated or actual shortfall of funds to defray the CBI’s expenses will always be granted by the Minister on a regular and prompt basis as the costs arise to ensure that the CBI does not have to fund the cost of its task under the draft law from its own funds. In addition, it could be helpful to clarify that repayment terms for amounts advanced by the Minister are, in all cases, subject to the overarching principle that the CBI may not use funds from its own resources to defray its expenses under the draft law. This opinion will be published on the ECB’s website. Done at Frankfurt am Main, 28 September 2018. [signed] The President of the ECB Mario DRAGHI


text: Directive

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

text: and repealing Directives

text: and

text: (OJ L176, 27.6.2013, p. 338).

text: See Title VII, Chapter 4 of Directive

text: on capital buffers and national law transposing those provisions, in particular

text: Article 3

text: :62a of the Wet op het financieel toezicht (‘Financial Supervision Act’ (FSA) adopted on 28 September 2006) and

text: Articles 105

text: c and 105d of the Besluit Prudentiële regels Wft (Decree on Prudential Rules FSA, adopted on 12 October 2006).

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

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

text: See

text: Article 92

text: and further of Directive

text: See paragraph 2.2 of ECB Opinion

title: Opinion of the European Central Bank of 23 October 2018 on the rules to be followed by systemically relevant credit institutions when defining fixed remuneration policies (CON/2018/44)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 23 October 2018 on the rules to be followed by systemically relevant credit institutions when defining fixed remuneration policies (

text: ) Introduction and legal basis

text: On 21 September 2018 the European Central Bank (ECB) received a request from the Ministry of Finance of the Netherlands for an opinion on a law on approval from the Minister for Finance regarding fixed remuneration of directors of systemically relevant credit institutions (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union, as the draft law relates to the ECB’s tasks concerning the prudential supervision of credit institutions pursuant to Article 127(6) of the Treaty. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft law

text: 1.1 The draft law encompasses two elements related to the fixed remuneration of staff of systemically relevant credit institutions. For this purpose, systemically relevant credit institutions include essentially those credit institutions which are considered by De Nederlandsche Bank as global or other systemically important credit institutions in accordance with national law transposing Directive 1 2

text: of the European Parliament and of the Council . 1.2 The first element refines the definition of ‘basic fixed remuneration’ by stipulating that basic fixed remuneration must not consist of shares in a systemically relevant credit institution or other financial instruments whose increase in value is partly dependent on an increase in the value of the credit institution’s shares or benefits associated therewith. 1.3 The second element introduces a requirement for systemically relevant credit institutions to obtain prior approval from the Minister for Finance for any increase in basic fixed remuneration. In particular, any proposal by the body or individual within the credit institution responsible for establishing remuneration, or to establish the fixed remuneration of a new director or increase the

text: fixed remuneration of an existing director, is to be submitted to the Minister for Finance for his/her prior consent. The Minister must refuse to consent if he/she deems the amount of the fixed remuneration inappropriate with a view to a cautious, controlled and sustainable remuneration policy taking into account the broad consensus that exists within society. More detailed rules regarding the appropriateness of the level of any fixed remuneration may be set by means of an administrative order. Furthermore, under or pursuant to such an order, rules may be laid down with regard to the details to be submitted in connection with the Minister’s consent. 1.4 The explanatory memorandum to the draft law and the opinion of the Council of State on the draft law contain divergent views as to whether the role proposed for the Minister for Finance under the draft law is consistent with the ECB’s prudential supervisory competence within the framework of the single supervisory mechanism (SSM) as set out in

text: Council Regulation (EU) No 1024/2013

text: 2. Observations

text: 2.1 Within the framework of the SSM as set out in

text: Regulation (EU) No 1024/2013

text: , the ECB is exclusively competent to carry out, for prudential supervisory purposes, specific tasks in relation to all credit institutions established in the participating Member States. One of those tasks consists of ensuring compliance with requirements imposed on credit institutions to have in place robust governance arrangements, including remuneration policies and practices, as set out in relevant Union law . For the purpose of carrying out the tasks conferred on it by

text: Regulation (EU) No 1024/2013

text: , and with the objective of ensuring high standards of supervision, the ECB applies all relevant Union law, and where this is composed of directives, the national legislation transposing those directives. In this respect, when carrying out its prudential supervision tasks, the ECB is the competent authority within the meaning of Directive

text: . Directive

text: provides that competent authorities must ensure that, when establishing and applying the total remuneration policies for categories of staff, credit institutions comply with the principles set out in that Directive in a manner and to the extent that is appropriate to their size, internal organisation and the nature, scope and complexity of their activities . 2.2 The competence granted to the Minister for Finance under the draft law does not seem to conflict with the ECB’s competence as the competent authority responsible for ensuring compliance with the abovementioned requirement for credit institutions to have in place robust governance arrangements, including remuneration policies and practices. The ECB understands that, in exercising his/her competence under the draft law, the Minister would assess the appropriateness of a proposed basic fixed remuneration for new or existing directors on an individual basis with a view to a cautious, controlled and sustainable remuneration policy taking into account the broad consensus that exists within society. As long as the Minister does not assess credit institutions’ compliance with their obligation to have in place robust governance arrangements, which falls under the ECB’s competence, this approach does not seem to conflict with the ECB’s supervisory

text: powers under

text: Regulation (EU) No 1024/2013

text: . In this vein, it has to be avoided that the eventual general administrative orders detailing the rules regarding the appropriateness of the level of individual fixed remuneration create a conflict with the ECB’s supervisory powers. As previously noted by the ECB, banking legislation adopted by the Member States after the establishment of the SSM should facilitate the exercise by the ECB of its responsibilities within the SSM, including its capacity to enhance the consistency of supervision across the euro area. Member States should refrain from setting obstacles both to uniform supervisory practice and to the exercise of supervisory discretion by the ECB within the SSM .

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

text: Done at Frankfurt am Main, 23 October 2018.

text: [signed]

text: The President of the ECB

text: Mario DRAGHI


text: Council Decision 98/415/EC of 29 June 1998

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

text: See Article 61 of Zakon o Hrvatskoj narodnoj banci (Narodne novine no 75/08 and 54/13).

text: See Article 13 of the draft law.

text: Kodeks profesionalne etike državnih revizora, Class: 003-05/16-02/2, File No: 613-01-01-16-1, available at www.revizija.hr.

text: All ECB opinions are published on the ECB website at www.ecb.europa.eu. 6 See paragraph 2.1.1 of Opinion

text: , paragraph 3.1.1 of Opinion

text: and paragraph 3.1.1 of Opinion

text: . 7 See Article 61 of the Law on HNB for the activities of the independent external auditors of HNB. 8 See paragraph 3.3 of Opinion

text: , paragraph 2.1 of Opinion

text: and paragraph 4.2 of Opinion

text: . 9 See paragraph 4.4 of Opinion

text: , paragraph 4.2 of Opinion

text: , paragraph 2.1 of Opinion

text: and paragraph 2.2 of Opinion

text: . 10 See Article 11(4) of the Law on HNB. 11 See Article 13 of the Law on HNB. 12 See Article 13 of the Law on HNB.

title: Opinion of the European Central Bank of 26 October 2018 on the legal framework of the State Audit Office (CON/2018/45)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 26 October 2018 on the legal framework of the State Audit Office (

text: ) Introduction and legal basis

text: On 7 September 2018 the European Central Bank (ECB) received a request from the Ministry of Finance of the Republic of Croatia for an opinion on a draft Law on the State Audit Office (hereinafter the ‘draft law‘). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third indent of

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

text: , as the draft law relates to Hrvatska narodna banka (HNB). In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft law

text: 1.1 The draft law proposes to replace in its entirety the existing Law on the State Audit Office. The scope of the draft law addresses the establishment of Državni ured za Reviziju (the State Audit Office), its internal organisation, competences and management, procedures and reporting, the implementation of its orders and/or recommendations, the qualifications of state auditors, cooperation with other bodies and penal provisions. The draft law specifies that in case of discrepancies between its provisions and the provisions of other laws, the provisions of the draft law apply. For the purposes of the draft law, an audit is defined as including (i) an examination of the documents, papers, reports, internal control systems, accounting, financial and other procedures, as well as other records, in order to be able to state whether the annual financial statements are prepared in accordance with the relevant financial reporting and legal framework; (ii) a procedure for evaluating whether the activities, financial transactions and information in any important aspect are in line with the relevant laws arranging the business operations of the audited entity; and (iii) a procedure for evaluating whether the programmes, projects and activities of the audited entity are implemented efficiently, i.e. according to the principles of cost-effectiveness, efficiency and purposefulness, and whether they can be improved. The draft law further provides that the audited entity’s revenues and expenditures, assets and liabilities, financial statements, financial transactions, programmes, projects and activities are also subject to the audit.

text: 1.2 In particular, the draft law introduces the state audit of HNB, in addition to the existing audit of the prepared financial statements and overall operations performed by independent external auditors, as required under the Law on Hrvatska narodna banka (hereinafter the ‘Law on HNB’) , and establishes the scope and rules for such audit. In this respect, the draft law provides that the State Audit Office is competent to verify and evaluate the use of funds by HNB through which the goals and tasks prescribed by the Law on HNB and other laws of the Republic of Croatia, as well as the tasks performed by HNB in compliance with the Treaty and the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB’) are not directly accomplished or performed. The draft law sets out the scope of such audit, specifying that it includes (i) a procedure for evaluating whether the activities, financial transactions and information referring to the costs of operations in respect of administrative business operations, acquisition, management and disposal of real estate, movable property and equipment in any important aspect are in line with relevant laws according to which HNB operates, and (ii) a procedure for evaluating whether the programmes, projects and activities of HNB, in respect of administrative business, acquisition, management and disposal of real estate, movable property and equipment, are implemented efficiently, i.e. according to the principles of cost-effectiveness, efficiency and purposefulness, and whether they can be improved. 1.3 The draft law provides that in performing the audit of HNB, the State Audit Office (i) is obliged, according to Article 130 of the Treaty, Article 7 of the Statute of the ESCB and Article 71 of the Law on HNB, to fully respect the independence of HNB; and (ii) is not allowed to give direct or indirect instructions to HNB, its bodies or members of the bodies of HNB which would or could have an impact on their independence. 1.4 As regards confidentiality, the draft law provides that in performing the tasks within their competence under the draft law, the certified state auditors, the deputy auditor general, the auditor general and other civil servants employed in the State Audit Office, must adhere to the rules on confidentiality of information, data and documentation encompassed by Article 37 of the Statute of ESCB in the same way as if they were employees of HNB. This obligation continues to exist even after the termination of their employment in the State Audit Office. For the purpose of performing the audit, the certified state auditors, the deputy auditor general and the auditor general may request information, data and documents from HNB that are necessary for the performance of the tasks referred to in the draft law. 1.5 The draft law clarifies that (i) the powers of the State Audit Office under the draft law are without prejudice to the goals and duties of HNB under the Treaty, the Statute of the ESCB, the Law on HNB and other existing national law of relevance; (ii) activities that are subject to the audit of business operations of HNB by independent external auditors are not subject to the audit performed by the State Audit Office in accordance with the provisions of the draft law, and (iii) the State Audit Office is not authorised to verify or evaluate the achievement of the goals and the fulfilment of the duties of HNB prescribed by the Law on HNB as well as of the duties prescribed by

text: other laws of the Republic of Croatia and the duties that HNB exercises in accordance with the Treaty and the Statute of the ESCB. 1.6 Regarding reporting, the draft law sets out a special procedure for HNB . The draft law provides that after the audit has been performed, the State Audit Office delivers a draft audit report, which may contain the orders and/or recommendations of the State Audit Office to HNB for its opinion. The Governor of HNB has the right to give his opinion on the draft audit report within 15 days. After receiving the Governor’s opinion, the State Audit Office prepares the audit report with this opinion included and returns it to the Governor. The Governor may lodge an objection to the audit report within 15 days from the date of its receipt and, thereafter, the auditor general must decide on the lodged objection within 30 days from the date of receipt. If the Governor does not accept the orders and/or recommendations contained in the audit report to which he lodged an objection, which the auditor general did not accept, he is obliged to inform the State Audit Office, without any delay, of such non-acceptance, and to state the reasons for non-acceptance. HNB is not obliged to deliver a plan for the implementation of the orders and/or recommendations to the State Audit Office. If HNB does not implement the orders and/or recommendations stated in the audit report to which no objection has been lodged, it is obliged to inform the State Audit Office thereof, without any delay, and to state the reasons for not implementing them. The explanatory memorandum accompanying the draft law notes that the State Audit Office opposes the proposed audit arrangements in respect of reporting and implementation of orders and/or recommendations, as this is not in line with the conduct of audits for other audited entities. The State Audit Office is of the opinion that the state audit of HNB should be conducted in line with the auditing standards of the International Organisation of Supreme Audit Institutions (INTOSAI) and with the Code of Professional Ethics of State Auditors, whereby it is prescribed that all state audits are conducted on a non-political, independent and purely professional basis. In that sense, it is the State Audit Office’s opinion that these provisions should not be part of the draft law. 1.7 Further, the draft law provides that the certified state auditors, the deputy auditor general and the auditor general, in implementing the duties regarding the audit of HNB under the draft law, will act in accordance with the procedures laid down in the framework of the auditing standards of the International Organisation of Supreme Audit Institutions (INTOSAI) and the Code of Professional Ethics of State Auditors . 1.8 Finally, the draft law provides that it enters into force on the eighth day upon the day following its publication in the Official Gazette.

text: 2. General observation

text: The ECB notes that it has previously issued Opinions

text: and

text: in response to legislative consultations from the Croatian authorities on legislative initiatives concerning the State Audit Office’s audit of HNB .

text: 3. Specific observations

text: 3.1 State Audit Office’s audit of HNB 3.1.1 As previously noted by the ECB , the principle of institutional independence referred to in Article 130 of the Treaty and Article 7 of the Statute of the ESCB refers to the fact that the exercise of central bank powers and the performance of the tasks and duties conferred on central banks must not be subject to external instructions or government influence. In particular, where the operations of a national central bank (NCB) are subject to the control of a state audit office or similar body charged with controlling the use of public finances, the scope of the control (a) should be clearly defined by the legal framework; (b) should be without prejudice to the activities of the NCB’s independent external auditors to examine all books and accounts of the NCB and, further, in line with the principle of institutional independence; (c) should comply with the prohibition on giving instructions to an NCB and its decision-making bodies; and (d) should not interfere with the NCB’s ESCB-related tasks . The state audit should be conducted on a non-political, independent and purely professional basis . 3.1.2 In line with the abovementioned criteria (see paragraph 3.1.1), the ECB notes that the draft law is committed to fully respect the independence of HNB and, consequently, prohibits the State Audit Office from giving direct or indirect instructions to HNB which would or could have an impact on its 10 11 independence . Similarly, the orders and/or recommendations that the audit report may contain must not have an impact on HNB’s independence. 3.1.3 The ECB understands that the general provisions of the draft law, as set out in paragraph 1.1, are subject to the specific provisions of the draft law pertaining to the audit of HNB. 3.1.4 The ECB notes that the provisions of the draft law regarding the audit of HNB, in particular the procedure whereby the Governor may express his opinion on draft audit reports and lodge objections to, and not accept, audit reports as well as that HNB should not be obliged to deliver a plan for the implementation of orders/recommendations to the State Audit Office , are compatible with the principle of central bank, including institutional, independence.

text: 3.1.5 For practical reasons, the authorities may wish to consider the introduction of a transitional period for the implementation of the draft law. For example, it may make sense for the provisions relating to the newly introduced audit of HNB to be brought into operation within a specified period of months (e.g. three or six months) after the entry into force of the draft law, in order to enable HNB to make the necessary adaptations to discharge its new obligations under the draft law.

text: Done at Frankfurt am Main, 26 October 2018.

text: [signed]

text: The President of the ECB

text: Mario DRAGHI