title: Opinion of the European Central Bank of 8 June 2016 on consumer credit (CON/2016/31)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 8 June 2016 on consumer credit (

text: ) Introduction and legal basis

text: On 28 April 2016 the European Central Bank (ECB) received a request from the Slovenian Ministry of Economic Development and Technology for an opinion on a draft law on consumer credit (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 Banka Slovenije. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft law

text: 1.1 The Slovenian Law on consumer credit (hereinafter the ‘Law on consumer credit’) currently implements Directive

text: of the European Parliament and of the Council and also contains a number of specific rules concerning consumer credit agreements relating to immovable property. The main purpose of the draft law is to implement Directive

text: of the European Parliament and of the Council in Slovenian law . The main effect of the draft law is to amend, by way of a recast, the existing framework for consumer credit agreements relating to immovable property. 1.2 Under the current Law on consumer credit, entities authorised to provide consumer credit by the Ministry of Economic Development and Technology, banks authorised to provide banking services in accordance with the Law on banking and a few other entities are permitted to engage in consumer lending, including as regards immovable property . No authorisation is currently required for intermediaries arranging consumer credit. However, intermediaries must fulfil certain conditions in the pursuit of their activity. The supervision of consumer credit providers authorised by the

text: Predlog zakona o potrošniških kreditih (ZPotK-2).

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

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

text: 3 Zakon o potrošniških kreditih (ZPotK-1) (Ur. l. RS No 59/10, 77/11, 30/13 and 81/15).

text: 4 Directive

text: of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers and repealing

text: Council Directive 87/102/EEC

text: (OJ L 133, 22.5.2008, p.66).

text: 5 Directive

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

text: and

text: and

text: Regulation (EU) No 1093/2010

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

text: 6 Zakon o bančništvu (ZBan-2) (Ur. l. RS No 25/15).

text: 7 Articles 29 and 30 of the Law on consumer credit. Ministry of Economic Development and Technology and of their intermediaries is entrusted to the Market Inspectorate . The supervision of credit institutions and entities intermediating consumer credit for credit institutions is entrusted to Banka Slovenije . The Information Commissioner supervises compliance with rules on the collection and processing of personal data . 1.3 The draft law introduces new conditions for the provision and intermediation of consumer credit relating to immovable property. In particular, in order to increase consumer protection, only the following groups of entities will be permitted to provide consumer credit relating to immovable property: (a) authorised credit institutions; (b) authorised non-bank financial institutions whose exclusive or main activity is financial leasing and (i) in which a bank has at least a 20% share of the institution’s voting rights or capital, or (ii) whose total balance sheet is at least EUR 50 000 000 (hereinafter ‘financial leasing companies’); and (c) certain other entities which do not need to be authorised (e.g. employers granting credit to their employees free of interest or at an annual percentage rate of charge lower than those applied by credit institutions) . Intermediaries of permitted providers will also be required to obtain authorisation in order to arrange consumer credit relating to immovable property . 1.4 In this context, in addition to its existing supervisory tasks , Banka Slovenije will become responsible for: (a) authorising financial leasing companies to provide consumer credit relating to immovable property ; (b) authorising intermediaries arranging consumer credit relating to immovable property ; and (c) supervising financial leasing companies and their intermediaries with respect to consumer credit relating to immovable property. In addition, Banka Slovenije will: (a) have powers to impose supervisory measures and sanctions on supervised entities ; (b) act as a competent authority in the context of cross-border intermediation of consumer credit relating to immovable property ; (c) serve as a single contact point for cooperation between competent authorities of different Member States for the purposes of Directive

text: ; and (d) establish and maintain a public register of financial leasing companies granting consumer credit relating to immovable property and of intermediaries arranging consumer credit relating to immovable property . 1.5 Under the Law on consumer credit, as a general rule, consumer loans may be transferred from consumer credit providers only to entities that are also permitted to act as consumer credit providers. However, this rule does not apply to credit institutions, which may thus transfer

text: 8 Article 34 of the Law on consumer credit.

text: 9 Article 33 of the Law on consumer credit.

text: 10 Article 36 of the Law on consumer credit.

text: 11 Article 58 of the draft law.

text: 13 Article 29 and 33 of the Law on consumer credit in conjunction also with the Law on banking.

text: 15 Article 62 of the draft law.

text: 16 Articles

text: and

text: and also Articles 71 and 65 of the draft law.

text: 17 Article

text: and

text: to 87 of the draft law.

text: 18 Article 74 of the draft law.

text: 19 Articles 68 and 63 of the draft law. consumer loans to any third party . With regard to entities that are not permitted to act as consumer credit providers, the draft law limits the scope of eligible third parties to: (a) securitisation special purpose vehicles, (b) the Slovenian Bank Asset Management Company (BAMC), and (c) other entities managing impaired assets of banks . These entities must fulfil the same obligations towards the consumer as a consumer credit provider, and may further transfer the credit only to a permitted consumer credit provider . Under the draft law, Banka Slovenije will be responsible for the supervision of the above entities with respect to consumer credit .

text: 2. General observations

text: 2.1 This opinion does not address whether the draft law effectively implements Directive

text: in Slovenian law. The ECB will only assess those provisions of the draft law that may impact on the role and tasks of Banka Slovenije as a central bank, a financial supervisory authority and as a member of the Eurosystem and the European System of Central Banks (ESCB). 2.2 The draft law broadens and expands Banka Slovenije’s current supervisory functions and activities in the consumer credit field beyond its existing responsibilities with respect to credit institutions and their intermediaries, by conferring on it the following tasks: (1) authorising financial leasing companies, as regards the provision of consumer credit relating to immovable property, and intermediaries that arrange consumer credit relating to immovable property; (2) supervising financial leasing companies and their intermediaries with respect to the consumer protection-related obligations in the field of consumer credit relating to immovable property; (3) supervising certain entities permitted to be transferees of consumer credit from entities authorised to perform banking activity or to provide financial services listed in paragraph 1.5. The ECB underlines that, in the context of a proposed conferral of new tasks on an ESCB member, it is necessary to assess whether this contravenes the prohibition of monetary financing under Article 123 of the Treaty. The ECB has developed the guidance set out in paragraphs 2.2.1 to 2.2.3 on the basis of which it may decide whether a new task conferred on a national central bank (NCB) is to be considered a central banking task or a government task for the purposes of assessing such conferral of tasks against the prohibition of monetary financing . 2.2.1 General considerations First, the systematic categorisation of tasks assigned to NCBs as central banking or government tasks applies to genuinely new tasks that did not exist in the past or did not form an integral part of the central banking tasks already assigned to the NCB in the past. In recognition of the different

text: 24 See Opinion

text: . All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. Member States’ legal frameworks, central banking traditions and national set-ups, the tasks currently discharged by an NCB as central banking tasks are not reviewed and re-categorised, but may be reassessed if their substance is amended. Second, it needs to be emphasised that when Member States decide to confer new tasks on their NCBs, due regard must be given to the role of the NCB as part of the ESCB or Eurosystem, as applicable, and to the requirement of central bank independence. The principle of financial independence, which is a key aspect of the principle of central bank independence as laid down in Article 130 of the Treaty, requires that the Member States may not put their NCBs in a position where they have insufficient financial resources to carry out their ESCB- or Eurosystem-related tasks, as applicable. Accordingly, an NCB must have sufficient financial means not only to perform its ESCB- or Eurosystem-related tasks but also its national tasks (e.g. financing its administration and own operations) . Where an NCB considers that the allocation of a new task would impinge on its financial independence, because it would not have sufficient means to focus primarily on its ESCB- or Eurosystem-related tasks, or that the discharge of the new task would impose a disproportionate burden on it, the NCB should be able to object to the new task being allocated to it. Third, central banking tasks comprise in particular those tasks that are related to the tasks listed in

text: Article 127(2)

text: , (5) and (6) of the Treaty. Fourth, new tasks conferred on an NCB which are atypical of NCBs’ tasks, or which are clearly discharged on behalf of and in the exclusive interest of the government or of other public entities, should be considered as government tasks. 2.2.2 Specific considerations Consumer protection tasks related to financial services are central banking tasks to the extent that these complement existing supervisory powers and thus contribute to the soundness of the financial markets and the preservation of confidence in the marketplace. An important criterion for qualifying a new task as a government task is the impact of the task on the institutional, financial and personal independence of the NCB. In particular, the following should be taken into account. First, it should be assessed whether the performance of the new task creates inadequately addressed conflicts of interests with existing central banking tasks, without necessarily complementing the NCB’s existing central banking tasks. If a conflict of interest arises between existing and new tasks, there should be sufficient mitigation measures in place to adequately address that conflict. Complementarity between the new task and existing central banking tasks should not, however, be interpreted broadly, as this could lead to the creation of an indefinite chain of ancillary tasks. The assessment of the complementarity of the new task should also take into account the financing of that task. In the event of a conflict of interest between prudential supervision and consumer protection, prudential supervisory considerations must prevail .

text: 25 See the ECB’s 2014 Convergence Report, p. 25.

text: 26 See paragraph 3.1 of Opinion

text: . Second, it should be assessed whether without new financial resources the performance of the new task places a disproportionate burden on the financial or organisational capacity of the NCB and may negatively impact on its capacity to properly perform its existing central banking tasks. Third, it should be assessed whether the performance of the new task is aligned with the institutional set-up of the NCB, in particular as regards central bank independence and accountability considerations. Fourth, it should be assessed whether the performance of the new task entails substantial financial risks. Fifth, it should be assessed whether the performance of the new task exposes the members of the NCB’s decision-making bodies to political risks that are disproportionate and could also impact on their personal independence and, in particular, the guarantee of the Governor’s term of office under Article 14.2 of the Statute of the European System of Central Banks and of the European Central Bank. 2.2.3 The final assessment of the qualification of a task given to an NCB as either falling within the scope of a central banking task or a government task will be guided by the objective of ensuring the consistent application of the prohibition of monetary financing within the Eurosystem and the ESCB.

text: 3. Specific observations

text: 3.1 Conferral on Banka Slovenije of new tasks The draft law broadens Banka Slovenije’s current supervisory responsibilities in the field of consumer credit to include the tasks of: authorising and supervising non-bank financial leasing companies providing consumer credit relating to immovable property, and intermediaries arranging consumer credit relating to such property; and supervising transferees of consumer credit. In the light of the guidance set out in paragraphs 2.2.1 to 2.2.3, it must be assessed whether Banka Slovenije’s new tasks could constitute a breach of the monetary financing prohibition. 3.2 Principle of financial independence The principle of financial independence requires NCBs to have sufficient means to carry out not only their ESCB-related tasks but also their national tasks, both from an operational and financial perspective . In this regard the ECB notes that, under the draft law, financial leasing companies that may provide consumer credit relating to immovable property and intermediaries arranging such consumer credit will be required to pay to Banka Slovenije a fee determined by Banka Slovenije for their authorisation . In addition, authorised financial leasing companies and authorised intermediaries arranging consumer credit relating to immovable property will also pay to Banka Slovenije an annual fee to cover the actual costs incurred by Banka Slovenije in the performance of its supervisory tasks . Whilst the ECB welcomes such provisions of the draft law, it notes that the draft law does not specify how costs related to the supervision of the entities that are permitted to

text: 27 See ECB’s 2014 Convergence Report, p. 25.

text: 28 Article 76 of the draft law. 29 Article 78 of the draft law. acquire consumer loans from banks, such as the BAMC or securitisation special purpose vehicles, are to be financed. In this regard the ECB invites the consulting authority to consider extending the cost-recovery regime to cover transferees of consumer credit. 3.3 Links to tasks listed in Article 127(5) of the Treaty The authorisation and supervision of non-bank financial leasing companies providing consumer credit relating to immovable property and of intermediaries arranging such consumer credit can be considered as tasks related to those referred to in Article 127(5) of the Treaty, based on the understanding that they are complementary to the supervisory tasks exercised by the NCB, particularly where, as in this case, Banka Slovenije already supervises credit institutions, including their consumer credit and financial leasing activities and their intermediaries, and has the task of ensuring the stability of the financial system . The new tasks are also complementary to its existing supervisory powers because they are financed through fees in a manner similar to the system used for financing the supervision of entities actively carrying out banking activity . 3.4 Atypical tasks A number of Member States have conferred on their NCBs supervisory tasks related to the provision of consumer credit . The ECB has generally accepted the allocation of such tasks to NCBs provided they do not interfere with the performance of the NCB’s ESCB-related tasks . The tasks of an NCB with regard to the supervision of non-bank consumer credit providers and intermediaries can therefore, if this condition is met, be regarded as tasks not atypical of a central bank, particularly if, as in the case of Banka Slovenije, it has a statutory responsibility for banking supervision, including supervising the provision of consumer credit and financial leasing, and financial stability . 3.5 Discharge of tasks on behalf of and in the exclusive interest of the Government or of other public entities Banka Slovenije is designated by the draft law as the sole supervisory authority for financial leasing companies and intermediaries arranging consumer credit relating to immovable property, and of certain non-bank transferees of consumer credit, in its own name and not on behalf of any other authority . There is no indication that, in carrying out its supervisory functions, Banka Slovenije would act exclusively in the interest of another public entity.

text: 30 In this regard, see paragraph 3.3 of Opinion

text: ; paragraph 3.1.2 of Opinion

text: ; paragraph 3.1.2 of Opinion

text: ; paragraphs 3.2 and 3.3 of Opinion

text: . 31 Article 238 of the Law on banking. 32 See paragraph 3.4 of Opinion

text: . 33 See, for example, paragraphs 2.1 to 2.3 of Opinion

text: , paragraphs 2.1 and 2.2 of Opinion

text: , paragraphs 2.1 to 2.5 of Opinion

text: , and paragraph 2 of Opinion

text: . 34 Article 33 of the Law on consumer credits, the Law on banking and the Law on Banka Slovenije (Zakon o Banki Slovenije) (ZBS-1) (Ur. l. RS No 72/06 – official consolidated text, and 59/11). 35 With Information Commissioner supervising compliance with the rules on the collection and processing of personal data (Article 77(5) of the draft law). 3.6 Extent to which the performance of tasks is aligned with Banka Slovenije’s institutional set-up, in particular as regards accountability considerations Given the complementarity of the new tasks with Banka Slovenije’s existing supervisory tasks, in particular in the field of supervision of credit institutions, including their consumer credit and financial leasing activities, and their intermediaries, the new tasks appear to broadly fit into Banka Slovenije’s institutional set-up. However, the draft law does not contain provisions clarifying the tools and powers necessary for Banka Slovenije to effectively perform its supervisory tasks in relation to transferees of consumer credit, such as the BAMC and securitisation special purpose vehicles, which may expose Banka Slovenije to reputational risks. 3.7 Extent to which the performance of tasks is proportionate to Banka Slovenije’s financial and operational capacity and its ability to perform its ESCB-related tasks As noted above, since not all of Banka Slovenije’s costs related to its new tasks are covered under the draft law (which does not specify whether the costs of supervision of transferees of consumer credits, such as the BAMC or securitisation special purpose vehicles, would be reimbursed), the ECB invites the consulting authority to consider introducing the same mechanism for all supervised entities as regards the financing of costs incurred by Banka Slovenije in the performance of its new tasks. 3.8 Extent to which the performance of tasks entails substantial financial risks The draft law does not contain any specific provisions on liability for the performance of supervisory tasks. Banka Slovenije’s potential liability for the performance of the new tasks given to it under the draft law will be thus subject to the rules on liability for damage caused in the exercise of public authority . 3.9 Conclusion The ECB considers that there are grounds for regarding Banka Slovenije’s new tasks of authorising financial leasing companies providing financial leasing services relating to immovable property to consumers and intermediaries arranging consumer credit relating to immovable property, as well as supervising these financial leasing companies, their intermediaries, and certain transferees of consumer credit transferred by entities authorised to perform banking activity or to provide financial services, as central banking tasks, in the sense that they can be regarded as complementing Banka Slovenije’s existing banking supervisory functions, including in the area of consumer credit. In addition, the fact that the supervised entities will contribute to the costs incurred by Banka Slovenije in performing its new supervisory tasks, by paying authorisation and annual supervisory fees, which will also have a positive impact on Banka Slovenije’s financial capacity to assume these tasks, may be regarded as reflecting such complementarity. However, the draft law does not contain provisions clarifying the tools and powers necessary for Banka Slovenije to effectively oversee compliance by certain transferees of consumer credits, such as the BAMC and securitisation special purpose vehicles, with consumer protection rules at the operational level, which may expose Banka Slovenije to reputational risks. In addition, the draft law does not specify

text: 36 Article 26 of the Slovenian Constitution in conjunction with the Code of Obligations (Obligacijski zakonik) (OZ) (Ur. l. RS No 97/07 – official consolidated text). how the supervisory costs incurred by Banka Slovenije in relation to these entities are to be reimbursed. This opinion will be published on the ECB’s website. Done at Frankfurt am Main, 8 June 2016. [signed] The President of the ECB Mario DRAGHI


publisher: Europeiska centralbanken

sprak: en

title: Opinion of the European Central Bank of 13 June 2016 on the reduction of statutory remuneration for employees in the public and semi-public sector (CON/2016/32)

serie: con

text: OPINION OF THE EUROPEAN CENTRAL BANK of 13 June 2016 on the reduction of statutory remuneration for employees in the public and semi-public sector (

text: ) Introduction and legal basis

type: rubrik

text: On 17 May 2016 the European Central Bank (ECB) received a request from the Dutch Minister of the Interior and Kingdom Relations for an opinion on a draft law extending the scope of the Law on standards for the remuneration of senior officials in the public and semi-public sector (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 De Nederlandsche Bank N.V. (DNB). 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 Law on standards for the remuneration of senior officials in the public and semi-public sector (hereinafter the ‘Law on remuneration’), which entered into force on 1 January 2013 , caps the salaries of top executives in the public and semi-public sector. The salaries for senior officials are limited to 100 % of a minister’s remuneration (i.e. EUR 179 000) . The Law on remuneration is already applicable to the members of DNB’s decision-making bodies . The draft law extends the statutory maximum of 100 % of a minister’s remuneration to the salaries of all employees working in the (semi-)public sector on the basis of an employment contract. DNB’s employees would thus fall within the scope of the draft law. The remuneration of a limited number of DNB staff, whose salaries would be reduced in accordance with the transitional regime set out below, would be directly affected .

text: 1 Conceptvoorstel voor de uitbreiding van de Wet normering bezoldiging topfunctionarissen publieke en semipublieke sector naar andere werknemers dan topfunctionarissen (Wet uitbreiding personele reikwijdte WNT).

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: 3 Law of 15 November 2012, published in the Staatsblad (Government Gazette) nr. 583 (2012). The ECB opined on this law in Opinion

text: . This opinion is without prejudice to the findings of the ECB in the aforementioned opinion. All ECB opinions are published on the ECB website at www.ecb.europa.eu.

text: 4 This amount is based on the gross salary of a minister. The other remuneration components are the employer’s contribution to social security premiums, taxable expenses and pension entitlements.

text: 5 See Opinion

text: 6 Other staff members could be indirectly affected if DNB were to revise its salary structure as a consequence of the (draft) Law. 1.2 The draft law lays down a transitional arrangement for employees whose remuneration exceeds the statutory remuneration maximum of 100 % of a minister’s salary. Their remuneration will remain unchanged for four years, and will subsequently be reduced over the following three years to the new statutory remuneration maximum of 100 %. 1.3 The draft law caters for the possibility of deviating from the maximum salaries for individual persons and specific ‘function groups’ if exceptional labour market conditions exist, such as certain expert knowledge, international level playing field and sector specific compensation schemes. A decision to deviate from the maximum remuneration must be taken by a Ministerial Decree for any deviation in favour of an individual person. For derogations in favour of certain ‘function groups’ the adoption of a Ministerial Regulation is required following the consultation of the cabinet of Ministers. The involvement of the respective (semi-)public sector entity is not laid down by law.

text: 2. Specific observations

text: 2.1 Financial Independence

text: The principle of financial independence, which is an aspect of the principle of central bank independence laid down in Article 130 of the Treaty, requires that a national central bank (NCB) should be able to avail itself autonomously of sufficient financial resources to fulfil its mandate , both operationally in terms of manpower, and financially in terms of appropriate financial resources. As a consequence Member States may not impair an NCB’s ability to employ and retain the qualified staff necessary for the NCB to perform independently the tasks conferred on it by the Treaty and the Statute of the ESCB . Autonomy in such matters extends to issues relating to staff salaries and pensions . As set out in past ECB opinions and ECB Convergence Reports, any amendment to the legislative provisions on the remuneration of members of the NCB’s decision-making bodies and its employees should be decided in close and effective cooperation with the NCB, taking due account of its views, to ensure the ongoing ability of the NCB to independently carry out its tasks . In addition, the ECB welcomes the optionality in the draft law to deviate from the statutory cap on the remuneration either on an individual or a ‘function group’ basis. It is likely that such a deviation would be justified should DNB experience difficulty in recruiting and/or retaining appropriate staff for ESCB-related tasks including for financial and market-related tasks or for supervisory tasks. However, according to the current wording of the draft law, the option of deviating may only be exercised by means of a Ministerial decree or a Ministerial Regulation without any involvement of the respective public sector entity (i.e. DNB) . In order to be compatible with the principle of

text: 7 I.e. to perform the ESCB-related tasks required of it under the Treaty and the Statute of the European System of Central Banks and of the European Central Bank (the ‘Statute of the ESCB’).

text: 8 See page 27 of the ECB’s 2014 Convergence Report for a general description of the doctrine regarding ‘central bank independence’ in relation to autonomy in staff matters, which refers to the following Opinions:

text: and

text: 9 See, for example, paragraph 3.1 of Opinion

text: 10 See page 27 of the ECB’s 2014 Convergence Report.

text: 11 See

text: Article 2

text: a.2 and 2a.3 of the draft law. financial independence the draft law should be amended to provide for a cooperation mechanism with DNB should DNB consider that an exception to the statutory cap on remuneration is required as such a deviation should be decided upon in close and effective cooperation with DNB, taking due account of its views, to ensure the ongoing ability of DNB to independently carry out its tasks. A good practice for effective cooperation between a government and an NCB relating to remuneration is reflected in Opinion

text: . The legislation opined upon in the aforementioned opinion exempted the NCB from its scope, while at the same time inviting the NCB to consider, taking into account its own legal order, whether the underlying reasons for the legislative provisions can be achieved without prejudicing the performance of the NCB’s tasks under the Treaty, the Statute of the ESCB and national legislation. Another form of effective cooperation which could provide guidance was considered in Opinion

text: : the draft legislative provisions in question established that the public service pension reduction scheme would only be applicable to the NCB with the consent of its Governor .The Dutch government could follow the same or a similar approach in order to achieve effective cooperation and to safeguard central bank independence . This opinion will be published on the ECB’s website. Done at Frankfurt am Main, 13 June 2016. [signed] The President of the ECB Mario DRAGHI

text: 12 See Opinion

text: paragraphs 2 and 3. In addition, see Opinion

text: and

text: paragraph 3.2.

text: 13 See the last indent of paragraph 3.2.2 of Opinion

type: vagledning

utgivare: ecb


text: For the activities of the independent external auditors of the NCBs see Article 27.1 of the Statute of the ESCB.

text: See the ECB’s Convergence Report, June 2014, p. 26 and Opinions

text: and

text: . All ECB Opinions and Convergence Reports are published on the ECB website at www.ecb.europa.eu.

text: 'See the ECB’s Convergence Report, June 2016, Chapter 7.5.3'. 7 See Article 2 of the draft law (which amends

text: Article 62

text: , paragraph 1 of Law on HNB).

text: See Paragraphs 3.5, 3.6 and 3.7 of the Opinion

text: . 10 See Decision of the Constitutional Court of the Republic of Croatia U-III-930/2015, 31 March 2015.

title: Opinion of the European Central Bank of 15 June 2016 on amendments to the Law on Hrvatska Narodna Banka (CON/2016/33)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 15 June 2016 on amendments to the Law on Hrvatska Narodna Banka (

text: ) Introduction and legal basis

text: On 24 May 2016 the European Central Bank (ECB) received a request from the Ministry of Finance of the Republic of Croatia for an opinion on draft amendments to the Law on Hrvatska Narodna Banka (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: The draft law proposes to amend the Law on Hrvatska Narodna Banka (1) to enable the State Audit Office to perform an annual audit of HNB’s prepared financial statements and overall operations of HNB; (2) to require HNB to submit its Annual Report on its work and operations to the Croatian Parliament as well as the semi-annual information on financial standing, the accomplished level of price stability and the implementation of monetary policy, where they will be discussed and voted on at the Parliament’s plenary session; and (3) to reduce the permissible number of 6-year terms of office of the Governor and other members of HNB’s Council to a maximum of two terms.

text: 2. Specific observations

text: 2.1 State Audit Office’s audit of HNB

text: 2.1.1 The principle of institutional independence referred to in Article 130 of the Treaty and Article 7 of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB’ or the ‘Statute’) 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 a national central bank (NCB)'s operations 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 (i) should be clearly defined by the

text: legal framework, (ii) 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, (iii) should comply with the prohibition on giving instructions to an NCB and its decision-making bodies and (iv) should not interfere with the NCB’s ESCB-related tasks . The state audit should be done on a non-political, independent and purely professional basis . 2.1.2 The ECB understands that the audit performed by the State Audit Office is generally governed by the provisions of the current Law on the State Audit Office. Its provisions stipulate that an audit includes a procedure for examining the auditee’s financial transactions in terms of the legal use of funds and for assessing the effectiveness and efficiency of the auditee’s operations and how effectively the auditee’s general objectives were met or how effectively the objectives of the auditee’s individual financial transactions, programmes and projects were met. Furthermore, the auditee must comply with audit findings and notify the State Audit Office of the actions taken in response to the audit findings. It follows that the State Audit Office would be empowered to assess whether HNB meets its general objectives, including its primary objective of maintaining price stability. These provisions of the current Law on the State Audit Office in conjunction with the relevant provisions of the draft law are not in line with the principle of central bank independence referred to in Article 130 of the Treaty and Article 7 of the Statute of the ESCB. There are no provisions to establish a framework for the public audit of HNB that respects HNB’s independence under the Treaty and the Statute of the ESCB, and prohibits external instructions and interference with HNB’s ESCB-related tasks or with the activities of HNB’s independent external auditors. Therefore the draft law would need to be adapted to comply with the requirements referred to in paragraph 2.1.1. 2.1.3 According to the current Law on the State Audit Office, the legal representative of the audited entity is obliged, for the purposes of the audit, to provide the certified state auditor with all documentation classified as a business secret or any other type of secret. Under Article 37 of the Statute of the ESCB members of the governing bodies and the staff of NCBs are required, even after their duties have ceased, not to disclose information of the kind covered by the obligation of professional secrecy. The primacy of Union law and the rules adopted thereunder means that national laws on access by third parties (such as the State Audit Office) to documents may not lead to infringements of the ESCB’s confidentiality regime. The access of a state audit office or similar body to an NCB’s information and documents must be limited and must be without prejudice to the ESCB’s confidentiality regime to which the members of NCBs’ decision-making bodies and staff are subject . Hence, access by the State Audit Office to HNB’s confidential information must be limited to that which is strictly necessary for the performance of the state auditor’s statutory tasks. Such access must also be without prejudice both to HNB’s independence and to the ESCB confidentiality regime, to which the members of HNB’s decision-making bodies and staff are subject. In addition, the relevant legal provisions in the draft law should be amended to stipulate that the State Audit

text: Office must safeguard the confidentiality of information and documents disclosed by HNB to the same extent as the professional secrecy provisions applied by HNB .

text: 2.2 Croatian Parliament’s vote on HNB’s Annual Report

text: 2.2.1 On the basis of the explanatory memorandum to the draft law, the ECB understands that the reference in the draft law to HNB’s obligation to ‘submit the Annual Report’, implies that the Croatian Parliament would discuss and vote upon the Annual Report. Although the explanatory memorandum states that the draft law clearly defines that HNB's Annual Reports are discussed and voted upon at a plenary session of the Croatian Parliament, it is not clear from the draft law what type of decision the Croatian Parliament would adopt on the Annual Report and what the consequences or implications of the Croatian Parliament’s vote on the Annual Report might be. Furthermore, in addition to the HNB’s obligation to ‘submit the Annual Report’ to the Croatian Parliament and its implied authority to discuss and vote upon the Annual Report, the proposed wording provides that semi-annual information on financial standing, on the level of price stability achieved and on the implementation of monetary policy should be submitted to the Croatian Parliament. Although the explanatory memorandum to the draft law does not expressly mention this, the proposed wording in the draft law implies that the semi-annual information shall be subject to discussion and voting by the Parliament in the same manner as the HNB's Annual Report. 2.2.2 In line with the principle of institutional independence under Article 130 of the Treaty and Article 7 of the Statute of the ESCB the NCBs and the members of their decision-making bodies are prohibited from seeking or taking instructions from Union institutions, bodies or agencies, from any government of a Member State or from any other body. In addition, the governments of the Member States are prohibited from seeking to influence the members of the NCBs’ decisionmaking bodies whose decisions may affect the fulfilment of the NCBs’ ESCB-related tasks. If national legislation mirrors Article 130 of the Treaty and Article 7 of the Statute, it should reflect both prohibitions and not narrow the scope of their application. 2.2.3 Furthermore, the rights of third parties to approve, suspend, annul or defer an NCB’s decisions are incompatible with the Treaty and the Statute as far as ESCB-related tasks are concerned . Therefore, the Croatian Parliament’s competence to vote on and adopt a decision on HNB’s Annual Report on its activities, semi-annual information, annual financial statements and auditor’s report could affect the institutional independence of HNB, as it goes beyond the transparency and accountability obligation of a central bank towards the national Parliament. The ECB notes that, in general, dialogue between NCBs and third parties is welcome and compatible with central bank independence, provided that (1) this does not result in interference with the independence of the members of the NCB’s decision-making bodies; (2) the special status of Governors in their capacity as members of the ECB’s General Council is fully respected; and (3) confidentiality requirements resulting from the Statute of the ESCB are observed. A decision of the Croatian Parliament as regards HNB’s Annual Report, semi-annual information, annual financial statements or auditor’s report must not result in any direct or indirect instructions being given to HNB, its decision-making

text: bodies or its members, for example as regards amending HNB’s Annual Report. Moreover, any right of the Parliament to approve, suspend, annul or defer HNB’s decisions would be contrary to HNB’s institutional independence under the Treaty and the Statute of the ESCB . 2.3 Reduction of the number of terms of office of HNB’s Governor and the other members of HNB’s

text: Council

text: 2.3.1 In view of the principle of central bank independence laid down in Article 130 of the Treaty and Article 7 of the Statute of the ESCB, Governors and other members of NCBs’ decision-making bodies involved in the performance of ESCB-related tasks may not be dismissed for reasons other than those mentioned in Article 14.2 of the Statute. Therefore, the current members of HNB’s Council should be allowed to complete their current terms of office, irrespective of how many terms of office have already been served in the past, and the draft law should be adapted to explicitly guarantee the completion of their current terms. 2.3.2 Moreover, the ECB understands, in accordance with the principles of the rule of law, legal safety, legal predictability and legal certainty under the Croatian Constitution, that the requirement that the members of the HNB Council may be appointed for a maximum of two terms of office does not apply in respect of terms which were served before the date the draft law comes into effect . This implies that the current and past members of the HNB Council would be able to serve two terms in the future, and that terms served in the past are not included and do not count towards the calculation of the limitation of two terms. The ECB welcomes this from the perspective of legal certainty.

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

text: Done at Frankfurt am Main, 15 June 2016.

text: [signed]

text: The President of the ECB

text: Mario DRAGHI


text: Directive

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

text: and

text: and

text: Regulation (EU) No 1093/2010

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

text: 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, for example, paragraph 3.1 of Opinion

text: paragraphs 2.2.1 to 2.2.3 of Opinion

text: and paragraphs 2.2.1 to 2.2.3 of Opinion

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

text: See paragraph 2.2.3 of the ECB’s 2014 Convergence Report.

text: See paragraph 3.1 of Opinion

text: See paragraph 2.2.3 of ECB’s 2014 Convergence Report.

text: See, for example, paragraph 3.3 of Opinion

text: , paragraph 3.1.2 of Opinion

text: , paragraph 3.1.2 of Opinion

text: and paragraphs 3.2 and 3.3 of Opinion

text: See Article 153 of Law 4261/2014 ‘Access to the activity of credit institutions and prudential supervision of credit institutions and investment firms (transposition of Directive

text: ), repeal of Law 3601/2007, and other provisions’, FEK A 107/ 5.5.2014.

text: See

text: Article 55

text: A of the Statute of the Bank of Greece.

text: See Article 1(2) of Law 4224/2013 ‘Government Council for Private Debt Management, Institution for Growth in Greece, provisions on the Hellenic Republic Asset Development Fund, and other urgent provisions’, FEK A 228/31.12.2013.

text: See recital 79 of Directive EU/2014/17.

text: See paragraph 3.4 of Opinion

text: See, for example, paragraphs 2.1 to 2.3 of Opinion

text: , paragraphs 2.1 and 2.2 of Opinion

text: , paragraphs 2.1 to 2.5 of Opinion

text: , and paragraph 2 of Opinion

text: See Article 4 of Law 4261/2014.

title: Opinion of the European Central Bank of 28 June 2016 on credit agreements for consumers relating to residential immovable property (CON/2016/34)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 28 June 2016 on credit agreements for consumers relating to residential immovable property (

text: ) Introduction and legal basis

text: On 31 May 2016 the European Central Bank (ECB) received a request from the Greek Ministry of Finance for an opinion on a draft law on the implementation of Directive

text: of the European Parliament and of the Council (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: , as the draft law relates to the Bank of Greece. 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 implement Directive

text: into Greek law, with a view to addressing problems uncovered by the financial crisis in the area of credit agreements for consumers relating to residential immovable property. The draft law aims at developing a more transparent and efficient market in this area which contributes to financial stability and provides a higher level of consumer protection, taking into account that much of the debt held by consumers within the Union is concentrated in credits related to residential immovable property. 1.2. The draft law designates the Bank of Greece as the competent authority responsible for ensuring the application and enforcement of certain requirements applicable to creditors and credit intermediaries when providing credit to consumers, and for the adoption of secondary legislation further specifying these requirements. The requirements to be monitored by the Bank of Greece include the following: (a) business conduct obligations; (b) knowledge and competence requirements; (c) minimum standards for the provision of advisory services to consumers; (d) requirements concerning the use of tying and bundling practices; (e) requirements on the provision of general information and adequate explanations to consumers on credit agreements; (f) the calculation of the annual percentage rate of charge (APRC); and (g) the assessment of consumers’ creditworthiness. The draft law also imposes obligations on creditors in relation to payment default

text: by consumers, such as exercising reasonable forbearance and making reasonable attempts to resolve the situation through alternative means before foreclosure proceedings are initiated. 1.3 Furthermore, the draft law designates the Bank of Greece as the competent authority for the licensing and supervision of credit intermediaries. In particular, the Bank of Greece will be responsible for: (a) licensing credit intermediaries; (b) ensuring that all licensed credit intermediaries comply with the professional requirements set out in the draft law; (c) withdrawing the license of credit intermediaries; (d) imposing sanctions in case of infringements; and (e) carrying out notification procedures which allow licensed credit intermediaries to operate throughout the Union. Finally, the draft law stipulates that the Ministry of Economy and Development should cooperate with the Bank of Greece and other relevant Greek authorities with a view to educating consumers on responsible borrowing and debt management and providing clear information on the debt-granting process especially in respect of consumers taking out mortgage credit for the first time.

text: 2. General observations

text: 2.1 This opinion does not address whether the draft law effectively implements Directive

text: into Greek law. The ECB will only assess those provisions of the draft law that may impact on the role and tasks of the Bank of Greece as a central bank, national supervisory authority and member of the Eurosystem and the European System of Central Banks (ESCB). 2.2 The draft law broadens the Bank of Greece’s current supervisory functions by assigning to it responsibility for the supervision and regulation of the market for credit agreements relating to residential immovable property. To this end, the draft law expands the categories of entities over which the Bank of Greece exercises prudential supervision to include credit intermediaries, which arrange credit by presenting credit agreements to consumers or concluding such agreements on behalf of creditors. Furthermore, the draft law expands the supervisory functions of the Bank of Greece in order to ensure proper market conduct of any natural or legal person granting credit relating to residential immovable property in the course of his trade, business or profession. 2.3 The ECB underlines that, in the context of a proposed conferral of new tasks on an ESCB member, it is necessary to assess whether such new tasks are in line with the prohibition of monetary financing under Article 123 of the Treaty. The ECB has developed the guidance set out in paragraphs 3.1 to 3.3 on the basis of which it may decide whether a new task conferred on a national central bank (NCB) is to be considered a central banking task or a government task for the purposes of assessing such conferral of tasks against the prohibition of monetary financing .

text: 3. Conferral of new tasks on national central banks

text: 3.1 General considerations

text: First, the systematic categorisation of tasks assigned to NCBs as central banking or government tasks applies to genuinely new tasks that did not exist in the past or did not form an integral part of the central banking tasks already assigned to the NCB in the past. In recognition of the different Member States’ legal frameworks, central banking traditions and national set-ups, the tasks currently discharged by an NCB as central banking tasks are not reviewed and re-categorised, but may be reassessed if their substance is amended. Second, it needs to be emphasised that when Member States decide to confer new tasks on their NCBs, due regard must be given to the role of the NCB as part of the ESCB or Eurosystem, as applicable, and to the requirement of central bank independence. The principle of financial independence, which is a key aspect of the principle of central bank independence as laid down in Article 130 of the Treaty, requires that the Member States may not put their NCBs in a position where they have insufficient financial resources to carry out their ESCB- or Eurosystem-related tasks, as applicable. Accordingly, an NCB must have sufficient financial means not only to perform its ESCB- or Eurosystem-related tasks but also its national tasks (e.g. financing its administration and own operations) . Where an NCB considers that the allocation of a new task would impinge on its financial independence, because it would not have sufficient means to focus primarily on its ESCB- or Eurosystem-related tasks, or that the discharge of the new task would impose a disproportionate burden on it, the NCB should be able to object to the new task being allocated to it. Third, central banking tasks comprise in particular those tasks that are related to the tasks listed in

text: Article 127(2)

text: , (5) and (6) of the Treaty. Fourth, new tasks conferred on an NCB which are atypical of NCBs’ tasks, or which are clearly discharged on behalf of and in the exclusive interest of the government or of other public entities, should be considered as government tasks. 3.2 Specific considerations Consumer protection tasks related to financial services are central bank tasks to the extent that these complement existing supervisory powers of a central bank and thus contribute to the soundness of the financial markets and the preservation of confidence in the marketplace. An important criterion for qualifying a new task as a government task is its impact on the institutional, financial and personal independence of the NCB. In particular, the following should be taken into account. First, it should be assessed whether the performance of the new task creates (inadequately addressed) conflicts of interest with existing central banking tasks, without necessarily complementing the NCB’s existing central banking tasks. If a conflict of interest arises between existing and new tasks, there should be sufficient mitigation measures in place to adequately address that conflict. Complementarity between the new task and existing central banking tasks should not, however, be interpreted broadly, as this could lead to the creation of an indefinite chain of ancillary tasks. The assessment of the complementarity of the new task should also take into

text: account the financing of that task. In the event of a conflict of interest between supervision and consumer protection, supervisory considerations must prevail . Second, it should be assessed whether without new financial resources the performance of the new task places a disproportionate burden on the financial or organisational capacity of the NCB and may negatively impact on its capacity to properly perform its existing central banking tasks. Third, it should be assessed whether the performance of the new task is aligned with the institutional set-up of the NCB, in particular as regards central bank independence and accountability considerations. Fourth, it should be assessed whether the performance of the new task entails substantial financial risks. Fifth, it should be assessed whether the performance of the new task exposes the members of the NCB’s decision-making bodies to political risks that are disproportionate and could also impact on their personal independence and, in particular, the guarantee of the Governor’s term of office under Article 14.2 of the Statute of the European System of Central Banks and of the European Central Bank. 3.3 The final assessment of the qualification of a task given to an NCB as either falling within the scope of a central banking task or a government task will be guided by the objective of ensuring the consistent application of the prohibition of monetary financing within the Eurosystem and the ESCB.

text: 4. Specific observations

text: 4.1 Conferral of new tasks on the Bank of Greece In the light of the guidance set out in paragraphs 3.1 to 3.3, it is further assessed whether the new tasks that the draft law confers on the Bank of Greece could constitute a breach of the monetary financing prohibition. 4.2 Principle of financial independence The principle of financial independence requires NCBs to have sufficient means to carry out not only their ESCB-related tasks but also their national tasks, both from an operational and financial perspective . In this regard the ECB notes that the draft law does not specify how the costs related to the supervision of credit intermediaries by the Bank of Greece are to be financed. The ECB therefore invites the consulting authority to consider establishing a cost recovery regime, which would require credit intermediaries to pay to the Bank of Greece an authorisation fee or an annual fee to cover the actual costs incurred by the Bank of Greece in the performance of its supervisory tasks. 4.3 Links to tasks listed in Article 127(5) of the Treaty The authorisation and supervision of credit intermediaries, as well as the oversight and regulation of the market for credit agreements relating to residential immovable property, can be considered

text: as tasks related to those referred to in Article 127(5) of the Treaty, based on the understanding that they are complementary to the supervisory tasks exercised by an NCB, particularly where, as in this case, the Bank of Greece already exercises tasks of a similar nature . More specifically, the ECB notes that the Bank of Greece already supervises credit institutions and other financing institutions, such as credit companies granting consumer credit to natural persons , with a view to enhancing the stability and effectiveness of the credit system and of the financial sector in general . As part of this function, the Bank of Greece establishes and monitors the application of requirements aimed at ensuring a proper interaction between market participants and consumers with respect to the provision of credit, at the pre-contractual stage as well as during the contractual relationship, including, for example, minimum disclosure requirements, and requirements relating to complaints, property valuation and creditworthiness assessments. Moreover, the Bank of Greece is also entrusted with the adoption and application of a code of conduct for the handling of arrears . Finally, in its capacity as the national supervisory authority, the Bank of Greece acts under the auspices of the European Banking Authority (EBA). Directive

text: favours the designation of authorities acting under the auspices of the EBA as the competent authorities responsible for the admission of credit intermediaries . 4.4 Atypical tasks A number of Member States have conferred on their NCBs supervisory tasks related to the provision of consumer credit . The ECB has generally accepted the allocation of such tasks to NCBs provided they do not interfere with the performance of the NCB’s ESCB-related tasks . The tasks of an NCB with regard to the supervision of credit intermediaries can therefore, if this condition is met, be regarded as tasks not atypical of a central bank, particularly if, as in the case of the Bank of Greece, it has a statutory responsibility for banking supervision . 4.5 Discharge of tasks on behalf of and in the exclusive interest of the Government or of other public

text: entities

text: The draft law designates the Bank of Greece as the sole authority responsible for supervising credit intermediaries, in its own name and not on behalf of any other authority. Under the draft law the Bank of Greece is also the sole authority responsible for enforcement of the requirements applicable to creditors and credit intermediaries. The ECB notes that the draft law designates the Ministry of Economy as the authority responsible for the application of certain provisions of the draft

text: law, notably those relating to the advertisement and marketing of credit agreements and the provision of advisory services by consumer associations. Responsibility for the financial education of consumers lies with the Ministry of Economy and Development, which may cooperate with the Bank of Greece and other relevant authorities on related matters. In view of the above, it appears that the allocation of the responsibilities under the draft law is clear and there is no indication that in carrying out its new tasks the Bank of Greece would act exclusively in the interest of another public entity. 4.6 Extent to which the performance of tasks is aligned with the Bank of Greece’s institutional set-up, in

text: particular as regards accountability considerations

text: Given the complementarity of the new tasks with the Bank of Greece’s existing supervisory powers, in particular in the field of supervision of credit institutions and other financial institutions and oversight of their market conduct, the new tasks appear to broadly fit into the Bank of Greece’s institutional set-up. 4.7 Extent to which the performance of tasks is proportionate to the Bank of Greece’s financial and operational capacity and its ability to perform its ESCB-related tasks As noted above, the draft law does not provide for a regime for the recovery of costs related to the supervision of credit intermediaries. Directive

text: requires Member States to ensure that competent authorities have adequate resources for the efficient and effective performance of their duties .However, the draft law does not specify the resources to be deployed by the Bank of Greece for the discharge of its new tasks, nor does it provide an estimate of the direct costs that the Bank of Greece is likely to incur in the performance of these tasks. The ECB notes that it is important that appropriate resources are available to the Bank of Greece in order to ensure that it can properly perform its new tasks, while maintaining, at all times, sufficient financial means to carry out its ESCB- or Eurosystem-related tasks and other national tasks, meet its international obligations and properly cover its administrative and operational expenses. 4.8 Extent to which the performance of tasks entails substantial financial risks and conflicts of interests

text: with existing tasks of the Bank of Greece are addressed

text: The draft law does not contain any specific provisions on liability for the performance of supervisory tasks. The Bank of Greece’s potential liability for the performance of its new tasks under the draft law will be thus subject to the general rules on the liability of the Bank of Greece. These general rules provide that the governor, the deputy governors, all members of collective bodies and staff members of the Bank of Greece shall not be subject to civil liability towards third parties for actions or omissions in the performance of their duties related to any competence exercised by the Bank of Greece in its capacity as a public authority other than for wilful misconduct . As regards potential conflicts of interest between existing and new tasks of the Bank of Greece, the ECB notes that under the draft law the Bank of Greece will be responsible for supervising conduct of creditors and credit intermediaries towards consumers, including their policies in respect of arrears and foreclosure. While these tasks seem to be broadly of the same nature as the supervisory tasks

text: already performed by the Bank of Greece, the ECB notes that conflicts of interest may arise. As the authority responsible for supervising the financial markets, the Bank of Greece will be required to mitigate any potential conflict of interest between its new consumer protection tasks and its supervision and financial stability mandates. The ECB recommends that sufficient mitigation measures are put in place. 4.9 Conclusion The ECB considers that there are grounds for regarding the Bank of Greece’s new tasks of supervising and regulating the market for consumer credit agreements as well as authorising and supervising credit intermediaries as central bank tasks, in the sense that they can be regarded as complementing the Bank of Greece’s existing supervisory functions. However, it is essential that the new role assigned to the Bank of Greece by the draft law does not adversely affect its capacity to carry out its ESCB- or Eurosystem-related tasks and to perform its other functions. To this end, it must be ensured that the supervisory costs incurred by the Bank of Greece in relation to its new tasks are adequately covered. Furthermore, it is important to ensure that sufficient mitigation measures are in place to adequately address any potential conflict of interests between the Bank of Greece’s new consumer protection tasks and its existing supervision and financial stability mandate. The ECB invites the Greek authorities to consider in more depth the abovementioned aspects before the draft law is adopted.

text: Done at Frankfurt am Main, 28 June 2016.

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: In accordance with the Law of 14 April 2011 and the Royal Decree of 17 July 2013.

text: See Opinions

text: and

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

text: See paragraphs 2.1 and 2.2 of Opinion

text: and paragraph 2 of Opinion

text: See Opinion

text: See paragraph 2 of Opinions

text: and

text: See paragraph 3.1.3 of Opinion

text: Paragraph 1.2 of Opinion

title: Opinion of the European Central Bank of 28 June 2016 on extending access to the central register of bank accounts (CON/2016/35)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 28 June 2016 on extending access to the central register of bank accounts (

text: ) Introduction and legal basis

text: On 1 June 2016 the European Central Bank (ECB) received a request from the Belgian Ministry of Finance for an opinion on a draft law extending access to the central register of bank accounts (hereinafter the ‘draft law’) to certain tax authorities, various departments of the Ministry of Justice and public notaries. 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 Nationale Bank van Belgiё/Banque Nationale de Belgique (NBB). 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 extend the list of persons authorised to access the central register of bank accounts, with a view to combating not only tax fraud and money laundering but also the financing of terrorism and financial crime in general. This central register, which has been operated by the NBB since 2011 , consolidates data on bank accounts held by clients of financial institutions established in Belgium and on other financial operations (such as investment, leasing, mortgage and credit agreements). The NBB exercises formal control over the structure of the data but it has no control over the correctness and completeness of such data, which are provided by the financial institutions directly. 1.2 Under the current legal framework, only a limited number of specifically nominated high-ranking tax authority civil servants appointed by the Ministry of Finance have access to the central register, for the purpose of identifying possible cases of tax fraud. Such access is provided by the NBB in the form of an extranet portal, which has been specifically designed for use by the Ministry of Finance. The information queries posted by the authorised officials of the Ministry of Finance are manually processed by NBB staff, who thereafter have to upload the relevant data to the portal. The costs

text: incurred by the NBB for the set-up, development, operation and maintenance of the central register are invoiced quarterly, in accordance with the agreement concluded between the NBB and the Ministry of Finance on the basis of Article 20 of the Royal Decree of 17 July 2013. 1.3 The draft law extends access to the central register to (a) high-ranking officials in charge of, in the event of fraud, value added tax and customs and excise duties; (b) high ranking officials in charge of collecting value added tax, customs and excise duties, non-tax debts, registration, mortgage and court registry rights, inheritance tax, criminal fines, confiscated sums of money and court costs; (c) public prosecutors in charge of investigations relating to tax fraud, money laundering and the financing of terrorism; (d) examining magistrates and the criminal courts; (e) the unit for the prevention of the use of the financial system for the purpose of money laundering and the financing of terrorism; and (f) notaries for the purpose of issuing inheritance declarations. 1.4 The draft law does not specify in which form access to the central register is to be provided to the persons granted access under the draft law. 1.5 The draft law is expected to enter into force shortly in order to enable immediate availability of the data contained in the central register to the persons mentioned in paragraph 1.3.

text: 2. General observations

text: 2.1 The ECB takes note of the fact that the draft law aims to combat tax fraud and prevent the use of the financial system for the purpose of money laundering and terrorist financing. 2.2 The ECB understands that the draft law amends the national legal framework governing the establishment and operation of the central register of bank accounts, which consists of the Law of 14 April 2011 and the Royal Decree of 17 July 2013. The ECB was consulted on these legal acts prior to their adoption and issued opinions on them . In its opinions, the ECB noted, in particular, that the new task entrusted to the NBB is not a central banking task, nor does it facilitate the performance of such a task. Rather, the ECB understood that the new task entrusted to the NBB is linked to a State task, i.e. the collection of taxes by the State and the reinforcement of the fight against tax fraud, and is performed in the interest of the State. The ECB concluded, therefore, that if the NBB is to be entrusted with such a task, it needs to be adequately remunerated in advance, to ensure compliance with with the monetary financing prohibition. In addition, the financing of this new task entrusted to the NBB must comply with the principle of financial independence, under which a national central bank must have sufficient means not only to perform its ESCB-related tasks, but also its national tasks, e.g. financing its administration and own operations . 2.3 The ECB would like to recall that when new tasks are conferred on a member of the European System of Central Banks (ESCB), it is necessary to assess these tasks against the prohibition of monetary financing under Article 123 of the Treaty. For this purpose, the ECB has developed guidance in the form of general and specific considerations on the basis of which the ECB may

text: decide whether the new task conferred on an ESCB national central bank (NCB) is to be considered a central banking task or a government task for the purposes of the monetary financing prohibition . This guidance is set out in paragraph 2.4. The concrete assessment of whether the NBB’s tasks in connection with the central register and the extension of access proposed under the draft law are to be considered central banking tasks or government tasks is then undertaken in paragraph 3 of this opinion. 2.4 Guidance on the assessment of the monetary financing prohibition 2.4.1 First, the systemic categorisation of tasks assigned to NCBs as central banking or government tasks applies to genuinely new tasks that did not exist in the past or did not form an integral part of the central banking tasks already assigned to an NCB. In recognition of the different Member States’ legal frameworks, central banking traditions and national set-ups, the tasks currently discharged by an NCB as central banking tasks are not reviewed and re-categorised, but may be reassessed if their substance is amended. Second, the principle of financial independence requires that the Member States may not put their NCBs in a position where they have insufficient financial resources to carry out their ESCB or Eurosystem-related tasks. Third, central banking tasks comprise in particular those tasks that are related to the tasks listed in

text: Article 127(2)

text: , (5) and (6) of the Treaty. Fourth, the new tasks conferred on an NCB which are atypical of NCBs’ tasks, or which are clearly discharged on behalf of and in the exclusive interest of the government or of other public entities, should be considered to be government tasks. 2.4.2 An important criterion for qualifying a new task as a government task is therefore the impact of the task on the institutional, financial and personal independence of the NCB. In particular, the following issues should be taken into account. First, it should be assessed whether the performance of the new task creates inadequately addressed conflicts of interests with existing central banking tasks, without necessarily complementing the existing central bank tasks. If a conflict of interest arises between existing and new tasks, there should be sufficient mitigation measures in place to adequately address that conflict. Complementarity between the new task and existing central banking tasks should not, however, be interpreted broadly, as this could lead to the creation of an indefinite chain of ancillary tasks. The assessment of the complementarity of a new task should also take into account the financing of that task. Second, it should be assessed whether without new financial resources the performance of the new task places a disproportionate burden on the financial or organisational capacity of the NCB and may negatively impact on its capacity to properly perform existing central banking tasks. Third, it should be assessed whether the performance of the new task is aligned with the institutional set-up of the NCB, in particular as regards central bank independence and accountability considerations. Fourth, it should be assessed whether the performance of the new task entails substantial financial risks. Fifth, it should be assessed whether the performance of the new task exposes the members of the NCB’s decision-making bodies to political risks that are disproportionate and could also impact on their personal independence. Any final assessment on the qualification of a task given to an NCB as either falling within the scope of a central banking ask or a government task will be guided by the

text: objective of ensuring the consistent application of the monetary financing prohibition within the Eurosystem and the ESCB.

text: 3. Specific observations

text: 3.1 Extended access to the central register The ECB notes that the draft law makes the NBB responsible for granting access to the central register of bank accounts to the persons mentioned in paragraph 1.3. The ECB understands that by extending access to the central register the users’ group will be considerably broadened and will thus become more heterogeneous. The NBB may need to revisit its communication channels with the users, since these were only developed to accommodate a small number of requests entered by a few high-ranking Ministry of Finance officials. The substance of the task initially conferred on the NBB would be significantly expanded by the provisions of the draft law and should therefore be reassessed in the light of the proposed extension of access against the prohibition of monetary financing. 3.2 Principle of financial independence The principle of financial independence requires that the Member States may not put their NCBs in a position where they have insufficient financial resources to carry out not only their ESCB related tasks, but also their national tasks, both from an operational and a financial perspective. In the two previous ECB opinions submitted to the Belgian authorities on the legal framework governing the central register of bank accounts , the ECB insisted that the NBB be adequately remunerated for all costs incurred when performing activities related to its tasks in connection with the central register, be it through remuneration provided in advance or through full and prompt reimbursement of costs on market terms. The Royal Decree of 17 July 2013 implementing

text: Article 322

text: , section 3 of the Revenue Code had met these concerns by requiring that all costs incurred by the NBB for the establishment, development, operation and maintenance of the central register be allocated quarterly to the Ministry of Finance, in accordance with the agreement entered into with the NBB. Currently the costs incurred in connection with the central register can be easily tracked and invoiced to the Ministry of Finance. However, full coverage of the costs associated with the task of extending access to the central register to the persons mentioned in paragraph 1.3, most of whom operate within the remit of the Ministry of Justice, cannot be ensured. The existing financial arrangements only cover the costs of the requests filed by persons falling within the remit of the Ministry of Finance and thus the reimbursement of all costs incurred by the NBB when performing the significantly expanded task cannot be ensured. The draft law contains no provisions on procedures for monitoring, allocating and invoicing the supplementary costs incurred by NBB in granting the extended access to the central register. The ECB understands that the Belgian legislator intends, at a later stage, to adopt a standalone law that would govern all relevant aspects of the central register, including its technical infrastructure and the financing mechanisms. However, the ECB notes that the expected significant increase in the

text: number of requests for access may, if the new access requests are not received in an automated manner or via electronic means, necessitate the mobilisation of substantial NBB staff resources and place a disproportionate burden on the NBB’s organisational capacity. This may negatively impact the NBB’s capacity to properly perform its existing central banking tasks. The ECB therefore urges the Belgian legislator to ensure that the entry into force of the draft law be accompanied by the implementation of a corresponding cost recovery mechanism, in order to safeguard the financial independence of the NBB and dispel the monetary financing concerns associated with carrying out a government task. 3.3 Discharge of tasks on behalf and in exclusive interest of Government The ECB has previously opined that tasks entrusted to an ESCB member relating to the establishment of a central register of bank accounts are not central bank tasks nor do they facilitate the enforcement of such tasks . The ECB considers this task to be clearly a government task since its purpose is to combat tax evasion, money laundering and the financing of terrorism. It thus cannot be regarded in any respect as a central bank task. 3.4 Complementarity of tasks with existing NBB tasks and extent to which conflicts of interest with

text: existing NBB tasks are addressed

text: Under the Royal Decree of 17 July 2013, the reasons for entrusting the NBB with the task of operating the central register are that the NBB is capable of handling sensitive bank account data, the NBB is neutral and independent of the other institutions involved in tax collection and the NBB has experience in centralising sensitive financial data. Notwithstanding these reasons, the ECB has analysed if the operation of a central register with such broad access is complementary to the NBB’s existing tasks. The ECB notes that the draft law is only extending the scope of persons having access to the existing register and that the central register has been placed into a separate department, with access to the database being exclusively granted by the NBB Board to certain staff. This institutional set-up should help to alleviate concerns regarding potential conflicts of interest. 3.5 Extent to which the performance of tasks is aligned with institutional set-up of NCB In view of the fact that operating a central register of bank accounts cannot be regarded as a central bank task, this might raise concerns as to how such a task would fit into the institutional setup of the NBB. However, it is acknowledged that locating the central register in a separate department adequately ensures that the data obtained in this context are not accessible to other NBB departments carrying out ESCB or other national tasks. 3.6 Extent to which the performance of tasks entails substantial financial risks As emphasised in its previous opinion , the liability of the NBB in relation to the operation of the central register is explicitly limited to cases of misconduct or wilful negligence, on account of the extremely limited control that the NBB has over the correctness and completeness of the data contained in the central register. This limitation of the NBB’s liability should help to reduce the financial risks associated with the performance of the extension of access to the exisiting register to a broader range of persons.

text: 3.7 Extent to which the performance of tasks exposes members of NBB’s Board to disproportionate

text: political risks or could impact their personal independence

text: The limitation of the NBB’s liability in relation to the operation of the central register is without prejudice to the Law of 8 December 1992 on the protection of privacy in relation to the processing of personal data, which applies to NBB as the central register is deemed to be a ‘filing system’ within the meaning of the said law. This law requires, in particular, that the NBB takes any appropriate technical and organisational measures necessary to protect personal data from unauthorised access and processing. In view of the increased number of persons authorised to access the central register, the NBB’s compliance with this obligation will inevitably become more complex. It cannot be excluded that the NBB’s Board could be exposed to reputational risks, should the data be accessed by a non-authorised applicant or otherwise be publicly disclosed. The fact that the central register will contain sensitive information could place NBB’s Board members in a difficult position should this information enter into the public domain, potentially entailing a negative impact on their personal independence. 3.8 Conclusion The ECB is concerned by the absence in the draft law of clear financial arrangements regarding the full recovery of the costs to be incurred by the NBB in performing its tasks concerning the central register of bank accounts. With a view to safeguarding the financial independence of the NBB and dispelling the monetary financing concerns associated with carrying out a government task, the ECB urges the Belgian legislator to ensure that the entry into force of the draft law be accompanied by procedures for monitoring, allocating and invoicing all costs associated with granting extended access to the central register.

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

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: Published in Dz. Urz NBP of 2015, item 8.

text: See Opinion

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

text: See paragraph 2.2 of Opinion

text: Council Regulation (EC) No 1339/2001 of 28 June 2001

text: extending the effects of

text: Regulation (EC) No 1338/2001

text: laying down measures necessary for the protection of the euro against counterfeiting to those Member States which have not adopted the euro as their single currency (OJ L 181, 4.7.2001, p. 11).

text: Council Regulation (EC) No 1338/2001 of 28 June 2001

text: laying down measures necessary for the protection of the euro against counterfeiting (OJ L 181, 4.7.2001, p. 6).

text: Decision ECB/2010/14 of the European Central Bank of 16 September 2010 on the authenticity and fitness checking and recirculation of euro banknotes (OJ L 267, 9.10.2010, p. 1). For euro coins, the authenticity check procedure is provided for in

text: Regulation (EU) No 1210/2010

text: of the European Parliament and of the Council of 15 December 2010 concerning authentication of euro coins and handling of euro coins unfit for circulation (OJ L 339, 22.12.2010, p. 1).

title: Opinion of the European Central Bank of 11 July 2016 on the method and procedure for counting, sorting, packaging and labelling of banknotes and coins (CON/2016/36)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 11 July 2016 on the method and procedure for counting, sorting, packaging and labelling of banknotes and coins (

text: ) Introduction and legal basis

text: On 13 June 2016 the European Central Bank (ECB) received a request from the President of Narodowy Bank Polski (NBP) for an opinion on a draft ordinance of the President of NBP on the method and procedure to be used in counting, sorting, packaging and labelling packages of banknotes and coins, and in conducting activities related to the supply of banknotes and coins to banks (hereinafter the ‘draft ordinance’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the second indent of

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

text: 1. Purpose of the draft ordinance

text: 1.1 The draft ordinance is intended to replace Ordinance No 19/2007 of the President of NBP of 24 October 2007 on the method and procedure to be used in counting, sorting, packaging and labelling packages of banknotes and coins, and in conducting activities related to the supply of 2 3 banknotes and coins to banks , on which the ECB commented in Opinion

text: . 1.2 Particularly in view of the need to update and adapt the legal provisions to new solutions and technologies used in the banking sector, the draft ordinance introduces (1) certain reporting requirements for banks regarding amounts of banknotes and coins subject to currency management processes, (2) banknote fitness assessment criteria, and (3) requirements for banknote handling machines, including the method for classifying banknotes by these machines and the requirement to conduct tests on these machines, at which a representative of NBP may be present. The draft ordinance also implements certain solutions aimed at improving the safety of cash circulation.

text: 1.3 In addition, the draft ordinance contains provisions relating to foreign currency. The definition of that term means that the provisions of the draft ordinance dealing with foreign currency apply to the euro. This includes rules on the method and procedure for counting, sorting, packaging, labelling, lodgement and withdrawal of foreign banknotes, and the verification of the authenticity of banknotes and coins.

text: 2. General observations

text: 2.1 As noted in Opinion

text: in relation to the predecessor ordinance, the draft ordinance, which forms part of a wider regulatory framework on currency management, needs to comply with the directly applicable provisions of

text: Council Regulation (EC) No 1339/2001

text: as regards euro banknotes and coins. 2.2

text: Article 1 of Regulation (EC) No 1339/2001

text: extends the application of

text: Article 6 of Council Regulation (EC) 1338/2001

text: to Member States which have not adopted the euro as their single currency. In accordance with

text: Article 6(1) of Regulation (EC) 1338/2001

text: cash handlers are obliged to carry out checks on the authenticity of euro banknotes in line with the procedures defined by the ECB. The ECB has defined these procedures in Decision ECB/2010/14 . 2.3 However, by virtue of

text: Article 6

text: (1a) of

text: Regulation (EC) 1338/2001

text: Member States which have not adopted the euro as their single currency may make use of a derogation. If these Member States make use of this option, they can allow cash handlers to carry out checks on the authenticity of euro banknotes by trained personnel. Where a machine is used, this machine however needs to be fully compliant with the ECB recirculation framework. Although the obligation established by

text: Article 6 of Regulation (EC) 1338/2001

text: in conjunction with

text: Article 1 of Regulation (EC) 1339/2001

text: is directly applicable in Poland and takes precedence over national law, the ECB would encourage the NBP to include a specific reference to this obligation in the draft ordinance to promote legal certainty for its addressees. 2.4 Going beyond the provisions of directly applicable Union law, in view of Poland’s prospects of adopting the euro in the future and the related obligation to align Polish law with the Eurosystem’s legal framework, the ECB would welcome the draft ordinance establishing a legal framework at

text: national level that is consistent with the ECB legal framework applicable to the protection of euro banknotes. This opinion will be published on the ECB’s website. Done at Frankfurt am Main, 11 July 2016. [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 ‘Decisions taken by the Governing Council of the ECB (in addition to decisions setting interest rates)’ for July 2005 and the related ECB press release of 22 July 2005 entitled ‘Eurosystem collateral framework: Inclusion of non-marketable assets in the Single List’, available on the ECB’s website at www.ecb.europa.eu. 3 In 2008 the European Commission noted that the possible exercise of set-off rights by the debtor of the credit claim provided as collateral could discourage the use of credit claims as collateral. This is because ‘the collateral can as such disappear if the debtor exercises set-off right vis-à-vis the creditors of the credit claim and vis-à-vis persons to which the creditors assigned, pledged or otherwise mobilised the credit claim as collateral.’ See ‘Commission staff working document accompanying the Proposal for a Directive of the European Parliament and of the Council amending the Settlement Finality Directive and the Financial Collateral Directive – Impact Assessment’, April 2008, available on Eur-lex website at www.eur-lex.europa.eu. 4 See the Law on the Autonomy of Banco de España, sixth additional provision, paragraph (4)(e) introduced by the Royal Decree-Law 2/2012 on the reorganisation of the financial sector. 5 The ECB notes that the legal technique used for the mobilisation of credit claims with the Banque de France is the title transfer financial collateral arrangement under Article L.211-38 of the French monetary and financial code (COMOFI). Under Article L.211-38 of the COMOFI the constitution and opposability of such title transfers are not subject to any particular formality.

text: The ECB already noted in its response to the Commission’s Green Paper on establishing a capital market union (CMU), that while set-off rights can currently be validly waived by debtors pursuant to the Financial Collateral Directive (FCD), the divergence in the transposition and interpretation of the FCD greatly undermines the underlying rationale of protecting collateral takers of this provision, which could be mitigated if set-off were fully excluded with respect to credit claims mobilised as collateral with central banks. See ‘Building a Capital Markets Union – Eurosystem contribution to the European Commission’s Green Paper’, p. 24, available on the ECB’s website at www.ecb.europa.eu.

title: Opinion of the European Central Bank of 12 July 2016 on the exclusion of set-off rights with respect to claims mobilised as collateral with a central bank of the European System of Central Banks (CON/2016/37)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 12 July 2016 on the exclusion of set-off rights with respect to claims mobilised as collateral with a central bank of the European System of Central Banks (

text: ) Introduction and legal basis

text: On 10 June 2016 the European Central Bank (ECB) received a request from the French Ministry of Finance and Public Accounts for an opinion on a draft legal provision excluding the exercise of any contractual or statutory right to set-off with respect to credit claims mobilised as collateral with a central bank of the European System of Central Banks (ESCB) (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third, fifth and sixth indents of

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

text: , as the draft law relates to national central banks, payment and settlement systems, and the rules applicable to financial institutions insofar as they materially influence the stability of financial institutions and markets. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft law

text: 1.1 The purpose of the draft law is to introduce in French law a specific provision to eliminate set-off risks resulting from the acceptance by the Banque de France and other ESCB central banks of credit claims as eligible collateral in ESCB monetary policy, intraday credit and other credit operations. 1.2 Set-off rights arise in situations where a debtor has a legal right to set-off or net its obligations towards a creditor by the amount of outstanding claims the debtor has against the creditor, e.g. bank deposits. A set-off risk is the risk of loss for the ESCB which arises when an ESCB central bank enforces a credit claim presented as collateral by a defaulting counterparty where the credit claim mobilised as collateral would have lost part of its value as a result of set-off. 1.3 In order to eliminate set-off risk the draft law provides that, notwithstanding any provision or stipulation to the contrary, no right to set-off may give rise to the extinction, in full or in part, of credit claims submitted as collateral to a central bank that forms part of the ESCB.

text: 2. General observations

text: 2.1 Credit claims have been accepted as eligible collateral for Eurosystem monetary policy and intraday credit operations since 1 January 2007 . The scope for accepting eligible credit claims has been extended by the additional credit claims (ACC) framework that was implemented in December 2011 as a temporary measure. Under the ACC framework other types of credit claims, such as residential mortgages or pools of credit claims, provided they meet certain additional specific criteria, qualify as eligible collateral in certain euro area jurisdictions, including France. 2.2 The ECB considers the draft law’s aim of excluding set-off risks associated with the acceptance of credit claims as collateral in Eurosystem credit operations as legitimate and fully in line with the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB’). Protecting the ESCB against any potential loss arising from the acceptance of such collateral is closely linked to the requirement laid down in the second indent of Article 18.1 of the Statute of the ESCB, pursuant to which lending by the ESCB central banks must be based on adequate collateral. In addition, adequately addressing set-off risks also facilitates the continued eligibility of credit claims as eligible collateral in Eurosystem credit operations , and thereby contributes to the efficiency of the transmission of monetary policy to the real economy. 2.3 The ECB notes that, in line with the draft law, several other euro area Member States have enacted statutory provisions which exclude set-off risks when credit claims are mobilised as collateral for central bank operations. The approach adopted by these Member States differs as to the scope of the parties benefitting from the exclusion. In certain Member States statutory provisions only exclude set-off rights for credit claims mobilised as collateral for operations with the particular Member State’s central bank. Some Member States also have statutory provisions that provide protection for the ECB and other ESCB central banks. In one Member State, the exclusion of setoff rights applies to operations with all Union central banks and any third party to whom a credit claim may subsequently be transferred by a central bank . 2.4 Against this background, the draft law excludes all rights to set-off credit claims mobilised as collateral with an ESCB central bank . This exclusion is not subject to any additional formalities and applies regardless of any other provisions or stipulations, whether laid down in other legal acts or by way of contract. The ECB welcomes the initiative of the French authorities to exclude such

text: set-off risks . In, particular, the ECB welcomes the broad scope of application of the draft law and the fact that its provisions will apply to credit claims mobilised as collateral in operations with all ESCB central banks. 2.5 However, the ECB considers that in order to increase the effectiveness of the protection against set-off rights, the draft law should also apply to any third party purchasing credit claims from an ESCB central bank. In fact, in the event of a default of a central bank’s counterparty, the collateral represented by the credit claims, would have to be enforced. The central bank enforcing the collateral as the legal owner of the credit claims, might decide to hold the credit claims in its portfolio or sell them to a third party. If the credit claims are sold to a third party, the ESCB central banks would only be fully protected against the set-off risk if the protection afforded to ESCB central banks was transferred together with the credit claims to the third-party purchaser. Otherwise the applicable set-off rights might continue to affect the value at which the ESCB central banks could sell the credit claims. In this respect, the ECB suggests that in order to ensure full effectiveness of the draft law when a central bank wants to sell its credit claims to a third party, the draft law should explicitly extend the protection against set-off rights to third-party purchasers.

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

text: Done at Frankfurt am Main, 12 July 2016.

text: [signed]

text: The President of the ECB

text: Mario DRAGHI