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

text: Article 1 of the draft law.

text: Article 25(1) of the Law on NBP of 29 August 1997 on Narodowy Bank Polski (consolidated text: Dz. U. 2005 No 1, Item 2, as amended) (hereinafter the ‘Law on NBP’). Entities operating on the basis of the Law on cooperative savings and loan associations of 14 December 1995 (Dz. U. 1996 No 1, Item 2, as amended) are not included within the scope of the Banking Commission’s supervision.

text: Article 3(1) of the Law of 29 July 2005 on supervision of the capital market (Dz. U. 2005 No 183, Item 1537). 6 Article 2(3) of the Law of 22 May 2003 on insurance and pension funds supervision and the Insurance Ombudsman (Dz. U. 2003 No 124, Item 1153, as amended). The interests of the insurance and pension fund beneficiaries are represented by the Insurance Ombudsman (Article 5(1) of this law), a function which is also covered by the current reform (Article 44(1) of the draft law). 7 Article 44 of the draft law. 8 Article 2(2) of the draft law. 9 Article 2(1) of the draft law. 10 Articles 16 and 18 of the draft law. 11 Article 56 of the draft law. 12

text: Article 56(2)

text: in conjunction with

text: Article 53(1)

text: (2) of the draft law. 13 As stated in the fifth paragraph of the consultation request from the Minister for Finance of 7 February 2006. 14 As stated in the fourth paragraph of the consultation request from the Minister for Finance of 7 February 2006. 15 As stated in the first, third and fourth paragraphs of the Explanatory Memorandum to the draft law.

text: Cf. European Central Bank, ‘The role of central banks in prudential supervision’, 30 March 2001, available on the ECB website (www.ecb.int). 17 See, e.g. paragraph 6 of ECB Opinion

text: of 24 October 2003 at the request of the Ministry of Finance of the Netherlands on a draft law on provisions concerning the merger of De Nederlandsche Bank and the Pensions and Insurance Supervisory Authority Foundation. 18 See, e.g. paragraph 4 of ECB Opinion

text: of 25 May 2001 at the request of the Austrian Ministry of Finance on a draft Federal law establishing and organising the financial market supervisory authority [title shortened]. 19 See, e.g. paragraph 5 of ECB Opinion

text: of 8 November 2001 at the request of the German Ministry of Finance on a draft law establishing an integrated financial services supervision. 20 See, e.g. paragraph 5 of ECB Opinion

text: of 11 May 2004 at the request of the Italian Ministry of Economic Affairs and Finance on a draft law on the protection of savings.

text: See paragraph 7 of ECB Opinion

text: of 22 September 2004 at the request of Národná banka Slovenska on a draft law on supervision of the financial market and on amendments to certain laws. 22 Cf. European Central Bank, ‘Financial Sectors in the EU Accession Countries’, 19 August 2002, p. 171; and ‘Banking structures in the new EU Member States’, 31 January 2005, p. 38. Both publications are available on the ECB website (www.ecb.int). 23 See paragraph 4 of the ECB Opinion

text: . 24

text: Article 3(2)

text: (6) of the Law on NBP. 25 See, e.g. paragraph 7 of Opinion

text: See, e.g. paragraph 10 of Opinion

text: . 27 Belgium: Article 23 of the Statutes of the Nationale Bank van België/Banque Nationale de Belgique; Estonia: Article 2(5) of the Law on Eesti Pank; Ireland: Section 6A(2)(a) of the Central Bank Act 1942; Hungary: Article 4(7) of Law No LVIII of 2001 on Magyar Nemzeti Bank; Malta: Section 4(2)(c) of the Central Bank of Malta Act; Finland: Point 3 of the Section 3(2) of the Law on Suomen Pankki (214/1998). 28 Basel Committee on Banking Supervision, ‘Core Principles for Effective Banking Supervision’, September 1997, available on the Bank for International Settlements website (www.bis.org). 29 See Section II, Principle 1 fifth indent of the Basel Core Principles (see footnote 28). 30 See, e.g. paragraph 8 of ECB Opinion

text: . 31 The Commissie voor het Bank, Financie- en Assurantiewezen/Commission bancaire, financière et des assurances (the Banking, Finance and Insurance Commission) and the Nationale Bank van België/Banque Nationale de Belgique collaborate closely on all issues of common interest and in particular with regard to international cooperation in respect of prudential matters, inter-sectoral aspects of prudential policy relating to the providers of financial services, macroprudential analyses and legal studies. See

text: Article 117

text: § 1 of the Law of 2 August 2002 on the supervision of the financial sector and on financial services. 32 The Bundesanstalt für Finanzdienstleistungsaufsicht (Federal Financial Supervisory Authority or BaFin) and the Deutsche Bundesbank are required to work together, and this cooperation includes ongoing monitoring of credit institutions by the Deutsche Bundesbank, including analysing and assessing documents, audit reports and annual accounts submitted by credit institutions, conducting and analysing banking audits to determine the capital adequacy and risk management procedures of credit institutions and evaluating audit findings. See Article 7(1) of the German Law on banking (Kreditwesengesetz – KWG).

text: Eesti Pank is required to cooperate with the Financial Supervision Authority in order to ensure financial stability and it has the right to obtain information necessary for the performance of its functions. See Section 2(5) of the Eesti Pank Act. The Supervision Authority may enter into bilateral or multilateral agreements for cooperation with Eesti Pank, the Ministry of Finance or any other state agency, if such cooperation is necessary for the attainment of the objectives of financial supervision. The Financial Supervision Authority, the Ministry of Finance and Eesti Pank are required to cooperate, on the basis of a written agreement, in the collection and analysis of reports, the drafting of legislation and the exchange of information on events which have a substantial impact on the financial sector. See Section 50 of the Law on the Financial Supervision Authority. 34 In course of performing its tasks, the Hungarian Financial Supervisory Authority is required to cooperate with Magyar Nemzeti Bank. See

text: Article 6

text: /C(1) of Law No CXXIV of 1999 on the Financial Supervisory Authority. This cooperation is curried out on the basis of a signed Memorandum of Understanding, updated every year. 35 Within the scope of its federal statutory duties and its duties within the ESCB, the Oesterreichische Nationalbank (OeNB) is required to cooperate with the Finanzmarktaufsicht (Financial Market Authority or FMA) by providing mutual assistance. Both the OeNB and the FMA are required to report to each other observations and findings of a fundamental nature or of particular importance in the area of banking. See Sections 5, 7 and 8 of the Federal Law on the institution and organisation of the Financial Market Authority; and Sections 79(1) and 80(1) of the Federal Law on banking. 36

text: Article 30(8) of Directive 2000/12/EC

text: of the European Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions (OJ L 126, 26.5.2000, p. 1). 37 See, e.g. paragraph 9 of ECB Opinion

text: . 38 See, e.g. Belgium: Article 56 of the Statutes of the Nationale Bank van België/Banque Nationale de Belgique; Denmark: Article 354(5) of the Law on financial services; Article 22 of the Law on deposit guarantees and investors; Article 20 of the Law on Danmarks Nationalbank; Estonia: Section 2(5) of the Law on Eesti Pank; Sections 48(2), 54(2) of the Law on the Financial Supervision Authority; Ireland: Sections 33C(1)(c) and 33C(8) of the Central Bank Act 1942; Latvia: Article 6 of the Law on Latvijas Banka; Article 10 of the Law on the Financial and Capital Market Commission; Luxembourg: Article 33(2) of the Law of 23 December 1998 concerning monetary status and the Banque centrale du Luxembourg;

text: Article 16

text: , third paragraph of the Law of 23 December 1998 on the establishment of a commission for the supervision of the financial sector; Hungary: Article 44 of Law No LVIII of 2001 on Magyar Nemzeti Bank; Malta: Section 38A of the Central Bank of Malta Act; Section 18 of the Malta Financial Services Act; Austria:

text: Articles 79

text: to 80 of the Law on banking; Finland: Section 26 of the Law on Suomen Pankki, No 214/1998.

text: Article 3(1)

text: (a)(c) of the draft law. 40

text: Articles 22

text: to 23 of the Law on supervision of the capital market (see footnote 5 above) and Article 17(6) of the law on insurance supervision (see footnote 6 above), respectively. 41 Articles 12 of the Directive

text: of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives

text: and

text: , and Directives

text: and

text: of the European Parliament and of the Council (OJ L 35, 11.2.2003, p. 1). 42 Economic Paper No 156, the Economic and Financial Committee, ‘Report on financial crisis management’, 17 April 2001, available on the European Commission website (www.europa.eu.int).

text: Article 26(1)

text: (1) of the Law on NBP. 44 Articles 25(1) and 29(1) of the NBP Law on NBP. 45 Article 29(3) of the Law on NBP. The General Inspector of Banking Supervision is a member of the Banking Commission, see

text: Article 26(1)

text: (7) of the Law on NBP. 46 In France, the prudential supervision of credit institutions is carried out by the Commission Bancaire. The Banque de France’s Governor chairs the Commission Bancaire, and the Banque de France provides the General Secretariat of the Commission Bancaire with staff and resources necessary for carrying out on-site inspections of credit institutions. See Articles L. 613-3 and L. 613-7 of the French Financial and Monetary Code. 47 Article 2 of the draft law. 48 Article 4(1) of the draft law. 49 Article 5 of the draft law. Such grounds include cases where the FSA President: (1) has received a final sentence for an intentionally committed offence; (2) has received a final sentence of imprisonment for an unintentionally committed

text: offence; (3) has resigned from office; (4) has lost Polish citizenship; or (5) has become unable to fulfill duties in office because of prolonged illness lasting more than nine months. 50

text: Article 11(2)

text: (1) of the draft law. 51 Article 4(2) of the draft law. 52 Article 3(2) of the draft law. 53 Article 6(1) of the draft law. 54 Article 6(2) of the draft law. 55 Article 6(3) of the draft law. 56 Article 53(4) of the draft law. 57 See, e.g. paragraph 14 of ECB Opinion

text: of 6 October 2005 at the request of the Italian Ministry of Economy and Finance on an amendment to the draft law on the protection of savings concerning the Banca d’Italia.

text: Three of the seven members of the Management Committee of the Commissie voor het Bank, Financie- en Assurantiewezen/Commission bancaire, financière et des assurances (the Banking, Finance and Insurance Commission) are required to be appointed from among the members of the Board of Directors of the Nationale Bank van België/Banque Nationale de Belgique. See the third indent of

text: Article 49

text: § 6 of the Law of 2 August 2002 on the supervision of the financial sector and on financial services. 59 Of the six members of the Estonian Financial Supervision Authority’s Supervisory Board, the Governor of Eesti Pank is an ex officio member and two of the remaining five members are appointed and removed by the Executive Board of Eesti Pank on the Governor’s proposal. See Section 8 of the Law on the Financial Supervision Authority. 60 The Chair and the Deputy Chair of the Council of the Latvian Financial and Capital Market Commission (FCMC) are appointed by the Parliament for a period of six years upon a joint proposal of the Governor of Latvijas Banka and the Minister for Finance. One of the grounds for dismissal of the Chair and their Deputy by the Parliament is if an application for dismissal is submitted jointly by the Governor of Latvijas Banka and the Minister for Finance. The FCMC’s Chair appoints and removes the other members of the FCMC Council, and is required to co-ordinate their decision with the Latvijas Banka’s Governor and the Minister for Finance. The Governor or Deputy Governor of Latvijas Banka may participate in FCMC Council meetings. See Articles 13(3), 13(4), 14(4) and 16(2) of the Law on the Financial and Capital Market Commission. 61 The Oesterreichische Nationalbank (OeNB) nominates the Deputy Chair of the Supervisory Board, as well as two additional members of the eight-member Supervisory Board and one member of the two-member Executive Board of the Austrian Finanzmarktaufsicht (Financial Market Authority or FMA), who are appointed by the Federal Minister for Finance (in the case of the Supervisory Board members) and the Federal Government (in the case of the Executive Board members). The Federal Minister for Finance is required to consult the OeNB prior to the dismissal of a member of the FMA Supervisory or Executive Boards nominated by the OeNB, except in case of imminent danger. See Sections 5, 7 and 8 of the Federal Law on the establishment and organisation of the Financial Market Authority. 62 Suomen Pankki proposes to nominate one of the six members and one of the three deputy members of the Board of Directors of the Finnish Financial Supervisory Authority. See Section 9 of the Law on the Financial Supervisory Authority. 63 See paragraph 5 of Opinion

text: . 64 A representative of Danmarks Nationalbank is a member of the Financial Business Council which, inter alia, takes decisions in supervisory cases of importance as well as in cases which are significant for financial entities and holding companies in general. See Article 345 of the Law on financial services (LBKG 2005-06-21, No 613).

text: The Irish Financial Services Regulatory Authority is required to consult the Governor of the Central Bank and Financial Services Authority of Ireland, and may act only with the agreement of the Governor on any matter relating to the financial stability of the state’s financial system, including (but not limited to) the issue, revocation and suspension of a licence or other authority. See Sections 33C(9), (9A) and (9B) of the Central Bank Act 1942, as amended. 66 Where prescribed by law, the Hungarian Financial Supervisory Authority must consult with or obtain the consent of Magyar Nemzeti Bank prior to issuing or revoking authorisations and licences. See

text: Article 6

text: /C(2) Law No CXXIV of 1999 on the Financial Supervisory Authority. 67 See paragraph 7 of Opinion

text: (Austria). Similarly, Hungary created a Financial Stability Committee comprising its newly established Financial Services Authority, Magyar Nemzeti Bank and the Ministry of Finance, to cooperate actively and discuss financial stability issues. 68 Germany: Law on banking (numerous provisions); Austria: Law on banking (numerous provisions). Also, in Ireland the Governor of the central bank has been given independent powers to investigate businesses and carry out on-site inspections of licensed credit and financial institutions. See, e.g. in the case of banks, Section 17A of the Central Bank Act 1971. 69 Article 16(1) of the Law on settlement finality in payment and securities settlement systems and on the supervision of such systems (Dz. U. 2001 No 123, Item 1351, as amended). 70 Article 8(6) of the Law on supervision of capital markets. At the same time, the General Inspector of Banking Supervision is a member of Securities Commission, see

text: Article 8(5)

text: (5) of the Law on supervision of capital market (see footnote 5). 71 Article 16.2 of the Law on settlement finality (see footnote 69 above).

text: See, e.g. paragraphs 10 to 14 of ECB Opinion

text: of 7 August 2003 at the request of the Banca d’Italia on a draft regulation on payment systems, payment infrastructures and payment instruments; paragraphs 13 to 16 of ECB Opinion

text: of 15 July 2005 at the request of the Ministry of Finance of the Czech Republic on a draft law on the integration of financial market supervisors. 73 Article 105(2) of the Treaty and Articles 3.1 and 22 of the Statute. 74

text: Article 135(2)

text: (3) of the Law on banking of 29 August 1997 (consolidated text: Dz. U. of 2002, No 72, Item 665, as amended), as amended by Article 23 of the draft law.

text: Article 141

text: h(2)(3) of the Law on banking, as amended by Article 23 of the draft law. 76 Article 101(1) of the Treaty and Article 21.1 of the Statute. 77 See paragraph 9(i) of ECB Opinion

text: of 2 December 2003 at the request of the Austrian Federal Ministry of Finance on a draft Federal law on the National Foundation for Research, Technology and Development. 78

text: Article 1(1)

text: (b)(ii) of

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

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

text: and

text: b(1) of the Treaty (OJ L 332, 31.12.1993, p. 1). 79 See paragraph 6 of ECB Opinion

text: of 3 February 2005 at the request of the Italian Ministry of Economic Affairs and Finance on a draft law amending Law Decree No 7 of 25 January 1999, as converted by Law No 74 of 25 March 1999, concerning urgent provisions on Italian participation in the International Monetary Fund’s interventions to confront severe financial crises of its member countries. 80 Article 101(2) of the Treaty and Articles

text: and

text: to 7 of

text: Regulation (EC) No 3603/93

text: . 81

text: Article 3(1)

text: (1)(c) of the draft law.

text: As stated in the fifth paragraph of the consultation request from the Minister of Finance of 7 February 2006. 83 Article 12(1) of the draft law. 84 Articles 1(3) and 4(1) of the Law of 6 July 2001 on the Tripartite Commission for Social and Economic Issues (Dz. U. 2001 No 100, Item 1080, as amended). 85 Article 10 of the draft law. 86

text: Article 43(1)

text: (2) of the draft law.

text: Article 50 of the draft law. 88 As stated in the third paragraph of the consultation request from the Minister for Finance of 7 February 2006.

title: Opinion of the European Central Bank of 9 March 2006 at the request of the Polish Minister of Finance on a draft law on the supervision of financial institutions (CON/2006/15)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 9 March 2006 at the request of the Polish Minister of Finance on a draft law on the supervision of financial institutions (

text: On 7 February 2006 the European Central Bank (ECB) received a request from the Polish Minister of Finance for an opinion on a draft law on the supervision of financial institutions (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on the third, fifth and sixth indents of

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

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft law relates to a national central bank (NCB), namely Narodowy Bank Polski (NBP), the oversight of payment and settlement systems and rules applicable to financial institutions insofar as they materially influence the stability of financial institutions and markets. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft law

text: 1.1 The draft law proposes to establish a new institutional framework for the supervision of banking, capital markets, insurance and pension funds in Poland . Under the current model financial supervision is conducted by three separate collegiate bodies: (i) for banking supervision: the Banking Supervision Commission (Komisja Nadzoru Bankowego) (hereinafter the ‘Banking Commission’) , which is chaired by the NBP’s President and which operates with the assistance of its executive arm, the General Inspectorate of Banking Supervision, a separate organisational unit within the structure of NBP ; (ii) for capital markets supervision: the Securities and Exchange Commission (Komisja Papierów Wartościowych i Giełd) (hereinafter the ‘Securities

text: Commission’) ; and (iii) for insurance and pension funds supervision: the Insurance and Pension Funds Supervisory Commission (Komisja Nadzoru Ubezpieczeń i Funduszy Emerytalnych) (hereinafter the ‘Insurance Commission’) . 1.2 Under the draft law, it is proposed to ultimately dissolve all three of the abovementioned supervisory bodies and transfer their competences to a newly established integrated supervisor, namely the President of the Financial Supervisory Authority (hereinafter the ‘FSA President’ and the ‘FSA’, respectively) . The FSA President will be the central government administrative body responsible for the supervision of financial institutions , i.e. a single-person decision-making organ, with the FSA functioning as its executive arm. The FSA is to be financed by contributions from supervised entities . In the case of banking supervision, this is a change from the current regime under which banking supervision is financed by NBP. 1.3 The draft law will transfer supervisory responsibilities from the current supervisors to the FSA President in two stages, beginning with the integration of the supervision of capital markets, insurance and pension funds from 1 April 2006 and concluding with the transfer of responsibility for banking supervision from the Banking Commission to the FSA President from 1 January 2008 . The delay in the transfer of responsibility for banking supervision is related to the implementation of the Capital Requirements Directive in the Polish banking sector . 1.4 The draft law’s provisions for the organisational merger of the supervisory authorities are not accompanied by any provisions for integrated supervisory methods or procedures; it is stated that such measures are not necessary in view of the existing level of financial market consolidation in Poland . However, the declared aim of the supervisory reform is to pursue the following advantages: (i) improved efficiency of the supervisory authority’s operations, (ii) facilitation of Poland’s participation in EU-level supervisory structures, (iii) lower operational costs for the integrated supervisor, (iv) decreased administrative burdens for the supervised entities, and (v) facilitated supervision over financial conglomerates .

text: 2. Financial stability and prudential role of a central bank

text: 2.1 General observations 2.1.1 The ECB notes that Article 105(5) of the Treaty establishing the European Community assigns to the European System of Central Banks the task of contributing to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system. 2.1.2 In line with the above, the ECB has consistently favoured the involvement of central banks in prudential supervision, expressing the view that an institutional framework in which the Eurosystem’s responsibilities for monetary policy in the euro area are coupled with extensive (i.e. both micro and macro-prudential) supervisory responsibilities of NCBs in domestic markets, and with enhanced cooperation at a euro area-wide level, is most appropriate for tackling the changes triggered by the introduction of the euro . Past ECB opinions on draft national legislation reforming the institutional framework for prudential supervision in Member States have noted: (i) central banks have traditionally been closely involved in the prudential supervision of credit institutions due to their pivotal role in the financial system, in particular regarding implementing monetary policy and ensuring the proper functioning of payment systems ; and (ii) maintaining a close involvement of NCBs in prudential supervision is an important condition for allowing the Eurosystem to contribute adequately to monitoring the risks to financial stability in the euro area , in accordance with Article 105(5) of the Treaty, and to safeguard a smooth coordination between the central banking functions exercised at the Eurosystem’s level and the supervisory functions carried out at national level . 2.1.3 The ECB recognises that the nature and scope of risk in the financial sector is widening, due to closer links between credit institutions, insurance companies, investment firms and pension funds. The traditional borders between the banking, securities and insurance sectors of the financial market are becoming increasingly blurred, as demonstrated by the emergence of hybrid financial products, the increased use of risk transfer instruments and distribution agreements between the three sectors, and the growing role of financial conglomerates. In this context, the ECB has welcomed institutional frameworks established in Member States that recognise the essential role of central banks in promoting the safety and soundness of financial institutions and the stability of the financial system as a whole .

text: 2.1.4 Maintaining NBP’s close involvement in prudential supervision will be all the more desirable as it is necessary for Poland’s adoption of the euro, to enable NBP to contribute adequately to monitoring the risks to financial stability in the euro area. This is of particular importance in a context in which the nature and scope of these risks are affected by the introduction of the single currency and the consequent enhanced integration of financial markets. As already noted by the ECB in the specific context of Member States preparing for the introduction of the euro, the independence, credibility and experience that NCBs can contribute to the monitoring of financial stability should be recognised as an important institutional asset . Also, given that banking activity accounts for a large proportion of the Polish financial market, and that banks remain key agents of financial intermediation in Poland, providing most of the credit to the economy and channelling most of the population’s savings, while the role of the capital markets remains secondary , the ECB believes that the systemic arguments in favour of maintaining a strong involvement by NBP in banking supervision are relevant. In this context, the draft law is seen as a proposal to create a body functioning as chiefly a banking supervisor, from whose operations NBP would be insulated. 2.1.5 In line with its previous opinions, the ECB considers that more effective coordination between supervision of all financial sectors could be pursued also with means that do not imply a reduced role of the central bank in this field .

text: 2.2 Legislative recognition of the central bank’s financial stability role 2.2.1 With the establishment of an independent FSA, it becomes important to delineate the financial stability role of NBP more explicitly. Under the existing provisions of Polish law, the financial stability role of NBP is implicitly reflected in its objective to ‘establish the necessary conditions for the development of the banking system’ . In practical terms, NBP’s financial stability role is also implicitly reflected in the existing institutional arrangements linking NBP with the Banking Commission. 2.2.2 In keeping with the position taken by the ECB in previous opinions on draft national legislation proposing supervisory reforms, the ECB considers that central banks are in general in the best position to take on responsibility for financial stability, given their insight into money and financial market developments and involvement in payment systems and monetary policy operations. This applies both to the normal conduct of business and in crisis situations . Central banks’ remit on systemic stability means that they concentrate on the potential impact of macro-economic shocks or

text: disturbances and of other common factors influencing the stability of financial system as a whole .

text: Explicit legislative recognition of NBP’s financial stability role would be consistent with the

text: approach taken in many Member States which have adopted a supervisory model based on an

text: independent financial supervisory authority . Hence, the ECB recommends amending the draft law

text: to clarify that NBP has formal responsibility for contributing to financial stability by monitoring

text: and assessing the financial system as a whole, as a separate function from hands-on supervision and

text: financial regulation.

text: 2.3 Duty of cooperation between central bank and FSA

text: As a general point, the ECB notes the emphasis placed by the Basel Core Principles for Effective

text: Banking Supervision on the maintenance of a system of cooperation and sharing of relevant

text: information among the various official agencies, both domestic and foreign, responsible for the

text: safety and soundness of the financial system . As noted in its previous opinions , the ECB

text: considers that it would be helpful to state in the draft law the basic principle that, in order to carry

text: out their respective responsibilities effectively, there should be close cooperation between the FSA

text: and NBP in all fields of common interest. This principle should be further reflected in a general

text: provision stipulating a duty of cooperation, whose ultimate purpose would be to put in place

text: effective and practical arrangements for cooperation and information-sharing between NBP and the

text: FSA. Such legislative provisions have been introduced in a number of Member States which have

text: adopted supervisory models based on an independent financial supervisory authority, including, for

text: example, Belgium , Germany , Estonia , Hungary and Austria . For this reason, the ECB

text: recommends subjecting in the draft law the FSA President to an express duty of co-operation with

text: NBP on all issues of common interest.

text: 2.4 Information-sharing between central bank and FSA

text: 2.4.1 Central bank access to prudential information is essential for the conduct of macro-prudential

text: monitoring, the oversight of payment systems and the safeguarding of other market infrastructures,

text: which are essential for the smooth conduct of monetary policy. In particular from a financial

text: stability perspective, should there be a crisis in financial markets, the central bank would inevitably

text: be involved. In that context, the ready availability of relevant information and the ability to

text: interpret it are important. The Consolidated Banking Directive provides that information subject to

text: confidentiality and professional secrecy requirements may be shared between supervisory

text: authorities and central banks, and vice versa, for the purposes of the exercise of their respective

text: tasks . As emphasised in previous ECB opinions , central banks provide valuable input to the

text: supervisory process, while access by central banks to supervisory information benefits the conduct

text: of monetary policy operations, the oversight of payment systems and the pursuit of financial

text: stability. Provisions authorising the exchange of information between central banks and

text: supervisory authorities have therefore been included in the legislation of virtually all Member

text: States which have adopted supervisory models based on an independent financial supervisory

text: authority .

text: 2.4.2 It is understood that there is currently no specific legal framework for the exchange of information between NBP and the Banking Commission since, as a practical matter, NBP’s President chairs both institutions. While the draft law provides, for example, that the FSA President is responsible for performing periodic assessments of the financial condition of banks and presenting these to the body responsible for monetary policy , it does not provide for an ongoing exchange of information between NBP and the FSA. Since the draft law plans a new supervisory authority separate from NBP, the ECB recommends expressly providing in the draft law for the exchange of information between NBP and the FSA. Furthermore, the ECB recommends expressly removing possible legal obstacles to information sharing between the independent financial supervisor and NBP, stipulating that information subject to confidentiality and professional secrecy requirements may be shared between the supervisory authority and the central bank, and vice versa, for the purposes of the exercise of their respective tasks. In drafting the provisions relating to the exchange of information between NBP and the FSA, it may be helpful to use, as a minimum standard, the example of the existing Polish provisions (which are retained under the draft law) regarding information-sharing between NBP and the Securities Commission or the Insurance Commission, respectively , in the context of the supplementary supervision of financial conglomerates (implementing the relevant Community legislation ). 2.4.3 Following Poland’s adoption of the euro, information-sharing may involve a cross-border dimension, since information concerning Eurosystem-related tasks may need to be conveyed to other NCBs of the Eurosystem and to the ECB. A provision reflecting this particular aspect would be welcome. This suggestion is in line with the recommendations made by the Economic and Financial Committee in its ‘Report on financial crisis management’ , to remove any legal impediments to the cross-border exchange of information between supervisors and central banks. The continuity of current arrangements with foreign supervisors should also be secured.

text: 3. Institutional relationship between NBP and the FSA

text: 3.1 The existing institutional model for prudential supervision in Poland 3.1.1 The ECB would like to express its very positive assessment of the existing institutional model for the prudential supervision of credit institutions in Poland. In particular, the following institutional elements ensure that there is the necessary degree of involvement in banking supervision on the

text: part of the central bank: (i) NBP’s President chairs the seven-person Banking Commission ; (ii) the Banking Commission’s decisions are implemented and coordinated by the General Inspectorate of Banking Supervision, which is structured as the executive arm of the Banking Commission and is a separate organisational unit of NBP, institutionally autonomous and subordinate to the Banking Commission ; (iii) the General Inspector of Banking Supervision is appointed and dismissed by NBP’s President in agreement with the Minister of Finance ; and (iv) there are staff cooperation arrangements in place between NBP departments and the General Inspector of Banking Supervision. This structure greatly facilitates the flow of information between NBP and the Banking Commission, allowing NBP to fulfil its role of promoting the safety and soundness of financial institutions and the stability of the financial system as a whole. From a more specific Eurosystem perspective, this structure, which shares a number of institutional features with the French banking supervisory model , is particularly well designed to facilitate an NCB’s contribution to the prudential supervision of credit institutions and the stability of the financial system, as required, also in the future euro accession context, under Article 105(5) of the Treaty. 3.1.2 Assuming, nevertheless, that an independent financial supervision authority will be established in Poland without the benefit of the existing institutional relationship between NBP and the Banking Commission, the ECB wishes to point out that Member States which have adopted supervisory models based on an independent financial supervisory authority have used a variety of institutional arrangements to ensure that the NCB can make its necessary contribution to the conduct of prudential supervision and financial stability. The ECB considers that these institutional arrangements make an important contribution towards ensuring the smooth interaction between central banks and supervisory authorities.

text: 3.2 Central bank appointment of members to the FSA’s decision-making body 3.2.1 The ECB understands that under the draft law, the FSA President, in his capacity as the central government administrative body responsible for the integrated supervision of the banking, capital markets and insurance/pension funds sectors, will be a single-person decision-making body for virtually all financial supervisory matters in Poland . The FSA President is to be appointed, from among qualified persons, by the Council of Ministers’ President for a six-year term in office , with narrowly defined grounds for possible dismissal . The appointment of the FSA President is not

text: subject to the provisions regulating open competitions for management positions in the Polish government . From the draft law provisions, it is not entirely clear to whom and how the FSA President will be accountable – a single reference to annual reports to be issued by the FSA President is not linked to any procedure for submitting or reviewing such reports. The legal framework proposed by the above quoted provisions does not provide for conformity with the applicable institutional standards that a market supervisor such as the FSA President needs to be embedded in; further consideration in this regard is recommended. A particular concern that needs to be expressed in this context relates to the prosecutorial powers that the FSA President is to have in civil proceedings related to the banking, capital market, insurance and pension funds markets . 3.2.2 The ECB further understands that the tasks of the FSA President will be carried out with the assistance of the FSA staff and the FSA Vice-Presidents . The FSA Vice-Presidents will be appointed by the Council of Ministers’ President upon the nomination of the FSA President and may apparently be dismissed at the sole discretion of the Council of Ministers’ President . The FSA Vice-Presidents will not form a board or any other collegiate body and will not have the powers of an organ of the government administration. As regards banking supervision responsibilities during the transitional period in which the FSA will exist alongside the Banking Commission, i.e. until 31 December 2007, the FSA President will be a member of the Banking Commission in the capacity of Deputy Chairman and will also appoint one additional person as a Banking Commission member . 3.2.3 In line with the position taken by the ECB in previous opinions , and in light of the widespread practice in the European Union on decision-making in supervisory matters, it would be desirable to allow for the establishment of a formal board acting on the basis of collegiality in the draft law. In this respect, the ECB notes that in many Member States which have adopted supervisory models based on an independent financial supervisory authority, the central bank either provides members of the decision-making body of the supervisory authority or plays an institutional role in the appointment and dismissal of its members. In some cases there is cross-membership between the decision-making bodies of the central bank and the supervisory authority. Such provisions have

text: been introduced, for example, in Belgium , Estonia , Latvia , Austria , and Finland . Such an

text: approach would retain some of the advantages of the existing institutional framework for the

text: supervision of credit institutions in Poland, and provide a practical means of exchanging

text: information between NBP and the FSA .

text: 3.2.4 Having regard to the above, the ECB proposes considering the inclusion in the draft law of

text: provisions establishing a collegiate decision-making body as the FSA’s sole organ and a body of

text: central government administration. The ECB also proposes including an appropriate number of

text: NBP representatives in such a collegiate body, with the full right to participate in its meetings and

text: deliberations, to vote and to share in all information available to the FSA. Such inclusion of the

text: NBP representatives in the FSA’s collegial body would need to be effected with appropriate

text: consideration given to the independence safeguards relating to the members of the NBP staff or

text: governing bodies.

text: 3.3 Central bank involvement in major supervisory decisions

text: In a number of Member States which have adopted supervisory models based on an independent

text: financial supervisory authority, the central bank has been given an explicit role in major

text: supervisory decisions, including decisions relating to issuing or revoking authorisations and

text: licences. Such legislative provisions have been introduced, for example, in Denmark , Ireland ,

text: and Hungary . Such provisions would assist NBP in the performance of its financial stability tasks.

text: 3.4 Financial Stability Committee Another institutional mechanism for encouraging cooperation between central banks and independent financial supervisory authorities which the ECB has welcomed in past opinions is the establishment of a financial stability/ market committee as a body to foster cooperation and information-sharing between the authorities, including the finance ministry, which are jointly responsible for financial system stability and regulation .

text: 3.5 Operational involvement of central banks in financial supervision Yet another mechanism which has been used in some Member States to encourage cooperation between central banks and independent financial supervisory authorities involves the allocation of certain operational tasks to the central bank, including on-site inspections and reviews of the capital adequacy and risk management systems of supervised institutions .

text: 4. Oversight of payment and securities settlement systems

text: 4.1 The ECB notes that NBP enjoys exclusive licensing and supervisory rights over payment systems in Poland . Additionally, the legislation currently in force grants to a representative of NBP’s President the right to participate, without the right to vote, in meetings of the Securities Commission whenever issues concerning the supervision of securities settlement systems (SSSs) are discussed . NBP’s President also has a right to give an opinion at any time when the approval of the establishment of a new SSS (with certain exclusions) is issued by the Securities Commission . The impact of the draft law on these NBP competences is not entirely clear. While winding up the Securities Commission (and hence eliminating NBP’s right to participate in its meetings), the draft law appears to retain the advisory role of NBP’s President, even though the relevant reference to the Securities Commission in the current legislation is not explicitly replaced

text: by a reference to the FSA President. The ECB recommends clarifying the NBP’s role in SSS oversight, in accordance with the principles set out below. 4.2 As noted in previous ECB opinions , payment systems and SSSs are interlinked, particularly in view of the use of the ‘delivery versus payment’ mechanism, under which settlements of securities and transfers of funds take place simultaneously. There is therefore a strong argument in favour of the model used in some Member States of integrating the oversight of payment and securities settlement systems, and for the NCB to perform this function. Settlement of both legs of such transactions should be subject to similar safeguards in order to avoid asymmetries with systemic implications. In order to safeguard the effectiveness of monetary policy and the overall stability of the financial system, the NCBs’ oversight responsibilities mean that they must ensure that SSSs are sufficiently protected against systemic disruptions. The framework for the NCBs’ conduct of this function, although informal, has been effective and successful. A growing number of NCBs see a benefit in formalising their oversight role. The majority of NCBs carry out this function on the basis of their general statutory laws, without any explicit detailed legal provisions. At the Community level, the general legal basis for this activity is provided by the Treaty and the Statute of the European System of Central Banks and of the European Central Bank , with more detailed policies introduced by the Eurosystem’s common oversight policy, as defined by the Governing Council. 4.3 In view of the widespread practice of Member States referred to above, the ECB recommends giving NBP responsibility for the oversight function over SSSs, including access to all information and data relevant for the performance of such oversight tasks.

text: 5. Monetary financing and monetary policy independence

text: 5.1 Monetary financing 5.1.1 According to the relevant Polish provisions, as amended by the draft law, the FSA President will have the competence to request a supervised bank to commission an audit from an indicated external auditor in cases where irregularities are established in the audit conducted on the bank’s own behalf. The costs of such an audit ordered by the FSA President will be borne by NBP, unless the audit reveals relevant irregularities (in which case the costs of the audit will be borne by the supervised bank) . Similarly, audit costs will be borne by NBP where an audit is demanded by the FSA President to clarify doubts as to the credibility of financial statements of dependent entities or

text: of entities having close links with a domestic bank operating in a holding structure and where the results of the audit do not support such doubts . 5.1.2 By virtue of the prohibition of monetary financing established under Article 101 of the Treaty, overdraft facilities or any other type of credit facility with NCBs in favour of public sector bodies 76 77 is prohibited . In this regard, the ECB wishes to recall its position that in assessing the compatibility of any financing arrangement with the prohibition of monetary financing, not only is a strict literal interpretation relevant, but it is also relevant to consider the purpose of the provision. The overall aim of the prohibition of monetary financing is to prevent NCBs from financing the public sector. Further, in line with relevant secondary Community law , any financing of the public sector’s obligations vis-à-vis third parties constitutes an ‘other type of credit facility’ for the purposes of the prohibition of monetary financing. Consequently, the monetary financing prohibition applies to national legislation conferring on central banks the task of financing third parties where such financing does not relate to any of the tasks and functions of the central bank, but is a responsibility of the State. The prohibition of such financing arrangements must be interpreted strictly, subject only to certain express and limited exemptions contained in Community law . For an NCB to bear the costs of audits independently ordered by a financial supervisor, in circumstances where the NCB has no meaningful involvement in the supervisory decision-making process, must be considered an instance of the NCB’s financing of the public sector’s obligations vis-à-vis third parties, which is not covered by any of the statutory exemptions . In this context, the ECB recommends that appropriate amendments be made to the draft law so that this activity of the FSA President will not be financed by NBP.

text: 5.2 Monetary policy competence of NBP Under the draft law, the FSA President will be responsible for evaluating the impact of monetary, tax and supervisory policies on the development of banks . In order to avoid any ambiguity with respect to NBP’s exclusive competences in the area of monetary policy, it is suggested that the reference to monetary policy in this provision should be deleted.

text: 6. Specific issues

text: 6.1 Implementation of the Capital Requirements Directive The ECB notes that a smooth transposition of the Capital Requirements Directive (CRD) is taken into account by the draft law proposal as a factor affecting the implementation of the proposed supervisory reform; it is for this reason that the transfer of banking supervision responsibilities to the FSA President is only foreseen as of 1 January 2008 . In this context, the ECB wishes to recall the long-term and far-reaching nature of the CRD reform, the residual uncertainty about its influence on the level of capital in the banking system and the need to develop appropriate supervisory guidance over time in line with evolving industry practices and experiences of national supervisors. The resulting institutional challenges in implementing the CRD are not expected to end with the CRD’s transposition into national law, since continuing challenges for national supervisors may be expected to arise beyond that date. Against this background, the ECB assumes that all precautionary measures are arranged by the Polish authorities so that the implementation of the supervisory reform does not affect negatively the implementation of the new capital adequacy regime.

text: 6.2 Advisory committee membership The ECB notes that the draft law plans to include within the FSA an advisory committee, a 15member body appointed by the Council of Ministers’ President, with at least six members recommended by the Tripartite Commission for Social and Economic Issues , which is a body consisting of representatives of employers, employees and government administration with a basic task of conducting social dialogue regarding labour remuneration and social benefits . Assuming that the draft law’s proposed reform is implemented, the ECB recommends including in the Advisory Committee, in order to provide the Advisory Committee with a broad range of banking and financial expertise, the representatives of banking, financial, insurance and consumer protection bodies. Under the same assumption, the ECB recommends that the Advisory Committee members should be covered by the same confidentiality requirements as would apply to the FSA management and staff under the draft law .

text: 6.3 Continuity of staff experience The ECB notes that the draft law provides for the transfer of the staff of the current supervisory bodies to the FSA, whereby these employees are to become employees of the FSA (in accordance with the proposed timing for the transfer of the supervisory responsibilities) . However, the

text: employment relationship of such employees is to expire after six months from the last day of the month in which the FSA is established (or in the case of the employees of the General Inspectorate of Banking Supervision, on 30 June 2008), unless they receive an offer of new employment and remuneration conditions within such period and accept it . While not commenting in any way on the legal safeguards for the stability of employment in national supervisory administration, the ECB would like to recall the Polish legislator’s declared aim of finding, under the newly proposed structure, the appropriate application for the accumulated competences and experiences of the existing supervisory bodies .

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

text: Done at Frankfurt am Main, 9 March 2006.

text: [signed]

text: The President of the ECB

text: Jean-Claude TRICHET


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

publisher: Europeiska centralbanken

sprak: en

title: Opinion of the European Central Bank of 10 March 2006 at the request of Lietuvos bankas on a draft law supplementing Article 45 of the Law on the securities market (CON/2006/16)

serie: con

text: OPINION OF THE EUROPEAN CENTRAL BANK of 10 March 2006 at the request of Lietuvos bankas on a draft law supplementing Article 45 of the Law on the securities market (

type: rubrik

text: 1. On 20 January 2006 the European Central Bank (ECB) received a request from Lietuvos bankas for an opinion on a draft law supplementing Article 45 of the Law on the securities market (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on the third and fifth indents of

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

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft law relates to Lietuvos bankas and securities settlement systems. 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: 2. The ECB understands that the main objective of the draft law is to provide a possibility for Lietuvos bankas to join the correspondent central banking model (CCBM). The draft law is intended to enter into force on adoption of the euro in Lithuania. In particular, the draft law amends Article 45 of the Law on the securities market by expressly providing for cases where securities held with the Lithuanian Central Securities Depository (LCSD) are pledged or transferred under repurchase agreements to the ECB or the national central banks (NCBs). The draft law also provides that the accounts in which book-entries are made will be opened in the name of Lietuvos bankas and that Lietuvos bankas may give instructions to the LCSD regarding the disposition of securities in these accounts.

text: 3. The CCBM, which has been established and developed by the European System of Central Banks (ESCB), enables NCBs to hold collateral on behalf of other ESCB members. In this context, the ECB welcomes the proposed amendment to Article 45 of the Law on the securities market which will prove useful for securities held with the LCSD as collateral for Eurosystem credit operations.

text: 4. With respect to collateralisation techniques in the draft law, Lietuvos bankas may consider broader wording covering all possible title transfer techniques, as well as outright transfer of securities which may be used in the CCBM framework, and not only pledge and repurchase agreements which are currently mentioned in Article 1(2) of the draft law.

text: 5. The ECB understands that the scope of the draft law is restricted to securities. Lietuvos bankas may consider evaluating whether the Lithuanian legal framework would allow for the handling of other assets eligible as collateral for Eurosystem credit operations, e.g. bank loans.

text: 6. The ECB also understands that the draft law does not intend to regulate the possibility to transfer securities to the ECB and NCBs through direct links between the LCSD and other securities settlement systems. However, the draft law may appear to imply that the use of direct links is not possible. In order to avoid any misinterpretation, the draft law should contain broader wording clarifying that securities may also be transferred by using such links. This opinion will be published on the ECB’s website. Done at Frankfurt am Main, 10 March 2006. [signed] The President of the ECB Jean-Claude TRICHET

type: vagledning

utgivare: ecb


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

text: OJ L 373, 21.12.2004, p. 1.

text: OJ L 373, 21.12.2004, p. 7.

text: OJ L 139, 11.5.1998, p. 1. Regulation as last amended by

text: Regulation (EC) No 2169/2005

text: (OJ L 346, 29.12.2005, p. 1).

text: In addition to being the currency of the ‘participating Member States’. See paragraph 1.1 of ECB Opinion

text: of 23 February 2006 at the request of the Central Bank of Malta on a draft law on the adoption of the euro.

text: See the following ECB Opinions:

text: of 14 June 2005 at the request of Lietuvos bankas on a draft law on the adoption of the euro;

text: of 1 December 2005 on a proposal for a Council Regulation amending

text: Regulation (EC) No 974/98

text: on the introduction of the euro; and

text: of 16 December 2005 at the request of the Slovene Ministry of Economic Affairs on the provisions of the draft Companies Act concerning redenomination resulting from the introduction of the euro.

text: Convergence Report 2004, pp. 232-234. 9 Ibid.,

text: Article 15

text: . 10 Ibid.,

text: Article 16

text: . 11 Ibid.,

text: Article 28

text: Article 34 of the draft law, inserting new

text: Articles 67

text: .b and 67.a into the Law.

text: Presented in the report entitled ‘Assessment of accession countries’ securities settlement systems against the standards for the use of EU securities settlement systems in Eurosystem credit operations’, January 2004; available on the ECB’s website at www.ecb.int.

text: Ibid.,

text: Article 5

text: . 18 Directive

text: of the European Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions (OJ L 126, 26.5.2000, p. 1). Directive as last amended by Directive

text: (OJ L 79, 24.3.2005, p. 9). 20 Ibid.,

text: Article 20

text: . 21 Ibid.,

text: Article 6

text: . 23 Available on the ECB’s website at www.ecb.int.

text: Zakon o bančništvu; published in the Official Gazette of the Republic of Slovenia, Nos 7/99, 59/01, 55/03 and 42/04. 27 Proposed new

text: Articles 49

text: .a and 50.a of the Law, inserted by Articles 24 and 25 of the draft law.

text: See paragraph 11 of ECB Opinion

text: of 30 December 2005 at the request of Lietuvos bankas on a draft law amending the Lietuvos bankas Act. 32 Article 31 of the draft law. 33 Ibid.,

text: Article 32

title: Opinion of the European Central Bank of 13 March 2006 at the request of the Slovenian Ministry of Finance on a draft law amending the Law on Banka Slovenije (CON/2006/17)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 13 March 2006 at the request of the Slovenian Ministry of Finance on a draft law amending the Law on Banka Slovenije (

text: ) Introduction and legal basis

text: On 13 February 2006 the European Central Bank (ECB) received a request from the Slovenian Ministry of Finance for an opinion on a draft law amending the Law on Banka Slovenije (hereinafter the ‘draft law’).

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

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

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft law relates to currency matters, means of payment, a national central bank (NCB), the collection, compilation and distribution of statistics and the instruments of monetary policy. 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 main purpose of the draft law is to bring the Law on Banka Slovenije (hereinafter the ‘Law’) into line with the Treaty and the Statute of the European System of Central Banks and of the European Central Bank, in particular with regard to the legal integration of Banka Slovenije into the Eurosystem. The draft law amends, inter alia, provisions relating to Banka Slovenije’s independence, economic policy objectives, monetary policy instruments, foreign reserve management, the issue and distribution of banknotes and coins and international cooperation, and introduces the correct spelling of the word ‘euro’. Moreover, in view of the inclusion of bank credits in the single list of eligible collateral for Eurosystem credit operations, the draft law introduces a register of financial assets. Finally, it also introduces sanctions for breaches of

text: Council Regulation (EC) No 2182/2004 of 6 December 2004

text: concerning medals and tokens similar to euro

text: coins and

text: Council Regulation (EC) No 2183/2004 of 6 December 2004

text: extending to the nonparticipating Member States the application of

text: Regulation (EC) No 2182/2004

text: concerning medals and tokens similar to euro coins .

text: 2. General observations

text: Terminological considerations

text: 2.1. In several parts of the draft law, the wording ‘introduction of the euro as the monetary unit of the Republic of Slovenia’ is used. In order to be consistent with the terminology used in

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

text: on the introduction of the euro , the draft law should refer to the ‘introduction of the euro as the currency of the Republic of Slovenia’ . 2.2. The ECB welcomes Article 1 of the draft law, which provides that in the Law the word ‘evro’ ‘in all grammatical cases shall be replaced with the word “euro” in the appropriate case’. As a single currency, the name of the euro needs to be identical in the nominative singular case in all Community languages to ensure that its singleness is apparent. The European Council at its meeting in Madrid on 15 and 16 December 1995 concluded that ‘the name given to the European currency shall be Euro’ and that ‘the name of the single currency must be the same in all the official languages of the European Union, taking into account the existence of different alphabets’, and these conclusions were reflected in

text: Regulation (EC) No 974/98

text: . The Community, as the exclusive holder of competence in monetary matters, determines alone the name of the single currency. On the basis of these legal considerations, and in view of the supremacy of Community law, the name of the single currency in the nominative singular case is to be consistently written in all national legal acts as ‘euro’ . The ECB expects that the correct spelling of the word ‘euro’ will be applied in all national legal acts using the name of the single currency and invites the consulting authority to take a proactive approach to ensure this.

text: Update of the structure of the Law

text: 2.3. The current structure of the Law would benefit from updating and consolidation in view of the fact that Slovenia has been a member of the EU since May 2004. The provisions applying today to Banka Slovenije are dispersed in various parts of the Law, and in particular in Chapter 10 (on Slovenian EU membership), whilst the text still contains obsolete provisions. For reasons of legal

text: clarity, it would be advisable to consolidate and update the Law by deleting provisions that are obsolete and/or completing them with rights and obligations that came into force as a consequence of Slovenia’s accession to the EU. Banka Slovenije’s independence and integration into the Eurosystem 2.4. The draft law addresses most of the issues that the ECB raised in its Convergence Report 2004 . The ECB welcomes those elements of the draft law that will contribute to achieving the required level of legal convergence. 2.5. Concerning institutional independence, the draft law amends Article 27 of the Law to expressly exclude the management of foreign reserves from the scope of Banka Slovenije’s contract with the Ministry of Finance, which will foster Banka Slovenije’s independence in this respect. 2.6. Concerning personal independence, the draft law partially aligns the wording of Article 39 of the Law (removal from office of Governing Board members) with Article 14.2 of the Statute. It deletes the third ground for dismissal, namely that the Governor has been found guilty of a criminal office and sentenced to imprisonment, which has no equivalent in the Statute. However, the ECB would welcome further amendments to this Article to bring the grounds for dismissal of the Governor of Banka Slovenije fully into line with the wording of Article 14.2 of the Statute. In particular, the Law should specify, without supplementary conditions, that a Governor may be relieved from office if they no longer fulfil the conditions required for the performance of their duties or if they have been guilty of serious misconduct. 2.7. The draft law also introduces a new

text: Article 39

text: .a into the Law exempting the members of Banka Slovenije’s Governing Board from those provisions of the Law on the prevention of corruption that relate to the sanction of early termination of the term of office. 2.8. In relation to the legal integration of Banka Slovenije into the Eurosystem, the amendment proposed in the draft law to Article 58(2) of the Law specifies which of Banka Slovenije’s tasks will be performed in accordance with the Treaty and the Statute from the day the euro is introduced in Slovenia. 2.9. The ECB would also advise aligning the wording of the second and third paragraphs of Article 2 of the draft law concerning Banka Slovenije’s objectives with the wording of Article 105(1) of the Treaty. Indeed, it is without prejudice to the objective of price stability that NCBs must support the general economic policies in the Community with a view to contributing to the achievement of the objectives of the Community as laid down in Article 2 of the Treaty.

text: 2.10. Two further provisions adequately address integration into the Eurosystem: from the day the euro is introduced, Banka Slovenije will participate in the ECB’s sanctions regime and will only be able to participate in international monetary organisations after prior ECB approval .

text: 3. Specific observations

text: Collection and processing of statistical data

text: 3.1. Under the new point 11 of Article 12(1) of the Law , Banka Slovenije must also perform financial statistics tasks, as a minimum within the parameters required for the functioning of the European System of Central Banks (ESCB). The proposed definition of this task, limiting it to financial statistics, could be too narrow. For this reason, the ECB recommends slightly amending the provision to make it clear that Banka Slovenije must as a minimum perform the statistical tasks which are required for the functioning of the ESCB, but may also perform other financial statistics tasks. 3.2. The draft law amends Article 13 of the Law to extend Banka Slovenije’s responsibility to collect and manage statistical data and information. This is indeed of importance for the implementation of its tasks and consequently for the functioning of the ESCB, as is also specified in Article 55 of the Law (concerning Banka Slovenije’s information system). However, the ECB would recommend refining the existing reference to ‘statistical data and information’ in the draft law by including an explicit reference to Article 5 of the Statute.

text: Payment and settlement systems

text: 3.3. In its assessment carried out in 2003 concerning securities settlement systems (SSSs) of accession countries , the ECB noted that Banka Slovenije’s oversight role in relation to the foreign exchange bills settlement system that it operates had not yet been established. The draft law’s proposed amendment to Article 12(1) of the Law explicitly inserts point 15 on Banka Slovenije’s oversight of the operation of payment and settlement systems. Pursuant to Article 14 of the Law, Banka Slovenije is already entitled to manage payment systems. The ECB would in addition suggest that the Law explicitly states that Banka Slovenije may operate a settlement system, as this would reflect the existing situation.

text: Definitions of ‘banks’ and ‘savings banks’

text: 3.4. The draft law inserts a new

text: Article 14

text: .a into the Law containing definitions of ‘banks’ and ‘savings banks’. The ECB questions the scope of these definitions since they could be interpreted as being narrower than the Community concept of ‘credit institutions’ . 3.5. A broader definition of ‘banks’ and ‘savings banks’ would also be compatible with certain other provisions of the draft law that already include references to entities other than banks and savings banks. The draft law’s proposed amendment of Article 43(1) of the Law extends Banka Slovenije’s supervision from banks and savings banks also to include ‘other persons pursuant to the law’. In the draft law’s proposed amendment to Article 44 of the Law, the deletion of specific references to ‘banks’ and ‘savings banks’ means the provision is extended to all relevant participants. For reasons of consistency, the ECB would suggest amending all other provisions of the Law referring to ‘banks’ and ‘savings banks’ accordingly.

text: Immunity of foreign reserve assets

text: 3.6. The ECB welcomes the proposed new

text: Article 22

text: .a of the Law, which exempts the official foreign reserve assets of other countries and central banks deposited at Banka Slovenije from any judicial or extra-judicial enforcement.

text: Register of financial assets

text: 3.7. The ECB notes with interest the provisions of the proposed new Chapter 4.2.a of the Law , which establishes a register of bank credits and other financial assets by means of which Banka Slovenije intends to secure liabilities to itself, the ECB and the NCBs of Member States. This proposal supports the ECB Governing Council’s decision published on 18 February 2005 to include bank credits in the Single List of assets eligible as collateral for Eurosystem credit operations . The new register of financial assets which will be established and administered by Banka Slovenije will contribute to ensuring that a valid security interest may be created over bank credits in a simple and certain manner and that the collateral can be swiftly realised in the event of counterparty default. 3.8. The ECB understands that the creation of collateral rights over registered assets by way of entry in the abovementioned register, in accordance with the new

text: Article 22

text: .c of the Law, is without prejudice to any other method of creating collateral in favour of Banka Slovenije, the ECB and the NCBs of Member States. In particular, it should not affect the provision of book-entry securities as collateral either by way of an entry in the accounts maintained by an SSS operator or by a similar method. It might be advisable to clarify the relationship between the different methods of creating

text: collateral rights. In this respect, the ECB suggests removing the reference to point 8 of

text: Article 12(1)

text: which is contained in the proposed new

text: Article 22

text: .b of the Law. 3.9. As regards the creation of collateral rights over bank credits in accordance with the proposed new

text: Article 22

text: .c of the Law, the ECB’s view is that the position of Banka Slovenije, the ECB and the NCBs of Member States as takers of collateral would be considerably improved if the first paragraph of the proposed

text: Article 22

text: .c were complemented by a provision prohibiting set-off against opposing claims by the debtor of a bank credit for the duration of the existence of collateral rights over such bank credit by way of registration. 3.10. Furthermore, the ECB understands that the proposed new

text: Article 22

text: .f is intended to protect collateral rights of Banka Slovenije, the ECB and the NCBs of Member States that have been established in good faith against conflicting third-party rights. However, the current wording of

text: Article 22

text: .f may not fully convey this meaning. The ECB suggests considering rewording this provision, to make it clear that collateral rights of Banka Slovenije, the ECB and the NCBs of Member States which have been acquired in good faith have priority over any third-party claims.

text: Prohibition on monetary financing

text: 3.11. Under Article 24 of the Law, Banka Slovenije may not grant overdrafts or any other type of credit facility in favour of ‘bodies of the Republic of Slovenia, of the European Union or of European Union Member States, or in favour of their regional and local authorities, and other public entities’. In order to ensure that this provision covers all categories of entities covered by Article 101 of the Treaty, thus avoiding any risk of discrepancy, the ECB recommends either using the exact wording of Article 101 of the Treaty in Article 24 of the Law or inserting an explicit reference to the prohibition under Article 101 of the Treaty.

text: Reporting of Banka Slovenije

text: 3.12. The draft law amends

text: Article 26

text: , concerning Banka Slovenije’s obligation to report on its activities. It specifies that Banka Slovenije reports exclusively to the National Assembly of the Republic of Slovenia at least biannually. This provision does not seem fully to recognise Banka Slovenije’s specific position as an ESCB member and, after the euro is introduced, a Eurosystem member, subject to and reporting to its decision-making bodies, and the ECB recommends rewording it to this end.

text: Application of provisions of the Law on banking

text: 3.13. The proposed new

text: Article 42

text: .a of the Law stipulates that the provisions of the Law on banking shall apply mutatis mutandis to Banka Slovenije’s procedure. The ECB understands this provision only to apply to the use of the provisions of Chapter XV (entitled ‘Procedure for adopting decisions

text: in individual matters’) of the Law on banking in individual matters falling within Banka Slovenije’s fields of competence. For reasons of clarity, the ECB recommends making it clearer which provisions of the Law on banking will apply to Banka Slovenije.

text: Creation of provisions and assets in the valuation accounts

text: 3.14. The ECB welcomes the two new articles in Chapter 9 (entitled ‘Income, expenditure and assets of Banka Slovenije’) that refer to Banka Slovenije’s position after the euro is introduced. 3.15. The proposed new

text: Article 49

text: .a of the Law makes it possible to create provisions for anticipated exchange rate, interest rate and price risks, in order to maintain the real value of assets. However, such provisions may not be created if, together with unrealised exchange rate differences, securities valuation effects and gold valuation effects, they would exceed 20 % of established net profit. 3.16. Under the proposed new

text: Article 50

text: .a of the Law, the unrealised income deriving from exchange rate and price changes must be allocated in its entirety to the valuation accounts, and it may only be used to cover unrealised expenditure deriving from the same types of change. After the allocation of the assets to the valuation accounts, the net profit must be allocated to general reserves and the Slovenian budget. Issue and distribution of banknotes and coins after introduction of the euro 3.17. The following provisions of the Law govern the issue and distribution of banknotes and coins:

text: Article 59

text: Article 60

text: (containing the amendment proposed in the draft law ); and the proposed new

text: Article 60

text: .a . 3.18. In

text: Article 59

text: , the reference to Article 7 of the Law, which historically concerns the issue of tolars as legal tender in Slovenia, should be deleted. This would reflect the fact that Banka Slovenije will no longer have the right to authorise the issue of banknotes with the status of legal tender. After the euro is introduced, such authorisation will derive from the Treaty and the Statute and will be closely linked to the exclusive right of the ECB’s Governing Council to authorise the issue of banknotes within the Eurosystem. The ECB therefore suggests also inserting an explicit reference to Article 106(1) of the Treaty and Article 16 of the Statute. 3.19. Article 60 of the Law should be further amended to reflect the fact that the ECB’s competence with respect to coin issue is limited to authorising the volume. 3.20. The ECB suggests reconsidering

text: Article 60

text: .a, which appears to be obsolete due to the existence of Articles 59 and 60 of the Law. It should at the very least be amended to ensure that the predistribution of banknotes and coins denominated in euro is subject to the rules and conditions that will be set out in the relevant ECB legal acts.

text: 3.21. Also, for reasons of legal clarity and certainty, and in order to avoid duplication, it would be advisable for the draft law specifically to repeal the entirety of Chapter 3, which will be obsolete once the euro is introduced. Banka Slovenije tasks in the implementation of monetary policy 3.22. The wording of the proposed amendment to Article 58(2) of the Law (on Banka Slovenije’s tasks after the euro is introduced) should be amended to state that Banka Slovenije ‘implements monetary policy’, without any reference to ‘defining’ monetary policy. Indeed, pursuant to Article 12.1 of the Statute, the Community’s monetary policy is exclusively formulated by the Governing Council . 3.23. Moreover, the proposed amendment to Article 61(2) of the Law (on Banka Slovenije’s tasks in the implementation of monetary policy after the euro is introduced) should also include a reference to Banka Slovenije’s responsibility for the general liquidity of the banking system, as specified in point 3 of Article 11 of the Law (which sets out the ESCB’s scope of competence), and not refer only to the tasks under point 1 of Article 11 of the Law. In addition, the proposed amendment to Article 61(2) of the Law should include a specific abrogation of Article 45 of the Law; the latter relates to Banka Slovenije’s supervisory measures in connection with the implementation of monetary policy and does not sufficiently recognise the ECB’s powers in this field.

text: Asset management after introduction of the euro

text: 3.24. Pursuant to the amendment to

text: Article 62

text: proposed in the draft law , Banka Slovenije will from the introduction of the euro manage: (i) the official foreign reserves that it has not transferred to the management of the ECB; (ii) its other assets; and (iii) any other assets entrusted to it. This does not sufficiently recognise the ECB’s powers in this field and could create the misleading impression that Banka Slovenije is autonomous as regards the management of foreign reserve assets. The ECB would therefore like to draw attention to Article 31.2 of the Statute concerning foreign reserve assets held by NCBs: this provides that all operations in foreign reserve assets remaining with the NCBs after the transfer of foreign reserve assets to the ECB under Article 30 of the Statute must, above a certain limit to be established within the framework of Article 31.3 of the Statute, be subject to approval by the ECB in order to ensure consistency with the exchange rate and monetary policies of the Community. To this end, an explicit reference to Article 31 of the Statute and the legal framework adopted on the basis thereof should be added.

text: Exchange rate list of Banka Slovenije

text: 3.25. Under the proposed amendment to Article 67 of the Law , after the euro is introduced Banka Slovenije ‘shall publish an exchange rate list on the basis of the reference exchange rates of foreign currencies determined and published by the European Central Bank, and shall determine and publish exchange rates of foreign currencies that are not on the exchange rate list of the European Central Bank’. The ECB suggests rewording

text: Article 67

text: to provide for the possibility of Banka Slovenije publishing euro foreign exchange reference rates set by the ECB and any other exchange rates that are not on the list published by the ECB. Otherwise this provision could be misinterpreted as a mandatory requirement to publish exchange rates.

text: International cooperation of Banka Slovenije

text: 3.26. The proposed new

text: Article 67

text: .a of the law provides that from the day of the introduction of the euro Banka Slovenije ‘shall participate in international monetary organisations after prior approval by the ECB’. The ECB suggests bringing this wording closer to that of Article 6.2 of the Statute, under which the NCBs may participate in international monetary institutions ‘subject to’ the ECB’s approval.

text: Infringements by banks, savings banks and other entities

text: 3.27. Point 1 of both

text: Article 68(1)

text: and Article 69(1) of the Law could be slightly amended to specify more clearly that the imposition of a fine for an infringement of the obligation to submit data and information required by Banka Slovenije in performing its tasks is without prejudice to the broader requirement to impose a sanction for an infringement of the obligation to submit the statistical data and information which Banka Slovenije needs to perform its tasks as an ESCB member. The relevant sanctions are already laid down in the proposed new

text: Article 67

text: .b of the Law , which concerns the ECB’s sanctions regime.

text: Done at Frankfurt am Main, 13 March 2006.

text: [signed]

text: The President of the ECB

text: Jean-Claude TRICHET 34 Ibid.,

text: Article 33

text: . 36 Containing the amendments proposed in Articles

text: and

text: , respectively, of the draft law.


text: Kursiverad stil i texten anger de strykningar som ECB föreslår.

text: Text markerad med fet stil anger ECB:s förslag till ny text.

sprak: sv

title: Europeiska centralbankens yttrande av den  24 mars 2006  om ett förslag till Europaparlamentets och rådets förordning om fastställande av den statistiska näringsgrensindelningen NACE Rev. 2 och om ändring av rådets förordning (EEG) nr 3037/90 och vissa EG-förordningar om särskilda statistikområden (CON/2006/18)

text: Den 6 mars 2006 mottog Europeiska centralbanken (ECB) en begäran från Europeiska unionens råd om ett yttrande över ett förslag till Europaparlamentets och rådets förordning om fastställande av den statistiska näringsgrensindelningen NACE Rev. 2 och om ändring av

text: rådets förordning (EEG) nr 3037/90

text: och vissa EG-förordningar om särskilda statistikområden (nedan kallat förslaget till förordning).

text: ECB:s behörighet att avge ett yttrande grundar sig på

text: artikel 105.4

text: första strecksatsen i fördraget om upprättandet av Europeiska gemenskapen, eftersom förslaget till förordning faller inom ECB:s behörighetsområde. I enlighet med

text: artikel 17.5

text: första meningen i arbetsordningen för ECB har detta yttrande antagits av ECB-rådet.

text: 1. Allmänna kommentarer

text: 1.1. ECB välkomnar förslaget till förordning, vilken syftar till att fastställa den gemensamma statistiska näringsgrensindelningen inom gemenskapen, (nedan kallad NACE Rev.2). ECB har varken något att invända mot den nya NACE-strukturen eller mot dess detaljerade indelning.

text: 1.2. ECB stödjer de principer som ligger till grund för NACE Rev.2, nämligen i) iakttagande av den ekonomiska verkligheten (utvidgning av klassifikationen avseende tjänsteindustrin), och ii) jämförbarhet med andra internationella klassifikationer, särskilt den internationella näringsgrensindelningen ISIC Rev. 4, och iii) kontinuitet i förhållande till den tidigare indelningen. ECB anser vidare att alla nödvändiga åtgärder bör vidtas och alla nödvändiga rättsliga bestämmelser införas för att säkerställa maximal överstämmelse med övriga internationella klassifikationer och statistikstandarder.

text: 1.3 ECB välkomnar också tillämpningsåtgärderna i förslaget till förordning för den viktigaste månads-, kvartals och årsstatistiken, särskilt artiklarna

text: och

text: vad beträffar konjunkturstatistik och arbetskostnadsindex. Tillämpningsåtgärderna liksom tillämpningsbestämmelserna för det europeiska national- och regionalräkenskapssystemet i gemenskapen måste dock definieras för att förhindra skadliga informationsförluster, som t.ex. brutna tidsserier, vilket följaktligen leder till att långa tidsserier uteblir.

text: 1.4 Vidare är det av avgörande betydelse att statistik för euroområdet och Europeiska unionen, som huvudsakligen sammanställs genom att använda landsinformation, tillämpas samtidigt i medlemsstaterna. Skulle tidsplanen för tillämpning av NACE Rev.2 skilja sig åt mellan EU-länderna, kunde detta få mycket negativa följder för kvaliteten och tillgängligheten av aggregerad statistik för euroområdet och EU, fram till den tidpunkt då alla medlemsstater fullt ut antagit den nya klassificeringen och reviderat sina tidsserier i enlighet därmed. ECB föreslår därför att skäl 9 och

text: artikel 6 c

text: förstärks för att säkerställa en fullt ut samordnad tillämpning av NACE Rev.2 i medlemsstaterna och överensstämmelse mellan statistikområdena.

text: 2. Ändringsförslag

text: ECB:s ändringsförslag återfinns i bilagan till detta yttrande.

text: Utfärdat i Frankfurt am Main den 24 mars 2006.

text: Jean-Claude Trichet

text: ECB:s ordförande

text: BILAGA

text: Kommissionens förslag | ECB:s ändringsförslag

text: Ändring 1 Skäl 9

text: rådets beslut 89/382/EEG

text: , Euratom, särskilt när det gäller att utreda problem som uppkommit vid tillämpningen av NACE Rev. 2, att säkra en smidig övergång från NACE Rev. 1 till NACE Rev. 2 samt att införa ändringar i NACE Rev. 2. | Vid användningen av näringsgrensindelningen i gemenskapen bör kommissionen bistås av den kommitté för det statistiska programmet som inrättades genom

text: rådets beslut 89/382/EEG

text: , Euratom, särskilt när det gäller att utreda problem som uppkommit vid tillämpningen av NACE Rev. 2, att säkra en smidig och fullt ut samordnad övergång från NACE Rev. 1 till NACE Rev. 2 samt att införa ändringar i NACE Rev. 2.

text: Motivering – se punkt 1.4 i yttrandet

text: Ändring 2

text: Artikel 6 c

text: åtgärder för att säkra en smidig övergång från NACE Rev. 1.1 till NACE Rev. 2, särskilt när det gäller brutna tidsserier, t.ex. dubbelrapportering eller backcasting av tidsserier. | åtgärder för att säkra en smidig och fullt ut samordnadövergång från NACE Rev. 1.1 till NACE Rev. 2, särskilt när det gäller brutna tidsserier, t.ex. dubbelrapportering eller backcasting av tidsserier och en samtidig tillämpning i medlemsstaterna.

text: Motivering – se punkt 1.4 i yttrandet


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

text: Council Regulation (EC) No 2531/98 of 23 November 1998

text: concerning the application of minimum reserves by the European Central Bank, OJ L 318, 27.11.1998, p. 1 and Regulation/ECB/2003/9 of 12 September 2003 on the application of minimum reserves, OJ L 250, 2.10.2003, p. 10.

title: Opinion of the European Central Bank of 3 April 2006 at the request of Latvijas Banka on a draft law amending the Law on Latvijas Banka (CON/2006/19)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 3 April 2006 at the request of Latvijas Banka on a draft law amending the Law on Latvijas Banka (

text: ) Introduction and legal basis

text: On 21 February 2006 the European Central Bank (ECB) received a request from Latvijas Banka for an opinion on a draft law amending the Law on Latvijas Banka (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Article 105(4) of the Treaty establishing the European Community and the third indent of

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

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft law relates to a national central bank (NCB). 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’s main objective is to further enhance the compatibility of the Law on Latvijas Banka with the Treaty and the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute’). It provides that Latvijas Banka is a member of the ESCB and acts in accordance with the ECB’s guidelines and instructions. In addition, it recognises the ECB’s right to approve Latvijas Banka’s participation in international monetary institutions. The draft law also clarifies several other provisions of the Law on Latvijas Banka and aligns their terminology with other Latvian laws.

text: 2. General observations

text: According to the consultation letter, the draft law will enter into force immediately after its adoption by the Latvian Parliament. The ECB also understands from the consultation letter that the Law on Latvijas Banka will be further amended as a separate exercise. Therefore, this opinion will not comment on

text: provisions of the current Law on Latvijas Banka that will have to be adapted for Latvia to adopt the euro and Latvijas Banka to be integrated into the Eurosystem. However, the ECB notes that to comply with Article 109 of the Treaty, Latvian national legislation had to be adjusted to ensure its compatibility with the Treaty and the Statute by 1 May 2004. This process is expected to be finalised in time for the 2006 convergence report. Nevertheless, national legislation integrating an NCB into the Eurosystem need only enter into force when such integration becomes effective, i.e. the date on which the Member State with a derogation adopts the euro.

text: 3. Specific observations

text: 3.1 The ECB welcomes the proposed new wording of Article 2 of the Law on Latvijas Banka according to which Latvijas Banka is a member of the ESCB and subject to the ESCB regulatory framework (although the reference to guidelines and instructions of course become relevant only on Latvijas Banka’s full integration in the Eurosystem in accordance with Article 14.3 of the Statute). 3.2 The ECB also welcomes the proposed new paragraph in Article 7 of the Law on Latvijas Banka which recognises the ECB’s right to approve Latvijas Banka’s participation in international monetary institutions as it brings the Law into line with Article 6.2 of the Statute. The ECB notes, however, that under Article 43.1 of the Statute this particular provision applies from the date of Latvijas Banka’s integration into the Eurosystem. Therefore the proposed amendment should enter into force on the date on which Latvia adopts the euro. 3.3 The ECB notes that the draft law does not deal with the personal independence of the members of Latvijas Banka’s Council (hereinafter the ‘Council’). The grounds for dismissal of the Governor, Deputy Governor and other members of the Council currently laid down in Article 22 of the Law on Latvijas Banka are that: (1) they have submitted their resignation; or (2) a court sentence against the Governor of Latvijas Banka, the Deputy Governor or other member of the Council for an intentional crime has taken legal effect; or (3) the Governor of Latvijas Banka, the Deputy Governor or other member of the Council is unable to perform their functions for a period exceeding six successive months because of illness. The ECB’s Convergence Report 2004, as well as ECB opinion

text: of 14 June 2005, concluded that the grounds for dismissal of Latvijas Banka’s Governor currently laid down in Article 22 of the Law on Latvijas Banka require further adaptation to comply fully with Article 14.2 of the Statute. The ECB therefore proposes already addressing this in the draft law as it is of immediate relevance. 3.4 The draft law amends Article 35 of the Law on Latvijas Banka so that Latvijas Banka may operate in financial markets of Latvia, Member States of the European Union and abroad by transacting in financial instruments and precious metals. The Law on the financial instruments market defines financial instruments as ‘an agreement, which concurrently creates financial assets for one person, but financial liabilities or capital securities for another’. This is a rather wide definition and appears to cover also lending and borrowing of claims such as, for example, bank loans. Accordingly, the

text: proposed wording of

text: Article 35

text: appears to be sufficiently wide to cover all transactions enumerated under Article 18.1 of the Statute. 3.5 Finally, the ECB notes the amendments to Article 38 of the Law on Latvijas Banka which provide for minimum reserve requirements. It is noted, however, that these measures do not contribute to further aligning Latvian reserve requirements with the regime adopted under Article 19 of the Statute and the relevant Community law . Thus, the Article will have to be amended again, prior to integration of Latvijas Banka into the Eurosystem.

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

text: Done at Frankfurt am Main, 3 April 2006.

text: [signed]

text: The President of the ECB

text: Jean-Claude TRICHET