text: 5 Understanding on specific economic policy conditionality of 3 May 2010 . In this respect the establishment of the FSF is also foreseen in the Memorandum as part of a set of measures to be implemented by the end of June 2010. 1.1.2 According to the explanatory memorandum to the draft law, the establishment of the FSF aims at maintaining the stability of the Greek banking system by means of recapitalisation of Greek credit institutions in the light of the paramount importance of the banking sector in general economic activity. The FSF will thus provide a safety net to credit institutions that may be unable to meet their capital requirements under the applicable legislation. Finally, the FSF will facilitate strategic decision-making in restructuring the Greek banking system to allow it to accomplish its function in financing and developing the Greek economy. 1.2 Main features Legal nature, purpose and capital 1.2.1 The FSF will be governed by private law. It will enjoy administrative and financial independence and operate purely in accordance with private economic activity standards . Its purpose will be to safeguard the stability of the Greek banking system by strengthening the capital adequacy of credit institutions, including credit institutions that are subsidiaries of foreign credit institutions and operate in Greece following authorisation by the BoG . The Greek State will gradually pay up and incorporate into securities its capital of EUR 10 billion not transferable before expiry of the FSF’s duration . The Minister for Finance will gradually deposit capital stemming from the financial support mechanism to Greece by virtue of Law 3845/2010 in a special interest-bearing account held with the BoG for the purpose of the draft law . Eligibility for recapitalisation 1.2.2 Under Article 2(1) of the draft law, credit institutions authorised by the BoG will be eligible for recapitalisation by the FSF. These include authorised credit institutions that are subsidiaries of legal entities with a registered office abroad, including the branches of authorised Greek credit institutions operating abroad.

title: Opinion of the European Central Bank of 9 July 2010 on the establishment of the Financial Stability Fund (CON/2010/54)

text: OPINION OF THE EUROPEAN CENTRAL BANK 9 July 2010 on the establishment of the Financial Stability Fund (

text: ) Introduction and legal basis

text: On 29 June 2010 the European Central Bank (ECB) received a request from the Greek Ministry of Finance for an opinion on a draft law on the establishment of the Financial Stability Fund (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the functioning of the European Union and the third and sixth indents of

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

text: 1. Purpose of the draft law

text: 1.1 Context and objective 1.1.1 The establishment of the Financial Stability Fund (FSF) implements

text: Council Decision 2010/320/EC of 10 May 2010

text: addressed to Greece with a view to reinforcing and deepening fiscal surveillance and giving notice to Greece to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit . In particular,

text: Article 2(1)

text: (p) prescribes the establishment by Greece of ‘an independent financial stability fund to deal with potential capital shortfalls and preserve the soundness of the financial sector, by providing equity support to banks as needed’. Furthermore, as clarified in recital 6 of the Loan Facility Agreement concluded on 8 May 2010 between certain euro area Member States as lenders and the Hellenic Republic as borrower, the support granted to the borrower is made dependent on its complying with measures consistent with Decision

text: and laid down, inter alia, in the Memorandum of

text: 1 OJ L 189, 3.7.1998, p. 42.

text: 2 OJ L 145, 11.6.2010, p. 6.

text: 3 Available at http://www.hellenicparliament.gr.

text: 4 The Memorandum is annexed as Annex IV to Law 3845/2010 on the measures implementing the support mechanism for the Greek economy by the euro area Member States and the International Monetary Fund (FEK Α 65 / 6.5.2010).

text: 5 Moreover, according to recital 8 of the Loan Facility Agreement, the release of loans subsequent to the first loan will be conditional on the lenders deciding favourably following verification that the implementation of the economic policy of the borrower complies with the adjustment programme or any other conditions laid down in the Decision

text: . See also

text: Article 3(5)

text: (c) of the Agreement.

text: 6 See

text: Article 1

text: 7 See

text: Article 2

text: . The FSF will manage its capital and assets and exercise the rights deriving from its shareholder capacity with a view to preserving the value of such assets, minimising risks to Greek taxpayers and preventing competition in the banking sector from being hampered or distorted; moreover, the liquidity support provided under Law 3723/2008 (FEK A 250) or as part of the operations of the Eurosystem and/or the BoG will not fall within the purpose of the FSF.

text: 9 See

text: Article 3(2)

text: . Such deposits will be remunerated at a rate not more or less than the following: (1) the rate applicable to the Eurosystem main refinancing operations; (2) the Eurosystem deposit facility rate; and (3) the EONIA rate. Moreover, under

text: Article 3(4)

text: , the FSF’s capital and cash may only be invested in such deposits; any other type of investment will be prohibited and the FSF may not enter into lending arrangements or issue bonds or other commercial paper. Board of Directors and staff 1.2.3 The FSF’s Board of Directors (hereinafter the ‘Board’) will have full independence in any matter relating to the FSF’s administration, operations, asset management, identification and pursuit of its objectives . Its three executive members will be the President and two Vice-Presidents, and two of the four non-executive members shall be ex officio members, namely the Secretary General of the Ministry of Finance and the Director of the BoG’s Financial Stability Department. The Minister for Finance, after proposal by the BoG’s Governor, will appoint all Board members for a term of five years, renewable until 30 June 2017 . One representative from each of the European Commission and the ECB will be invited to participate in the Board’s meetings without the right to vote . Board members may not be employed by credit institutions for a period of two years after their term of office has ended for any reason whatever . 1.2.4 Its staff must be freely recruited by the Board under private employment contracts for a fixed renewable term. The secondment of civil servants from other Greek authorities is also possible subject to a decision by the relevant Minister or an act to be adopted by the BoG’s Governor, following a request by the Board’s President . Activation of the FSF 1.2.5 Under Article 6(1) of the draft law, a credit institution complying with Pillar 2 capital requirements may apply to the FSF for recapitalisation, following an instruction from the BoG or on its own initiative, provided that the following conditions are both met: (a) on the basis of conservative assumptions by the BoG that there is a well-founded risk that the credit institution may not be able to continue to comply with such Pillar 2 requirements; and (b) the credit institution has failed to increase its own funds with the participation of its existing or new shareholders. 1.2.6 Furthermore, under Article 6(2) of the draft law, the BoG may also instruct a credit institution to apply to the FSF for recapitalisation, if the credit institution does not comply with either Pillar 1 or 2 capital requirements and, at the same time, it has failed to increase its own funds with the participation of its existing or new shareholders. In these cases, if the credit institution does not

text: 10 See

text: Article 4(1)

text: and

text: Article 4(2)

text: (e). In the performance of their duties Board members will enjoy full independence, may not seek or receive instructions from the Greek State or any other government body or official and may not be subject to any influence. Likewise, the Greek State and the abovementioned government bodies and officials must refrain from giving any instructions to the FSF.

text: 14 See

text: Article 5

text: 15 See Article 28 of Law 3601/2007 (FEK A 178 / 1.8.2007) and the BoG’s Governor’s act 2595/20.8.2007 (FEK B 1748 / 31.8.2007).

text: 16 See Article 27 of Law 3601/2007. apply for recapitalisation to the FSF, the BoG will either appoint a Commissioner or withdraw the credit institution’s authorisation , or may require removal of the credit institution’s management . 1.2.7 The credit institution’s request for recapitalisation may be submitted to the FSF within one month from receipt of a BoG instruction and must be accompanied by: (a) a business plan specifying the amount of the required capital injection and detailing the measures that the credit institution intends to take to safeguard and strengthen its solvency as soon as possible ; and (b) a detailed timetable for the implementation of the measures, stating the estimated time by which the credit institution should be able to repurchase the preference shares referred to in Article 7 of the draft law. If the draw up jointly with the credit institution a detailed restructuring plan or amend any plan already submitted to the European Commission, in accordance with the applicable Union State aid rules and European Commission practices . Recapitalisation procedure, issuance of shares and related issues 1.2.8 The capital injection will be granted through the FSF’s participation in an increase of the credit institution’s share capital by issuing preference shares , except if the credit institution fails to meet Pillar 1 capital requirements , where the capital increase will be carried out by issuing ordinary shares to the FSF. The share issue price must reflect the estimated fair value or market price disregarding any actual or potential support by the Greek State, the FSF or the BoG outside the framework of Eurosystem operations . The preference shares must be redeemed in their entirety by the credit institution after five years or earlier, on approval by the BoG, at a price to be set at the highest between the original issue price (plus accrued and unpaid dividends) and the price at the time of the decision to convoke the General Meeting of Shareholders for the purposes of the share

text: 17 Under Article 63(2) of Law 3601/2007. Prior to the Commissioner’s appointment, the BoG will communicate in writing to the credit institution the verified breach. From the communication of such appointment to the credit institution, any act related to the credit institution’s management will be null and void unless approved by the Commissioner. Within the time limit specified by the BoG, the Commissioner must report to it on the capital adequacy and the overall financial condition and the administrative and organisational structure of the credit institution. If the BoG, on the basis of other data and information available to it, judges that the credit institution’s operations cannot continue under the current management, it will decide to assign its management to the Commissioner. The Commissioner will be subject to the BoG’s control and supervision. The BoG will decide on the fees and overall costs to be paid by the credit institution. The BoG may replace or terminate the mandate of the Commissioner.

text: 18 Under Article 8 of Law 3601/2007.

text: 20 e.g. by increasing its capital and/or restoring its profitability through cost-cutting, reducing risks or receiving support from other companies of its group, etc. The plan may also include any prospects of a merger or absorption, or a transfer of its activities or units to another credit institution or financial organisation (see

text: Article 6(4)

text: (a)).

text: 21 See

text: Article 6(7)

text: to 6(9) also providing for the period for implementation of the restructuring plan and the monitoring and assessment of such implementation.

text: 24 See

text: Article 7(3)

text: . For the purposes of determining the issue price, account must be taken of the average of the valuations provided by two independent audit firms using commonly accepted methodologies and criteria. Such audit firms will be appointed by the FSF and the credit institution. In the event of a deviation of more than 10% between the two valuations, a third independent audit firm, appointed jointly by the Minister for Finance and the BoG’s Governor, will determine the final price. The appointment of the audit firms should also include deadlines for their evaluation compatible with the submitted business plan’s timing. In any event, the Union State aid rules and European Commission practices for similar valuations must also be observed. redemption . If five years have lapsed and the redemption of the preference shares by the credit institution has not been completed, an annual cumulative surcharge of 2% will be imposed on annual compensation payable by the credit institution as provided for in Article 10(2) of the draft law . 1.2.9 The preference shares will be converted into ordinary transferable shares by a decision of the FSF, following a proposal by the BoG, in accordance with Article 9 of the draft law. Moreover, such preference shares may neither be transferable by the FSF to third parties nor tradable on a regulated market until the end of the FSF’s duration . They will, inter alia, confer on the FSF the right to participate in the credit institution’s Board of Directors with a representative as an additional member . In this respect, the FSF ’s representative may, in particular: (a) call a General Meeting of Shareholders within the time limits provided ; and (b) veto any decision by the credit institution’s Board of Directors: (i) regarding the distribution of dividends and the remuneration policy in relation to the credit institution’s senior executives; or (ii) where the decision in question could jeopardise the interests of depositors, or seriously impair the credit institution’s liquidity or solvency or its overall sound and smooth operation. Moreover, the FSF’s representative will attend the General Meeting of ordinary shareholders and have a right to veto any resolution on the issues referred to above . 1.2.10 The FSF may request, even prior to the request for its activation, all relevant data and information from credit institutions through the BoG, as well as on-site inspections to be carried out by the BoG with the participation of a FSF representative, expert or external auditor . Financial results and statements, auditing and other provisions 1.2.11The FSF will establish unrealised revaluation reserve accounts in accordance with the International Financial Reporting Standards (IFRS) . Moreover, provision is made for: (1) the approval of the FSF’s annual financial statements prepared in accordance with the IFRS and their submission, together with other relevant reports, to the Greek authorities and the European Commission, the ECB and the IMF; (2) regular financial audits and ad hoc audits, the outcome of which must be submitted to the Greek Parliament; (3) a comprehensive internal audit mechanism; and (4) FSF immunities .

text: 25 See

text: Article 8(1)

text: . Partial redemption will not be permitted. The BoG will only approve redemptions that do not jeopardise the credit institution’s solvency and financial stability.

text: 31 See

text: Article 11

text: 32 See

text: Article 12

text: 33 See

text: Articles 13

text: to 15.

text: 2. General observations

text: 2.1 The ECB welcomes the establishment of the FSF as a means to improve the safety net for the Greek banking system during an economic downturn which could have adverse implications for the asset quality of Greek credit institutions. Moreover, it takes note that the FSF is part of a broader set of measures under the Memorandum and its design therefore takes into account the other characteristics of the Programme plan . The ECB appreciates that the FSF’s mandate is clearly defined. At the same time, the ECB welcomes the FSF’s role in facilitating strategic decisionmaking in terms of restructuring the Greek banking system and thus allowing it to continue its function in extending credit to the Greek economy. 2.2 The ECB welcomes the scope of the draft law covering subsidiaries operating in Greece of credit institutions having their registered office abroad as well as branches operating abroad of Greek credit institutions. Moreover, the draft law does not discriminate between credit institutions established in Greece in accordance with the Declaration of Paris , which states that Member States’ actions taken to facilitate the funding of banks ‘will be designed in order to avoid any distortion in the level playing field’, a crucial element for the integration of the financial markets in Europe. The ECB also welcomes the FSF’s finite life, ending on 30 June 2017. Despite its relatively long tenure, this is in line with earlier ECB opinions underscoring the need for any national support scheme to be temporary in nature, even if it may be extended or renewed . The ECB also appreciates the clarification in Article 2 of the draft law according to which the liquidity provision by the BoG in the context of the Eurosystem’s refinancing operations will not fall within the FSF’s purpose, hence respecting the Eurosystem’s exclusive competence under Article 127(2) of the Treaty as regards the implementation of the single monetary policy. 2.3 The ECB welcomes the close link between the activation of the FSF and the supervisory process under Law 3601/2007 on banking and the relevant Basel rules. Taken in conjunction with the BoG’s supervisory powers over credit institutions under Law 3601/2007, the draft law should ensure that the capital adequacy requirements of credit institutions are properly maintained. In particular, the ECB endorses the need, at the first instance, for the recommendation by the BoG for the credit institution to apply to the FSF for a capital injection to be based on a forward-looking assessment using conservative assumptions under the Pillar II review process. The ECB notes that

text: 34 In accordance with Article 1(3) of Law 3845/2010, Annex III (Memorandum on economic and financial policy) and Annex IV (Memorandum of Understanding on specific economic policy conditionality) are jointly referred to as the ‘Programme plan’. The Ministry of Finance drew up the Programme plan with the European Commission, the ECB and the IMF, to implement the support mechanism in accordance with the Statements reproduced in Annexes I and II to Law 3845/2010 (Statement by the Heads of State and Government of the euro area of 25 March 2010 and Statement on the support to Greece by euro area Member States of 11 April 2010).

text: 35 The Declaration issued by the Heads of State of the euro area on 12 October 2008. The text of the Declaration is available on the former French Presidency’s website at www.ue2008.fr.

text: 36 See paragraph 3.3 in Opinion

text: . All ECB opinions are available on the ECB’s website at www.ecb.europa.eu. any recourse to the FSF may occur only after the credit institution can show that it has failed to increase its own funds with the participation of its existing or new shareholders . 2.4 The strong sanctions, including the possibility of appointing a Commissioner or requiring removal of the management, or even withdrawing the banking licence, are to be imposed by the BoG on a credit institution which, despite a recommendation by the BoG based on a forward-looking assessment, fails to enhance its solvency position and whose capital subsequently falls below the relevant Pillar I or II limits. Such rules, in conjunction with the quantitative targets for activating the FSF, are essential to allow the BoG to exercise its supervisory powers in safeguarding financial stability. 2.5 The ECB appreciates that any request by a credit institution for recapitalisation must be accompanied by a business plan and a detailed timetable for its implementation, even before the submission of the restructuring plan to be drawn up in line with the requirements of the European Commission in the context of Union State aid rules and European Commission practices. The ECB notes that these mandatory rules go in the direction of ensuring that the recapitalised institutions will be subject to a proper viability assessment and will not be unfairly advantaged by recourse to the FSF, which is in line with earlier ECB opinions . 2.6 The ECB notes that the requirement for the pricing of the preference shares to be issued or redeemed by the credit institution in exchange for recapitalisation funds, as well as the pricing applied in conversion of the preference shares to ordinary shares on a decision by the FSF, must reflect the fair value or market price. As in its previous opinions, the ECB stresses the importance of appropriate pricing for recapitalisations to enhance the stability of the financial system, facilitate the return to normal market conditions, ensure a level playing field and the proper financing of the economy . The ECB welcomes the time limit of five years for the repurchase of the shares, as this significantly contributes to the temporary nature of the FSF support. The ECB also appreciates the need for the BoG to approve any redemption of shares, also taking into account the possible implications for financial stability. 2.7 The ECB welcomes the FSF’s extensive powers over the management and shareholders of the credit institutions receiving capital support . In particular, and in addition to the abovementioned requirements for the nature and pricing of any capital injection, these rules ensure that existing shareholders bear the due consequences of the intervention, in line with previous ECB opinions . The ECB appreciates that the FSF will have access to all relevant data and information from the credit institutions through the BoG, even prior to the submission of a request for its activation, as

text: 38 See paragraph 3.3 in Opinion

text: 39 See paragraph 3.2 in Opinion

text: 41 See paragraph 2.2 in Opinion

text: . well as on-site inspections. Such access should be subject to the same confidentiality requirements imposed on the BoG with respect to information from the credit institutions . 2.8 The ECB welcomes the establishment of the FSF as an entity with its own decision-making powers independent of its founder, the Greek State. Under the draft law the FSF will be governed and managed by a Board, which will be its supreme decision making body and will enjoy full independence in deciding on any issue concerning the FSF’s administration, operation, asset management, identification and pursuit of its objectives. The ECB understands that as regards corporate governance, the FSF’s Board as the FSF’s supreme decision-making body will have the powers that would be assigned to the Board of Directors and to the General Meeting of shareholders were the entity to be a joint stock company. This decision-making autonomy should enable the FSF to decide on recapitalising particular credit institutions independently of outside influence. Moreover, the President of the Board will represent the FSF in its relations with judicial authorities, other bodies and third parties .

text: 3. Specific observations

text: Role of Governor of Bank of Greece in appointing the FSF Board members 3.1 The ECB notes that all seven members of the Board are to be appointed by a decision of the Minister for Finance on a proposal by the BoG’s Governor . The formal appointment of members of the Board by the Minister for Finance is important to ensure the democratic legitimacy of the FSF, whose capital is provided by the Greek State .That being the case, the ECB notes that the BoG’s Governor will have an initiating role in the appointment procedure, having the power to select five Board members following a public call for expressions of interest .The ECB considers that this enhanced role in the appointment procedure is important in view of the BoG’s prudential supervision role and the stability of the financial system. Presence of ECB observer in FSF Board meetings 3.2 The ECB supports the draft law’s requirement for an observer from the ECB to be invited to participate in the Board’s meetings . To facilitate participation by the ECB and Commission

text: 44 Other Member States have set up domestic funds to recapitalise and restructure banks. Some of these funds have a similar procedure for appointing most of the members of the fund’s decision-making body on a proposal by the national central bank. For example, in the case of the Spanish Fund for Orderly Bank Restructuring (FROB) set up under the Royal Decree Law 9/2009 of 26 June 2009,

text: Article 3

text: provides that the Minister for Economic Affairs and Finance appoints all members of the Governing Committee, the FROB’s decision-making body, with five of the eight members to be proposed by the Banco de España. The remaining three members are representatives of the bank deposit guarantee funds for each of the three Spanish banking sectors. See ECB Opinions

text: and

text: 45 Also, the Board assures the FSF’s accountability to the Greek legislature and the State authorities by having to report periodically on its activities to the Minister for Finance and the BoG, and to provide detailed information to them through its President on request. The Board must also submit bi-annual reports to the Greek Parliament notified to the Ministry of Finance, the European Commission, the ECB and the International Monetary Fund, as well as to the BoG. See

text: Article 4(9)

text: . observers in the Board’s meetings, it would be helpful if the draft law could clarify that all documents going to the Board will be made available in English. Impact of FSF account at the BoG on implementation of Eurosystem monetary policy 3.3 The recourse to a BoG deposit account for the investment of the FSF’s capital provides a stable solution. This does not necessarily raise difficulties for the implementation of the single monetary policy provided that even infrequent account movements are known in advance and therefore included in liquidity forecasts. Prohibition on monetary financing 3.4 As regards the monetary financing prohibition laid down in Article 123 of the Treaty, as the FSF’s capital is to be issued in the form of securities that are wholly owned by the Greek State, the FSF should be considered as a ‘public undertaking of a Member State’ within the meaning of Article 123(1) of the Treaty and

text: Article 8 of Council Regulation (EC) 3603/93 of 13 December 1993

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

text: and

text: b(1) of the Treaty . Under the draft law the FSF may not enter into any loan agreement or issue bonds or commercial paper . Accordingly there will be no question of the FSF being involved in any borrowing from the ECB, the BoG or any other ESCB central bank so that the monetary financing prohibition will not be breached. 3.5 Furthermore, to comply with the monetary financing prohibition, it is essential to specify that the remuneration of the account held by the FSF at the BoG will reflect market parameters. In particular, it is important to correlate the deposits’ remuneration rate with their maturity. Past ECB opinions have noted that the prohibition on monetary financing by central banks of government activities is independent of its form, e.g. loans or direct, non-reimbursable funding to the public sector. Interest payments above market rates constitute a de facto advanced distribution of profits. This, in turn, implies a de facto intra-year credit, contrary to the objective of the monetary financing prohibition. Therefore, the remuneration for public entity deposits should not go beyond the remuneration applied to a similar deposit made by a market counterparty. If the remuneration mechanism for deposits of public entities allows public sector entities to systematically steer the remuneration by a national central bank at a rate above the rate at which a similar deposit would be remunerated by a market counterparty, this would contravene the objectives of the monetary financing prohibition under the Treaty. It may also have undesired signalling effects. Given the purpose of the FSF’s financial resources held at the BoG, their maturity is very short term to be quickly available. The interest rate at which the BoG should remunerate deposits made by the FSF should be at a rate equivalent to, or in a range, the highest and lowest points of which will be set by (1) the Eurosystem deposit facility rate and (2) the Euro Overnight Index Average (EONIA) rate. The reference to the rate applicable to the Eurosystem main refinancing rate (MRO) should be

text: 48 OJ L 332, 31.12.1993, p. 1.

text: 50 See in particular ECB Opinions

text: and

text: . removed as this rate would normally be positioned within the range defined above, but it might, in exceptional circumstances, exceed the EONIA rate. 3.6 The ECB notes the draft law expressly provides that the remuneration of the Board members and 51 52 staff salaries will be payable from the FSF’s budget . As the FSF will be financially independent and will draw up its own financial statements , this implies that it will be responsible for its operating costs. Thus there should not be any cause for the FSF to resort to central bank resources to finance any of its operations. Earmarking of FSF capital 3.7

text: Article 3(1)

text: provides that the FSF’s capital ‘stem[s]…..from the EU/IMF financial support mechanism to Greece by virtue of Law 3845/2010’. There may be a need to clarify this in a nonlegislative act instead of in the draft law. Conflicts of interest 3.8 The ECB considers that the draft law already deals with most of the situations where Board members’ private interests could conflict with those of the FSF. Nevertheless there are still a number of technical details that could be usefully clarified. 3.9 First, as regards the second sentence of

text: Article 4(2)

text: (E), the draft law is ambiguous as to whether the BoG officials may not be subject to the incompatibility requirements for Board members in subparagraph E. This second sentence is understood to mean only that the holding of any office with the BoG by a Board member may not be considered incompatible with that person’s status as a Board member. If this is what is intended, this should be specified in a separate clause and the words ‘with the exception of officials coming from the BoG’ at the end of the second sentence of

text: Article 4(2)

text: (E) should be deleted. Otherwise, the current wording could mean that the direct shareholding of BoG officials in credit institutions would not be covered by the incompatibility requirements in sub-paragraph E. 3.10 Second, the fifth sentence of

text: Article 4(2)

text: (E) should clarify that Board members should be obliged not only to disclose any possible conflict of interest, but also to abstain in any relevant Board resolution where a matter is on the agenda in which they have an actual or possible conflict of interest. 3.11 Third, it is important to clarify that the members of the Board and the staff may not use confidential price sensitive market information to which they have access by reason of their position at the FSF to carry out private transactions for their or their relatives’ private benefit. 3.12 Fourth, in

text: Article 16(3)

text: , consideration could be given to whether the cooling off period of six months following the end of the contract should only apply to senior professional staff.

text: Article 1

text: Article 13

text: . Definition of credit institutions 3.13 It is understood that the reference to ‘subsidiaries of credit institutions having their registered office abroad’ in

text: Article 2

text: , and concerning the types of institutions eligible for a capital injection by the FSF to strengthen their capital adequacy, is intended to refer to subsidiaries which are themselves credit institutions authorised by the BoG operating in Greece, and not any other type of authorised financial institution. This part of the provision could be made clearer for the sake of legal certainty. This opinion will be published on the ECB’s website. Done at Frankfurt am Main, 9 July 2010. [signed] The President of the ECB Jean-Claude TRICHET


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

text: Zakon o plačilnem prometu, published in Uradni list Republike Slovenije No 30/2002.

text: Zakon o plačilnih storitvah in sistemih, published in Uradni list Republike Slovenije No 58/2009. The ECB issued Opinion

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

text: , the present opinion does not include any assessment of the implementation of directives in Slovenia.

text: Directive

text: of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market amending Directives

text: and

text: and repealing Directive

text: (OJ L 319, 5.12.2007, p. 1).

text: Zakon o javnih financah, published in Uradni list Republike Slovenije No 79/1999.

text: Article 61 of the Law on public finance.

text: The draft law was submitted to the National Assembly on 20 May 2010, while the relevant consultation request was received by the ECB on 22 June 2010.

text: Zakon o Banki Slovenije, published in Uradni list Republike Slovenije, No 72/2006.

text: See e.g. the ECB’s Convergence Report of May 2010, p. 21.

text: See the ECB’s Convergence Report of May 2010, p. 25, which states that ‘The purpose of Article 21.2 of the Statute was to enable NCBs, following transfer of the monetary policy competence to the Eurosystem, to continue to conduct the fiscal agent service traditionally provided by central banks to governments and other public entities without automatically breaching the monetary financing prohibition.’

text: See

text: Article 1(1)

text: (b)(ii) of

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

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

text: Articles 104

text: [now 123] and 104b(1) [now 125(1)] of the Treaty (OJ L 332, 31.12.1993, p. 1).

text: See also ECB Opinion

text: , paragraph 2.2.

text: See in particular ECB Opinions

text: and

publisher: Europeiska centralbanken

sprak: en

title: Opinion of the European Central Bank of 9 July 2010 on the provision of information and other obligations of Banka Slovenije as payment service provider for budget users (CON/2010/55)

serie: con

text: OPINION OF THE EUROPEAN CENTRAL BANK of 9 July 2010 on the provision of information and other obligations of Banka Slovenije as payment service provider for budget users (

text: ) Introduction and legal basis

type: rubrik

text: On 22 June 2010 the European Central Bank (ECB) received a request from the Slovenian Ministry of Finance for an opinion on a draft law on the provision of payment services to budget users (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third indent of

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

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

type: stycke

text: 1. Purpose of the draft law

text: 1.1 The draft law mainly governs the organisation and tasks of the Public Payments Administration of the Republic of Slovenia (hereinafter the ‘PPA’) and certain aspects of the functioning of the single treasury account system. The PPA’s tasks are currently laid down in the Law on payment 2 3 transactions , which was mostly replaced in 2009 by a new Law on payment services and systems implementing the Payment Services Directive . Further rules are laid down in regulations adopted on the basis of the Law on payment transactions. According to the explanatory memorandum, the draft law does not introduce a new regime for the functioning of the single treasury account system or for the performance of payment transactions by ‘budget users’ (defined by the Law on public finance as State and municipal authorities and organisations, municipal administrations and public

text: funds, institutes and agencies established by the State or a municipality). Instead, the draft law transforms the key provisions of the existing regime governing the PPA’s tasks into a functional whole. 1.2 The abovementioned single treasury account system is one of the characteristics of the system of public finance in Slovenia. There is one such single treasury account system for the State and one for each municipality, and it is composed of accounts opened with Banka Slovenije . The maintenance and management of these accounts, however, is entrusted to the PPA. Several types of accounts are maintained within each single treasury account system, namely: treasury sub-accounts of the State and of municipalities, maintained for the management of funds of each single treasury account system; sub-accounts to which fiscal revenues are paid in; sub-accounts maintained for the provision of payment services to budget users, and other types of accounts foreseen by laws and other regulations . In addition to maintaining these accounts, the PPA also collects and distributes all relevant information on payments to and from these accounts, maintains a register of budget users and performs other tasks assigned by law. The whole system, established in its current structure in 2003, is described in the draft law’s explanatory memorandum as being effective in ensuring complete, up-to-date and accurate information on all transactions involving public funds in one place, thereby facilitating, among other things, the processing of the relevant data for budget, tax, statistical and other purposes and the supervision of the monetary flow to and from the budget. 1.3 Under conditions laid down in the Law on public finance or a regulation adopted by the Minister of Finance, budget users are authorised to open special-purpose transaction accounts (a category of payment accounts) directly with Banka Slovenije, for the purpose of the separate management of funds allocated to a specific programme or project. Pursuant to Article 23(3) of the draft law, Banka Slovenije provides to the PPA, free of charge, information on payments debited and credited to such accounts and on the amount of funds held on such accounts, while regulations adopted by the Minister of Finance define rules on the method and deadlines for this provision of information. Pursuant to

text: Article 23(5)

text: , the Minister of Finance also lays down the terms for opening, maintaining and closing the accounts of budget users, and several other rules in connection with the payments to and from the system of public finance.

text: 2. The appropriate time to consult the ECB

text: 2.1 In its consultation request, the consulting authority asks for the ECB’s opinion to be delivered as soon as possible, considering that the draft law is already in the parliamentary procedure. However, no explicit time limit for the submission of the opinion has been set. Since the date of receipt of the consultation request, further steps towards adoption of the draft law have been made in the Slovenian National Assembly, including the inclusion of several amendments to the draft law.

text: 2.2 The ECB points out that, in cases of particular urgency which do not allow for a normal consultation period, the consulting authority may indicate urgency in the consultation request and ask for a shorter deadline for the ECB’s opinion to be adopted. This does not prejudice the consulting authority’s duty under Article 127(4) and 282(5) of the Treaty to consult the ECB on national draft legislative provisions falling within its fields of competence at an appropriate stage in the national legislation process, as stated in the second sentence of

text: Article 4 of Decision 98/415/EC

text: . This implies that the consultation should take place at a point in the legislative process which affords the ECB sufficient time to examine the draft legislative provisions and to adopt its opinion in all required language versions, and which also enables the relevant national authorities to take the ECB’s opinion into consideration before the provisions are adopted.

text: Article 3(4) of Decision 98/415/EC

text: also obliges Member States to suspend the adoption process for draft legislative provisions, pending receipt of the ECB’s opinion. As the draft law was submitted to the National Assembly of the Republic of Slovenia a month before the ECB received the consultation request , this cannot be considered as a case of extreme urgency within the meaning of

text: Article 3(2) of Decision 98/415/EC

text: and it was also not indicated as such in the consultation request. In the absence of an explicit deadline for the submission of its opinion, but taking into account the consulting authority’s request for it to deliver an opinion as soon as possible, the ECB decided to apply the minimum one-month deadline provided in

text: Article 3(1) of Decision 98/415/EC

text: . 2.3 The opportunity to issue an opinion on a draft law allows the ECB to express its views on the substance of the proposed legislation. The ECB reiterates its position that even cases of particular urgency do not relieve national authorities from their duty to consult the ECB and to allow sufficient time to take into account its views in accordance with Decision

text: . Any substantive amendments to the draft law have to be submitted to the ECB in order to allow it to issue its opinion based on the most recent text. Furthermore, with respect to the present consultation, the process of adoption of the draft law should have been suspended. The ECB’s comments on the provisions on which it was consulted do not eliminate the breach of the obligation to consult it. The ECB would appreciate the Ministry of Finance’s giving due consideration to honouring its obligation to consult the ECB in the future.

text: 3. Obligations of Banka Slovenije as service provider

text: 3.1 Requirements for the provision of information 3.1.1 Article 21.2 of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB’) establishes that the ‘ECB and national central banks may act as fiscal agents’ for ‘Union institutions, bodies, offices or agencies, central governments, regional local or other public authorities, other bodies governed by public law, or public undertakings of Member States.’ This is reflected in Article 12 of the Law on Banka Slovenije ,

text: according to which Banka Slovenije may act as a payment and/or fiscal agent for the State and maintains accounts for the Republic of Slovenia, State bodies and public entities. Pursuant to Article 53 of the same Law, Banka Slovenije lays down the tariff for remuneration of the services it provides. The opening of special-purpose transaction accounts of budget users with Banka Slovenije, as referred to in Article 23(2) of the draft law, falls within the existing tasks of Banka Slovenije, for the provision of which the latter should be able to charge appropriate fees. 3.1.2 Article 23(3) of the draft law obliges Banka Slovenije to provide to the PPA information on payments debited and credited to such accounts and on account balances free of charge. In addition, the draft law authorises the Minister of Finance to independently prescribe the method and deadlines for such provision of information, while it does not provide any further guidelines in this respect. The requirements laid down by the Minister might expose Banka Slovenije to a considerable burden, as they could have an impact on its internal procedures and information systems and, consequently, could require additional human and financial resources. In order to protect the financial independence of Banka Slovenije, the availability of such additional resources should be ensured in order not to affect Banka Slovenije’s capacity to carry out its European System of Central Banks (ESCB)-related tasks. Additionally, as noted in the ECB’s convergence reports, the principle of financial independence requires a national central bank to have sufficient means not only to perform its ESCB-related tasks but also its national tasks (e.g. financing its administration and own operations) . 3.1.3 Furthermore, the ECB recommends defining in more detail the scope of the relevant obligations of Banka Slovenije, in order to ensure certainty as regards its tasks. Also, the involvement of Banka Slovenije in the preparation or adoption of the Minister’s act (e.g. through giving its consent) might be considered to ensure that its provisions are feasible and to optimise them. 3.2 Other requirements prescribed by the Minister of Finance 3.2.1 Pursuant to Article 23(5) of the draft law, the Minister of Finance prescribes, among other things, the terms for opening, maintaining and closing the accounts of budget users, the content, method and deadlines for the provision of information by payment service providers on payments debited and credited to the accounts of budget users, the obligatory content of instructions for the payment of fiscal revenues as well as rules on the provision of other information in connection with the relevant payment transactions. 3.2.2 It is not clear from the draft law whether (or to what extent) such rules would also apply to the accounts maintained by Banka Slovenije or otherwise impose additional obligations on Banka Slovenije. Should this be the case, it seems unusual that the Minister of Finance, as a customer, defines the terms and condition for the accounts and services provided by Banka Slovenije. The draft law should respect the provisions of

text: Article 27

text: in conjunction with Article 12 of the Law on Banka Slovenije whereby such terms and conditions are established by an agreement between Banka Slovenije and the Ministry of Finance. More importantly, taking into account the express

text: recognition in Article 21.2 of the Statute of the ESCB of the provision of fiscal agency services as a legitimate function traditionally performed by central banks , the ECB notes that provision by central banks of fiscal agency services should comply with the monetary financing prohibition laid down in Article 123 of the Treaty by not constituting central bank financing of public sector 12 13 obligations vis-à-vis third parties or central bank crediting of the public . In this respect, the ECB recalls that it is essential to make explicit that any remuneration of the account held by the budget users with Banka Slovenije will reflect market parameters. In particular, it is important to correlate the remuneration rate of the deposits with their maturity. As recalled in past ECB opinions , the prohibition on monetary financing by central banks of government activities is independent of its form, i.e. loans or other direct financial means (e.g. the provision of direct, non-reimbursable funding to the public sector) are covered by the prohibition. Interest payments above market rates constitute a de facto advance distribution of profits. This, in turn, implies a de facto intra-year credit, contrary to the objective of the monetary financing prohibition. Therefore, the remuneration of deposits of public entities should not go beyond the remuneration applied to a similar deposit made by a market counterparty. If the remuneration mechanism for deposits of public entities allows the Government to systematically steer the remuneration by an NCB at a rate above the rate at which a similar deposit would be remunerated by a market counterparty, this would contravene the objectives of the monetary financing prohibition under the Treaty.

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

text: Done at Frankfurt am Main, 9 July 2010.

text: [signed]

text: The President of the ECB

text: Jean-Claude TRICHET

type: vagledning

utgivare: ecb


text: Draft law T/581 on the adoption and amendment of certain economic and financial legal acts, submitted to the Parliament by the Minister for the National Economy on 2 July 2010.

text: Article 95

text: submitted to the ECB amends the Law on the MNB.

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

text: ECB Opinions

text: and

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

text: See for example paragraph 4.3 of ECB Opinion

text: See paragraph 3.2.2 of ECB Opinion

text: and ECB Opinion

title: Opinion of the European Central Bank of 12 July 2010 on amendments to the Law on the Magyar Nemzeti Bank introducing salary reductions (CON/2010/56)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 12 July 2010 on amendments to the Law on the Magyar Nemzeti Bank introducing salary reductions (

text: ) Introduction and legal basis

text: On 1 July 2010, the European Central Bank (ECB) received a request from the Hungarian Ministry of the National Economy for an opinion on a draft law amending, inter alia, the Law on the Magyar Nemzeti Bank (hereinafter the ‘draft law’) . The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third indent of

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

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft law relates to the Magyar Nemzeti Bank (MNB). 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 On 8 June 2010 the Hungarian Prime Minister announced an action plan containing 29 measures to establish a balanced budget. One of these measures is the implementation of a HUF 2 000 000 monthly wage ceiling in the public sector. This is equal to 10 times the average gross monthly salary of employees in the national economy. According to the explanatory memorandum attached to the draft law, the proposed measure would allow a more performance-based and equitable income distribution in the public sector and would strengthen the public administration’s efficiency. 1.2 Article 95 of the draft law will amend Article 53(1) of Act LVIII of 2001 on the Magyar Nemzeti Bank (hereinafter ‘Law on the MNB’) according to which the total salary of the MNB’s Governor in a given year will be the total salary established for the Governor for the preceding year, increased by the increment calculated on the basis of the consumer price index expected for the current year, as contained in the convergence programme submitted to the Commission of the

text: European Union in the preceding year. Furthermore, according to the ECB’s information, the ‘total salary of the Magyar Nemzeti Bank’s Governor’ has been determined in a shareholder resolution by the Minister for Finance on behalf of the Hungarian State in 2000 and has been subject since to Article 53(1) of the Law on the MNB. The proposed provision intends to introduce a ceiling on the Governor’s salary providing that ‘the total monthly salary of the MNB’s Governor shall be, in the period from 1 March of a given year to the end of February of the next year, 10 times the average gross monthly salary of employees in the national economy of the previous year, as officially published by the Central Statistical Office’. 1.3 In addition to the Governor, the Deputy Governors, the members of the Monetary Council and the Supervisory Board are also affected by the draft law, since their salary is based on the Governor‘s salary under Article 53 of the Law on the MNB. Against this background, the proposed changes result in a decrease of approximately 75%, compared to the Governor’s present salary, and accordingly the proposed cut in salary would also result in a decrease in the salary of the Deputy Governors, as well as the members of the MNB’s Monetary Council and Supervisory Board.

text: 2. General observations

text: The appropriate time to consult the ECB

text: 2.1 The consulting authority submitted Article 95 of the draft law to the ECB on 1 July 2010, requesting the ECB’s opinion as soon as possible. According to information received by the ECB, the Parliament expects to adopt the draft law before 19 July 2010 when the spring session of the parliamentary legislative process ends. Once adopted by the Parliament, the relevant provisions of the draft law will enter into force on the eighth day following its publication. Moreover, no explicit time limit for submission of the opinion has been set. Since the date of receipt of the consultation request, further steps towards the adoption of the draft law have been taken in the Hungarian Parliament. 2.2 In cases of particular urgency that do not allow for a normal consultation period, the consulting authority may indicate urgency in the consultation request and ask for a shorter deadline for the ECB’s opinion to be adopted. The ECB would like to emphasise that even in such cases a minimum one-month deadline applies according to

text: Article 3(1) of Decision 98/415/EC

text: . This does not prejudice the consulting authority’s duty under Articles 127(4) and 282(5) of the Treaty to consult the ECB on national draft legislative provisions falling within its fields of competence at an appropriate stage in the national legislation process, as provided by the second sentence of

text: Article 4 of Decision 98/415/EC

text: Article 3(4) of Decision 98/415/EC

text: also obliges Member States to suspend the adoption process for draft legislative provisions, pending receipt of the ECB’s opinion. 2.3. In the event of extreme urgency, the time limit of one month may be reduced. In accordance with

text: Article 3(2) of Decision 98/415/EC

text: , the consulting authority shall state the reasons for the urgency. The ECB considers that the justification provided by the consulting authority cannot be considered as a case of extreme urgency within the meaning of

text: Article 3(2)

text: . 2.4 The ECB reiterates its position that even cases of particular urgency do not relieve national authorities from their duty to consult the ECB and to allow sufficient time to take into account its views in accordance with Decision

text: . Any substantive amendments to the draft law have to be submitted to the ECB to allow it to adopt its opinion on the most recent text. Furthermore, with respect to the present consultation, the process of adoption of the draft law should have been suspended. The ECB’s comments on the provisions on which it was consulted do not eliminate the breach of the obligation to consult it. The ECB would appreciate the Ministry for the National Economy giving due consideration to honouring its obligation to consult the ECB in the future.

text: Legislation subject to consultation

text: 2.5 The ECB understands that the draft law amends several legal acts including the Law on the MNB. This opinion only covers Article 95 of the draft law that the consulting authority has submitted for consultation. The ECB also advises that this Opinion is without prejudice to any other ECB opinions concerning the legal acts affected by the draft law and falling under the ECB’s competence. The ECB expects to be consulted also on such matters.

text: 3. Central bank independence

text: 3.1 When a Statute of a national central bank (NCB) (in this case the Law on the MNB) is amended, the amending law should ensure that central bank independence guaranteed by Article 130 of the Treaty and

text: Article 7

text: and Article 14.2 of the Statute of the ESCB and the ECB (hereinafter the ‘Statute of the ESCB’) is respected. Compatibility of a Member State’s legislation, including its NCB’s Statute, with the requirements of the Treaty and the Statute of the ESCB concerning central bank independence must be ensured on accession to the Union. Compatibility with Article 130 of the Treaty and Article 7 of the Statute of the ESCB is a fundamental aspect of the legal convergence in a Member State examined in the convergence reports required by Article 140(1) of the Treaty to assess a country’s readiness to join the euro area.

text: Financial independence

text: 3.2 As recalled in the ECB Convergence Reports 2008 and 2010 and stressed in several ECB opinions on issues concerning autonomy in staff matters, an aspect of an NCB’s financial independence,

text: Member States may not impair an NCB’s ability to employ and retain the qualified staff necessary for the NCB to perform independently the tasks conferred on it by the Treaty, the Statute of the ESCB and national legislation. Furthermore, an NCB may not be put into a position where it has limited or no control over its staff, or where the government of a Member State is in a position to influence the NCB’s policy on staff matters. 3.3 By amending Article 53(1) of the Law on the MNB, Article 95 of the draft law introduces a threshold for the Governor’s salary which results in a decrease of the Governor’s salary and consequently the salaries of the Deputy Governors and the members of the Monetary Council and the Supervisory Board. 3.4 To protect the MNB’s autonomy in staff matters, part of the principle of central bank independence under Article 130 of the Treaty, the Hungarian authorities have an obligation to ensure that any amendment to the legislative provisions on the remuneration of the MNB’s staff is decided in cooperation with the MNB, taking due account of the MNB’s views . Personal independence of the members of MNB’s decision-making bodies 3.5 To comply with the Treaty requirements for personal independence of the members of NCB’s decision-making bodies who are involved in the performance of ESCB-related tasks, any amendment to the salaries of the Governor and other members of the MNB’s decision-making bodies who are involved in the performance of ESCB-related tasks should not affect the terms under which they have been appointed. Consequently, the draft law should specifically provide that such an amendment may apply only to future appointments .

text: Conclusion

text: 3.6 For these reasons the process for adoption of the draft law should ensure the involvement of the MNB and the draft law should be amended to comply with the principle of central bank independence.

text: Done at Frankfurt am Main, 12 July 2010. [signed]

text: The President of the ECB

text: Jean-Claude TRICHET


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

text: Directive

text: of the European Parliament and of the Council of 16 September 2009 amending Directives

text: and

text: as regards banks affiliated to central institutions, certain own funds items, large exposures, supervisory arrangements, and crisis management (OJ L 302, 17.11.2009, p. 97).

text: Commission Directive 2009/27/EC of 7 April 2009

text: amending certain Annexes to Directive

text: of the European Parliament and of the Council as regards technical provisions concerning risk management (OJ L 94, 8.4.2009, p. 97).

text: Commission Directive 2009/83/EC of 27 July 2009

text: amending certain Annexes to Directive

text: of the European Parliament and of the Council as regards technical provisions concerning risk management (OJ L 196, 28.7.2009, p. 14).

text: Directive

text: of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ L 302, 17.11.2009, p. 32). 4 Directive

text: of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast) (OJ L 177, 30.6.2006, p. 1). 5 See Austrian Parliament’s press release, 01/07.07.2010/Nr. 585.

text: See ‘The role of central banks in prudential supervision’, published on the ECB’s website at www.ecb.europa.eu; also see ECB Opinion

text: . All ECB opinions are available on the ECB’s website. 7 See, e.g. paragraph 2.4 of ECB Opinion

text: or paragraph 9 of ECB Opinion

text: See the examples stated in footnote 19 of ECB Opinion

text: . 9 Proposal for a regulation of the European Parliament and of the Council on Community macro prudential oversight of the financial system and establishing a European Systemic Risk Board, COM (2009) final, 23.9.2009.

text: These include among other reporting obligations under Regulation ECB/2007/8 of 27 July 2007 concerning statistics on the assets and liabilities of investment funds (OJ L 211, 14.8.2007, p. 8).

title: Opinion of the European Central Bank of 16 July 2010 on the transfer of prudential supervision tasks to the Austrian Financial Market Authority (CON/2010/57)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 16 July 2010 on the transfer of prudential supervision tasks to the Austrian Financial Market Authority (

text: ) Introduction and legal basis

text: On 2 June 2010, the European Central Bank (ECB) received a request from the Austrian Ministry of Finance for an opinion on a draft Federal law amending the Law on banking, securities supervision, pensions for employees and the self-employed, and severance payments (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third and fourth indents of

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

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft law contains provisions concerning the Oesterreichische Nationalbank (OeNB) and relates to the collection, compilation and distribution of financial and banking statistics. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft law

text: 1.1 The draft law transposes several directives into Austrian legislation . As mentioned in the consultation request, the draft law also includes an amendment to the Law on banking that does not relate to the transposition of directives. In line with

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

text: , this opinion only covers such amendment. 1.2 The new Article 3(8) of the Law on banking transfers competences from the OeNB to the Austrian Financial Market Authority (FMA) as regards prudential supervision of credit institutions authorised to provide only investment, real estate investment, and severance and retirement fund business (‘special purpose banks’). Concretely, the draft law is intended to transfer to the FMA the

text: OeNB’s responsibility for providing individual bank off-site analysis and on-site audits in connection with such special purpose institutions. 1.3 The explanatory memorandum explains the reasons for the transfer of prudential supervisory competences from the OeNB to the FMA as follows. The OeNB’s common risk-based analysis approach to be applied to the abovementioned special purpose banks would not deliver meaningful results due to a lack of comparability with full service banks. Furthermore, the memorandum states that the OeNB’s risk-based analysis approach would not be suited to the low balance sheet totals of special purpose banks. According to the memorandum, without the draft law the forthcoming implementation of Directive

text: would also lead to an OeNB non-systemic cross-border competency with regard to on-site inspections at foreign undertakings for collective investment in transferable securities, which are non-banks. Austrian law considers investment companies as credit institutions, whereas in other Member States they are not regarded as banks in accordance with Article 4(1) of Directive 2006/48 . While the UCITS IV-Directive has to be transposed into Austrian legislation by 1 July 2011, the transfer of supervisory competences will already take effect on 1 January 2011 for organisational reasons.

text: 2. General observations

text: The appropriate time to consult the ECB

text: 2.1 The ECB points out that, in cases of particular urgency which do not allow for a normal consultation period, the consulting authority may indicate urgency in the consultation request and ask for a shorter deadline for the ECB’s opinion to be adopted. This does not prejudice the consulting authority’s duty under Articles 127(4) and 282(5) of the Treaty to consult the ECB on national draft legislative provisions falling within its fields of competence. The second sentence of

text: Article 4 of Decision 98/415/EC

text: provides that the ECB must be consulted ‘at an appropriate stage’. This implies that the consultation should take place at a point which affords the ECB sufficient time to examine the draft legislative provisions and to adopt its opinion in all required language versions, and which also enables the relevant national authorities to take the ECB’s opinion into consideration before the provisions are adopted.

text: Article 3(4) of Decision 98/415/EC

text: also obliges Member States to suspend the adoption process for draft legislative provisions, pending receipt of the ECB’s opinion. The Ministry of Finance’s consultation request on 2 June 2010 did not indicate any urgency and also did not set a deadline for the opinion, which in accordance with

text: Article 3(1) of Decision 98/415/EC

text: may not be less than one month. Notwithstanding this, the National Council adopted the draft law within less than one month and before this ECB opinion has been adopted .

text: 2.2 The opportunity to adopt an opinion on a draft law allows the ECB to express its views on the substance of the proposed legislation, including considerations such as the importance that the ECB may attach to a particular legislative proposal and its potential impact on the Eurosystem. Therefore, the ECB reiterates its position that even cases of particular urgency do not relieve national authorities from their duty to consult it and to allow sufficient time to take into account its views in accordance with Decision

text: . With respect to the ongoing consultation, the process of adoption of the draft law should have been suspended. The ECB’s comments on the consulted provisions do not eliminate the breach of the obligation to consult the ECB. Even though the Austrian National Council already adopted the draft law on 7 July 2010, the ECB considers that its comments are important for its application and interpretation and any future amendments. The ECB would appreciate the Ministry of Finance giving due consideration to the above observations by honouring its obligation to consult the ECB in the future, in accordance with Decision

text: Transfer of supervisory competences

text: 2.3 Article 127(5) of the Treaty assigns to the Eurosystem 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. In line with this Article, the ECB has consistently stated that maintaining a close involvement of national central banks in prudential supervision is a condition for the Eurosystem to contribute adequately to monitoring the risks to financial stability in the euro area . The ECB notes that the OeNB’s broad role in the field of prudential supervision will – subject to the ECB’s observations in paragraph 3.1 and 3.2 – not substantially diminish as a result of the adoption of the draft law, since the supervisory tasks to be transferred only apply to companies not regarded as credit institutions according to

text: Article 49 of Directive 2006/48/EC

text: . The ECB understands that, without the draft law, the OeNB would be responsible for conducting on-site audits at branches of foreign investment companies in accordance with

text: Article 101(4) of Directive 2009/65/EC

text: , whereby the competent authorities of one Member State may request the cooperation of the competent authorities of another Member State in a supervisory activity or for an on-the-spot verification or in an investigation on the territory of the latter within the framework of their powers pursuant to this Directive, although the national competent authority to supervise UCITS is and will continue to be the FMA.

text: 3. Information-sharing between the OeNB and the FMA

text: 3.1 As emphasised in previous ECB opinions , central bank access to prudential information and cooperation between financial supervisory authorities and central banks are essential to macroprudential monitoring, the oversight of payment systems and the safeguarding of other market infrastructures, which are in turn indispensable for the smooth conduct of monetary policy and conducive to reducing the prudential reporting burden imposed on institutions. In particular, from a

text: financial stability perspective, a central bank would inevitably need to be involved in the event of any financial market crisis. In that context, the availability of relevant information and the ability to interpret it are crucial. Directive

text: provides that, subject to confidentiality and professional secrecy requirements, information may be shared between supervisory authorities and central banks and vice versa, for the purposes of the exercise of their respective tasks. Therefore the legislation of virtually all Member States that have adopted supervisory models based on an independent financial supervisory authority authorises the exchange of information between central banks and supervisory authorities . 3.2 Against this background, the ECB notes that as a consequence of this draft law the OeNB would no longer be authorised to evaluate individual special purpose bank analysis data in light of the individual and overall economic situation, especially for the purpose of performing its duties in connection with financial stability. This follows from the provision by the draft law that only the first to third and last sentences of

text: Article 79

text: (4a) of the Law on banking will apply to special purpose banks. Accordingly, the FMA must share all relevant information arising from its banking supervision activities in the joint database for banking supervision analysis. Relevant information includes data pursuant to

text: Article 77(4)

text: , banking supervision data pursuant to Article 14 of the Law on financial conglomerates, reports from State Commissioners, the results of investigations and other observations regarding specific institutions within the FMA’s area of responsibility. Furthermore, information available to both institutions is to be stored in the database by the OeNB. The OeNB is also permitted to perform statistical evaluations of the data with the objective of generating results which are not related to specific persons. However, according to the draft law, the eighth sentence of

text: Article 79

text: (4a), which currently authorises the OeNB to evaluate individual special purpose bank analysis data for the purpose of its financial stability duties, would no longer apply to special purpose banks. Taking into account the importance of central bank access to prudential information, the ECB considers essential the OeNB’s continued access for macroprudential monitoring to all available prudential information, including special purpose banks, as far as this access is needed in the course of its respective duties. Provided the eighth sentence of

text: Article 79

text: (4a) of the Law on banking is retained, this problem will not arise. Otherwise, such access in case of need should be explicitly provided. Furthermore, according to Article 3 of the Commission proposal for a regulation establishing the European Systemic Risk Board (ESRB) , this institution will be responsible for the macro-prudential oversight of the financial system within the Union to prevent or mitigate systemic risks within the financial system, to avoid episodes of widespread financial distress, contribute to a smooth functioning of the internal market and ensure a sustainable contribution of the financial sector to economic growth. Therefore, the OeNB will need continued access to evaluate individual special purpose bank analysis data for financial stability.

text: 3.3 The ECB welcomes that the OeNB will continue to perform statistical evaluations of supervisory analysis data regarding UCITS, real estate investment funds and severance and retirement funds. The ECB also notes that the draft law does not affect the statistical reporting obligations of special purpose banks to the OeNB on the activity of the funds they manage .

text: 4. Specific issues

text: The ECB supports legislation that clearly and explicitly assigns competences to the respective supervisory authorities. However, while the draft law specifically transfers the on-site inspection responsibility, it does not confer on the FMA the responsibility for individual bank analysis. Instead, the draft law merely suggests that certain provisions of

text: Article 79

text: (4a), including the fourth sentence empowering the OeNB to conduct off-site analysis, will no longer apply to special purpose banks. The draft law does not provide that the FMA will assume this responsibility in the future. This could imply that conducting individual bank analysis is no longer required for special purpose banks The ECB understands that this is not intended. Accordingly, for reasons of legal clarity, the ECB recommends expressly conferring on the FMA the responsibility of comprehensively evaluating special purpose banks on an ongoing basis (individual off-site bank analysis).

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

text: Done at Frankfurt am Main, 16 July 2010. [signed]

text: The President of the ECB

text: Jean-Claude TRICHET


text: Gazzetta Ufficiale della Repubblica Italiana No 125, 31.5.2010; Supplemento Ordinario No 114. 2 OJ L 189, 3.7.1998, p. 42.

text: Title I of the Decree-Law consists of several provisions the aim of which is to reduce public expenditure.

text: 5 2.1.2 As recalled in the ECB Convergence Reports and several opinions on issues concerning autonomy in staff matters, which are an aspect of NCBs’ financial independence, Member States may not impair an NCB’s ability to employ and retain the qualified staff necessary for the NCB to perform independently the tasks conferred on it by the Treaty and the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB’). 2.1.3 The ECB understands that Article 3(3) of the Decree-Law does not require the Banca d’Italia to take specific measures but invites it to consider, taking into account its own legal order, whether the purposes enshrined in the Decree-Law can be achieved without prejudicing the Banca d’Italia’s performance of its tasks under the Treaty, the Statute of the ESCB and national legislation. The Decree-Law can therefore be considered compatible with the principle of central bank independence. However, the ECB trusts that it will be consulted on any future or revised draft legislative provisions in this matter.

text: See, for example, the ECB Convergence Report 2010, p. 23; available on the ECB’s website at www.ecb.europa.eu.

text: See ECB Opinions

text: and

text: . All ECB opinions are available on the ECB’s website.

text: On this point see also ECB Opinions

text: and

text: See on this point Opinion

text: , paragraphs 2.2 and 2.3. In particular, the ECB would like to emphasise that even in cases of particular urgency a minimum one-month deadline applies according to

text: Article 3(1) of Decision 98/415/EC

text: . This does not prejudice the consulting authority’s duty under Articles 127(4) and 282(5) of the Treaty to consult the ECB on national draft legislative provisions falling within its fields of competence at an appropriate stage in the national legislative process, as provided by the second sentence of

text: Article 4 of Decision 98/415/EC

text: . This means that the consultation should take place at a point in the legislative process which affords the ECB sufficient time to examine the draft legislative provisions and to adopt its opinion in all required language versions, and which also enables the relevant national authorities to take the ECB’s opinion into consideration before the provisions are adopted.

text: Article 3(4) of Decision 98/415/EC

text: also obliges Member States to suspend the adoption process for draft legislative provisions, pending receipt of the ECB’s opinion. In the event of extreme urgency, the time limit of one month may be reduced but, pursuant to

text: Article 3(2) of Decision 98/415/EC

text: , the consulting authority must state the reasons for the urgency. The ECB reiterates its position that even cases of particular urgency do not relieve national authorities from their duty to consult the ECB and to allow themselves sufficient time to take into account the ECB’s views, in accordance with Decision

text: . On this point see also ECB Opinion

text: , paragraph 2.

text: See on this point ECB Opinions

text: , paragraph 2, last sentence and

text: , paragraph 2, last sentence.

text: Any substantive amendments to the draft law must be submitted to the ECB to allow it to adopt its opinion on the most recent text. On this point see ECB Opinion

text: , paragraph 2.3, last sentence, and ECB Opinion

text: , paragraph 2.1.

title: Opinion of the European Central Bank of 26 July 2010 on the containment of public expenditure, as regards the Banca d’Italia (CON/2010/58)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 26 July 2010 on the containment of public expenditure, as regards the Banca d’Italia (

text: ) Introduction and legal basis

text: On 15 July 2010 the European Central Bank (ECB) received a request from the Italian Ministry of Economic Affairs and Finance (hereinafter the ‘Ministry’) for an opinion on Decree-Law No 78 of 31 May 2010 on urgent measures for financial stabilisation and economic competitiveness (hereinafter the ‘Decree-Law’), in particular Article 3(3) thereof. The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third indent of

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

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the Decree-Law relates to the Banca d’Italia. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the Decree-Law

text: The Italian Government adopted the Decree-Law on 31 May 2010 with the purpose of stabilising the public finances, including by means of reducing public expenditure. The specific provision on which the ECB was consulted regards the role of the Banca d’Italia as a national central bank (NCB). Article 3(3) of the Decree-Law provides that the Banca d’Italia ‘shall take account, in relation to its own legal order, of the principles of the containment of expenditure’ laid down in Title I of the Decree-Law for the three years 2011-2013.

text: 2. General observations

text: 2.1 Compliance with the central bank independence principle 2.1.1 The ECB understands that Article 3(3) of the Decree-Law directly and specifically concerns the Banca d’Italia, thus it prevails over any other provision of Title I of the Decree-Law which might otherwise have been applicable to the Banca d’Italia.

text: 2.2 Compliance with the consultation obligation 2.2.1 In view of the late stage in the legislative process at which the ECB was consulted on an urgent basis, the ECB would like to draw attention to

text: Article 4 of Decision 98/415/EC

text: , which requires Member States to ensure that the ECB is consulted at an appropriate point in time to allow the consulting authority to take its opinion into consideration before deciding on the substance of the draft legislative provisions . In the present matter, the ECB was consulted more than one month after approval of the Decree-Law by the Italian Government, and fourteen days before the deadline for final conversion of the Decree-Law into a law by the Parliament. 2.2.2 As has been stated in other ECB opinions , in cases of particular urgency which do not allow for a normal consultation period, the consulting authority may indicate such urgency in the consultation request and ask for a shorter deadline for adoption of the ECB’s opinion. However, the ECB considers that the justification provided by the Ministry cannot be considered as a case of extreme urgency within the meaning of

text: Article 3(2) of Decision 98/415/EC

text: . The ECB understands that, pursuant to Article 77 of the Italian Constitution, the Italian Government may, in the event of

text: urgency, adopt a Decree-Law. The Decree-Law has to be converted into a law by the Parliament within sixty days from its publication. The Decree-Law enters into force immediately after publication and has the same legal effect as a law. Thus, when a Decree-Law falls within the competence of the ECB, as in this case, the ECB should be consulted in due time prior to the entry into force of the relevant provisions. More generally, internal administrative procedures should be in place to ensure that timely consultation of the ECB is foreseen whenever such consultation is mandatory , and the ECB should be consulted at an appropriate point in time in the event of relevant amendments in the course of the legislative procedure .

text: Done at Frankfurt am Main, 26 July 2010.

text: [signed]

text: The President of the ECB

text: Jean-Claude TRICHET


text: OJ L 189, 3.7.1998, p. 42. 2 [2009] Bundesgesetzblatt (BGBl.) I p. 160.

text: [2009] BGBl. I p. 813. 4 See paragraph 2.4 of Opinion

text: . All ECB opinions are available on the ECB website at www.ecb.europa.eu.

text: See paragraph 3.2 of Opinion

text: . 6 See ECB Convergence Report 2010, p. 23, and Opinions

text: and

title: Opinion of the European Central Bank of 29 July 2010 on the careers of Deutsche Bundesbank civil servants (CON/2010/59)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 29 July 2010 on the careers of Deutsche Bundesbank civil servants (

text: ) Introduction and legal basis

text: On 7 July 2010, the European Central Bank (ECB) received a request from the Deutsche Bundesbank for an opinion on a draft regulation on the careers of Deutsche Bundesbank civil servants (hereinafter the ‘draft regulation’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third indent of

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

text: 1. Purpose of the draft regulation

text: The draft regulation adopts rules on vocational training and careers for Deutsche Bundesbank civil servants that take special account of the legal relationships at the Deutsche Bundesbank. The draft regulation is necessary because the power to regulate these issues was transferred to the Federal Government (hereinafter the ‘Government’) as the result of an amendment to § 31 of the Law on the Deutsche Bundesbank made by the Law on the reorganisation and modernisation of Federal civil service law , on which the ECB gave its views in Opinion

text: . Before the abovementioned amendment to § 31 of the Law on the Deutsche Bundesbank was adopted, the Executive Board of the Deutsche Bundesbank (hereinafter the ‘Executive Board’) had the power to regulate staff and career matters autonomously, subject to approval or agreement, as applicable, by the Government. Pursuant to the amended § 31(4) and (6) of the Law on the Deutsche Bundesbank, however, the Government is authorised to regulate the legal relationships between the Deutsche Bundesbank and its civil servants, employees and workers either by adopting regulations itself, or by delegating the power to adopt regulations to the Executive Board.

text: Since adoption of the amendments to § 31 of the Law on the Deutsche Bundesbank, the Government has delegated its power to the Executive Board by means of § 1 and § 2 of the Regulation on the transfer of the Federal Government’s powers to adopt regulations pursuant to § 31 of the Law on the Deutsche Bundesbank . In this context, the ECB has been consulted by the Deutsche Bundesbank in 2009 with regard to a draft regulation on the legal relationships applying to Deutsche Bundesbank staff, which concerned a draft regulation regulating certain features of the legal relationships between the Deutsche Bundesbank and its civil servants, employees and workers, and replacing the Deutsche Bundesbank’s Staff Regulations; on 11 May 2009, the ECB adopted Opinion

text: . The Executive Board now intends to make use of the power delegated to it by the Government to adopt the second draft regulation, on career matters. In so far as the draft regulation does not intend to derogate from the more general regulation on the careers of Federal civil servants, its relevant provisions are referred to by the draft regulation. The rules of this draft regulation on banking service careers, as well as on the introduction of preparation for the upper intermediate banking service at the Deutsche Bundesbank’s university of applied sciences, derogate from the Federal Regulation on public service careers.

text: 2. General observations

text: 2.1 The ECB welcomes this consultation request by the Deutsche Bundesbank on the draft regulation. Bearing in mind the principle of central bank independence and central bank autonomy in staff matters, however, the ECB would like to take this opportunity to reiterate its concerns about the regulatory arrangements that form the basis of the draft regulation. 2.2 In Opinion

text: , the ECB expressed its concerns about the change of regulatory competence in relation to Deutsche Bundesbank staff issues. In particular, it considered that the proposed amendment would increase the Government’s discretion in this context, thereby reducing the Deutsche Bundesbank’s autonomy to take decisions concerning its staff regulations. Further, the ability of the Government to withdraw the delegation at any moment was considered a potential tool to unduly influence a national central bank (NCB) in fulfilling its tasks and thus was considered as limiting that NCB’s independence . The ECB therefore recommended including sufficient safeguards in the draft law under consideration to ensure that the Deutsche Bundesbank’s ability to carry out its tasks, particularly ESCB-related tasks, would not be affected; moreover, the ECB stated that it considered that the intention to delegate powers to the Deutsche Bundesbank as provided for in the draft law was insufficient. In Opinion

text: , these concerns were restated. 2.3 The ECB’s concerns and recommendations, as expressed in Opinions

text: and

text: , were not taken into account by the national legislator. Against this background, the

text: ECB considers it highly important to restate that an NCB’s autonomy in staff matters is a particular aspect of the principle of central bank independence under Article 130 of the Treaty . As has been recently emphasised on several occasions regarding different Member States, an NCB may not be put into a position where it has limited control or no control over its staff, or where the government of a Member State can influence its policy on staff matters . This stance taken by the ECB with respect to the autonomy of the NCBs in staff matters is well-established practice. 2.4 In this context, the ECB once again stresses that, when it comes to the adoption of regulations regarding staff matters and the direct regulation of the legal relationships between the Deutsche Bundesbank and all categories of its staff, including the careers of such staff, the amended § 31 of the Law on the Deutsche Bundesbank now authorises the Government both to delegate such power to the Executive Board and to withdraw such power from the Executive Board. Although it was already the case prior to the amendment of § 31 in 2009 that Government approval was required for the adoption of regulations by the Executive Board, the ECB considers that the amended § 31 nonetheless amounts to a withdrawal of the Deutsche Bundesbank’s authority to determine the legal relationships and career policies for all categories of its staff. This is a situation which, in comparison with the rules previously in force, is detrimental to the Deutsche Bundesbank’s independence. 2.5 The ECB therefore reiterates to the national legislator and the Government its recommendation that the Deutsche Bundesbank should be given more autonomy in staff matters, thereby providing for sufficient safeguards to ensure that it can carry out all of its tasks independently, in particular its ESCB-related tasks.

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

text: Done at Frankfurt am Main, 29 July 2010. [signed]

text: The Vice-President of the ECB

text: Vítor CONSTÂNCIO


text: As decided at a meeting of the Economic and Financial Affairs Council on 13 July 2010. 3 See Opinions

text: and

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

title: Opinion of the European Central Bank of 2 August 2010 on the minimum reserves framework (CON/2010/60)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 2 August 2010 on the minimum reserves framework (

text: ) Introduction and legal basis

text: On 23 July 2010 the European Central Bank (ECB) received a request from Eesti Pank for an opinion on the draft Governor decrees amending the procedure for calculating and complying with the reserve requirement and on the complementary report on the reserve requirement calculation (hereinafter the ‘draft decrees’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and

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 decrees relates to 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 decrees

text: The purpose of the draft decrees is to smooth the transition from the minimum reserve framework in Estonia to the Eurosystem minimum reserve system in relation to the introduction of the euro in Estonia on 1 January 2011 . First, the draft decrees provide for a gradual decrease in the minimum reserve requirement at 11% on 1 September 2010 and 7% on 1 November 2010. Second, reporting on the reserve requirement calculation is extended to meet the reporting requirements based on the Eurosystem minimum reserve framework.

text: 2. General observations

text: 2.1 The ECB has addressed Estonia’s minimum reserve system on two occasions . In both cases, it noted that differences between the Estonian and the Eurosystem’s minimum reserve systems would

text: need to be eliminated on adoption of the euro. Member States that have not adopted the euro retain their powers in the field of monetary policy, for which they remain responsible. At the same time, it is beneficial for them to achieve consistency with the Eurosystem operational framework for monetary policy in due time so that credit institutions in those Member States can become acquainted with the requirements that will apply to them when the euro is introduced: in the current context the single reserve ratio of 2%. 2.2 Estonia will be subject from 1 January 2011 to the following minimum reserves framework: 1) Article 19 of the Statute of the European System of Central Banks and of the European Central Bank; 2)

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

text: concerning the application of minimum reserves by the European Central Bank ; 3) Regulation ECB/2003/9; and 4) in relation to the definition and calculation of the reserve base, Regulation ECB/2008/32 of 19 December 2008 concerning the balance sheet of the monetary financial institutions sector (recast) .

text: Article 11

text: and Annex III to Regulation ECB/2008/32 require the use of the statistical information by credit institutions reported under this Regulation for the purpose of minimum reserves. Special rules set out in this Regulation prevail over Regulation ECB/2003/9 and concern small credit institutions, group reporting and reserve requirements in the case of mergers. 2.3 The aim of the transitional regime foreseen by the draft decrees is to contribute to the efficient functioning of the financial markets and a smooth adjustment of liquidity management. In this respect, it is helpful to ensure an adequate notice period before the application of the measures to allow credit institutions to adjust to the changes introduced by the draft decrees. It must also be stressed that these transitional measures will only apply until 31 December 2010 following which Estonia will adopt the euro. In this regard, it is noted that in the interests of legal clarity, the draft decrees should specify their expiry dates. 2.4 It is also noted that the Decree on the complementary report could be clearer in setting requirements only for transitional reporting. It should also avoid any risk of confusion that could arise from

text: Article 3

text: which concerns the minimum reserve ratio based on Regulation ECB/2003/9 of 12 September 2003 on the application of minimum reserves . The current wording of this Article may be read as implying that the Eurosystem minimum reserve ratio applies on entry into force of these draft decrees.

text: This opinion will be published on the ECB’s website. Done at Frankfurt am Main, 2 August 2010. [signed]

text: The President of the ECB

text: Jean-Claude TRICHET