title: Opinion of the European Central Bank of 20 January 2025 on national cybersecurity system (CON/2025/2)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 20 January 2025 on national cybersecurity system (

text: ) Introduction and legal basis

text: On 18 November 2024 the European Central Bank (ECB) received a request from the Polish Ministry of Digital Affairs for an opinion on a draft law amending the Law on the national cybersecurity system and certain other laws (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 Article 2(1), third and fifth indents, of

text: Council Decision 98/415/EC

text: , as the draft law relates to Narodowy Bank Polski (NBP) and to payment and settlement systems. In accordance with

text: Article 17.5

text: 1. Purpose of the draft law

text: 1.1 The draft law amends the Law on the national cybersecurity system currently in force, which implemented

text: Directive (EU) 2016/1148

text: of the European Parliament and of the Council . The main purpose of the draft law is to improve cybersecurity in Poland by strengthening and enhancing the existing measures and procedures to bolster the security of network and information systems of essential and important entities, as set out in

text: Directive (EU) 2022/2555

text: of the European Parliament and of the Council , which, inter alia, repealed

text: Directive (EU) 2016/1148

text: . 1.2 More specifically, the draft law significantly expands the scope of the national cybersecurity system by including additional sectors, such as wastewaters, the management of information and communication technology (ICT), space, postal services, and the production and distribution of chemicals and food. It strengthens the roles and responsibilities of national authorities responsible for cybersecurity by granting them expanded supervisory powers. Stricter obligations are imposed

text: 1 Ustawa z dnia z dnia 5 lipca 2018 r. o krajowym systemie cyberbezpieczeństwa (consolidated text: Dz. U. z 2024 r. poz. 1077 i 1222).

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

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

text: Directive (EU) 2016/1148

text: of the European Parliament and of the Council of 6 July 2016 concerning measures for a high common level of security of network and information systems across the Union (OJ L 194, 19.7.2016, p. 1).

text: Directive (EU) 2022/2555

text: of the European Parliament and of the Council of 14 December 2022 on measures for a high common level of cybersecurity across the Union, amending

text: Regulation (EU) No 910/2014

text: and

text: Directive (EU) 2018/1972

text: , and repealing

text: Directive (EU) 2016/1148

text: (NIS 2 Directive) (OJ L 333, 27.12.2022, p. 80). on essential and important entities, which categories, in line with

text: Directive (EU) 2022/2555

text: , replace operators of essential services and providers of digital services. According to the explanatory memorandum accompanying the draft law, the rapidly changing international landscape and the need to provide services to an increasing number of new clients underscore the importance of strengthening cybersecurity measures. This is reflected in the statistics reported by one of the Computer Security Incident Response Teams (CSIRT): over 39 000 cybersecurity incidents were recorded in 2022, and more than 75 000 in 2023. 1.3 The draft law also introduces a National Incident Response Plan to address large-scale cybersecurity 5 6 incidents and crises , and implements the 5G Toolbox to ensure 5G network security and harmonise cybersecurity policies across Member States. 1.4 Subject to certain exceptions, the draft law applies to NBP, which will qualify as an essential entity under the new framework. Provisions concerning the withdrawal of ICT products, services and processes stemming from high-risk suppliers do not apply to NBP. In particular, whilst the Minister for Digital Affairs is empowered to identify high-risk suppliers through formal decisions and to issue security orders specifying actions to mitigate the effects of ongoing critical incidents, these powers are restricted in relation to NBP. Instead, the Minister of Digital Affairs will notify the Governor of NBP about any decisions designating a supplier as high-risk. It is then the Governor’s prerogative to decide whether to withdraw the ICT products, services, or processes identified in the decision . According to the explanatory memorandum accompanying the draft law, these exclusions uphold NBP’s constitutional independence and operational autonomy within the national cybersecurity framework. 1.5 The draft law imposes obligations on essential and important entities to implement appropriate and proportionate technical, operational, and organisational measures to mitigate risks and protect networks and information systems , in line with

text: Directive (EU) 2022/2555

text: . At the same time, it strengthens the supervisory powers of the authorities responsible for cybersecurity, allowing them to ensure compliance through measures such as issuing warnings, appointing monitoring officers, and mandating information system security assessments or cybersecurity audits . The draft law introduces new financial penalties for non-compliance with the obligations imposed by it . In addition, the draft law anticipates that a financial penalty may also be imposed on persons in charge of essential entities for failure to ensure compliance with cybersecurity-related tasks . Supervision over the application of the provisions of the draft law is entrusted to the authorities responsible for

text: 6 Cybersecurity of 5G networks: EU Toolbox of risk mitigating measures, CG Publication 01/2020. cybersecurity, which are also empowered to impose the abovementioned penalties. For public entities, such as NBP , the competent authority responsible for cybersecurity is the Minister for Digital Affairs . For the banking sector and financial market infrastructures, the competent authority is Komisja Nadzoru Finansowego (KNF, Polish Financial Supervision Authority). 1.6 The draft law establishes additional sectoral cyber security incident response teams (CSIRTs), which are tasked with supporting essential and important entities in responding to cybersecurity incidents, ensuring specialised assistance tailored to the unique needs of each sector. The draft law also strengthens national-level CSIRTs, enhancing their capacity to address a broader range of cybersecurity challenges and support an increasing number of entities. Essential and important entities are required to report incidents through an IT system managed by the Minister for Digital Affairs, directing notifications to the relevant sectoral or national-level CSIRTs . Additionally, CSIRTs are authorised to conduct security assessments of information systems used by entities within the national cybersecurity system. However, security assessments of NBP information systems may only be carried out with NBP’s explicit consent . 1.7 The role of the Government Plenipotentiary for Cybersecurity is also reinforced, granting him/her the authority to issue recommendations aimed at improving the cybersecurity of information systems within the national framework .

text: 2. General observations

text: Directive (EU) 2022/2555

text: is a minimum-harmonisation directive. Article 5 of that Directive provides that it does not preclude Member States from adopting or maintaining provisions ensuring a higher level of cybersecurity, provided that such provisions are consistent with Member States’ obligations laid down in Union law. The draft law goes beyond

text: Directive (EU) 2022/2555

text: , which excludes central banks (along with parliaments and the judiciary) from the definition of a ‘public administration entity’ . This would have the consequence that the Polish component of Eurosystem-owned and operated financial market infrastructures, such as TARGET, would not benefit from the exclusion of central banks from the application of

text: Directive (EU) 2022/2555

text: . 2.2 The ECB refers to its previous stance taken in the context of national measures implementing

text: Directive (EU) 2016/1148

text: , whereby the ECB supported the aim of

text: Directive (EU) 2016/1148

text: of ensuring a high common level of network and information security across the Union and of achieving a consistency of approach in this field across business sectors and Member States . The ECB

text: 12 See Appendix 1 of the draft law.

text: 17 See

text: Article 6

text: , point (35), of

text: Directive (EU) 2022/2555

text: 18 See paragraph 2.1 of Opinion

text: and paragraph 2.1 of Opinion

text: . All ECB opinions are published on EUR-Lex.

text: 19 See paragraph 2.1 of Opinion

text: of the European Central Bank of 25 July 2014 on a proposal for a directive of the European Parliament and of the Council concerning measures to ensure a high common level of network and information security across the Union (OJ C 352, 7.10.2014, p. 4), paragraph 2.1 of Opinion

text: , paragraph 2.2 of Opinion

text: , paragraph 2.2 of Opinion

text: and paragraph 2.2 of Opinion

text: . strongly supports the objectives of

text: Directive (EU) 2022/2555

text: to increase the level of cyber resilience across all relevant sectors, reduce inconsistencies across the internal market and improve the level of situational awareness and the collective capability to prepare and respond by ensuring efficient cooperation in the Union . As already noted by the ECB, it is important to ensure that the internal market is a safe place to do business and that all Member States have a certain minimum level of preparedness for cybersecurity incidents .

text: Directive (EU) 2022/2555

text: produces benefits from synergies and economies of scale. In particular, the dedicated national cyber security authorities have the potential to become repositories of considerable resources and expertise which the European System of Central Banks (ESCB) may draw upon. Concurrently, it should be ensured that the provisions of the national legislation transposing

text: Directive (EU) 2022/2555

text: are interpreted and applied consistently with the ESCB’s competences and respect the principle of central bank independence enshrined in Article 130 of the Treaty. Indeed, NBP’s independent exercise of its tasks and responsibilities, such as its tasks relating to the smooth operation of payment and settlement systems, should not be affected. Central bank independence does not have the consequence of separating the Union’s central banks entirely from the Union and exempting them from every rule of Union law . This also applies to national legislative measures capable of applying to national central banks (NCBs) in the ESCB. Furthermore, the exercise of the powers of the authorities responsible for cybersecurity, which in the case of NBP, would be the Minister for Digital Affairs, is subject to various specific rules, guarantees and limitations, whilst the purpose for which they may be used is clearly delineated. The ECB welcomes the exclusion of provisions concerning the withdrawal of ICT products, services, and processes in relation to NBP. This exclusion upholds NBP’s operational autonomy within the national cybersecurity framework and reflects the importance of maintaining the specific safeguards applicable to the independence and operational integrity of central banks. The fact that the information system security assessment of NBP can be carried out only after obtaining the consent of NBP also upholds NBP’s independence . In addition, certain provisions of the draft law provide for specifically listed powers of the responsible authority to be exercised with a view to achieving the objectives of the draft law . Therefore, national measures implementing

text: Directive (EU) 2022/2555

text: that extend to NCBs, such as the draft law, are not per se precluded from applying to NCBs.

text: 3. Impact of the draft law on TARGET and on payment systems overseen by the ECB, NBP and the ESCB

text: 3.1 In accordance with

text: Article 127(2)

text: , fourth indent, of the Treaty, promotion of the smooth operation of payment systems is one of the core tasks of the ESCB.

text: Article 139(2)

text: , point (c), of the Treaty stipulates, inter alia, that the basic tasks of the ESCB as listed in Article 127(2) of the Treaty, including

text: 20 See Opinion

text: of the European Central Bank of 11 April 2022 on the Proposal for a Directive of the European Parliament and of the Council on measures for a high common level of cybersecurity across the Union, repealing

text: Directive (EU) 2016/1148

text: (OJ C 233, 16.6.2022, p. 22), General observations.

text: 21 See paragraph 2.2 of Opinion

text: 22 See judgment of the Court of Justice of 10 July 2003, Commission v ECB,

text: , EU:C:2003:395, paragraphs 134 to 136. promoting the smooth operation of payment systems, shall not apply to Member States with a derogation, such as Poland. However, the ability of an NCB of a Member State with a derogation, including NBP, to independently achieve its primary objective of maintaining price stability, as required under Articles 127 and 130 of the Treaty, would be jeopardised if that NCB’s basic payment system tasks are not subject to central bank independence requirements . Thus, the ESCB as a whole has a particular interest in an enhanced level of network information security in respect of payment systems, as it fosters confidence and the smooth functioning of the economy . 3.2 Systemically important payment systems (SIPS) such as, for example, TARGET, are identified pursuant to ECB decisions and are thus overseen by the ECB. Among SIPS, TARGET plays a distinct role, as it is the large value payment system for the euro, which is owned and operated by the Eurosystem and which serves as the channel for the implementation of the euro area’s monetary policy. TARGET is subject to harmonised legal conditions defined in Guideline

text: (EU) 2022/912

text: of the European Central Bank (ECB/2022/8) . NBP, acting as a connected NCB, facilitates Polish participation in TARGET . The Polish component of TARGET, TARGET-NBP, for which NBP acts as the operator, would appear to fall within the scope of the draft law, as the draft law applies to NBP and, except for the provisions concerning the withdrawal of ICT products, services, and processes which do not apply to NBP, no exemption with regard to infrastructures or payment systems operated by NBP is provided. 3.3 Further, in addition, to its role as a connected NCB facilitating Poland’s participation in TARGET, NBP exercises oversight competences in respect of the payment systems’ infrastructures under Polish law. The main objectives of this oversight are to ensure the smooth and safe functioning of the payment system and verify compliance with legal provisions governing the operation of supervised systems, schemes, and services. These objectives are integral to fulfilling NBP's statutory tasks, such as organising monetary settlements and contributing to the stability of the national financial system . Specifically, NBP is responsible for monitoring the safety and operational reliability of key payment systems, such as SORBNET2 and TARGET-NBP, as well as several retail payment systems, payment schemes and clearing and settlement systems. The Governor of NBP exercises

text: 25 See paragraph 2.8 of Opinion

text: 26 See paragraph 3.1 of Opinion

text: and paragraph 3.1 of Opinion

text: 27 Regulation of the European Central Bank

text: (EU) No 795/2014

text: of 3 July 2014 on oversight requirements for systemically important payment systems (ECB/2014/28) (OJ L 217, 23.7.2014, p. 16).

text: 28 Decision ECB/2014/35 of the European Central Bank of 13 August 2014 on the identification of TARGET2 as a systemically important payment system pursuant to

text: Regulation (EU) No 795/2014

text: on oversight requirements for systemically important payment systems (OJ L 245, 20.8.2014, p. 5); Decision ECB/2014/36 of the European Central Bank of 13 August 2014 on the identification of EURO1 AND STEP2-T as systemically important payment systems pursuant to

text: Regulation (EU) No 795/2014

text: on oversight requirements for systemically important payment systems, available on EUR-Lex.

text: 29 Guideline

text: (EU) 2022/912

text: of the European Central Bank of 24 February 2022 on a new-generation Trans-European Automated Real-time Gross Settlement Express Transfer system (TARGET) and repealing Guideline ECB/2012/27(ECB/2022/8) (OJ L 163, 17.6.2022, p. 84); see also paragraph 3.5 of Opinion

text: and paragraph 3.5 of Opinion

text: 30 See Article 4 of Guideline

text: (EU) 2022/912

text: (ECB/2022/8). oversight through mechanisms such as granting authorisations for the operation and modification of payment systems and schemes, issuing binding recommendations, and conducting assessments to monitor compliance and operational risks. Specific activities include collecting and analysing data, investigating incidents, and collaborating with entities managing payment systems and schemes. In performing its oversight duties, NBP also assesses payment systems for compliance with cybersecurity standards, aiming to enhance their resilience and operational security. This includes evaluating large-value payment systems for their compliance with the Cyber resilience oversight expectations (CROE) of December 2018 issued by the Eurosystem oversight function . In addition, the Governor of NBP may issue decisions to address deficiencies, such as suspending or revoking authorisations if necessary. Furthermore, NBP cooperates with other supervisory authorities, including KNF, to ensure coordinated oversight. While its primary focus is on safeguarding payment system operations within Poland, NBP also plays a pivotal role in aligning its oversight practices with ESCB standards . The draft law should aim to respect NBP’s oversight competences over the payment systems infrastructure as established under Polish law. Against this background, the ECB would welcome the establishment under the draft law of additional cooperation arrangements between the cybersecurity implementing bodies and NBP. The ECB suggests that, in the context of such cooperation, effective information-sharing and consultation mechanisms are put in place in order to prevent situations which could undermine NBP’s ability to perform its ESCB tasks independently or to preserve the confidentiality of ESCB information. In particular, NBP would need to be informed about actual and potential cyber incidents, as well as planned or adopted measures which may affect the TARGET-NBP component in a timely and efficient manner in order to enable NBP to fulfil its obligations under the Treaty and the Statute of the ESCB. Such arrangements would also ensure that the cybersecurity implementing bodies and NBP exchange information and consult on actual and potential cyber incidents or threats in the financial sector’s systems, and in particular infrastructures operated by the Eurosystem, and on planned and adopted measures, in an effective and timely manner without the need to resort to the unilateral enforcement measures envisaged under the draft law. 3.4 In addition, the ECB stands ready to cooperate with cybersecurity implementing bodies, in particular the Polish Minister for Digital Affairs, with a view to ensuring that best practices with regard to

text: Directive (EU) 2022/2555

text: are established and followed . The ECB also suggests that the respective cooperation and information-sharing arrangements are established between the Minister for Digital

text: 32 See ‘Cyber resilience oversight expectations for financial market infrastructures’ (December 2018), approved by the ECB’s Governing Council, available on the ECB’s website at www.ecb.europa.eu.

text: 33 See the Polish Payment System Oversight Report for 2022, which references the applicable national legal framework: Act of 24 August 2001 on Settlement Finality in Payment and Securities Settlement Systems and the Rules of Oversight of these Systems; Act of 29 July 2005 on Trading in Financial Instruments; Act of 19 August 2011 on Payment Services. Available on NBP’s website at www.nbp.pl.

text: 34 See paragraph 6.3 of Opinion

text: and paragraph 2.4 of Opinion

text: . Affairs and the ECB, through NBP, to ensure that the overall functioning of TARGET is not undermined. This opinion will be published on EUR-Lex. Done at Frankfurt am Main, 20 January 2025. [signed] The President of the ECB Christine LAGARDE


publisher: Europeiska centralbanken

sprak: en

title: Opinion of the European Central Bank of 4 February 2025 on flood insurance (CON/2025/3)

serie: con

text: OPINION OF THE EUROPEAN CENTRAL BANK of 4 February 2025 on flood insurance (

text: ) Introduction and legal basis

type: rubrik

text: On 10 October 2024 the European Central Bank (ECB) received a request from the Chair of the Oireachtas (Irish National Parliament) Joint Committee on Finance, Public Expenditure and Reform and Taoiseach (Irish Prime Minister) for an opinion on the Flood Insurance Bill 2021 (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 Article 2(1), third and sixth indents, of

text: Council Decision 98/415/EC

text: , as the draft law relates to the Central Bank of Ireland (CBI), rules applicable to financial institutions insofar as they materially influence the stability of financial institutions and markets, and the ECB’s tasks concerning the prudential supervision of credit institutions pursuant to Article 127(6) of the Treaty. In accordance with

text: Article 17.5

text: , first sentence, 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 contains provisions intended to achieve fairness in the market for property and flood insurance in Ireland by prohibiting insurers from discriminating between certain persons when offering property insurance policies and by prohibiting insurers from unreasonably refusing to offer an insurance policy. To achieve this purpose, the draft law places certain obligations on insurance undertakings carrying out business in Ireland (hereinafter ‘insurers’) and confers certain powers upon the CBI. 1.2 The draft law prohibits insurers from discriminating when offering property insurance policies between: (a) persons with an insurable interest in a property located in an area designated as being at low or at medium risk of flooding (hereinafter ‘affected persons’); and (b) persons with an insurable interest in a property located in an area which is not designated as being at low, at medium or at high risk of flooding (hereinafter ‘unaffected persons’) . In this regard, the draft law employs the risk levels within the meaning of Directive

text: of the European Parliament and of the Council . Insurers are prohibited from discriminating as regards the following matters. First, insurers cannot discriminate in their decision whether to offer an insurance policy to an affected or an unaffected person. Second,

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

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

text: 2 Section 3 of the draft law.

text: 3 Sections 1 and 2 of the draft law and

text: Article 6 of Directive 2007/60/EC

text: of the European Parliament and of the Council of 23 October 2007 on the assessment and management of flood risks (OJ L 288, 6.11.2007, p. 27). insurers cannot discriminate as regards the price at which a policy is offered, unless the price is reasonably justified by the current risk profile of the property. In other words, the prohibition on discrimination does not appear to prevent insurers from calculating a higher premium for affected persons than for unaffected persons, subject to reasonable justification based on the current risk profile of the property. Finally, insurers cannot discriminate as regards other terms on which the insurance is offered . 1.3 In addition, the draft law prohibits insurers from unreasonably refusing to offer an insurance policy to affected persons or offering a policy at an unreasonable price or on unreasonable terms to them . 1.4 The draft law confers upon the CBI the power to carry out an assessment of the manner in which an insurer deals with applications for insurance by affected persons . This assessment may include the extent to which the insurer in question acts in compliance with the draft law’s prohibition on discrimination and the duty not to act unreasonably in its dealings with an affected person. The draft law does not set any further parameters for such an assessment or the circumstances in which the CBI might carry out such an assessment. 1.5 Where the CBI has performed such an assessment, the draft law confers upon the CBI the powers to issue a direction to the insurer concerned to take such steps or to adopt or cease such practices as it considers appropriate and necessary to ensure compliance by that insurer with its obligations under the draft law . With regard to enforcement, the draft law confers powers on the CBI to enforce such directions on insurers that fail to comply with them by applying to the High Court for an enforcement order . When granting the enforcement order, the High Court must also impose a fine on the insurer unless the High Court determines that it would be unjust to impose such a fine. In such a case, it may impose a lesser fine or dispense with the requirement to impose a fine .

text: 2. General observations

text: This opinion assesses the provisions of the draft law that impact: (a) the stability of the financial system, (b) the prudential supervision of credit institutions, and (c) the tasks of the CBI as a national central bank (NCB) and a member of the Eurosystem and the European System of Central Banks (ESCB). This opinion does not comment on the elements of the draft law that pertain to the prudential supervision of insurance undertakings, as these matters fall outside the ECB’s fields of competence . Moreover, this opinion does not address whether the draft law is compatible with Directive

text: 4 Section 3 of the draft law.

text: 5 Section 4 of the draft law.

text: 6 Section 8 of the draft law.

text: 7 Section 9 of the draft law.

text: 11 Directive

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

text: 3. Impact of the draft law on financial stability

text: 3.1 The draft law is relevant to financial stability, insofar as it relates to the climate insurance protection gap. The climate insurance protection gap refers to the uninsured portion of economic losses caused by climate-related natural disasters and this gap is expected to widen in the light of the increasing frequency and severity of such events due to climate change . In 2023, the ECB, in conjunction with the European Insurance and Occupational Pensions Authority (EIOPA), released a joint discussion paper analysing the climate insurance protection gap throughout EU Member States, whilst also identifying policy options to tackle the gap . This joint report also set out the economic relevance of the gap, including its implications for financial stability, and noted the role that private insurance may play in addressing the impact of climate-related natural disasters. More recently, the ECB and EIOPA have released a follow-up report, which analyses 12 existing national insurance schemes and outlines the possible role that European solutions may play in reducing the impact of natural catastrophes . 3.2 The joint ECB-EIOPA work on this topic outlines that climate-related natural disasters can be a source of systemic risk for financial institutions and financial markets through two main channels. First, physical damage to assets such as buildings can lead to reduced collateral values, including mortgage collateral. It can also lead to substantial repricing of loans and securities for financial institutions exposed to high-risk areas. Second, physical damage can lead to supply chain disruptions, which can, in turn, cause large losses for the real economy and on financial institutions’ balance sheets. In both cases, a high concentration of key economic activities in high-risk areas can amplify such losses, giving local events wider significance. This can result in a lower provision of credit in high-risk areas and to lower income borrowers, especially from less well-capitalised or less profitable banks . 3.3 Catastrophe insurance can increase banks’ resilience to such shocks by mutualising and transferring collateral and property losses to (re)insurance companies, which are better equipped to manage their climate-related exposures. By accelerating reconstruction, insurance can also help to reduce losses from supply chain disruptions. Finally, a lack of insurance may prevent the qualification of some property as eligible collateral, potentially increasing the exposure of banks to credit risk . 3.4 Catastrophe insurance is also a key tool to mitigate macroeconomic losses following extreme climate-related events such as floods and fires, as it provides prompt funding for reconstruction and should incentivise risk reduction and adaptation . Insurance payouts reduce uncertainty and support

text: 12 See European Central Bank and European Insurance and Occupational Pensions Authority, Policy options to reduce the climate insurance protection gap: Discussion Paper, April 2023 (the ‘2023 joint ECB-EIOPA paper’).

text: 13 See generally 2023 joint ECB-EIOPA paper.

text: 14 Consorcio de Compensación de Seguros (CCS; Spain), Caisse Centrale de Réassurance (CCR; France), Norwegian Natural Perils Pool (NNPP; Norway), Belgian Natural Catastrophe Pool (CANARA; Belgium), Natural Disaster Insurance Pool (PAID, Romania), Natural catastrophe insurance of Iceland (NCI, Iceland), Danish Storm (DSC; Denmark), FloodRe (United Kingdom), Japan Earthquake Reinsurance (JER; Japan), National Flood Insurance Program (NFIP; United States), Australian Reinsurance Pool Corporation (ARPC; Australia), and Swiss National Hazard Pool (SNHP; Switzerland).

text: 15 See European Central Bank and European Insurance and Occupational Pensions Authority, Towards a European system for natural catastrophe risk management, December 2024 (the ‘2024 joint ECB-EIOPA paper’).

text: 16 See 2023 joint ECB-EIOPA paper, p. 12.

text: 17 See 2023 joint ECB-EIOPA paper, p. 12.

text: 18 See 2023 joint ECB-EIOPA paper, p. 2. aggregate demand and investment for reconstruction, enabling economies to recover faster and limiting the period of lower economic output. By contrast, without insurance, households and firms must finance post-disaster recovery mainly with savings, credit and/or uncertain government relief, which is likely to be much less efficient. In addition, low insurance coverage may increase the burden on governments, both in terms of macroeconomic risks and in terms of fiscal spending to cover uninsured damage. 3.5 The wider advantages of catastrophe insurance for the financial system, the economy and governments’ fiscal balances are not reflected in individual insurance contracts, which leads to market failure and insurance coverage that may be lower than is socially optimal . The positive externalities of insurance, such as a faster recovery following a disaster, less burden on fiscal budgets and reduced costs through better risk management, benefit not only policyholders but also the wider economy. However, individual insurers and consumers do not typically take these broader economic benefits of insurance into account, which leads to a market failure that exacerbates the insurance protection gap. Furthermore, the expectation that governments will ultimately cover natural catastrophe losses can encourage underinsurance, a moral hazard issue that further reduces the overall effects of insurance. 3.6 From this perspective, it might be beneficial to develop solutions that help address this market failure and reduce the insurance protection gap. However, to be effective, such solutions should be comprehensive and well designed. In particular, the joint ECB-EIOPA work on this topic suggests that such solutions require a multi-layered approach involving both the private and public sectors, while also considering the intricate interaction between insurance supply and demand . 3.7 In this respect, the ECB welcomes the objective of the draft law, to achieve fairness in the market for property and flood insurance. However, the design of the draft law could benefit from certain improvements. This is because the draft law, as it currently stands, may not effectively achieve its stated objective. First, given that the draft law prohibits insurers from discriminating between affected and unaffected persons as regards whether an insurance policy is offered, and as regards the price and terms on which an insurance policy is offered, it negatively impacts the ‘risk signalling role’ of insurance, which might in turn lead to less risk reduction and adaptation as well as lower risk awareness. Second, it may widen rather than reduce the flood insurance protection gap in Ireland over time. Finally, and most importantly, it is not sufficiently comprehensive: it narrowly targets the private sector and focuses only on its supply side. 3.8 Regarding the first point, the ECB would recommend that the draft law is carefully designed to ensure that the conditions under which insurance is offered encourage adaptation and reduce vulnerability to climate-related catastrophes over time. In that respect, the draft law should not undermine the role of insurance in providing incentives for risk reduction and adaptation by, for example, promoting risk

text: 19 See 2024 joint ECB-EIOPA paper, p. 12.

text: 20 See generally the 2023 and 2024 joint ECB-EIOPA papers.

text: 21 Adaptation is a key component of the long-term global response to climate change. Climate change adaptation refers to enhancing adaptive capacity, strengthening resilience and reducing vulnerability to climate change. See

text: Article 5 of Regulation (EU) 2021/1119

text: of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations

text: (EC) No 401/2009

text: and

text: (EU) 2018/1999

text: (‘European Climate Law’) (OJ L 243, 9.7.2021, p. 1). awareness and providing risk-based incentives linked to premiums. In particular, impact underwriting is an underwriting and pricing strategy aimed at incentivising the policyholder to implement ex ante (structural) measures and reduce exposure to climate-related hazards . Both (a) the price of insurance and (b) the contractual terms and conditions under which insurance is offered are strong signals of the level of risk. Therefore, risk-based incentives linked to premiums and other contractual terms help enhance the awareness of policyholders of current vulnerabilities and can provide incentives to implement adaptation and mitigation measures that minimise physical risk exposure to climate-related hazards . For example, premium reductions could be associated with properties meeting certain standards with respect to flood-proofing in flood-prone areas. The cost of implementing the risk reduction measure could be compensated by a lower premium. From this perspective, the provisions of the draft law, particularly those prohibiting discriminatory treatment by insurers as between affected persons and unaffected persons, be it in relation to price or other contractual terms, may negatively impact the role that insurers play in signalling climate risk and incentivising risk reduction and adaptation. 3.9 As to the second point, the increasing frequency and severity of climate-related catastrophe events such as floods is likely to trigger repricing of insurance contracts or even prompt insurers to cease to offer cover in certain areas . If insurers are restricted from doing so, this may lead them to withdraw from certain markets altogether, thereby possibly increasing rather than reducing the climate insurance protection gap . Thus, the provisions of the draft law prohibiting discriminatory treatment between affected and unaffected persons might lead to a situation where insurers weigh the costs of providing flood insurance to a broad range of individuals in Ireland against the insurers’ benefits from being in the Irish flood insurance market. 3.10 This may happen where the internal risk assessments of certain insurers do not correspond to the risk levels of the flood hazard maps utilised by the draft law in assessing discrimination. For example, an insurer’s internal risk assessment might designate a specific geographical area as being high risk (or uninsurable), whereas the flood hazard maps may designate the same geographical area as medium risk. The non-discrimination provisions in the draft law then imply that the insurer has only two options: (a) offer insurance to ‘affected’ and ‘unaffected’ persons including those that – according to its own assessment – are at high risk (or uninsurable) or (b) withdraw from the (Irish flood insurance) market altogether. Since climate change brings more uncertainty and makes flood risk more unpredictable, diverging risk assessments between private financial institutions and public authorities cannot be excluded. 3.11 The climate insurance protection gap may also be widened by other inadvertent effects such as higher premiums or lower competition. If the draft law mandates insurers to treat unaffected and affected persons similarly in terms of flood protection insurance, this could lead to insurers offering higher cost premiums to both affected and unaffected persons. Higher insurance premiums could

text: 22 See 2023 joint ECB-EIOPA paper, p. 18.

text: 23 See 2023 joint ECB-EIOPA paper, p. 18 and p. 33.

text: 24 See 2024 joint ECB-EIOPA paper, p. 9.

text: 25 Some national insurance schemes include elements that allow for a certain degree of solidarity and crosssubsidisation among policyholders, but these elements are often complemented by other measures. See 2024 joint ECB-EIOPA paper, in particular Section 2. then lower insurance demand, especially from unaffected persons. This could in turn lead to adverse selection bias and the concentration of insurers’ portfolios on high-risk contracts, which could trigger further repricing of the contracts. Similarly, the retreat of some insurers from the Irish flood insurance market, or the potential unattractiveness of the market for new entrants, could lead to less market competition and thus to generally higher prices, which could in turn further lower insurance demand, in particular from unaffected persons. 3.12 As to the final point, all these examples illustrate that solutions that aim to address the insurance protection gap should be comprehensive and carefully designed. Overall, they should consider both the demand and supply sides of private insurance and involve, as appropriate, both the private and public sector. In addition to comprehensive solutions at national level, EU-level solutions could also be considered, notably in view of the potentially larger risk pooling and risk diversification benefits at EU compared to national level. 3.13 For instance, insurers’ reluctance to offer cover in certain areas may be justified where risks become excessively high or unpredictable . In such cases, insurance cannot make up for inadequate climate adaptation, spatial planning and (re)building conventions . 3.14 More generally, Member States should not only aim at addressing the insurance protection gap but also develop their fiscal frameworks to identify and account for the costs of natural disasters, adaptation and mitigation in order to make informed assessments of trade-offs . This requires better information and data and improved governance and management of climate risks. Pro-active measures on the vulnerability of buildings, planning rules that determine the location of exposures and climate change-resilient public investments are also likely to be important elements of a resilient society.

text: 4. Impact of the draft law on the prudential supervision of credit institutions

text: 4.1 The ECB expects credit institutions under its prudential supervision to consider climate-related and environmental risks at all relevant stages of the credit-granting process and to monitor these risks in their portfolios . For lending secured by immovable properties, in particular for mortgage lending, catastrophe insurance, such as flood insurance, plays an important role in mitigating credit risk, especially from the context of physical risk. Consequently, credit institutions should consider insurance availability when assessing the potential financial impact of physical risk on collateral taken for risk management purposes .

text: 26 See 2024 joint ECB-EIOPA paper, p. 9.

text: 27 See also Elderson F. (2024), ‘“Know thyself’ – avoiding policy mistakes in light of the prevailing climate science’, keynote speech at the Delphi Economic Forum IX, Delphi, April.

text: 28 See 2023 joint ECB-EIOPA paper, p. 25. See also

text: Article 9(2)

text: , point (d), and

text: Article 14(3) of Council Directive 2011/85/EU of 8 November 2011

text: on requirements for budgetary frameworks of the Member States (OJ L 306, 23.11.2011, p. 41).

text: 29 European Central Bank, Guide on climate-related and environmental risks, November 2020.

text: 30 See Supervision Newsletter, ‘Climate-related data for the real estate sector: challenges and solutions’, 13 November 2024. 4.2 Credit institutions are, inter alia, required to consider environmental, social and governance risks, including physical risks arising from flooding, in their collateral valuations . Catastrophe insurance, such as flood insurance, plays a central role in this regard. Notably, Article 208(5) of the Capital Requirements Regulation requires that immovable property taken as credit protection is adequately insured against the risk of damage. Furthermore, credit institutions are required to have in place procedures to monitor the adequacy of insurance. As described in the previous section, the draft law may negatively affect insurance coverage in Ireland, and this may in turn negatively affect the ability of credit institutions to recognise immovable properties as eligible collateral in cases where insurance coverage cannot be deemed as adequate. 4.3 The ECB further wishes to highlight that credit institutions can also mitigate the impact of physical risks from flooding by financing improvements to the resilience, protection and adaptation to physical risks of buildings or housing units. Where such modifications to immovable property unequivocally increase its value, credit institutions can recognise such increases in their valuation of immovable property . As outlined above, the draft law may negatively impact the role that insurers play in incentivising such risk reduction and adaptation measures, thereby undermining incentives for such modifications.

text: 5. Impact of the draft law on the Central Bank of Ireland

text: 5.1 The ECB observes that it adopted an opinion in 2017 on a substantially identical draft Irish law . Since then the Court of Justice of the European Union has given a ruling on the interpretation of Union law having implications for the ECB’s assessment of the conferral of new tasks on NCBs in the ESCB, including the CBI . 5.2 In accordance with Article 14.4 of the Statute of the European System of Central Banks and of the European Central Bank, NCBs may perform functions other than those specified in that Statute, unless the Governing Council finds that those functions interfere with the objectives and tasks of the ESCB. Where a Member State assigns such a function to its NCB, that NCB is responsible and liable for the performance of that function. Nevertheless, when defining the responsibility and liability of an NCB in relation to that function, Member States are required to comply with their obligations deriving from Union law and, in particular,

text: Article 123(1)

text: and Article 130 of the Treaty .

text: 5.3 Monetary financing prohibition

text: 31 See

text: Article 208(3) of Regulation (EU) No 575/2013

text: of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and amending

text: Regulation (EU) No 648/2012

text: (OJ L 176, 27.6.2013, p. 1).

text: Regulation (EU) No 575/2013

text: Regulation (EU) No 648/2012

text: (OJ L 176, 27.6.2013, p. 1).

text: 33 See

text: Article 229(1) of Regulation (EU) No 575/2013

text: Regulation (EU) No 648/2012

text: (OJ L 176, 27.6.2013, p. 1).

text: 34 See Opinion

text: . All ECB opinions are published on EUR-Lex.

text: 35 See judgment of the Court of Justice of 13 September 2022, Banka Slovenije,

text: , ECLI:EU:C:2022:670.

text: 36 See judgment of the Court of Justice of 13 September 2022, Banka Slovenije,

text: , ECLI:EU:C:2022:670, paragraphs 53, 54, 57 and 97. 5.3.1 Article 123(1) of the Treaty prohibits the NCBs from granting overdraft facilities or any other type of credit facility to public authorities and bodies of the Member States.

text: Article 1(1)

text: , point (b), of Council Regulation No 3603/93 defines the term ‘other type of credit facility’ for the purposes of Article 123 of the Treaty as, inter alia, any financing of the public sector’s obligations vis-à-vis third parties. Accordingly, the NCB concerned must not assume obligations vis-à-vis third parties that could potentially be incumbent on the public sector. Consequently, the NCB concerned must not finance pre-existing obligations vis-à-vis third parties that are incumbent on other public authorities or bodies and the effective financing of the obligations vis-à-vis third parties by the NCB concerned must not result directly from the measures adopted by, or from the policy choices made by, other public authorities or bodies . 5.3.2 While the draft law does not as such impose any financing obligations on the CBI, the conditions under which the CBI is to exercise the function assigned to it under the draft law must be in line with the above limitations deriving from Article 123(1) of the Treaty. In particular, the liability of the CBI must be limited to infringements by the CBI of the rules imposed on it in that context, to the effect that the compensation of third parties who have suffered harm is the consequence of the actions of the CBI and not the assumption of a pre-existing obligation vis-à-vis third parties incumbent on other public authorities or bodies . 5.3.3 The draft law does not specifically state the liability regime applicable to the CBI in carrying out the tasks under the draft law. The ECB understands, however, that there is a general liability regime applicable to the CBI for anything done or omitted in the performance or purported performance or exercise of any of its functions or powers . The functions or powers of the CBI include the performance of such other functions as are imposed on it by or under the Central Bank Act 1942 and any other act or law. Moreover, the Central Bank Act 1942 grants the CBI the power to do whatever is necessary for or in connection with, or reasonably incidental to, the performance of its functions . The Central Bank Act 1942 provides that the general liability regime applicable to the CBI only applies if it is proved that the act or omission was in bad faith . It follows that the general liability regime applicable to the CBI is fault based. The CBI will only be liable for the compensation of third parties who have suffered harm, where such harm is the consequence of the actions of the CBI acting in bad faith. Against this backdrop, the liability regime applicable to the CBI, when exercising the function assigned to it under the draft law, is in line with the limitations deriving from Article 123(1) of the Treaty. 5.4 Financial independence

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

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

text: and

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

text: 38 See judgment of the Court of Justice of 13 September 2022, Banka Slovenije,

text: , ECLI:EU:C:2022:670, paragraphs 67 to 75 and 84.

text: 39 See judgment of the Court of Justice of 13 September 2022, Banka Slovenije,

text: , ECLI:EU:C:2022:670, paragraph 71.

text: 40 Section 33AJ(1) and (2) of the Central Bank Act 1942.

text: 41 Section 5A(1)(i) and Section 5A(2) of the Central Bank Act 1942.

text: 42 Section 33AJ(2) of the Central Bank Act 1942. 5.4.1 Article 130 of the Treaty prohibits Member States from placing their NCBs in a situation which in any way undermines their ability to carry out independently a task falling within the scope of the ESCB . This would be the case if, for example, an NCB were prevented from building up adequate financial resources in the form of reserves or buffers to offset losses, particularly those resulting from monetary policy operations, and the Member State concerned did not ensure in advance that the NCB had the necessary funds to bear the financial burden resulting from exercising a function outside the scope of the ESCB (such as the funds necessary to be able to pay the compensation resulting from the liability regime for the performance of that function), while retaining its ability to carry out its ESCB tasks effectively and independently . An NCB constrained in its ability to create and/or restore its reserves or buffers may need to seek the consent of political authorities to obtain funding or recapitalisation. This places the NCB in a situation of dependence on those political authorities of the Member State . 5.4.2 The ECB notes that, in the light of the general limitations applicable to the CBI’s liability, i.e. liability is limited to acts or omissions which are in bad faith, the CBI’s risk of exposure to liability in the context of the exercise of its functions under the draft law appears to be sufficiently remote. It does not appear that the draft law would lead to substantial losses of a magnitude that might constrain the CBI’s ability to build up adequate financial resources to carry out its ESCB tasks. This opinion will be published on EUR-Lex. Done at Frankfurt am Main, 4 February 2025. [signed] The President of the ECB Christine LAGARDE

text: 43 See judgment of the Court of Justice of 13 September 2022, Banka Slovenije,

text: , ECLI:EU:C:2022:670, paragraph 97.

text: 44 See judgment of the Court of Justice of 13 September 2022, Banka Slovenije,

text: , ECLI:EU:C:2022:670, paragraph 105.

text: 45 See judgment of the Court of Justice of 13 September 2022, Banka Slovenije,

text: , ECLI:EU:C:2022:670, paragraphs 100 to 102.

type: vagledning

utgivare: ecb


title: Opinion of the European Central Bank of 5 February 2025 on indirect participants in, and access to, payment systems, and a new exemption from the cash rule (CON/2025/4)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 5 February 2025 on indirect participants in, and access to, payment systems, and a new exemption from the cash rule (

text: ) Introduction and legal basis

text: On 6 January 2025 the European Central Bank (ECB) received a request from the Danish Financial Supervisory Authority (FSA) for an opinion on a draft proposal amending the Law on financial services, the Law on managers of alternative investment funds, the Law on investment associations, the Law on money laundering, the Law on fund brokers, the Law on capital markets, the Law on payments, the Law on insurance services and various other laws (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, Article 25.1 of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB’) and Article 2(1), second, third and fifth indents of

text: Council Decision 98/415/EC

text: , as certain provisions of the draft law relate to means of payment, Danmarks Nationalbank and payment and settlement systems. In accordance with

text: Article 17.5

text: , first sentence, 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 amends a total of 24 different laws in the financial field. This opinion focuses on three 2 3 specific proposed amendments to the Law on capital markets and the Law on payments . 1.2 Indirect participants in payments and securities settlement systems 1.2.1 The draft law amends the definition of ‘indirect participant’ in payment and securities settlement systems under the Law on capital markets to provide that an indirect participant may be considered to be a participant if this is justified by a systemic risk, without however limiting the liability of the participant through which the indirect participant sends transfer orders to the system . This provision transposes an option under Directive

text: of the European Parliament and of the Council (hereinafter the ‘SFD’) whereby Member States may, for the purposes of this Directive, consider an

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

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

text: 2 Lov om kapitalmarkeder, Lovbekendtgørelse nr. 198 af 26.2.2024.

text: 3 Lov om betalinger, Lov nr. 53 af 18.1.2023.

text: 5 See

text: Article 2

text: , point (f), third paragraph, of Directive

text: of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems (OJ L 166, 11.6.1998, p. 45). indirect participant to be a participant where that is justified on the grounds of systemic risk, and on condition that the indirect participant is known to the system. 1.2.2 According to the interpretative notes to the draft law (hereinafter the ‘interpretative notes’) , Danmarks Nationalbank decided in 2020 to move settlement in Danish kroner from Danmarks Nationalbank's own system, Kronos2, to the ECB’s corresponding services, i.e. the Trans-European Automated Real-time Gross settlement Express Transfer system (TARGET) . The move is planned to take place at Easter 2025. As a consequence, it is expected that a number of credit institutions that are today direct participants in Danmarks Nationalbank’s systems will proceed to settle their payments as indirect participants in TARGET. This entails a need for clarification of when an indirect participant can be considered to be a participant in a payment system or securities settlement system. So far, participation by indirect participants in either a payment system or a securities settlement system has not constituted a systemic risk, but on the basis of the expected changes in the proportion of indirect participants in payment processing, it is now considered appropriate to implement the relevant provision of the SFD. 1.3 Access to payment systems 1.3.1 The Law on payments currently provides that the conditions for access to payment systems for payment service providers (PSPs) must be objective, non-discriminatory and proportional, so that these conditions do not prevent access to a greater extent than necessary to protect against specific risks such as settlement risks, operational risks and business risks and to ensure the financial and operational stability of the payment system . 1.3.2 The draft law proposes to amend this provision to provide that the conditions for access to payment systems for PSPs must be objective, non-discriminatory and proportional, and that these conditions may not prevent access to a greater extent than is necessary to protect against specific risks such as settlement risks, operational risks and business risks and to secure the payment system financial and operational stability . 1.3.3 According to the interpretative notes , the draft law is designed in accordance with a particular provision of the Proposal for a Regulation of the European Parliament and of the Council on payment services in the internal market and amending

text: Regulation (EU) No 1093/2010

text: (hereinafter the ‘proposed regulation on payment services’) clarifying the duty to provide access to payment systems . Moreover, this draft amendment is proposed as a part of a package of initiatives that aim to secure efficient competition in the payment area, where amendment of the access to payment systems is seen to secure fair competition terms for the redemption of, for example, Dankort transactions . In this respect, the interpretative notes state that the duty to provide access to payment systems includes the party or parties that are responsible for a payment system, where that

text: 6 See pages 206 and 207 of the general comments in the interpretative notes.

text: 8 See Section 10(4) and (5) of the draft law, amending Section 64(1), point (1), and inserting a new sentence after Section 64(1), point (1), of the Law on payments.

text: 9 See page 238 of the general comments in the interpretative notes.

text: 10 COM/2023/367 final.

text: 12 The Dankort is Denmark’s national payment card. party or parties does not itself issue payment cards, but, for example, cooperates with banks to issue cards to bank customers . The interpretative notes go on to state that the draft amendment entails that the payment system cannot reserve the access to sole redemption to itself . The Ministry of Business takes the view that the clarification of the legal situation in Denmark will thus correspond to the upcoming change in the Union, if the proposed regulation on payment services is adopted . 1.4 New exemption from the cash rule 16 17 1.4.1 The draft law proposes to amend the ‘cash rule’ under the Law on payments , which, as a general rule, obliges payment recipients to accept payments in cash, subject, however, to the Law on money laundering , which contains a threshold limit for payments in cash of 15 000 Danish kroner (approximately EUR 2 021). Under the currently applicable cash rule, vendors are obliged to accept payments in cash in respect of physical transactions, except for specifically defined cases. The latter include distance sales – for example, via the internet – and sales via self-service vending machines . Moreover, in areas with a particularly high risk of robberies, the cash rule only applies between the hours of 06:00 and 20:00 . Under certain conditions, the cash rule also does not apply for payment recipients taking part in festivals, town celebrations and similar events of a temporary nature . The cash rule can also be deviated from as regards business-to-business payments . In such cases it is left to the parties’ freedom of contract to agree on the applicable means of payment . 1.4.2 The draft law introduces a new exemption to the cash rule, whereby a municipal board can grant an exemption from the obligation to accept payments in cash to companies and institutions that handle tasks in the field of children and youth, which refers to companies and institutions that mainly cater for children and young people including, inter alia, daycare centres, elementary schools and childminding programs, as well as free primary schools and post-secondary schools . The municipal board must publish information detailing the institutions that have been granted such an exemption. Companies and institutions that have been granted an exemption are required to inform consumers about this in a clear manner. A municipal board may grant such exemptions to companies and institutions in their municipality and on a regional basis. Appeals against decisions on exemptions may be made to the Appeals Board , which is an agency under the Ministry of Social Affairs and Housing that decides on complaints, coordinates practices and carries out investigations into developments mainly in the social and employment field.

text: 13 The ECB understands that this is the case for the company Nets, which issues the Dankort.

text: 14 See page 239 of the general comments in the interpretative notes.

text: 15 See page 238 of the general comments in the interpretative notes.

text: 23 See paragraph 1.2 of Opinion

text: . All ECB opinions are published on EUR-Lex.

text: 24 See page 244 of the general comments in the interpretative notes.

text: 25 See page 146 of the specific comments in the interpretative notes. 1.4.3 The interpretative notes state that the individual municipal boards are responsible for the affairs of the municipalities and therefore have in-depth knowledge of the individual companies and institutions that handle tasks in the field of children and young people, as well as any special needs of the citizens who use them . Against this background the municipal boards will be suitable to assess the advantages and disadvantages of granting an exemption from the cash rule to such individual companies or institutions. It is argued that such an exemption should be granted to institutions and companies in the field of children and young people, since a number of municipalities have implemented digital payment solutions in this field to ensure that staff and users – i.e. children, young people and their parents – do not need to handle cash. An exemption from the cash rule will ensure that these companies and institutions are not obliged to keep cash boxes etc., which can ease burdens and create greater security for staff and users, who are children, young people and their parents. The interpretative notes also explain that, in order not to treat private institutions in the field of children and young people differently from municipal institutions and companies, the exemption scheme should include such private institutions as they are comparable to those municipal institutions and companies. Moreover, when granting an exemption, the municipal boards will have to weigh up safety and costs considerations against the consideration of citizens’ opportunity to access the services provided by the companies and institutions concerned. The municipal boards will thus have to consider that the exemptions do not hinder the citizens’ access to the institution or company, for instance because a citizen does not have access to electronic means of payment .

text: 2. General observations

text: 2.1 In view of the notice given to the Council by the Danish Government on 3 November 1993, Denmark has an exemption from participating in the third stage of economic and monetary union. The effect of this exemption is that all articles and provisions of the Treaties and the Statute of the ESCB referring to a derogation are applicable to Denmark. As for the abrogation of the exemption, the procedure referred to in Article 140 of the Treaty on the abrogation of derogations of the Member States fulfilling the necessary conditions regarding the achievement of economic and monetary union are only to be initiated at the request of Denmark . 2.2 In accordance with Article 42.2 of the Statute of the ESCB, Danmarks Nationalbank retains its powers in the field of monetary policy according to national law. However, Article 131 of the Treaty and Article 14.1 of the Statute of the ESCB, in accordance with Article 139(2) of the Treaty and Article 42.1 of the Statute of the ESCB, also apply to Denmark, so that Denmark is required to ensure that its national legislation, including Danmarks Nationalbank’s statutes, is compatible with the Treaties and the Statute of the ESCB. Furthermore, as Article 130 of the Treaty, and

text: Article 7

text: and Article 14.2 of the Statute of the ESCB, in accordance with Article 139(2) of the Treaty and Articles 42.1 and 42.4 of the Statute of the ESCB, also apply to Denmark, Danish legislation must also fulfil the requirements of central bank independence .

text: 26 See page 245 of the general comments in the interpretative notes.

text: 27 See page 245 of the general comments in the interpretative notes.

text: 28 See paragraphs 1 and 2 of Protocol (No 16) to the Treaty on certain provisions relating to Denmark.

text: 29 See page 17 of the ECB Convergence Report (June 2022), available on the ECB’s website at www.ecb.europa.eu. 2.3

text: Article 127(2)

text: , fourth indent, of the Treaty, which provides that a basic task to be carried out through the ESCB is to promote the smooth operation of payment systems, does not apply to Member States with a derogation . In addition, Article 22 of the Statute of the ESCB, which provides that the ECB and the national central banks (NCBs) may provide facilities, and the ECB may make regulations, to ensure efficient and sound systems, does not apply to Member States with a derogation or to NCBs whose currency is not the euro . Consequently, according to Article 4 of Guideline

text: (EU) 2022/912

text: (ECB/2022/8) , the NCBs of Member States whose currency is not the euro may only connect to TARGET, which encompasses the real-time gross settlement (RTGS) service T2, owned and operated by the Eurosystem, if they conclude an agreement with the Eurosystem central banks. Danmarks Nationalbank has concluded such an agreement, on the basis of which TARGET- Danmark has been established as Danmarks Nationalbank’s TARGET component system . 2.4 On 21 March 2024 the ECB and Danmarks Nationalbank announced that the ECB and Danmarks Nationalbank had signed an agreement for Denmark to join the Eurosystem’s T2 wholesale payments service and the TARGET Instant Payment Settlement (TIPS) service, which are part of TARGET. This will facilitate the settlement of high-value payments in euro and Danish kroner in the T2 service and will make the Danish krone the third currency available for settlement in TIPS after the Swedish krona was included earlier in 2024. Danish financial market participants are concluding the testing of both services in preparation for the launch in April 2025. Danmarks Nationalbank already uses the T2 service for settling payments in euro and has been using the TARGET2- Securities (T2S) platform for settlement of securities in both euro and kroner since October 2018. The inclusion of the Danish krone in the Eurosystem’s payment services will enable market participants in Denmark to use all three TARGET services to settle all payments and securities transactions in their national currency and to benefit from optimised liquidity management. 2.5 The ECB takes due account in this opinion of the legal culture and legislative technique in Denmark, according to which legislative proposals on draft laws are accompanied by interpretative notes. The ECB understands that once a draft law has been adopted, the interpretative notes are of essential importance for the practical application of the adopted law, representing a very important tool for the courts to understand the intention of the legislator with respect to the adopted law, allowing the courts to apply the law in accordance therewith .

text: 31 See Articles 42.1 and 42.4 of the Statute of the ESCB.

text: 32 Guideline

text: (EU) 2022/912

text: of the European Central Bank of 24 February 2022 on a new-generation Trans-European Automated Real-time Gross Settlement Express Transfer system (TARGET) and repealing Guideline ECB/2012/27 (ECB/2022/8) (OJ L 163, 17.6.2022, p. 84).

text: 33 See ‘New payment systems in the pipeline’ under ‘Safe payments’ on Danmarks Nationalbank’s website at www.nationalbanken.dk/en/what-we-do.

text: 34 See ECB press release of 21 March 2024, ‘Denmark joins T2 and TIPS to fully integrate Danish krone in Eurosystem’s payment services’, available on the ECB’s website at www.ecb.europa.eu.

text: 35 See Justitsministeriets vejledning om lovkvalitet (Guide on Law Quality), p. 130, by the Ministry of Justice, available at www.lovkvalitet.dk (in Danish only).

text: 3. Specific observations regarding the draft law’s provisions concerning payment and securities settlement systems

text: 3.1 Indirect participants in payments and securities settlement systems 3.1.1 The ECB understands that the draft law’s amendment of the definition of ‘indirect participants’ in payment and securities settlement systems under the Law on capital markets is motivated by the imminent migration from Kronos2 to T2 and TIPS of settlement of Danish currency transactions. While the specific accounts for such non-euro currencies are technically established and function on an underlying technical central liquidity management, RTGS and common components for Eurosystem TARGET services, they remain within the legal perimeter of the payment system operated by Danmarks Nationalbank, which is connected to T2 and TIPS via agreements concluded with the Eurosystem central banks in March 2024. In this respect, the migration does not have legal implications for the Danish participants in Danmarks Nationalbank’s systems, which will continue to maintain their legal relationship with Danmarks Nationalbank. 3.1.2 However, with the requirements for direct participants to connect to the European Single Market Infrastructure Gateway (ESMIG), which is the Eurosystem Single Market infrastructure gateway for all users who want to access and communicate with TARGET Services, Danmarks Nationalbank expects that a number of its current direct participants will request to become indirect participants in Danmarks Nationalbank’s systems. Against this backdrop, the ECB agrees that it is justified on the grounds of systemic risk that indirect participants are considered to be participants under the Danish legislation transposing the SFD. The ECB therefore welcomes the draft law’s amendment of the definition of ‘indirect participants’ in payment and securities settlement systems and the enhanced legal clarity that this amendment will bring upon its adoption. 3.1.3 The ECB understands that this provision in the draft law is without prejudice to the definitions and requirements for participation in TARGET, as set out in Guideline

text: (EU) 2022/912

text: (ECB/2022/8). 3.2 Access to payment systems 3.2.1 Although the draft law’s amendment concerning access to payment systems purports to transpose certain provisions of the proposed regulation on payment services, there are, in fact, a number of discrepancies between the draft law and the proposed regulation on payment services. 3.2.2 First, the proposed regulation on payment services does not apply to payment services provided within the Union by NCBs, including Danmarks Nationalbank, when acting in their capacity as monetary authority . This provision is, however, not replicated in the draft law, with the consequence that the draft law appears to apply to Danmarks Nationalbank , including in connection with

text: 36 See

text: Article 2(1)

text: , point (d), of the proposed regulation on payment services. 37 According to the currently applicable Section 64(2), point 1, of the Law on payments, the requirements for access conditions do not apply to payment systems designated under the SFD, which includes TARGET-Danmark. However, the exemption is to be repealed with effect from 9 April 2025, cf. Section 18(3) of the Law on payments, no. 1666 of 30 December 2024, in line with the amendment to

text: Article 35 of Directive (EU) 2015/2366

text: of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives

text: and

text: and

text: Regulation (EU) No 1093/2010

text: , and repealing Directive

text: (OJ L 337, 23.12.2015, p. 35) made by

text: Regulation (EU) 2024/886

text: Regulation (EU) 2024/886

text: of the European Parliament and of the Council of 13 March 2024 amending Regulations

text: (EU) No 260/2012

text: and

text: (EU) 2021/1230

text: and Directives

text: and

text: (EU) 2015/2366

text: as regards instant credit transfers in euro (OJ L, 2024/886, 19.3.2024, ELI: http://data.europa.eu/eli/reg/2024/886/oj). Danmarks Nationalbank’s function, as monetary authority, to operate its component of the TARGET system, TARGET-Danmark. 3.2.3 Second, the draft law has been formulated in a different manner from the proposed regulation on payment services, giving rise to some ambiguity as to how it is to be interpreted. In particular, while the proposed regulation requires payment system operators to have in place objective, nondiscriminatory, transparent and proportionate rules on access to a payment system by authorised or registered PSPs that are legal persons , the draft law requires payment systems to provide PSPs access to their payment systems on objective, non-discriminatory and proportional conditions. It is unclear whether the draft law, so formulated, would require Danmarks Nationalbank and other payment system operators in Denmark not only to have in place objective, non-discriminatory and proportional conditions governing access to their systems, but would also place them under an obligation to provide PSPs with access to their payment systems. In this context, it is also noted that the draft law does not replicate the provisions of the proposed regulation on payment services whereby (1) upon receiving an application for participation by a payment service provider, a payment system operator is to assess the relevant risks of granting the applicant payment service provider access to the system, (2) a payment system operator should only refuse participation to an applicant payment service provider where the applicant poses risks to the system, and (3) the payment system operator is to notify that applicant payment service provider in writing as to whether the request for participation is granted or refused and must provide full reasons for any refusal. 3.2.4 As noted above, the proposed regulation on payment services has not yet been adopted by the Union legislator. The proposed regulation will have primacy over the draft law (once enacted) and therefore the draft law must be read and applied in conjunction with the regulation on payment services when the latter is adopted . Following the adoption of the proposed regulation on payment services, the draft law should be subject to a detailed review to ensure its compliance with the regulation . In this respect, legislating in advance of the adoption of Union legislation entails the risk that the Danish legislator may need to further adapt national legislation in the event of discrepancies between Union and national legislation, taking account of the supremacy of Union law over national law. It is also noted that the proposed regulation on payment services states that the Union rules on payment services should be further harmonised, by incorporating rules governing the conduct of the payment services activity, including the rights and obligations of the parties involved, in a Regulation. Such rules should be clarified and more detailed, thus minimising margins of interpretation . With this in mind, it is questionable whether there is any national possibility for Member States to transpose provisions of the proposed regulation. 3.2.5 In its opinion on the proposed regulation on payment services, the ECB welcomed, in principle, the intention of the Union legislator that payment system operators should ensure a level playing field for all PSPs accessing payment systems. The ECB particularly welcomed the requirement for payment system operators across the Union to have in place objective, non-discriminatory,

text: 38 See Article 31(1) of the proposed regulation on payment services. 39 See Article 31(3) of the proposed regulation on payment services. 40 See paragraph 2 of Opinion

text: and paragraph 6.4 of Opinion

text: . 41 See paragraph 3 of Opinion

text: . 42 See recital 4 of the proposed regulation on payment services. transparent and proportionate rules on access to a payment system, coupled with clarifications on admission and risk assessment procedures. However, as regards the euro area, the ECB noted that it should be for the ECB to adopt the access criteria in respect of Eurosystem-operated payment systems, as well as the relevant conditions, including remuneration, and limits. Moreover, the ECB considers that, in view of the ESCB’s independent performance of its basic monetary policy and payment system tasks under Article 130 of the Treaty, the proposed requirements should not apply to payment systems overseen by ESCB central banks. The reason for this is that the oversight frameworks of ESCB central banks, which are currently applicable to payment systems, already cater, inter alia, for non-discriminatory access to payment systems. 3.2.6 As previously noted by the ECB to the Danish authorities, in order for TARGET-Danmark to continue settling payments in TARGET, Danmarks Nationalbank must be able to abide at all times by the access criteria defined by the Eurosystem . In addition, as concerns Danmarks Nationalbank’s oversight competence in respect of national payment systems , Danmarks Nationalbank is the only authority that oversees Danish payment systems – a task which includes ensuring that there is fair and open access to such systems. Danmarks Nationalbank performs the oversight task based on the international standards set out in the Principles for Financial Market Infrastructures . Thus, Danmarks Nationalbank ensures objective, non-discriminatory and proportionate access to KRONOS2, TARGET-Danmark and the other payment systems established in Denmark, such as the retail payment system operated by Finans Danmark, the Danish Bankers’ Association. The ECB notes that as the oversight of payment systems is typically a central bank task, Danmarks Nationalbank should be able to continue exercising this task in an independent manner. 3.2.7 Against this backdrop, the Danish authorities are invited to further reflect on whether and how to regulate access to payment systems, taking account of the competences of Danmarks Nationalbank.

text: 4. Specific observations regarding the draft law’s provisions concerning the cash rule

text: 4.1 Cash continues to play an important role in society irrespective of the fact that electronic payment instruments are increasingly used for retail payments in Member States, including Denmark . Cash is generally appreciated as a payment instrument because it is widely accepted, fast and facilitates control over the payer’s spending. It is currently the only payment instrument that allows citizens to settle a transaction in central bank money, which is also settled instantly , while, importantly,

text: 43 See paragraph 2.1.6 of Opinion

text: of the European Central Bank of 30 April 2024 on a proposed Regulation and Directive on payment and electronic money services (OJ C, C/2024/3869, 19.6.2024, ELI: http://data.europa.eu/eli/C/2024/3869/oj). 44 See paragraph 4.5 of Opinion

text: . 45 See Article 1 of the Law on Danmarks Nationalbank, according to which Danmarks Nationalbank must maintain a safe and secure currency system and facilitate and regulate the traffic in money. See also Article 212(3) of the Law on capital markets. 46 Principles for Financial Market Infrastructures, April 2012, available on the Bank for International Settlements’ website at www.bis.org. 47 See paragraph 2.4 of Opinion

text: , paragraph 2.4 of Opinion

text: and paragraph 2.4 of Opinion

text: . 48 See paragraph 2.4 of Opinion

text: , paragraph 2.1 of Opinion

text: , paragraph 9.2.1 of Opinion

text: , paragraph 2.3 of Opinion

text: , paragraph 7.2.1 of Opinion

text: , paragraph 2.1 of Opinion

text: , paragraph 2.1 of Opinion

text: , paragraph 2.1 of Opinion

text: and paragraph 2.1 of Opinion

text: . ensuring privacy. Moreover, it does not carry the legal possibility of imposing a fee for the use thereof. Furthermore, cash payments are not subject to daily or weekly payment limits set by entities providing underlying payment services . In addition, cash payments also facilitate the inclusion of the entire population in the economy by allowing citizens to settle a wide range of payment transactions in this way, thus ensuring freedom of choice as to the method of payment for all citizens . The ability to pay in cash remains particularly important for all those citizens who, for various legitimate reasons, prefer to use cash due to its unique features, rather than other payment instruments. Also, cash remains important especially for those who do not have access to the banking system and electronic means of payments. These groups include not only elderly people, but also some disabled citizens, immigrants, socially vulnerable citizens, minors and others with limited or no access to digital payment services . The practical use of and handling of cash by children and young people could be a part of their financial education enabling them to be better equipped for their adult life, recalling that financial literacy means the knowledge and skills needed to make important financial decisions . The ECB surveys payment habits in the euro area biennially. The latest of these surveys revealed that around 60 % of the euro area citizens want to have the freedom to use cash at the point of sale . Finally, a critical mass of cash in circulation is necessary to maintain the business case for third parties involved in the cash cycle. Thus, the imposition of limitations on cash payment or the discontinuance of a denomination could lead to a situation in which the unit costs of cash deter third parties from continuing to supply cash. This would have the consequence of endangering the contingency feature of cash if the cash infrastructure and cash suppliers were to disappear altogether or were insufficient to cater for an unexpected surge in cash demand. 4.2 These characteristics of cash are also acknowledged by the European Commission in its Retail Payments Strategy, which, while promoting the emergence of digital payments to offer more options to consumers, will continue to safeguard the legal tender of euro cash and the availability of central bank money . 4.3 Against this backdrop, the ECB closely monitors any national law developments that aim to limit cash payment possibilities and thereby interfere with citizens’ right to pay in cash . 4.4 New exemption from the cash rule 4.4.1 The purpose of the proposal for a new exemption from the cash rule under the draft law is to empower municipal boards to exempt companies and institutions that handle tasks in the field of children and youth from the obligation to accept payments in cash.

text: 49 See paragraph 2.1 of Opinion

text: . 50 See paragraphs 2.4 and 3.1 of Opinion

text: , paragraph 2.7 of Opinion

text: , paragraph 2.6 of Opinion

text: , paragraph 7.2.1 of Opinion

text: , paragraphs 2.1 to 2.3 of Opinion

text: , paragraph 2.3 of Opinion

text: , paragraph 2.1 of Opinion

text: and paragraph 2.1 of Opinion

text: . 51 See paragraph 1.5 of Opinion

text: and paragraph 2.1 of Opinion

text: . 52 See page headed ‘Financial literacy’ on the Commission’s website at www.commission.europa.eu. The Organisation for Economic Co-operation and Development (OECD) has made recommendations as to the importance of financial literacy skills for current and future generations of youth to help them face contemporary financial challenges, see ‘Recommendation of the Council on Financial Literacy’, available on the OECD’s website at www.oecd.org. 53 See European Central Bank, Study on the payment attitudes of consumers in the euro area (SPACE), available on the ECB’s website at www.ecb.europa.eu. 54 See COM(2020) 592 final. 55 See paragraph 2.6 of Opinion

text: . 4.4.2 Under the Treaty, the ECB has the exclusive right to authorise the issue of euro banknotes within the Union . The euro banknotes issued by the ECB and the NCBs of the euro area are the only banknotes with legal tender status within the euro area . 4.4.3 If Denmark were to initiate an abrogation of its exemption status in accordance with Protocol (No 16) of the Treaty on certain provisions relating to Denmark, the draft law would enable the introduction of restrictions to the obligation to accept euro banknotes as a means of payment, which would be assessed against the relevant Union law, as set out below . 4.4.4 The concept of ‘legal tender’ of a means of payment denominated in a currency unit has been considered by the Court of Justice of the European Union. In particular, the Court has clarified that the concept of ‘legal tender’ signifies that this specific means of payment cannot generally be refused in settlement of a debt, denominated in the same currency unit, at its full face value, with the effect of discharging the debt. In clarifying the concept of ‘legal tender’ under Union law, the Court has taken into consideration Commission Recommendation 2010/191 , which provides useful guidance for the interpretation of the relevant provisions of Union law. Point 1 of Recommendation 2010/191 states that, where a payment obligation exists, the legal tender of euro banknotes and coins should imply (a) mandatory acceptance of those banknotes and coins; (b) their acceptance at full face value; and (c) their power to discharge from payment obligations. According to the Court, this shows that the concept of ‘legal tender’ encompasses, inter alia, an obligation in principle to accept banknotes and coins denominated in euro for payment purposes . 4.4.5 The Court has clarified that the concept of ‘legal tender’ is a concept of Union law that must be given an autonomous and uniform interpretation throughout the Union . Insofar as it allows the Union legislature to lay down the measures necessary for the use of the euro as the single currency, the Court clarified that Article 133 of the Treaty empowers the Union legislature alone to specify the legal rules governing the status of legal tender accorded to banknotes and coins denominated in euro, insofar as that is necessary for the use of the euro as the single currency. In this respect, the ECB notes that, on 28 June 2023, the Commission published a proposal for a Regulation of the European Parliament and of the Council on the legal tender of euro banknotes and coins (hereinafter the ‘proposed regulation on the legal tender of euro cash’), which would establish rules on the legal tender of euro banknotes and coins in binding Union secondary law. The explanatory memorandum to the proposed regulation on the legal tender of euro cash states that discussions within the Euro Tender Expert Group (ELTEG) confirmed the existence of uncertainty and important differences regarding the practical application of the concept of legal tender across the euro area . These

text: Article 128(1)

text: , first sentence, of the Treaty and

text: Article 16

text: , first sentence, of the Statute of the ESCB. 57

text: Article 128(1)

text: , third sentence, of the Treaty and

text: Article 16

text: , third sentence, of the Statute of the ESCB. 58 See paragraph 3.1 of Opinion

text: . 59

text: Commission Recommendation 2010/191/EU of 22 March 2010

text: on the scope and effects of legal tender of euro banknotes and coins (OJ L 83, 30.3.2010, p. 70). 60 See judgment of 26 January 2021, Hessischer Rundfunk, joined cases

text: and

text: , ECLI:EU:C:2021:63, paragraphs 46 to 49. 61 See judgment of 26 January 2021, Hessischer Rundfunk, joined cases

text: and

text: , ECLI:EU:C:2021:63, paragraph 45. 62 COM(2023) 364 final. 63 See Section 3 of the explanatory memorandum to the proposed regulation on the legal tender of euro cash, and the Final report of the Euro Legal Tender Expert Group (ELTEG) of 6 July 2022. differences would justify establishing rules on the legal tender of euro cash in a regulation adopted under Article 133 of the Treaty . 4.4.6 The Union legislature’s exclusive competence precludes any competence on the part of the Member States in this matter, unless they are acting on the basis that they have been empowered by the Union to do so or for the implementation of Union acts . 4.4.7 However, the Court further clarified that the status of legal tender calls for acceptance in principle of banknotes and coins denominated in euro as a means of payment, not for absolute acceptance. The Union’s exclusive competence in matters of monetary policy is without prejudice to the competence of Member States whose currency is the euro to regulate the procedures for settling pecuniary obligations, which do not affect the principle that, as a general rule, it must be possible to discharge a payment obligation in cash. Thus, that exclusive competence does not prevent a Member State from adopting measures falling within one of the Member State’s competences; for instance, a Member State may, based on its competence to organise its public administration, oblige the public administration to accept cash payments from citizens. Neither does it prevent a Member State, in the exercise of its own powers, from introducing, on legitimate public interest grounds, a derogation from that obligation for statutorily imposed payments, subject to compliance with certain conditions. In particular, the obligation to accept euro banknotes and coins may, in principle, be restricted by the Member States for reasons of public interest and subject to the principle of proportionality. This means that any such restrictions must be proportionate to the public interest objective pursued. When limiting the possibility, recognised by Union law, of generally discharging a payment obligation in banknotes and coins denominated in euro, Member States must ensure that any measures comply with the principle of proportionality, which requires in particular that they are appropriate for achieving the legitimate objectives pursued by the legislation at issue and do not go beyond what is necessary in order to achieve those objectives . 4.4.8 The Court has established that restrictions of the obligation to accept euro banknotes as a means of payment in particular require that the legislation (1) does not have the object or effect of establishing legal rules governing the status of legal tender of euro banknotes; (2) does not lead, in law or in fact, to abolition of those banknotes, in particular by calling into question the possibility, as a general rule, of discharging a payment obligation in cash; (3) has been adopted for reasons of public interest; (4) only entails a limitation in on payments in cash that does not go beyond what is necessary in order to achieve the public interest objective . More specifically regarding criterion number (3), on public interest, the Court specified that ‘the limitations on payments in notes and coins denominated in euro

text: 64 The ECB has welcomed the proposed regulation and strongly supported the establishment of rules on the legal tender status of euro banknotes and coins in secondary Union law, as well as the measures laid down in the proposed regulation regarding access to cash. See paragraphs 1.1 and 1.2 of Opinion

text: of the European Central Bank of 13 October 2023 on a proposal for a regulation on the legal tender of euro banknotes and coins (OJ C, C/2023/1355, 1.12.2023, ELI: http://data.europa.eu/eli/C/2023/1355/oj). 65 See judgment of 26 January 2021, Hessischer Rundfunk, joined cases

text: and

text: , ECLI:EU:C:2021:63, paragraphs 50 to 52. 66 See judgment of 26 January 2021, Hessischer Rundfunk, joined cases

text: and

text: , ECLI:EU:C:2021:63, paragraphs 55 to 56 and 67 to 70. 67 See judgment of 26 January 2021, Hessischer Rundfunk, joined cases

text: and

text: , ECLI:EU:C:2021:63, paragraph 78. may, in practice, be justified just as much on grounds of public policy relating to security or the fight against crime as by the public interest in ensuring the efficient organisation of payments in society’ . 4.4.9 Regarding the proportionality of a restriction of the obligation to accept euro banknotes, the Court requires not only that the measure is appropriate for attaining the public interest objective pursued, but also that it does not go beyond what is necessary in order to achieve that objective. The ECB has opined on whether limitations may be considered appropriate . In particular, the ECB has noted that the broader and more general a limitation is, the stricter should be the interpretation of the requirement for the limitation to be proportionate to the objective pursued . When considering whether a limitation is proportionate, the adverse impact of the limitation in question and whether alternative measures could be adopted that would fulfil the relevant objective with a less adverse impact should always be considered . 4.4.10 The ECB notes that the draft law does not establish a cash restriction. Rather, it authorises municipal councils to introduce cash restrictions by granting exemptions from the cash rule to individual companies or institutions. Consequently, it remains difficult to assess the draft law against the criteria defined by the Court and summarised in the previous paragraphs, as these criteria are designed to apply to specific cash restrictions. Given that the exemptions to be granted by the municipal councils specifically focus on payments to be made to companies and institutions that handle tasks in the field of children and youth, the draft law cannot be said to have the objective or the effect of amending the legal rules governing the status of legal tender of euro banknotes or coins. Moreover, the draft law does not lead, in law or in fact, to the abolition of banknotes in Denmark, in particular by calling into question the possibility, as a general rule, of discharging a payment obligation in cash . 4.4.11 According to the explanatory notes, the draft law is proposed in order to ease burdens and create greater security for staff and users . The public policy grounds relating to security and the public interest in ensuring the efficient organisation of payments in society are in principle amongst the legitimate public interest reasons that the Court has identified as justifying a limitation on the obligation to accept cash. The Court has also established that, for a cash restriction to be proportionate, the measure must be appropriate for attaining the public interest objective pursued and not go beyond what is necessary to achieve that objective. Whether a specific exemption from the cash rule granted by a municipal council to certain companies and institutions pursues a public interest objective and is proportionate to that objective depends on the justification provided by the municipal council in the decision by which it will grant the exemption. In other words, given that the discretion under the draft law to impose concrete limitations on the use of cash payments lies, in

text: 68 See judgment of 26 January 2021, Hessischer Rundfunk, joined cases

text: and

text: , ECLI:EU:C:2021:63, paragraph 66. 69 See paragraph 4 of Opinion

text: of the European Central Bank of 16 February 2022 on a proposal for a directive and a regulation on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (OJ C 210, 25.5.2022, p. 15). 70 See paragraph 2.7 of Opinion

text: , paragraph 2.11 of Opinion

text: and paragraph 2.8 of Opinion

text: . 71 See paragraph 2.7 of Opinion

text: , paragraph 2.7 of Opinion

text: and paragraph 2.8 of Opinion

text: . 72 See paragraph 4.6 of Opinion

text: and paragraph 3.2 of Opinion

text: . 73 See page 245 of the general comments to the interpretative notes. practice, with the municipal boards, it is not feasible, at this time, to make any definitive conclusions regarding the limitations to be imposed by the municipal boards. This opinion will be published on EUR-Lex. Done at Frankfurt am Main, 5 February 2025. [signed] The President of the ECB Christine LAGARDE