text: The full title of the draft law is as follows: ‘Law on the Depositors and Investors of Credit Institutions Compensation Fund, the Athens Stock Exchange Members Guarantee Fund, the Dematerialised Securities System and other provisions’. 2 The draft amendment on the amount of guaranteed deposits was submitted to the Greek Parliament on 9 October 2008 as an amendment-addendum to a draft law on the protection of borrowers which had already been submitted to Parliament at this point. 3 OJ L 189, 3.7.1998, p. 42.

text: Law 2832/2000 on the codification of the provisions on the establishment, organisation and operation of the deposit scheme and supplementing the Statute of the Bank of Greece (FEK Vol. A 141, 13.6.2000) codified and supplemented the provisions of Law 2324/1995 (FEK Vol. Α 146, 17.7.1955) which, inter alia, transposed Directive

text: of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes, OJ L 135, 31.5.1994, p. 5. 5 ‘Covered investment services’ include those listed in

text: Article 4(1)

text: (a) to (d), (f) and (g) of Law 3606/2007 on financial instrument markets and other provisions (FEK Vol. Α 195, 17.8.2007) and the ancillary service referred to in

text: Article 4(2)

text: (a) of the same law. 6 According to the explanatory memorandum to the draft law, the proposal for combined coverage of deposits and investment services provided by credit institutions has been put forward by the Bank of Greece, the Hellenic Bank Association and the HDGF itself, as an arrangement which has also been adopted by other EU legislators (e.g. Austria, Luxembourg, the Netherlands and Sweden). 7 The HDGF, established under Article 2 of Law 2832/2000, is a legal person governed by private law and supervised by the Minister for Economy and Finance. 8 Law 2533/1997 on the stock exchange derivates market and other provisions (FEK Vol. Α 228, 11.11.1997) established the ASEMGF as a legal person governed by private law and supervised by the Hellenic Capital Market Committee. Its provisions replaced those of Legislative Decree No 3078 of 11 October 1954 establishing the ASEMGF’s predecessor fund, by restructuring and renaming it in order to better meet the needs of investment protection and ensure harmonisation with Directive

text: of the European Parliament and of the Council of 3 March 1997 on investorcompensation schemes (OJ L 84, 26.3.1997, p. 22).

text: The Council (Ecofin) agreed in its 7 October meeting that ‘all Member States would, for an initial period of at least one year, provide deposit guarantee protection for individuals for an amount of at least EUR 50 000, acknowledging that many Member States determine to raise their minimum protected amount to EUR 100 000’. See the press release of the 2894th Council meeting (13784/08), available on the Council’s website, www.consilium.europa.eu. 10 See Article 2(5) of the draft law.

text: In accordance with Article 2(6) of the draft law, the Fund’s DCB assets are clearly distinct from its ICB assets, as specified in the draft law. Moreover, in accordance with Article 4(10) of the draft law, contributions to the DCB’s initial capital and any other form of contribution made by a credit institution to the DCB do not constitute assets of the credit institution and may not be refunded. To contrast,

text: Article 5(2)

text: stipulates that ICB assets constitute a ‘group of assets’ managed by the Fund, the individual components of which shall be jointly owned by the participating credit institutions in proportion to their participation therein. Consistently,

text: Article 8

text: specifies that in the event that a credit institution withdraws from the ICB, for any legal reason, its individual share’s value, as assessed at the time of withdrawal, will be refunded to it in cash. 12 See Article 24(4) of the draft law. 13 These include the following: (i) initial and annual regular contributions of credit institutions participating in the DCB; (ii) an additional contribution levied in the event that DCB resources are insufficient to cover compensation payments; (iii) donations; and (iv) revenue deriving from liquidation of claims and management of DCB assets. Similarly, ICB resources are listed in Article 6 of the draft law. 14 Directives

text: of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast) (OJ L 177, 30.6.2006, p. 1) and

text: on the capital adequacy of investment firms and credit institutions (recast) (OJ L 177, 30.6.2006, p. 201), implemented by Law 3601/2007 on the taking up and pursuit of the business of credit institutions, on capital adequacy of credit institutions and investment firms and other provisions (FEK Vol A 178/1.8.2007).

text: See

text: Article 3(4)

text: and Article 22(2) of the draft law. 16 See e.g. paragraph 7 of ECB Opinion

text: of 25 May 2001 at the request of the Austrian Ministry of Finance on a draft Federal law establishing and organising the financial market supervisory authority. 17 See Financial Stability Forum, ‘Guidance for Developing Effective Deposit Insurance Systems’, September 2001, point V.1(c) (‘Basic governance arrangements’), p. 19. According to these recommendations, the governing body of a deposit-guarantee scheme should include individuals with the requisite knowledge to allow them to understand the environment in which the scheme operates.

title: Opinion of the European Central Bank of 17 October 2008 at the request of the Greek Ministry of Economy and Finance on a draft law on, inter alia, the establishment of the ‘Depositors and Investors of Credit Institutions Compensation Fund’ (CON/2008/51)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 17 October 2008 at the request of the Greek Ministry of Economy and Finance on a draft law on, inter alia, the establishment of the ‘Depositors and Investors of Credit Institutions Compensation Fund’ (

text: ) Introduction and legal basis

text: On 24 September 2008 the European Central Bank (ECB) received a request from the Greek Ministry of Economy and Finance for an opinion on a draft law on, inter alia, the establishment of the ‘Depositors and Investors of Credit Institutions Compensation Fund’ (hereinafter the ‘draft law’). On 10 October 2008 the ECB received a related consultation request from the Ministry on a draft provision raising the coverage limit of the present deposit protection scheme in Greece (hereinafter, the ‘draft amendment on the amount of guaranteed deposits’), which is to be adopted separately from the draft law and which stems from the decisions taken at the Ecofin Council meeting held in Luxembourg on 7 October 2008 to address the current turmoil in the financial sector. This opinion covers both the draft law and the draft amendment on the amount of guaranteed deposits. The ECB’s competence to deliver an opinion is based on Article 105(4) of the Treaty establishing the European Community and the third and sixth indents of

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

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

text: 1. Purpose of the draft law

text: 1.1 The part of the draft law relating to compensation schemes is intended to achieve the following objectives: (i) replace the provisions of Law 2832/2000 currently governing deposit guarantees; and (ii) codify the arrangements on deposit guarantees and investor compensation schemes in cases of insolvency of credit institutions, with the view to establishing a set of coherent, efficient and transparent compensation arrangements, enhancing confidence in the financial system and in the capital market. These objectives are to be achieved by the following means: (i) Institutional consolidation of Greek compensation schemes with regard to credit institutions. This will be achieved by establishing a single entity under the name of the ‘Depositors and Investors of Credit Institutions Compensation Fund’ (hereinafter the ‘Fund’) which will be the compensation scheme for both deposits and covered investment services provided by credit institutions to their clients . The Fund will replace the current ‘Hellenic Deposit Guarantee Fund’ (HDGF) which has only guaranteed compensation payments to depositors with credit institutions, while other entities that provide investment services and are already members of the Athens Stock Exchange Members Guarantee Fund (ASEMGF) under Law 2533/1997 will continue to be covered by the ASEMGF. In line with the extension of the Fund’s scope to cater for investor protection vis-à-vis credit institutions, the draft law provides for two separate dedicated branches within the Fund, which would secure compensation payments for depositors and for investors, as the case may be. Moreover, the draft law introduces specific arrangements as regards the scope of the Fund’s coverage as well as its financing and governance, as referred to in paragraphs 2 to 4 of this opinion. (ii) Enhancement of the Bank of Greece’s supervisory functions relating to the operation of the

text: Fund

text: This arrangement, based on the supervisory function performed by the Bank of Greece in relation to the banking sector in Greece, will include measures such as: (i) the Bank of

text: Greece’s power to decide on the equivalence of coverage of Greek branches of credit institutions having their registered office outside the EU under the respective home country scheme; (ii) closer cooperation between the Bank of Greece and the EU supervisory authority concerned in the event of non-compliance by a Greek branch of a credit institution with a registered office in a Member State; and (iii) enhanced representation of the Bank of Greece on the Fund’s Board. 1.2 Moreover, under the draft amendment on the amount of guaranteed deposits, the deposit guarantee will increase from EUR 20 000 to EUR 100 000, with the rates for calculating credit institutions’ contributions to the deposit-guarantee scheme being adjusted accordingly. This arrangement will be valid until 31 December 2011 and may be extended by a decision of the Minister for Economy and Finance

text: 2. General observations

text: 2.1 The ECB welcomes the consolidation of compensation schemes for both deposits and investment services provided by credit institutions in Greece, as it will increase operational efficiency and enhance the confidence of credit institutions’ clients in the scheme responsible for compensation in case of insolvency. However, it is noted that according to the draft law’s final and transitional provisions, credit institutions that, at the time of entry into force of the draft law, are already members of the ASEMGF will continue as such and will have no obligation to join the Investors’ Cover Branch (ICB). This means that some credit institutions will not join the ICB of the Fund. The ECB notes that to ensure a level playing field, all credit institutions should be subject to the same regime as regards the calculation of contributions payable to the compensation scheme. 2.2 Moreover, the ECB welcomes the draft amendment on the amount of guaranteed deposits increasing the guaranteed amount for deposits to EUR 100 000 in accordance with the conclusions of the Ecofin Council held on 7 October 2008 . This proposed measure should facilitate prevention of the financial turmoil’s impact on the real economy in Greece, while improving the stability of the banking system and protecting the deposits of individuals.

text: 3. Financing of the Fund

text: 3.1 The initial capital of the Fund will be taken over from the HDGF, to which the Fund is the universal successor, and which has had its capital covered as to 60 % by the Bank of Greece and as to 40 % by those credit institutions which are members of the Hellenic Bank Association . The Fund’s assets will be grouped in two distinct branches, namely the Depositors’ Cover Branch

text: (DCB) and the ICB and will be exclusively dedicated to serving their respective purposes, i.e. compensation payments to depositors and investors concerned .The Fund’s operating costs relating to the DCB and the ICB will be determined on an annual basis by a decision of the Board. Specifically, the costs incurred by the ICB will be allocated to each participating credit institution in proportion to the value of its participation . 3.2 Article 4 of the draft law lists the DCB’s resources and

text: Article 4(4)

text: specifies the amount of a credit institution’s regular annual contribution and the details of its calculation on the basis of scales. By decision of the Fund’s Board, the contribution calculated will be adjusted, from 1 January 2009 onwards, using a coefficient ranging from 0.90 to 1.10, according to the ranking which, solely for the purposes of the application of the draft law’s provisions establishing the Fund, will be attributed to the credit institution concerned by a decision of the Bank of Greece. The ranking will take into account the criteria of capital adequacy, liquidity and adequacy of internal audit systems, as reflected in Law 3601/2007 implementing Directives

text: and

text: . In this respect the ECB welcomes the principle of risk-based premiums, which will align the calculation of a credit institution’s contributions to the Fund to its risk profile.

text: 4. Governance of the Fund

text: 4.1 Article 23 of the draft law introduces certain changes to the current regime, namely it proposes an increase to the number of members of the Fund’s Board from seven to nine. The Board will continue to be chaired by one of the Deputy Governors of the Bank of Greece, the other members coming from the Ministry of Economy and Finance (one member), the Bank of Greece (three members as opposed to two under the current regime), the Hellenic Bank Association (three members) and the Association of Cooperative Banks of Greece (one member). It also introduces the possibility to renew the Board’s five-year mandate more than once and enables the Board Chairman to delegate representation of the Fund before any authority or third party, judicially and extra-judicially to another Board member, the Director or another officer of the Fund. The ECB

text: further notes that the draft law, as referred to in paragraph 1.1(ii) above, transfers certain supervisory powers previously entrusted to the HDGF to the Bank of Greece. The ECB welcomes these proposed amendments to the extent that they maintain a significant level of central bank involvement. 4.2 As a general point, the ECB repeats its earlier observation that central banks are in general in the best position to take on responsibility for financial stability, given their insight into money and financial market developments and their involvement in payment systems and monetary policy operations . At the same time, as deposit-guarantee schemes in particular are a key element of the financial safety net, the governance framework should ensure that the important function of such schemes is carried out professionally and efficiently . Moreover, effective coordination with the overall role of central banks in safeguarding financial stability should be ensured. This aim may be achieved, inter alia, through maintaining an adequate level of involvement of the central bank in the governance and regulation of national deposit-guarantee schemes.

text: 5. Concluding remarks

text: For reasons of consistency and to ensure clarity and legal certainty, the ECB recommends that the two sets of provisions, namely the draft law and the draft amendment on the amount of guaranteed deposits, should be properly aligned. In particular, as the latter amends Law 2832/2000 and will be adopted prior to the draft law, which in turn will replace Law 2832/2000 itself, the draft law should be amended to reflect the exceptional nature and, thus, the limited life of the draft amendment on the amount of guaranteed deposits, for example by including a transitional provision or by any other means that the Greek legislator considers appropriate.

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

text: Done at Frankfurt am Main, 17 October 2008. [signed]

text: The President of the ECB

text: Jean-Claude TRICHET


text: Declaration on a concerted European action plan of the euro area countries, available on the website of the French Presidency at www.eu2008.fr.

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

text: See the first paragraph of the preamble to Royal Decree-Law 1.

text: The Executive Council will consist of the Minister for Economic Affairs and Finance as Chair, the State Secretary for Economic Affairs, the State Secretary for Finance and the Budget, the President of the Instituto de Crédito Oficial, the Attorney General and the Auditor General. See

text: Article 3(1)

text: to (2) of Royal Decree-Law 1.

text: See Article 1 of Royal Decree-Law 2. 7 See the press release of the 2894th Council meeting (13784/08), available on the Council’s website at www.consilium.europa.eu.

text: See also the third and sixth paragraphs of the preamble to Royal Decree-Law 1. 9 ECB Opinion

text: of 15 October 2008 at the request of the Irish Minister for Finance on a draft Credit Institutions (Financial Support) Scheme 2008. All ECB opinions are available on the ECB’s website at www.ecb.europa.eu. 10 See, e.g. ‘investment guidelines’ to be adopted by the Fund’s Executive Council under

text: Article 3(3)

text: (1) of Royal Decree- Law 1. See also Article 1(4) of Royal Decree-Law 2. 11 See definition of ‘draft legislative provisions’ under

text: Article 1(1)

text: and also the sixth indent of

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

text: . 12 See 4(2) of Royal Decree-Law 1. 13 See 4(3) of Royal Decree-Law 1. 14 See ECB Opinion

text: See ‘Communication from the Commission – The application of State aid rules to measures taken in relation to financial institutions in the context of the current global financial crisis’ of 13 October 2008, available on the Commission’s website at www.ec.europa.eu. 16 See paragraph 18 of the Commission’s guidance, specifying that ‘The eligibility criteria of financial institutions … must be objective, taking due account of their role in the relevant banking system and the overall economy, and nondiscriminatory so as to avoid undue distortive effects on neighbouring markets and the internal market as a whole. In application of the principle of non discrimination on the grounds of nationality, all institutions incorporated in the Member State concerned, including subsidiaries, and with significant activities in that Member State should be covered by the scheme’. 17 See for instance ECB Opinion

text: . 18 Article 4(5) of Royal Decree-Law 1. 19 Article 3(6) of Royal Decree-Law 1; seventh paragraph of the preamble to Royal Decree-Law 1. 20

text: Article 2(3)

text: and (4) of Royal Decree-Law 1.

text: See the classifications of ‘public undertaking’ in

text: Article 8(1) of 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: Article 2 of Royal Decree-Law 2.

publisher: Europeiska centralbanken

sprak: en

title: Opinion of the European Central Bank of 17 October 2008 at the request of the Spanish State Secretary for Economic Affairs on a Royal Decree-Law creating a Fund for the acquisition of financial assets and on a Royal Decree-Law adopting urgent financial and economic measures in relation to the concerted European action plan of the euro area countries (CON/2008/52)

serie: con

text: OPINION OF THE EUROPEAN CENTRAL BANK of 17 October 2008 at the request of the Spanish State Secretary for Economic Affairs on a Royal Decree-Law creating a Fund for the acquisition of financial assets and on a Royal Decree-Law adopting urgent financial and economic measures in relation to the concerted European action plan of the euro area countries (

text: ) Introduction and legal basis

type: rubrik

text: On 13 October 2008 the European Central Bank (ECB) received a request from the Spanish State Secretary for Economic Affairs for an opinion on a Royal Decree-Law creating a Fund for the acquisition of financial assets (hereinafter ‘Royal Decree-Law 1’). On 15 October 2008 the ECB received from the Spanish State Secretary for Economic Affairs a related request on a Royal Decree-Law adopting urgent financial and economic measures in relation to the concerted action plan of the euro area countries (hereinafter ‘Royal Decree-Law 2’ and ‘concerted European action plan’ respectively). This opinion covers both Royal Decree-Laws. A Royal Decree modifying the guarantees provided for Spanish deposit and investment schemes was submitted only for information purposes. The ECB’s competence to deliver an opinion is based on Article 105(4) of the Treaty establishing the European Community and on the third and sixth indents of

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the Royal Decree-Laws relate to Banco de España and to the rules applicable to financial institutions insofar as they materially influence the stability of financial institutions and markets. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

type: stycke

text: 1. Purpose of the Royal Decree-Laws

text: Royal Decree-Law 1 is motivated by the current financial market crisis and by the Spanish authorities’ concern to foster financing to companies and households . For this purpose, Royal Decree-Law 1 establishes a fund that will be used to acquire from financial institutions top quality assets on a voluntary basis and subject to market criteria. The Fund will receive from the State budget an initial provision of

text: EUR 30 billion extendable to up to EUR 50 billion . The Fund will be managed by the Ministry for Economic Affairs and Finance, which will establish the Fund’s Executive Council and its Executive Committee . Moreover, Royal Decree-Law 2 seeks to implement the outcome of the Declaration on a concerted European action plan of the euro area countries in facilitating the funding of banks, while taking into account the situation of the Spanish financial system and the measures already adopted in Royal Decree-Law 1. To this end, Royal Decree-Law 2 authorises State guarantees of new financing operations by credit institutions with a maximum maturity of five years, 31 December 2009 as the time limit for granting such guarantees and EUR 100 billion as the maximum covered amount for 2008 .

text: 2. General observations

text: 2.1 The Spanish Government has already adopted and published the Royal-Decree Laws on an urgent basis, thus having already normative effects. Therefore, this opinion relates to the parliamentary discussion in the validation phase of the Royal Decree-Laws, any further legislative amendments to them and to their subsequent implementation. 2.2 The ECB notes that the conclusions adopted at the Ecofin meeting on 7 October 2008 highlighted common principles to guide the States’ action, namely that (i) interventions should be timely and the support should in principle be temporary; (ii) the interests of taxpayers should be protected; (iii) existing shareholders should bear the due consequences of the intervention; (iv) the Government should be in a position to bring about a change of management; (v) management should not retain undue benefits; (vi) governments may have, inter alia, the power to intervene in remuneration; (vii) legitimate interest of competitors must be protected, in particular through the State aid rules, and (viii) negative spillover effects should be avoided . Moreover, the ECB notes that in the concerted action plan of 12 October 2008 the Heads of State of the euro area agreed on common principles to be followed by the EU and euro area governments, central banks and supervisors to avoid national measures adversely affecting the functioning of the single market and the other Member States. The ECB highlights that all the initiatives put in place by national governments to restore confidence in financial markets should be aimed at implementing such common principles, in the spirit of close cooperation with other Member States and EU institutions. 2.3 Against this background, the ECB notes that Royal Decree-Law 1, to be in line with one of the conclusions of the Ecofin meeting on 7 October 2008, namely that the support should be temporary, should contain an expiry date. Although the references in the preamble of the Royal Decree-Law 1 to the temporary nature of the scheme and to the Budget Law of 2009 indicate that the scheme will

text: not go beyond 2009 , a clear time limit would dissipate any expectation that the scheme is permanent. 2.4 The ECB draws the consulting authority’s attention to the Declaration of Paris where it says in point (8) that Member States’ actions‘ taken to facilitate the funding of banks ‘will be designed in order to avoid any distortion in the level playing field’, which is a crucial element for the integration of the financial markets in Europe. And further, that ‘all the financial institutions incorporated and operating in [euro area countries] and subsidiaries of foreign institutions with substantial operations will be eligible’ to benefit from States’ actions. The ECB welcomes the fact that Royal Decree-Law 1 does not discriminate between credit institutions established in Spain. However, the ECB notes that Royal Decree-Law 2, namely in

text: Article 1(1)

text: , could be considered as allowing for different treatment of some EU credit institutions established in Spain, with a potential disruption of the level playing field within the internal market. The ECB has stated in other opinions that ‘arrangements that may be seen as providing preferential treatment to specified institutions should be avoided’ . 2.5 The ECB understands that implementing rules will complete the details of the Royal Decree- Laws . Consequently, the ECB expects to be consulted on any proposed implementing legislation to be adopted under the Royal Decree-Laws that materially influences the stability of financial institutions and markets .

text: 3. Specific comments

text: 3.1 Eligibility for support The ECB notes that: (i) the Fund will use competitive procedures to select assets and make acquisitions in accordance with the usual financial market mechanisms to perform its operations ; and (ii) the financial instruments in which the Fund will invest will be of the highest quality and determined by the Fund’s Executive Committee in accordance with the criteria established by the Fund’s Executive Council and in all cases respecting the principles of objectivity, security, transparency, efficiency, profitability and diversification . The ECB welcomes the above provisions, as financial support arrangements which may be considered as providing preferential treatment of specified credit institutions should be avoided . The ECB further draws the consulting

text: authority’s attention to the recently adopted Commission’s guidance on compliance by the financial sector support schemes with EU State aid rules , which includes in the specific context of provision of State guarantees detailed rules on setting the eligibility criteria for the beneficiary institutions . In this context, the ECB recommends clarifying in Royal Decree-Law 2 that it ensures compliance with the requirements of EU State aid and competition law and that regulatory and supervisory measures will be undertaken to ensure that the beneficiary institutions will not be unfairly advantaged by making undue use of their guaranteed status to engage in a heightened level of activities which create market distortions and facilitate abnormal balance sheet growth . In this regard, the ECB underlines the importance of establishing appropriate safeguards such as for example limits to marketing of financial products or limits to expansion of activities on the basis of the State guarantees. 3.2 Role of the central bank The ECB understands that the Fund will be managed by the Ministry for Economic Affairs and Finance, and that the role of Banco de España in relation to the Fund will be limited to: (i) acting as an instrument for the Fund’s financial operations of the Fund in its capacity as agent to the Government and deposit bank ; and (ii) providing expert advice to the Fund’s Executive Committee . The ECB appreciates that the above provisions recognise the Banco de España’s expertise relevant to the operation of the Fund. Moreover, the ECB notes that the Banco de España’s involvement with the Fund must be compatible with the Treaty. First, the ECB understands from Royal Decree-Law 1 that Banco de España will only play the role of fiscal agent. Therefore, the ECB expects that functions to be performed by Banco de España for the benefit of the Fund will be conducted in a manner fully compatible with Banco de España’s institutional and financial independence, as a safeguard for the proper performance of the Banco de España’s tasks under the Treaty and the Statute of the European System of Central Banks and of the European Central Bank. Second, the ECB also understands that the Fund’s resources will be financed through public debt issuance and that the Fund will finance its own management costs . It is therefore expected that the involvement of Banco de España will not go beyond the agent function and, in particular, that it will fully comply with the prohibition on monetary financing laid down in the Treaty.

text: 3.3 State guarantees and the prohibition on monetary financing In addition, the ECB reminds the Spanish authorities that compliance of the State guarantee arrangements with the monetary financing prohibition laid down in the Treaty needs to be ensured. It should be noted in this context that the Fund will qualify as a ‘public undertaking’ within the meaning of Article 101(1) of the Treaty, since the State will exercise dominant influence over the Fund by controlling its financial resources and governing bodies . As a result, the ECB notes that, to ensure compliance with the monetary financing prohibition, the Fund may not benefit from overdraft facilities or any type of credit facility with the Banco des España in accordance with

text: Regulation (EC) No 3603/93

text: . 3.4 The scheme’s relationship with the single monetary policy of the euro area The ECB notes that, in line with the concerted action plan, Member States must act in a coordinated manner to avoid significant differences in national implementation from having a counterproductive effect and creating distortions in global banking markets. The concerted action plan also acknowledges the need to work in cooperation with the ECB to ensure consistency with the Eurosystem’s management of liquidity and compatibility with its operational framework. Against this background, the ECB notes that uncoordinated decisions among Member States should be avoided as they may involve a fragmentation of the euro area money market. First, the ECB notes that, under Royal Decree-Law 1, the Fund will acquire top quality assets from financial institutions, giving priority to assets backed by new credit that could be granted later than 7 October 2008. In this respect, the ECB makes the following observations which are important from the monetary policy perspective. Although such measures should restore confidence in the Spanish banking system, it is important that they are taken in a coordinated manner, that the pricing of assets is determined by market conditions (e.g. through auction procedures) and that the transactions conducted by the Fund do not interfere with the transmission of the monetary policy of the Eurosystem. Second, the ECB considers that extending the State guarantees to cover interbank deposits should be avoided. It could entail a substantial distortion in the various national segments of the euro area money market by potentially increasing short-term debt issuance activity across Member States and therefore impairing the implementation of the single monetary policy, which is an exclusive Eurosystem competence under Article 105(2) of the Treaty. In this context, the ECB attaches the utmost importance to Article 1(2) of Royal Decree Law 2 that provides that any State guarantee for interbank deposits will only be issued ‘within a concerted and coordinated framework of euro area Governments’. It also appears crucial to ensure the harmonisation of the pricing of such guarantee within the euro area and the EU, as a level playing field is of essence. The ECB should be involved in such concertation and coordination, and would welcome an explicit provision for this in any subsequent legislation.

text: 3.5 Recapitalisation of credit institutions The ECB notes that Royal Decree-Law 2 provides the Minister for Economic Affairs and Finance with the temporary power until 31 December 2009 to acquire securities issued by credit institutions 22 to reinforce their own resources, including preference shares and participations . The ECB again draws attention to the common principles adopted at the Ecofin meeting on 7 October 2008 and in particular to the need to ensure that shareholders and management bear the due consequences of intervention. Against this background, the ECB would suggest that the Minister consider setting specific terms to maximise the potential benefits for taxpayers along those common principles.

text: Done at Frankfurt am Main, 17 October 2008.

text: [signed]

text: The President of the ECB

text: Jean-Claude TRICHET

type: vagledning

utgivare: ecb


text: OJ L 189, 3.7.1998, p. 42. 2 Law on Narodowy Bank Polski of 29 August 1997 (consolidated text: Dz.U. of 1 April 2005 No 1, item 2). 3 The data collected by NBP under the proposed provisions will be used to implement monetary policy, perform periodic assessments of the State’s monetary position as well as to compile the balance of payments and international investment position statistics (see

text: Article 23(2)

text: and

text: Article 23

text: (2c) of the Law on NBP, as amended by

text: Article 1(1)

text: (a) to (b) of the draft law). See point 1 of the explanatory memorandum to the draft law. 4 OJ L 211, 11.8.2007, p. 8. See point 1 of the explanatory memorandum to the draft law. 5 See Article 23(7) of the Law on NBP, as amended by

text: Article 1

text: (e) of the draft law.

text: See

text: Article 23(8)

text: and (9) of the Law on NBP, as amended by

text: Article 1

text: (e) of the draft law. 7 First sentence of recital 5 to Regulation ECB/2007/8. 8 OJ L 318, 27.11.1998, p. 8.

text: Recital 17

text: of

text: Regulation (EC) No 2533/98

text: states that, while it is recognised that the statistical information needed to fulfil the ECB’s statistical reporting requirements is not the same for the participating as for the non-participating Member States, Article 5 of the Statute applies to both participating and non-participating Member States. 9 See ECB Opinion

text: of 8 August 2007 at the request of Banca Naţională a României on a draft regulation concerning statistical reporting of assets and liabilities recorded on the balance sheet of non-banking financial institutions.

text: See ECB Opinion

text: of 28 February 2005 at the request of Central Bank of Malta on a draft directive No 5 on statistical reporting requirements. 12 See Article 23(7) of the Law on NBP, as amended by

text: Article 1

text: (d) and Article 3 of the draft law. 13 See paragraph 3.4 of ECB Opinion

text: of 1 September 2008 at the request of the Polish Minister for Finance on a draft law on the Financial Stability Committee.

title: Opinion of the European Central Bank of 17 October 2008 at the request of the Polish Minister for Finance on a draft law amending the Law on Narodowy Bank Polski and certain other laws (CON/2008/53)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 17 October 2008 at the request of the Polish Minister for Finance on a draft law amending the Law on Narodowy Bank Polski and certain other laws (

text: ) Introduction and legal basis

text: On 9 September 2008 the European Central Bank (ECB) received a request from the Polish Minister for Finance for an opinion on a draft law amending the Law on Narodowy Bank Polski and certain other laws (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Article 105(4) of the Treaty establishing the European Community and the third and fourth indents of

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

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft law relates to Narodowy Bank Polski (NBP) and to the collection, compilation and distribution of statistical information. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft law

text: 1.1 The draft law amends the Law on Narodowy Bank Polski (hereinafter the ‘Law on NBP’) and certain other laws by extending the legal framework for NBP’s collection of statistical information to statistical reporting by non-banking financial institutions operating in Poland, in particular by investment funds . In this regard, the draft law is intended to align statistical reporting requirements in Poland with Regulation ECB/2007/8 of 27 July 2007 concerning statistics on the assets and liabilities of investment funds . 1.2 Furthermore, the draft law introduces rules on the transmission of the collected statistical information, allowing NBP to transfer such information to specified national and international entities, including the ECB . Finally, the draft law permits the reciprocal sharing of individual and

text: aggregated statistical information between NBP and the Polish Central Statistical Office, to the extent necessary for the performance of their statutory functions .

text: 2. General observations

text: 2.1 Article 5.2 of the Statute of the European System of Central Banks and of the European Central Bank provides that ‘national central banks shall carry out, to the extent possible, the tasks described in

text: Article 5.1

text: ’, which are the tasks of the European System of Central Banks (ESCB) as defined by the Treaty and the ESCB Statute. Although regulations adopted under Article 34.1 of the ESCB Statute do not confer any rights or impose any obligations on Member States that have not adopted the euro (hereinafter the ‘non-participating Member States’), Article 5 of the ESCB Statute applies to all Member States, whether or not they have adopted the euro . Further, Article 47.2 of the ESCB Statute provides that the ECB’s General Council is required to contribute to the collection of statistical information as referred to in Article 5 of the ESCB Statute. In addition, Article 10 of the Treaty requires Member States to ‘take all appropriate measures ... to ensure fulfilment of the obligations arising out of this Treaty’ and, more specifically,

text: Article 4 of Council Regulation (EC) No 2533/98 of 23 November 1998

text: concerning the collection of statistical information by the European Central Bank requires all Member States to ‘organise themselves in the field of statistics … and fully cooperate with the ESCB in order to ensure the fulfilment of the obligations arising out of Article 5 of the Statute’. These provisions therefore mean that non-participating Member States are under an obligation to design and implement at national level all measures they consider appropriate to carry out the collection of statistical information needed to fulfil the ECB’s statistical reporting requirements and to make timely preparations in the field of statistics in order for them to become participating Member States . 2.3 In this context, it is primarily the task of the national authorities of non-participating Member States to determine which detailed reporting requirements and collection methods are the most efficient and effective at the national level and the least burdensome for the reporting population concerned. The ECB notes that the reporting regimes for collecting statistical data by national central banks are an indispensable component of the national statistical collection systems. The ECB does not comment in detail on national reporting provisions as they may differ considerably between Member States, depending on various national and external factors. The ECB’s comments are therefore of a general nature only and are meant to serve as a guide, enabling NBP to shape its

text: reporting requirements in line with those of the Eurosystem in preparation for Poland’s adoption of the euro .

text: 3. Collection of statistical information

text: The ECB welcomes both objectives of the draft law, i.e. clarifying the legal obligations of financial institutions outside the banking sector to provide statistical information directly to NBP and aligning NBP’s statistical framework with the ECB’s requirements, in particular as laid down in Regulation ECB/2007/8. Achieving consistency with the ECB’s statistical standards will enable reporting agents to become familiar with the statistical reporting regime that will apply once the euro has been introduced in Poland. The above comments do not prejudice any future ECB assessment relating to the reporting scheme for statistics on balance sheet assets and liabilities of non-banking financial corporations in Poland.

text: 4. Rules on exchange of information

text: 4.1 The ECB welcomes the proposed amendments to the Law on NBP, which will enable individual and aggregated statistical data to be exchanged, on the basis of reciprocity, between NBP and the Central Statistical Office . As this extended data-sharing may prevent duplication in the collection of statistical data, the proposed amendments are expected to reduce the reporting burden on the reporting population in Poland. At the same time, they may further enhance the quality of the statistics concerned. 4.2 Furthermore, the draft law will allow NBP to disclose data collected from individual financial institutions to: (i) the ECB, in connection with NBP’s obligations stemming from its participation in the ESCB; (ii) foreign entities, in performance of Poland’s international obligations; (iii) the Minister for Finance, for the purposes of management of the public debt; and (iv) other entities, as specified in separate provisions . The ECB notes that this part of the amendments introduced by the draft law is substantially similar to the amendments proposed in the previous draft law amending the Law on NBP, as commented in ECB Opinion

text: . The ECB reiterates in this respect that the Community law provisions protecting the confidentiality of information reported by market participants apply not only to NBP’s provision of information to the ECB but also to other exchanges of supervisory and statistical information. The draft law needs to precisely define the other instances when NBP is allowed to disclose information. In addition, it needs to refer to the requirement to comply with Community law in this respect. Moreover, the ECB understands that the draft law’s provisions amending Article 23 of the Law on NBP will be

text: reconciled later in the drafting procedure with the amendments proposed by the draft provisions commented on in ECB Opinion

text: , in so far as both proposals amend Article 23 of the Law on NBP. This opinion will be published on the ECB’s website.

text: Done at Frankfurt am Main, 17 October 2008. [signed]

text: The President of the ECB

text: Jean-Claude TRICHET


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

text: Available on the website of the Ministry of Economic and Business Affairs, www.oem.dk.

text: Directive

text: of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes, OJ L 135, 31.5.1994, p. 5 and Directive

text: of the European Parliament and of the Council of 3 March 1997 on investor-compensation schemes, OJ L 84, 26.3.1997, p. 22.

text: See Sections 3-6 of the Law.

text: See Sections 9 and 10 of the Law

text: See Section 11 of the Law.

text: See ECB Opinion

text: of 3 October 2008 at the request of the Irish Minister for Finance on a draft Credit Institutions (Financial Support) Bill 2008. 12 See the press release of the 2894th Council meeting (13784/08), available on the Council’s website, www.consilium.europa.eu. 13 See the Declaration of 12 October 2008, available on the website of the French Presidency, www.ue2008.fr.

text: See paragraph 2.3 of ECB Opinion

text: . 15 See Commission press release IP/08/1483 of 10 October 2008. The non-confidential version of the Commission’s decision will be made available under Case NN 58/2008. 16 See Section 3 of the Law. 17 See Section 3(2) of the Law. 18 Such being the three options for classification as a ‘public undertaking’, as specified in Article 8(1) of Council Regulation No 3603/93 of 13 December 1993 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. 19 Cf. paragraph 2.4 of ECB Opinion

text: of 17 January 2008 at the request of the Polish Minister for Finance on a draft law amending the Law on the Bank Guarantee Fund.

text: See ECB Opinion

text: of 10 September 2008 at the request of the Banque centrale du Luxembourg on amendments to the draft law improving the legislative framework for Luxembourg as a financial centre and amending the Law of 23 December 1998 on monetary status and on the Banque centrale du Luxembourg, footnote 16.

title: Opinion of the European Central Bank of 17 October 2008 at the request of the Danish Ministry of Economic and Business Affairs on a proposed Law on financial stability (CON/2008/54)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 17 October 2008 at the request of the Danish Ministry of Economic and Business Affairs on a proposed Law on financial stability (

text: ) Introduction and legal basis

text: On 9 October 2008 the European Central Bank (ECB) received a request from the Danish Ministry of Economic and Business Affairs for an opinion on a proposed Law on financial stability, which was adopted on 10 October 2008 (hereinafter the ‘Law’). Given the turbulence in the international financial markets, the consulting authority requested the ECB to provide its opinion urgently. The ECB’s competence to deliver an opinion is based on Article 105(4) of the Treaty establishing the European Community and on the sixth indent of

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

text: 1. Purpose of the Law

text: 1.1 The Law is motivated by the current financial market crisis. It introduces a special resolution regime for banks affected by financial difficulties and ensures that all domestic and foreign claims by depositors, debt holders (senior debt) and other ordinary creditors in relation to banks and savings banks in Denmark are fully covered by a State guarantee from 5 October 2008 until 30 September 2010 . Only creditors in relation to covered bonds and holders of subordinated debt (hybrid core capital and subordinate loan capital) are excluded from the State guarantee. 1.2 The Law implements the political agreement on financial stability of 5 October 2008 between the Danish Government, the financial sector and the majority of political parties represented in the Danish Parliament (Folketinget) . That political agreement states that the Danish financial sector

text: should demonstrate moderation, implying for example that a more moderate approach should be taken in future to management remuneration within credit institutions, and it should also aim at consolidation over the next two years. 1.3 The guarantee scheme set up under the Law supplements the existing Deposit and Investor Insurance Scheme, which transposed the EU Directives on depositor guarantee and investorcompensation schemes . It also widens the scope of operation of the existing Private Contingency Association (PCA), an association set up and administered by the Danish financial sector, which may draw on guarantees given by its members for the purpose of winding up ailing credit institutions. Such guarantees currently amount to DKK 750 million per year. Under the Law, the new guarantee scheme applies to all credit institutions that apply for membership of the PCA before 13 October 2008, after which date such credit institutions will not be allowed to withdraw from the guarantee scheme during the two years for which it is scheduled to apply . 1.4 In addition to the above features, the Law obliges the Minister for Economic and Business Affairs to set up a Winding-Up Company (WUC), fully owned by the State, with the objective of covering the claims of creditors of credit institutions that are members of the PCA, and of contributing to a regulated winding-up of failing institutions . The WUC will have powers to organise private-sector takeovers of credit institutions affected by financial difficulties, either by means of a directed transfer of the troubled credit institution’s assets and liabilities to a purchaser nominated by the WUC, e.g. a subsidiary of the WUC, or of capital injections provided by the WUC to a selected private-sector purchaser acquiring the assets and liabilities of the troubled credit institution under a commercial contract . Where insolvency procedures are initiated in relation to a credit institution, the WUC will enter into an agreement with the insolvency administrator on the sale of the insolvent credit institution’s assets and liabilities . 1.5 The PCA will guarantee losses incurred by the WUC during the period of operation of the Law up to a maximum amount of DKK 35 billion . The State will guarantee any losses exceeding the amount guaranteed by the PCA .

text: 2. General observations

text: 2.1 The ECB was consulted on the Law at the draft stage in the afternoon of 9 October 2008. Less than 24 hours later, the Danish Parliament adopted the Law. The ECB understands that the application

text: of an accelerated procedure during the preparation and adoption of the Law did not leave room for the normal consultation process. This does not, however, prejudice the duty under Article 105(4) of the Treaty to consult the ECB on national draft legislative provisions falling within its advisory fields of competence, and perhaps the ECB could have been consulted on a previous draft of the Law a few days earlier. 2.2 As already mentioned in a recent ECB opinion on another draft national law relating to emergency measures arising out of the current financial turmoil , the ECB is of the view that it is important for national authorities to seek to coordinate their responses to the current financial situation with their EU partners. In view of the similarities of the causes and consequences of the financial crisis across Member States and the potential interdependencies of policy responses, it would have been advisable to consult other EU authorities formally on the envisaged Law at the draft stage. At the same time, the ECB notes that there is an ongoing discussion at international and European level aimed at coordinating action to preserve confidence and financial stability. More specifically, the ECB would draw attention to the conclusions adopted at the Ecofin meeting on 7 October 2008, which highlighted common principles to guide the action of Member States as follows: (i) interventions should be timely and the support should in principle be temporary; (ii) the interests of taxpayers should be protected; (iii) existing shareholders should bear the due consequences of the intervention; (iv) the government should be in a position to bring about a change of management; (v) management should not retain undue benefits; (vi) governments may have, inter alia. the power to intervene in remuneration; (vii) legitimate interest of competitors must be protected, in particular through the State aid rules, and negative spill-over effects should be avoided . Against this background, the ECB notes that a number of the elements contained in the Law are in line with the conclusions of the Ecofin meeting of 7 October 2008, inter alia on the temporary nature of the arrangement and the possibility, subject to certain conditions, to replace the board and management of institutions. 2.3 In line with the Declaration of 12 October 2008 made at the summit of the euro area Member States in Paris, the ECB notes that EU Member States have to act in a coordinated manner to avoid significant differences in national implementation having a counter-productive effect, creating distortions in global banking markets. In particular, the ECB notes that uncoordinated decisions to guarantee interbank deposits in some Member States should be avoided as they may involve a fragmentation of money markets. 2.4 At this stage, the ECB wishes to underline the importance it attaches to ensuring that the Law, and any subsequent executive orders, fully comply with the relevant provisions of Community law, including State aid rules, especially in view of the fact that interbank deposits from foreign credit

text: institutions are covered by the guarantee scheme. This feature could be seen to give some Danish credit institutions a competitive advantage both in a European context and domestically, as certain national competing financial institutions, such as mortgage credit institutions, are excluded from the guarantee scheme . In this respect, the ECB notes that the Danish authorities notified the Commission of the State guarantee on 8 October 2008. According to the Commission’s press release the guarantee scheme has been approved under the State aid rules laid down in the Treaty, because it was the most appropriate means of addressing the risk of a severe disturbance in the Danish economy, while keeping potential distortions of competition to a minimum through effective safeguard mechanisms .

text: 3. State guarantee and the prohibition on monetary financing

text: 3.1 The ECB welcomes the new guarantee scheme, which is structured in such a way that it should encourage the Danish financial sector to take an active and responsible role in the measures necessary to ensure financial stability and the regulated winding-up of failing institutions. At the same time, it is noted that Section 3 of the Law states that the Minister for Economic and Business Affairs will set up a company, the WUC, with share capital provided by the State. The State will be 16 17 the sole owner of the WUC , which will be able to borrow to cover its financing needs . However, neither the Law nor the explanatory memorandum to the Law specifies or clarifies from whom such borrowing will take place. 3.2 In this specific context, the ECB would remind the Danish authorities that a number of elements must be observed in order to comply with the monetary financing prohibition laid down in the Treaty. First, it should be noted that the WUC will qualify as a ‘public undertaking’ within the meaning of Article 101(1) of the Treaty, since the State will exercise dominant influence over the WUC by controlling its entire subscribed capital and will have the majority vote in a general 18 meeting, while also being able to appoint members of the WUC’s governing body . The WUC will also qualify as a ‘body governed by public law’ of Denmark within the meaning of Article 101(1) of the Treaty, since it will be established by the Law as a legal person financed and closely dependent on the Danish State, with the specific purpose of meeting needs in the general interest, while its organisation and the exercise of its public functions and powers in relation to 19 commercial banks will be based on the provisions of the Law . The ECB notes therefore that the

text: WUC should not be allowed to benefit from any type of lending or overdraft facilities from Danmarks Nationalbank to ensure compliance with the prohibition on monetary financing, and Danmarks Nationalbank has confirmed that it does not intend to lend or provide any financing to the WUC. Second, it should also be remembered that the provision of emergency liquidity assistance is a central bank function, which consists in giving support in exceptional circumstances 20 and on a case-by-case basis to temporarily illiquid but solvent credit institutions . 3.3 It is the ECB’s view that national legislation providing for the financing by NCBs of credit institutions other than in connection with central banking tasks, such as monetary policy, payment systems or temporary liquidity support operations, in particular to support insolvent credit and/or other financial institutions, is incompatible with the monetary financing prohibition.

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

text: Done at Frankfurt am Main, 17 October 2008.

text: [signed]

text: The President of the ECB

text: Jean-Claude TRICHET


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

text: See the Declaration of 12 October 2008, available on the website of the French Presidency, www.ue2008.fr.

text: See ‘Communication from the Commission – The application of State aid rules to measures taken in relation to financial institutions in the context of the current global financial crisis’ of 13 October 2008, available on the Commission’s website, www.ec.europa.eu.

text: See paragraph 18 of the Commission’s guidance, specifying that ‘The eligibility criteria of financial institutions … must be objective, taking due account of their role in the relevant banking system and the overall economy, and nondiscriminatory so as to avoid undue distortive effects on neighbouring markets and the internal market as a whole. In application of the principle of non discrimination on the grounds of nationality, all institutions incorporated in the Member State concerned, including subsidiaries, and with significant activities in that Member State should be covered by the scheme’.

text: On 20 October 2008 the Austrian authorities informed the ECB that it will adjust the draft legislation in order to include this point. 6 See paragraph 5 of ECB Opinion

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

text: See, e.g. paragraph 2.4 of ECB Opinion

text: of 5 November 2007 on the reform of financial supervision in Austria (title shortened).

title: Opinion of the European Central Bank of 20 October 2008 at the request of the Austrian Ministry of Finance on draft legal measures to ensure the stability of the Austrian financial market (CON/2008/55)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 20 October 2008 at the request of the Austrian Ministry of Finance on draft legal measures to ensure the stability of the Austrian financial market (

text: ) Introduction and legal basis

text: On 15 October 2008, the European Central Bank (ECB) received a request from the Austrian Ministry of Finance (hereinafter the ‘Ministry’) for an opinion on a draft Federal law adopting a Federal Law on the strengthening of the interbank money market and a Federal Law on measures for ensuring the stability of the financial market, as well as amending the Law on the Austrian Investment and Privatisation Agency (the ‘OIAG’) 2000, the Law on banking, the Law on the stock exchange, the Law on the Financial Market Supervisory Authority and the Law on the Federal budget 2008 (hereinafter the ‘draft law’). The Ministry has informed the ECB that the first chamber of the Austrian Parliament will discuss the draft law in a special session on 20 October 2008 and that the second chamber of Parliament will convene several days later, implying that the Ministry is invoking the exemption under

text: Article 3(2) of Council Decision 98/415/EC of 29 June 1998

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , which allows for a reduction in the minimum time limit for consultation of one month in case of extreme urgency. The ECB’s competence to deliver an opinion is based on Article 105(4) of the Treaty establishing the European Community and on the sixth indent of

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

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

text: 1. Purpose of the draft law

text: 1.1 The draft law is motivated by the current financial market crisis and comprises a number of different legal measures to ensure the stability of the Austrian financial market. In its letter to the ECB, the Ministry stresses that the draft law is in line with the decisions taken at the summit of the euro-area Member States held on 12 October 2008. 1.2 The main purpose of the first part of the draft law is to revive the interbank money market. It therefore envisages that financial institutions, i.e. banks, insurance companies or their respective

text: interest groups established by law, may set up a company that will operate as a ‘clearing house’, as it is referred to in the explanatory memorandum to the draft law, between financial institutions, i.e. borrow money from financial institutions and lend money against collateral and at a market rate to financial institutions. According to the submission of the Minister to the Council of Ministers of 14 October 2008, which is not repeated in the draft law or the explanatory memorandum, however, the collateral must not qualify as eligible collateral for receiving central bank liquidity. The clearing house has to provide access to all banks as defined in Section 1(1) of the Law on banking and to all Austrian insurance companies on equal terms. The Minister is empowered to provide a state guarantee to the clearing house for its lending and borrowing operations, which would be effective for a limited period only, and to act as guarantor to credit institutions that issue certain securities for refinancing operations. The beneficiaries of the measures have to pay adequate compensation for such guarantees. The measures may not exceed the amount of EUR 85 billion in total. Finally, the Minister has sole discretion to take any of the measures, although he has to report to the main committee of Parliament on a regular basis regarding any measures taken. The draft law on the strengthening of the interbank money market provides that it will expire on 31 December 2009. 1.3 The main purpose of the second part of the draft law is to support financial institutions in distress. The Minister is empowered to act as guarantor for the liabilities of a financial institution or towards a financial institution, to provide loans or own funds to financial institutions, to acquire shares either by way of a capital increase or by contract and to take over the assets of a financial institution. If this proves insufficient, the Minister may also temporarily take over ownership rights by adoption of a decree, thereby making all other ownership rights null and void, while providing for adequate compensation of the previous owners, i.e. nationalisation. The ownership rights of the State may be held by the Austrian Investment and Privatisation Agency. Once the measures prove successful, the re-privatisation of the nationalised companies will begin. The measures under this part of the draft law may not cost more than EUR 15 billion total, unless the measures to support the interbank money market have not been used up to the maximum amount permitted. Again, the Minister of Finance has to report to Parliament on the measures taken under this part of the draft law. 1.4 Regarding the proposed amendments to the Law on banking, the deposit guarantee for natural persons, which is currently EUR 20 000 per account holder and per bank, will become an unlimited guarantee with retroactive effect from 1 October 2008. This applies to all banks that are members of the Austrian deposit guarantee mechanisms, participation in which is mandatory for all banks with a licence from the Financial Market Supervisory Authority (hereinafter the ‘FMA’). As a last resort, if a deposit guarantee mechanism is unable to meet this obligation, it has to take out loans or issue debt certificates, which the State can guarantee. The State has – up to a certain amount recourse to the deposit guarantee mechanism concerned. Moreover, the FMA’s powers to require a bank to have additional capital in specific circumstances, where the bank concerned is subject to an

text: increased risk that is not adequately covered by the generally applicable capital requirements have been strengthened. 1.5 The proposed amendments to the Law on the stock exchange provide a legal basis for the FMA to prohibit short selling of financial instruments. 1.6 Finally, as regards the proposed amendments to the Law on the FMA, the FMA is required to report to the Minster if it becomes aware that it is possible that measures under the draft law on measures for ensuring the stability of the financial market could be necessary.

text: 2. General observations

text: 2.1 The ECB notes that there is an ongoing discussion at both international and European level with a view to coordinating the actions of countries aimed at preserving confidence in and stability of the international financial markets. More specifically, the ECB notes that on 12 October 2008 the Heads of State of the euro area issued a ‘Declaration on a concerted European action plan of the euro area countries’ (hereinafter the ‘Declaration’), in which they confirmed their commitment to act together in a decisive and comprehensive way in order to restore confidence and proper functioning of the financial system, aiming at restoring appropriate and efficient financing conditions for the economy. They agreed on common principles to be followed by the EU and euro area governments, central banks and supervisors to avoid national measures adversely affecting the functioning of the single market and the other Member States. Such coordinated approach includes initiatives aimed at ensuring appropriate liquidity, facilitating the funding of banks through various means, providing additional capital resources to financial institutions and recapitalisation of distressed banks. These principles were also endorsed for all Member States by the European Council on 16 October 2008. Against this background, the ECB highlights that all the initiatives put in place by national governments to restore the confidence in financial markets should be aimed at implementing such common principles, in the spirit of close cooperation with other Member States and EU institutions. 2.2 The draft law was agreed by the Council of Ministers on 14 October 2008, i.e. two days following the summit of euro area Member States. In line with the Declaration, Member States have to act in coordinated manner to avoid significant differences in national implementation having a counterproductive effect, creating distortions in global banking markets. The euro area Heads of State also acknowledged the need to cooperate with the ECB to ensure consistency with the management of liquidity by the Eurosystem and compatibility with the operational framework of the Eurosystem. The ECB appreciates the fact that the Ministry consulted it on the draft law on 15 October 2008, five days before the discussion in the first chamber of Parliament. It understands that the application of an accelerated procedure during the preparation and adoption of the draft law left insufficient time for the normal consultation process. This does not, however, prejudice the duty under Article 105(4) of the Treaty to consult the ECB on national draft legislative provisions

text: falling within its advisory fields of competence, and perhaps the ECB could have been consulted on a previous version of the draft law a few days earlier.

text: 3. Specific observations

text: Eligibility for support

text: 3.1 The ECB notes that both the draft law on the strengthening of the interbank money market and the draft law on measures for ensuring the stability of the financial market refer to support measures to credit institutions and ‘domestic insurance undertakings’. the ECB understands that the institutions potentially addressed by these measures comprise all credit institutions licensed in Austria and all insurance companies having their seat in Austria and being licensed by the Austrian FMA as well. Thereby any distortion in the level playing field as regards the treatment of domestic financial institutions and subsidiaries of foreign institutions should be avoided. The ECB draws the Ministry’s attention to the recently adopted Commission guidance on compliance by financial sector support schemes with EU State aid rules , which includes in the specific context of provision of State guarantees detailed rules on setting the eligibility criteria for the beneficiary institutions . 3.2 Moreover, the ECB would draw attention to the conclusions adopted by the Declaration which highlighted some common principles to guide the action of euro area Member States when providing for recapitalisation of relevant financial institutions, in particular stressing the need to ensure that financial institutions to which Member States make available additional capital resources should be obliged to accept additional restrictions, notably to preclude possible abuse of such arrangements at the expense of non-beneficiaries. The ECB would therefore suggest that the draft law should include specific terms in accordance with the abovementioned principles .

text: Relationship with the central bank

text: 3.3 The ECB understands that the Oesterreichische Nationalbank (OeNB) will not be among the possible shareholders of the ‘clearing house’ to be established under the draft law on the strengthening of the interbank money market. In line with its previous opinions , the ECB considers that, with a view to ensuring the compatibility of the envisaged structure with the financial independence of the European System of Central Banks and the monetary financing prohibition laid down in Article 101 of the Treaty, the OeNB, not being involved in the operation

text: of the ‘clearing house’, should be under no obligation to contribute to its finances, either under the draft law or otherwise. The OeNB has confirmed that no OeNB contribution is envisaged or under discussion. Relationship of the proposals under the draft law to the single monetary policy of the euro area 3.4 The ECB notes that, in line with the Declaration, Member States have to act in a coordinated manner to avoid significant differences in national implementation having a counter-productive effect, creating distortions in global banking markets. The euro area Heads of State also acknowledged the need to work in cooperation with the ECB to ensure consistency with the management of liquidity by the Eurosystem and compatibility with the operational framework of the Eurosystem. The ECB therefore notes that uncoordinated decisions among Member States should be avoided as they may involve a fragmentation of the euro area money market. The Declaration states that the euro area Governments would make available a Government guarantee of new medium-term (up to 5 years) bank senior debt issuance. Against this background, the ECB has a number of observations to make in relation to the draft law. 3.5 Regarding the draft law on measures for ensuring the stability of the financial market, the ECB understands that the Minister of Finance is empowered to act as guarantor for liabilities of a financial institution without limitation in time. Although such measures should have a positive impact to restore confidence in the Austrian banking system, it should also be noted that an openended scheme of this nature does not seem to be in line with the Declaration, which pointed to the temporary nature of such schemes. Moreover, it is the ECB’s view that the extension of the guarantee to cover all interbank deposits should be avoided. Otherwise there could be a substantial distortion in the various national segments of the euro area money market due to a potential increase in short-term debt issuance activity across Member States, which would impair the implementation of the single monetary policy, which is an exclusive competence of the Eurosystem under Article 105(2) of the Treaty. It also appears crucial to ensure the harmonisation of the price determination of such guarantee within the euro area and the EU, where a level-playing-field is essential. The ECB should be involved in such coordination, and the ECB would welcome that this is explicitly provided for in any subsequent legislation. 3.6 Regarding the draft amendments to the Law on banking, while recognising that the extension of the deposit guarantee for natural persons from EUR 20 000 to an unlimited amount should improve consumer confidence in Austrian financial institutions, the ECB would also remind the Ministry of the need for coordinated measures in this matter, as stated in the Declaration.

text: 4. Information obligations of the FMA

text: The ECB understands that under the draft amendments to the Law on the FMA, the FMA must report to the Minister if it becomes aware of the possibility that measures under the Law on measures for ensuring

text: the stability of the financial market could become necessary. As emphasised in previous ECB opinions , central bank access to prudential information, and cooperation between financial supervisory authorities and central banks are essential for the conduct of macro-prudential monitoring, the oversight of payment systems and the safeguarding of other market infrastructures, which are in turn essential for the smooth conduct of monetary policy. In particular, from a financial stability perspective, a central bank would inevitably need to be involved in the event of any crisis in financial markets. Even though it is understood that the Austrian system of banking supervision and the safeguarding of financial stability requires close cooperation and information exchange between the FMA and the OeNB, with the OeNB being in charge of all analyses and on-site inspections in the banking area and entrusted with an explicit financial stability monitoring responsibility. However, the draft law could further underline this interaction andprovide for a similar reporting obligation to the OeNB.

text: Done at Frankfurt am Main, 20 October 2008.

text: [signed]

text: The President of the ECB

text: Jean-Claude TRICHET


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

text: In accordance with

text: Article 34

text: -II-5 of the Organic Law No 2001-692 of 1 August 2001 on finance laws.

text: See the explanatory memorandum to the draft law.

text: Article 6

text: -II of the draft law.

text: It is noted that the two categories of State guarantees mentioned in paragraphs 1.2 and 1.3 of this opinion are granted to debt securities issued before 31 December 2009 having a maximum duration of five years.

text: Article 6

text: -III of the draft law.

text: Article 6

text: -III of the draft law.

text: Article 6

text: -IV of the draft law.

text: The Declaration is available on the French Presidency’s website at www.ue2008.fr. 12 See the press release of the 2894th Council meeting (13784/08), available on the Council’s website at www.consilium.europa.eu.

text: In order to qualify as a ‘public undertaking’ within the meaning of Article 101(1) of the Treaty, the State must exercise dominant influence over the company by controlling its financial resources and governing bodies in accordance with

text: Article 8(1) of 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). 14 See

text: Article 6

text: -III of the draft law. 15 In accordance with

text: Regulation (EC) No 3603/93

text: See

text: Article 6

text: -II.A of the draft law.

title: Opinion of the European Central Bank of 21 October 2008 at the request of the Banque de France on a draft amending finance law for the financing of the economy (CON/2008/56)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 21 October 2008 at the request of the Banque de France on a draft amending finance law for the financing of the economy (

text: ) Introduction and legal basis

text: On 14 October 2008 the European Central Bank (ECB) received a request from the Banque de France, acting on behalf of the French Ministry for Economic Affairs, Industry and Employment, for an opinion on a draft amending finance law for the financing of the economy (hereinafter the ‘draft law’). Given the turbulence in the international financial markets, the consulting authority has requested the ECB to provide its opinion urgently. The ECB’s competence to deliver an opinion is based on Article 105(4) of the Treaty establishing the European Community and on the sixth indent of

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

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft law, and in particular

text: Article 6

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

text: 1. Purpose of the draft law

text: 1.1 The draft law is motivated by the current financial market crisis. It concerns the provision of several State guarantees in the context of the measures taken in France in order to restore confidence and to create the conditions for the normal functioning of the system that finances the economy . 1.2 The first State guarantee (hereinafter the ‘first State guarantee’) is an integral part of a measure designed to re-inject liquidity into the economy . The State guarantee may be granted, against consideration, to debt securities issued by a refinancing company whose purpose is to grant loans to credit institutions that are authorised and supervised under the Monetary and Financial Code

text: (hereinafter the ‘refinancing company’). The statutes of the refinancing company will be authorised by an order of the Minister for the Economy. Only credit institutions that satisfy the capital requirements under the Monetary and Financial Code may be granted funds by the refinancing company. In addition, the institutions concerned will enter into an agreement with the State specifying the consideration to be provided for the guarantee. The loans granted by the refinancing company will be collateralised in accordance with the draft law. 1.3 In addition, a State guarantee (hereinafter the ‘second State guarantee’) may be given in exceptional circumstances, in particular in urgent cases, in relation to securities issued by credit institutions against consideration and provided that the State receives collateral security (from the credit institution) equivalent to that which the refinancing company has . 1.4 The third State guarantee (hereinafter the ‘third State guarantee’) is an integral part of the measure designed to reinforce the own funds of financial entities in order to guarantee the stability of the French financial system . The State guarantee may be granted to financing raised by a separate company whose sole shareholder is the State and whose aim is to subscribe to securities that have been issued by financial entities and which constitute regulatory own funds (the ‘recapitalisation company’). 1.5 The fourth State guarantee (hereinafter the ‘fourth State guarantee’) may be granted, against consideration, on financing raised by companies of the Dexia group from credit institutions and institutional depositors, as well as bonds and debt securities that they issue for institutional investors, provided that the financing, bonds or securities have been raised or subscribed for between 9 October 2008 and 31 October 2009 included and mature before 31 October 2011. This State guarantee will be dependent on a guarantee being sought at the same time from Belgium and Luxembourg and will be limited to 36.5 % of the eligible amounts.

text: 2. General observations

text: 2.1 The draft law was adopted by the Council of Ministers on 13 October 2008, i.e. on the day following the summit of Paris of 12 October 2008. The French authorities consulted the ECB on the draft law on 14 October 2008. On 15 October 2008, the French Parliament adopted the draft law. The law was finally published in the Journal officiel de la République française on 17 October 2008. The ECB understands that the application of an accelerated procedure during the preparation and adoption of the draft law did not leave room for the normal consultation process. This does not, however, prejudice the duty under Article 105(4) of the Treaty to consult the ECB on national draft legislative provisions falling within its advisory fields of competence. This opinion

text: should therefore be taken into account in the context of any further legislative provisions complementing or implementing the adopted legislation. The ECB will need to be consulted on any such draft legislative provisions which substantially affect the adopted legislation and fall within its advisory fields of competence. 2.2 The ECB notes that there is an ongoing discussion at both the international and European levels with a view to coordinating actions of countries aimed at preserving confidence in and stability of the international financial markets. More specifically, on 12 October 2008 the Heads of States of the euro area issued a ‘Declaration on a concerted European action plan of the euro area countries’ (hereinafter the ‘Declaration’) , in which they confirmed their commitment to act together in a decisive and comprehensive way in order to restore confidence and proper functioning of the financial system, aiming at restoring appropriate and efficient financing conditions for the economy. They agreed on common principles to be followed by the EU and euro area governments, central banks and supervisors to avoid national measures adversely affecting the functioning of the single market and the other Member States. Such coordinated approach includes initiatives aimed at: (i) ensuring appropriate liquidity; (ii) facilitating the funding of banks through various means; (iii) providing additional capital resources to financial institutions; and (iv) recapitalisation of distressed banks. These principles were also endorsed by the European Council on 16 October 2008. The ECB highlights that all the initiatives put in place by national governments to restore the confidence in financial markets should be aimed at implementing such common principles, in the spirit of close cooperation with other Member States and EU institutions. 2.3 Against this background, the ECB notes that the draft law is aimed at implementing in France several of the principles listed in the Declaration. However, the ECB also notes that the draft law provisions relating to the third State guarantee, in order to be in line with one of the conclusions of the Ecofin meeting of 7 October 2008 , namely that the support should be temporary, should contain an expiry date. Although the references in the explanatory memorandum to the draft law to the temporary nature of the measures seems to indicate that the State guarantee will be provided for a limited period of time, a clear time limit in the draft law itself, following the example of the provisions of the draft law relating to the first, second and fourth State guarantees, would remove any expectation that the scheme is permanent.

text: 3. Specific comments

text: 3.1 Prohibition of monetary financing The ECB reminds the French authorities that compliance of the State guarantee arrangements with the monetary financing prohibition laid down in the Treaty needs to be ensured. With regard to the first State guarantee, the ECB notes that the draft law does not specifically address the legal status

text: of the refinancing company and the nature of its shareholding. Should this company be considered as a public undertaking within the meaning of Article 101(1) of the Treaty , the prohibition of monetary financing would apply. In the context of the third State guarantee, the prohibition of monetary financing applies, since the recapitalisation company is an entity whose sole shareholder is the State . The ECB notes that, to ensure compliance with the prohibition of monetary financing, both companies cannot benefit from overdraft facilities or any type of credit facility with the Banque de France (or any other central banks of the European System of Central Banks (ESCB)) while ESCB central banks are prohibited from purchasing debt instruments directly from these companies. The ECB also notes that the draft law does not foresee any specific role for the Banque de France. However, in case the Banque de France would be led to perform certain activities for the refinancing company (or the recapitalisation company) at the request of the State, these activities would also need to comply with the above prohibition and the relevant provisions of the Statute of the Banque de France as regards their remuneration. 3.2 The scheme’s relationship with the single monetary policy of the euro area First, the ECB notes that, in line with the Declaration, Member States must act in a coordinated manner to avoid significant differences in national implementation from having a counterproductive effect and creating distortions in global banking markets. The Declaration acknowledges the need to work in cooperation with the ECB to ensure consistency with the Eurosystem’s management of liquidity and compatibility with its operational framework. Against this background, the ECB notes that uncoordinated decisions among Member States should be avoided as they may involve a fragmentation of the euro area money market. Regarding the first State guarantee, the ECB notes that the refinancing company will acquire from financial institutions financial assets and/or will grant loans to credit institutions. Although such measures should restore confidence in the French banking system, it is important that the price applied by the refinancing company to its transactions with credit institutions be determined in a coordinated manner within the euro area and the EU. The ECB notes the importance of the price determination of the transactions conducted by the refinancing company and their potential implications on the transmission of the single monetary policy decisions within the euro area. Indeed, uncoordinated price determination between all euro area Member States could lead to possible segmentation of the euro area money market. Moreover, the pricing of the transactions conducted by the refinancing company should not interfere with the implementation and/or the transmission of the Eurosystem’s monetary policy.

text: Second, the ECB considers that extending the guarantees to cover all interbank deposits should be avoided. It could entail a substantial distortion in the various national segments of the euro area money market by potentially increasing short-term debt issuance activity across Member States and thereby impairing the implementation of the single monetary policy, which is an exclusive competence of the Eurosystem under Article 105(2) of the Treaty. It also appears crucial to ensure the harmonisation of the price determination of such guarantee within the euro area and the EU, as a level-playing-field is of essence. The ECB should be involved in such concertation and coordination, and would welcome the explicit provision for this in subsequent legislation. In this context, the ECB notes that the fourth State guarantee as regards financing raised by companies of the Dexia group from credit institutions and institutional depositors, as well as bonds and debt securities that they issue for institutional investors (to be raised or subscribed for between 9 October 2008 and 31 October 2009 and mature before 31 October 2011), is an exceptional measure that is part of a rescue package arranged with the participation of the French Government, which will be assessed by the Commission under the Treaty State aid rules. Third, the ECB understands that under French law, the refinancing company will not be a credit institution . Therefore, the refinancing company will not be an eligible counterparty for Eurosystem monetary policy operations. Fourth, since it cannot be excluded that the refinancing company will receive as collateral assets that are on the list of the assets eligible as collateral for Eurosystem monetary policy operations, it may be advisable to put in place a mechanism whereby information can be exchanged in order to avoid the risk that collateral is mobilised twice.

text: 3.3 Recapitalisation of credit institutions As regards the third State guarantee, the draft law provides that it may be granted to the debt securities issued by the recapitalisation company to subscribe to securities that have been issued by financial entities and which constitute regulatory own funds. The ECB draws attention to the conclusions adopted by the Declaration which highlighted some common principles so as to guide the action of euro area Member States when providing for recapitalisation of relevant financial institutions, in particular stressing the need to ensure that financial institutions to which Member States make available additional capital resources should be obliged to accept additional

text: restrictions, notably to preclude possible abuse of such arrangements at the expense of nonbeneficiaries. Against this background, the ECB would suggest that the specific suggestions set out above be included in any subsequent related legislation. This opinion will be published on the ECB’s website.

text: Done at Frankfurt am Main, 21 October 2008. [signed]

text: The President of the ECB

text: Jean-Claude TRICHET