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: As set out in Article 4 of the Law on De Nederlandsche Bank (Bankwet 1998, Staatsblad 26 March 1998, p. 200).

text: See Law on De Nederlandsche Bank Implementing Decree.

text: 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: See DNB Working Paper 796, ‘Floods and financial stability: Scenario-based evidence from below sea level’, Francesco Caloia, David-Jan Jansen and Kees van Ginkel, 20 December 2023, available on DNB’s website at www.dnb.nl.

text: See DNB consultation, ‘Consultatie verlenging regeling risicoweging hypothecaire leningen 2024’, 14 May 2024, available on DNB’s website at www.dnb.nl.

text: See IMF Staff Country Reports, ‘Kingdom of the Netherlands-The Netherlands: Financial System Stability Assessment’, 8 April 2024, available on the IMF’s website at www.imf.org.

text: Directive (EU) 2024/1275

text: of the European Parliament and of the Council of 24 April 2024 on the energy performance of buildings (OJ L, 2024/1275, 8.5.2024, ELI: http://data.europa.eu/eli/dir/2024/1275/oj).

text: See paragraph 3 of Opinion

text: of the European Central Bank of 16 January 2023 on a proposal for a Directive on the energy performance of buildings (OJ C 89, 10.3.2023, p. 1).

title: Opinion of the European Central Bank of 15 July 2024 on the introduction of a reporting obligation in respect of mortgage-related data (CON/2024/25)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 15 July 2024 on the introduction of a reporting obligation in respect of mortgage-related data (

text: ) Introduction and legal basis

text: On 23 May 2024 the European Central Bank (ECB) received a request from the Dutch Minister for Finance for an opinion on a draft law amending the Law on De Nederlandsche Bank (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and Article 2(1), third, fourth and sixth indents, of

text: Council Decision 98/415/EC

text: , as the draft law relates to De Nederlandsche Bank (DNB), the collection, compilation and distribution of monetary, financial, banking, payment systems and balance of payments statistics and rules applicable to financial institutions insofar as they materially influence the stability of financial institutions and markets. 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 Under the draft law, banks, investment funds, pension funds and insurance corporations established in the Netherlands or acting through a branch located in the Netherlands are required to report to DNB via electronic means granular data on mortgage loans relating to residential and commercial real estate. According to the draft law, DNB needs such data in the context of two of its tasks , namely to promote the stability of the financial system and the collection of statistical data and the production of statistics. 1.2 The reporting obligation is to be further developed by an implementing decree that may set out the information to be provided, the periodicity and deadlines for the provision of this information, the way in which the data relating to loans for house purchases should be pseudonymised by the reporting parties, and the threshold below which a company is exempt from the reporting obligation. Broadly speaking, the information on a loan will include data on the borrower, and the collateral and the risk characteristics, including default, interest rate repricing and climate risks, but will not be able to be traced back to individual households.

text: 1.3 According to the memorandum of understanding accompanying it, the draft law will re-establish a previously existing practice whereby DNB will request granular loan-level mortgage data from banks, pension funds, insurance corporations and investment funds under its supervision. This request is transformed into a periodic reporting obligation. At the same time, the draft law imposes certain legal safeguards, mainly in the area of data protection and privacy, for the acquisition and processing of this information. 1.4 Under the draft law and its implementing decree, DNB may process and provide the collected data under certain conditions to organisational units of DNB that are entrusted with a different task, such as the part of DNB dealing with prudential supervision. Such supervision must focus on the soundness of financial undertakings and the stability of the financial system. The draft law also provides that DNB may share the data under certain conditions with the International Monetary Fund (IMF), the Financial Stability Board and the Bank for International Settlements in view of their tasks in the area of financial stability. In this regard, it is understood that the data to be collected under the draft law and that may also be shared under the specified conditions solely concerns data collected from the DNB. 1.5 Under the draft law, granular loan-level residential mortgage data is collected. This aspect sets it apart from existing reporting requirements of credit institutions, such as under

text: Regulation (EU) No 575/2013

text: of the European Parliament and of the Council , which are aggregated at institution level.

text: 2. Observations

text: 2.1 For the analysis of the pass-through of monetary policy via the financial sector to the real economy, access to granular data on commercial and residential mortgage loans is highly valuable, as they allow a detailed assessment of the monetary policy transmission. The ECB therefore strongly supports the draft law. Granular data enhance the monetary analysis based on aggregate macroeconomic data, taking into account that the transmission of monetary policy differs depending on borrower characteristics. Specifically, detailed data such as data on household income, indebtedness, the probability of their default as well as risks related to the interest fixation periods of mortgages and the value of the real estate collateral for the mortgage loan, provide crucial information for assessing household vulnerabilities. In addition, granular data on commercial real estate are essential for assessing credit risks in this sector, which may spill over to other sectors. Credit risks related to vulnerabilities of households and firms across mortgage market segments have an impact on credit conditions, access to new credit, the prolongation of existing mortgages, and, in turn, on private consumption, investment and the economy as a whole. In addition, the provision of the energy label of the real estate would add further value allowing for enhancement of the analysis of credit risks related to climate change. The fact that the provisions of the draft law apply to banks, investment funds, pension funds and insurance corporations allows for a more holistic characterisation of the transmission mechanisms of monetary policy. Against this background, the ECB highly welcomes the objective and detail of the draft law.

text: 2.2 Having access to granular data on mortgages is essential for a macroprudential authority to adequately perform its financial stability tasks. Shocks in the housing market are often a determining factor in the materialisation or amplification of vulnerabilities in the financial system with negative effects on the real economy. These risks are particularly important for the Netherlands, which has a tight housing market, elevated housing prices and generous mortgage standards. A detailed and structural monitoring of the developments in housing prices, indebtedness of households and firms, and the credit quality of mortgage portfolios is therefore key in identifying and addressing potential risks for financial stability. Because of the heterogeneity of the market, the granularity of the data is needed across regions, households and characteristics of the real estate and mortgage loan. For example, a recent study on the impact of floods in the Netherlands on credit risks in the housing market used geographical-specific data to perform its analysis and concluded that loan-to-value ratios are an important driver of the impact on capital ratios for banks. Granular data are also needed to implement targeted macroprudential policies to mitigate systemic risks. The measure that imposes a floor on the risk weights of mortgage portfolios is calibrated on the specifics of the underlying loan- 6 7 to-value ratios . Finally, in its recent report on financial stability in the Netherlands , the IMF also recommended the creation of a clear legal basis for access to granular data. 2.3 The ECB supports the proposed granular reporting as it offers several significant advantages. By analysing individual loans, their terms, and borrower profiles, analysts gain a deep understanding of market dynamics, which is especially relevant in the multifaceted Dutch mortgage market. Policymakers benefit from this agility, which allows them to make informed decisions and implement targeted policies. Additionally, the flexibility of granular data ensures that such data serve various purposes, from risk assessment to policy formulation. The ECB welcomes the proposed reporting scheme; reusing the AnaCredit data model, it concentrates on real estate loans and their features, and includes non-bank lenders to achieve comprehensive Dutch real estate loan market coverage. Moreover, the draft law respects the proportionality principle, balancing adequate coverage with reporting burden, and allowing lenders with small mortgage portfolios to be exempted from reporting. 2.4 It is crucial to note that the goals of the forthcoming Integrated Reporting Framework (IReF), which include the reduction of the reporting burden on reporting agents and enhancing the quality of the data, are taken into account in the implementing decree. 2.5 Regarding the content to be reported by banks, the ECB considers that providing not only the energy label, but also the data underpinning it, especially the level of primary energy use in kWh/(m2.y) and, where possible, greenhouse gas emissions and the life-cycle global warming potential, would allow DNB or external stakeholders to better compare the performance of the real estate assets at the international level. Indeed, the methodologies and thresholds used to determine energy labels may differ considerably across countries, even after the revision of

text: Directive (EU) 2024/1275

text: of the

text: European Parliament and of the Council , and access to data on the underlying metrics may be of importance for external stakeholders, in order to better assess climate change-related risks . This opinion will be published on EUR-Lex. Done at Frankfurt am Main, 15 July 2024. [signed]

text: The President of the ECB

text: Christine LAGARDE


publisher: Europeiska centralbanken

sprak: en

title: Opinion of the European Central Bank of 24 July 2024 on a constitutional law on cash as legal tender and access to cash (CON/2024/26)

serie: con

text: OPINION OF THE EUROPEAN CENTRAL BANK of 24 July 2024 on a constitutional law on cash as legal tender and access to cash (

text: ) Introduction and legal basis

type: rubrik

text: On 10 May 2024 the European Central Bank (ECB) received a request from the Slovenian National Assembly for an opinion on a draft proposal to initiate a procedure to amend the Constitution of the Republic of Slovenia to include a right to use cash as legal tender in the Republic of Slovenia (hereinafter the ‘draft constitutional 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), first and second indents of

text: Council Decision 98/415/EC

text: , as the draft constitutional law relates to currency matters and means of payment. In accordance with

text: Article 17.5

type: stycke

text: 1. Purpose of the draft constitutional law

text: 1.1 As noted in the consultation request, the draft constitutional law was prepared and presented to the Slovenian National Assembly for consideration by a qualified group of voters. 1.2 The draft constitutional law would supplement the Slovenian Constitution by inserting a new

text: Article 50

text: .a in Chapter Two of the Constitution dealing with human rights and fundamental freedoms. 1.3 The draft constitutional law provides that cash is legal tender in the territory of Slovenia . The draft constitutional law further specifies that everyone has the right to make a payment for the purchase of goods and the provision of services using cash as legal tender , and that the right to perform a cash transaction in a bank or a branch of a foreign bank is guaranteed . 1.4 The explanatory memorandum accompanying the draft constitutional law explains that the aim of the draft constitutional law is to set up a constitutional framework for the right to use cash, while respecting the right to privacy. 1.5 The explanatory memorandum states that banknotes and coins denominated in the currency of Slovenia are the only legal tender in Slovenia, and that cash is the only form of public money to which

text: Predlog za začetek postopka za spremembo Ustave Republike Slovenije z osnutkom ustavnega zakona z dne 23.11.2023.

text: 2 Council Decision of 29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42).

text: Article 50

text: .a(1) of the Constitution as proposed by the draft constitutional law.

text: Article 50

text: .a(2), first sentence, of the Constitution as proposed by the draft constitutional law.

text: Article 50

text: .a(2), second sentence, of the Constitution as proposed by the draft constitutional law. everyone has direct access. It also states that the Eurosystem has a fundamental responsibility, together with the banking sector, to ensure the smooth supply of cash and to facilitate the use of cash in payments by people and businesses. 1.6 The explanatory memorandum further states that in the light of certain statements made by influential persons from the banking and political sectors, there is reason to suspect that the introduction of digital money is intended to give the central bank or national governments complete control over money and over the regulation and conditions that will determine its use. Based on this, the explanatory memorandum states that there would be a justified fear among the proposers of the draft constitutional law that the introduction of digital money and the phasing out of cash is primarily intended for governments to control and monitor the financial data of citizens, meaning that the privacy and financial freedom of the citizens of Slovenia could be under attack. 1.7 According to the explanatory memorandum, citizens have the right to decide of their own free will whether they want to pay in cash. The right to use cash is one of the key rights with which citizens can exercise their freedom in commercial and legal relations. The explanatory memorandum further states that in recent times various proactive steps have been taken leading to the gradual erosion of this right in the form of generally binding legal norms. The explanatory memorandum argues that the inclusion of the right to cash in the Constitution is one way of addressing all attempts to strictly limit and ultimately abolish the right to pay in cash, including the associated right to privacy, for the benefit of society. 1.8 The explanatory memorandum states that a complete abolition of cash would endanger low-income people as well as civil associations that finance their charitable activities by fundraising in cash. The proposers of the draft constitutional law also believe that the preservation of the right to pay in cash is important to contribute to financial literacy among young people. More generally, the right to pay in cash is viewed in the explanatory memorandum in the context of freedom of choice. 1.9 The consultation request states that the draft constitutional law might constitute a proposal which would not be in line with the exclusive competence of the Union as concerns monetary policy for Member States whose currency is the euro under Article 3 of the Treaty.

text: 2. General observations

text: 2.1 Although electronic payment instruments are increasingly used for retail payments in a number of Member States, cash continues to play an important role in society and is still widely used throughout the entire population. The ability to pay in cash remains particularly important for those who, for various legitimate reasons, prefer to use physical money for payments rather than other payment instruments, or do not have access to the banking system and electronic means of payment. These groups include not only elderly people but also people with disabilities, immigrants, socially

text: vulnerable people, minors and others with limited or no access to digital payment services . Cash is generally also useful as a payment instrument because it is widely accepted, fast and facilitates control over the payer’s spending. Moreover, it is currently the only payment instrument that allows everyone to settle a payment transaction in central bank money, which is also settled instantly while, importantly, ensuring privacy. Furthermore, cash could play an important role in the event of a 7 8 disturbance in the payment system and it is robust against cyber-crime . Cash also has an important function as a store of value. The availability and accessibility of cash and its fallback function in case of disruptions to electronic payment systems contribute to trust in the financial system, which is important for the smooth functioning of monetary policy . Against this backdrop, the ECB welcomes the core objective of the draft constitutional law to strengthen the availability and acceptance of cash in Slovenia. 2.2 The ECB is, thus, fully committed to ensuring that euro cash remains available, including in peripheral regions, and accepted in payments throughout the euro area, in line with the Eurosystem’s cash strategy . The specific observations presented below should not be read as undermining the ECB’s commitment to these objectives. Where measures contributing to the protection of euro cash fall within the Union’s exclusive competence for monetary policy, as is the case for legal rules governing the legal tender status of euro banknotes and coins (as explained in paragraph 2.5), the ECB is of the view that such protection should be achieved by rules established in a harmonised manner at Union, rather than at national, level . 2.3 The ECB has the exclusive right to authorise the issue of euro banknotes within the Union, and the euro banknotes issued by the ECB and the national central banks of the euro area are the only banknotes with legal tender status within the euro area . The legal tender status of euro coins is provided for in secondary Union law . 2.4 The concept of ‘legal tender’ as 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 of Justice 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

text: 6 See, for example, 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

text: , paragraph 2.1 of Opinion

text: , paragraph 1.7 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), paragraph 2.1 of Opinion

text: , paragraph 2.4 of Opinion

text: , paragraph 2.1 of Opinion

text: and paragraph 2.1 of Opinion

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

text: 7 See, for example, paragraph 2.1 of Opinion

text: , paragraph 9.2.1 of Opinion

text: , paragraph 2.3 of Opinion

text: , paragraph 2.1 of Opinion

text: , paragraph 2.4 of Opinion

text: , paragraph 2.1 of Opinion

text: and paragraph 2.1 of Opinion

text: 8 See paragraph 2.2 of Opinion

text: , paragraph 2.1 of Opinion

text: and paragraph 2.4 of Opinion

text: 9 See paragraph 2.2 of Opinions

text: and

text: 10 See ‘The Eurosystem cash strategy’, available on the ECB’s website at www.ecb.europa.eu. See also paragraph 1.7 of Opinion

text: 11 See paragraph 2.4 of Opinion

text: , paragraph 2.4 of Opinion

text: , paragraph 2.3 of Opinion

text: and paragraph 2.3 of Opinion

text: Article 128(1)

text: , first and third sentences, of the Treaty and

text: Article 16

text: , first and third sentences, of the Statute of the European System of Central Banks and of the European Central Bank.

text: Article 11 of Council Regulation (EC) No 974/98 of 3 May 1998

text: on the introduction of the euro (OJ L 139, 11.5.1998, p. 1). value, with the effect of discharging the debt. In clarifying the concept of ‘legal tender’ under Union law, the Court of Justice took into consideration

text: Commission Recommendation 2010/191/EU

text: , which provides useful guidance for the interpretation of the relevant provisions of Union law. Point 1 of Recommendation

text: 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 of Justice, 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 . 2.5 The Court of Justice 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 of Justice 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. Furthermore, the Union legislature’s exclusive competence precludes any competence on the part of the Member States in the matter, unless they have been empowered by the Union to do so or for the implementation of Union acts . 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 will 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 Legal Tender Expert Group (ELTEG) confirmed the existence of legal uncertainty regarding the legal tender of euro cash and differing application of its principles in the euro area . These differences would justify establishing rules on the legal tender of euro cash in a regulation adopted under Article 133 of the Treaty.

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).

text: 15 See judgment of the Court of Justice of 26 January 2021, Hessischer Rundfunk,

text: and

text: , EU:C:2021:63, paragraphs 46 to 49.

text: 16 See judgment of the Court of Justice of 26 January 2021, Hessischer Rundfunk,

text: and

text: , EU:C:2021:63, paragraph 45.

text: 17 See judgment of the Court of Justice of 26 January 2021, Hessischer Rundfunk,

text: and

text: , EU:C:2021:63, paragraphs 50 to 52.

text: 18 COM(2023) 364 final.

text: 19 See Opinion

text: 20 See section 3, page 4 of the explanatory memorandum of the proposed regulation on the legal tender of euro cash and the final report of ELTEG of 6 July 2022, available on the Commission’s website at www.ec.europa.eu. See also Opinion

text: 3. Specific observations

text: 3.1 Constitutional recognition of the legal tender status of cash 3.1.1

text: Article 50

text: .a(1) of the Constitution, as proposed by the draft constitutional law, recognises the status of cash as legal tender in Slovenia. It thus reproduces directly applicable provisions of Union law, namely Article 128 of the Treaty and

text: Article 11 of Regulation (EC) No 974/98

text: . 3.1.2 The ECB underlines that the reproduction in national law of a provision of Union law that is directly applicable in the legal order of the Member State may create uncertainty both as to the legal nature of the applicable provision and as to the date of its entry into force. This would not align with the uniform application and interpretation of Union law throughout the Union . 3.1.3 Furthermore, the ECB also underlines that the incorporation of some elements of Union law into national law is warranted only in exceptional circumstances for the sake of coherence and to make them comprehensible to the persons to whom they apply . If such exceptional circumstances do exist, the reproduction of elements of directly applicable provisions of Union law should be done precisely, by incorporation or reference , and only to the extent warranted by the exceptional circumstances. However, such exceptional circumstances do not exist if the directly applicable provisions of Union law are sufficiently coherent and comprehensive, making it unnecessary to repeat or reflect them in national law . 3.1.4 In the light of the above, the ECB recommends that

text: Article 50

text: .a(1) of the Constitution, as proposed by the draft constitutional law, which recognises the status of cash as legal tender, should either be deleted or, alternatively, amended to merely refer to the relevant provisions of Union law . 3.2 Constitutional right to make payments in cash 3.2.1

text: Article 50

text: .a(2), first sentence, of the Constitution, as proposed by the draft constitutional law, specifies that everyone has the right to make a payment for the purchase of goods and the provision of services

text: 21 See judgment of the Court of Justice of 7 February 1973, Commission v Italy,

text: , EU:C:1973:13, paragraphs 16 and 17; judgment of the Court of Justice of 10 October 1973, Variola,

text: , EU:C:1973:101, paragraphs 9 to 11; and judgment of the Court of Justice of 2 February 1977, Amsterdam Bulb,

text: , EU:C:1977:13, paragraphs 5 to 8. See also paragraph 12 of Opinion

text: , paragraph 2.1 of Opinion

text: , paragraph 2.4 of Opinion

text: , paragraph 2.1 of Opinion

text: , paragraph 2.2 of Opinion

text: , paragraph 2.3 of Opinion

text: , paragraph 2.3 of Opinion

text: , paragraph 2.2.5 of Opinion

text: and paragraph 3.3.1 of Opinion

text: 22 See paragraph 12 of Opinion

text: with reference to the judgment of the Court of Justice of 28 March 1985, Commission v Italian Republic,

text: , EU:C:1985:147, paragraph 2.4 of Opinion

text: , paragraph 2.2.6 of Opinion

text: and paragraph 3.3.2 of Opinion

text: . See a contrario also paragraph 2.2 of Opinion

text: 23 See paragraph 2.2 (footnote 6) of Opinion

text: , paragraph 2.4 of Opinion

text: , paragraph 2.2.6 of Opinion

text: and paragraph 3.3.2 of Opinion

text: 24 See paragraph 13 of Opinion

text: , paragraphs 2.2 and 3.2 of Opinion

text: , paragraph 2.4 of Opinion

text: , paragraph 2.2.6 of Opinion

text: and paragraph 3.3.2 of Opinion

text: 25 See paragraph 2.4 of Opinion

text: , paragraph 2.3 of Opinion

text: , paragraph 2.2.6 of Opinion

text: and paragraph 3.3.3 of Opinion

text: . See also principle 16 of the final report of the Euro Legal Tender Expert Group (ELTEG) of 6 July 2022: ‘The Member States should check thoroughly their national legislation for references to legal tender and repeal them or else, make sure that they are a) purely declaratory, referring to the applicable Union provisions as the applicable legal source, b) make no change to the wording of

text: Article 128(1)

text: TFEU or of other applicable EU provisions on the legal tender status of euro cash.’ using cash as legal tender. The draft constitutional law does not envisage any exemptions to this right. 3.2.2 In this respect the ECB recalls that the Court of Justice has held that the status of banknotes denominated in euro as legal tender calls only for acceptance in principle of such banknotes as a means of payment, not for absolute acceptance . The Court of Justice held that the Union’s exclusive competence in matters of monetary policy is without prejudice to the competence of the Member States whose currency is the euro in the exercise of their own powers, to regulate the procedures for settling pecuniary obligations, whether under public law or private law, provided, in particular, that the legislation does not affect the principle that, as a general rule, it must be possible to discharge a payment obligation in cash. This also includes that Member States may introduce stricter rules, which will strengthen the mandatory acceptance of euro cash in their territory, in the exercise of their own powers, such as the organisation of their public administration or in the field of consumer protection. The Court of Justice has also held that one must assess the objective and content of a national law measure that provides for an obligation to accept euro cash to determine whether that measure has been adopted within the framework of the Member States’ own competences . 3.2.3 It must therefore be considered whether

text: Article 50

text: .a(2), first sentence, of the Constitution, as proposed by the draft constitutional law, in the light of its objective and content, establishes legal rules governing the status of legal tender of euro banknotes, an area of exclusive competence of the Union under Article 133 of the Treaty, or is a measure taken in the exercise of a competence of the Member States. 3.2.4

text: Article 50

text: .a(2), first sentence, of the Constitution effectively sets out the mandatory acceptance of cash as a means of payment , which is connected to the constitutional enshrinement of the legal tender status of cash under

text: Article 50

text: .a(1) of the Constitution, as proposed by the draft constitutional law. This can be seen from the wording of the provision , and from the fact that the right to pay in cash is recognised in respect of everyone and without any exemptions. It therefore appears that the content and objective of

text: Article 50

text: .a(2), first sentence, of the Constitution, as proposed by the draft constitutional law, is to ensure the acceptance of cash as legal tender as a right of general application and without any exemptions. The ECB thus understands that, in the light of its objective and content,

text: Article 50

text: .a(2), first sentence, of the Constitution, as proposed by the draft constitutional law, does not regulate the procedures for settling pecuniary obligations in the exercise of national powers but rather appears to regulate the status of euro cash as legal tender. 3.2.5 Furthermore, it must also be considered whether

text: Article 50

text: .a(2), first sentence, of the Constitution, as proposed by the draft constitutional law, laying down the mandatory acceptance of euro banknotes

text: 26 See judgment of the Court of Justice of 26 January 2021, Hessischer Rundfunk,

text: and

text: , EU:C:2021:63, paragraph 55.

text: 27 See judgment of the Court of Justice of 26 January 2021, Hessischer Rundfunk,

text: and

text: , EU:C:2021:63, paragraphs 56 to 58. 28 In accordance with Article 15 of the Constitution the manner in which human rights and fundamental freedoms enshrined in the Constitution are exercised may be regulated by law whenever the Constitution so provides or where this is necessary due to the particular nature of an individual right or freedom, which means that specifics may be regulated in the law. 29

text: Article 50

text: .a(2) of the Constitution, as proposed by the draft constitutional law, expressly mentions the right to pay using cash as legal tender. 30 See paragraph 3.2.2. and coins, which the right for everyone to make payments in cash seems to protect, can be said to reproduce provisions of Union law . From this perspective, it must be stated that

text: Article 50

text: .a(2), first sentence, of the Constitution, as proposed by the draft constitutional law, uses significantly different terms than those used in Union law. According to Recommendation

text: , on which the Court of Justice relied when interpreting Article 128(1) of the Treaty and

text: Article 11 of Regulation (EC) No 974/98

text: , the first defining element of the concept of legal tender is the mandatory acceptance of euro banknotes and coins where a payment obligation exists . In the same vein, it is clear from the prominence given to the provision on this issue in the proposed regulation on the legal tender of euro cash, which is currently being negotiated by the co-legislators, that mandatory acceptance of euro banknotes and coins is one of the key elements of the legal tender status of euro banknotes and coins . Thus, to the extent that

text: Article 50

text: .a(2) of the Constitution, as proposed by the draft constitutional law, uses wording different from its legal sources in Union law it potentially creates regulatory content of its own, which would not be in line with the Union’s exclusive competence in matters of monetary policy for the Member States whose currency is the euro. 3.2.6 Consequently, as stated in paragraph 3.1.4 regarding

text: Article 50

text: .a(1), the ECB recommends that

text: Article 50

text: .a(2), first sentence, of the Constitution, as proposed by the draft constitutional law, which establishes that everyone has the right to make a payment for the purchase of goods and the provision of services using cash as legal tender, should be deleted. Alternatively, if the intention of the draft constitutional law was to reproduce Union law, the provision should either be deleted or amended to merely refer to the relevant provisions of Union law. 3.3 Constitutional right to perform cash transactions at a bank 3.3.1

text: Article 50

text: .a(2), second sentence, of the Constitution, as proposed by the draft constitutional law, provides for the imposition of a targeted obligation on banks and branches of foreign banks to offer the possibility to conduct cash transactions. 3.3.2 The ECB welcomes the core objective of strengthening the availability of cash in Slovenia. Sufficient and effective access to cash is necessary to preserve the effectiveness of the legal tender status of cash. If there is neither sufficient nor effective access to cash, it will not be available as a means of payment. In this regard, the proposed regulation on the legal tender of euro cash includes an obligation for Member States to ensure sufficient and effective access to cash throughout their territory . 3.3.3 However, the ECB is of the view that the scope and extent of the strengthened constitutional protection of the right to perform cash transactions at banks and branches of foreign banks should be clarified. For example, it is not fully clear which operations (e.g. dispensing euro banknotes and

text: 31 See paragraphs 3.1.2 and 3.1.3. 32 See judgment of the Court of Justice of 26 January 2021, Hessischer Rundfunk,

text: and

text: , EU:C:2021:63, paragraphs 45 to 48. 33 See point 1(a) of Recommendation

text: . 34 See Article 4(1) of the proposed regulation on the legal tender of euro cash. 35 The ECB has consistently welcomed legislative proposals aimed at ensuring access to cash in euro area Member States. See, for example, Opinion

text: , Opinion

text: , paragraph 3.4.2 of Opinion

text: , paragraph 2.3 of Opinion

text: and paragraph 2.3 of Opinion

text: . See also paragraph 1.2 of Opinion

text: , in which the ECB particularly welcomes the measures laid down in the proposed regulation on the legal tender of euro cash regarding the need for Member States whose currency is the euro to ensure sufficient and effective access to cash. coins by debiting a payment account, receiving deposits of euro banknotes and coins in order to credit a payment account) would fall under the scope of the cash transactions to be offered. It is also not clear whether under the proposed constitutional regime banks would have to perform cash transactions for anyone or only for their clients that hold a payment account, or whether there are further conditions and limitations on the right to perform cash transactions in a bank or branch of a foreign bank . In this context, the costs of implementation of obligations for credit institutions related to cash transactions would need to be adequately accounted for. The ECB therefore recommends that the conditions applicable to the right to perform cash transactions in a bank or branch of a foreign bank pursuant to

text: Article 50

text: .a(2) of the Constitution, as proposed by the draft constitutional law, should be properly specified. 3.4 Considerations in relation to the digital euro 3.4.1 The ECB has clearly underlined that the digital euro would complement, rather than replace, cash as another form of central bank money with legal tender status available to the public . The legal tender status of the digital euro would promote its wide acceptance as a means of payment in respect of all digital payments throughout the euro area. The digital euro would also offer a higher level of privacy and data protection than other current electronic means of payment. 3.4.2 On 28 June 2023, alongside the proposed regulation on the legal tender of euro cash, the Commission published a proposal for a Regulation of the European Parliament and of the Council on the establishment of the digital euro (hereinafter the ‘proposed regulation on the digital euro’). The proposed regulation on the digital euro states that the digital euro should complement euro banknotes and coins and should not replace the physical forms of the single currency and that, as legal tender instruments, both cash and digital euro are equally important . 3.4.3 On 31 October 2023, the ECB adopted its opinion on the proposed regulation on the digital euro . In its opinion, the ECB strongly welcomed the goal of establishing a framework facilitating the possible introduction of a digital euro that would ensure that central bank money continues to play a key role, side by side with commercial bank money payments, in maintaining a well-functioning payment system and financial stability, and ultimately trust in the euro currency: the ‘monetary anchor’ role of central bank money . Furthermore, the ECB also welcomed, in particular, that the

text: 36 See also, in this respect, paragraphs 2.5 to 2.7 of Opinion

text: . 37 See paragraph 1.1 of Opinion

text: and paragraph 1.2 of Opinion

text: of the European Central Bank of 31 October 2023 on the digital euro (OJ C, C/2024/669, 12.1.2024, ELI: http://data.europa.eu/eli/C/2024/669/ojof). 38 COM(2023) 369 final. 39 See recital 6 of the proposed regulation on the digital euro. 40 Opinion

text: . 41 See paragraph 1.1 of Opinion

text: . proposed regulation on the digital euro aims at ensuring a high degree of privacy and data protection for users of the digital euro . This opinion will be published on EUR-Lex. Done at Frankfurt am Main, 24 July 2024. [signed] The President of the ECB Christine LAGARDE

text: 42 See paragraph 2.3 of Opinion

type: vagledning

utgivare: ecb


title: Opinion of the European Central Bank of 26 August 2024 on the modernisation of laws on international sanctions (CON/2024/27)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 26 August 2024 on the modernisation of laws on international sanctions (

text: ) Introduction and legal basis

text: On 5 July 2024 the European Central Bank (ECB) received a request from the Dutch Minister for Finance for an opinion on a draft legislative proposal for a Law on the implementation of international sanctions (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 (TFEU) and Article 2(1), third indent, of

text: Council Decision 98/415/EC

text: , as the draft law relates to De Nederlandsche Bank (DNB) and the tasks conferred upon the ECB concerning the prudential supervision of credit institutions pursuant to

text: Article 127(6)

text: TFEU. 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 1.1 As noted in the explanatory memorandum accompanying the draft law (hereinafter the ‘explanatory memorandum’), sanctions imposed by the United Nations (UN) and the Union are intended to maintain or restore peace; support the democratic rule of law, human rights and the principles of international law; prevent conflicts; strengthen international security; and fight terrorism. The Dutch sanctions regime consists of various national acts that implement in national law sanctions based on international law without ‘goldplating’ the latter. Over the past decade the Dutch sanctions regime has changed only to a limited extent, while the scope and complexity of international sanction measures have increased sharply. The draft law modernises the Dutch sanctions regime in response to the increased importance of sanctions . 1.2 The draft law safeguards the effective implementation of international sanction measures within the Dutch legal order but is not an implementation of Union or international law. The draft law modernises the Dutch sanctions regime by providing for, inter alia, an enforcement regime based on Dutch administrative law (instead of solely on criminal law), specific enforcement powers to be used in the event of serious non-compliance or evasion of sanction measures (e.g. replacement of the 1

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 See, for example, the Law on sanctions (Sanctiewet 1977, Stb. 1980, 93).

text: 3 Pages 1 and 2 of the explanatory memorandum. management of an undertaking), and measures to safeguard business continuity and resolution of undertakings impacted by international sanctions . 1.3 To mitigate or prevent adverse consequences for financial stability or serious social, economic or employment effects on Dutch society, the draft law contains provisions on business continuity and resolution for undertakings that are impacted by international sanctions. The draft law provides for the possibility for the responsible minister to take measures aimed at (1) ensuring that undertakings comply with international sanction measures, and (2) limiting the influence that can be exercised by a sanctioned owner or other affiliate. The purpose of these measures is to ensure the continuity or the orderly wind-down of the respective undertaking, as the case may be . According to the explanatory memorandum, the measures will always be aimed at minimising negative social effects, such as loss of employment and disruption of economic processes in the Netherlands and the Union . 1.4 A core competence of the responsible minister is to appoint a third-party administrator , either on his or her own initiative or at the request of an undertaking that is subject to an obligation pursuant to an international sanction. The appointment of a third-party administrator and any instructions issued by such administrator may only be intended to secure the cooperation of the undertaking in order to ensure its compliance with obligations under the imposed sanctions, while also safeguarding financial stability, the continuity of the undertaking or the careful winding-up of the undertaking’s activities. The draft law defines an instruction as the imposition of an obligation to perform or refrain from any factual act or legal act . Apart from the purpose of the instruction, the draft law does not expressly limit or specify the kinds of instructions the third-party administrator may give to an undertaking, but the explanatory memorandum refers to instructions that aim to restructure the undertaking in a way that safeguards compliance with international sanction measures (e.g. terminating contracts with sanctioned counterparties of the undertaking). The third-party administrator does not replace the undertaking’s board of directors. The undertaking does not need the consent of its shareholders when it implements the instructions of the third-party administrator, and neither the provisions of the articles of association nor any arrangements between the undertaking and its shareholders (e.g. on decision-making in shareholders’ meetings) apply . All officials (e.g. board members) who work for the undertaking are obliged to respond to information requests from the third-party administrator and to follow its instructions. Legal acts of an undertaking in breach of an instruction of the third-party administrator may be annulled by the third-party administrator or the responsible minister . The responsible minister may revoke the appointment of the third-party administrator if he or she deems the presence of the third-party administrator to be no longer necessary, but this may be done no later than the time at which the obligation to comply with

text: 4 Page 6 of the explanatory memorandum.

text: 5 Chapter 5 of the draft law.

text: 7 Articles 5.2 and 5.4 of the draft law.

text: 8 Article 5.1 of the draft law. the international sanction measure expires . The decision to appoint a third-party administrator and the revocation thereof must be published in the Government Gazette . 1.5 The draft law provides that if an undertaking is subject to supervision under the Law on financial 13 14 supervision or the Law on the supervision of trust offices 2018 , the responsible minister must exercise the abovementioned powers , including the power to appoint or provide instructions to the third-party administrator in agreement with DNB or the Dutch Authority for the Financial Markets, each to the extent responsible for carrying out tasks pursuant to those laws, or the ECB, if it is authorised to supervise that undertaking pursuant to Articles

text: and

text: of Council Regulation (EU) No 1024/2013 (hereinafter the ‘SSM Regulation’). The explanatory memorandum notes in this respect that the largest banks are supervised by the ECB . 1.6 The responsible minister will revoke the appointment of the third-party administrator for a financial institution in the event that (1) a resolution decision is taken, (2) a prudential supervisor appoints a 18 19 (silent) administrator , or (3) the continuous presence of DNB at the credit institution is established , unless the competent authority consents to keeping the third-party administrator in place . 1.7 Under the draft law DNB is responsible for the supervision and enforcement of administrative organisation and internal control in relation to the compliance of financial institutions with international 21, 22 sanction measures, which already falls under its supervision under Dutch supervisory law . 1.8 Under the draft law DNB may share information on international sanction measures with various foreign financial supervisors, including the ECB . This refers to information DNB receives in its capacity as supervisor in respect of compliance with sanction laws. The draft law contains various requirements for the sharing of information, including the following: adequate justification that provides a clear goal for the use of the shared information; sufficient guarantees regarding the confidential treatment of the information; and the requirement that the intended use of the information fits within the framework of the draft law, prudential regulations or the supervision of financial institutions .

text: 13 Wet op het financieel toezicht, Stb. 2018, 443.

text: 14 Wet toezicht trustkantoren 2018, Stb. 2006, 475.

text: Council Regulation (EU) No 1024/2013 of 15 October 2013

text: conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63).

text: 17 Page 70 of the explanatory memorandum.

text: 18 On the basis of

text: Article 1

text: :76 or

text: Article 1

text: :76a of the Law on financial supervision. These articles also cover the appointment of a temporary administrator under

text: Article 29 of Directive 2014/59/EU

text: of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending

text: Council Directive 82/891/EEC

text: , and Directives

text: and

text: , and Regulations

text: (EU) No 1093/2010

text: and

text: (EU) No 648/2012

text: 19 On the basis of

text: Article 3

text: :111a(2)(o) of the Law on financial supervision.

text: 21 Chapter 7 of the draft law.

text: Article 10

text: i of the draft law.

text: 24 See

text: Article 10

text: i(2) of the draft law.

text: 2. Observations

text: 2.1 The ECB’s role under the draft law 2.1.1

text: Article 127(6)

text: TFEU and the provisions of the SSM Regulation referenced in the draft law confer various specific tasks concerning the prudential supervision of credit institutions upon the ECB. The ECB carries out the tasks, inter alia, of authorising and withdrawing authorisations and assessing notifications of the acquisition and disposal of qualifying holdings in respect of all credit institutions. For significant credit institutions the ECB also has the task, inter alia, of ensuring compliance with relevant Union law imposing prudential requirements on credit institutions, including the requirement to have in place robust governance arrangements, such as sound risk management processes and internal control mechanisms . To this end, the ECB is given all supervisory powers that are necessary for the exercise of its functions . The draft law envisages that the agreement of either DNB or the ECB, rather than both DNB and the ECB, is required in respect of the exercise of the responsible minister’s powers under the draft law. Consequently, and in view of the reference in the explanatory memorandum to the largest banks being supervised by the ECB, the ECB understands that the draft law requires the ECB’s agreement in respect of significant institutions only, while DNB’s agreement would be required in respect of less significant institutions. 2.1.2 The UN and the Union are the authorities responsible for the imposition of international sanctions. UN sanctions range from comprehensive economic and trade sanctions to more targeted measures such as arms embargoes, travel bans, and financial or commodity restrictions . The Union can impose sanctions as a means of, inter alia, promoting peace, international security, human rights, democracy, the rule of law, and compliance with international law. Union sanctions do not target a country or population, but are always targeted at specific policies or activities, the means to conduct them and those responsible for them . The ECB neither imposes these sanctions nor monitors compliance with them, even if they are imposed on significant institutions directly supervised by the ECB. It is for those entities to implement and monitor compliance with the different sanctions regimes. Meanwhile, individual Member States are responsible for identifying breaches of sanctions applicable within the Union and imposing penalties if necessary. 2.1.3 Against this backdrop, the purpose of the draft law’s envisaged appointment and revocation of the appointment of a third-party administrator is to ensure the effective implementation and monitoring of compliance with international sanctions; while also ensuring that the imposition of those international sanctions does not result in adverse consequences for an undertaking’s financial stability or continuity, insofar as ceasing the operations of an undertaking could have serious social, economic or employment effects for Dutch society. Consequently, the draft law does not concern the exercise of the ECB’s prudential supervisory tasks or underpin a prudential supervisory function

text: 26 See paragraph 2.1 of Opinion

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

text: 27 See, for the UN, Chapter VII, in particular

text: Article 41

text: , of the United Nations Charter, available on the website of the United Nations at www.un.org.

text: 28 Union sanctions are based on Article 29 of the Treaty on the European Union (TEU) and

text: Article 215

text: TFEU. The policy goals of the sanction measures are laid down in

text: Article 21

text: TEU. under Union law . The competences and powers under the draft law are therefore distinct from, and without prejudice to, the ECB’s prudential supervisory tasks under the SSM Regulation. Therefore, the ECB should not have a formal role in approving the exercise of the responsible minister’s powers under the draft law, including the appointment of a third-party administrator, since this would exceed the scope of the ECB’s prudential supervisory mandate under

text: Article 127(6)

text: TFEU and the SSM Regulation. 2.1.4 Although the subject matter of the draft law falls outside the ECB’s fields of competence, certain competences under the draft law, such as the appointment of a third-party administrator on, inter alia, financial stability grounds, could indeed have prudential repercussions for the credit institution concerned. For example, a third-party administrator might be appointed by the responsible minister with the aim of terminating client relationships between the credit institutions and entities that are subject to international sanction measures. Terminating these client relationships could negatively influence the prudential soundness of a credit institution. Therefore, the ECB would welcome the introduction of a duty to inform the ECB of measures taken under the draft law insofar as such measures could impact the prudential requirements applicable to an institution that falls under the supervision of the ECB pursuant to the SSM Regulation. As the exercise of the responsible minister’s powers could have a prudential impact on credit institutions, the Dutch legislator should also consider clarifying that the relevant provisions of the draft law are without prejudice to the tasks and powers conferred on the ECB for prudential supervisory purposes under the TFEU and the SSM Regulation . 2.1.5 The ECB welcomes that the draft law expressly provides for the possibility for DNB to share information related to international sanction measures directly with the ECB . The ECB takes the view that, in order for it to be timely informed, the draft law would benefit from an express legal basis for the responsible minister to also share with the ECB information which is related to international sanction measures and relevant for the supervisory task of the ECB. 2.2 Relationship between the draft law and the resolution of credit institutions 2.2.1 The measures relating to financial institutions, including credit institutions, under the draft law, such as the appointment of a third-party administrator, may be taken in the event a sanction has adverse consequences for financial stability or the continuity of an enterprise, and is thus likely to cause serious social, economic or employment effects for Dutch society. Hence, the rationale for these measures seems to overlap with the aim of the various resolution regimes for financial institutions, such as credit institutions and investment firms, which also aim to safeguard the public interest, including the continuity of critical functions, financial stability and the imposition of minimal costs on taxpayers. Under

text: Regulation (EU) No 806/2014

text: of the European Parliament and of the Council (hereinafter the ‘SRMR’) the Single Resolution Board (SRB) can take resolution measures provided

text: 29 See paragraphs 2.4 and 2.5 of Opinion

text: 30 See paragraph 2.6 of Opinion

text: Article 10

text: i(1) of the draft law.

text: Regulation (EU) No 806/2014

text: of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending

text: Regulation (EU) No 1093/2010

text: (OJ L 225, 30.7.2014, p. 1). that (1) the credit institution is failing or likely to fail, (2) there is no reasonable prospect that any alternative private sector measures would prevent the failure of the credit institution within a reasonable timeframe, and (3) a resolution action is necessary in the public interest . The public interest requirement refers to the resolution objectives laid down in the SRMR , two of which correspond with the objectives of the draft law: the avoidance of significant adverse effects on financial stability and ensuring the continuity of critical functions. Critical functions refer to activities, services or operations the discontinuance of which is likely to lead to the disruption of services that are essential to the real economy or to disrupt financial stability . 2.2.2 To safeguard the proper functioning of the various resolution regimes, good cooperation between the competent authorities under the draft law and the relevant resolution authorities is key. Although the draft law prevents the responsible minister from appointing a third-party administrator for a credit institution in respect of which a resolution decision is taken, and provides for the possibility for DNB to relieve such an administrator of its duties in the event it takes a resolution decision, the draft law does not clarify the cooperation between the two functions in the event that a resolution decision may be taken in the (near) future. Therefore, the ECB would welcome clarification of the cooperation between the responsible minister, the respective resolution authorities and the third-party administrator. For example, the draft law should take into account the role of the SRB, which is responsible for the effective and consistent functioning of the Single Resolution Mechanism within the Banking Union . A duty for the responsible minister to inform the SRB and DNB should be considered. In addition, the draft law should cater for the sharing of information by DNB on international sanction measures with the SRB and the resolution function within DNB, as the draft law currently lacks a legal basis for sharing such information. 2.3 Relationship between the draft law and DNB’s task to promote financial stability DNB is responsible within the Netherlands for the promotion of financial stability, which also encompasses DNB’s tasks as the Dutch macroprudential authority . There is an overlap between the task of the third-party administrator under the draft law and DNB’s financial stability mandate. DNB’s involvement in the appointment and instruction of the third-party administrator should therefore not be limited to DNB’s supervisory mandate and its role as resolution authority, but should also expressly take into account its financial stability task. 2.4 DNB’s enforcement and supervision powers under the draft law Under the draft law DNB will be responsible for the enforcement and supervision of the adequacy of the internal controls and the administrative organisation of financial institutions in order to comply

text: 35 See

text: Article 2

text: , point (35), of Directive

text: Council Directive 82/891/EEC

text: , and Directives

text: and

text: , and Regulations

text: (EU) No 1093/2010

text: and

text: (EU) No 648/2012

text: , of the European Parliament and of the Council (OJ L 173, 12.6.2014, p. 190). 36 Article 7 of the SRMR. 37 See

text: Article 4(1)

text: (c) of the Law on De Nederlandsche Bank (Bankwet 1998, Stb. 1998, 200). with international sanctions. The ECB welcomes the strengthening of the legal basis and clarification of DNB’s supervisory powers in this respect. This opinion will be published on EUR-Lex. Done at Frankfurt am Main, 26 August 2024. [signed] The President of the ECB Christine LAGARDE


title: Opinion of the European Central Bank of 30 August 2024 on the term of office of the members of the Board of Governors of Danmarks Nationalbank, oversight and operation competences in respect of payment systems, and the right of deposit in basic business accounts (CON/2024/28)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 30 August 2024 on the term of office of the members of the Board of Governors of Danmarks Nationalbank, oversight and operation competences in respect of payment systems, and the right of deposit in basic business accounts (

text: ) Introduction and legal basis

text: On 7 August 2024 the European Central Bank (ECB) received a request from the Danish Financial Supervisory Authority (FSA) for an opinion on a draft law amending the Law on payment accounts, the Law on financial services, the Law on capital markets, the Law on Danmarks Nationalbank 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 and Article 2(1), first, third and fifth indents, of

text: Council Decision 98/415/EC

text: , as the draft law relates to currency matters, 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 number of different laws. However, for the purpose of this opinion it is the 2 3 proposed amendments to the Law on Danmarks Nationalbank , the Law on payments and the Law on payment accounts , which are addressed. 1.2 First, the draft law introduces a fixed term of office for the three members of the Board of Governors of Danmarks Nationalbank by amending the Law on Danmarks Nationalbank. The existing Law on Danmarks Nationalbank provides that the Board of Governors of Danmarks Nationalbank consists of three members . One of the Governors is appointed by the King, and the other Governors are appointed by the Board of Directors on the recommendation of the Committee of Directors . The interpretative notes to the draft law (hereinafter the ‘interpretative notes’) clarify that in practice the

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 Danmarks Nationalbank, Lov nr. 116 af 7.4.1936.

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

text: 4 Lov om betalingskonti, Lov nr. 407 af 29.3.2022. appointment of the Governor performed by the King is undertaken by the Government on behalf of 7 8 the King . The said Governor is the chair of the Board of Governors . 1.3 The existing Law on Danmarks Nationalbank contains no term limits for the members of the Board of Governors, but simply provides that they must resign before the expiration of the month in which they reach the age of 70 . The draft law repeals this obligation and replaces it by laying down that the governors are to be appointed for a term of 6 years, with the possibility of one extension of 6 additional years . The interpretative notes state that the maximum term of office of 12 years does not apply where a Governor appointed by the Board of Directors has undertaken his or her office for, for example, almost 12 years, and is subsequently appointed by the King as chair of the Board of Governors with the possibility of reappointment for an additional period of 6 years . 1.4 The draft law clarifies that the new tenure regime does not apply to Governors appointed before 1 January 2025, unless a Governor who was originally appointed by the Board of Directors, is subsequently appointed by the King . Thus, according to the interpretative notes, a Governor appointed by the Board of Directors before the entry into force of the draft law, will in this scenario be subject to a fixed term of office . Moreover, the interpretative notes further clarify that the current members of the Board of Governors do not need to be reappointed upon the entry into force of the new tenure regime and, thus, that their existing terms of employment continue to apply . In this manner, new members of the Board of Governors will not be appointed collectively, but at the time when their predecessors resign. 1.5 The interpretative notes state that the appointment of members of the Board of Governors for an indefinite period is atypical compared generally to other tenure rules in the Danish governmental administration, where fixed term contracts are the rule . Likewise, the current regime is considered atypical compared to the setup in other national central banks (NCBs) in the European System of Central Banks (ESCB), which generally have terms of office of 5 to 8 years, in some cases supplemented by an option for one reappointment. The interpretative notes also refer to Article 14.2 of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB’). This provision applies to the governors of all Member State NCBs and provides, in order to safeguard their personal independence, that the term of office of an NCB Governor is to be no less than five years. The suggested new regime is considered to ensure a good balance between continuity and continuous replacement of the Board of Governors. 1.6 Second, the draft law amends the Law on payments with a view to transposing into Danish legislation the amendments enacted by

text: Regulation (EU) 2024/886

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

text: of the European Parliament and of the

text: 7 See page 42 of the general comments to the interpretative notes.

text: 11 See page 43 of the general comments to the interpretative notes.

text: 13 See page 324 of the specific comments to the interpretative notes.

text: 14 See page 324 of the specific comments to the interpretative notes.

text: 15 See pages 42 and 43 of the general comments to the interpretative notes.

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). Council (hereinafter the ‘SFD’) and

text: Directive (EU) 2015/2366

text: of the European Parliament and of the Council (hereinafter the ‘PSD2’) . The existing Law on payments requires payment service providers to lay down access conditions for payment systems which are objective, non-discriminatory and proportionate and do not prevent access to the system to a greater extent than is necessary to protect against specific risks such as settlement, operational and commercial risks and to ensure the financial and operational stability of the payment system , which is in line with Article 35 of the PSD2. 1.7 However, there are two exceptions to this requirement , as it applies neither to payment systems designated under the SFD, such as KRONOS2 (Danmarks Nationalbank’s system settling for transactions in Danish kroner) and TARGET-Danmark (which settles transactions in euro as part of TARGET) , nor to payment systems consisting exclusively of payment service providers belonging to the same group. The Law on payments does not apply to payment transactions carried out within the framework of a system for settlement of payments or securities between settlement agents, central counterparties, clearing houses, central banks or other participants in the system and payment service providers, without prejudice to the abovementioned rules on access conditions . 1.8

text: Regulation (EU) 2024/886

text: amends Article 35 of the PSD2 , with the consequence that the exemption in the Law on payments for payment systems designated under the SFD, related to access conditions for authorised or registered payment service providers which are objective, nondiscriminatory and proportionate, is repealed . Thus, SFD-designated systems like KRONOS2 and TARGET-Danmark must, from the entry into force of the draft law, have access conditions based on the requirements of the Law on payments. The existing Law on payments allocates the competence to ensure compliance with its provisions to the Danish Competition and Consumer Authority. 1.9 Third, the draft law amends the Law on payment accounts with a view to establishing a regime for ‘basic business accounts’ in line with Directive

text: of the European Parliament and of the 26 27 Council (hereinafter the ‘Payment Accounts Directive’) with certain modifications . The draft law accordingly changes the title of the Law on payment accounts to the Law on payment accounts and 28 29 basic business accounts . The interpretative notes state that there may currently be substantial challenges for private entrepreneurs and associations to open bank accounts in Denmark, for which

text: 17 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).

text: 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).

text: 21 See Article 3(1) of 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). Under Article 4 of Guideline

text: (EU) 2022/912

text: (ECB/2022/8) NCBs of Member States whose currency is not the euro may only connect to TARGET if they conclude an agreement with the Eurosystem central banks. TARGET-Danmark is Danmarks Nationalbank’s national TARGET component system.

text: 26 Directive

text: of the European Parliament and of the Council of 23 July 2014 on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features (OJ L 257, 28.8.2014, p. 214).

text: 27 See page 38 of the general comments to the interpretative notes.

text: 29 See page 38 of the general comments to the interpretative notes. reason the draft law aims to facilitate this within the wider framework of facilitating the establishment and running of private businesses and the receipt of public subsidies by associations. The draft law accordingly proposes to add to the Law on payment accounts a new Chapter 4a regulating the requirements for a basic business account in Danish kroner. More specifically, it is proposed, inter alia, to insert a new provision defining the ‘services that a trader or an association should be able to use to an unlimited extent’ in relation to a basic business account . This includes, inter alia, the possibility to deposit funds in the account and withdraw funds from it, albeit that cash deposits are in fact limited to in total DKK 20 000 (approximately EUR 2 700) per month . The interpretative notes indicate that the limitation on making cash deposits does not, however, restrict the credit institutions from either generally or via individual agreements with account holders allow entrepreneurs and associations to deposit cash to a larger extent .

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 the NCB’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 comply with the requirements of central bank independence . Hence, with regard to compliance issues relating to central bank

text: 32 See page 127 of the specific comments to the interpretative notes.

text: 33 See Protocol (No 16) to the Treaty on certain provisions relating to Denmark, paragraphs 1 and 2. Furthermore, as elaborated in a Decision of the Heads of State and Government (Decision of Heads of State and Governments, Edinburgh Summit meeting on 11-12 December 1992), the consequence of Denmark having notified that it will not participate in the third stage of economic and monetary union is that it is not bound by the rules concerning economic policy, which apply only to the Member States participating in the third stage of economic and monetary union, and will retain its existing powers in the field of monetary policy according to its national laws and regulations, including Danmarks Nationalbank’s powers in the field of monetary policy. Moreover, Denmark participates fully in the second stage of economic and monetary union and continues to participate in exchange-rate cooperation within the European Monetary System.

text: 34 See ECB Convergence Report (June 2022), p. 17, available on the ECB’s website at www.ecb.europa.eu. independence, this opinion is based on the current legal understanding of the related requirements . Otherwise, this opinion refrains from commenting on matters relating to the possible legal integration of Danmarks Nationalbank into the Eurosystem, which would only be relevant if Denmark requests that the procedure for the abrogation of its exemption is initiated. 2.3 In addition, it is recalled that Danmarks Nationalbank retains its powers in the field of monetary policy according to national law. Given that oversight of clearing and payment systems is a task closely linked to its monetary policy tasks, the Treaty provisions awarding the Eurosystem oversight on clearing and payment systems as part of its mandate pursuant to

text: Article 127(2)

text: , fourth indent, of the Treaty, as mirrored in

text: Article 3.1

text: , fourth indent, and Article 22 of the Statute of the ESCB, subject to which one of the basic tasks to be carried out through the ESCB is to promote the smooth operation of payment systems, including the competence to provide facilities, make regulations and ensuring efficient and sound systems, does not apply to Member States with a derogation . 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 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 The ECB takes due account 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: 3. Term of office of the members of the Board of Governors of Danmarks Nationalbank

text: Article 14.2

text: , first subparagraph, of the Statute of the ESCB requires that the term of office of a Governor of an NCB must be no less than five years. The Chairman of the Board of Governors of Danmarks Nationalbank, is considered to be the Governor of Danmarks Nationalbank in the sense of the Treaty and the Statute of the ESCB. Against this background, the ECB welcomes the

text: 35 In March 1998 the former European Monetary Institute (EMI) established a list of features of central bank independence which were the basis for assessing the compatibility of Member States’ national legislation, in particular the NCBs’ statutes, with central bank independence requirements at that time. The concept of central bank independence articulated by the EMI included various types of independence that must be assessed separately, namely institutional, personal and financial independence. The EMI concluded that Danmarks Nationalbank’s statute did not contain incompatibilities in the area of central bank independence (See EMI Convergence Report: Report required by

text: Article 109

text: j of the Treaty establishing the European Community (March 1998), pp. 15 and 299, available on the ECB’s website at www.ecb.europa.eu). There has been no assessment of the compliance of Danmarks Nationalbank’s statutes with central bank independence requirements since 1998 due to Denmark’s special status (See ECB Convergence Report (June 2022), p. 12, available on the ECB’s website at www.ecb.europa.eu). Over the years there have been further refinements of the analysis of the different aspects of central bank independence in the opinions adopted by the ECB, including functional independence (See paragraph 2.1 of Opinion

text: . All ECB opinions are published on EUR-Lex.), as well as jurisprudential developments regarding the concept of central bank independence at the Court of Justice of the European Union (see, e.g., Judgment of the Court of 10 July 2003, Commission v ECB,

text: Case C-11/00

text: , EU:C:2003:395, paragraphs 130 to 145).

text: 36 See Article 42.1 of the Statute of the ESCB.

text: 37 See Justitsministeriets vejledning om lovkvalitet (Guide on Law Quality), p. 130, by the Ministry of Justice, available at www.lovkvalitet.dk (in Danish only). introduction of a six-year fixed term of office for the members of the Board of Governors, with the option of one reappointment for an additional 6 years. 3.2 Article 130 of the Treaty and Article 7 of the Statute of the ESCB, concerning central bank independence, both refer to ‘members of the decision-making bodies’ of NCBs. Applying the same rules for the security of tenure and the minimum term of office as applicable to the Governor to the other members of the decision-making bodies of NCBs involved in the performance of ESCB-related tasks safeguards their personal independence. Hence, the ECB also welcomes the introduction of a six-year fixed term of office, with the option of one reappointment for an additional period of six years, also with a view to the other members of the Board of Governors . 3.3 Furthermore, the ECB welcomes the clarification in the draft law that the proposed new tenure rule applies as from the point in time where the draft law has been enacted and enters into force on 1 January 2025. This implies that the members of the Board of Governors appointed in accordance with the currently applicable rules will continue to remain subject to these rules. This ensures that the current members of Danmarks Nationalbank’s decision-making bodies undertaking ESCBrelated matters are allowed to complete their current terms .

text: 4. Oversight and operation competences of the Eurosystem and Danmarks Nationalbank

text: 4.1 The Treaty and the Statute of the ESCB provide for the Eurosystem to conduct oversight of clearing and payment systems as part of its mandate. Pursuant to

text: Article 127(2)

text: Article 3.1

text: , fourth indent, of the Statute of the ESCB, one of the basic tasks to be carried out through the ESCB is to promote the smooth operation of payment systems. In the performance of this basic task, the members of the ESCB may provide facilities, and the ECB may make regulations, to ensure efficient and sound clearing and payment systems within the Union and with other countries . 4.2 Pursuant to its oversight role, the ECB has adopted Regulation of the European Central Bank

text: (EU) No 795/2014

text: (ECB/2014/28) (hereinafter the ‘SIPS Regulation’), which governs both large-value payment systems and retail payment systems of systemic importance, operated either by a Eurosystem central bank or a private entity. The SIPS Regulation includes, inter alia, provisions on the establishment and disclosure of non-discriminatory access and participation criteria for the payment systems . In addition, non-systemic payment systems are overseen based on an oversight framework for retail payment systems , which also contains relevant provisions on access and participation criteria . 4.3 To date, the role of primary overseer of the payment systems that are in scope of the Eurosystem is assigned by reference to the national anchor of the respective payment system and the legal

text: 38 See ECB Convergence Report (June 2024), available on the ECB’s website at www.ecb.europa.eu.

text: 39 See paragraph 3.3.3 of Opinion

text: and paragraph 2.2.2 of Opinion

text: 40 See Article 22 of the Statute of the ESCB.

text: 41 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: 42 See Article 16 of the SIPS Regulation.

text: 43 Eurosystem, ‘Revised oversight framework for retail payment systems’, February 2016, available on the ECB’s website at www.ecb.europa.eu.

text: 44 In view of its mandate, the ECB may make further regulations, and carries out frequent reviews to check whether the scope of oversight covers all relevant functions and entities in the payment ecosystem. incorporation of its governance body. For pan-European payment systems, such as TARGET, including TARGET-Danmark, the ECB has as a rule the primary oversight role, unless otherwise decided by the Governing Council . 4.4 Deciding whether to grant access to payment systems operated by Eurosystem central banks is an integral part of the Eurosystem’s basic task of promoting the smooth operation of payment systems , which is also related to its role as operator of payment systems. In this respect, it is for the Eurosystem to adopt the access criteria in respect of payment systems in euro operated by the Eurosystem, such as TARGET, including the TARGET-Danmark national component. 4.5 The Eurosystem has competence for, inter alia, the operation of payment systems by Eurosystem central banks as defined by the Treaty. Consequently, in order for TARGET-Danmark to continue settling euro payments in TARGET, Danmarks Nationalbank must be able to abide at all times by the access criteria defined by the Eurosystem and must also honour its obligations under the agreement between Danmarks Nationalbank and the ECB on the establishment of Danmarks Nationalbank’s TARGET component system, without any interference by the Danish Competition and Consumer Authority. 4.6 Danmarks Nationalbank’s oversight competence in respect of national payment systems is based on 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. In 2005, Danmarks Nationalbank received explicit authorisation for supervision/oversight in the Law on securities 48 49 trading , which is now contained in the Law on capital markets . 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 and the other payment systems established in Denmark, such as the retail payment system operated by Finans Danmark, the Danish Bankers’ Association. In accordance with international best practice , to ensure consistency and equal treatment in the oversight of Danmarks Nationalbank’s own systems and other systems, Danmarks Nationalbank’s oversight function is distinct from its development and operation of payment systems function. 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.

text: 46 See section 3 (‘Access to central bank-operated payment systems’) of Policy on access by non-bank payment service providers to central bank-operated payment systems and to central bank accounts, July 2024, available on the ECB’s website at www.ecb.europa.eu.

text: 47 See Article 1 of the Law on Danmarks Nationalbank.

text: 48 Lov on værdipapirhandel, Lov nr. 251 af 21/3/2017 (repealed).

text: 50 Principles for Financial Market Infrastructures, April 2012, available on the Bank for International Settlements’ website at www.bis.org.

text: 51 See Principles for Financial Market Infrastructures, paragraph 3.2.7.

text: 5. Right of deposit in basic business accounts

text: 5.1 The ECB welcomes the proposed facilitation of both the establishment and running of private businesses and associations by means of the proposed new regime for basic business accounts. The ECB understands that whilst the new regime is in principle based on the model for consumers’ access to basic payment accounts, in accordance with the Payment Accounts Directive, the proposed law introduces a new requirement that holders of a basic business account may only deposit a total of DKK 20 000 in cash per month. 5.2 The ECB has in recent years opined on a number of reductions of the cash limit under the Danish money laundering regime . On those occasions it was acknowledged that the proposed amendments to the Law on money laundering had neither the objective nor the effect of amending the legal rules governing the status of legal tender. Furthermore, they did not lead, either in law or in effect, to the abolition of banknotes in Denmark. Likewise, it was welcomed that the draft measures did not apply to consumers but only to specific groups of business-to-business and customer-tobusiness payments . However, it was also noted that ‘no substantiation has been provided in the explanatory notes on the effect of the previous 2013 and 2020 reductions of the cash limitations. If such measures have not produced the desired effects, it is hard to understand why lowering that threshold to 15 000 DKK would be considered more appropriate and more effective . In the same vein, whilst recognising that the current draft law is not related to combating money laundering, the ECB questions the need to limit monthly deposits of cash in basic business payment accounts to DKK 20 000, as this is a measure that has negative effects on the use of legal tender in payments in the future and is likely to discredit cash. Whilst the ECB understands that commercial banks that offer such basic payment accounts may set higher ceilings for monthly cash deposits, it is not clear which criteria the banks will apply if a business or association wants to open such an account with a higher ceiling or wants to lift this ceiling for an existing basic business account. While an analogy to the Payment Accounts Directive has been drawn, which has inspired this new type of payment account, the ECB notes that the Payment Accounts Directive requires Member States to ensure that a payment account with basic features allows consumers to execute an unlimited number of operations in relation to services considered to be in the scope of the payment account with basic features, including enabling cash withdrawals . Furthermore, the proposed limitation of cash deposits in basic business accounts would constitute a disadvantage for certain categories of payment service users, which could be considered to contradict the very idea of the introduction of basic business accounts.

text: 52 Lov om hvidvask, nr. 807 af 21.6.2024.

text: 53 See Opinions

text: and

text: 54 See paragraph 3.19 of Opinion

text: 55 See Article 17 of the Payment Accounts Directive. 5.3 As a possible alternative to the establishment of a DKK 20 000 ceiling for cash deposits in basic business accounts, it may be expected that the application of existing money laundering rules will provide for sufficient safeguards to identify and report suspicious transactions, including deposits of cash in basic business accounts, to the FSA. This opinion will be published on EUR-Lex. Done at Frankfurt am Main, 30 August 2024. [signed] The President of the ECB Christine LAGARDE