text: BOE, núm. 263 of 3 de Noviembre 2021.

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

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

text: Directive (EU) 2019/2162

text: of the European Parliament and of the Council of 27 November 2019 on the issue of covered bonds and covered bond public supervision and amending Directives

text: and

text: (OJ L 328, 18.12.2019, p. 29).

text: Article 37 of the draft law.

text: Article 38 of the draft law.

text: Regulation (EU) No 260/2012

text: of the European Parliament and of the Council of 14 March 2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending

text: Regulation (EC) No 924/2009

text: (OJ L 94, 30.3.2012, p. 22).

text: Paragraphs 2 to 5 of the fourth additional disposition of Real Decreto-ley 19/2018, de 23 de noviembre, de servicios de pago y otras medidas urgentes en materia financiera, BOE núm. 284, e 24 de noviembre de 2018, páginas 114474 a 114568.

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: Recital 27

text: of

text: Directive (EU) No 2019/2162

text: Directive

text: of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive

text: and repealing Directives

text: and

text: (OJ L 176, 27.6.2013, p. 338).

text: See paragraph 3.1 of Opinion

text: and paragraph 3.1 of Opinion

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

text: See General observations in Opinion of the European Central Bank of 22 August 2018 on a proposal for a directive of the European Parliament and of the Council on the issue of covered bonds and covered bond public supervision and amending Directive

text: and Directive

text: ; and on a proposal for a regulation of the European Parliament and of the Council on amending

text: Regulation (EU) No 575/2013

text: as regards exposures in the form of covered bonds (

text: ) (OJ C 382, 23.10.2018, p. 2) and paragraph 3.3 of Opinion

text: See paragraph 3.1 of Opinion

text: and paragraph 3.3 of Opinion

text: See Article 21 of Ley 2/1981, de 25 marzo, de regulación del mercado hipotecario, BOE núm. 90, de 15 de abril de 1981, páginas 8148 a 8150.

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

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

text: and

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

text: This statement of the approach taken reflects, for example, paragraph 2.3.1 of Opinion

text: In Belgium, the law of August 3, 2012 establishing a legal regime for Belgian covered bonds designates the National Bank of Belgium (NBB) as the relevant authority to grant two types of authorisations to credit institutions for the issuance of covered bonds. A first type is to verify that credit institutions have the organizational capacity to issue covered bonds. In this respect, NBB is responsible for granting such authorisation vis-à-vis less significant institutions. The second type, which is granted by NBB regardless of the significance of the institution, aims to verify whether the credit institution satisfies all requirements specifically related to the issuance of the covered bonds. In Cyprus, Law (130 (I)/2010) on covered bonds, designates the Central Bank of Cyprus (CBC) as the competent authority for the purpose of the inscription and maintenance of a covered bonds register (sections 12 to 17). The CBC is also entitled to appoint a covered bond monitor in certain circumstances. Administrative Decision 463/2006 issued under the provisions of the above Law constitutes the regulatory framework for the issue of covered bonds. In the Czech Republic, Act No. 6/1993 on Czech National Bank (CNB) refers to the supervisor of entities operating in the financial market as one of the functions of CNB. On this basis, Act No. 190/2004 Coll., on Bonds, refers to CNB as the authority which must be informed by the issuer institutions of their compliance with the terms of the Act (

text: Article 32

text: ) or the authority in charge of appointing the forced administrator of covered pools (

text: Article 32

text: .d). In Greece, article 152 of Law 4261/2014 and the Bank of Greece’s Governor’s Act No 2620/2009 currently set the conditions for qualifying the bonds issued by credit institutions as covered bonds for supervisory purposes. Bank of Greece has been designated as the competent authority in this respect and has been empowered, among other things, to define the assets that form the cover pool, to establish rules on the assets’ valuation and to ensure proper monitoring of the coverage. In addition, the covered bond program must be authorized by the Bank of Greece before issuance takes place. Bank of Greece may also appoint an administrator in the event of the issuer’s insolvency. In Ireland, under section 54 of the Asset Covered Securities Act, 2001, the Central Bank of Ireland (CBI) is entitled to have access to the issuing institution’s register of public credit covered securities. On the basis of this same provision, the CBI may specify requirements in relation to the valuation of the assets in the covered pool held by the issuer institutions. The CBI may appoint the cover assets monitor in specific circumstances and possesses investigative powers in relation to the activities that the issuer institutions carry out on the basis of the Act (Part 5). In Netherlands, sections 3:33a and 3:33b of the amendment of the Financial Supervision Act (Wet op het financieel toezicht), Section 40d up to and including Section 40k of the Decree on Prudential Rules for Financial Undertakings (Besluit prudentiële regels), and section 20d up to and including Section 20i of the Regulation Implementing the Financial Supervision Act (Uitvoeringsregeling), set the conditions and minimum requirements that an issuing institution must meet if bonds issued or to be issued by that institution are to qualify as covered bonds that may be entered in the public register of covered bonds maintained by De Nederlansche Bank (DNB). In addition to maintaining the public register of covered bonds, DNB is responsible to assess the conditions and minimum requirements referred to above. In the Explanatory Memorandum (memorie van toelichting) accompanying the introduction of this legal framework, it is mentioned that the scope of supervision by DNB is extended with the introduction of this legal framework. In Romania, Law no.304/2015 on mortgage bonds issuance and Regulation no. 1/2016 on the activity of issuing mortgage bonds confers supervisory powers on the Banca Naţională a României regarding mortgage bonds issued by credit institutions, such as the prior authorisation of each issuance of mortgage bonds by the issuer institution. In Slovakia, according to the law amending and supplementing the Act No 483/2001 Coll. on Banks, Národná banka Slovenska, as a national competent authority for supervision of the financial market, is designated as the only competent authority for the purpose of Division Twelve (“Covered Bonds Programmes”) of the Act. In Slovenia, the Mortgage Bond and Municipal Bond Act (Zakon o hipotekarni in komunalni obveznici) requires from the issuing institution the need to obtain an authorisation from Banka Slovenije before issuing mortgage and municipal bonds. To that end, this Act establishes the methodology for determining the conditions for obtaining such authorisation (Articles

text: and

text: ). Banka Slovenije is also responsible for issuing and withdrawing the authorisation to the custodian of the cover register (

text: Article 43

text: Ley 13/1994, de 1 de junio, de Autonomía del Banco de España, BOE núm. 131, de 2 de junio de 1994, páginas 17400 a 17408.

text: Ley 10/2014, de 26 de junio, de ordenación, supervisión y solvencia de entidades de crédito, BOE núm. 156, de 27 de junio de 2014, páginas 49412 a 49549.

text: Ley 40/2015, de 1 de octubre, de Régimen Jurídico del Sector Público, BOE núm. 236, de 2 de octubre de 2015, páginas 89411 a 89530.

text: See Article 25 of Resolución de 28 de marzo de 2000, del Consejo de Gobierno del Banco de España, por la que se aprueba el Reglamento Interno del Banco de España, BOE núm. 83, de 6 de abril de 2000, páginas 14323 a 14340.

text: Real Decreto-ley 6/2013, de 22 de marzo, de protección a los titulares de determinados productos de ahorro e inversión y otras medidas de carácter financiero, BOE núm. 71, de 23 de marzo de 2013, páginas 22901 a 22911. The first paragraph of the Third final disposition of the draft law reconfirms the Banco de España’s role as competent authority responsible for ensuring the compliance of PSPs with

text: Regulation (EU) No 260/2012

text: See second paragraph of the fourth additional disposition of Real Decreto-Ley 19/2018.

text: Under

text: Article 2(9) of Regulation (EU) No 260/2012

text: a ‘PSU’ means a natural or legal person making use of a payment service in the capacity of payer or payee.

text: See the third paragraph of the Third final disposition of the draft law.

text: See paragraphs 3.1.1 and 3.1.2 of Opinion

text: See paragraph 3.2 of Opinion

text: See the Annex to the Report from the Commission to the European Parliament and to the Council on the application of Regulation EU n°260/2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending

text: Regulation (EC) No 924/2009

text: , COM/2017/0683 final. Available on the European Commission’s website at ec.europa.eu.

text: See paragraph 3.3 of Opinion

text: See, for example, Opinion

text: , Opinion

text: , Opinion

text: and Opinion

text: See paragraph 3.4 of Opinion

text: See

text: Article 7(5)

text: (b) of Ley 13/1994 and Ley 41/1999, de 12 de noviembre, sobre sistemas de pagos y de liquidación de valores, BOE núm. 272, de 13 de noviembre de 1999, páginas 39646 a 39653.

text: See paragraph 3.6 of Opinion

title: Opinion of the European Central Bank of 16 November 2021 on the Banco de España’s new and expanded tasks relating to covered bonds and the single euro payments area (CON/2021/34)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 16 November 2021 on the Banco de España’s new and expanded tasks relating to covered bonds and the single euro payments area (

text: ) Introduction and legal basis

text: On 14 October 2021 the European Central Bank (ECB) received a request from the Ministry of Economic Affairs and Digital Transformation for an opinion on a draft law on covered bonds (hereinafter the ‘draft law’). The draft law was approved as a Royal Decree-Law on 2 November 2021 and published in the Official Journal a day later. The Royal Decree-Law is currently pending ratification by the Congress. The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third indent of

text: , as the draft law relates to the Banco de España and the ECB’s tasks concerning the prudential supervision of credit institutions pursuant to Article 127(6) of the Treaty. 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 main purpose of the draft law is to implement

text: Directive (EU) No 2019/2162

text: of the European Parliament and of the Council in Spanish law. The draft law accordingly designates the Banco de España as the competent authority responsible for the public supervision of covered bonds issued by credit institutions and confers on it supervisory, investigatory and sanctioning powers in relation to the compliance with the requirements of the draft law and its implementing administrative regulations of credit institutions issuing covered bonds, including under covered bond programmes . More particularly, the Banco de España is to authorise the issuance by credit institutions of a covered bonds programme and to approve the appointment of the monitoring body for the cover pool (the ‘cover pool monitor’), whether this is an external service provider or internal to the credit institution issuing the covered bonds . The Banco de España must keep a register of

text: the cover pool monitors detailing the programme or programmes for which each monitor has been authorised. It may require credit institutions to make changes to the cover pool policies and procedures based on cover pool risk diversification considerations . The Banco de España is also required to make certain disclosures, including the publication on its website of the list of credit institutions permitted to issue covered bonds . In the event of the insolvency of a credit institution issuing covered bonds under that programme the presiding judge must consult the Banco de España on the appointment of a special administrator to administer a covered bond programme. The Banco de España may also adopt non-binding instruments and technical guidelines in relation to the supervision of covered bonds. 1.2 The draft law also designates Banco de España as the competent authority responsible for ensuring compliance with the payment accessibility requirement of

text: Article 9 of Regulation (EU) No 260/2012

text: of the European Parliament and of the Council in relation to companies, entrepreneurs or professionals acting on the basis of their commercial or professional activities which are not payment service providers and are beneficiaries of a payment order whose originator is another company, entrepreneur or professional acting on the basis of their commercial or professional activity that is not a payment service provider. In this respect the Banco de España may request the necessary information to ascertain whether companies, entrepreneurs or professionals which are the beneficiaries of a payment are not requiring that transfers and direct debits are made only through accounts located in their country of origin. The Banco de España may also impose sanctions in this respect .

text: 2. Specific observations

text: Directive (EU) No 2019/2162

text: must be interpreted in line with Council Regulation (EU) 10 11 No 1024/2013 , to which it refers .

text: Article 4(1)

text: (a) of

text: Regulation (EU) No 1024/2013

text: gives the ECB the exclusive task of authorising credit institutions and withdrawing authorisations of credit institutions. The draft law’s provisions implementing

text: Directive (EU) No 2019/2162

text: regarding the right to issue authorisations for the issuance of covered bonds must also be interpreted in line with

text: Regulation (EU) No 1024/2013

text: . In accordance with

text: Article 6(4) of Regulation (EU) No 1024/2013

text: , the ECB exercises this responsibility in respect of both significant and less significant institutions. This task is exercised for all banking activities listed in Annex I of Directive

text: of the

text: European Parliament and of the Council as well as for any additional activity allowed under national law . 2.2 The draft law implements

text: Article 19 of Directive (EU) 2019/2162

text: , which requires permission for a covered bond programme to be obtained before issuing covered bonds under it. Under Article 34(1) of the draft law the issuance of a covered bond programme requires the Banco de España’s prior authorisation. 2.3 The ECB has previously opined on the allocation of competences between the ECB and the national competent authorities (NCAs) in the Single Supervisory Mechanism , noting that

text: Directive (EU) 2019/2162

text: makes provision for the supervision of covered bonds by the NCAs and that this product supervision is distinct from and without prejudice to the ECB’s prudential supervisory tasks under

text: Regulation (EU) No 1024/2013

text: and, in particular, does not affect the ECB’s exclusive task of authorising credit institutions and withdrawing authorisations of credit institutions, which may, depending on the national legal framework, include a general authorisation to issue covered bonds. Similarly, the ECB remains competent to ensure that the prudential risks arising from covered bond issuances as well as investments in covered bonds are adequately managed and assessed by credit institutions. The ECB has also previously noted that any possible authorisation for a specific covered bond programme or supervision of covered bonds as a financial product would be considered as a product-specific regulation and, as such, to fall under the supervision of an NCA. 2.4 Accordingly, the competence conferred on the Banco de España by the draft law to authorise the issuance by a credit institution of a covered bonds programme should be without prejudice to the ECB’s competence to issue authorisations for credit institutions.

text: 3. Conferral of new tasks on the Banco de España as to the supervision of covered bonds

text: 3.1 New tasks of the Banco de España 3.1.1 The draft law confers tasks concerning the supervision of covered bonds on the Banco de España. It should be noted that the existing national covered bonds legislation already confers certain specific supervisory tasks in relation to the monitoring and inspection of covered assets on the Banco de España. These tasks vary depending on the type of instrument concerned. In particular, certain specific supervisory tasks have been conferred on the Banco de España in relation to mortgage covered bonds (cédulas y bonos hipotecarias), internationalisation covered bonds (cédulas y bonos de internacionalización) and public sector covered bonds (cédulas territoriales). Despite the conferral of these specific supervisory tasks on the Banco de España, the existing

text: Spanish covered bonds legislation provides a general competence to the Ministry of Economy to ensure compliance with the requirements established in this legislation, including those requirements applicable to the different types of covered bonds, without prejudice to the specific powers of the Banco de España . The general tasks which are proposed to be conferred on the Banco de España by the draft law may therefore be properly characterised as new tasks of the Banco de España. 3.1.2 The ECB emphasises that a proposed conferral of new tasks on a national central bank (NCB) participating in the European System of Central Banks (ESCB) must be assessed against the prohibition on monetary financing under Article 123 of the Treaty. For the purposes of that prohibition,

text: Article 1(1)

text: (b)(ii) of

text: Council Regulation (EC) No 3603/93

text: defines ‘other type of credit facility’ as, inter alia, ‘any financing of the public sector’s obligations vis-à-vis third parties’. 3.1.3 Ensuring that Member States implement a sound budgetary policy is one of the key objectives of the prohibition on monetary financing. Therefore, the task of financing measures, which are normally the responsibility of the Member States, and which are financed from their budgetary sources rather than by the NCBs, must not be entrusted to NCBs. To decide what constitutes financing of the public sector’s obligations vis-à-vis third parties, which can be translated as the provision of central bank financing outside the scope of central bank tasks, it is necessary to carry out, on a case-by-case basis, an assessment of whether the task to be undertaken by an NCB is a central bank task or a government task, i.e. a task within the responsibility of the Member States. 3.1.4 As part of its discretion in the exercise of its duty, on the basis of

text: Article 271

text: (d) of the Treaty and Article 35.6 of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB’), to ensure that NCBs honour the obligations laid down by the Treaty, the Governing Council has endorsed safeguards in the form of criteria for determining what may be considered as falling within the scope of ‘the public sector’s obligations vis-à-vis third parties’ within the meaning of

text: Article 1(1)

text: (b)(ii) of

text: Regulation (EC) No 3603/93

text: or, in other words, what constitutes a government task, as follows: First, central bank tasks are, in particular, those tasks that are related to the tasks that have been conferred upon the ECB and the NCBs by the Treaty and the Statute of the ESCB. These tasks are mainly defined in

text: Article 127(2)

text: , (5) and (6), and Article 128(1) of the Treaty, as well as in

text: Article 22

text: and Article 25.1 of the Statute of the ESCB. Second, as Article 14.4 of the Statute of the ESCB allows NCBs to perform ‘functions other than those specified in [the Statute of the ESCB]’, new tasks, i.e. tasks that are not related to tasks that have been conferred upon the ECB and the NCBs, are not precluded per se. However, new tasks that are undertaken by an NCB and which are atypical of NCB tasks or which are clearly discharged

text: on behalf of, and in the exclusive interest of the government or of other public sector entities, should be considered government tasks. Third, an important criterion for qualifying a new task as atypical of an NCB task, or as being clearly discharged on behalf of and in the exclusive interest of the government or other public sector entities, is the impact of the task on the institutional, financial and personal independence of that NCB. In particular, the following aspects should be taken into account: (a) whether the performance of the new task creates conflicts of interest with existing central bank tasks which are not adequately addressed, and its performance does not necessarily complement those existing central bank tasks. If a conflict of interest arises between existing and new tasks, sufficient safeguards to mitigate that conflict should be in place. The complementarity between a new task and existing central bank tasks should not be interpreted broadly so that it could lead to the creation of an indefinite chain of ancillary tasks. Such complementarity should be examined in relation to the financing of those tasks; (b) whether without new financial resources the performance of the new task is disproportionate to the NCB’s financial or organisational capacity, and may have a negative impact on the capacity to properly perform the existing central bank tasks; (c) whether the performance of the new task fits into the institutional set-up of the NCB in the light of central bank independence and accountability considerations; (d) whether the performance of the new task harbours substantial financial risks; (e) whether the performance of the new task exposes the members of the NCB decision-making bodies to political risks that are disproportionate and may also have an impact on their personal independence and, in particular, on the guarantee of term of office set out in Article 14.2 of the Statute of the ESCB. 3.1.5 The systematic categorisation of tasks assigned to NCBs as central banking or government tasks applies to genuinely new tasks that did not exist in the past or did not form an integral part of the central banking tasks already assigned to the NCB in the past. In recognition of the different Member States’ legal frameworks, central banking traditions and national set-ups, the tasks currently discharged by an NCB as central banking tasks are not reviewed and re-categorised, but may be reassessed if they are subject to legislative amendments of substance . On the basis of the criteria set out in paragraph 3.1.4, the following paragraphs assess whether the draft law is in line with the prohibition on monetary financing. 3.2 Tasks related to the tasks conferred upon the ECB and the NCBs by the Treaty and the Statute of

text: the ESCB

text: The Banco de España’s proposed task of supervising covered bonds is not related to the tasks conferred upon the ECB and the NCBs by the Treaty and the Statute of the ESCB.

text: 3.3 Tasks which are atypical of central bank tasks

text: The task of supervising covered bonds is not atypical of central bank tasks. This task complements

text: the existing role of several NCBs as supervisors of credit institutions. A central bank acting as a

text: banking supervisor may be entrusted with the task of supervising covered bonds due to its specific

text: expertise regarding credit institutions’ balance sheets, which is relevant to ensuring compliance

text: with the requirements relating to the high quality of covered assets with the purpose of ensuring

text: the robustness of the covered pool.

text: In the implementation of

text: Directive (EU) 2019/2162

text: , or under other relevant provisions of national

text: law, Member States have conferred supervisory tasks in relation to covered bonds on a wide range

text: of public authorities including central banks, financial supervisory authorities (some of which are

text: central banks), and securities market supervisors. More concretely, the ECB has identified nine

text: Member States that had directly conferred these supervisory tasks or a substantial part of these

text: supervisory tasks on their NCBs . The ECB also understands that in the implementation of

text: Directive (EU) 2019/2162

text: several Member States are considering conferring tasks relating to the supervision of covered bonds on their respective NCBs. The Banco de España, as the body responsible for the supervision of credit institutions on the basis of Article 7(6) of Law 13/1994 on the autonomy of the Banco de España and on the basis of Law 10/2014 on the regulation, supervision and solvency of credit institutions , may supervise credit institutions that issue covered bonds in Spain. Given the Banco de España’s existing role in the supervision of credit institutions, a role which numerous other ESCB NCBs fulfil in relation to such institutions in their respective Member States, as well as the existing specific tasks conferred on the Banco de España in relation to the supervision of covered bonds, its new tasks under the draft law are not atypical of central bank tasks. 3.4 Tasks clearly discharged on behalf of and in the exclusive interest of the government For the same reasons, the Banco de España’s supervisory tasks in relation to covered bonds issued by credit institutions conferred by the draft law are not tasks discharged on behalf of and in the exclusive interest of the government. The Banco de España already plays a role in both the supervision of covered bonds and in the prudential supervision of credit institutions. There is no indication that, in carrying out the new tasks conferred by the draft law, the Banco de España would be acting exclusively in the interest of another public authority. 3.5 Extent to which performance of the new tasks creates conflicts of interest with existing central bank

text: tasks

text: Since the Banco de España’s new tasks under the draft law complement its existing tasks, no conflicts of interest arise with other aspects of the Banco de España’s mandate. 3.6 Extent to which the performance of the new tasks is disproportionate to the Banco de España’s

text: financial or organisational capacity

text: The ECB notes that it is essential to ensure that the Banco de España has available to it sufficient resources, including personnel, for the performance of assessments and the issuance of directions under the draft law, so that its capacity to perform its ESCB-related tasks is not affected. In this regard, the draft law does not specifically address how the additional expenses that arise from the granting the Banco de España these additional powers will be financed. The ECB understands that the additional resources required by the Banco de España to exercise these additional powers will be financed through its existing budgetary framework and so there will be no specific cost recovery mechanism designed to ensure the full recovery of the costs incurred in carrying out the supervision of covered bonds. However, the performance of the new tasks by the Banco de España is not disproportionate to its financial or organisational capacity.

text: 3.7 Extent to which performance of the new tasks fits into the Banco de España’s institutional set-up, in the light of central bank independence and accountability considerations The performance of the new tasks appears to be aligned with the Banco de España’s institutional set-up. As mentioned in paragraphs 1.2 and 3.3, the Banco de España already has specific competences in respect of the supervision of covered bonds and is a prudential supervisor of credit institutions. 3.8 Extent to which the performance of the new tasks harbours substantial financial risks The performance of the new tasks does not harbour substantial financial risks for the Banco de España. The draft law does not directly address the Banco de España’s potential liability in the event of any legal action or other legal proceedings for damages in relation to the exercise of its powers under the draft law. In this respect, under Article 32 of Law 40/2015 on the legal regime of the public sector natural or legal persons have a right to be compensated by public administration bodies in the exercise of their functions for any damage those natural or legal persons suffer to their property and/or rights, except in cases of force majeure. Under Article 1(2) of Law 13/1994 the Banco de España is included as a public administration body for these purposes. Further, the internal rules of the Banco de España state that the Banco de España’s direct liability extends to claims for compensation for damages and losses that individuals make against employees of the Banco de España in the exercise of their functions, except in cases of gross negligence or bad faith. 3.9 Extent to which the performance of the new tasks exposes members of the Banco de España’s decision-making bodies to disproportionate political risks and has an impact on their personal

text: independence

text: The performance of the new tasks conferred by the draft law does not expose members of the Banco de España’s decision-making bodies to any disproportionate political risk or have an impact on their personal independence. 3.10 Conclusion The new tasks conferred by the draft law on the Banco de España as to supervision of the issuance of covered bonds by credit institutions can be regarded as central bank tasks, as they would complement the Banco de España’s existing functions in relation to the prudential supervision of credit institutions. The new tasks conferred by the draft law are not atypical of central bank tasks and have been conferred on a number of other ESCB NCBs.

text: 4. Substantial amendment of tasks conferred on the Banco de España in relation to the Single Euro Payments Area

text: 4.1 Substantial amendment of the tasks of the Banco de España 4.1.1 The ECB understands that the objective of the draft law is to ensure compliance with Regulation

text: (EU) No 260/2012

text: . The ECB welcomes this, in particular with regard to the right to payment accessibility, under which the beneficiary of a payment cannot require transfers and direct debits to be made only through accounts located in its country of residence. 4.1.2 The Banco de España is currently one of the competent authorities in Spain responsible for ensuring compliance with

text: Regulation (EU) No 260/2012

text: . More concretely, under Royal Decree- Law 6/2013 , the Banco de España is the competent authority for ensuring the compliance of payment service providers (PSPs) with

text: Regulation (EU) No 260/2012

text: . The draft law designates the Banco de España as the competent authority responsible for ensuring compliance with

text: with respect to companies, entrepreneurs or professionals that act on the basis of their commercial or professional activities and are not considered to be PSPs .

text: relates to the acceptance of any euro payment account within the Union for making or receiving payments and contains obligations vis-à-vis payment service users (PSUs) . In particular,

text: Article 9

text: ensures that payers (are able to) make credit transfers to, and payees (are able to) collect funds by accepting credit transfers or by using direct debits from, payment accounts held with PSPs which are located in any Member State, provided that the payment account is reachable in accordance with

text: Article 3 of Regulation (EU) No 260/2012

text: . Accordingly, the draft law, in the context of non-PSP company-to-company relations under

text: , designates Banco de España as the competent authority and confers sanctioning powers on the Banco de España for non-compliance with

text: Article 9

text: in that context . 4.1.3 The addition of PSUs which are non-PSP companies, entrepreneurs or professionals to the group of entities whose compliance the Banco de España is now tasked with monitoring and sanctioning is a substantial expansion of the Banco de España’s existing tasks under

text: Regulation (EU) No 260/2012

text: . 4.1.4 A proposed conferral of new or substantially amended tasks on an NCB in the ESCB must be assessed against the prohibition on monetary financing laid down in Article 123 of the Treaty based on the considerations set out in paragraphs 3.1.2 to 3.1.5. 4.2 Tasks related to the tasks conferred upon the ECB and the NCBs by the Treaty and the Statute of

text: the ESCB

text: The tasks of ensuring compliance with

text: , and sanctioning companies, entrepreneurs and professionals, whether PSPs or PSUs, for non-compliance with this provision, are not among the basic tasks listed in

text: Article 127(2)

text: and (5) of the Treaty or otherwise conferred upon the NCBs by the Statute of the ESCB. However, insofar as the Single Euro Payments Area (SEPA) project is designed to achieve a fully integrated internal market for

text: payments and payment services, thereby enhancing public confidence in the euro, the expanded tasks conferred on the Banco de España as a result of the draft law could be regarded as being linked to the basic ESCB task of promoting the smooth operation of payment systems . 4.3 Tasks which are atypical of central banks The ECB notes that Member States have followed different approaches when designating authorities responsible for ensuring PSPs and PSUs’ compliance with

text: Regulation (EU) No 260/2012

text: . The majority of Member States, including in the euro area, have followed a bifurcated approach whereby the competent authority as regards compliance by PSPs is the respective central bank or financial supervision authority, and the competent authority as regards compliance by PSUs is a national consumer protection or competition authority. However, a number of Member States, including in the euro area, have designated their respective NCBs as competent authorities as regards compliance by both PSPs and PSUs . For that reason, the expanded tasks conferred on the Banco de España by the draft law are not atypical of central bank tasks . 4.4 Tasks clearly discharged on behalf of and in the exclusive interest of the government The promotion of the smooth operation of payment systems is one of the core tasks to be carried out by the ESCB. In that respect, the ECB has always been firmly committed to, and has actively promoted, a fully integrated payment area for the euro, recognising that this would help reduce substantially and eventually eliminate the differences in cost and convenience of making domestic and cross-border payments. As previously noted, the ECB considers that the creation of a single payment area for the euro is desirable in order to enhance public confidence in the single currency . The recitals to

text: Regulation (EU) No 260/2012

text: clarify that the creation of a single payment area for the euro is necessary for the proper functioning of the internal market and aims to provide Union citizens and businesses with secure, competitively priced, user-friendly, and reliable payment services in euro, regardless of location within the Union. The expanded tasks conferred on the Banco de España by the draft law are directly connected with these overarching objectives of the SEPA project and is therefore not considered as tasks that are clearly discharged on behalf of and in the exclusive interest of the government . 4.5 Extent to which performance of the new tasks creates conflicts of interest with existing central bank

text: tasks

text: In principle, the new tasks as to ensuring compliance by companies, entrepreneurs and professionals which are not PSPs in respect of their company -to-company relations with

text: conferred upon the Banco de España as a result of the draft law are not expected to create any conflict of interest with existing central bank tasks. The ECB understands that the new tasks will supplement the Banco de España’s existing tasks under

text: Regulation (EU) No 260/2012

text: regarding compliance by PSPs. In that regard, the expanded tasks are expected to ensure compliance by an important number of PSUs which are participants in the market for payments and payment services with

text: Regulation (EU) No 260/2012

text: and thereby enhance confidence in the single currency. The conferral of these new tasks on the Banco de España is therefore aligned with the conferral on it of its existing tasks under

text: Regulation (EU) No 260/2012

text: , as well as with its competence to oversee payment systems and payment instruments . 4.6 Extent to which performance of the expanded tasks is disproportionate to the financial or

text: organisational capacity of the Banco de España

text: The ECB notes that PSUs which are non-PSP companies, entrepreneurs or professionals are not entities already supervised by the Banco de España, and that the Banco de España will be required to commit additional resources, both human and financial, to carry out the new task conferred on it by the draft law. In this regard, the ECB would like to reiterate that Member States may not put their NCBs in a position where they have insufficient operational and financial resources to carry out their ESCB or Eurosystem-related tasks, as applicable. Therefore, it is necessary that the performance of this additional task does not affect the Banco de España’s operational or financial capacity to carry out other ESCB-related tasks. The draft law does not specify the resources to be used by the Banco de España for the discharge of the abovementioned tasks, nor does it provide an estimate of the costs likely to be incurred in the performance of these tasks. It cannot, therefore, be excluded that the new task may have an impact on the Banco de España’s regular budget. It is therefore important that adequate resources are available to the Banco de España in order to ensure that it can properly perform its tasks, while maintaining, at all times, sufficient means to carry out its ESCB-related and national tasks and to meet its administrative and operational expenses . 4.7 Extent to which performance of the new tasks fits into the institutional set-up of the Banco de España, in the light of central bank independence and accountability considerations The performance of the Banco de España’s expanded tasks appears to be consistent with its institutional set-up and not to raise any issues in terms of accountability considerations, as the Banco de España has been carrying out other tasks in relation to

text: Regulation (EU) No 260/2012

text: , as one of the competent authorities, since 2013. It should also be noted that, insofar as the draft law extends the Banco de España’s existing competence to non-supervised entities, notably non-supervised PSUs in the context of

text: , it deviates from the existing allocation of competences as established in Royal Decree-Law 6/2013. In this regard, the ECB takes note of the fact that, as the explanatory memorandum of the draft law states, the relevant organisms of the Autonomous Communities already do the work of ensuring compliance with

text: when there is a payment relationship in which natural persons or natural persons and companies are involved.

text: 4.8 Extent to which the performance of the task harbours substantial financial risks The performance of the expanded tasks does not harbour substantial financial risks for the Banco de España. The draft law does not directly address the Banco de España’s potential liability in the event of any legal action or other legal proceedings for damages in relation to the exercise of its powers under the draft law. In this respect, Article 32 of Law 40/2015 establishes the right for natural or legal persons to be compensated by public administration bodies in the exercise of their functions for any damage those natural or legal persons suffer to their property and/or rights, except in cases of force majeure. The Banco de España is included as a public administration body for those purposes by virtue of Article 1(2) of Law 13/1994. Further, Article 25 of the internal rules of the Banco de España states that the Banco de España’s direct liability extends to claims for compensation for damages and losses that individuals make against employees of the Banco de España in the exercise of their functions, except in cases of gross negligence or bad faith. 4.9 Extent to which the performance of the new tasks exposes members of the decision-making bodies of the Banco de España to disproportionate political risks and impacts on their personal

text: independence

text: The performance of the expanded tasks conferred by the draft law does not expose members of the Banco de España’s decision-making bodies to any disproportionate political risk or have an impact on their personal independence. 4.10 Conclusion Insofar as the SEPA project is designed to achieve a fully integrated internal market for payments and payment services, thereby enhancing public confidence in the single currency, the new tasks conferred on the Banco de España by the draft law are considered to be linked to the basic ESCB task of promoting the smooth operation of payment systems. Moreover, these tasks are not atypical of central bank tasks, as a number of Member States have designated their respective NCBs as competent authorities for ensuring compliance by PSUs with

text: Regulation (EU) No 260/2012

text: Done at Frankfurt am Main, 16 November 2021.

text: [signed]

text: The President of the ECB

text: Christine LAGARDE


text: Το περί της Κεντρικής Τράπεζας της Κύπρου, ως Υπηρεσίας Πολιτικής Σχεδίασης Εκτάκτων Αναγκών (ΥΠΣΕΑ) Διάταγμα του 2021. 2

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). 3 These are not specified in the explanatory memorandum or draft decree. 4 Ο περί Πολιτικής Σχεδίασης Έκτακτων Αναγκών Νόμος του 2000 (Ν. 44(I)/2000).

text: Οι περί Πολιτικής Σχεδίασης Έκτακτων Αναγκών (Γενικοί) Κανονισμοί του 2011.

text: See paragraph 9 of Opinion

text: , paragraph 8 of Opinion

text: , paragraph 2.1 of Opinion

text: and paragraph 2.1 of Opinion

text: , each available on www.eur-lex.europa.eu. 7 See

text: Article 3(1)

text: (c) of the Treaty. 8 See

text: Article 282(2)

text: and (4) of the Treaty and Articles 8 and 12 of the Statute of the ESCB. 9 See Article 130 of the Treaty and Article 7 of the Statute of the ESCB. 10

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). 11 See paragraph 2.1 of Opinions

text: and

text: , and paragraph 10.2.2 of Opinion

text: . 12 See judgment of the Court of Justice of 19 December 1968, Salgoil, 13/68, ECLI:EU:C:1968:54; judgment of the Court of Justice of 5 May 1981, Commission v UK, 804/79, ECLI:EU:C:1981:93; paragraph 13 of Opinion

text: ; paragraph 2.3 of Opinion

text: ; Gilsdorfer and Brandtner, ‘Vorbem. zu den Artikeln 296 bis 298 EG’, Nos. 3 to 5, in Bardenhewer-Rating, Grill, Jakob and Woelker (eds.), EG- und EU-Kommentar, 6th ed. (2004), p. 1534; Zilioli, C., ‘National Emergency Powers and Exclusive Community Competences – A Crack in the Dam?’ Legal Aspects of the European System of Central Banks, ECB, 2005, pp. 115 to 133, at pp. 131 to 132. 13 Judgment of the Court of Justice of 19 December 1968, Salgoil, 13/68, ECLI:EU:C:1968:54; Gilsdorfer and Brandtner, ‘Vorbem. zu den Artikeln 296 bis 298 EG’, Nos. 3 to 5, in Bardenhewer-Rating, Grill, Jakob and Woelker (eds.), EGund EU-Kommentar, 6th ed. (2004), p. 1534; paragraph 13 of Opinion

text: ; paragraph 2.3 of Opinion

text: See e.g. judgment of the Court of Justice of 5 May 1981, Commission v UK, 804/79, ECLI:EU:C:1981:93, paragraph 30; paragraph 13 of Opinion

text: ; paragraph 2.3 of Opinion

text: . 15 See paragraph 2.2 of Opinion

text: , paragraph 2.2 of Opinion

text: and paragraph 10.2.2 of Opinion

text: . 16 See C. Zilioli, ‘National Emergency Powers and Exclusive Community Competences – A Crack in the Dam?’ Legal Aspects of the European System of Central Banks, ECB, 2005, pp. 115 to 133, at pp 131 to 132. 17 See the ECB’s Convergence Report 2020, available on the ECB’s website. 18 See paragraph 2.7 of Opinion

text: See paragraph 3.1.1 of Opinion

text: . 20 See paragraph 3.1.2 of Opinion

text: . 21

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

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

text: and

text: b(1) of the Treaty (OJ L 332, 31.12.1993, p. 1). 22 Article 123 of the Treaty also serves the objective of maintaining price stability and reinforces central bank independence.

text: In 10 Member States (Bulgaria, the Czech Republic, Finland, Greece, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia) NCBs have been assigned some type of national defence preparedness obligations. In Bulgaria, pursuant to Article 42 of the Law on defence and armed forces of the Republic of Bulgaria, Българска народна банка (BNB, Bulgarian National Bank) must: (i) develop rules and norms for providing for the activity of the banking system during war time; (ii) in coordination with the Minister for Defence develop a plan enabling BNB to work in wartime; and (iii) manage the planning process to enable the banking system to work during wartime. In the Czech Republic preparedness for crisis situations is set out in Article 13 of the Law on crisis (No. 240/2000 Coll.) and in Article 23 of the Law on economic measures for crisis situations (No. 241/2000 Coll.), and includes, inter alia, an obligation of the central bank to cooperate with the government, to adopt a proper crisis plan and to establish and operate a crisis crew. In Finland, the Law on emergency powers (2011/1552) applies to public organs and institutions such as Suomen Pankki, but only in emergency situations, and confers specific tasks on them. Emergency situations are explicitly defined in the Law on emergency powers. The Law on emergency powers also sets out a general preparedness obligation. In Greece, an Emergency Planning Office was established in the Bank of Greece in 1975, by Decision No 670/5/222984/24.9.1975 of the Minister for National Defence that was issued on the basis of Article 12 of Legislative Decree 17/1974 on emergency planning. The Emergency Planning Office deals with emergency planning policy issues including the design of emergency planning to the extent this is associated with the Bank of Greece’s competences, the measures to be taken during peacetime with a view to implementing emergency planning policy, and the monitoring of preparedness as regards the execution of emergency planning policy. In Hungary, according to Article 18(3) of Law CXIII of 2011 on national defence and the Hungarian armed forces and the measures adoptable under a special legal order (Law on national defence), Magyar Nemzeti Bank will participate in the preparation for national defence in the performance of its tasks, in its area of operations, but will be exempted from the requirement of economic and material service obligations. In Latvia, the functions of Latvijas Banka also apply in national defence situations and thus Latvijas Banka plans the preparedness for such situations, inter alia, within contingency planning. Latvijas Banka also participates in national defence planning at national level. In Lithuania, according to the Law on mobilisation and adoptive country support, Lietuvos bankas is a civil mobilisation institution. Paragraph 3.5 of the Government resolution on the State mobilisation tasks for State municipal institutions and Authorities of the Republic of Lithuania determines the mobilisation tasks for Lietuvos bankas as follows: to ensure: (i) the supervision of activities of essential financial market participants supervised by Lietuvos bankas; (ii) the management and usage of the foreign financial assets of Lietuvos bankas; (iii) the delivery of cash for subjects of the mobilisation system who perform vital State functions; (iv) the performance of credit operations of Lietuvos bankas as well as the effective operation of the necessary information systems and databases; (v) the functioning of the necessary payment systems of Lietuvos bankas; (vi) international relations related to financial support for the Republic of Lithuania, as well as representation of the Republic of Lithuania in international institutions. In Poland, under point 2 of Article 11(5) of the Law on Narodowy Bank Polski, the President of Narodowy Bank Polski (NBP) must perform tasks resulting from the universal duty to defend the Republic of Poland. Also, on the basis of Articles 18(3) and 22(1) of the Law on the general defence obligation and point 2 of Article 11(5) of the Law on Narodowy Bank Polski (and in some cases on the basis of Council of Ministers’ regulations), the President of NBP has issued various defence related ordinances. In Slovakia, according to Article 23 of Law No 179/2011 Coll. on economic mobilisation, as amended, Národná banka Slovenska (NBS) will prepare and carry out measures in times of crisis in the foreign exchange field, including the protection of foreign reserve assets. NBS will also: (i) provide the cash banking services necessary for the activities of the armed forces of the Slovak Republic, armed security corps, the Slovak Intelligence Service and the Military Police, upon written agreement concluded with the Ministry of Finance and the State Treasury; (ii) control, within its field of competence, the performance of the measures of economic mobilisation; (iii) process and update information necessary for the performance of the measures of economic mobilisation within the specific application program of the unified information software; (iv) process the emergency plan of economic mobilisation according to instructions provided by the Ministry of Economy and determine access rights for other users within the specific application programme of the unified information software. In Slovenia, Banka Slovenije is engaged in national defence planning during peacetime. According to the Law on defence, the government, which adopts the country’s defence plan, prescribes in detail the process of drawing up and the content of defence plans and the planning of production and services during wartime.

text: This is done by the Decree on defence planning, which defines the scope and content of the defence plan, and the responsibility for defence planning (the scope of tasks related to the functioning of the defence system in emergency situations, war or crises). 24 In Bulgaria, Article 13 of the Law on defence and armed forces of the Republic of Bulgaria provides that the financial provision for defence activities must be borne by the State budget and other sources, provided for in a law or act of the Council of Ministers. In Lithuania, Article 31 of the Law on mobilisation and adoptive country support provides that the Ministry of Defence, the Mobilisation Department, the Lithuanian Army and civil mobilisation institutions will be financed from the State budget for the implementation of the mobilisation system tasks established by the Law. In Slovakia, according to Article 1(2) of the Decree of the Ministry of Economy of the Slovak Republic No 552/2011 Coll. all expenses incurred by NBS as a result of economic mobilisation will be reimbursed to the NBS from the State budget. 25 See paragraph 3.4.1 of Opinion

text: . 26 See paragraph 3.5.1 of Opinion

text: . 27 See, for example, paragraph 4.6.1 of Opinion

text: See paragraph 3.6.1 of Opinion

text: . 29 See Article 32 of the Law on the business of credit institutions of 1997 (66(I)/1997),

text: Article 47

text: A 6(3) of the Law on the Central Bank of Cyprus of 2002 (138(I)/2002), and Article 52 of the Law on credit agreements for consumers relating to immovable property intended for residential use of 2017 (41(I)/2017). 30 See paragraph 3.9.1 of Opinion

publisher: Europeiska centralbanken

sprak: en

title: Opinion of the European Central Bank of 22 November 2021 on the designation of the Central Bank of Cyprus as an Emergency Civil Planning Agency (CON/2021/35)

serie: con

text: OPINION OF THE EUROPEAN CENTRAL BANK of 22 November 2021 on the designation of the Central Bank of Cyprus as an Emergency Civil Planning Agency (

text: ) Introduction and legal basis

type: rubrik

text: On 30 September 2021 the European Central Bank (ECB) received a request from the Minister for Defence of the Republic of Cyprus for an opinion on a draft decree on the designation of the Central Bank of Cyprus (CBC) as an Emergency Civil Planning Agency (ECPA) of 2021 (hereinafter the ‘draft decree’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third indent of

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

text: , as the draft decree relates to the CBC. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

type: stycke

text: 1. Purpose of the draft decree

text: 1.1 The draft decree designates the CBC as an Emergency Civil Planning Agency (ECPA) and calls on the Governor of the CBC to draw up, in consultation with the Minister for Defence or the Central Emergency Civil Planning Authority (CECPA), a detailed emergency plan in accordance with the principles to be included in the general emergency civil planning strategy. 1.2 The explanatory memorandum submitted by the Ministry of Defence states that the main purpose of the draft decree is to enable the CBC to develop the necessary mechanisms for the smooth continuation of its operational functions if the Republic of Cyprus declares a state of emergency, thus enabling the Republic both to continue carrying out, through the CBC, its domestic and foreign payments, and to maintain or increase its defence capabilities. In addition, in order for the CBC to effectively comply with its legal obligations, it will have to examine the procedures regarding the carrying out of critical transactions or payments, as well as the safeguarding of its own assets and subsequently the assets of the Republic of Cyprus. 1.3 The draft decree is to be read together with the relevant legislation currently in force, comprising the Law on Emergency Civil Planning of 2000 (hereinafter the ‘Law’) and the Regulations on

text: Emergency Civil Planning (General) of 2011 (hereinafter the ‘Regulations’). 1.4 According to the Law, the Council of Ministers must take all measures it deems appropriate from time to time for the purpose of strengthening the defence capacity of the Republic of Cyprus in the face of any hostile actions against it. The Council of Ministers is also granted the power to proclaim, by issuing a decree, any ministry or independent service of the Republic, or any department or agency thereof, and any public or private law body, or any department or agency thereof, as an ECPA, and to call on the relevant minister, director, supervisor or manager, as the case may be, in consultation with the Minister for Defence or the CECPA, to draw up a detailed emergency plan and to undertake the organisation, self-protection and training of the staff of that ECPA in order to be able to apply the plan in a state of emergency. The Law further provides that, notwithstanding the provisions of any other law or regulation or employment contract relating to the terms of service of employees, the staff members of any ECPA and their employers, supervisors or directors must comply with the provisions of the decree issued by the Minister for Defence. 1.5 The Law defines ‘state of emergency’ as a state declared by the Council of Ministers in the event of war or the threat of war in line with

text: Article 183(1)

text: the Constitution of the Republic of Cyprus. According to the latter, in the event of war or any other public danger threatening the existence of the Republic or any part thereof, the Council of Ministers has the power, by a decision taken in this respect, to declare a state of emergency, subject to the right of veto against any such decision that may be exercised, jointly or severally, by the President and the Vice-President of the Republic within forty-eight hours of the date of that decision. 1.6 In addition, the Law provides that the Minister for Defence must prepare and submit to the Council of Ministers for approval a general plan for emergency planning, the purpose of which is to define the basic principles on the basis of which the detailed emergency plans of the ECPAs are drawn up regarding: (a) their organisation and training in peacetime; and (b) their action and self-protection in a period in which there is a valid state of emergency. 1.7 Any violation or non-compliance with any provision of a regulation, decree or directive issued under the Law is an offence punishable by imprisonment of not more than six months or a fine not exceeding five hundred pounds or both. 1.8 The Regulations set out the details regarding the establishment, operation and staffing of the ECPAs and are applicable to all ECPAs and their personnel. The Regulations grant the Minister for Defence, by way of issuing instructions, the power to exercise general oversight and control over the ECPAs and the duty of coordinating and providing the ECPAs with guidance when regulating any matters that need clarification regarding the implementation of the Law and Regulations and the relevant decisions of the Council of Ministers. The Minister for Defence may also monitor whether the ECPAs: (a) have taken all necessary measures for their organisation, staffing, preparation and readiness, as well as the training of their staff, for the purpose of carrying out their mission; (b) have created and operate suitable and equipped infrastructures; (c) coordinate and cooperate with the CECPA; and (d) are supplied with, store and maintain the necessary materials, supplies and other means required to implement their emergency plans.

text: 1.9 Moreover, each ECPA must: (a) comply with the instructions issued by the Minister for Defence; (b) prepare an emergency plan in consultation with the CECPA, within six months of its designation as an ECPA; (c) take any measure it deems expedient or necessary to implement the provisions of the Law and Regulations, the relevant instructions of the Minister for Defence and its emergency plan. This includes measures on: (i) its organisation, staffing, preparation and readiness; (ii) the training of its staff; and (iii) securing the means, supplies, materials or resources necessary to accomplish its mission; (d) participate, when requested, in emergency planning exercises as designated by the Minister for Defence; and (e) notify the CECPA of any change in the official status of any member of its staff in its employment, as well as of any change in the means and material resources at its disposal, provided that the implementation of its emergency plan is directly or indirectly affected, and immediately take appropriate measures, including modifying or revising that plan, in cooperation with the CECPA. 1.10 The Regulations further provide that each ECPA must establish a dedicated department which will be responsible for coordinating the work and fulfilling the assignments of the ECPA in a state of emergency. The head of the department is given a number of responsibilities, including submitting to the manager of the ECPA any measures deemed necessary to better implement, inter alia, the Law, the Regulations, the general civil emergency and the specific emergency plans and the maintenance of a registry listing the personnel of the ECPA and any other relevant information. 1.11 The ECPA’s personnel comprises staff members of the ECPA, as well as any other individuals called into service or for training by the Minister for the Interior, such as National Guard reservists or individuals with a reserve duty to the Civil Defence, or others deemed suitable on the basis of their specialised education, skills or experience. The ECPA’s personnel is obliged, inter alia: (a) to comply with the provisions of the Law, the Regulations and the instructions issued thereunder, as well as their obligations stemming from the applicable emergency plan; (b) to maintain professional secrecy; (c) to notify the dedicated department of any temporary or permanent change to their residence; and (d) to carry with them any device or equipment given to them for the exercise of their duties and not to give access to them to any other person. In the event of a declaration by the Cypriot government of a state of emergency, the ECPA’s personnel may be called into service by the Minister for the Interior, following the approval of the Council of Ministers. The regular employment of any person called into service or for training is suspended for the duration of the service or training. 1.12 In addition, the dependents of any member of the ECPA’s personnel who dies during training or service, and any member of ECPA’s personnel who becomes incapable of performing their employment due to an injury or illness caused while performing their service or training, are entitled to compensation. The members of the ECPA’s personnel are also not to be held liable for any damage caused by any action or omission during the exercise of their duties, provided that such damage was reasonably necessary for the exercise of their duties, except in the event of negligence or fault on their part.

text: 2. General observations

text: 2.1 As previously noted by the ECB , under the Treaty the Union has exclusive competence in the area of monetary policy for Member States whose currency is the euro . Therefore, a Member State whose currency is the euro transfers to the Union its powers in the area of monetary policy and the tasks of the European System of Central Banks (ESCB) enumerated in the Treaty and the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB’). In these fields, Member States whose currency is the euro may not adopt unilateral measures as it is for the decision-making bodies of the ECB alone to take the measures necessary to ensure the performance of the tasks entrusted to the ESCB under the Treaty and the Statute of the ESCB , including contingency planning with respect to the continued performance of these tasks. Furthermore, when exercising their powers and carrying out their ESCB tasks, the ECB and the national central banks (NCBs) act independently, which means that they may not seek or take instructions from any government of a Member State when performing their tasks. The governments of the Member States have undertaken to respect this principle . Moreover, under Article 127(6) of the Treaty and

text: Council Regulation (EU) No 1024/2013

text: specific tasks concerning the prudential supervision of credit institutions have also been conferred upon the ECB. As previously noted by the ECB, pursuant to the principle of sincere cooperation under Article 4(3) of the Treaty on European Union, the Member States are obliged to assist the ECB in carrying out tasks which flow from the Treaties. This implies that Member States should refrain from taking any measures which could jeopardise the ECB’s or the ESCB’s objectives . 2.2 Article 347 of the Treaty envisages that a Member State may be called upon to take action in the event of serious internal disturbances affecting the maintenance of law and order, in the event of war, serious international tension constituting a threat of war, or in order to carry out obligations it has accepted for the purpose of maintaining peace and international security. However, any reliance on Article 347 of the Treaty must take place strictly in the exceptional cases laid down in the Treaty itself, as interpreted by the Court of Justice of the European Union (CJEU) , in a restrictive manner, and it can therefore be understood only as a ‘hedging clause’ and not as an expression of any residual Member State competence . Moreover, the CJEU has held that, when acting due to urgency in areas of exclusive Union competence, Member States may act only as

text: ‘trustees of the common interest’ and may not bring into force any interim measures except as part of a process of collaboration with the Union . Accordingly, only where the conditions under Article 347 of the Treaty are met, may national authorities be justified in exercising, on a temporary and exceptional basis, powers that fall within the exclusive competence of the ESCB . Due to the exceptional nature of Article 347 of the Treaty, Member States should refrain from adopting preventive legislation in the absence of the conditions prescribed by Article 347 of the Treaty . If the national legislature wishes to rely on this provision, it is for the Member State to ensure that the conditions for applying Article 347 of the Treaty are specifically fulfilled at the time of adopting the measure that conflicts with that Member State’s Treaty obligations. 2.3 The ECB understands that the Law and the Regulations take a holistic approach to national defence, whereby national defence includes not only the actions of specific defence authorities, such as the Council of Ministers, the Minister for Defence, the CECPA and other specifically designated authorities, but also includes within national defence the actions of other public bodies and private persons within their respective fields of competence. As part of such a national defence policy the functions fulfilled by public bodies in usual circumstances, including the central banking function, support the resolution of national defence situations. The ECB notes that this approach must not lead to a breach of the obligations of the Republic of Cyprus under the Treaty and the Statute of the ESCB highlighted above. 2.4 As noted in paragraph 1.8, the Minister for Defence has the power to oversee the ECPAs and issue instructions to the ECPAs, including the CBC, with which the ECPAs have a duty to comply. The rights of government officials to give instructions to NCBs, their decision-making bodies or their members are incompatible with the Treaty and the Statute of the ESCB as far as ESCB-related tasks are concerned . Therefore, while the ECB understands that the powers attributed to the Minister for Defence are intended to ensure compliance with the applicable legal framework on national defence preparedness, it recommends that it should be explicitly clarified in the draft decree, for the avoidance of any doubt, that there should be no interference with the tasks and duties of the CBC as part of the ESCB . 2.5 Finally, it is understood that the exact defence tasks that the CBC will have to undertake are to be specified in the emergency plan to be drawn up by the CBC, in consultation with the Minister for Defence or the CECPA, after the issuance of the draft decree.

text: 3. Specific observations – conferral of new tasks on the CBC

text: 3.1 New tasks of the CBC 3.1.1 By designating the CBC as an ECPA and by virtue of the Law and the Regulations, the draft decree confers upon the CBC a number of tasks, such as preparing and implementing a dedicated emergency plan, ensuring that it is organised, prepared and has the necessary means and resources, and training its staff . The proposed national defence preparedness tasks of the CBC would differ from internal contingency planning undertaken by ESCB central banks such as the CBC. Contingency planning for the discharge of ESCB and other central banking tasks may take the form of an internally-driven process whereby the ESCB central banks evaluate for themselves which resources they would need and how they should prepare for various emergency situations, including situations that could be characterised as defence situations, based on their own targets and strategies. By contrast, the proposed national defence preparedness tasks of the CBC will be driven by external strategic plans and aims set by the Cypriot Government and would require the CBC to take into account considerations external to the CBC, most notably the overarching national defence framework. This could lead to the CBC acquiring resources it might not otherwise have considered relevant, participating in planning processes it would not otherwise have taken part in and/or developing processes it would not otherwise have introduced. This means, in effect, that the new tasks introduce, alongside any internal contingency planning process, an additional process driven by the national defence framework. As such, the proposed new national defence preparedness tasks would differ from an internal contingency planning performed by the CBC, including within the framework of the ESCB, and therefore involves the conferral of a new task on the CBC . 3.1.2 The ECB underlines that a proposed conferral of new tasks on an NCB in the ESCB must be assessed against the prohibition on monetary financing under Article 123 of the Treaty. For the purposes of that prohibition,

text: Article 1(1)

text: (b)(ii) of

text: Council Regulation (EC) No 3603/93

text: defines ‘other type of credit facility’, inter alia, as ‘any financing of the public sector’s obligations vis-à-vis third parties’. 3.1.3 Ensuring that Member States implement a sound budgetary policy is one of the key objectives of the monetary financing prohibition . Therefore, the task of financing measures, which are normally the responsibility of the Member States, and which are financed from their budgetary sources rather than by the NCBs, must not be entrusted to NCBs. To decide what constitutes financing of the public sector’s obligations vis-à-vis third parties, which can be translated as the provision of central bank financing outside the scope of central bank tasks, it is necessary to carry out, on a case-bycase basis, an assessment of whether the task to be undertaken by an NCB is a central bank task or a government task, i.e. a task that falls within the responsibilities of the Member States.

text: 3.1.4 As part of its discretion in the exercise of its duty, on the basis of

text: Article 271

text: (d) of the Treaty and Article 35.6 of the Statute of the ESCB, to ensure that NCBs honour the obligations laid down by the Treaty, the Governing Council has endorsed criteria for determining what may be seen as falling within the scope of a public sector obligation within the meaning of

text: Article 1(1)

text: (b)(ii) of

text: Regulation (EC) No 3603/93

text: or, in other words, what constitutes a government task as follows: First, central bank tasks are in particular those tasks that are related to the tasks that have been conferred upon the ECB and the NCBs by the Treaty and the Statute of the ESCB. These tasks are mainly defined in

text: Articles 127(2)

text: , (5) and (6) and 128(1) of the Treaty, as well as

text: Article 22

text: and Article 25.1 of the Statute of the ESCB. Second, as Article 14.4 of the Statute of the ESCB allows NCBs to perform ‘other functions’, new tasks, i.e. tasks that are not related to tasks that have been conferred upon the ECB and the NCBs, are not precluded per se. However, new tasks that are undertaken by an NCB and which are atypical of NCB tasks or which are clearly discharged on behalf of, and in the exclusive interest of, the government or other public sector entities should be considered government tasks. Third, an important criterion for qualifying a new task as atypical of an NCB task or as being clearly discharged on behalf of, and in the exclusive interest of, the government or other public sector entities is the impact of the task on the institutional, financial and personal independence of that NCB. In particular, the following aspects should be taken into account: (a) whether the performance of the new task creates conflicts of interest with existing central bank tasks which are not adequately addressed and does not necessarily complement those existing central bank tasks. If a conflict of interest arises between existing and new tasks, sufficient safeguards to mitigate that conflict should be in place. The complementarity between a new task and the existing central bank tasks should not be interpreted broadly, so as to lead to the creation of an indefinite chain of ancillary tasks. Such complementarity should be examined in relation to the financing of those tasks; (b) whether without new financial resources the performance of the new task is disproportionate to the NCB’s financial or organisational capacity, and may have a negative impact on the capacity to perform properly the existing central bank tasks; (c) whether the performance of the new task fits into the institutional set-up of the NCB in the light of central bank independence and accountability considerations; (d) whether the performance of the new task harbours substantial financial risks; (e) whether the performance of the new task exposes the members of the NCB decisionmaking bodies to political risks which are disproportionate and may also have an impact on their personal independence and, in particular, on the guarantee of term of office set out in Article 14.2 of the Statute of the ESCB. 3.1.5 Based on the criteria set out above, the following paragraphs assess whether the new national defence preparedness tasks of the CBC are in line with the prohibition on monetary financing.

text: 3.2 Tasks related to the tasks conferred upon the ECB and the NCBs by the Treaty and the Statute of

text: the ESCB

text: 3.2.1 The purpose of the Law and, by consequence, of the Regulations and the draft decree is to

text: it. The functions of the NCBs under the Treaty and the Statute of the ESCB do not encompass this

text: aim. The new tasks conferred on the CBC are not therefore related to the tasks that have been

text: 3.3 Tasks which are atypical of NCB tasks

text: 3.3.1 While the majority of NCBs of the ESCB do not appear to have been assigned national defence

text: preparedness tasks, NCBs in several Member States have been assigned national defence

text: preparedness tasks which are similar to the new task assigned to the CBC . Based on this the

text: proposed national defence preparedness task of the CBC could be considered to be a task which is not atypical of NCB tasks. In several Member States the related costs for the NCBs are required to be reimbursed by the central government . 3.4 Tasks clearly discharged on behalf of and in the exclusive interest of the government 3.4.1 As noted above, the purpose of the Law and, by consequence, of the Regulations and the draft decree is to strengthen the defence capacity of the Republic of Cyprus in the face of any hostile actions against it. The CBC’s proposed national defence preparedness task would therefore be clearly discharged on behalf of and in the exclusive interest of the Cypriot government . 3.5 Extent to which performance of the new tasks create conflicts of interest with existing central bank

text: tasks

text: 3.5.1 The performance of the national defence preparedness task would be unlikely to give rise to any conflicts of interest with the CBC’s existing central bank tasks. However, it should be ensured that the assignment of national defence tasks to the CBC does not conflict with Union law (see paragraph 2.1) . 3.6 Extent to which performance of the new tasks are disproportionate to the CBC’s financial or

text: organisational capacity

text: 3.6.1 As previously noted by the ECB , the principle of financial independence requires that Member States may not put their NCBs in a position where they have insufficient resources to carry out both their ESCB-related tasks and their national tasks, from an operational and financial perspective. Furthermore, when allocating specific new tasks to NCBs, each NCB concerned should have sufficient financial and human resources at its disposal to ensure that the tasks can be carried out without impacting on the NCB’s financial or operational capacity to perform its ESCB tasks. In order to ensure that the CBC’s capacity to perform its ESCB-related tasks is not impaired, the CBC must, therefore, be in a position to avail itself of the necessary resources to carry out its duties under the draft decree, together with the Law and the Regulations. At this stage, it is not possible for the ECB to assess what additional resources the CBC will require in order to perform its new tasks under the draft decree, together with the Law and the Regulations. Nevertheless, it is noted that the draft decree does not provide for the CBC being reimbursed for the costs of carrying out these new tasks as is the case in at least three Member States where reimbursement mechanisms for the performance of similar tasks have been included in the relevant national legislation (see paragraph 3.3.1). Although the ECB is not aware of whether the potential financial burden on the

text: CBC will be significant, the ECB invites the consulting authority to consider the impact of the draft decree, together with the Law and the Regulations, on the resources of the CBC, and include a reimbursement mechanism in the relevant legislation in order to avoid any potential breach of Article 123 of the Treaty . 3.7 Extent to which performance of the new task fits into the institutional set-up of the CBC, in the light of central bank independence and accountability considerations 3.7.1 The potential impact of the new tasks on the institutional, financial and personal independence of the CBC must also be taken into consideration. In particular, consideration is given to the power granted to the Minister for Defence to exercise general oversight and control over the fulfilment of the new tasks and to give the CBC instructions in this regard. While it is understood that this power is aimed at compliance with the national defence preparedness framework, it should be ensured that, as far as the fulfilment of ESCB-related tasks is concerned, this power is exercised in accordance with Union law (see paragraph 2.2). 3.8 Extent to which the performance of tasks harbours substantial financial risks 3.8.1 The Regulations provide that the members of an ECPA’s personnel are not to be held liable for any damage caused by any action or omission during the exercise of their duties, provided that such damage was reasonably necessary for the exercise of their duties, except in the event of negligence or fault. Furthermore, this task would seem to primarily require planning and coordination within the CBC and with the competent national authorities. Hence, the ECB is not aware of significant financial liabilities for the CBC arising out of this task. At the same time, the ECB invites the consulting authority to consider introducing a provision on the liability of the CBC in relation to the tasks it undertakes in carrying out its role as an ECPA to bring it in line with other existing laws which attribute tasks to the CBC . 3.9 Extent to which the performance of the new tasks expose members of the decision-making bodies of the CBC to disproportionate political risks and impact on their personal independence 3.9.1 The ECB does not consider that the new tasks would either expose the members of the decisionmaking bodies of the CBC to disproportionate political risks or impact on their personal independence. Moreover, national defence preparations and planning are primarily the tasks of other authorities and the additional involvement of the CBC in national defence preparations is not likely to be substantial. In such circumstances any impact on the members of the CBC’s decisionmaking bodies should be limited . 3.10 Conclusion regarding the conferral of new tasks on the CBC 3.10.1 Although the new tasks, including the national defence preparedness task of the CBC, could be considered to be tasks which are not atypical of NCBs’ tasks in the ESCB, these tasks would be clearly discharged on behalf of and in the exclusive interest of the Cypriot government, in order to ultimately strengthen the defence capacity of the Republic of Cyprus in the face of any hostile

text: actions against it. Given that these tasks go beyond the internal contingency planning tasks of a central bank, they are government, rather than central banking tasks. Therefore, similar to the arrangements existing in a number of Member States which have conferred comparable tasks on their NCBs, a mechanism for reimbursing the CBC for any costs incurred in the performance of this government task should be introduced in the relevant legislation.

text: This opinion will be published on EUR-Lex.

text: Done at Frankfurt am Main, 22 November 2021.

text: [signed]

text: The President of the ECB

text: Christine LAGARDE

type: vagledning

utgivare: ecb