text: OJ L 189, 3.7.1998, p. 42. 2 Under Law No 3229/2004 on the supervision of private insurance, supervision and control of games of chance, the application of international accounting standards and other provisions, FEK A 38/10.2.2004. 3 Article 1 of the draft law.

text: Article 5(1) of the draft law. 5 Article 5(2) of the draft law. 6 Article 5(3) of the draft law. 7 See also

text: Article 14

text: in Chapter C of the explanatory memorandum to the draft law. 8 See Article 16 of the draft law. According to the explanatory memorandum to the draft law, the amendments are intended to enable such cooperatives to raise increased amounts of capital and to finance their members. 9 See ‘The role of central banks in prudential supervision’, ECB, 22.3.2001, available on the ECB’s website at www.ecb.europa.eu.

text: See ECB Convergence Report May 2008, p. 20.

text: Article 1(6) of the draft law. 12 See paragraph 4.2(d) of Opinion

text: and paragraphs 8 to 12 of Opinion

text: . All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 13 Article 1(8) of the draft law. 14 See paragraph 4.2(d) of Opinion

text: . 15 See e.g. ECB Convergence Report May 2008, p. 20.

text: As provided for in Article 17 of Presidential Decree 20/2006, FEK Α 17/7.2.2006. 17

text: Article 1(5)

text: (d) of the draft law. 18 See e.g. Opinions

text: and

text: . See also ECB Convergence Report May 2008, p. 22. 19 Article 1(3) of the draft law. These contributions will amount to a maximum of 1.5 thousandths (1.5 ‰) of the total annual yield from gross insurance premiums. 20 The ECB notes that the framework in place for the supervision of credit institutions in Greece (Law No 3601/2007, FEK A 178/1.8.2007) also provides for the possibility for the Bank of Greece to impose such contributions.

text: Article 1(10) of the draft law. 22 Article 1(1) of the draft law. 23 Article 4 of the draft law. 24 More specifically, the draft law provides that: (i) the Bank of Greece will decide on actuarial operations and adjustments to be performed by the PLIGF, where insurance policy terms and conditions infringe the relevant legislation in force (

text: Article 7(2)

text: ), while the Minister for Finance, on a proposal by the PLIGF, addresses any specific issues or details (

text: Article 7(3)

text: ); (ii) the Bank of Greece will decide on the procedure and any details for the transfer of the life insurance portfolios of insurance companies whose authorisation has been revoked (

text: Article 9(1)

text: ) and will approve the successor insurance undertaking selected by the PLIGF (

text: Article 9(3)

text: ); the Bank of Greece’s Governor will decide on any specific issues and details (

text: Article 9(7)

text: ); (iii) the Bank of Greece will approve any decision by the Management Committee to impose extraordinary contributions in urgent cases (

text: Article 10(2)

text: ), while any specific issues and details relating to the application of

text: Article 10

text: will be regulated by a Governor’s decision (

text: Article 10(5)

text: ); (iv) the PLIGF’s rules of procedure, as adopted by its members’ assembly, will be approved by the Bank of Greece (

text: Article 11(2)

text: (b)). 25 See in this respect paragraph 4.2 of Opinion

text: Paragraph 2.1 of Opinion

text: , paragraph 2.2.2 of Opinion

text: and paragraph 2.11 of Opinion

text: See also paragraph 3.1 of Opinion

title: Opinion of the European Central Bank of 23 April 2010 on private insurance supervision, the establishment of a private life insurance guarantee fund and other provisions (CON/2010/33)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 23 April 2010 on private insurance supervision, the establishment of a private life insurance guarantee fund and other provisions (

text: ) Introduction and legal basis

text: On 1 March 2010 the European Central Bank (ECB) received a request from the Greek Ministry of Finance for an opinion on a draft law on private insurance supervision, the establishment of a private life insurance guarantee fund and other provisions (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third and sixth indents of

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

text: 1. Purpose of the draft law

text: 1.1 The draft law abolishes the Insurance Supervision Commission for Private Insurance (HPISC), 2 3 established as an entity supervised by the Ministry of Finance , and transfers its competences to the Bank of Greece, thus placing the insurance sector under the supervision of the Bank of Greece. Following the adoption of the draft law, the Bank of Greece will supervise credit and financial institutions and insurance companies, and the Hellenic Capital Market Commission (HCMC) will supervise investment firms. 1.2 The draft law also establishes the Private Life Insurance Guarantee Fund (PLIGF) as a legal entity governed by private law and subject to the supervision and control of the Minister for Finance. The PLIGF will preserve and transfer all or part of the life insurance portfolios of insurance undertakings in liquidation to other insurance undertakings and, should this not be feasible, the PLIGF will terminate the insurance policies and pay compensation for the value of the said policies

text: and outstanding claims and payable benefits . Moreover, the PLIGF will provide cover for insurance payments deriving from any life insurance policies entered into and operations carried out in Greece or other Member States or European Economic Area countries through a branch or through the free (cross-border) provision of services . Finally, from the date of declaring bankrupt or revoking the authorisation of an insurance undertaking, the PLIGF will be automatically subrogated to such insurance undertaking in respect of all the rights and obligations deriving from such life insurance policies . 1.3 Article 14 of the draft law establishes a Systemic Stability Council (SSC) at the Ministry of Finance to monitor the systemic stability of the economy . More specifically, the SSC will: (a) monitor the relationships and dynamics between financial systems, with an emphasis on capital markets, the banking and insurance systems, liquidity, public debt and State guarantees, as well as on prudential action in extreme situations, instability and crises; (b) monitor and coordinate the Ministry of Finance’s financial policy on issues arising in the context of the operation of the European supervisory institutions; and (c) monitor and ensure the exchange of information between the Ministry of Finance and the financial sector’s supervisory authorities for the coordination of the Ministry’s financial policy. The SSC’s members will comprise the Minister and the Deputy Minister for Finance, the Governor and one Deputy Governor of the Bank of Greece, the HCMC’s Chair and two persons of recognised standing with special knowledge of the financial sector, to be designated by the Minister for Finance. The Minister for Finance will chair the SSC. 1.4 Finally, the draft law streamlines the legal framework governing credit cooperatives operating as credit institutions, while taking into account their special features .

text: 2. General observations

text: Article 127(5) of the Treaty provides that the European System of Central Banks (ESCB) contributes to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system. In this context, the ECB has stressed the importance of the national central banks’ (NCBs) close involvement in prudential supervision , which may support their contribution to the macro-prudential oversight of the financial sector. The financial crisis demonstrates the need to strengthen supervision and regulation of the financial system as a whole. With respect to the insurance sector in particular, experience has shown that insurance companies are important for systemic financial stability because of their size, their interconnectedness with the financial sector and the economic function

text: of insurance. In view of the systemic relevance of the insurance sector for financial stability, insurance is part of the macro-prudential oversight to be exercised by the proposed European Systemic Risk Board (ESRB). Against this background, the ECB welcomes the Bank of Greece’s future supervisory role for the insurance sector, as the new tasks will enhance its contribution to safeguarding financial stability and preventing or mitigating systemic risks, also in the context of ESCB and ECB support to the ESRB which will be responsible for macroprudential supervision of the EU financial system as a whole.

text: 3. Transfer of insurance sector supervisory competences to the Bank of Greece and related arrangements

text: 3.1 The ECB notes that the proposed transfer of insurance sector supervisory competences is in line with

text: Article 55

text: A of the Statute of the Bank of Greece which provides, inter alia, that categories of enterprises and organisations other than those currently provided for therein may also be brought under the Bank of Greece’s prudential supervision. 3.2 Safeguards for central bank independence and compliance with the monetary financing prohibition The principle of central bank independence requires Member States to ensure that NCBs have sufficient financial resources to perform ESCB or Eurosystem-related tasks as well as their own national tasks . In this respect, the new functions to be performed by the Bank of Greece should be conducted in a manner that is fully compatible with the Bank of Greece institutional and financial independence and consequently should not impede the proper performance of its ESCB-related tasks. Also,

text: Article 5

text: A of the Statute of the Bank of Greece guarantees the independence of the Bank and of the members of its decision-making bodies in respect of all tasks carried out by them, i.e. both ESCB-related and other tasks, which would include the supervision of insurance undertakings. To ensure that the proposed reform guarantees the Bank of Greece’s institutional and financial independence and compliance with the monetary financing prohibition and that the solution is balanced, the ECB comments as follows. 3.2.1 Transfer of the HPISC’s competences to the Bank of Greece Under Article 1(1) of the draft law, all the HPISC’s competences, which are listed non-exhaustively in Article 3(1) of Law 3229/2004, are transferred to the Bank of Greece, with the exceptions explicitly referred to in Article 1(1) of the draft law. To ensure legal certainty in relation to the transfer of competences to the Bank of Greece, the ECB recommends that Article 1(1) of the draft law should state that, in addition to the transfer of the HPISC’s competences to the Bank of Greece specified in the draft law, all other concurrent competences of other authorities relating to the supervision of the insurance sector under other national legislation are transferred. This would enable the Bank of Greece to carry out its new tasks without interference.

text: 3.2.2 Devolution of the HPISC’s assets to the Greek State In order for the Bank of Greece to be able to perform its new supervisory tasks without being adversely affected in the performance of all its existing tasks, sufficient resources should be available to it. The draft law provides that the capital created through the contributions made by the insurance undertakings, as well as the HPISC’s remaining property in terms of assets and liabilities, will devolve to the State . The ECB therefore understands that, while the function of the insurance sector supervision previously entrusted to the HPISC will be transferred to the Bank of Greece, assets that belonged to the HPISC will not be transferred. In this respect, it should be ensured that the Bank of Greece will not bear any financial costs or liability related to any HPISC supervisory activities undertaken prior to the effective date of transfer of responsibilities to the Bank of Greece. 3.2.3 Pending legal proceedings Any provisions under which an NCB becomes the legal successor to any liabilities of a distinct supervisory authority raise issues of compliance with the monetary financing prohibition provided for in Article 123 of the Treaty . The draft law provides in this respect that pending legal proceedings relating to disputes or matters involving the abolished HPISC will be continued by the Bank of Greece without interruption. Any financial consequences resulting from judicial decisions will ultimately be borne by the Greek State, which may, where appropriate, intervene and assume the legal proceedings .The ECB understands that the draft law does not provide for any compensation for legal proceedings or disputes which may occur after the transfer of responsibilities to the Bank of Greece but originate in events occurring prior to this transfer. Moreover, the ECB understands that any judgment rendered by the Greek courts granting compensation to a holder of an insurance policy will imply that the compensation will be borne by Bank of Greece, which will only have subsequent recourse to the Greek State for reimbursement. Accordingly, the Bank of Greece would acquire a claim against the Greek State. This arrangement would be incompatible with Article 123 of the Treaty. The ECB therefore recommends specifying in the draft law that the Greek State will meet in advance any financial obligations incurred by the Bank of Greece as a result of it being a legal successor to a supervisory authority and that the State will not have any recourse to the Bank of Greece in relation to its liability in this respect . In addition, as regards the principle of central bank independence, as previously mentioned by the ECB , in order to ensure an NCB’s financial independence, ‘Member States may not put their NCBs in a position where they have insufficient … resources to carry out their ESCB or Eurosystem-related tasks’. In this vein, the proposed taking on of legal proceedings should be preceded by an assessment of the direct or indirect effect this may have on the Bank of Greece’s

text: ability (both operationally in terms of manpower, and financially in terms of financial resources) to fulfil its mandate. 3.2.4 Staff Special scientific staff employed by the HPISC under private law contracts of indefinite duration may request their integration into the permanent staff of the Bank of Greece following submission of an application and a relevant assessment, accepting, as appropriate, the terms and conditions for their grade and salary adjustment to be notified by an act of the Governor of the Bank of Greece within two months of publication of the draft law . In accordance with what has been stated on previous occasions , the ECB understands that the Bank of Greece’s autonomy in staff matters is respected by such an arrangement and that it is the exclusive and independent decision of the Bank of Greece whether to employ the HPISC’s staff. At the same time, it should be ensured that the Bank of Greece is able to recruit specialised staff where appropriate for the proper implementation of the new responsibilities in the same way as for its current responsibilities. In line with paragraph 3.2.2 above, it should be ensured, however, that the Bank of Greece does not bear any financial obligations deriving from the employment relations that new staff may have had with the HPISC. 3.2.5 Contributions of supervised insurance undertakings The ECB notes that the contributions of the supervised insurance undertakings will be defined and any relevant detail addressed by a decision of the Minister for Finance . For reasons of financial independence of the Bank of Greece it should be ensured that the performance of the new supervisory functions by the Bank of Greece will be adequately financed by the contributions to be received from supervised entities and will not result in any loss for the Bank of Greece. In terms of the competence for defining the contributions of the supervised insurance undertakings, the ECB notes that, to the extent that the new supervisory competences will be exclusively transferred to the Bank of Greece, the modalities for the definition of such contributions should be defined independently by the Bank of Greece . The attribution of such power to the Bank of Greece would reflect international practice established with the aim of safeguarding the supervisory authorities’ independence. 3.2.6 Transitional period The substantive and technical details for the unimpeded substitution of the Bank of Greece for the abolished HPISC, as well as any other specific issues and details for the purposes of the application

text: of

text: Article 1

text: , will be determined by a decision of the Minister for Finance . In the light of the concerns raised above about financial independence and monetary financing, and with a view to ensuring a smooth transfer of the supervisory competences to the Bank of Greece and their efficient performance, the ECB recommends drawing up the details for the transfer of such competences by a joint decision of the Ministry of Finance and the Bank of Greece. Finally, the ECB notes that the draft law provides that the HPISC must be abolished from the first day of the third month following the publication of the law . To ensure a smooth transfer of the tasks to the Bank of Greece, the draft law should provide for a longer transitional period, to be determined in agreement with the Bank of Greece. 3.3 Failure to amend the draft law along the lines suggested in paragraphs 3.2.2, 3.2.3 and 3.2.4 would lead the ECB to the conclusion that the proposed arrangements are incompatible with Articles 123 and 130 of the Treaty.

text: 4. Establishment of the Private Life Insurance Guarantee Fund (PLIGF)

text: 4.1 The PLIGF will be established as a private law legal entity supervised and controlled by the Minister of Finance . At the same time, several provisions of the draft law assign to the Bank of Greece decision-making and/or approving powers in relation to the PLIGF’s operations, in particular in terms of coverage, transfer of life insurance portfolios following revocation of an insurance undertaking’s authorisation, contributions and internal governance . In this regard, the ECB would like to stress that the activities performed by the Bank of Greece need to comply with the monetary financing prohibition contained in Article 123 of the Treaty, so it should not have to finance any of the PLIGF’s activities in the event that the members’ contributions to the Fund under the first and second paragraphs of Article 10 of the draft law prove insufficient. Moreover, the Bank of Greece’s operational independence would need to be enhanced. This could be facilitated by giving a clearer definition of the Bank of Greece’s involvement in the PLIGF’s operations and by an adequate level of central bank involvement in the PLIGF’s governance . The attribution to the Bank of Greece of clear and autonomous responsibility for supervising the PLIGF may greatly benefit the efficient and effective fulfilment of the aims of the draft law to extend its current supervisory responsibilities to encompass the insurance sector. In order to ensure the

text: compliance of the draft law with the abovementioned requirements, substantial substantive amendments should be made to the relevant provisions. 4.2 As noted in paragraph 1.2, the PLIGF will provide cover for insurance payments deriving from any life insurance policies entered into and operations carried out in Greece or other Member States or European Economic Area countries through a branch or through the free (cross-border) provision of services. The ECB understands that some Member States have already established private life insurance guarantee funds, membership of which is obligatory for insurance companies established in these Member States and any branches they may have situated outside the Member State, in line with the general principle in Union law of home State supervision. For this reason, and with a view to possible future Union initiatives in this area, the ECB suggests that Article 6 of the draft law be amended in order to avoid the operation and membership of the PLIGF being made obligatory in respect of branches of insurance companies that are already covered by equivalent guarantee funds in their countries of establishment.

text: 5. Establishment of the Systemic Stability Council (SSC)

text: 5.1 As pointed out in previous opinions , the establishment of national financial stability committees may enhance the ability of NCBs and supervisory authorities to provide analytical support to the ESRB. The tasks performed by these committees should complement the ESRB’s activities. Therefore, it is particularly important to exploit appropriate synergies. However, it is necessary to avoid such national committees being entrusted with tasks and powers that potentially conflict with those of the ESRB and which may undermine its effectiveness. Moreover, the legal frameworks of these committees should appropriately reflect the NCBs’ roles, should not constrain the independence of their governors or unduly affect the quality and impartiality of their contributions as members of the ESRB. With regard to the SSC’s composition, the ECB notes that committees with similar tasks have been established in a number of Member States, in the majority of cases with their composition restricted to institutional members. Such composition seems preferable, for reasons related to safeguarding the competence of the institutional entities entrusted with the responsibility for macroeconomic stability analysis and the established confidentiality regime. Lastly, in view of the importance of ensuring the effectiveness of macroprudential supervisory arrangements at Union level, it is essential to safeguard the ESRB’s ability to perform its tasks independently and to guarantee an authoritative and effective channel for transmitting its warnings and recommendations. Since, under the draft law, the SSC will adopt resolutions and conclusions, it is important to ensure that it will function in a way that is fully consistent with the abovementioned important principles. 5.2 In particular, the new institutional framework for financial stability in Greece should ensure that the involvement of the Bank of Greece and its Governor and Deputy Governor is performed in a

text: manner that fully complies with the institutional and financial independence of the Bank of Greece and with the Governor’s and Deputy Governor’s personal independence, as well as with the confidentiality requirements resulting from the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB’), which are designed to safeguard the proper performance of their tasks under the Treaty and the Statute of the ESCB .

text: Further implementation of the draft law with regard to the SSC’s establishment, organisation and mandate should also respect the principle of central bank independence.

text: Done at Frankfurt am Main, 23 April 2010. [signed]

text: The Vice-President of the ECB

text: Lucas D. PAPADEMOS


text: OJ L 189, 3.7.1998, p. 42. 2 Articles 9 and 10 of the draft law.

text: Article 16 of the draft law. 4 All ECB opinions are published on the ECB’s website at www.ecb.europa.eu.

publisher: Europeiska centralbanken

sprak: en

title: Opinion of the European Central Bank of 23 April 2010 on debt arrangements for over-indebted individuals (CON/2010/34)

serie: con

text: OPINION OF THE EUROPEAN CENTRAL BANK of 23 April 2010 on debt arrangements for over-indebted individuals (

text: ) Introduction and legal basis

type: rubrik

text: On 25 January 2010 the European Central Bank (ECB) received a request from the Greek Ministry of Economy, Competitiveness and Shipping for an opinion on a draft law on debt arrangements for overindebted individuals (hereinafter the ‘draft law’). On 12 February 2010 the Ministry submitted an addendum to its consultation request with some clarifications and additional information on specific aspects of the draft law. The ECB’s competence to deliver an opinion is based on Article 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the sixth indent of

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

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

type: stycke

text: 1. Purpose of the draft law

text: According to its explanatory memorandum, the draft law draws on similar legislation in other Member States and fills a significant gap in Greece’s current insolvency legislation. In particular, it introduces procedures to enable over-indebted natural persons, who are not merchants for the purposes of the existing bankruptcy framework and who have a proven and continuing inability to service their pecuniary debts that have fallen due to credit institutions and other creditors, to seek to repay such debts under more favourable conditions and to obtain debt relief where there are no assets available for the repayment of such debts or where their current and expected income is not sufficient for that purpose. The draft law also contains special provisions, such as the possibility for debtors to request the exclusion of their primary residence from realisation of their assets, and the possibility of a judicial settlement without debt relief where a debtor is temporarily unable to service their debt . Finally, the draft law contains a

text: provision on the period of retention and use of data in relation to the debt repayment arrangements introduced therein .

text: 2. General observations

text: 2.1 The ECB understands that the draft law introduces these insolvency arrangements as part of a comprehensive legal framework of unlimited duration and general application. As the draft law applies to debtors and, among other things, governs their relationships with credit institutions, the new legal framework should be clear as to the rights and obligations it creates and should take into account existing legal relationships between credit institutions – including in their capacity as mortgage lenders – and their debtors, thus ensuring legal certainty. 2.2 To the extent that the draft law provides for the medium and longer term repayment of and relief from debts owed to credit institutions, such repayment and relief arrangements should contain the necessary safeguards to prevent them having implications for financial stability. Such arrangements should also cater for possible interaction with the other similar legislative arrangements already adopted by the Greek Government to address the current adverse economic conditions. In view of the above, the ECB stresses the importance of making a thorough prior assessment of the impact of the draft law on the functioning of the financial system so as to safeguard financial stability and it refers to its recent Opinion

text: , on restructuring of business and professional debts owed to credit institutions and on credit bureau data processing, which is also relevant for the purposes of the draft law. 2.3 Finally, the ECB considers that the proposed framework needs to be clear in providing the right incentives to debtors falling within its scope to service their debts appropriately and that it should contain sufficient safeguards to avoid moral hazard, as this could have serious adverse consequences on banks’ capital and liquidity positions, as well as on the overall cost of financing.

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

text: Done at Frankfurt am Main, 23 April 2010.

text: [signed]

text: The Vice-President of the ECB

text: Lucas D. PAPADEMOS

type: vagledning

utgivare: ecb


text: See Opinion

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

text: OJ L 135, 31.5.1994, p. 5. 4 See for example paragraph 2 of Opinion

text: and paragraph 3.2 of Opinion

text: . 5 See also paragraph 2.3.2 of Opinion

text: . 6 Paragraph 2.17 of Opinion

text: . 8 See the Eurosystem’s reply to the public consultation of the Commission Communication on ‘An EU framework for cross-border crisis management in the banking sector’ of 4 February 2010. 9 Idem.

text: European Convention for the Protection of Human Rights and Fundamental Freedoms, as amended by Proctocol No 11, Rome, 4 November 1950. 11 7 November 2002, Olczak v Poland, No 30417/96 and 1 April 2004, Camberrow MMS AD v Bulgaria, No 50357/99. 12 Paragraph 3.1.3 of Opinion

text: . 13 Paragraph 3.2.1 of Opinion

text: and paragraph 3.4.2 of Opinion

text: . See also the Recommendations of the Governing Council of the European Central Bank on the pricing of recapitalisations, 20 November 2008, available on the ECB’s website at www.ecb.europa.eu. 14 See, for example, paragraph 3.4 of Opinion

text: . 15 See the ‘Communication from the Commission – The application of State aid rules to measures taken in relation to financial institutions in the context of the current global financial crisis’ of 13 October 2008, available on the Commission’s website at www.ec.europa.eu. 16 Declaration of 12 October 2008 on a concerted European action plan of the euro area countries, available on the French Presidency’s website at www.ue2008.fr. See also point 3.1.1 of Opinion

title: Opinion of the European Central Bank of 26 April 2010 on additional financial stability measures in Estonia (CON/2010/35)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 26 April 2010 on additional financial stability measures in Estonia (

text: ) Introduction and legal basis

text: On 23 March 2010 the European Central Bank (ECB) received a request from the Ministry of Finance for an opinion on the draft law amending the Law on the financial supervision authority, the Law on credit institutions and the Law on the guarantee fund (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the sixth indent of

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

text: 1. Purpose of the draft law

text: The draft law is aimed at fostering the necessary tools for handling a financial crisis and mainly regulates issues within the competence of the Financial Supervisory Authority (FSA) and the State. Estonia adopted the first measures to secure the stability and functioning of the Estonian financial system in March 2009 . The draft law further increases the efficiency and effectiveness of financial supervision, also in the event of a financial crisis. The draft law allows for a faster exchange of information and makes it possible for the State to acquire shares of a credit institution in the public interest for fair compensation (expropriation), if this is necessary to safeguard financial stability. Under the current law, a credit institution may not be divided and the legal form may not be changed; however, the draft law establishes a regime for the division of a credit institution, i.e. the transfer of assets and liabilities to one or more existing or newly created companies, if this is necessary to guarantee its financial soundness. Under the draft law, the FSA will be responsible for supervising the division of credit institutions, adopting proposals to impose structural changes to a credit institution’s organisational structure, requesting specific rehabilitation measures for a credit institution and granting temporary exemptions from prudential requirements. The draft law also introduces changes to the guarantee fund, resulting mainly from the

text: enhanced requirements under Directive

text: of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes .

text: 2. General observations

text: 2.1 The ECB welcomes measures that strengthen the powers of competent authorities to intervene when the stability of either individual credit institutions or the financial system as a whole is jeopardised . The financial crisis has shown the importance of an efficient resolution regime and has triggered reflections both at international and European level on how to enhance the instruments at the disposal of competent authorities in a crisis situation. In this context, the ECB welcomes the draft law’s measures to enhance the capability of a competent authority to respond in a timely and effective manner in the case of a solvent credit institution in distress . Another important aspect is enhanced information sharing and cooperation between competent authorities . 2.2 The ECB has assessed measures related to the creation of ‘bad banks’, ‘good banks’ and ‘bridge banks’ and pointed out that such measures are welcome and are in line with current policies both at European and international levels for establishing a sound crisis resolution framework to intervene when financial institutions have a systemic impact on the financial system . Such resolution framework is important in order to achieve the objective of ensuring the continuity of systemically important operations; this has been highlighted by the Eurosystem when replying to the initial ideas expressed by the Commission on a Union framework for crisis management and resolution . The possibility to use a bridge bank is recognised as part of the trend towards enhanced convergence of national legal schemes for crisis management and resolution developing at both international and European level. In this context, the Estonian legal framework for crisis management and resolution may need to be further adapted taking into account future regulatory initiatives at Union level that aim to enhance the coordination of resolution and insolvency proceedings involving cross-border credit institutions. 2.3 Additional supervisory tools may be needed to handle a crisis involving cross-border credit institutions. The greater interdependencies among financial systems require appropriate action to address the possible systemic impact of failing cross-border credit institutions . Therefore, supervisory tools should be effective in order to manage problems arising from such a crisis. The ECB emphasises the need for the mutual recognition of crisis management and resolution proceedings and measures. National supervisory authorities should work closely with relevant home and host resolution authorities to resolve cross-border situations effectively.

text: 2.4 The draft law allows a credit institution to be divided. The FSA will have the right to carry out onsite inspections of the acquiring company and may refuse to authorise the transfer of assets and liabilities if the acquiring company is not subject to financial supervision. In this context, the option to divide credit institutions may be mainly useful under normal market conditions; it may take too much time to implement this solution in a crisis situation. However, these provisions are of general application and are not limited to financial crises. 2.5 The draft law provides for the expropriation of credit institutions’ shares as a new measure to safeguard the stability of the financial system. The ECB welcomes the involvement of Eesti Pank and the FSA in this procedure. The proceedings leading to expropriation must be in line with the European Convention for the Protection of Human Rights and Fundamental Freedoms and decisions of the European Court of Human Rights , and so comply with the principle that nobody may be deprived of their property except in the public interest and in accordance with the law. The ECB assumes that expropriation measures will only be taken in exceptional circumstances where, in compliance with the principle of proportionality, the seriousness of the measure is commensurate with the threat to financial stability . 2.6 Finally, the ECB reiterates that the financial support measures should not be applied to insolvent credit institutions and the pricing conditions should be risk-based and market-oriented . As a general remark and in line with previous opinions , the ECB reiterates the importance of ensuring that the regulatory practice under the proposed arrangements will be conducted in full compliance with the relevant Union law provisions, including single market principles and financial services legislation, as well as competition and State aid rules . Moreover, remedies to handle financial crises should be temporary in nature .

text: This opinion will be published on the ECB’s website. Done at Frankfurt am Main, 26 April 2010. [signed]

text: The President of the ECB

text: Jean-Claude TRICHET


text: OJ L 139, 11.5.1998, p. 1. 3 The legal tender status of euro banknotes is laid down by Article 128(1) of the Treaty on the Functioning of the European Union and Article 16 of the Statute of the European System of Central Banks and of the European Central Bank.

text: See paragraph 5 of Opinion

text: ‘According to settled case-law, reliance by a national authority on the concept of public policy presupposes the existence … of a genuine and sufficiently serious threat to a fundamental interest of society’,

text: Case C-349/06

text: Polat [2007] ECR I- 167, paragraph 34.

text: As far as consumer protection is concerned, Article 169 of the Treaty requires such a high level of protection to be ensured. It may be argued that restrictions on payments by cash, such as those provided for in the draft law, should differ between those applicable to business-to-business transactions, where the parties are deemed to have equivalent negotiating power, and those applicable to business-to-consumer transactions, where cash should not be refused unless the business can give restrictively defined and objective reasons. In this respect see the Report of the Euro Legal Tender Expert Group (ELTEG) on the definition, scope and effects of legal tender of euro banknotes and coins, Section 2.1.2. Acceptance/refusal of cash, available at: www.ec.europa.eu/economy_finance/articles/euro/documents/elteg_en.pdf. See also Commission recommendation of 22 March 2010 on the scope and effects of legal tender of euro banknotes and coins (OJ L 83, 30.3.2010, p. 70), paragraph 2, whereby ‘The acceptance of euro banknotes and coins as means of payments in retail transactions should be the rule. A refusal thereof should be possible only if grounded on reasons related to the “good faith principle” (for example the retailer has no change available)’.

title: Opinion of the European Central Bank of 30 April 2010 on a draft law on restoring fairness in taxation and addressing tax evasion (CON/2010/36)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 30 April 2010 on a draft law on restoring fairness in taxation and addressing tax evasion (

text: ) Introduction and legal basis

text: On 26 March 2010 the European Central Bank (ECB) received a request from the Greek Ministry of Finance for an opinion on a draft law on restoring fairness in taxation and addressing tax evasion (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the second and fifth indents of

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

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft law relates to means of payment and payment and settlement systems. 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: Among other things, the draft law is intended to progressively establish the use of electronic invoices. Article 20 of the draft law introduces specific restrictions on cash payments in favour of other means of payment, in order to ensure the genuineness of transactions and underlying documents and to enable direct cross-checking of such transactions. Article 20(2) of the draft law states that, for transactions between businesses, invoices and equivalent documents with a value exceeding EUR 3 000 shall be paid through business bank accounts or by cheques drawn on and paid to such accounts. These accounts will be connected to a secure electronic database held by the Ministry of Finance’s General Secretariat for Information Systems (GSIS). Banking secrecy is lifted for this purpose and banks may not charge fees for the operation of such business accounts.

text: Under Article 20(3) of the draft law, invoices with a value exceeding EUR 1 500 for the sale of goods or services to consumers shall be paid through a bank with debit cards, credit cards or cheques, and the use of cash will not be allowed.

text: 2. General observations

text: 2.1 Consultation at an appropriate stage The Government submitted the draft law to the Greek Parliament on 24 March 2010. The Ministry of Finance consulted the ECB on 26 March 2010, requesting that the opinion be given as early as possible. The draft law was adopted by the Greek Parliament on 20 April 2010. In cases of particular urgency that do not allow for a normal consultation period, the consulting authority may indicate urgency in the consultation request and ask for a shorter time limit for the ECB’s opinion to be adopted. This does not alter the national authorities’ duty under Articles 127(4) and 282(5) of the Treaty to consult the ECB on draft legislative provisions falling within its fields of competence in due course of the legislative process. The second sentence of

text: Article 4 of Decision 98/415/EC

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

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

text: also obliges Member States to suspend the adoption process for draft legislative provisions, pending receipt of the ECB’s opinion. In the present case, the consulting authority did not give the ECB a specific time limit within which to submit its opinion and referred only to urgency on the grounds that Parliament would probably enact the draft law within two weeks from the date of its submission. As the circumstances invoked by the consulting authority do not constitute sufficient reason to justify extreme urgency, the ECB considers that the minimum consultation period of one month provided for in

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

text: applies. 2.2 Consistency of the draft law 2.2.1 According to the draft law’s explanatory memorandum, from 1 January 2011: (i) invoices for transactions between businesses or between businesses and the State with a value exceeding EUR 3 000 will only be acceptable if submitted electronically, and (ii) cash payments between businesses or between businesses and consumers with a value exceeding EUR 1 500 will be considered illegal. However, the provisions of the draft law, i.e.

text: Articles 20(2)

text: -(3), do not clarify the legal consequences of non-compliance with the rules. In addition, in

text: Article 20(3)

text: it appears that the EUR 1 500 threshold only applies to the sale of goods or services to consumers, and it is not explicitly stated that such transactions will be considered illegal. Moreover, the draft legislative provisions do not give any date for their entry into force.

text: 2.2.2 For reasons of legal certainty, the ECB recommends that the draft law should be consistent with its explanatory memorandum. 2.3 Limitations on payments in cash 2.3.1 With regard to restrictions on payments in cash under Union law,

text: recital 19

text: of

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

text: on the introduction of the euro states that ‘limitations on payments in notes and coins, established by Member States for public reasons, are not incompatible with the status of legal tender of euro banknotes and coins, provided that other lawful means for the settlement of monetary debts are available’. The third sentence of

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

text: states: ‘Except for the issuing authority and for those persons specifically designated by the national legislation of the issuing Member State, no party shall be obliged to accept more than 50 coins in any single payment’. 2.3.2 A prohibition of payments in cash of a certain value does not affect the legal tender status of 3 4 banknotes and is compatible with Union law . However, in view of the legal tender status of euro banknotes, the ECB should be consulted on the proposed adoption of any similar measures, as such prohibitions should be subject to individual examination of the specific requirements and purposes of the legislative provision in each case. In this respect, the ECB, acknowledging that the draft legislative provisions are in principle compatible with Union law, has the following specific observations.

text: 3. Specific observations

text: 3.1 As referred to in paragraph 2.3.1 above, limitations on payments in banknotes and coins established by Member States for public reasons are not incompatible with the status of legal tender of euro banknotes and coins, provided other lawful means for the settlement of monetary debts are available. The ECB acknowledges that: (i) lawful means for the settlement of monetary debts, other than cash, are available in Greece; and (ii) ensuring the genuineness of transactions and underlying documents and enabling direct cross-checking of such transactions, as referred to in the explanatory memorandum to the draft law, qualify as public reasons within the meaning of

text: Regulation (EC) No 974/98

text: . 3.2 However, limitations on payments by euro banknotes and coins should be proportionate to the objectives pursued and should not go beyond what is necessary to achieve such objectives. The

text: ECB considers that the proposed thresholds of EUR 3 000 for business-to-business transactions (or between businesses and the State) and of EUR 1 500 for transactions for the sale of goods or services by businesses to consumers will effectively be limitations on cash payments. Any impact of the proposed limitations should be carefully weighed against the public benefits expected to be derived from them. The ECB suggests that the competent authorities should assess whether the effects of these measures go beyond what is necessary for achieving the objective of ensuring the genuineness of transactions and underlying documents and the direct cross-checking of such transactions, taking also into consideration the need to ensure an appropriate level of consumer protection . 3.3 Finally, the draft law gives rise to a risk of legal uncertainty in the light of Article 452 of the Greek Penal Code on ‘refusal of cash’, according to which ‘Any person who refuses to accept payment in cash legally introduced into circulation within the State shall be punished with a fine’. In this context, the ECB stresses the need to amend the draft law in order to ensure the consistency of the legal provisions governing the restrictions on payments in cash.

text: Done at Frankfurt am Main, 30 April 2010.

text: [signed]

text: The President of the ECB

text: Jean-Claude TRICHET


text: Published on the website of the Polish Parliament at www.sejm.gov.pl, parliamentary print No 3008.

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

text: Law of 29 August 1997 on Narodowy Bank Polski (consolidated text: Dziennik Ustaw (Dz. U.) of 2005 No 1, Item 2).

text: Article 10(1)

text: does not specify the nature of the absence or the scope of duties and powers conferred upon the Vice- President as regards his participation in certain decision-making bodies of NBP. While this lack of full clarity was provisionally remedied in practice, the draft law aims to provide legal certainty to this end.

text: See explanatory memorandum to the draft law, p. 1.

text: Ground for the expiry of the NBP President’s term of office provided for under

text: Article 9(4)

text: (1) of the Law on NBP. 7 Grounds for termination of the term of office of the NBP President provided for under

text: Article 9(4)

text: (2-4) of the Law on NBP.

title: Opinion of the European Central Bank of 7 May 2010 on an amendment to the rules securing the continuation of office of the President of Narodowy Bank Polski (CON/2010/37)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 7 May 2010 on an amendment to the rules securing the continuation of office of the President of Narodowy Bank Polski (

text: ) Introduction and legal basis

text: On 3 May 2010 the European Central Bank (ECB) received a request from the Marshal of the Polish Parliament for an opinion on a draft law amending the Law on Narodowy Bank Polski (hereinafter the ‘draft law’) . The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third indent of

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

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft law relates to Narodowy Bank Polski (NBP). 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 Under Article 10(1) of the Law on Narodowy Bank Polski (hereinafter the ‘Law on NBP’) , in the event of absence, the President of NBP is substituted by the Vice-President – First Deputy President of NBP (hereinafter the ‘Vice-President’). This provision is currently the only provision in Polish law securing the continuity of office of the NBP President . 1.2 According to the explanatory memorandum to the draft law , the smooth performance and transfer of the duties of NBP’s decision-making bodies following the expiry of the term of office of NBP’s President, as well as the continuity of the operations of NBP, are essential for the financial security of the State and the stability of its monetary policy. The draft law aims to clarify the current rules securing the continuity of the office of the NBP President by adding a new

text: Article 9

text: a according to

text: which: (i) following the expiry of the whole of the 6-year term of office of the NBP President , the NBP President remains in office until a newly appointed President takes up his duties; and (ii) following the termination of the term of office of the NBP President due to death, resignation or dismissal , the duties of the NBP President are performed by the Vice-President until a newly appointed NBP President takes up his duties.

text: 2. ECB comments

text: 2.1 The continuity of the office of the Governor or President of a national central bank raises two issues for central bank independence. First, there is the issue of institutional independence. The statutes of national central banks have to provide clear rules on who will take over the office of Governor or President in the event of the expiry of the term of office of the existing Governor or President by passage of time or due to death, resignation or dismissal so as to avoid any external interference. Second, there is the issue of personal independence. It must be ensured that any person who takes over the duties of the Governor or President on an interim basis until a newly appointed Governor or President takes up his duties benefits from the same rules on security of tenure of office and grounds for dismissal as any member of the decision-making bodies of national central banks involved in the performance of ESCB-related tasks. 2.2 The ECB welcomes the draft law as it improves legal certainty by securing continuity of the office of the NBP President and removes ambiguities in the existing provisions. As regards personal independence, the ECB notes that, when performing the duties of the President under proposed

text: Article 9

text: a(2), the Vice-President benefits from the same safeguards as are normally applicable to the members of decision-making bodies of national central banks. 2.3 As regards the institutional independence, in relation to the expiry of the 6-year term of office or termination of the office under

text: Article 9(4)

text: (2-4) of the Law on NBP, the national authorities should ensure that a successor is appointed within a reasonable time following such expiry or termination. 2.4 In addition, the ECB notes that, for reasons of legal clarity, the Law on NBP as amended by the draft law would benefit from a clarification of the relationship between the current wording of

text: Article 10(1)

text: and the proposed

text: Article 9

text: a.

text: This opinion will be published on the ECB’s website. Done at Frankfurt am Main, 7 May 2010. [signed]

text: The President of the ECB

text: Jean-Claude TRICHET


text: EGT L 189, 3.7.1998, s. 42.

sprak: sv

title: Europeiska centralbankens yttrande av 7 maj 2010 om förnyelse av sedel- och myntserien (CON/2010/38)

text: EUROPEISKA CENTRALBANKENS YTTRANDE av 7 maj 2010 om förnyelse av sedel- och myntserien (

text: ) Inledning och rättslig grund

text: Den 29 mars 2010 mottog Europeiska centralbanken (ECB) en begäran från Sveriges riksbank om ett yttrande över ett förslag om ändring av lagen (1988:1385) om Sveriges riksbank (nedan kallat förslaget). ECB:s behörighet att avge ett yttrande grundas på artiklarna

text: och

text: i fördraget om Europeiska unionens funktionssätt och artikel 2.1 andra strecksatsen i

text: rådets beslut 98/415/EG av den 29 juni 1998

text: om nationella myndigheters samråd med Europeiska centralbanken rörande förslag till rättsregler , eftersom förslaget rör betalningsmedel. I enlighet med

text: artikel 17.5

text: första meningen i arbetsordningen för Europeiska centralbanken har detta yttrande antagits av ECB-rådet.

text: 1. Syftet med förslaget

text: Enligt förslaget ges Riksbanken rätt att ge ut mynt med valörerna 2 och 20 kronor samt sedlar med valören 200 kronor. Eftersom 50-öresmyntet upphör att vara lagligt betalningsmedel den 30 september 2010 föreslås även att Riksbankens rätt att ge ut 50-öresmynt upphör.

text: 2. Allmänna kommentarer

text: Enligt 9 kap. 14 § regeringsformen har Sveriges riksbank ensamrätt att ge ut sedlar och mynt. Av 5 kap. 1 § lagen (1988:1385) om Sveriges riksbank framgår att sedlar och mynt som ges ut av Sveriges riksbank är lagliga betalningsmedel. Allmänna regler om penning- och betalningsväsendet, såsom beslut om att vissa svenska sedlar och mynt ska upphöra att vara lagliga betalningsmedel ska däremot meddelas genom lag som antagits av Sveriges riksdag. ECB noterar att Riksbanken gjort en ingående granskning av behovet att förnya sedel- och myntserien där man beaktat användningen och efterfrågan på olika valörer samt kostnaden för olika alternativ. Man har även beaktat synpunkter från allmänheten, banker samt handeln.

text: Detta yttrande kommer att offentliggöras på ECB:s webbplats. Utfärdat i Frankfurt am Main den 7 maj 2010. [Namnteckning] Jean-Claude TRICHET

text: ECB:s ordförande


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

text: Law 138(I)/2002, (Official Government Gazette No. 3624 of 19 July

text: O περί της Κεντρικής Τράπεζας της Κύπρου Νόµος

text: 2002), as amended.

title: Opinion of the European Central Bank of 14 May 2010 on the transfer of rights and obligations in relation to the issuance, distribution and redemption of public debt (CON/2010/39)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 14 May 2010 on the transfer of rights and obligations in relation to the issuance, distribution and redemption of public debt (

text: ) Introduction and legal basis

text: On 28 April 2010 the European Central Bank (ECB) received a request from the Cypriot Minister for Finance (hereinafter ‘the consulting authority’) for an opinion on a draft law amending the Laws of 1989 to 2008 on Treasury bills (hereinafter, the ‘draft law’) and on two accompanying draft regulations (hereinafter, the ‘draft regulations’). 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 on the third indent of

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

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft law relates to the Central Bank of Cyprus (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.

text: 1 Purpose of the draft law and the draft regulations

text: 1.1 The objective of the draft law and of its associated draft regulations is to transfer from the CBC to the Ministry of Finance the ‘rights, privileges, obligations, responsibilities, competences, duties and tasks’ involved in the issuance, distribution and redemption of public debt. This objective is to be achieved by means of the adoption of three identically worded legal acts, namely (i) the (Amending) Law of 2010 on Treasury bills, (ii) the (Amending) Regulations of 2010 on loan (development), (iii) the (Amending) Regulations of 2010 on savings loans. According to the request for an opinion, these legal acts are interrelated and are to be submitted to the Cypriot Council of Ministers and Parliament as a single legislative package. 1.2 Until now, the issuance, distribution and redemption of Government bonds, Treasury bills and other securities have been carried out by the CBC which, in its capacity as agent to the Cypriot

text: 2 General observations

text: 2.1 The domestic legal framework governing the issuance, distribution and redemption of Government bonds, Treasury bills and other securities comprises not only those legal acts that the consulting authority proposes amending through the draft law and its associated draft regulations, but also the CBC Laws. Section 51(c) thereof attributes specific executory powers to the CBC in connection with (i) the issuance of Government bonds, Treasury bills and other securities, and (ii) the servicing of public debt. 2.2 Section 51(c) of the CBC Laws expressly provides that the CBC’s powers pertaining to the issuance of Government bonds, Treasury bills and other securities and the servicing of public debt may be repealed by the Cypriot Council of Ministers, provided that certain procedural requirements are met. In July 2008 the Council of Ministers transferred the CBC’s public debt management authority from the CBC to the Ministry of Finance, with effect from 1 August 2010. More generally, the ECB notes that it is common for central banks not to be responsible for public debt management and, instead, for this task to be the responsibility of an independent debt management agency. 2.3 Without prejudice to the foregoing observations, the ECB stresses the need for Cyprus to ensure the same level of transparency and accountability in managing its public debt as that achieved by the CBC, inter alia, in the interests of the Eurosystem’s liquidity management. If the Ministry of Finance is to be directly responsible for debt management, debt management should be kept separate from budget and fiscal control, and sufficient material resources and expertise will need to be secured for a public debt management office to substitute the CBC in its public debt management tasks. Alternatively, if debt management is to be delegated to a separate, independent agency outside the Ministry of Finance, clear governance, legal and institutional arrangements will need to be established to control and monitor the external agency’s compliance with the debt management objectives, benchmarks and guidelines set by the Ministry of Finance and to avoid conflicts of interest.

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

text: Done at Frankfurt am Main, 14 May 2010. [signed]

text: The President of the ECB

text: Jean-Claude TRICHET


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

text: OJ L 332, 31.12.1993, p. 1. 3 The fourteenth recital of

text: Regulation (EC) No 3603/93

text: states: ‘Whereas the financing by the central banks of obligations falling upon the public sector vis-à-vis the International Monetary Fund or resulting from the implementation of the medium-term financial assistance facility set up within the Community [the Union] results in foreign claims which have all the characteristics of reserve assets; whereas it is, therefore, appropriate to authorize them’. 4 See Opinion

text: ; all ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 5 See also Opinions

text: and

title: Opinion of the European Central Bank of 14 May 2010 on a bilateral loan between the International Monetary Fund and the Oesterreichische Nationalbank (CON/2010/40)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 14 May 2010 on a bilateral loan between the International Monetary Fund and the Oesterreichische Nationalbank (

text: ) Introduction and legal basis

text: On 9 April 2010, the European Central Bank (ECB) received a request from the Austrian Ministry of Finance for an opinion on a draft Federal law on a bilateral loan agreement between the International Monetary Fund (IMF) and the Oesterreichische Nationalbank (OeNB) (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third indent of

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

text: 1. Purpose of the draft law

text: 1.1 The draft law authorises the OeNB to grant the IMF a loan of up to EUR 2 180 million on behalf of Austria and within the framework of a bilateral agreement. The Minister of Finance is in charge of implementing the law. 1.2 The explanatory memorandum to the draft law refers to the expansion of the IMF’s New Arrangements to Borrow (NAB). This expansion, as adopted by the IMF’s Executive Board on 12 April 2010, includes both new NAB participant countries and additional payments from existing NAB participants, such as Austria. Under the expanded and more flexible NAB, credit amounts of up to SDR 367 500 million (equivalent to about EUR 429 600 million) will be available. The Member States have agreed to contribute EUR 128 000 million to the expanded NAB. Austria’s share of this contribution is EUR 3 714 million, to be funded from the OeNB’s resources. Austria currently provides credit arrangements under the NAB for SDR 412 million (equivalent to about EUR 467 million). 1.3 The negotiations with existing and new participants on the expansion of the NAB are not expected to be completed within the next 12 months, and in view of the uncertain economic climate the NAB

text: participants have agreed to make bilateral agreements with the IMF in the interim. The draft law implements such an agreement to provide an interim bilateral loan. The bilateral agreement with the IMF addressed in the draft law can be terminated once the new NAB agreement has been made, and the bilateral loan would be offset against Austria’s expanded provision of credit arrangements under the NAB of EUR 3 714 million.

text: 2. General observations

text: It is necessary to assess whether the draft law complies with the prohibition of monetary financing under Article 123(1) of the Treaty, which prohibits overdraft facilities or any other type of credit facility with national central banks in favour of central governments. This prohibition is subject to certain exceptions contained in Article 123(2) of the Treaty and in

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 [now Articles 123 and 125(1) of the Treaty] . In particular,

text: Article 7 of Regulation (EC) No 3603/93

text: provides that the financing by national central banks of obligations falling upon the public sector vis-à-vis the IMF is not regarded as a credit facility within the meaning of Article 123 of the Treaty . The draft law is similar to that addressed in Opinion

text: , where the EMI considered that the authorisation of the OeNB to grant a loan to the IMF on behalf of Austria under the NAB scheme was not a credit facility within the meaning of

text: Article 123(1)

text: (then

text: Article 104

text: ), but fell within the exception in

text: Article 7 of Regulation (EC) No 3603/93

text: . The ECB came to the same conclusion with regard to a law authorising Banka Slovenije to provide payments to the IMF on the basis of bilateral agreements with the IMF . The OeNB’s authority, under the draft law, to grant a bilateral loan to the IMF should also be considered as falling under the exception in

text: Article 7 of Regulation (EC) No 3603/93

text: and should therefore not be regarded as a form of monetary financing prohibited by the Treaty .

text: The President of the ECB

text: Jean-Claude TRICHET


text: For the banking sector, see the proposal for a Directive of the European Parliament and of the Council amending Directives

text: and

text: as regards capital requirements for the trading book and for re-securitisations, and the supervisory review of remuneration policies (COM(2009) 362 final). The Committee of European Banking Supervisors also developed guidelines for sound compensation policies (‘High-level principles for Remuneration Policies’ of 20 April 2009), which have also been taken into account in this draft law.

text: Circular 22/2009 (BA) of 21 December 2009 – Requirements for remuneration systems for institutions, and Circular 23/2009 (VA) of 21 December 2009 – Requirements for remuneration systems in the insurance industry. The circulars entered into force on publication. According to these rules, all institutions are required to comply with a set of general requirements while the application of additional stricter requirements relating, in particular, to the structure and form of the remuneration, the establishment of a remuneration committee and disclosure, is conditioned upon the size of the institution, its remuneration structure as well as the type, extent, complexity and scope of risk or internationality of the business pursued. In this respect, the institution has to assess itself whether it falls under the respective requirements. The analysis must be plausible, comprehensive and understandable for third parties. Under these specific requirements, the broad lines of the deferred payment of variable remuneration for risk takers are as follows. At least 40% of variable remuneration is to be stretched over a withholding period of at least three years. Moreover, at least 50% of deferred variable remuneration must depend on the sustainable growth of the institution. In accordance with the general requirements in the circular, the administrative or supervisory board of an institution needs to be informed at least annually about the remuneration systems so it can form an independent judgment on their appropriateness. The institution must try everything legally possible to adapt existing labour law agreements which do not comply with an adequate remuneration system.

text: Finanzmarktstabilisierungsgesetz, Bundesgesetzblatt I, 17.10.2008, p. 1982.

text: Gesetz zur Stärkung der Finanzmarkt- und der Versicherungsaufsicht, Bundesgesetzblatt I, 31.7.2009 p. 2305.

text: See Opinions

text: and

text: . Furthermore, the ECB was consulted on further German crisis-related legislation:

text: and

text: . All ECB opinions are available on the ECB’s website at www.ecb.europa.eu. 8 See in particular paragraph 2.1 of Opinion

text: and paragraph 2.2 of Opinion

title: Opinion of the European Central Bank of 14 May 2010 on compensation systems at institutions and insurance companies (CON/2010/41)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 14 May 2010 on compensation systems at institutions and insurance companies (

text: ) Introduction and legal basis

text: On 9 March 2010 the European Central Bank (ECB) received a request from the German Federal Ministry of Finance for an opinion on a draft law on the prudential supervision requirements for the compensation systems at institutions and insurance companies (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the sixth indent of

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

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

text: 1. Purpose of the draft law

text: 1.1 The draft law aims at implementing the Financial Stability Board (FSB) Principles for Sound Compensation Practices of 2 April 2009 and their Implementation Standards released in September 2009, together with the measures currently being finalised at Union level . According to the explanatory memorandum to the draft law, one of the causes of the financial market crisis was compensation policies geared to short-term parameters and unilaterally rewarding success without having sufficient sanctions for failure, which can lead to sight being lost of long-term and sustainable corporate success and thus increase the employees’ risk propensity. As the financial market crisis has shown, such compensation policies can endanger not only individual companies but also financial stability in general. The aim of the FSB principles and standards and the legislation implementing them is to establish compensation systems in the financial sector that are

text: commensurate with effective risk management, particularly by orienting compensation structures more strongly to the long-term success of the financial institution. 1.2 To ensure swift implementation of the international standards, the Federal Government pursued a three-stage approach. As a first step, in December 2009 some large German credit institutions and insurance companies committed themselves on a voluntary basis to orient their compensation systems to long-term business success. Second, the Federal Financial Supervisory Authority implemented the international rules by two circulars in anticipation of the draft law. As a third step, the draft law and two forthcoming implementing regulations will establish the legal basis for compensation systems at credit and financial services institutions as well as of insurance companies. 1.3 The draft law aims at establishing appropriate and transparent compensation systems that are oriented to the long-term development of the financial institution or company in question; these compensation systems will form part of the statutory minimum requirements for appropriate and effective risk management by institutions and insurance companies. The two forthcoming implementing regulations will lay down the detailed requirements for compensation systems, in particular regarding structure; monitoring and further development, including the decision-making processes; the composition of the compensation, the compensation parameters and the performance period; and disclosure. 1.4 In case of failure or impending failure of the financial institution to meet specific supervisory requirements, the Supervisory Authority has the power to prohibit the payment of variable compensation components or to limit them to a specific share in the annual result. Variable compensation components are concluded within the framework of contractual freedom, which is protected by the German Constitution. The draft law also covers agreements concluded before its entry into force insofar as entitlement to specific future compensation was contained in such agreements. In that regard, Section 45(1), first sentence, No 4, of the Law on banking prohibits payment of specific compensation components, but does not retrospectively affect compensation that has already been paid.

text: 2. General observations

text: 2.1 This draft law can be viewed as a logical step following (i) the compensation restrictions adopted for institutions benefiting from rescue measures by the Federal Government in the Law on financial market stabilisation and the Financial Market Stabilisation Fund Regulation , and (ii) the measures reforming financial supervision instruments in the Law on strengthening the supervision of the 5 6 financial market and insurance sector , on which the ECB was consulted . The draft law will put in place measures with a view to limiting incentives for risk-taking behaviour and ensure efficient and effective supervision on a long-term basis. 2.2 The ECB welcomes the draft legislation by the Federal Government which, together with the implementing regulations to be issued subsequently, will implement the international standards on compensation intended to enhance the stability and robustness of the financial system. In this respect the ECB emphasises the importance of fully aligning requirements relating to compensation practices and policies with the international standards on compensation, and with the envisaged revision of Directive

text: of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast) , introducing provisions aimed at ending practices that lead to excessive risk-taking. 2.3 The ECB understands that the draft law sets out the general terms of compensation, whereas the detailed rules are to be set out in the foreseen implementing regulations. These implementing regulations have not yet been subject to consultation of the ECB. The ECB encourages the consulting authority to consult it also on these implementing regulations in due time before their adoption. 2.4 The ECB draws the consulting authority’s attention to the need, in addition to adopting measures such as the draft law, to strengthen coordination of policy measures in response to the crisis .

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

text: Done at Frankfurt am Main, 14 May 2010. [signed]

text: The President of the ECB

text: Jean-Claude TRICHET


text: The first paragraph of point 2 of the Explanatory memorandum to the draft law.

text: See, e.g., paragraph 2.2 of Opinion

text: , paragraph 2.2 of Opinion

text: and paragraph 2.2 of Opinion

text: . 8 See paragraph 3.2.2 of Opinion

text: Also see paragraph 3 of

text: . 10 See paragraph 3.2.2 of

text: . 11 Fifth paragraph of point 2 of the Explanatory memorandum to the draft law.

title: Opinion of the European Central Bank of 18 May 2010 on the legal status of Lietuvos bankas’s assets, terms of office and remuneration of Board members, immunity of foreign reserves of foreign central banks and annual financial statements of Lietuvos bankas (CON/2010/42)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 18 May 2010 on the legal status of Lietuvos bankas’s assets, terms of office and remuneration of Board members, immunity of foreign reserves of foreign central banks and annual financial statements of Lietuvos bankas (

text: ) Introduction and legal basis

text: On 12 April 2010 the European Central Bank (ECB) received a request from the Lithuanian Ministry of Finance for an opinion on a draft law amending and supplementing Articles 1, 10, 17, 35 and 49 of the Law on Lietuvos bankas (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third indent of

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft law relates to Lietuvos bankas. 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: The aim of the draft law is to: (a) specify the legal status of Lietuvos bankas’s assets; (b) reduce the terms of office of the Board members of Lietuvos bankas (with the exception of the Chairman of the Board) from nine to six years; (c) amend and specify the remuneration of the Chairman and other Board members; (d) provide for not only the Deputy Chairmen but also other Board members to deputise for the Chairman of the Board; (e) allow other Board members to participate in the meetings of the Government in an advisory capacity; (f) provide explicitly for immunity from appropriation by third parties of foreign reserves of foreign central banks held in Lietuvos bankas; and (g) ensure that the use of the term ‘annual financial statements’ in the Law on Lietuvos bankas is in line with other national legislation.

text: 2. Legal status of Lietuvos bankas’s assets

text: 2.1 The ECB is aware of and concerned about the unclear legal status of Lietuvos bankas’s assets. The primary legal registration of Lietuvos bankas’s real property, after the restoration of the

text: independence of Lithuania, confirmed Lietuvos bankas’s ownership of its real property . However, the ECB understands that, after a unilateral change of the data in the State Real Property Cadastre and Register, the Lithuanian State is currently considered to be the legal owner of Lietuvos bankas’s real property and that there is a risk that Lietuvos bankas would only be able to dispose of its property with the approval of government authorities. This situation undermines both the institutional and the financial independence of Lietuvos bankas. Instructions from the state authorities to Lietuvos bankas or intervention by such authorities with regard to the assets held by Lietuvos bankas would be contrary to the principle of Lietuvos bankas’s institutional independence. Lietuvos bankas’s financial independence would also be undermined, since it would no longer be entirely free to decide on the allocation of its resources, and it could be unable to secure sufficient means for the performance of its tasks. 2.2 Under the current legal situation, it is unclear whether Lietuvos bankas could independently sell its real property and keep the proceeds from such sale. If Lietuvos bankas could not keep the proceeds, this would raise doubts as to whether the current legislation is compatible with the monetary financing prohibition laid down in Article 123(1) of the Treaty and supplemented by

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 . 2.3 The ECB understands that this problem has arisen because no national law explicitly specifies whether Lietuvos bankas has the right to own the assets, or whether Lietuvos bankas can only manage and hold such assets on trust. However, the ECB also understands that Lietuvos bankas has historically included these assets in its annual financial statements. 2.4 Therefore, the ECB welcomes the fact that it is explicitly specified in the Law on Lietuvos bankas that Lietuvos bankas legally owns the assets belonging to it, ensuring that the legal title and economic control of the assets will rest with the Lietuvos bankas. 2.5 The ECB would also welcome such specification of the legal status of Lietuvos bankas’s assets being applied by virtue of the law, i.e. without an additional requirement for Lietuvos bankas to apply to administrative authorities with regard to the change in the legal status of its real property, as provided for in Article 6 of the draft law. Otherwise, this requirement raises concerns about the institutional independence of Lietuvos bankas.

text: 3. Terms of office of Board members

text: 3.1 As noted in the ECB’s Convergence Report of May 2008 , when statutes of a national central bank (NCB) are amended, the amending law should safeguard the security of tenure of the Governor and of other members of decision-making bodies who may have to deputise for the Governor. The Treaty and the Statute of the European System of Central Banks and of the European Central Bank

text: (hereinafter the ‘Statute of the ESCB’) require such security of tenure. Article 14.2 of the Statute of the ESCB does not restrict the security of tenure of office to Governors, while Article 130 of the Treaty and Article 7 of the Statute of the ESCB refer to ‘members of the decision-making bodies’ of NCBs, rather than to Governors specifically . 3.2 The change in the length of the terms of office of Board members should not affect the length of the terms of office of the current members and the new provisions should only apply to future terms. In order to protect the personal independence of current Board members, the draft law should specifically provide that the reduction of the term of office only applies to future appointments of Board members, and that the current members will carry out their duties until the expiry of their full terms of office.

text: 4. Remuneration of Board members

text: 4.1 As noted in the Convergence Report of May 2008 under the heading ‘Autonomy in staff matters’, Member States may not impair an NCB’s ability to employ and retain the qualified staff necessary for the NCB to perform independently the tasks conferred on it by the Treaty and the Statute of the ESCB. In addition, an NCB may not be put into a position where it has limited or no control over its staff, or where the government of a Member State is in a position to influence the NCB’s policy on staff matters . This point, which is derived from the concept of financial independence, has been stressed by the ECB in several recent opinions on matters concerning national central bank staff . In its opinion on draft Italian legislation on the overall remuneration of NCB staff, the ECB also pointed out ‘that the ECB defines autonomously its staff’s conditions of employment and that this autonomy forms part of the ECB’s independence as guaranteed by

text: Article 108

text: [now

text: Article 130

text: ] of the Treaty and Article 36 of the Statute [of the ESCB]’ . 4.2 According to the current Article 10(7) of the Law on Lietuvos bankas, the Board of Lietuvos bankas decides the salaries of the Deputy Chairmen and Board members, taking into account the salary of the Chairman of the Board. The ECB notes that, according to the proposed amendment, the salaries of the Deputy Chairmen and Board members can not exceed 90 percent of the salary of the Chairman of the Board. The ECB also notes that the draft law proposes reducing the salary of the Chairman of the Board. 4.3 In order to protect Lietuvos bankas’s autonomy in staff matters, which is an aspect of the principle of central bank independence under Article 130 of the Treaty, the Lithuanian authorities have an obligation to ensure that any amendment to the legislative provisions on the determination of the

text: remuneration of Board members (including the Chairman) of Lietuvos bankas is decided in cooperation with Lietuvos bankas, taking due account of the views of Lietuvos bankas . 4.4 In addition, any amendment to the remuneration of Board members (including the Chairman) should not affect the terms under which the current Board members (including the Chairman) have been appointed and should only apply to future appointments .

text: 5. Immunity of foreign reserves of foreign central banks

text: The ECB welcomes the draft law provisions which explicitly protect the foreign reserves owned by foreign central banks and held in the accounts opened with Lietuvos bankas from appropriation by third parties, both judicial and extra-judicial, thereby ensuring greater legal certainty.

text: 6. Harmonisation of the term ‘annual financial statements’

text: 6.1 The consulting authority has noted that the amendment of Article 49 of the Law on Lietuvos bankas is editorial in nature, and is aimed at ensuring harmonisation of the use of the term ‘annual financial statements’ in the Law on Lietuvos bankas with other national legislation. 6.2 However, in the Law on Lietuvos bankas it should remain clear that the annual financial statements of Lietuvos bankas consist only of a balance-sheet, a profit and loss statement and explanatory notes (as specified in the current version of the Law), and that the proposed new wording should leave no room for ambiguity as regards the content of the annual financial statements.

text: Done at Frankfurt am Main, 18 May 2010. [signed]

text: The President of the ECB

text: Jean-Claude TRICHET


text: Published in Darjaven vestnik No 83, 21.9.1999. 2 Published in Darjaven vestnik No 85, 24.7.1998.

text: See the proposed amendment to Article 8(1) of the Law on the currency. 6 See the proposed amendment to Article 8(3) of the Law on the currency. 7 See the proposed amendment to Article 10(3) of the Law on the currency. 8 OJ L 318, 27.11.1998, p. 8. See the proposed amendment to

text: Article 17(2)

text: (a) of the Law on the currency.

title: Opinion of the European Central Bank of 21 May 2010 on statistics, cross-border cash movements and Българска народна банка (Bulgarian National Bank) competences (CON/2010/43)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 21 May 2010 on statistics, cross-border cash movements and Българска народна банка (Bulgarian National Bank) competences (

text: ) Introduction and legal basis

text: On 7 April 2010 the European Central Bank (ECB) received a request from the Bulgarian Minister of Finance for an opinion on a draft law amending the Law on the currency and the Law on measures against money laundering (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the first, second, third and fourth indents of

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

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft law relates to currency matters, means of payment, Българска народна банка (Bulgarian National Bank) (BNB) and the collection of statistics. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft law

text: The draft law will amend certain provisions of the Law on the currency, among other things to: (a) regulate the controls of cross-border cash movements between Bulgaria and other Member States or third countries; (b) introduce rules on the collection, maintenance and reporting of balance of payments and international investment position statistics, provide definitions of certain terms in this field, and extend BNB’s competences; (c) bring the terminology of the Law on the currency and the Law on measures against money laundering into line with the terminology of Bulgarian and Union legislation.

text: 2. Specific observations

text: 2.1 Controls of cross-border cash movements between Bulgaria and other Member States or third

text: countries

text: The ECB understands that the proposed amendments are aimed at aligning the Law on the currency with the provisions of

text: Regulation (EC) No 1889/2005

text: of the European Parliament and of the Council of 26 October 2005 on controls of cash entering or leaving the Community . 2.2 Balance of payments and international investment position statistics The ECB welcomes the proposed amendments to the Law on the currency and the aim of achieving the required level of statistical legal convergence with the relevant Union framework and the Sixth Edition of the IMF’s Balance of Payments and International Investment Position Manual. The ECB welcomes the removal of the reference to the quarterly reporting requirement in proposed Article 10(1) of the Law on the currency, in order to allow the monthly collection and processing of statistics. For the same reason, it is advisable to make the reporting requirement in relation to resident natural persons, under proposed Article 10(2) of the Law on the currency, more frequent than once a year. Therefore, the ECB suggest deleting the words ‘on an annual basis by 31 March each year’ in proposed Article 10(2) of the Law on the currency. 2.3 BNB’s competences concerning statistics The ECB welcomes the extension of BNB’s competences, which will entitle BNB to: (a) require from any person information relevant to the international investment position of Bulgaria ; (b) access public administration databases containing information necessary for the production, 6 7 development and distribution of European statistics ; (c) conduct other regular statistical surveys ; and (d) verify and compulsorily collect statistical information pursuant to

text: Article 6 of Council Regulation (EC) No 2533/98 of 23 November 1998

text: concerning the collection of statistical information by the European Central Bank .

text: This opinion will be published on the ECB’s website. Done at Frankfurt am Main, 21 May 2010. [signed]

text: The President of the ECB

text: Jean-Claude TRICHET


text: OJ L 189, 3.7.1998, p. 42. 2 See Opinion

text: . All opinions are published on the ECB’s website at www.ecb.europa.eu. 3 Article L. 142-3 of the French Monetary and Financial Code as amended by the draft law. 4 Article L. 631-1 of the French Monetary and Financial Code as amended by the draft law.

text: The General Council is also responsible for examining issues relating to the terms of employment of staff and approving the Banque de France’s balance sheet and accounts, allocating profits and fixing the State’s share of the dividend. See Article L.141-1 of the French Monetary and Financial Code. 6 Article L. 612-18 of the French Monetary and Financial Code. 7 The ECB’s Convergence Report 2008, p. 20. The principle of financial independence implies that a national central bank must have sufficient means not only to perform ESCB-related tasks but also its own national tasks (e.g. financing its administration and own operations).

title: Opinion of the European Central Bank of 21 May 2010 on certain provisions relating to the Banque de France (CON/2010/44)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 21 May 2010 on certain provisions relating to the Banque de France (

text: ) Introduction and legal basis

text: On 19 April 2010 the European Central Bank (ECB) received a request from the French Ministry for Economic Affairs, Industry and Employment for an opinion on certain provisions of a draft law ratifying Order No 2010-76 of 21 January 2010 merging the banking and insurance licensing and supervisory authorities (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third indent of

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

text: 1. Purpose of the draft law

text: 1.1 The draft law provides for the ratification of the order that created the new Prudential Control Authority . It modifies the composition of the Banque de France’s General Council (hereinafter the ‘General Council’) and provides that the Prudential Control Authority’s Vice-President becomes a member of the General Council . It also clarifies that the Banque de France, the Prudential Control Authority and the Financial Markets Authority are to cooperate with each other and that they may share the information necessary for the performance of their tasks .

text: 2. General observations

text: 2.1 The ECB understands that the reason for the Prudential Control Authority’s Vice-President becoming a member of the General Council is to strengthen the links between the Prudential

text: Control Authority and the Banque de France. The General Council is, inter alia, responsible for the administration of the Banque de France, managing the Banque de France’s activities other than those related to the European System of Central Banks (ESCB), deciding on the use of own funds, and drawing-up projected and amended expenditure budgets to ensure that the Banque de France is allocated the necessary resources for carrying out the tasks delegated to it due to its ESCB participation . The ECB understands that the General Council will therefore be the competent body within Banque de France for deciding on the allocation of additional contributions to the Prudential Control Authority . In this context, the ECB considers that the participation of the Prudential Control Authority’s Vice-President in the General Council does not affect the Banque de France’s financial independence . 2.2 The ECB welcomes the provision that provides for information sharing between the national supervisory authorities and the Banque de France for the performance of their tasks. The ECB understands that, prior to the establishment of the Prudential Control Authority and the setting-up of structured collaboration between the Prudential Control Authority and the Financial Markets Authority, the national supervisory authorities and the Banque de France did cooperate and were able to share the information required for their respective tasks. Information sharing remains crucial following the establishment of the Prudential Control Authority as an independent administrative authority closely connected to the Banque de France.

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

text: Done at Frankfurt am Main, 21 May 2010.

text: [signed]

text: The President of the ECB

text: Jean-Claude TRICHET