title: Opinion of the European Central Bank at the request of the Spanish Ministry of Economy and Finance under Article 109f (6) of the Treaty establishing the European Community (the "Treaty") and Article 5.3 of the Statute of the EMI on a draft law on the Introduction of the euro ("Umbrella law") (CON/98/31)

text: 1. On 8 June 1998 the ECB has received a request from the Spanish Ministry of Economy and Finance, through the Banco de España, for an opinion on a draft law on the Introduction of the euro (“Umbrella law”).

text: 2. In accordance with Article 109l (2) of the Treaty, the ECB has taken over the advisory functions of the EMI which has gone into liquidation upon the establishment of the ECB on 1 June 1998. The ECB’s competence to deliver an opinion is based on Article 1.1 of the Council Decision (

text: ) of 22 November 1993 on the consultation of the EMI by the authorities of the Member States on draft legislative provisions, as the Umbrella law contains rules which, in the context of national change-over legislation, deal with provisions that concern monetary law and have an impact on financial markets and, thus, fall within the consultative competence of the ECB.

text: 3. The aim of the Umbrella law is to supplement the EU Council Regulations 1103/97 of 17 June 1997 and 974/98 of 3 May 1998, concerning the introduction of the euro, providing with the adaptations of the national monetary system to the new situation, setting out general principles and rules applying to the changeover, during the transitional period, and at the end of the transitional period. It contains provisions regarding the relationship between the two currency units in the areas of accounting and reporting, re-denomination of the capital of companies, adaptations in the domain of administrative contracts and payments, taxation and social security rules, consumer protection and fixing of exchange rates. It also provides for the maintenance of the Madrid Interbank Offered Rate (MIBOR). One of the provisions of the Umbrella law is given the rank of “organic law” in order to make the necessary adaptations to the laws that have such a qualified rank. The Umbrella law is to be effective as from the 1 January 1999. The ECB welcomes the initiative of the Spanish Government to prepare for the timely implementation of the measures necessary or appropriate for the changeover to the single currency. The Umbrella law constitutes a comprehensive piece of legislative work which encompasses a wide range of topics and areas under an overall intention of (i) on the one hand, being pedagogic for the public, and (ii) on the other hand facilitating the smooth introduction of the euro. It moreover incorporates provisions fully in line with the Commission Recommendations of 1998 on “banking charges for conversion to the euro” and on “dual display of prices and other monetary amounts”. The assessment is therefore positive, and no major inconsistencies or problems are to be mentioned.

text: 4. The Umbrella law follows deliberately a legislative technique which includes the reproduction, where necessary, of provisions of the EU Council Regulations 1103/97 and 974/98. Whilst it is clear from the preamble of the draft and from the text of several provisions that the rules have a Community origin, the legislative technique of reproducing in a national act parts of Community legislation that has all the features of direct applicability and direct effect has been consistently critized by the European Court of Justice. Implementation by insertion into national legal acts of EU Council Regulations: - is not necessary, because of the direct applicability and direct effect of such Community acts (they are to be considered a part of the legal order of each Member State without any further national step); - it is inconvenient when the reproduction is not identical to the wording of the Community regulations, since it may jeopardise the simultaneous and uniform application of those regulations in the whole of the Community (

text: Case 39/72

text: [1973] E.C.R. 101); - it may cast doubts about the place that the provision has in the hierarchy of sources, appearing to the reader as if it were a national legal source, thus interfering with the right of the Community to autonomously amend its legislation from time to time. The technique of incorporating Community provisions in a national act may be acceptable when: - the national laws incorporate some elements of Community regulations for the sake of coherence and in order to make them comprehensible to the persons to whom they apply (

text: Case 272/83

text: [1985] E.C.R. 1057), but only if the Community nature of a legal rule is clearly shown or disclosed to those subject to it (

text: Case 34/73

text: [1973] E.C.R. 981); - the Community provision leaves room for interpretation and demands a national supplementary act specifying a solution where a certain discretion is given to the national legislator (direct effect requires clarity, precision and unconditionality of the Community provision). The above considerations have specific cases of application: - Article 2 of the Umbrella law reproduces parts of Article 1 of the EU Council Regulation 974/98, but it has added to the scope of the term “legal instruments” the meaning of “entries in official registries”; whilst there is no objection in the substance, the reservations described above concerning the legislative technique of the Umbrella law would recommend that the text reproduces remains identical to the Community text. -

text: Article 3(2)

text: , last sentence, of the Umbrella law, reproduces in an imperfect manner the second paragraph of

text: Article 105

text: a(1) of the Treaty; in particular, the name of the centimal subdivision of the euro is “cent”; whilst the Preamble of the EU Council Regulation 974/98 permits the “use of variants in common usage in the Member States”, such permission refers to common usage and not to legal designation (however, legal use of the term “céntimo” might be permitted when employed as the equivalent for the English term “hundredth” of an euro, but not as legal denomination of “cent”; see Arts. 10.1 and 15.3 of the Umbrella Law). The above considerations are here also applicable. - The third paragraph of Article 5 of the Umbrella law reproduces imperfectly Article 2 of the EU Council Regulation 1103/97; the above considerations are here also applicable. - Article 7 of the Umbrella law reproduces with different wording Article 6 (2) of EU Council Regulation 974/98. Whilst it may be said that the draft article improves the Community text, the above considerations would warrant identical wording or deletion. - Article 9 of the Umbrella law re-states the principle of contract continuity which is enshrined in Article 3 of the EU Council Regulation 1103/97; whilst it may be said that the draft article improves the Community text, the above considerations would warrant identical wording or deletion. - Article 10 of the Umbrella law reproduces with slight differences the text of Article 5 of the EU Council Regulation 1103/97. Whilst it may be said that the draft article improves the Community text, the above considerations would warrant identical wording or deletion. - Article 11 of the Umbrella law reproduces partially one of the definitions in Article 1 of the EU Council Regulation 974/98, and states that the monetary regime during the transitional period is governed “according to the provisions of this chapter”, with no reference whatsoever to the Community regulations; it is recommended that such reference is clearly made. - Article 13(1) of the Umbrella law reproduce with different wording Article 8(1) of the EU Council Regulation 974/98. Whilst it may be said that the draft article improves the Community text, the above considerations would warrant identical wording or deletion. - Article 13(2) of the Umbrella law reproduce with different wording Article 8(3) of the EU Council Regulation 974/98. Whilst it may be said that the draft article improves the Community text, the above considerations would warrant identical wording or deletion.

text: 5. The ECB welcomes and assesses positively the rules contained in the Umbrella law about redenomination of securities. However, Article 15.5 of the Umbrella law, concerning the redenomination of the outstanding public debt in foreign currency, issued according to foreign law, identifies the currency of issuance (lex monetae) and not the governing law (lex contractus) as “critère de rattachement” for re-denomination purposes. Although the normal case will be of both lex monetae and the lex contractus coinciding, it is worth mentioning that other Member States having introduced changeover legislation generally refer to the lex contractus as the only relevant connecting point.

text: 6. The ECB welcomes the prohibition of banking charges and fees for the final exchange of banknotes, stated in Article 23 of the Umbrella law.

text: Article 31

text: refers to the Madrid Interbank Offered Rate (MIBOR). It distinguishes between different uses of MIBOR. Paragraph one refers to references to the MIBOR in mortgage contracts and states that, as long as technical or market practices do not impede this publication, the MIBOR will continue to be published to ensure continuity of contracts in the mortgage area. Should MIBOR not be available any more, the Minister of Economy and Finance would determine a substitute, with a view to creating the most similar rate in terms of calculation procedures. Most Member States will cease to elaborate local reference interest rates for money markets, and euro-wide rates will replace them. The continuation of the MIBOR in Spain is not in line with the criteria that other participating Member States will follow, aimed at ensuring the unity of the money market in the euro area. However, this continuation may be justified by its limited target, namely the continuity of outstanding contracts in the mortgage industry, and protection of consumers.

text: 8. For contracts other than mortgage loans, Article 31 of the Umbrella law states that the Ministry of Economy and Finance will either fix a new calculation formula or determine a new reference rate which will replace the MIBOR, provided that the MIBOR looses its economic meaning and the parties in the contract do not replace it by consensual agreement with a new rate. The law adds that, if these conditions are respected, parties will not be entitled to request courts to unilaterally rescind their obligations because of the substitution of MIBOR. The ECB strongly recommends that the EURIBOR be named as the interbank rate which best approximates the functions of the MIBOR in an euro area-wide money market.

text: 9. The ECB requests that it be consulted with respect to any royal decree and/or ministerial order to be enacted pursuant to the Umbrella law.

text: 10. The ECB authorises the publication of this opinion at the discretion of the consulting authorities. In Frankfurt am Main, on 21 July 1998 On behalf of the President of the ECB [signed] The Vice-president, Mr. C. Noyer


publisher: Europeiska centralbanken

sprak: en

title: Opinion of the European Central Bank at the request of the German Ministry of Justice under Article 109f (6) of the Treaty establishing the European Community (the "Treaty") and Article 5.3 of the Statute of the EMI on a draft FIBOR ("Frankfurt Interbank Offered Rate") Transition Regulation (CON/98/32)

serie: con

text: 1. On 29 May 1998 the EMI has received a request from the German Ministry of Justice for an opinion on a draft “FIBOR” (“Frankfurt Interbank Offered Rate”) Transition Regulation.

type: stycke

text: ) of 22 November 1993 on the consultation of the EMI by the authorities of the Member States on draft legislative provisions, as the regulation contains rules which, in the context of national change-over legislation, deal with provisions that have an impact on financial markets and, thus, fall within the consultative competence of the ECB.

text: 3. The aim of the draft regulation is to provide for the replacement of the FIBOR with the interest rate that most closely corresponds to its function. Reference variables for interest rates and other services which refer to the FIBOR for loans of one to twelve-month funds shall be replaced by the “Euro Interbank Offered Rates” (EURIBOR) for loans of one to twelve-month funds as fixed for the respective maturities. Reference variables for interest rates and other services which refer to the FIBOR for overnight loans shall be replaced by the “Euro Overnight Index Average” (EONIA). Furthermore, provisions are made for the replacement of the socalled “old FIBOR” for three-month and for six-month funds. The legal basis for the draft regulation is to be found in §3, paragraph 2, No. 2 of the Discount Rate Transition Act.

text: 4. The Discount Rate Transition Act was part of the Act on the Introduction of the Euro, on which the European Monetary Institute has given its opinion, dated 16 December 1997 (CON/97/24). In this opinion, the EMI stated it “favoured a rate representing the whole euro area as it is of the opinion that only this could have a corresponding function in the third stage to that performed at the moment by the FIBOR in relation to the Deutsche Mark”. In line with this, the ECB welcomes the approach taken in the draft regulation and considers it to be a relevant contribution for the change-over to Monetary Union. - 2 -

text: 5. It should be noted that in the Explanatory Memorandum to the draft regulation on § 2, paragraph 1, first sentence, reference is made to the EURIBOR which should be a reference rather to EONIA. The ECB has no objection to this opinion being made public. 22 June 1998

type: vagledning

utgivare: ecb


title: Opinion of the European Central Bank at the request of the Italian Ministry of the Treasury, Budget and Economic Planning under Articles 109f (6) and 109l (2) of the Treaty establishing the European Community (hereinafter referred to as the "Treaty"), Article 5.3 of the Statute of the European Monetary Institute and Council Decision 93/717/EC of 22 November 1993 on a draft legislative decree implementing Article 108 of the Treaty concerning the Ufficio Italiano dei Cambi (hereinafter referred to as the "Draft Legislative Decree") (CON/98/35)

text: 1. On 10 July 1998 the European Central Bank (hereinafter referred to as the “ECB”) received a request for an opinion from the Italian Ministry of the Treasury, Budget and Economic Planning on the Draft Legislative Decree. An explanatory note was also submitted to the ECB. This opinion is based on the English translation of the Draft Legislative Decree submitted to the ECB by the consulting authority.

text: 2. In accordance with Article 109l (2) of the Treaty, the ECB has taken over the advisory functions of the European Monetary Institute (hereinafter referred to as the “EMI”), which went into liquidation upon the establishment of the ECB on 1 June 1998. The ECB’s competence to deliver an opinion is based on Article 1.1, second indent, of the Council Decision (

text: ) of 22 November 1993 on the consultation of the EMI by the authorities of the Member States on draft legislative provisions, as the Draft Legislative Decree contains provisions concerning the status and powers of the national central bank. In accordance with Articles

text: and

text: , second indent, of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter referred to as the “Statute”), this Opinion has been adopted by the Governing Council with the contribution of the General Council.

text: 3. The ECB considers the Draft Legislative Decree to be another step towards ensuring full compliance with the Treaty and the Statute. By cutting the remaining links between the Ufficio Italiano dei Cambi (hereinafter referred to as the “UIC”) and the Italian Ministry of the Treasury, Budget and Economic Planning and by making it clear in its organisational structure that the UIC is an instrumental entity of the Banca d’Italia, the Draft Legislative Decree eliminates from the Italian legal system those provisions which could be seen to jeopardise the independence of the Banca d’Italia when holding and managing the Italian official foreign reserves, where this independence is required by Article 107 of the Treaty. However, the ECB regrets the fact that the obligation to implement

text: Article 108

text: in respect of the UIC was not fulfilled by the date of the establishment of the European System of Central Banks (hereinafter referred to as the “ESCB”).

text: 4. With regard to the new organisational structure of the UIC, the ECB welcomes the objective of

text: Article 2.1

text: , which establishes the legal nature of the UIC as an instrumental entity of the Banca d’Italia to which the latter assigns implementation tasks. However, the wording of

text: Article 2.1

text: and its title in particular give the wrong impression that the UIC has a role and tasks of its own within the ESCB. On the contrary, the general principle is that the tasks assigned to the ESCB by the Treaty and the Statute have to be fulfilled exclusively by the ECB and by the national central banks (hereinafter referred to as the “NCBs”). Even though the UIC is an entity entirely controlled by the Banca d’Italia, it is the Banca d’Italia which is responsible for fulfilling the obligations arising from the Treaty and the Statute or from guidelines and instructions issued by the ECB. Therefore, the Draft Legislative Decree cannot directly assign the task of implementing ECB guidelines and instructions on the management of official foreign reserves to the UIC, since the Treaty assigns this task to the Banca d’Italia. To better reflect this situation, the ECB suggests that the reference to the ESCB in the title of

text: Article 2

text: be deleted (in addition to the fact that the second and third paragraphs do not refer to ESCB tasks) and that the first paragraph be reworded.

text: 5. The ECB takes note of Article 3 of the Draft Legislative Decree, which gives the Governor of the Banca d’Italia the exclusive power to appoint the Board of Directors of the UIC and which applies to the members of the Board of Directors the same criteria as those which are applicable to the members of the Board of Directors of the Banca d’Italia to protect their independence from external interference. However, the protection they enjoy against revocation, combined with their number, seems to conflict with the principle of instrumentality: in the event of a divergence of views between the Banca d’Italia and the UIC, the former has no means by which to impose its will on its instrumental entity. This outcome would render the assignment of implementing functions for the ESCB to the UIC unacceptable. The number of Board members should therefore be modified in order to grant the Banca d’Italia effective control over its instrumental entity.

text: 6. Moreover, the ECB recognises that it will normally be within the powers of the Banca d’Italia to comply with its obligations to the ECB through its instrumental entity. However, one exception to this general rule relates to the management of the ECB’s own foreign reserves. The ECB currently proposes the appointment of the Banca d’Italia (and all other participating NCBs) to act as its agent for the management of its foreign reserves. If the Banca d’Italia wishes to request that this agency function be delegated to the UIC, the ECB will at least wish to review the terms of the agreement between the Banca d’Italia and the UIC as mentioned in

text: Article 2.1

text: Article 2.1

text: also needs to be reworded from the point of view of the collection of statistical information. In fact, the reference to “gathering data on foreign exchange for fact finding and statistical purposes” might cause difficulty in the euro area. A clear reference to “balance of payments and international investment position statistics” would clarify the concept and comply with the Treaty.

text: 8. The ECB welcomes

text: Article 4

text: , which provides for the treatment of the Balance Sheet of the UIC to be the same as that foreseen for the Balance Sheet of the Banca d’Italia, in accordance with Article 27 of the Statute, and for the Banca d’Italia to be responsible for the profits and losses of the UIC. This financial regime makes it clear that the UIC is in fact operating as an instrumental entity of the Banca d’Italia, which will even provide the Balance Sheet of the UIC as an annex to its Balance Sheet.

text: 9. With regard to the functions that the UIC continues to perform, the ECB notes that such tasks, which concern anti-money laundering measures, the combating of usury, and the transparency and stability of financial intermediaries, are of limited scope in the spirit of

text: Article 14.4

text: . In this respect, the ECB understands that the “highest supervision of the Ministry of the Treasury, Budget and Economic Planning” (

text: Article 2.2

text: ) consists only in the right to receive periodic reports by the UIC (

text: Article 2.2

text: , last sentence) and excludes any right of the Ministry of the Treasury, Budget and Economic Planning to interfere in the activities of the UIC. This is confirmed by

text: Article 5.2

text: , last part, of the Draft Legislative Decree.

text: 10. The ECB confirms that it has no objection to this Opinion being made public by the competent Italian authorities at their discretion. Done at Frankfurt am Main on 31 July 1998. For the President of the ECB (signed)

type: rubrik

text: Christian Noyer Vice-President


title: Opinion of the European Central Bank at the request of the Portuguese Ministry of Finance under Articles 109f (6) and 109l (2) of the Treaty establishing the European Community (hereinafter referred to as the "Treaty"), Article 5.3 of the Statute of the European Monetary Institute and Council Decision 93/717/EC of 22 November 1993 on a draft Decree-Law containing measures adapting several Portuguese legislation to the introduction of the euro (CON/98/36)

text: 1. On 23 July 1998 the European Central Bank (hereinafter referred to as the “ECB”) received a request for an opinion from the Portuguese Ministry of Finance on a draft Decree-Law containing measures adapting several Portuguese legislation to the introduction of the euro. An explanatory note was also submitted to the ECB. This opinion is based on the English translation of the Draft Legislative Decree submitted to the ECB by the consulting authority.

text: 2. In accordance with Article 109l (2) of the Treaty, the ECB has taken over the advisory functions of the European Monetary Institute (hereinafter referred to as the “EMI”), that went into liquidation upon the establishment of the ECB on 1 June 1998. The ECB’s competence to deliver this opinion is based on Article 1.1, second indent, of the Council Decision (

text: ) of 22 November 1993, as the draft Decree-Law under consultation contains rules which, in the context of national change-over legislation, deal with provisions related to monetary law that have an impact on financial markets and, thus, fall within the consultative competence of the ECB. In accordance with Articles

text: and

text: , second indent, of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter referred to as the “Statute”), this Opinion has been adopted by the Governing Council with the contribution of the General Council.

text: 3. The aim of the Decree-Law is to supplement the EU Council Regulations 1103/97 of 17 June 1997 and 974/98 of 3 May 1998, concerning the introduction of the euro, providing with the adaptations of the national civil, commercial and economic law, setting out general principles and rules applying to the changeover, during the transitional period, and at the end of the transitional period. In section 1 it contains provisions dealing with changes in the Civil Code (Código Civil), in the Commercial Companies Code (Código das Socidedades Comerciais), in the Co-operative Code (Código Cooperativo), in the Decree-Law no. 248/86, of 25 August (individual establishment with limited liability), in the Stock Market Code (Código do Mercado de Valores Mobiliários) and in the Decrees-Law no. 125/90 of 16 April (mortgage bonds), 408/91 of 17 October (short-term bonds) and 181/92 of 22 August (commercial paper). Section 2 deals specifically with re-denomination of transferable securities, section 3 with redenomination of direct public debt, section 4 with taxation and public finance law and section 5 with the entry into force and transitional provisions. The Decree-Law is to be effective as from the 1 January 1999 and a number of transitory rules are adopted in line with the transitional provisions set out in the EU Council Regulation 974/98 of 3 May 1998.

text: 4. The ECB welcomes the initiative of the Portuguese Government to prepare for the timely implementation of the measures necessary or appropriate for the changeover to the single currency both in the private and in the public sector. The draft Decree-Law constitutes a comprehensive piece of legislative work which encompasses a wide range of topics and areas under an overall intention of facilitating the smooth introduction of the euro in the Portuguese legal system and in the Portuguese securities market. It introduces a simple administrative procedure and no additional costs for companies re-denominating their share capital into euro from the start of Stage Three. Moreover, the possibility to re-denominate private bonds is foreseen, provided that the same method is retained as for the re-denomination of outstanding public debt. This is a helpful rule, providing for not preferential treatment of public securities. The assessment is therefore positive, and no major inconsistencies or problems are to be mentioned.

text: 5. The ECB welcomes and assesses positively the provisions contained in the Decree-Law, in particular the use of the “legal tender” technique as criterion for the denomination of capital stock, bonds and securities. This technique would be in line with EU Council Regulation 974/98 of 3 May 1998 by allowing a “dual” currency denomination of capital stock, bonds and securities, opening the way to a broad implementation of the “no compulsion, no prohibition” principle in the Portuguese legislation. Moreover, the change in article 406 of the Stock Market Code is clearly in line with flexibility in the settlement of market operations. It might be useful to confirm this interpretation in the explanatory note. In this sense, article 6 of the draft Decree- Law, amending article 406 (1) of the Stock Market Code (Código do Mercado de Valores Mobiliários), would be interpreted as allowing the negotiation, quotation and settlement in such dual legal tender currencies, as from the start of the transition period, of securities and shares denominated in euro and escudo. In practice, it would be possible to negotiate, quote and settle in euro securities and shares denominated in escudo, without re-denominating them (and, less important, vice versa). A different interpretation of article 406 (1) of the Stock Market Code (Código do Mercado de Valores Mobiliários), as amended by the draft Decree-Law, would be that securities in euro would be negotiated only in euro and securities in escudo only in escudo. The ECB considers that this interpretation would be contrasting with the EU Council Regulation 974/98 of 3 May 1998.

text: 6. The solutions envisaged in section 2 under the principles of freedom of initiative of the issuer, unity, information, simplification and neutrality for the re-denomination process are regarded as highly appropriate for re-denomination, hence they comply with the principles of legal certainty and respect for the holder’s economic position.

text: 7. The ECB also welcomes and assesses positively the rules for re-denomination of transferable securities that are deemed to be in line with the Commission Reports on the subject. The ECB notes that the possibility to introduce the “no par value principle” in Portuguese legislation was not retained (see

text: article 12

text: ), as it is the case in the other countries (e.g. Italy and Spain). Article 19 of the draft Decree-Law in considered an advisable measure as an incentive for the smooth introduction of the euro in the life of the economic agents.

text: 8. The ECB confirms that it has no objection to this Opinion being made public by the competent Portuguese authorities at their discretion. Done at Frankfurt am Main on 7 August 1998. For the President of the ECB [signed]

text: ___________________ Otmar Issing


title: Opinion of the European Central Bank at the request of the Minister of Finance of the Netherlands under Articles 109 l(2) and 109 f(6) of the Treaty establishing the European Community (hereinafter referred to as the "Treaty") and Article 5.3 of the Statute of the European Monetary Institute (hereinafter referred to as the EMI) on a draft legislative proposal to amend the Dutch Central Bank Act 1998 (CON/98/38)

text: 20 August 1998

text: OPINION OF THE EUROPEAN CENTRAL BANK at the request of the Minister of Finance of the Netherlands under Articles 109 l(2) and 109 f(6) of the Treaty establishing the European Community (hereinafter referred to as the “Treaty”) and Article 5.3 of the Statute of the European Monetary Institute (hereinafter referred to as the EMI) on a draft legislative proposal to amend the Dutch Central Bank Act 1998. (CON/98/38)

text: 1. On 27 July 1998 the European Central Bank (hereinafter referred to as the “ECB”) received a request from the Minister of Finance of the Netherlands for an opinion on a draft legislative proposal to amend the Dutch Central Bank Act 1998 (hereinafter referred to as the “draft Act”).

text: 2. In accordance with Article 109 l(2) of the Treaty, the ECB has taken over the advisory functions of the EMI, which went into liquidation upon the establishment of the ECB on 1 June 1998. The ECB’s competence to deliver an opinion is based on Article 1.1, second indent, of the Council Decision (

text: ) of 22 November 1993 on the consultation of the EMI by the authorities of the Member States on draft legislative provisions, as the draft Act contains provisions concerning De Nederlandsche Bank and its Governor. In accordance with Articles 12.4 and 47.1 of the ESCB Statute, this opinion has been adopted by the Governing Council with the contribution of the General Council.

text: 3. The ECB notes with satisfaction that the draft Act follows up on issues raised in the EMI’s March 1998 report prepared under

text: Article 109

text: j of the Treaty (hereinafter referred to as the “Convergence Report”). In this Report (in particular pages 333 and 334), the EMI mentioned that

text: Article 3

text: , section 1, introduction and paragraph (a) of the Central Bank Act 1998 contained an imperfection. This Article states that the “Bank co-defines” (and executes) the ESCB’s monetary policy rather than its Governor whose unique position in this respect has to rather implicitly be derived from references to the Bank’s integration in the ESCB (in the Central Bank Act 1998) and to the Governor’s dual capacity as Governor and as member of the ECB’s Governing Council and General Council (in the Bank’s Articles of Association). The draft Act corrects this situation through an amendment of

text: Article 3

text: and an addition to

text: Article 12

text: Article 3

text: (draft) now states that the “Bank contributes (in Dutch: “draagt bij”) in the framework of the ESCB to the definition” (in Dutch: “het bepalen”) (and execution) of the ESBC’s monetary policy. The addition to

text: Article 12

text: states that the Bank’s Board of Directors with regard to the performance of ESCB-related tasks shall “respect” (in Dutch: “in acht nemen”) the capacity of its Governor as member of the Governing Council and the General Council of the ECB. This drafting accommodates the concerns raised in the EMI’s Convergence Report with regard to Article 3 of the Central Bank Act 1998, it being understood that the competence for monetary policy in the ESCB rests exclusively with the Governing Council of the ECB.

text: 4. Finally, the draft Act also introduces, in

text: Article 19

text: , an obligation for the Bank’s Governor to appear in Second Chamber and/or the Senate if so requested. In accordance with the EMI’s Convergence Report, such dialogue between NCBs and their respective political authorities, even when based on statutory obligations to provide information and exchange views, is not incompatible with the Treaty and the ECB Statute provided that: - this does not result in interference with the independence of the members of the decisionmaking bodies of NCBs; - the ECB’s competences and accountability as well as the special status of a governor in his/her capacity as a member of its decision-making bodies are respected; and - confidentiality requirements resulting from Statute provisions are observed The first concern is met through an explicit reference in Article 19 of the draft Act to Article 107 of the Treaty, the second concern through an explicit recognition in

text: Article 1

text: , section 2, of the Central Bank Act 1998 of the Bank’s and its Governor’s integration in the ESCB, and the third concern through an explicit reference in Article 19 of the draft Act to Articles 10.4 and 38 of the ECB Statute.

text: 6. The ECB confirms that it has no objection to this opinion being made public by the competent Dutch authorities at their discretion. Done at Frankfurt am Main on 20.08.1998 The President of the ECB [signed] ____________________ Willem F. Duisenberg


title: Opinion of the European Central Bank at the request of the Luxembourg Minister for Relations with Parliament under Articles 109l(2) and 109f(6) of the Treaty establishing the European Community (hereinafter referred to as the "Treaty") and Article 5.3 of the Statute of the European Monetary Institute (hereinafter referred to as the "EMI") on : 1) a law proposal concerning the monetary status and the Banque centrale du Luxembourg, and 2) a law proposal concerning the creation of a commission charged with the surveillance of the financial sector (CON/98/39)

text: OPINION OF THE EUROPEAN CENTRAL BANK at the request of the Luxembourg Minister for Relations with Parliament under Articles 109l(2) and 109f(6) of the Treaty establishing the European Community (hereinafter referred to as the “Treaty”) and Article 5.3 of the Statute of the European Monetary Institute (hereinafter referred to as the “EMI”) on : 1) a law proposal concerning the monetary status and the Banque centrale du Luxembourg, and 2) a law proposal concerning the creation of a commission charged with the surveillance of the financial sector (CON/98/39). CON/98/39

text: 1. On 6 August 1998 the European Central Bank (hereinafter referred to as the “ECB”) received a request from the Luxembourg Minister for Relations with Parliament for an opinion on 1) a law proposal concerning the monetary status and the Banque centrale du Luxembourg (hereinafter referred to as “Law Proposal 1”), and 2) a law proposal concerning the creation of a commission charged with the surveillance of the financial sector (hereinafter referred to as “Law Proposal 2”).

text: 2. In accordance with Article 109l (2) of the Treaty, the ECB has taken over the advisory functions of the EMI, which went into liquidation upon the establishment of the ECB on 1 June 1998. The ECB’s competence to deliver an opinion on Law Proposal 1 is based on Article 1.1, second indent, of the Council Decision (

text: ) of 22 November 1993 on the consultation of the EMI by the authorities of the Member States on draft legislative provisions. The ECB’s competence to deliver an opinion on Law Proposal 2 is based on

text: Article 1.1

text: , fifth indent, of the Council Decision (

text: ) of 22 November 1993 on the consultation of the EMI by the authorities of the Member States on draft legislative provisions. In accordance with Articles

text: and

text: , second indent, of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter referred to as the “Statute”), this Opinion has been adopted by the Governing Council of the ECB with the contribution of the General Council of the ECB.

text: 3. The ECB notes that the objective of Law Proposal 1 is to address, in the perspective of Article 108 of the Treaty, the imperfections in Luxembourg monetary law identified by the EMI in its Convergence Report of March 1998, prepared under

text: Article 109

text: j of the Treaty (hereinafter referred to as the “Convergence Report”). At the same time, Law Proposal 1 takes account of the decision by the Luxembourg Government to assign the task of prudential supervision of the financial sector to an authority which is distinct from the Banque centrale du Luxembourg, i.e. the “Commission de surveillance du secteur financier”. According to the Explanatory Memorandum, such decision aims at safeguarding the independence of the Banque centrale du Luxembourg (hereinafter referred to as the “BCL”) by avoiding conflicts of interest which might otherwise arise between monetary tasks and a mission of prudential supervision.

text: 4. The ECB notes with satisfaction that Law Proposal 1 addresses the issues raised in the Convergence Report with respect to Luxembourg. As such: - Independence: 1. Institutional independence: The scope of Art. 5.2 of Law Proposal 1, which reproduces the first part of the prohibition on seeking or taking instructions as laid down in Art. 107 of the Treaty, is no longer limited to the monetary realm but extends to all functions of the ESCB; 2. Personal independence: Art. 12.3 of Law Proposal 1 provides that the Government, having previously consulted the Council of the BCL, may propose to the Grand-Duc that a member of the Management of the BCL be relieved of his/her functions if he/she no longer fulfils the conditions required for the performance of his/her duties or if he/she is found guilty of serious misconduct. Such a provision reproduces the literal grounds for dismissal as laid down in Art. 14.2 of the Statute; Art. 7.3 of Law Proposal 1 addresses the concern raised in the Convergence Report with respect to conflicts of interest. The new article stipulates that no one can be appointed a member of the Council of the BCL or remain member of the Council of the BCL if he/she has professional responsibilities outside the BCL which are in conflict with the requirements of Art. 5.2 or with the provisions concerning professional secrecy applicable to the ESCB. - Legal integration in the ESCB: 1. Statutory objective: Art. 2 of Law proposal 1 now reflects the primacy of the ESCB’s statutory objective and confirms the integration of the BCL into the ESCB. The article provides that the BCL will form an integral part of the ESCB and that it will act in accordance with the guidelines and instructions of the ECB. The article further states that the principal mission of the BCL is to participate in the execution of the tasks of the ESCB with a view to attaining the objectives of the ESCB. The BCL will pursue its secondary objectives only to the extent that their pursuit is compatible with its principal mission; 2. Tasks: The new Art. 6 of law Proposal 1 no longer contains any allocation of competences to the Council of the BCL beyond the scope of the execution of monetary policy, as defined by the Governing Council of the ECB and implemented by the Executive Board of the ECB; Art. 17-20 which regroup the provisions pertaining to the issuance of monetary tokens address the comments contained in the Convergence Report and, consequently, reflect the prerogatives of the ECB in this field; 3. Instruments: Art. 22-23 define the BCL’s instruments in the monetary field in relation to BCL’s objective and missions which, in accordance with Art. 2 of Law Proposal 1, is to participate in the execution of the missions of the ESCB with a view to attaining the objectives of the ESCB; Art. 25 of Law Proposal 1 no longer makes reference to the provision of “credit facilities” but only to the provision of “facilities” to ensure efficient and sound clearing and payment systems. In general the ECB welcomes Law Proposal 1 as it remedies, in the perspective of Article 108 of the Treaty, the imperfections in Luxembourg monetary law identified by the EMI in its Convergence Report. Moreover, the ECB notes with satisfaction that, in the perspective of Art. 105a of the Treaty and Art. 16 of the Statute, Art. 36(2) of Law Proposal 1 abrogates (on 1 January 1999) all statutory and regulatory provisions conferring legal tender to the banknotes issued by the BIL (Banque Internationale à Luxembourg). Notwithstanding the foregoing, the ECB would like to invite the Luxembourg legislator to take account of the following comments and suggestions: - in respect of article 2 of Law Proposal 1, paragraph (3) states that the performance by the BCL of its secondary functions is subject to compliance with the “BCL’s principal mission”. In order to bring such a stipulation more into line with Art. 14.4 of the Statute, the ECB would like to suggest that the current wording be revised so as to state that the performance by the BCL of its secondary functions is subject to compliance with the Treaty and the Statute; - in respect of the financial independence of the BCL: The ECB takes note of the fact that, in its start-up phase, the BCL will not have substantial reserves while at the same time it will be imperative for the BCL to dispose of an appropriate financial endowment sufficient to ensure the satisfactory performance of its tasks and the pursuit of its objectives resulting from participation in the ESCB. To this end the Luxembourg legislator may wish to bolster the BCL’s financial soundness, particularly in view of the new rule (laid down in Art. 31) concerning the transfer of the BCL’s net profit to the Luxembourg Treasury and owing to the absence of any provisions outlining the ways in which the BCL’s potential losses will be covered. On this subject, the ECB would also like to recall that the EMI, in its Convergence Report (p.295), stressed the importance of national central banks being in a position to avail themselves of the appropriate means to ensure that their ESCB-related tasks can be properly fulfilled. - in respect of Art. 7 and 12: The ECB would like to point out that Art. 108 of the Treaty, in combination with

text: Article 109

text: e (5) of the Treaty, require that central bank independence, including the personal independence of the members of the decisionmaking bodies of national central banks involved in the performance of ESCB related tasks, be achieved at the latest at the date of the establishment of the ESCB/ECB. This implies that the adoption itself of Law Proposal 1 might not affect the security of tenure of the present members of such bodies which would be incompatible with the Treaty; - in respect of Art. 13: In light of the reference to collegial decision taking, the ECB would like the personal independence of the “directeur général” of the BCL to be highlighted by starting this article with wording along the lines of (cf. Art. 6(a)): “Sans préjudice de l’indépendence du directeur général par rapport à toute instruction en sa qualité de membre du conseil des gouverneurs de la BCE et sans préjudice des dispositions relatives au secret professionnel applicables au SEBC…”; - in respect of Art. 23: The ECB questions whether the reference to measures of exchange controls in this article is appropriate; - in respect of Art. 32(1): The ECB is of the view that the last sentence of Art. 32(1) ought to recognise Community legislation as well as the competencies of the ESCB in this area;

text: 5. The ECB notes that the twofold objective of Law Proposal 2 is: 1) to create an authority which is distinct from the Banque centrale du Luxembourg, i.e. the “Commission de surveillance du secteur financier” and 2) to assign to such authority the tasks of i) the prudential supervision of credit institutions, other professionals in the financial sector, organisations of collective investment and exchanges, and ii) the surveillance of markets of financial assets. Law Proposal 2 thus achieves the separation of central banking and prudential supervision as well as the bringing together of public control attributions with regard to certain parts of the financial sector. The ECB welcomes Law Proposal 2 to the extent that it purports to increase the stability of financial institutions and markets. Notwithstanding the above-mentioned views, the ECB submits that it may be advisable, in order to avoid any misunderstanding, for Law Proposal 2 explicitly to exempt the BCL from supervision by the “Commission de surveillance du secteur financier”.

text: 6. The ECB confirms that it has no objection to this Opinion being made public by the competent Luxembourg authorities at their discretion. Done at Frankfurt am Main on 23 September 1998 The Vice-President of the ECB [signed] Christian Noyer


title: Opinion of the European Central Bank at the request of the French Minister of the Economy, Finance and Industry under Articles 109l (2) and 109f (6) of the Treaty establishing the European Community (hereinafter referred to as the "Treaty") and Article 5.3 of the Statute of the European Monetary Institute (hereinafter referred to as the "EMI") on a draft decree on the modernisation of the regulation of negotiable certificates of deposit, commercial paper and medium-term notes (hereinafter referred to as the "Decree") (CON/98/40)

text: 1. On 7 August 1998 the European Central Bank (hereinafter referred to as the “ECB”) received a request from the French Minister of the Economy, Finance and Industry for an opinion on a draft decree on the modernisation of the regulation of negotiable certificates of deposits, commercial paper and medium term notes (collectively referred to as “Titres de créances négociables” or “TCNs”).

text: 2. In accordance with Article 109l (2) of the Treaty, the ECB has taken over the advisory functions of the EMI, which went into liquidation upon the establishment of the ECB on 1 June 1998. The ECB’s competence to deliver an opinion on the Decree is based on Article 1.1, fifth indent, of the Council Decision (

text: ) of 22 November 1993 on the consultation of the EMI by the authorities of the Member States on draft legislative provisions, since the Decree contains rules that influence the stability of financial institutions and markets. In accordance with Articles

text: and

text: 3. The ECB notes that the objective of the Decree is to modernise the current regulation of TCNs. Indeed, the Decree aims at adapting the regulatory provisions applicable to TCNs to the regulatory framework established by the law 96-597 of 2 July 1996 on the modernisation of financial activities. The said law harmonises the status of market operators, distinguishes between regulated and over-the-counter markets, and makes provision for the right of - 2 - investment services to a European passport. Moreover, this adaptation is taken as an opportunity to modernise further the rules concerning the issuance of, and dealing in, TCNs in order to open this market to the largest extent possible to European intermediaries and investors and to make negotiable debt instruments attractive in the market for certificates of deposit, commercial paper and medium-term notes in euro. The Decree authorises credit institutions and investment firms incorporated in the European Economic Area and licensed by their respective national authorities to place and deal in TCNs as from 1 January 1999. In particular, credit institutions incorporated in other Member States participating to the euro area will be allowed, as from 1 January 1999, to issue certificates of deposit under the same conditions as French credit institutions. The Decree completes the list of issuers of negotiable debt instruments by including investment firms. In addition, the Decree abrogates all references to categories of institutions repealed by the law on the modernisation of financial activities: “maison de titres”, “agents des marchés interbancaires” and “sociétés de bourse”. The Decree also liberalises somewhat the framework for setting up the remuneration of TCNs and their maturity (the minimum maturity is now set at 1 day instead of 10 days), and requests depository functions to conform to the general regulations in this area. Finally, the Decree contributes to improving the availability of market data by requiring issuers to frequently submit to the Banque de France data both on amounts outstanding and on the early redemption and purchase of own issues.

text: 4. The ECB welcomes the proposal considering that it intends to enhance the French securities markets while maintaining their stability.

text: 5. The ECB confirms that it has no objection to this Opinion being made public by the competent French authorities at their discretion. Done at Frankfurt am Main on 4 September 1998 The Vice-President of the ECB [signed] Christian Noyer


title: Opinion of the European Central Bank at the request of the Banco de España under Articles 109l (2) and 109f (6) of the Treaty establishing the European Community (hereinafter referred to as the "Treaty") and Article 5.3 of the Statute of the European Monetary Institute (hereinafter referred to as the "EMI") on a draft Monetary Circular Letter amending the Spanish regime of minimum reserves for the two last months of 1998 (hereinafter referred to as the "Circular") (CON/98/41)

text: 1. On 13 August 1998 the European Central Bank (hereinafter referred to as the “ECB”) received a request from the Banco de España for an opinion on a draft Monetary Circular Letter amending the Spanish regime of minimum reserves for the two last months of 1998.

text: 2. In accordance with Article 109l (2) of the Treaty, the ECB has taken over the advisory functions of the EMI, which went into liquidation upon the establishment of the ECB on 1 June 1998. The ECB’s competence to deliver an opinion is based on Article 1.1 of the Council Decision (

text: ) of 22 November 1993 on the consultation of the EMI by the authorities of the Member States on draft legislative provisions, as the Circular contains rules on monetary policy instruments. In accordance with Articles

text: and

text: 3. The aim of the Circular is to prepare the system of minimum reserves (“coeficiente de caja”) for the situation in 1999, when minimum reserves will be imposed by the ECB. To that end, the Circular introduces two basic amendments: - the period for computing the amount of the minimum reserves is set at one month, instead of the current period of ten days; - the amount of the liability base is to be frozen at the amount existing in October 1998 and the corresponding data reporting is to be suspended for the last two months of the year. - 2 -

text: 4. The ECB welcomes the proposal, which is aimed at facilitating the changeover to the new regime for minimum reserves that will apply as from 1 January 1999.

text: 5. The ECB confirms that it has no objection to this Opinion being made public by the competent Spanish authorities at their discretion. Done at Frankfurt am Main on 8 September 1998 The President of the ECB [signed] ________________________ Willem F. Duisenberg


title: Opinion of the European Central Bank at the request of the Dutch Ministry of Finance under Articles 109l (2) and 109f (6) of the Treaty establishing the European Community and Article 5.3 of the Statute of the European Monetary Institute on a draft Act on the replacement of contractual reference rates of interest (CON/98/42)

text: 1. On 21 August 1998 the European Central Bank (ECB) received a request from the Dutch Ministry of Finance for an ECB Opinion on a draft Act (hereinafter referred to as the “draft Act”) providing for: - regulations regarding the replacement of contractual references to the Amsterdam Interbank Offered Rate (AIBOR) and to other reference rates of interest; and - an amendment to the Act on the Supervision of Securities Trade 1995 in connection with the participation of the Netherlands in Economic and Monetary Union.

text: 2. In accordance with Article 1091 (2) of the Treaty establishing the European Community (hereinafter referred to as the “Treaty”), the ECB has taken over the advisory functions of the European Monetary Institute (EMI), which went into liquidation upon the establishment of the ECB on 1 June 1998. The ECB’s competence to deliver an opinion is based on Article 1.1, fifth indent, of the Council Decision (

text: ) of 22 November 1993 on the consultation of the EMI by the authorities of the Member States on draft legislative provisions, as the draft Act contains provisions concerning the stability of financial markets and institutions. In accordance with

text: Article 17.5

text: , first sentence, of the Rules of Procedure of the ECB, this ECB Opinion has been adopted by the Governing Council of the ECB.

text: 3. The aims of the draft Act are twofold: - First, with a view to ensuring the continuity of contracts under Dutch law, it accommodates the need for replacement rates for those contracts which refer to rates which will disappear as a result of the start of Stage Three of Economic and Monetary Union (the Amsterdam Interbank Offered Rate (AIBOR), the fixed advance rate of De Nederlandsche Bank and the discount on promissory notes). The ECB takes note that the Dutch Government intends to replace AIBOR by EURIBOR, the future euro area-wide indicator of interbank rates (provided that the levels of the two rates are very similar). The ECB also takes note that the Dutch Government intends to replace references to the fixed advance rate of De Nederlandsche Bank and the discount on promissory notes by a reference to the most relevant ECB rate, with corrections for differences. The determination of reference rates is not binding; parties may agree between themselves to use other reference rates. Whatever the case, reference rates replacing the fixed advance rate and the discount on promissory notes will cease to exist on 1 January 2002 when parties to contracts are expected to have the conditions of those contracts adjusted to the new circumstances. Finally, the determination of reference rates by the Dutch Government does not constitute a ground for the termination or amendment of contracts (with the exception of the previous reference rates). - Second, by amending the Act on the Supervision of Securities Trade 1995, the draft Act removes any uncertainty about the legal validity/enforceability under Dutch law of repurchase agreements relating to securities. Such uncertainty stems from fears among financial market operators that repurchase agreements may not constitute a valid legal basis for the transfer of ownership in the light of the prohibition on the fiduciary transfer of property as laid down in Article 84(3) of Book 3 of the Dutch Civil Code. This is an obstacle to the development of a market of repurchase agreements which may be affected by Dutch law and, as far as the European System of Central Banks is concerned, to the application of repurchase agreements in the execution of monetary policy operations and within the framework of the TARGET system if they may be affected by Dutch law.

text: 4. The ECB welcomes the draft Act since it enhances the stability of financial markets and institutions and will serve to smooth the transition of the Netherlands from Stage Two to Stage Three of Economic and Monetary Union. The manner in which it is envisaged that the above aims will be achieved is consistent with existing Community legislation and practices adopted in Member States. The principle of the continuity of contracts was laid down in

text: Article 3 of Council Regulation (EC) No. 1103/97 of 17 June 1997

text: on certain provisions relating to the introduction of the euro, and measures similar to those which are currently contained in the draft Act have already been taken in other Member States. The ECB supports in particular that AIBOR will be replaced by EURIBOR which conforms with the ECB’s previous recommendations in this respect. As far as the removal of uncertainties about the legal validity/enforceability under Dutch law of repurchase agreements relating to securities is concerned, this in general reflects the widespread use of this instrument in the financial markets. In particular, the draft Act removes an obstacle faced by Dutch counterparties in, and for the mobilisation of Dutch collateral for, ESCB operations to the extent that they will be executed through repurchase agreements. In this connection, it is noted that Article 18.1 of the Statute of the European System of Central Banks and of the European Central Bank requires the ECB and the national central banks to obtain “adequate” collateral from counterparties, a requirement which cannot be fulfilled if the legal instrument through which collateral is to be provided would be invalid/unenforceable. In addition,

text: Article 9.1 of Directive 98/26/EC

text: of the European Parliament and of the Council of 10 May 1998 on settlement finality in payment and securities settlement systems makes provision for the insulation of rights of holders of collateral security and, in particular, protects the ECB and the national central banks from the effects of the insolvency of the provider, irrespective of the legal method used to establish such collateral. If the provision of collateral security as referred to in that Directive through repurchase agreements were to be legally invalid/unenforceable under Dutch law, this would undermine the spirit of Article 9.1 of the Settlement Finality Directive.

text: 5. The ECB confirms that it has no objection to this ECB Opinion being made public by the competent national authorities at their discretion. Done at Frankfurt am Main on 16 October 1998. The President of the ECB [signed] Willem F. Duisenberg


title: Opinion of the European Central Bank at the request of the Banque de France under Articles 109l (2) and 109f (6) of the Treaty establishing the European Community (hereinafter referred to as the "Treaty") and Article 5.3 of the Statute of the European Monetary Institute (hereinafter referred to as the "EMI") on a draft Decision of the Council for Monetary Policy of the Banque de France, completed by an Instruction of the Banque de France, amending the regime of minimum reserves in Metropolitan France for the period starting on 16 October 1998 and ending on 31 December 1998 (CON/98/43)

text: 1. On 8 September 1998 the European Central Bank (hereinafter referred to as the “ECB”) received a request from the Banque de France for an opinion on a draft Decision (hereinafter referred to as the “Decision”) of the Council for Monetary Policy of the Banque de France, completed by an Instruction (hereinafter referred to as the “Instruction”) of the Banque de France, amending the regime of minimum reserves in Metropolitan France for the period starting on 16 October 1998 and ending on 31 December 1998 .

text: 2. In accordance with Article 109l (2) of the Treaty, the ECB has taken over the advisory functions of the EMI, which went into liquidation upon the establishment of the ECB on 1 June 1998. The ECB’s competence to deliver an opinion is based on Article 1.1, second indent, of the Council Decision (

text: ) of 22 November 1993 on the consultation of the EMI by the authorities of the Member States on draft legislative provisions, as the Decision and Instruction contain rules on monetary policy instruments. In accordance with Articles

text: and

text: , second indent, of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter referred to as the “Statute”), this Opinion has been adopted by the Governing Council of the ECB with the contribution of the General Council of the ECB.

text: 3. The aim of the Decision is to prepare the system of minimum reserves in Metropolitan France for the situation in 1999, when minimum reserves will be imposed by the ECB. To that end and taking account of the Recommendation of the ECB of 7 July 1998 for a Council Regulation concerning the application of minimum reserves by the ECB, the Decision introduces the following amendments: - Institutions subject to reserve requirements: Institutions with total liabilities not exceeding 500,000,000 FF will loose their exemption from reserve requirements after 15 November 1998. In addition, an allowance of 1,000,000 FF to be deducted from the amount of the reserve requirement shall be granted to each institution; - Reserve basis and amount: The reserve basis is extended in accordance with the specifications set forth in the General Documentation. By way of transition: 1) liabilities vis-à-vis correspondents outside the euro area are excluded from the reserve basis for technical reasons, and 2) all outstanding debt securities, including those held by other credit institutions subject to reserve requirements, with initial maturity of less than two years, are taken into account for the application of the 2% reserve ratio; - Maintenance periods: Two maintenance periods are defined for the end of 1998: 1) from 16 October till 15 November, and 2) from 16 November till 31 December; - Reserve ratio and calculation of reserve requirements: The Council for Monetary Policy of the Banque de France decided to set a reserve ratio of 2% applicable to all liabilities included in the reserve basis and a reserve ratio of 0% applicable to repurchase agreements, deposits with agreed maturity over two years and debt securities with agreed maturity over two years. Reserves will be remunerated at a level which is the average of the 7 day fixed rate tender offers by the Banque de France for the relevant maintenance period. Such remuneration will be paid within a period of maximum two days following the last day of the maintenance period. - Sanctions: In case of non-compliance with minimum reserve requirements the Banque de France will levy a penalty interest fixed at 3% above the rate set by the Banque de France for repurchase agreements between 5 and 10 days. A higher penalty interest, with a maximum of 0,1% per day, may be used to sanction serious or repeated offences as well as deceptive declarations. The ECB understands that in Stage Three of Monetary Union the minimum reserves regime of the Banque de France will cease to extend to credit institutions established in Monaco. The ECB notes that Article 3 of the Instruction maintains a penalty for late data submission which is set at 10% above the reserve requirement applicable on the basis of the last available data. This rule appears less strict than the sanctions regime for infringement of reporting obligations that will be introduced in Stage Three. With respect to Annex 3 to the Instruction, the ECB deems it advisable to clarify that excess reserves will not be remunerated.

text: 5. The ECB confirms that it has no objection to this Opinion being made public by the competent French authorities at their discretion. Done at Frankfurt am Main on 23 September 1998 The Vice-President of the ECB [signed] C. Noyer


title: Opinion of the European Central Bank at the request of the Luxembourg Minister of Finance under Articles 109l (2) and 109f (6) of the Treaty establishing the European Community and Article 5.3 of the Statute of the European Monetary Institute on draft regulations by the "Institut belgo-luxembourgois du change" on the recording of foreign payments and on the establishment of the balance of payments (CON/98/45)

text: 1. On 15 September 1998 the European Central Bank (ECB) received a request from the Luxembourg Minister of Finance for an ECB Opinion on draft regulations by the “Institut belgoluxembourgois du change” (hereinafter referred to as “IBLC”) on the recording of foreign payments and on the establishment of the balance of payments (hereinafter referred to as the “Draft Regulations”).

text: 2. In accordance with Article 1091(2) of the Treaty establishing the European Community (hereinafter referred to as the “Treaty”), the ECB has taken over the advisory functions of the European Monetary Institute (EMI), which went into liquidation upon the establishment of the ECB on 1 June 1998. The ECB’s competence to deliver an opinion is based on Article 1.1, third indent, of the Council Decision (

text: ) of 22 November 1993 on the consultation of the EMI by the authorities of the Member States on draft legislative provisions, as the Draft Regulations contain provisions concerning the collection, compilation and dissemination of monetary, financial, banking and balance of payments statistics. In accordance with

text: Article 17.5

text: 3. The ECB notes that the objective of the Draft Regulations is to update the existing regulations of the IBLC regarding the collection of the statistical information necessary for the production of the balance of payments of the Belgian-Luxembourg Economic Union and the current account of Luxembourg.

text: 4. The ECB welcomes the Draft Regulations since the definitions and classification principles given in the proposed Draft Regulations are compliant with the IMF Balance of Payments Manual th (5 edition) released in October 1993 and the harmonisation proposals defined by the EMI. This relates in particular to the residence criterion, the principles underlying the classification of the resident entities, and the breakdown by instruments. At the same time, the ECB would like to put forward the following important technical points.

text: 5. In Draft Regulation L3, the definitions for a “paiement avec l’étranger” and for the “pays de la contrepartie non résidente” might be confusing. It is understood that the reporting of payments between residents, which are neither to be compiled within the balance of payments nor in the international investment position, may be requested for checking purposes. Nonetheless, it should be stressed that the corresponding data must be clearly isolated from those recorded in the statistics (see neutral codes in Annex 1 to proposed Draft Regulation L3).

text: 6. In Annex 1 of proposed Draft Regulation L3, options are included amongst portfolio investment, while other derivatives are recorded in another chapter, which is not fully compliant with the agreed harmonisation proposals on derivatives and might also be confusing. It has to be stressed that, since a change in international standards as defined by the IMF may be made in the near future, derivatives may soon have to be isolated as a separate item of the financial account.

text: 7. No specific information is requested in Draft Regulation L2 regarding transactions of Monetary Financial Institutions with their branches and subsidiaries abroad. This should not reduce the ability of the IBLC to identify transactions between direct investors and direct investment th enterprises, as requested in Chapter 18 of the 5 edition of the IMF Balance of Payments Manual.

text: 8. Article 15 of Draft Regulation L2 makes a special case of holding companies that follow the rules of the law of 31 July 1929. This special treatment is welcome as long as it allows the correct identification and recording of transactions with non-residents by this category of institutions.

text: 9. The annex of Draft Regulation L2 is not exactly identical to the annex of the Kingdom of Belgium’s Regulation B2. In particular, commercial loans are not distinguished, which may give rise to difficulties in establishing the quarterly breakdown on instruments (including trade credits) as requested by the EMI’s report entitled “Statistical Requirements for Stage Three of Monetary Union – Implementation Package” (July 1996), hereinafter referred to as “the Implementation Package”, approved by the ECB Governing Council in September 1998.

text: 10. Although the Implementation Package does not request any country breakdown, it states this question is not resolved yet, as regards the quarterly and annual balance of payments. In accordance with recent discussions on this topic, the ECB would be in favour of leaving open the possibility to request this kind of information from reporting agents. Draft Regulation L1 states in its

text: article 5

text: that residents will have to report this type of information to the credit institution in charge of the payments, and Draft Regulation L2,

text: article 7

text: paragraph 2 requests this information from credit institutions for their own transactions. However, it is noted that the information which credit institutions should report on their own assets and liabilities, as described in Article 17 of Draft Regulation L2, does not include such a country breakdown.

text: 11. The classification of the Monetary Financial Institutions (hereinafter referred to as “MFIs”) is important not only due to their role in the collection system in Luxembourg, but also for the sectoral breakdown requested for the quarterly and annual balance of payments and for the annual international investment position. The classification must comply with the definition of MFIs for statistical purposes and the criteria set out in Annex 4 of the General Documentation on ESCB monetary policy instruments and procedures published by the ECB in September 1998. A list of MFIs for statistical purposes is now available for information on the ECB’s internet site. In this regard, the branch of the National Bank of Belgium in Luxembourg will no longer exist as from the end of December 1998, which may be mentioned in the Draft Regulations. Financial services of Post and Telecommunications should not be considered as MFIs, but as part of the General Government sector. The sectoral breakdown (including the MFIs) applies to portfolio investment and other investment in the financial account. Moreover, the MU/non-MU split for direct investment abroad and for portfolio investment (assets and liabilities) is also a major requirement for the ECB’s “monthly key items”. The ECB is pleased to note that the economic and sectoral classifications given in Annex 1 and 2 to the proposed Draft Regulation L3 appear to be compliant with both requirements on sectoral breakdown and MU/non-MU split.

text: 12. The ECB is pleased to note that the timeliness required (Draft Regulation L1

text: article 5

text: paragraph 7, Draft Regulation L2

text: article 4

text: paragraph 1, Draft Regulation L4

text: article 3

text: , Draft Regulation L5

text: article 5

text: ) is fully compliant with the deadlines described in the Implementation Package, approved by the ECB Governing Council last September, for monthly, quarterly and annual balance of payments as well as for the annual international investment position.

text: 13. Article 2 of Draft Regulation L4 states that individual answers to the survey are not to be disseminated outside the IBLC and the “Service Central de la Statistique et des Etudes Economiques” (STATEC). This should not prejudice the possibility for the ECB to be communicated information made available to these institutions, under the conditions prescribed by Community law.

text: 14. Finally, the ECB notes that, as opposed to the project submitted recently by the Kingdom of Belgium, no mention has been made of the possibility of enforcing adequate verification. Such a regulation would in the view of the ECB be a useful means of ensuring the quality of the reporting on balance of payments transactions.

text: 15. The ECB confirms that it has no objection to this ECB Opinion being made public by the competent national authorities at their discretion. Done at Frankfurt am Main on 5 November 1998. The President of the ECB [signed] Willem F. Duisenberg


title: Opinion of the European Central Bank at the request of the French Ministry of Economics, Finance and Industry under Articles 109l (2) and 109f (6) of the Treaty establishing the European Community and Article 5.3 of the Statute of the European Monetary Institute on a draft law concerning savings and financial security (CON/98/46)

text: 1. On 16 September 1998 the European Central Bank (ECB) received a request from the French Ministry of Economics, Finance and Industry for an ECB Opinion on a draft law concerning savings and financial security (hereinafter referred to as the “Law”).

text: 2. In accordance with Article 1091(2) of the Treaty establishing the European Community (hereinafter referred to as the “Treaty”), the ECB has taken over the advisory functions of the European Monetary Institute (EMI), which went into liquidation upon the establishment of the ECB on 1 June 1998. The ECB’s competence to deliver an opinion is based on Article 1.1, fifth indent, of the Council Decision (

text: ) of 22 November 1993 on the consultation of the EMI by the authorities of the Member States on draft legislative provisions, as the Law contains provisions concerning the safety and soundness of financial institutions and markets. In accordance with

text: Article 17.5

text: , first sentence, of the Rules of Procedure of the ECB, this ECB Opinion has been adopted by the Governing Council of the ECB.

text: 3. The ECB notes that the objective of the Law is to foster the trust of the general public in the financial sector through a number of specific measures. Such measures relate to 1) the conduct of prudential supervision and in particular cross-sectoral and international supervisory cooperation and flows of information, 2) the protection of depositors, investors and insured persons, and 3) disciplinary and redress measures to be taken vis-à-vis financial institutions. A number of the provisions of the Law specifically purport to strengthen the stability of the financial system and to improve the financial supervisory framework in France. The enlargement of the set of preventive actions that can be taken by the “Commission bancaire” (cf. Article 31 of the Law) as well as the option available to the “Commission bancaire” to limit or even prohibit the disbursement of dividends to shareholders of a credit institution or investment firm (cf. Article 35 of the Law) are likely to increase both the possibility of and the choice of method available regarding early intervention of such supervisory authority. Early intervention is understood to be an effective tool for reducing or avoiding the cost of failures and market exits of credit institutions. A committee, comprising supervisory authorities from different sectors of the financial industry (“collège des autorités de contrôle des entreprises du secteur financier”), is established (cf. Article 40 of the Law) with a view to 1) facilitating the exchange of information among supervisory authorities of financial conglomerates involved in credit, investment and/or insurance activities, and 2) raising issues of common interest pertaining to the co-ordination of control of such financial conglomerates. The ECB notes that the establishment of this committee is in line with the studies of several international fora regarding the ways of improving the prudential supervision of financial conglomerates. Article 42 of the Law sets out the relationship between the “Commission bancaire” and supervisory authorities of other countries. As such, the “Commission bancaire” and the supervisory authorities of the EEA may 1) ask one another for any information necessary for the execution of their mission, or 2) arrange for a third party supervisory authority to carry out, or themselves carry out, on-site examinations of subsidiaries and branches, established in the EEA, of credit institutions or investment firms subject to their control. The new Article

text: introduces means for the exchange and verification of information, as well as for on-site examinations of subsidiaries and branches located outside the EEA, which are similar to the ones described above, but subject to the condition that an agreement must be entered into to provide for reciprocity between the “Commission bancaire” and the relevant prudential supervisor. The ECB takes note that the Law also lays down an enhanced and streamlined structure of deposit insurance and investor protection. For the further organisation planned for the deposit insurance and funding of the scheme, the introduction of risk-based premia (according to which poorly managed and more risky institutions would have to pay higher insurance premia) could be considered in order to provide an incentive for credit institutions to move towards safe and sound management. As for the scope of the scheme, the ECB considers as a desirable objective that the funds received against the issuance of electronic money be covered in principle by the deposit guarantee scheme. The ECB was informed by the Banque de France that such is already the case, according to the texts presently applicable in France. As a general assessment, the ECB welcomes the new measures of intervention in cases of credit institutions or investment firms experiencing financial difficulties. Such measures are likely to prove helpful in facilitating orderly market exits of financial institutions. To the extent that the Law relates to the implementation of EU Directives, the ECB has not investigated the compatibility of the draft provisions with such Directives.

text: 4. The ECB confirms that it has no objection to this ECB Opinion being made public by the competent national authorities at their discretion. Done at Frankfurt am Main on 16 October 1998. The President of the ECB [signed] Willem F. Duisenberg


title: Opinion of the European Central Bank at the request of Banco de Portugal under Articles 109f (6) and 109l (2) of the Treaty establishing the European Community (hereinafter referred to as the "Treaty"), Article 5.3 of the Statute of the European Monetary Institute and Council Decision of 22 November 1993 (93/717/EC), concerning two drafts of regulatory provisions on (i) monetary policy instruments and procedures and on (ii) minimum reserve requirements (CON/98/47)

text: 1. On 18 September 1998 the European Central Bank (hereinafter referred to as the “ECB”) received a request from Banco de Portugal for an opinion on two drafts of regulatory provisions (hereinafter referred to as “instruções”) (i) replacing the current “instrução” on “Mercado de Operações de Intervenção” (Central Bank’s Intervention Transaction Market — “instrução n.° 34/96”) and (ii) amending the current “instrução” on “disponibilidades mínimas de caixa” (minimum reserve requirements — “instrução n.° 28/96”), for the period starting on 1 October 1998 and ending on 31 December 1998. An explanatory note was also submitted to the ECB.

text: 2. In accordance with Article 109l (2) of the Treaty, the ECB has taken over the advisory functions of the European Monetary Institute (hereinafter referred to as the “EMI”), that went into liquidation upon the establishment of the ECB on 1 June 1998. The ECB’s competence to deliver this opinion is based on Article 1.1, second indent, of the Council Decision of 22 November 1993 (

text: ), on the consultation of the EMI by the authorities of the Member States on draft legislative provisions, since the “instruções” contain rules on monetary policy instruments. In accordance with Articles

text: and

text: , second indent, of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter referred to as the “Statute”), the Governing Council with the contribution of the General Council has adopted this Opinion.

text: 3. The general aim of both “instruções” is to prepare the Portuguese financial system to the changes that will take place from 1 January 1999 onwards, when Banco de Portugal starts to carry out monetary policy operations in compliance with the decisions taken within the European System of Central Banks (ESCB). In fact, despite the broad similarity between the monetary policy instruments currently used by Banco de Portugal and the ones that will be used in the execution of the single monetary policy, the current “instruções” on monetary policy instruments and procedures (“instrução n.° 34/96”) and on minimum reserve requirements (“instrução n.° 28/96”) will have to be changed in a large number of items to comply with the requirements established for the implementation of the single monetary policy of the ESCB. Notwithstanding, Banco de Portugal intends to introduce some changes in the above mentioned “instruções” in advance, in order to “avoid possible difficulties in the transition to Stage Three, namely, in terms of the changes in the “established practices”, among which, the most important is the frequency of the intervention operations conducted by Banco de Portugal”.

text: 4. The ECB welcomes the initiative of Banco de Portugal and assesses positively the provisions contained in both “instruções” which would prepare the counterparties of Banco de Portugal in monetary policy operations to the procedures that will be implemented in Stage Three of the EMU.

text: 5. The “instrução” on “Mercado de Operações de Intervenção” that replaces “instrução n.° 34/96” st with effects as from the 1 October 1998, contains provisions concerning open market operations, standing facilities, eligibility criteria for counterparties, tender and settlement procedures and eligible instruments for intervention in money market operations. In particular, it changes the regular liquidity provision operations from a daily basis to a weekly basis and the standing facility, which will be “overnight”. These changes, associated with the changes in the types of operations, maturities, collateral, tender and settlement procedures, will require banks to reformulate their liquidity management systems and thus will have a highly positive impact in the preparation of the Portuguese financial institutions to the new environment that will prevail from January onwards. However, the ECB notes that risk control measures and valuation principles, as well as events of default, were not included in the aforementioned “instrução” intended to replace “instrução n.° 34/96”, but will be contained in the “instrução” which will be in place as from the beginning of Stage Three of the EMU.

text: 6. The ECB also welcomes and assesses positively the amendments to the “instrução” on “disponibilidades mínimas de caixa” (minimum reserve requirements — “instrução n.° 28/96”), which are in line with the changes implemented the “instrução” on “Mercado de Operações de Intervenção”, since the present reserve maintenance periods would be excessively short having regard to the changes thereby introduced in the open market operations and standing facilities. Therefore, the minimum reserve system introduced through amendments to the “instrução n.° 28/96” as the merit of anticipating, for the institutions subject to reserve requirements, the minimum reserve system that will prevail as from 1 January 1999. In particular, it is provided that the calculation of the reserve base is made on the basis of the data referring to the last day of each month. Furthermore, the maintenance period of minimum reserves is checked on the basis of the average of the balances on the deposit accounts with the Banco de Portugal, starting on the 24th calendar day of the month following the one to which the reserve base refers and ending on the 23rd calendar day of the following month.

text: 7. The ECB confirms that it has no objection to this Opinion being made public by the competent Portuguese authorities at their discretion. Done at Frankfurt am Main on 1 October 1998. The Vice-President of the ECB [signed]

text: ___________________ Christian Noyer


title: Opinion of the European Central Bank at the request of the Luxembourg Minister for Relations with Parliament, the Grand Duchy of Luxembourg, under Articles 109l (2) and 109f (6) of the Treaty establishing the European Community and Article 5.3 of the Statute of the European Monetary Institute on a draft legislative proposal to facilitate the redenomination of the capital of corporations in euro and settle rounding problems in this connection (CON/98/48)

text: 1. On 21 September 1998 the European Central Bank (ECB) received a request from the Luxembourg Minister for Relations with Parliament, the Grand Duchy of Luxembourg, for an ECB Opinion on a draft legislative proposal No. 4456 (hereinafter referred to as the “Draft Act”) regarding: - the redenomination of the capital of commercial companies in euro, which modifies the law of 10 August 1915 regarding commercial companies, as amended; and - the differences that result from the application of the rules on rounding.

text: 2. In accordance with Article 1091 (2) of the Treaty establishing the European Community (hereinafter referred to as the “Treaty”), the ECB has taken over the advisory functions of the European Monetary Institute (EMI), which went into liquidation upon the establishment of the ECB on 1 June 1998. The ECB’s competence to deliver an opinion is based on Article 1.1, first indent, of the Council Decision (

text: ) of 22 November 1993 on the consultation of the EMI by the authorities of the Member States on draft legislative provisions, as the legislative proposal contains provisions concerning currency regulation. In accordance with

text: Article 17.5

text: 3. The ECB welcomes the Draft Act since it aims (a) to facilitate the redenomination of the capital of corporations in euro through a procedure which is less time consuming and less expensive than the capital increase provided for under the laws of Luxembourg, and (b) to settle rounding problems that may occur as a result of such redenomination. The Draft Act provides that the types of commercial corporations specified therein may redenominate their capital from any national currency unit (with the exception of the ECU) of the Member States of the European Union to euro from 1 January 1999 until 31 December 2001. In this connection, and in order to avoid rounding problems, the shareholders’ meeting may also decide to increase the capital up to E1,000 for small corporations or up to 4% of the capital for large corporations. This provision will facilitate the smooth introduction of the euro by implementing simple and inexpensive measures which ease the redenomination of share capital in euro, as well as by introducing the possibility of capital adjustment in the event that a whole amount is preferred. Moreover, the non-par value share principle is foreseen in

text: Article 1(1)

text: in parallel with a mere redenomination of the share in euro. This provision is welcomed since it introduces flexibility and simplicity. This point was made in the Convention of 4 May 1998, which states that non-par value shares should be encouraged in order to avoid technical problems. The Draft Act simplifies the procedure of the shareholders’ meeting. Furthermore, in the spirit of

text: Council Regulation (EC) No. 1103/97 of 17 June 1997

text: , which provides, that from 1 January 1999, references to the ECU in legal instruments shall be replaced by a reference to the euro at a rate of E 1 to ECU 1, the Draft Act states that the board of directors may replace the reference to the ECU, in the event that the capital of the corporation is expressed in ECU in the corporate charter, by a reference to the euro. Obviously, such a measure would not constitute a capital increase because it shall occur by operation of law pursuant to

text: . The provisions of the law of 10 August 1915 regarding publicity will still apply to the decision regarding the simplified capital redenomination in euro, which is crucial in order to ensure the dissemination of information.

text: Article 5

text: amends the provision of the law of 10 August 1915 on limited liability companies (SARL) regarding the minimum par value of the shares. According to the Explanatory Memorandum, this provision allows limited liability companies to express their capital in any national currency unit other than Luxembourg francs; however, the minimum par value of the shares must correspond to the minimum of LUF 1,000. This particular amendment is not connected to the scope of the Draft Act, which concerns the redenomination of the capital of commercial corporations in euro. Article 6 of the Draft Act is declaratory in nature and states that, if the rounding conventions pursuant to the

text: are applicable, payments effected or book entries constitute full repayment of the obligations and do not raise any liability for indemnification. This provision is welcomed since it clarifies any uncertainties that may arise with respect to the settlement of a debt.

text: 4. The ECB confirms that it has no objection to this ECB Opinion being made public by the competent national authorities at their discretion. Done at Frankfurt am Main on 20 October 1998. The President of the ECB [signed] Willem F. Duisenberg


title: Opinion of the European Central Bank at the request of the Finnish Ministry of Finance under Articles 109l (2) and 109f (6) of the Treaty establishing the European Community and Article 5.3 of the Statute of the European Monetary Institute on a draft legislative proposal concerning the clearing and settlement of securities transactions (CON/98/49)

text: 1. On 29 September 1998 the European Central Bank (ECB) received a request from the Finnish Ministry of Finance for an ECB Opinion on a draft legislative proposal concerning the clearing and settlement of securities transactions (hereinafter referred to as the “legislative proposal”). In the legislative proposal, it is suggested that Finnish law (the Act on the Book-Entry System (826/1991) (lagen av den 17 maj 1991 om värdeandelssystemet) and certain related legislation) should be amended in order: - to facilitate the establishment of international links with the Finnish central securities depository (CSD) for the cross-border transfer and administration of foreign securities within the Finnish book-entry system; - to introduce rules regarding the redenomination into euro of bonds issued in Finnish markka; - to improve the possibility for the Finnish Financial Supervisory Authority to obtain information concerning book entries in respect of securities held through nominee registration (which are registered in a specific book-entry account (hereinafter referred to as the “custodial account”), whereby the nominee is administering the securities on behalf of another party); - to provide for the possibility for Suomen Pankki and foreign central banks to hold custodial accounts, which would accommodate needs in relation to the collateral requirements of the European System of Central Banks (ESCB) for Stage Three of EMU; and - to add legislative provisions to, inter alia, the Securities Market Act (495/1989) (värdepappersmarknadslagen av den 26 maj 1989) regarding the introduction of the euro in relation to the public trading of securities and clearing activities.

text: 2. In accordance with Article 1091 (2) of the Treaty establishing the European Community (hereinafter referred to as the “Treaty”), the ECB has taken over the advisory functions of the European Monetary Institute (EMI), which went into liquidation upon the establishment of the ECB on 1 June 1998. The ECB’s competence to deliver an opinion is based on Article 1.1, fourth and fifth indents, of the Council Decision (

text: ) of 22 November 1993 on the consultation of the EMI by the authorities of the Member States on draft legislative provisions, as the legislative proposal contains provisions concerning both clearing systems, in particular for those cross-border transactions, and the stability of financial markets and institutions. In accordance with

text: Article 17.5

text: , first sentence, of the Rules of Procedure of the ECB, this ECB Opinion has been adopted by the Governing Council of the ECB.

text: 3. The ECB notes that the objective of the legislative proposal is to facilitate the introduction of the euro and to promote the international links of the Finnish securities market. The legislative proposal is also intended to improve the practical conditions for State borrowing within the euro area and, from an investment perspective, the proposed amendments would represent an adaptation of the Finnish clearing and settlement arrangements to the European markets.

text: 4. The ECB welcomes the legislative proposal and notes in particular the amendments suggested in order to facilitate the establishment of links between the Finnish CSD and other European and international CSDs for the cross-border transfer and administration of foreign securities. This will enhance the integration of the Finnish and European securities markets. The ECB also notes and welcomes the proposal to strengthen the risk control measures which have to be applied by the Finnish CSD, which is aimed at reducing the risks associated with cross-border securities transfers.

text: 5. The ECB also welcomes the new provisions concerning the holding of securities by, inter alia, Suomen Pankki and other national central banks (NCBs) in custodial accounts in the Finnish book-entry system.

text: 6. The proposed amendments to Section 26b of the Act on the Book-Entry System will allow the Finnish CSD to establish the links and necessary arrangements with other CSDs envisaged as part of the future securities settlement infrastructure in support of, inter alia, euro area-wide financial markets and the single monetary policy of the euro area. The ECB understands that the scope of application of the amended Section 26b of the Act on the Book-Entry System will also extend to links with international central securities depositories (ICSDs), the NCBs and the ECB (cf. Section 16 of the Act on the Book-Entry System, on international relations). Such a wide scope of application and the flexibility afforded under the new legal provisions should prove useful when the Finnish CSD implements the new regime in relation to corresponding entities in other countries. In this connection, it is noted that the explanation in relation to the legislative proposal recalls the standards set out in the report published by the EMI in January 1998 entitled “Standards for the use of Securities Settlement Systems in ESCB credit operations”. These standards, and the further reports on the topic produced by the ECB, are indeed important for the future activities of CSDs and ICSDs as such activities relate to the credit operations of the ESCB.

text: 7. As noted in the explanatory part of the legislative proposal, it is not expected, however, that it will be possible for the work under the auspices of the European Central Securities Depositories Association (ECSDA), which is aimed at establishing all the envisaged links, to be fully concluded by the start of Stage Three. The correspondent central banking model (CCBM) developed by the ESCB, and referred to in connection with the legislative proposal, will therefore provide an important arrangement in respect of the collateral requirements in relation to ESCB operations. The CCBM has been established on the basis of NCBs holding collateral on behalf of other members of the ESCB and, in this context, the ECB welcomes the proposed amendment to Section 5a of the Act on Book-Entry Accounts (827/1991) (lagen av den 17 maj 1991 om värdeandelskonton), which will prove useful, inter alia, in relation to Suomen Pankki’s participation in the CCBM and the utilisation of Finnish securities as collateral for ESCB operations.

text: 8. Finally, the ECB notes the proposed provisions concerning the introduction of the euro and the redenomination of bonds, whereby the Finnish legislative proposal is intended to apply to issues which are not already covered by the two euro regulations directly applicable in Finland. The ECB has also taken note of the provisions for the practical implementation measures in relation to the redenomination of debt, particularly redenominations within the Finnish bookentry system, and the scope provided by the legislative proposal for the application of the “bottom-up” approach. The analysis provided in the explanatory part of the legislative proposal concludes that the suggested amendments will conform with Article 8.4 of the EU

text: Council Regulation (EC) No. 974/98

text: on the introduction of the euro, and the ECB does not wish to express any contrary opinion in this respect.

text: 9. The ECB confirms that it has no objection to this ECB Opinion being made public by the competent national authorities at their discretion. Done at Frankfurt am Main on 2 November 1998. The President of the ECB [signed] Willem F. Duisenberg