EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 14 February 2011 
on Italy’s participation in International Monetary Fund programmes in response to the financial crisis 
(CON/2011/10)  
 
Introduction and legal basis  
On 20 January 2011, the European Central Bank (E CB) received a request from the Italian Ministry of 
Economic Affairs and Finance for an opinion on a decree-law on the extension of deadlines and on urgent 
measures in the field of taxation and in support of enterprises and families1, concerning also Italy’s 
participation in International Monetary Fund (IMF) programmes in response to the financial crisis 
(hereinafter the ‘Decree-Law’). 
The ECB’s competence to deliver an opinion is based on  Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third indent of Article 2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft legislative provisions
2, as the Decree-Law relates to the Banca d’Italia. In accordance with the first sentence 
of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted 
this opinion. 
 
1.  Purpose of the Decree-Law 
1.1  Article 2(13) to (16) of the Decree-Law3 regulates the relations between Italy and the IMF with regard 
to the implementation of the commitments made by the Italian State to the IMF in response to the 
financial crisis4. 
1.2 The Decree-Law refers to the expansion of the IMF’s New Arrangements to Borrow (NAB). The 
increase in the NAB, as approved by the IMF’s Executive Board on 12 April 20105, includes credit 
                                                 
1  Decree Law No 225 of 29 December 2010, Gazzetta Ufficiale della Repubblica Italiana , Serie generale No 303, 29.12.2010, 
p. 1. 
2  OJ L 189, 3.7.1998, p. 42.  
3  The Decree-Law was adopted by the Italian Government on 29 December 2010 and entered into force on the same day. Under 
the Italian Constitution, the Decree-Law needs to be converted into a law by the Italian Parliament within 60 days from 
adoption by the Government. 
4  As also provided in Article 2(13) of the Decree-Law, the initia tives were decided at the G20 Summit of the Heads of State and 
Government held in London on 2 April 2009, later reaffirmed  at the G20 Summit held in Seoul in November 2010, and 
supported by the European Council. See also the Presidency C onclusions of the European Council held in Brussels on 18 and 
19 June 2009. 
 
2 lines from new NAB participant countries and additional credit lines from existing NAB participants, 
such as Italy. Under the expanded and more flexible NAB, credit of up to SDR 367,5 billion 
(equivalent to about EUR 429,6 billion) will be available. Member States have agreed to contribute 
EUR 125 billion to the expanded NAB6. According to the Decree-Law, Italy’s contribution will 
amount to EUR 13,58 billion7, to be funded from the Banca d’Italia’s resources8.  
1.3  In view of the uncertain economic situation9, a number of IMF member countries have agreed to make 
bilateral agreements with the IMF in the interim. The Decree-Law implements such an agreement to provide an interim bilateral loan, authorising the Banca d’Italia to grant the IMF a loan of up to EUR 8,11 billion
10 on Italy’s behalf. The IMF’s Executive Board approved a draft borrowing agreement with 
the Banca d’Italia on 27 October 2009 that became effective on entry into force of the Decree-Law. 
The bilateral agreement with the IMF addressed in the Decree-Law may be terminated once the new NAB agreement has entered into force
11.   
1.4 The Decree-Law also refers to Italy’s participatio n in the Extended Credit Facility (ECF) of the Poverty 
Reduction and Growth Trust (PRGT)12. The Decree-Law authorises the Banca d’Italia to provide loans 
at market rates of up to SDR 800 million, whereas the Italian Ministry of Economic Affairs and 
Finance will provide a SDR 22,1 million subsidy13. 
1.5 The State budget will guarantee the reimbursement of the capital and interest and will cover any 
exchange rate risk on the loans provided by the Banca d’Italia under the Decree-Law. 
 2. General observations  
2.1 It is necessary to assess whether the decree law complies with the prohibition of monetary financing 
under Article 123(1) of the Treaty, which prohibit s overdraft facilities or any other type of credit 
                                                                                                                                                                   
5  The IMF’s Executive Board adopted a ‘Proposed decision to modi fy the New Arrangements to Borrow’ on 12 April 2010. It 
is available on the IMF’s website at www.imf.org. 
6  Italy’s agreed share of this contribution was SDR 13 578 million. 
7  Until now Italy has participated in the NAB with a credit line provided by the Banca d’Italia currently amounting to 
SDR 1 753 billion (equivalent to about EUR 2 billion).. 
8  According to the explanatory memorandum, the Italian contribution will be charged to the Banca d’Italia and will not affect 
the Italian State budget. 
9  The process of consents and adherences to the proposed expansion of the NAB has not yet been completed. 
10  Where additional financial resources are needed, the Banca d’Italia may contribute up to a cumulative total of EUR 13,53 
billion. See Article 2(13)(b) of the Decree-Law. 
11  The bilateral loan will be offset against Italy’s extende d provision of credit arrangemen ts under the NAB of EUR 13,53 
billion. 
12  On 23 July 2009, the IMF’s Executive Board approved wide ranging modifications to upgrade its concessional financial 
facilities for low-income countries. The decision adopted by the IMF’s Executive Board establishes the PRGT, replacing and expanding the former Poverty Reduction and Growth Facility-Exogenous Shocks Facility. The PRGT includes new financially improved credit lines, such as the ECF, that are co nsidered to be more adapted to low-income countries’ needs. 
13  According to the explanatory memorandum, this amount repres ents remaining contributions that have already been provided 
but which will be considered as new resources.  
 
3 facility with national central banks (NCBs) in favour  of central governments. This prohibition is 
subject to certain exceptions contained in Article 123(2) of the Treaty and in Council Regulation (EC) 
No 3603/93 of 13 December 1993 specifying definitions for the application of the prohibitions referred 
to in Articles 104 and 104b(1) of the Treaty14. In particular, Article 7 of Regulation (EC) No 3603/93 
provides that the financing by NCBs of obligations fa lling upon the public sector vis-à-vis the IMF is 
not regarded as a credit facility within the meaning of Article 123 of the Treaty15. 
 It is also necessary to ensure that the possible euro liquidity injections resulting from the Banca 
d’Italia’s funding of Italy’s participation in the NAB, from the disbursements by the Banca d’Italia under the bilateral loan agreement between the Banca d’Italia and the IMF and from the loans granted 
by the Banca d’Italia under the ECF of the PRGT, do not interfere with the implementation of the 
single monetary policy. Under paragraph 23 of the IMF’s Proposed Decision to Modify the New Arrangements to Borrow, there is a presumption that the IMF will notify the respective central bank at least five business days prior to drawing. Likewise, under paragraph 2(a) of the Borrowing Agreement 
between the Banca d’Italia and the IMF, the IMF will give the Banca d’Italia at least five business 
days’ notice of its intention to draw. Also with regard to the loans under the ECF of the PRGT, the Banca d’Italia should be given sufficient notice of a loan. This will allow for possible euro liquidity injections under these facilities to be taken into account when implementing single monetary policy 
 Increase of the credit limits under the expanded IMF’s NAB  
2.2 Opinion CON/1997/16 considered a draft law authorising the Oesterreichische Nationalbank 
(hereinafter the ‘OeNB’) to grant, in Austria’s name, a loan to the IMF, and Opinion CON/2010/74
16 
considered a draft law authorising the OeNB to incr ease on Austria’s behalf the credit limits for the 
NAB with the IMF. In both Opinions, the ECB concluded that the operations covered were not a credit 
facility within the meaning of Article 123(1), but fell within the exception in Article 7 of Regulation 
(EC) No 3603/93. Similarly, the Banca d’Italia’s aut horisation, under the Decree-Law, to increase the 
credit limits for the NAB should be considered as falling within the scope of Article 7 of Regulation (EC) No. 3603/93, and should therefore not be regarded as a form of monetary financing prohibited by 
the Treaty.  
 Bilateral loan with the IMF  
2.3 The Banca d’Italia’s authorisation under the Decree-Law to grant a bilateral loan to the IMF should 
also be considered as falling within the scope of Article 7 of Regulation (EC) No 3603/93, and should therefore not be regarded as a form of monetary financing prohibited by the Treaty. Opinion 
                                                 
14  OJ L 332, 31.12.1993, p. 1. 
15  The 14th recital of Regulation (EC) No 3603/93 reads as follows:  ‘Whereas the financing by the central banks of obligations 
falling upon the public sector vis-à-vis the International Moneta ry Fund or resulting from the implementation of the medium-
term financial assistance facility set up within the Community results in foreign claims which have all the characteristics of 
reserve assets; whereas it is, therefore, appropriate to authorise them’. 
16  All Opinions are available on the ECB’s website at www.ecb.europa.eu. 
 
4 CON/2009/100 considered a draft law authorising Banka Slovenije to provide payments to the IMF on 
the basis of a bilateral agreement between Slovenia and the IMF, while Opinion CON/2010/40 
considered a draft law authorising the OeNB to provide payments to the IMF on the basis of a bilateral 
agreement between the OeNB and the IMF. In both cases, the ECB came to the same conclusion.  
 Contribution to the IMF’s ECF of the PRGT  
2.4 Opinion CON/2010/22 considered more closely an NCB’s involvement in financing the IMF’s facility 
for low-income countries. Similarly, Opinion CON/2008/4117 considered a draft law on the OeNB’s 
involvement in financing the IMF’s PRGF and PR GF-HIPC Trusts for Liberia’s debt relief, and 
Opinion CON/2005/29 considered a draft law on the OeNB’s authorisation to pay, in Austria’s name, a contribution to the trust fund administered by the IMF for low income developing countries affected by 
natural disasters. In all the abovementioned Opinions, the ECB took the view that an NCB’s financing 
of an IMF-administered initiative fell within the exemp tion in Article 7 of Council Regulation (EC) No 
3603/93. Also in view of the above, the provision by the Banca d’Italia of loans under the ECF of the PRGT should be considered as falling within the exemption in Article 7 of Regulation (EC) No 3603/93 and therefore should not be regarded as a form of monetary financing prohibited by the 
Treaty. 
 
This opinion will be published on the ECB’s website.  
 
 Done at Frankfurt am Main, 14 February 2011. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET 
 
                                                 
17  This Opinion considered that an NCB’s involvement in financing such an IMF initiative reduces what is in principle 
government expenditure on development aid, and that the NCB effe cts this reduction by immediately transferring funds in lieu 
of the Government.