OPINION OF THE EUROPEAN CENTRAL BANK
at the request of the French Ministry of Ec onomics, 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
1. On 16 September 1998 the European Central Ba nk (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).
2. In accordance with Article 1091(2) of the Treaty establishing the European Community
(hereinafter referred to as the Treaty), the E CB 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 deliv er an opinion is based on Article 1.1, fifth
indent, of the Council Decisi on (93/717/EC) of 22 November 1993 on the consultation of the
EMI by the authorities of the Member States on dr aft legislative provisions, as the Law contains
provisions concerning the safety and soundne ss of financial institutions and markets. In
accordance with Article 17.5, first sentence, of th e Rules of Procedure of the ECB, this ECB
Opinion has been adopted by the Governing Council of the ECB. 
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 meas ures. Such measures relate to 1) the conduct
of prudential supervision and in particular cr oss-sectoral and international supervisory co-
operation and flows of information, 2) the pr otection 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 specifica lly purport to strengthen the stability of the
financial system and to improve the financial supervisory framework in France.
2
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 Commissionbancaire to limit or even prohibit the disburseme nt 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 suchsupervisory authority. Early intervention is unders tood to be an effective tool for reducing or
avoiding the cost of failures and market exits of credit institutions.
A committee, comprising supervisory authorities fro m different sectors of the financial industry
(collège des autorités de contrôle des entrepri ses 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 conglomera tes involved in credit, investment and/or
insurance activities, and 2) raising issues of co mmon interest pertaining to the co-ordination of
control of such financial conglomerates. Th e ECB notes that the establishment of this
committee is in line with the studies of seve ral international fora regarding the ways of
improving the prudential supervision of financial conglomerates.
Article 42 of the Law sets out the relati onship 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 theEEA, of credit institutions or investment firms subject to their control. The new Article 42-2
introduces means for the exchange and verifi cation of information, as well as for on-site
examinations of subsidiaries and branches lo cated outside the EEA, which are similar to the
ones described above, but subject to the condition that an agreement must be entered into toprovide for reciprocity between the Commi ssion bancaire and the relevant prudential
supervisor.
The ECB takes note that the Law also lays dow n an enhanced and streamlined structure of
deposit insurance and investor protection. For th e further organisation planned for the deposit
insurance and funding of the scheme, the introduc tion 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 sche me, the ECB considers as a desirable objective
that the funds received against the issuance of el ectronic 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.
3
As a general assessment, the ECB welcomes the ne w measures of intervention in cases of credit
institutions or investment firms experiencing fi nancial 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 Di rectives, the ECB has not investigated the
compatibility of the draft provisions with such Directives.
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