OPINION OF THE EUROPEAN CENTRAL BANK
of 25 November 1999
at the request of the Ministry of Fina nce of the Grand Duchy of Luxembourg 
on a draft legislative proposal concerning the contractual obligat ions of the financial sector 
which are due on 31 December 1999
(CON/99/17)
1. On 26 October 1999 the European Central Bank (ECB) received a request from the Ministry of
Finance of the Grand Duchy of Luxembourg for an ECB Opinion on a draft legislative proposal
concerning the contractual obligations of th e financial sector which are due on 31 December
1999.
2. The ECB’s competence to deliver an opinion is based on Article 105 (4), second indent, of the
Treaty establishing the European Community and Ar ticle 2 (1), fifth and sixth indents, of the
Council Decision of 29 June 1998 on the consultation of the European Central Bank by national
authorities regarding draft legislative provisions  (98/415/EC), as the legislative proposal deals
with payment and settlement systems, as well as with the stability of fi nancial institutions and
markets. In accordance with Article 17.5, first se ntence, of the Rules of Procedure of the
European Central Bank, this ECB Opinion has been adopted by the Governing Council of the
ECB.
3. Following the conclusions of the informal m eeting of the ECOFIN Council on 16 to 18 April
1999 on ways of dealing with possible problems during the changeover to the year 2000, the
Ministry of Finance has prepared  a draft legislative proposal. The purpose of this draft legislative
proposal is to facilitate the transition to the year 2000 for the financial sector. The scope ofapplication of the draft legislative proposal is broadly defined. The obligations covered by the
draft legislative proposal include obligations of th e financial sector, as well as of other obligors
which use financial intermediaries, falling due on 31 December 1999. The draft legislativeproposal takes into consideration the fact th at TARGET will be closed on 31 December 1999 in
order to facilitate the end-of-year activities of the financial sector in relation to the transition to
the year 2000.
4. In order to address these legal consequences, the dr aft legislative proposal stipulates that principal
and accessory contractual obligations of the financial sector falling due on 31 December 1999shall be performed on 30 December 1999. In addition, Article 1, section 2, of the draft legislativeproposal clarifies that other obligors whose contr actual obligations are performed by means of a
financial institution shall not be in breach of  contract because such obligations cannot be
performed on 31 December 1999. Such obligors may discharge their responsibilities on the firstworking day after 31 December 1999. This protection means, for transactions subject to thelegislation of Luxembourg, that neither the clie nts, the credit institutions nor other financial
intermediaries shall be liable for possible losses suffered by creditors on account of this late
performance. Contractual parties are, however, free to agree on other solutions inter se. First, the
draft legislative proposal declares valid those contracts concluded by counterparties to execute
performances due on 31 December 1999 on a day other than 30 December 1999. Second,counterparties may, after the introduction of the legislative proposal, opt to maintain 31 December
1999 as a performance day, provided that the financ ial intermediary which is to be used consents
to such performance. 
5. The ECB welcomes the effort made by the authorities of the Grand Duchy of Luxembourg to
reduce the legal uncertainty which might result,  under the legislation of Luxembourg, from the
closure of payment and securities settlement systems on 31 December 1999. The legislativeproposal takes into account the “Communiqué of  the central bank governors, endorsed by
ECOFIN Ministers at their informal meeting”, i ssued after the informal meeting in Dresden on
17 April 1999, which urged the Member States to ta ke appropriate measures to ensure that the
performance of any contractual obligations of cred it institutions or other agents in the financial
markets shall neither become due nor be en forceable on 31 December 1999. The ECB also notes
that by shifting the performance of the said ob ligations to 30 December 1999, the draft legislative
proposal limits the number of transactions in the first week of the year 2000. This is in line with
international advice. In doing so, the ECB finds th at the draft legislative proposal could contribute
to maintaining the stability of fi nancial institutions and markets during the changeover to the year
2000.  
6. Banque centrale du Luxembourg has one comment su ggesting that with respect to overnight
credits the settlement date be postponed until 3 January 2000.  The ECB has no objection to thatsuggestion.
 
7. 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 25 November 1999.
The President of the ECB
[signed by C. Noyer]
Willem F. Duisenberg