EN ECB-PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 22 April 2014  
on monitoring the use of credit ratings by market participants 
(CON/2014/28) 
 
Introduction and legal basis 
On 28 March 2014, the European Central Bank (ECB) re ceived a request from the Lithuanian Ministry of 
Finance for an opinion on draft amendments to the La w on Lietuvos bankas (hereinafter the ‘draft law’). 
The ECB’s competence to deliver an  opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third inde nt of Article 2(1) of Council Decision 98/415/EC1, 
as the draft law relates to Lietuvos bankas. In accord ance 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 draft law 
1.1 The main objective of the draft law is to d esignate a competent authority for the purpose of 
Regulation (EC) No 1060/2009 of the European Parliament and of the Council
2 (hereinafter the 
‘Regulation’). 
1.2 The draft law amends Article 42 of the Law on Lietuvos bankas which sets out the aim, functions, 
rights and obligations of Lietuvos bankas in perform ance of financial market supervision. The draft 
law provides that Lietuvos bankas is to carry out th e functions of a competent authority assigned to 
it by the Regulation. 
 2. General observations 2.1 The ECB understands that Lietuvos bankas has been performing the functions of a competent 
authority for the purpose of the Regulation
3 since 1 January 2012, when supervision of the entire 
Lithuanian financial market was integrated with in Lietuvos bankas. This function was provided for 
in the Law on markets in financial instruments4 and not in the Law on Lietuvos bankas. 
                                                 
1  Council Decision 98/415/EC of 29 June 1998 on the consulta tion of the European Central Bank by national authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 
2  Regulation (EC) No 1060/2009 of the European Parliament  and of the Council of 16 September 2009 on credit rating 
agencies (OJ L 302, 17.11.2009, p. 1). 
3  Article 22(1) requires Member States to designate a competent authority for the purpose of the Regulation. 
4  Article 70(2)(5) of the Law on ma rkets in financial instruments. 
ECB-PUBLIC  
2 2.2 Article 5a(2) of the Regulation requires sectoral  competent authorities in charge of supervising 
credit and other financial institutions5, taking into account the nature, scale and complexity of their 
activities, to monitor the adequacy of their credit risk assessment processes, assess the use of 
contractual references to credit ratings and, wh ere appropriate, encourage them to mitigate the 
impact of such references, with  a view to reducing sole and me chanistic reliance on credit ratings, 
in line with specific sectoral legislation.  
2.3 The ECB understands that Lietuvos bankas’ d esignation as a ‘competent authority for the purpose 
of the Regulation’ covers functions of the ‘compe tent authority’ specified in Article 22 of the 
Regulation and of the ‘sectoral competent authorit y’ specified in Article 25a of the Regulation. 
 The ECB understands that the aim of the draft la w is to extend and clarify the scope of Lietuvos 
bankas’ competence for the purposes of the Regulation.  In particular, according to the draft law, 
this function of Lietuvos bankas is now provided for in the Law on Lietuvos bankas along with its 
other functions, rights and obligations in performan ce of the supervision of all financial market 
participants and not in sectoral financial legisla tion regulating a specific sector of the financial 
market. The enactment of the draft law should r esult in clarifying and enhancing Lietuvos bankas’ 
supervisory and regulatory powers in this field. 
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 22 April 2014. 
 
[signed] 
 
The President of the ECB 
Mario DRAGHI 
  
                                                 
5  Entities referred to in the first subparagraph of Article 4(1)  of the Regulation, i.e. cred it institutions, investment firms,  
insurance undertakings, reinsurance undertakings, institu tions for occupational retirement provision, management 
companies, investment companies, alternative investment fund manage rs and central counterparties.