EN ECB -PUBLIC 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 31 May 2012  
on the Law on Česká  národn í banka  
(CON/20 12/44) 
 
Introduction and legal basis  
On 26 March 2012, the European Central Bank (ECB) received a request from the Czech Ministry of 
Finance for an opinion on a draft law amending Law No 6/1993 Coll. on Česká národní banka and other 
related laws  (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 (TFEU)  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 provisions1, as the draft law relates to Česká národní  banka (CNB) . 
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 draft law  
The draft law is primarily  aimed at addressing certain issues identif ied by the ECB and the European 
Commission in their Convergence Reports2 in relation to Law No 6/1993 Coll. on Česká národní banka 
(hereinafter the ‘Law on CNB’) . To this end, amendments are made in particular to the provisions 
concerning the grounds for dismissal of the Governor and other members of the Bank Board, the 
confidentiality  obligation  and monetary financing  prohibition. The draft law is also aimed at 
strengthening CNB’s mandate as an institution responsible for ensuring financial stability and the safe 
functioning of the Czech financial system . It also  specifies that one of CNB’s tasks in this context is to set 
macro -prudential policy . Other proposed changes include : (a) more detailed and extended legal regulation 
of reporting and statistics, based on Union legislation; ( b) legal clarification concerning the management 
of CNB’s assets , including foreign r eserves;  (c) further specifi cation of  CNB’s powers as regards 
oversight of payment and settlement systems; (d) repeal of CNB’s power to issue provisions , a special 
regulatory tool  to be replaced by decrees or CNB’s communications;  (e) necessary adjustments  to the 
provisions concerning administrative offences and administrative proceedings; and (f) abolition of the 
Financial Market Committee as an advisory body to the Bank Board. In addition, s everal changes are 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2  See, for example, the ECB’s Convergence Report May 2010.  
ECB -PUBLIC 
2 made to the internal organisation of the L aw on CNB  with a view to clarifying issues relating to its 
application and structure . The draft law does not include any changes necessary for the legal integration 
of CNB into the Eurosystem.  
 
2. Central bank independence   
2.1 General considerations  
 Pursuant  to Article 131 TFEU, each Member State must ensure that its national legislation is 
compatible with the Treaties and the Statute of the European System of Central Banks and of the 
European Central Bank (hereinafter the ‘Statute of the ESCB’). Adaptation of national legislation 
may be achieved by referring to the Treaties and the Statute of the ESCB , by incorporating 
provisions thereof and referring to their provenance, by deleting any incompatibility with the 
Treaties and the Statute of the ESCB or by a co mbination of these methods3. In this context, the 
ECB notes that the amended Article 6(12) of the Law on CNB , which aims to mirror Article 14.2 
of the Statute of the ESCB , only refers to infringements of the TFEU, while under Article 14.2 of 
the Statute of  the ESCB , a decision to relieve a Governor from office may be referred to the Court 
of Justice of the European Union on the grounds of infringement not only of the TFEU , but of both 
Treaties (including their annexes and protocols). Similarly, the amended Article  9 of the Law on 
CNB , which aim s to mirror the provisions of Article 130 TFEU , refers only to tasks and duties 
conferred by the TFEU and the Statute of the ESCB , while pursuant to Article 130 TFEU the 
principle of central bank independence applies t o tasks and duties conferred upon central banks by  
both the Treaties and the Statute of the ESCB , thus including the Treaty on European Union. 
Consequently, t he ECB recommends adapting  Article 6(12) and Article  9 of the Law on CNB  for 
the sake of consisten cy. 
2.2 Functional independence  
In line with Article 127(1) T FEU, the secondary objective of CNB ‘ to ensure financial stability and 
the safe and sound operation of the financial system in the Czech Republic’4 should be stated  to be 
without prejudice to the CNB’s  primary objective to maintain price stability.  
2.3 Institutional independence  
 The ECB notes that the draft law does not remove the existing incompatibilities of the Law on CNB in the area of institutional independence
5. In particular, Article 3 of the Law on CNB obliges 
CNB to submit a report on monetary development s to the Chamber of Deputies at least twice a year 
for review. Upon the Chamber of Deputies’ resolution, CNB must submit an extraordinary report to 
be prepared pursuant to such resolution . The Chamber of Deputies has the power to acknowledge 
the report or ask for a revised report; such revised report must comply with the Chamber of 
                                                 
3    See the ECB’s Convergence Report May 201 2, p. 23.  
4  Amended Article 2(1) of the Law on CNB.  
5  See the ECB ’s Convergence Report May 201 2, pp. 302 to 303.  
ECB -PUBLIC 
3 Deputies’ requirements. These parliamentary powers could potentially breach the prohibition on 
giving instruc tions to national central banks ( NCBs ) pursuant to Article 130 T FEU and Article 7 of 
the Statute of the ESCB. In addition, Article 47(5) of the Law on CNB requires CNB to submit a revised report if the Chamber of Deputies rejects its annual financial repor t. This  revised report  
must comply with the Chamber of Deputies’ requirements. Such parliamentary powers breach the prohibition on approving, annulling or deferring decisions. Article 3 and Article 47(5) of the Law on CNB are therefore incompatible with ce ntral bank independence and should be adapted 
accordingly.  
 Under amended Article 9(1)  of the Law on CNB , when carrying out CNB’s primary objective and 
when exercising the powers and carrying out the tasks and duties conferred upon them by the TFEU and the  Statute of the ESCB, CNB, the Bank Board and any member of the Bank Board are 
prohibited from seeking or taking instructions from the President of the Republic, from Parliament, from the Government, from administrative authorities of the Czech Republic, f rom the bodies, 
institutions or other entities of the Union, from Member State governments or from any other body. 
Amended Article 9(1) does not prohibit the Government from seeking to influence the members of 
CNB ’s decision -making bodies in situations whe re this may have an impact on CNB ’s fulfilment of 
its ESCB -related tasks. In this respect the Law on CNB needs to be adapted to be fully consistent 
with Article 130 T FEU  and Article 7 of the Statute  of the ESCB . 
2.4 Personal independence  
Article 14.2 of the Statute of the ESCB stipulates , inter alia , that NCB Governors who have been 
dismissed from office or the Governing Council may refer such a decision to the Court of Justice  
on grounds of infringement of the Treaties or of any rule of law relating to the ir application . As 
regards judicial review  by the Court of Justice , national legislation should either refer to the Statute  
of the ESCB  or remain silent on the right to refer such decision to the Court of Justice (as 
Article  14.2 of the Statute of the ESCB  is directly applicable)
6. Amended Article 6(12) of the L aw 
on CNB  does not apply either of the two approaches and is not in line with Article 14.2 of the 
Statute of the ESCB , i.e. the date from which the Governor may challenge the decision of 
dismissal . In addition, it is not necessary to transpose the right of the ECB to refer a decision of 
dismissal to the Court of Justice  into the Law on CNB since this right stems directly from 
Article  14.2 of the Statute of the ESCB. 
As regards the members of the Board  other than the Governor, as noted in the ECB’s Convergence 
Reports7, the draft law does not specifically provide for the right of national courts to review a 
decision to dismiss any member, other than the Governor, of the CNB’s Bank Board who is involved in the performance of ESCB -related tasks. Although it is understood that this right is 
available under the general law, providing specifically for such a right of review could increase legal certainty.  
                                                 
6  See, for example, the ECB’s Convergence Report May 2012 , p. 29.  
7  See, for example, the ECB’s Convergence Report May 2012 , p. 304 . 
ECB -PUBLIC 
4 2.5 Financial independence  
 The ECB refers to its 2012 Convergence Report8 and the negative capital situation of CNB  for a 
prolonged period of time . 
 
3. Monetary financing prohibition  
3.1 The ECB understands that new Article 34a of the Law on CNB  aims at addressing defects 
highlighted in the ECB’s Convergence  Report in relation to the prohibition on monetary financing. 
The ECB therefore welcomes the proposed changes. However, t he ECB notes that  instead  of 
providing  for an exception to the monetary financing prohibition in favour of publicly owned credit 
institutions in the context of the supply of reserves, new Article 34a(2)  provides for such an 
exception with reference to ‘banks, foreign banks and credit unions ’. As noted in the ECB’s 
Convergence Report9, in general, it is unnecessary to transpose Article 123 TFEU, supplemented 
by 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 Treaty10, into national legislation as 
they are both directly applicable. If,  however, national legislative provisions mirror these 
provisions, they may not narrow the scope of application of the monetary financing prohibition or 
extend the exemptions available under Union law. In this regard, the ECB understands that sectoral 
laws, i.e. the Law on banks and the Law on credit unions11 define that banks, foreign banks and 
credit unions are covered by the definition of credit institutions12. However , the respective national 
legislative provisions should include an explicit reference to their provenance13. New Article 
34a(2) of the L aw on CNB  should therefore include an explicit reference to Article 123(2) T FEU . 
3.2  Article 28 of the Law on CNB provides that CNB may purchase from banks or sell to them 
government bonds or other securities underwritten by the Government. The ECB notes that while secondary market purchases of debt instruments from the public sector are, in principle , allowed, 
Council Regulation (EC) 3603/93 clarifies in recital 7 that purchases made on the secondary market must not be used to circumvent the objective of Article 123 T FEU . In order to ensure compliance 
with the monetary financing prohibition it should therefore be ensured that , when applying 
Article  28, such purchases remain fully consistent with the objectives of Article 123 T FEU, 
namely : (a) the primary objective of price stability, ( b) central bank independence, and ( c) fiscal 
discipline.  
                                                 
8  See the ECB’s Convergence Report May 201 2, p. 304 . 
9  See the ECB’s Co nvergence Report May 201 2, p. 36.  
10  OJ L OJ L 332, 31.12.1993, p. 1.  
11  Law No 21/1992 Coll. on banks and Law No 87/1995 Coll. on credit unions.  
12  Article 4(1) of Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating  to the 
taking up and pursuit of the business of credit institution (OJ L 177, 30.6.2006, p. 1) defines a credit institution as ‘an 
undertaking the business of which is to receive deposits or other repayable funds from the public and to grant credits for 
its own account’.  
13   See the ECB’s Convergence Report May 201 2, p. 23.  
ECB -PUBLIC 
5 3.3 Amended Article 30 of the Law on CNB provides that CNB keep s accounts in accordance with the 
budgetary rules, without further details . As noted in the ECB’s Convergence Report14, national 
legislation that enables an NCB to hold government deposit s and to service government accounts 
does not raise concerns about the compliance with the monetary financing prohibition as long  as 
such provisions do not enable the extension of credit, including overnight overdrafts , and that 
deposits or current account balances are not remunerated above market rates.  
3.4 The ECB understands that Article  31 and new Article 31a of the Law on CNB  refer to activities to 
be carried out by CNB as an agent of the State. Taking into account the express recognition in 
Article  21.2 of the Statute of the ESCB  of the provision of fiscal agency services as a legitimate 
function traditionally performed by cent ral banks, the ECB notes  that the provision by central 
banks of fiscal agency services15 complies with the monetary financing prohibition, provided that 
such services remain within the scope of the fiscal agency function and do not constitute central 
bank f inancing of public sector obligations vis -à-vis third parties16 or central bank crediting of the 
public sector outside the narrowly defined exceptions specified in Regulation (EC) No 3603/9317. 
The ECB considers that the provision without remuneration by CNB  of fiscal agent services 
provided for under new Article 31a of the L aw on CNB does not raise monetary financing 
concerns, provided they are core fiscal agent services.  As regards possible CNB activities pursuant 
to Article 31 of the L aw on CNB , relating t o the management, redemption and transfer of 
government bonds, the payment of interest on such bonds and other activities as required, the law provides for remuneration of CNB to be agreed with the Ministry of Finance. In order to ensure full 
compliance wi th th e monetary financing prohibition under Article 123 TFEU, it needs to be 
ensured  that such activities do not involve any financing by CNB, even by means of bridge 
financing . The ECB understands that under the arrangements currently in place, the govern ment 
bond redemptions and coupon redemptions are financed from government account balances and that the CNB does not provide any form of financing with the exception of intraday financing, which is in line with the  monetary financing prohibition. 
 
                                                 
14  See the ECB’s Convergence Report May 201 2, p. 39.  
15  See the ECB’s Convergence Report May 201 2, p. 38 , stating that ‘The purpose of Article 21.2 of the Statute is, following 
transfer  of the monetary policy competence to the Eurosystem, to enable NCBs to continue to provide the fiscal agent 
service traditionally provided by central banks to governments and other public entities without automatically breaching 
the monetary financing prohibition.’ See also, e.g., Opinion CON/2009/23. All ECB opinions are published on the ECB’s 
website at www.ecb.europa.eu.  
16  This is one of the prohibited forms of monetary financing; see Article 1(1)(b)(ii) of Regulation (EC) No 3603/93 
specifying definitions for the application of the prohibitions referred to in Articles 104 and 104b(1) of the Treaty . See the 
ECB’s Convergence Report May 2008, p.  233, which states with reference to the provision by CNB of administrative and 
financial support to the Financ ial Arbitrator, an administrative body entirely independent from the central bank, 
‘constitutes a form of central bank financing of the public sector’s obligations’.  
17  See Article 4 (non -extendable intra-day credits), Article 5 (crediting, under specified  conditions, the public sector’s 
account with cheques issued by third parties) and Article 6 (holding, within specified limits, coins issued by and credited 
to the public sector) of Regulation (EC) No 3603/93.  
ECB -PUBLIC 
6 4. Legal  integration of  CNB into the Eurosystem  
 The legal integration of NCBs into the Eurosystem requires that national legislation be adapted to 
allow for the performance of Eurosystem -related tasks and compliance with the ECB’s decisions 
once the Member State concerned has adopted the euro. The ECB draws the consulting authority’s attention to the fact that, to comply with Article 131 T FEU , relevant Czech legislation had to be 
adjusted by the date of the Czech Republic’s accession to the Union, i.e. 1 May 2004. Such 
adjustments necessary to ensure full integration of CNB into the Eurosystem need only enter into 
force on the date the Czech Republic adopts the euro. The ECB’s Convergence Report 2010 
identifies several provisions of the Law on CNB and Law No 2/1969 Coll.
18 that need to be 
adapted to ensure compatibility with the T FEU  and the Statute of the ESCB in respect of 
Eurosystem -related tasks.   
 An NCB’s secondary objectives must be consistent and not interfere with its obligation to support 
the Union’s genera l economic policies with a view to contributing to the achievement of the 
objectives laid down in Article 3 of the Treaty on the European Union, which is itself an objective expressed to be without prejudice to maintaining price stability
19. Therefore , amen ded Article 2(1) 
of the Law on CNB should make it clear that the objective in the area of financial stability is 
subordinate to the secondary objective of the ESCB20, which is provided in the last sentence of 
amended Article 2(1).  
 
5.  CNB ’s role in macro -prudential supervision  
5.1 The ECB welcomes the proposed amendments to the Law on CNB  which  entrust CNB with 
specific tasks in the area of macro -prudential policy. The ECB considers  that the ECB and  NCBs  
should play a leading role in macro- prudential overs ight given  their expertise and existing 
responsibilities in the area of financial stability , as referred to in the draft law. Against this 
background, the ECB would like to draw attention to the Recommendation of the European 
Systemic Risk Board of 22 December 2011 on the macro- prudential mandate of national 
authorities21 and m ore specifically  to the following aspects of performance by CNB of its  macro -
prudential oversight tasks.  
5.2 First, in order for CNB to undertake its tasks, the draft law entitles CNB  to require necessary 
information and documents in the form of statistical statements  and statements for supervisory 
purposes and additional information or reports  (hereinafter the ‘statements’) from listed reporting 
                                                 
18  Law No 2/1969 Coll, establishing ministries and other central administrative bodies of the Czech Republic.  
19  See Opinions CON/2010/30 and CON/2010/48.  
20  See Articles 127(1) and 282(2) TFEU.  
21  See Recommendation ESRB/2011/3 of the European Systemic Ris k Board of 22 December 2011 on the macro-prudential 
mandate of national authorities (OJ C 41, 14.2.2012, p. 1). See also recital 24 of Regulation (EU) No 1092/2010 of the 
European Parliament and of the Council of 24 November 2010 on European Union macro-pr udential oversight of the 
financial system and establishing the European Systemic Risk Board (OJ L 331, 15.12.2010, p. 1).  
ECB -PUBLIC 
7 entities.22 Under the draft law, CNB may use these statements to carry out any of its tasks, unless 
provided otherwise in a separate legislative act.23 The ECB understands that, for the benefit of its 
macro -prudential oversight tasks, CNB would thus be authorised to require and obtain in a timely 
fashion  all data and information collected from reporting entities  such as all financial corporations  
and other persons who have the information in their disposal , as referred to in new Article 41 of the 
Law on CNB , including information other than that cu rrently  collected for the purpose of 
supervising financial institutions24. 
5.3. Second, t he Law on CNB, as amended by the draft law , provides that CNB ‘ shall cooperate with 
the relevant state authorities in setting macro -prudential policy ’25 that it ‘ shall b e part of the 
European System of Financial Supervision and cooperate with the European Systemic Risk Board 
and with European Supervisory Authorities ’26 and further that it ‘shall cooperate and negotiate 
agreements within the scope of its field of competence with the central banks of other countries, 
with foreign authorities engaged in financial market supervision, and with international 
organisations engaged in financial market supervision’27. The ECB is of the view that these 
provisions may in addition speci fically provide  that the macro -prudential authority is entitled to 
exchange information with other central banks, macro- prudential authorities and with the ESRB , in 
particular on actions taken to address sy stemic risks at national level.  
 
6.  Statistics an d reporting  
6.1 The ECB takes note of  the detailed and extended legal regulation of reporting and statistics, which 
is based on Union legislation and introduces a confidentiality regime for statistical information.  
6.2 Article 5 of the Statute of the ESCB and Regulation (EC) No 2533/9828 provide the legal basis for 
the ECB, assisted by NCBs , to collect the statistical information necessary for the performance of 
ESCB tasks. Although the draft law refers to Regulation (EC) No 2533/98, certain provisions are 
not fully in line with Article 8(4) of Regulation  (EC) No 2533/98. Under Article 8(4), the 
transmission of confidential statistical information collected pursuant to Article 5 of the Statute of the ESCB ‘shall take place (a) to the extent and at the level o f detail necessary for the performance 
of the tasks of the ESCB referred to in the Treaty; or (b) provided that such transmission is 
necessary for the efficient development, production or dissemination of statistics under Article 5 of the [Statute of the E SCB] or for increasing their quality’. N ew Article 43e and Article 43f(1)(a) and 
(c) of the Law on CNB limit the transmission  of confidential statistical information that may be 
                                                 
22  See new Article 41(1) of the Law on CNB.  
23  See new Article 41(2) of the Law on CNB.  
24  See also  recommendation C(2) of Recommend ation ESRB/2011/3.  
25  See new Article 2(2)(e) of the Law on CNB.  
26  See Article 2a of the Law on CNB. 
27   See new Article 2 (3) of the Law on CNB.  
28  Council Regulation (EC) No 2533/98 of 23 November 1998 concerning the collection of statistical information by the 
European Central Bank (OJ L 318, 27.11.1998, p. 8) . 
ECB -PUBLIC 
8 provided by CNB to the ESCB to statistical purposes. In this respect , the draf t law  should be 
amended to allow the transmission  of confidential statistical information also in accordance with 
Article 8(4)(a)  of Regulation (EC) No 2533/98.  
 
This opinion will be published on the ECB’s website.  
  
Done at Frankfurt am Main,  31 May 2012.  
 
[signed]  
 
The Vice -President of the ECB  
Vítor CONSTÂNCIO