EN
OPINION OF THE EUROPEAN CENTRAL BANK
of 4 September 2003
at the request of the Belgian Ministry of Finance
on a draft proposal for a royal decree implementing Article 118 of the Law of 2 August 2002
relating to the prudential supervision of the financial sector and of financial services
(CON/2003/19)
1. On 7 August 2003 the European Central Bank (ECB) received a request dated 31 July 2003 from
the Belgian Ministry of Finance for an opinion on a draft royal decree implementing Article 118 ofthe Law of 2 August 2002 relating to the prudential supervision of the financial sector and offinancial services (hereinafter the ‘draft decree’).
2. The ECB’s competence to deliver an opinion is based on the second indent of Article 105(4) of the
Treaty establishing the European Community and the third, fifth and sixth indents of Article 2(1) ofCouncil Decision 98/415/EC of 29 June 1998 on the consultation of the ECB by nationalauthorities regarding draft legislative provisions
1, since the draft decree establishes the methods of
cooperation – in particular the methods, content and financing of the efficient pooling of variousactivities – between the Nationale Bank van België/ Banque Nationale de Belgique (NBB) and theBelgian Banking, Financial and Insurance Commission (BFIC)
2 in, inter alia , the fields of
prudential policy, payment, clearing and settlement systems, and international relations. Inaccordance with the first sentence of Article 17.5 of the Rules of Procedure of the EuropeanCentral Bank, the Governing Council of the ECB has adopted this opinion.
3. On 18 March 2002 the ECB was consulted on a draft Belgian law relating to the prudential
supervision of the financial sector and financial services (hereinafter the ‘Law’). The ECB gave itsopinion on 24 April 2002 (CON/2002/13). The Law was adopted on 2 August 2002 and enteredinto force on 1 June 2003. Article 117(1) of the Law establishes the principle of cooperationbetween the NBB and the BFIC in relation to issues of common interest, and lists certain specificareas of cooperation. Further, Article 118 of the La w states that the King of Belgium may, in the
absence of any relevant agreement between the NBB and the BFIC, establish the methods of this
                                                     
1OJ L 189, 3.7.1998, p. 42.
2The BFIC will be established on 1 January 2004 and will result from the integration of the current Belgian insurance
supervisory authority into the current Belgian banking and finance supervisory authority.
2cooperation by royal decree3. The purpose of the draft decree is to lay down such methods on the
basis of Article 118 of the Law. The ECB broadly welcomes the draft decree in view of itsobjective, i.e. increasing the efficiency and effectiveness of the NBB and the BFIC through mutualcooperation in fields of common interest, while at the same time observing their respective powersand responsibilities and guaranteeing the confidentiality of any information exchanged.
4. The ECB welcomes the fact that Article 2 of the draft decree states that the methods of this
cooperation do not alter the respective powers of the NBB4 and the BFIC, and that each remains
fully responsible for its respective decisions and actions. As the ECB mentioned in its opinionCON/2002/13, this is particularly important for the tasks that the NBB has to execute pursuant tothe Treaty and the Protocol on the Statute of th e European System of Central Banks and of the
European Central Bank within the framework of the European System of Central Banks (ESCB).
The ECB emphasises that cooperation between the NBB and the BFIC should not impinge uponthe independent execution of the above tasks by the NBB, nor upon the fact that, in executing thesetasks, the NBB might be obliged to keep certain information confidential vis-à-vis the BFIC aswell.
5. The ECB also welcomes the fact that Article 2 of the draft decree states that the draft decree does
not affect the agreements or memoranda already concluded between the NBB and the BFIC. This isparticularly relevant to the Memorandum of understanding on co-operation between payment
systems overseers and banking supervisors in stage three of economic and monetary union  and the
Memorandum of understanding on high-level principles of co-operation between bankingsupervisors and central banks of the Europe an Union in crisis management situations , to which
both the NBB and the BFIC are also signatories.
6. The ECB further notes with respect to Article 2 of the draft decree that according to Article 117(3)
of the Law, the Financial Stability Committee (FSC), which will deal with issues of commoninterest to the NBB and the BFIC and which will  be made up of the management boards of the
NBB and the BFIC, will decide by double majority (i.e. within the FSC itself and separately withinthe NBB and the BFIC) on the determination and management of the activities to be jointlyexercised. The ECB emphasised in its opinion (C ON/2002/13) the risk that, under specific but
possibly remote circumstances, this mechanism might result in the decision-making process beingobstructed in cases where the FSC’s view differed from that of the NBB and/or the BFIC. AsArticle 2 of the draft decree confirms that the respective powers of the NBB and the BFIC remainunaffected, the ECB assumes that the necessary safeguards exist or will be put in place to ensurethat the NBB can continue to pursue its tasks within the framework of the ESCB independently. 
                                                     
3See ECB opinion CON/2002/13 for the obligation to consult the ECB when measures on the basis of Article 118 of the
Law were proposed.
4The ECB would again like to draw attention to the fact that it considers that the inclusion in the NBB’s Statute andOrganic Law of the task of contributing to the stability of th e financial system (see opinion  CON/2002/13) is beneficial.
This is also relevant to distinguish between the respective powers of the NBB and the BFIC in the context of the draft
decree.
37. As regards cooperation between the NBB and the BFIC in the field of payment, clearing and
settlement systems (see Article 5 of the draft d ecree), the ECB points out that on 1 August 2003 a
joint task force of the ESCB and the Committee of European Securities Regulators (CESR)launched a public consultation procedure regarding standards applicable to clearing and settlementsystemsin the European Union. The outcome of this procedure might result in changes to thegeneral standards currently applicable to such systems. Consistent with the objective of the entiredraft decree, Article 5 of the draft decree also appears only to lay down the methods of closecooperation between the NBB and the BFIC with regard to payment, clearing and settlement
systems and does not affect the respective (oversight) tasks of the NBB and the BFIC in this field.The ECB nevertheless assumes that the Belgian authorities are aware of the fact that Article 5 ofthe draft decree, if enacted, may need to be revi sed to take into account the results of the work
undertaken by the ESCB/CESR task force.
8. The ECB welcomes the fact that Article 20 of the draft decree states that the NBB and the BFIC
shall treat as confidential all information exchanged between them in the context of theircooperation which does not fall under the professional secrecy by which they are both bound. TheECB notes in this respect that, according to th e explanatory memorandum to the draft decree, the
professional secrecy obligations applicable to the NBB and the BFIC are no obstacle to suchexchange of information, since the Law provides th at these institutions may exchange information
covered by these obligations in so far as this information is necessary for the accomplishment oftheir respective tasks. This reflects the standpoint adopted in various European Union directivesaccording to which the duty of professional secrecy does not prevent the transmission ofinformation between the competent authorities. Th e ECB would nevertheless draw attention again
to its remarks in paragraph 4 regarding the NBB’s independence and confidentiality obligations inrelation to tasks executed within the framework of the ESCB.
9. The ECB emphasises that, notwithstanding the two explicit statements made in Articles 2 and 20 of
the draft decree (see paragraphs 4 and 8 of this opinion), it is equally important to adopt andimplement internal measures in order also to  respect in practice the distinct powers and
responsibilities of the NBB and the BFIC and their respective secrecy and confidentialityobligations. Such measures would in particular concern cooperation between the NBB and theBFIC in the fields of prudential policy (Article 4 of the draft decree), payment, clearing andsettlement systems (Article 5 of the draft decree), processing of external confidential information(Article 6 of the draft decree), legal services (Articles 8 and 9 of the draft decree), internationalactivities (Article 10 of the draft decree), info rmation technology (Article 12 of the draft decree)
and archives (Article 16 of the draft decree). These measures could, for example, be implementedby establishing and monitoring the effective operation and enforcement of so-called ‘Chinesewalls’ or ‘firewalls’. These could, inter alia , regulate and restrict access by employees of the NBB
and the BFIC to computer files and documents containing information relating to the independent
4and/or confidential execution of the respective tasks entrusted to these institutions. The ECB
assumes that the NBB and the BFIC will take the measures necessary to achieve this.
10. The ECB confirms that it has no objection to the competent national authorities making this
opinion publicly available at their discretion. This  opinion will be published on the ECB’s website
six months after the date of its adoption.
Done at Frankfurt am Main on 4 September 2003.
The President of the ECB
[signed]
Willem F. DUISENBERG