EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 14 May 2010  
on the transfer of rights and obligations in relation to the issuance, distribution and redemption of 
public debt 
(CON/2010/39) 
 
Introduction and legal basis  
On 28 April 2010 the European Central Bank (ECB) r eceived a request from the Cypriot Minister for 
Finance (hereinafter ‘the consulting authority’) fo r an opinion on a draft law amending the Laws of 1989 
to 2008 on Treasury bills (hereinafter, the ‘draft  law’) and on two accompanying draft regulations 
(hereinafter, the ‘draft regulations’).  
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 on the third i ndent of Article 2(1) of Council Decision 98/415/EC 
of 29 June 1998 on the consultation of the European Central Bank by national au thorities regarding draft 
legislative provisions1, as the draft law relates to the Central Bank of Cyprus (CBC). In accordance with 
the first sentence of Article 17.5 of the Rules of Pr ocedure of the European Central Bank, the Governing 
Council has adopted this opinion. 
 1  Purpose of the draft law and the draft regulations 
1.1 The objective of the draft law and of its associated  draft regulations is to transfer from the CBC to 
the Ministry of Finance the ‘rights, privileges,  obligations, responsibilities, competences, duties 
and tasks’ involved in the issuance, distribution a nd redemption of public debt. This objective is to 
be achieved by means of the adoption of three identically worded legal acts, namely (i) the 
(Amending) Law of 2010 on Treasury bills, (ii) the (Amending) Regulations of 2010 on loan 
(development), (iii) the (Amending) Regulations  of 2010 on savings loans. According to the 
request for an opinion, these legal acts are interrel ated and are to be submitted to the Cypriot 
Council of Ministers and Parliament as a single legislative package. 
1.2 Until now, the issuance, distribution and rede mption of Government bonds, Treasury bills and 
other securities have been carried out by the CBC which, in its capacity as agent to the Cypriot 
                                                     
 
1  OJ L 189, 3.7.1998, p. 42.  
2 Government in financial matters pursuant to S ections 6(2)(f) and 51(c) of the Laws on the CBC2, 
has also managed public debt. 
2 General observations    
2.1 The domestic legal framework governing the issu ance, distribution and redemption of Government 
bonds, Treasury bills and other securities comprises not only those legal acts that the consulting 
authority proposes amending through the draft law and its associat ed draft regulations, but also the 
CBC Laws. Section 51(c) thereof attributes speci fic executory powers to the CBC in connection 
with (i) the issuance of Government bonds, Treasury bills and other securities, and (ii) the servicing 
of public debt.  
2.2 Section 51(c) of the CBC Laws expressly provides that the CBC’s powers pertaining to the 
issuance of Government bonds, Treasury bills and ot her securities and the servicing of public debt 
may be repealed by the Cypriot Council of Minister s, provided that certain procedural requirements 
are met. In July 2008 the Council of Minister s transferred the CBC’s public debt management 
authority from the CBC to the Ministry of Fi nance, with effect from 1 August 2010. More 
generally, the ECB notes that it is common for central  banks not to be responsible for public debt 
management and, instead, for this task to be th e responsibility of an independent debt management 
agency.  
2.3 Without prejudice to the foregoing observations, the ECB stresses the need for Cyprus to ensure 
the same level of transparency and accountability in managing its public debt as that achieved by 
the CBC, inter alia , in the interests of the Eurosystem’s liquidity management. If the Ministry of 
Finance is to be directly responsible for debt  management, debt mana gement should be kept 
separate from budget and fiscal control, and sufficient material resources and expertise will need to be secured for a public debt management offi ce to substitute the CBC in its public debt 
management tasks. Alternatively, if debt manageme nt is to be delegated to a separate, independent 
agency outside the Ministry of Finance, clear governance, legal and ins titutional arrangements will 
need to be established to control and monitor the external agency’s co mpliance with the debt 
management objectives, benchmarks and guidelines set  by the Ministry of Finance and to avoid 
conflicts of interest.  
 This opinion will be published on the ECB’s website.     
                                                     
 
2  Law 138(I)/2002, O περί της Κεντρικής  Τράπεζας  της Κύπρου  Νόµος (Official Government Gazette No. 3624 of 19 July 
2002), as amended.  
3 Done at Frankfurt am Main, 14 May 2010. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET