EN 
 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 23 July 2008 
at the request of the Polish Minister for Finance  
on a draft law amending the Law on the Bank Guarantee Fund 
(CON/2008/32) 
 Introduction and legal basis
 
On 23 May 2008 the European Central Bank (ECB) received a request from the Polish Minister for 
Finance for an opinion on a draft law (hereinafter the ‘draft law’) amending the Law of 14 December 1994 
on the Bank Guarantee Fund1 (hereinafter the ‘Law on the Bank Guarantee Fund’).  
The ECB’s competence to deliver an  opinion is based on Article 105(4) of the Treaty establishing the 
European Community and the third and sixth indents 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 provisions2, as the draft law relates to Narodowy Bank Polski (NBP) and to rules applicable to 
financial institutions insofar as they materially infl uence the stability of financial institutions and markets. 
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 1.1 The draft law proposes certain amendments to the regulation of the na tional deposit insurance 
scheme, managed by the Bank Guarantee Fund (hereinafter the ‘Fund’)
3. The ECB has already been 
consulted on two earlier versions of the amendm ents, as described in detail in ECB Opinions 
CON/2007/26 and CON/2008/54.  
1.2 The draft law introduces inter alia the following amendments to the Law on the Bank Guarantee 
Fund:  
                                                 
1  Consolidated text: Dz.U. of 19 April 2007 No 70, Item 474. 
2  OJ L 189, 3.7.1998, p. 42. 
3  Participation in the deposit guarantee scheme operated by the Fund is mandatory  for all banks established in Poland, 
including cooperative banks, but not for Polish credit unions  operating on the basis of the Law of 14 December 1995 on 
cooperative savings and loan associations (D z.U. of 4 January 1996 No 1, Item 2, as amended). The scheme is compulsory 
for branches of non-EU banks and optional for branches of EU credit institutions  to the extent that their home country 
schemes do not ensure the level of deposit guarantees provi ded by Polish law (Articles 2(3) and 2b of the Law on the 
Bank Guarantee Fund). For ease of reference,  the entities covered by the mandatory deposit guarantee scheme operated by 
the Fund are referred to in this opinion as ‘commercial banks’. 
4  See ECB Opinion CON/2007/26 of 27 August 2007 at the reque st of the Polish Minister for Finance on a draft law 
amending the Law on the Bank Guarantee Fund and ECB Opinio n CON/2008/5 of 17 January 2008 at the request of the 
Polish Minister for Finance on a draft law amending the Law on the Bank Guarantee Fund. 
2 (i) it abolishes NBP’s non-repayable annual subsidies for the Fund5. NBP’s right to extend credit 
facilities to the Fund will be restricted to short-term credit facilities extended at NBP’s discretion to enable the Fund to repay guarant eed deposits, only insofar as the Fund’s own 
resources are insufficient and only where the st ability of the banking system is threatened
6; 
(ii)  it introduces new rules for the Fund’s manage ment of its financial resources. In particular, 
any balance sheet surplus of the Fund should, as a rule, be allocated to its assistance fund 
supporting the Fund’s operations to the benefit of distressed but still solvent commercial 
banks, rather than to the Fund’s core res ources securing the repayment of guaranteed deposits 
in the event of a bank insolvency7;  
(iii)  it modifies the rules for the Fund’s govern ance, regulation and supervision. Most of the 
NBP’s governance and regulation powers over the Fund will be eliminated or limited, as 
further specified in paragraph 3.18. 
 
2. Compatibility with the monetary financing prohibition 
2.1 In line with its previous recommendations, the ECB welcomes the draft law insofar as it continues 
to propose abolishment of NBP’s annual subsidies of the Fund9.  
2.2 As regards the possibility of NBP extending credit facilities to the Fund, the ECB repeats its stance 
on the prohibition on monetary financing, as mo st recently expressed in its 2008 Convergence 
Report. In the Convergence Report, the ECB states that national legislation which provides for the 
‘financing by NCBs [national central banks] of a public sector national deposit insurance scheme 
for credit institutions … would not be compatible wi th the monetary financing prohibition, if it is 
not short term, does not address urgent situations, systemic stability aspects are not at stake, and 
decisions do not remain at the NCB’s discretion’10. The ECB further notes that Article 43 of the 
Law on Narodowy Bank Polski11 and Articles 15(6) and 34(3) of the Law on the Bank Guarantee 
Fund, which empower NBP to grant credit to the Fu nd, are incompatible with the Treaty prohibition 
on monetary financing12. 
                                                 
5  At the same time, the method for cal culating the commercial banks’  financial contributions to  the Fund is modified (see 
Article 13 of the Law on the Bank Guarantee Fund,  as amended by Article 1(9) of the draft law). 
6  See Article 16(2) to (2b) of the Law on the Bank Guaran tee Fund, as amended by Artic le 1(13) of the draft law. 
7  See Article 1(13) of the draft law. The statutory application of the Fund’s various resources is  regulated in paragraphs 28 
to 31 of the Bank Guarantee Fund Statute (see the Anne x to the Regulation of the Council of Ministers of 
28 February 1995 on the adoption of the Bank Guarantee Fund Statute, Dz.U. of 6 March 1995 No 21, Item 113, as 
amended (hereinafter the ‘Fund Statute’)).  
8  See Article 1(4), (5), (8) and (17) of the draft law. Among other things thes e amendments increas e the Minister for 
Finance’s regulatory and supervisory powers over the Fund.  Auditing powers exercised by the Supreme Chamber of 
Auditing are also strengthened (Article 3 of the draft law). 
9  See the ECB Convergence Report, May 2008, p. 244 (Sec tion 6.7.3 ‘Monetary financing and privileged access’). 
Available on the ECB’s website at www.ecb.europa.eu. See also paragr aph 2.2 of ECB Opinion CON/2007/26. 
10  See the ECB Convergence Report, May 2008, p. 24 (unde r ‘Financial support for deposit insurance and investor 
compensation schemes’). 
11  Law on Narodowy Bank Polski of 29 August 1997 (consolidated  text: Dz.U. of 1 April 2005 No 1, Item 2, as amended 
(hereinafter the ‘Law on NBP’)). 
12  See the ECB Convergence Report, May 2008, p. 244. 
3 2.3 The draft law will amend the conditions under wh ich NBP may grant credit facilities to the Fund. 
Under the amended Article 34(3) of the Law on the Bank Guarantee Fund, such credit facilities may 
only be given for a short term, and only if: (i ) the total amount of claims submitted for the 
repayment of guaranteed deposits exceeds the Fund’s accumulated resources; and (ii) the stability of the banking system is threatened
13. Further, Article 15(6) of the Law on the Bank Guarantee Fund, 
establishing the sources of finance of the Fund, is amended to reflect the amendments to 
Article 34(3) of the same Law14. At the same time, the draft law amends Article 43 of the Law on 
NBP so that it will now provide: ‘In the event refe rred to in Article 34(3) of the Law on the Bank 
Guarantee Fund, Narodowy Bank Polski may ex tend a short-term credit facility to the Bank 
Guarantee Fund’15. 
2.4  According to the consulting authority, the ne w regulation of conditions under which NBP’s credit 
facilities may be extended to the Fund is intended to ensure full compliance of the Law on the Bank 
Guarantee Fund with the monetary financing prohibition under Article  101(1) of the Treaty16. The 
ECB welcomes this intention, but points to the remaining incompatibility. The Convergence Report 
states that central bank credit extended to a na tional deposit insurance scheme may only address 
urgent situations is not incorporated. To this effect, the amended Article 34(3) of the Law on the 
Bank Guarantee Fund needs to specify that credit fa cilities may only be granted for urgent needs of 
the Fund17.  
2.5 Other related comments in ECB Opinion CON/2008/5 remain valid, as in particular referring to the 
classification of the Fund as a ‘body governed by public law’, the priority of commercial banks’ 
contributions over possible NBP credit faciliti es among the sources of Fund’s funding and the 
possible enhancement of the regulation of the NBP’s crediting of the Fund by way of including express references to adequate collateral and to compliance with Article 101 of the Treaty
18.  
2.6  Moreover, the ECB notes the stronger emphasis by the draft law on the Fund’s assistance activity 
constituting financial support for the reorganisa tion and consolidation of commercial banks 
threatened with insolvency19, which is differentiated from the Fund’s operations related to 
                                                 
13  The proposed wording of Article 34(3) of the Law on the Ba nk Guarantee Fund, as amended by  Article 1(17) of the draft 
law. 
14  The proposed wording of Article 15(6) of the Law on the Ba nk Guarantee Fund, as amended by  Article 1(12) of the draft 
law, specifies ‘short-term credit facility extended by NBP pursu ant to Article 34(3) [of the Law]’ as one of the sources of 
finance of the Fund. The related provisions of the Law on the Bank Guarantee Fund specifying the mode of application 
and repayment of NBP’s credits are not affected.  
15  Article 43 of the Law on NBP, as amended by Article 4 of the draft law. 
16  See the third paragraph of the general part of the explanatory memorandum accompanying the draft law (p. 12 of the joint 
document containing the draft law and the explanatory memo randum) as well as specific remarks in point 15 of the 
explanatory memorandum (p. 17 of the joint document). 
17  See paragraph 2.5(ii) of ECB Opinion CON/2008/5. 
18  See paragraphs 2.4 and 2.6 to 2.7 of ECB Opinion CON/2008/5. 
19  See Article 1(13) of the draft law amending Article 16 of the Law on the Bank Guarantee Fund, as commented in point 19 
of the specific remarks in the explanatory memorandum (p. 16 of the joint document containing the draft law and the 
explanatory memorandum). The assistance act ivity constitutes providing repayable fi nancial assistance, under statutorily 
defined conditions, to commercial banks threatened with in solvency by, among other things, issuing credit facilities, 
guarantees and endorsements to such co mmercial banks, acquiring specified types of their loan portfolios and other 
receivables, or crediting the acquisition of bank shares or st ocks. See also Article 4(2) of the Law on the Bank Guarantee 
Fund, as partly amended by Article 1(5) of the draft law.  See also paragraph 4 of the Regulation of the Council of 
4 repayment of guaranteed deposits held by insolven t banks. In this respect, the ECB notes that the 
Law on the Bank Guarantee Fund stipulates that NB P’s credit facilities may only be used to fulfil 
the Fund’s task of protecting guaranteed depos its, hence excluding the use of NBP’s credits to 
finance any of the Fund’s other operations20. From a Community law perspective, as consistently 
held by the ECB, any financing by the central ba nk of the tasks of a deposit guarantee fund which is 
a public sector body will be compatible with the m onetary financing prohib ition only subject to the 
introduction of the necessary safeguards related to solvency of the recipient institution, as most 
recently stated in the ECB Convergence Report of May 200821. 
 3.  Governance of the Fund and coordination with the central bank’s financial stability role  
3.1 The draft law will make certain changes to the current institutional and regulatory regime for the 
Fund which, as regards the powers of NBP’s President  exercised in relation to the Fund: (i) reduces 
the number of Fund Council members appointed by NBP’s President from four to two, and limits 
the role of NBP’s President in selecting the Fund Council’s Chair
22; (ii) NBP’s President will only 
submit a non-binding opinion on draft regulations proposed by the Minister for Finance relating to the Fund, instead of being a co-regulator of the Fund operations
23; (iii) NBP’s President will lose his 
current powers related to the selection of the Fund’s auditors24; and, on the other hand, (iv) NBP’s 
President will obtain a new right to receive, together with the Minister for Finance, quarterly reports on the activities and finances of the Fund
25. 
3.2  The ECB repeats its earlier observation that de posit insurance schemes are a key element of the 
financial safety net and that effec tive coordination of their important  functions with the overall role 
of central banks in safeguarding financial stability  should be ensured. This aim may be achieved 
                                                                                                                                                              
Ministers of 22 September 1999 on the trade by the Bank Guarantee Fund in the receivables acquired from banks 
threatened with insolvency (Dz.U. of 8 October 1999 No 80, Item 904). 
20  Article 16(1)(2) in conjunction with Article 15(6) of the Law on the Bank Guarantee Fund.  
21  See the ECB Convergence Report, May 2008, p. 244 (Secti on 6.7.3 ‘Monetary financing and privileged access’) and 
paragraph 2.2 of ECB Opinion CON/2007/26. 
22  Currently the Prime Minister appoints the Fund Council’s Ch air on a joint recommendation by the Minister for Finance 
and NBP’s President; the draft law provides for appointment by the Minister for Finance after consulting NBP’s President, 
the Chair of the Financial Supervision Commission and the Polish Banking Associa tion (Article 1(6) of the draft law, 
amending Article 6(3) and (4) of th e Law on the Bank Guarantee Fund). 
23  Currently, proposals for regulations in the following areas must be agreed between the Minister for Finance and NBP’s 
President: (1) the adoption of the Fund’s Statute; (2) setting the conditions for the Fund’s trading in the loans acquired 
from commercial banks threatened with insolvency; and (3) any additional Fund tasks concerning the provision of 
assistance to commercial banks. Further, NBP’s President adopts the regulation regardi ng remuneration of the Fund 
Council’s members in consultation with the Minister for Financ e. These powers of NBP’s Pres ident will be replaced with 
the right to issue a non-binding opinion on the proposals submitte d by the Minster for Finance (see Articles 3(4), 4(2a), 
4(3) and 6(6) of the Law on the Bank Guarantee Fund, as amen ded by Article 1(4)(a), (5)(d) and (6) of the draft law). 
Additionally, NBP’s President will also obtain the right to i ssue a non-binding opinion on draft regulations by the Minister 
for Finance relating to special accounting rules for the Ba nk Guarantee Fund (see Article 81(2)(11) of the Law of 
29 September 1994 on accounting (consolidated text: Dz.U. 2002 No 76, Item 694, as amended) as added by Article 2 of 
the draft law). 
24  See Article 17(2) of the Law on the Bank Guarantee Fund, as  amended by Article 1(14) of the draft law, which provides 
that auditors are selected through a tender announced by the Fund Council (and no longer by NBP’s President). 
25  See Article 7(2)(3a) of the Law on the Bank Guaran tee Fund, as added by Article 1(7) of the draft law. 
5 through, among other things, maintaining an adeq uate level of central bank involvement in the 
governance and regulation of the national deposit insurance scheme26.  
3.3 Moreover, the ECB notes that as a result of the supervisory reform comp leted on 1 January 2008, 
banking supervision responsibilities have been tr ansferred from the defunct Banking Supervision 
Commission, a body closely associated with NBP,  to the newly created Financial Supervision 
Commission, which is largely disconnected from NBP27. In this new institutional setting, it is 
important to maintain channels for timely centr al bank access to information concerning financial 
market participants, relating in particular to cris is situations. Such meaningful access to prudential 
information, as possessed inter alia by the Fund, will allow NBP to properly perform its financial 
stability role. The ECB further notes that the financ ial stability role, as expressly introduced by the 
draft law in relation to the Fund28, should also be expressed more explicitly in relation to NBP. 
Specifically, the ECB refers to paragraph 4.2 of ECB Opinion CON/2006/39: ‘Assuming the implementation of a supervisory reform weakeni ng the existing institutional relationship between 
NBP and the banking supervisory authority, th e ECB recommends amending the Law on NBP, so 
as to specify that NBP has a formal responsib ility for contributing to financial stability by 
monitoring and assessing the financial system as a whole, as a separate function from hands-on supervision and financial regulation’
29. 
3.4 Finally, the ECB notes the introduction by the dr aft law of a procedure under which the members of 
the Fund’s governing bodies will be  automatically dismissed if the Council of Ministers does not 
endorse the Fund’s financial report30. This procedure is described by the explanatory memorandum 
to the draft law as ‘similar’ to the procedure fo r endorsement of the NBP’s financial report by the 
Council of Ministers31. For clarification purposes, the ECB und erstands that in the context of 
submission of NBP’s financial report for endorsem ent by the Council of Ministers no dismissal 
sanction of any kind may be applied to members of the NBP’s governing bodies. 
 
This opinion will be published on the ECB’s website. 
 
Done at Frankfurt am Main, 23 July 2008. 
[signed] 
The President of the ECB 
Jean-Claude TRICHET 
                                                 
26  See paragraph 3.3 of ECB Opinion CON/2007/26. 
27  As described in paragraph 1.1 of ECB Opinion CON/2007/31 of 9 October 2007 at the request of the Polish Minister for 
Finance on a draft law amending the Law on  the supervision of financial markets. 
28  See Article 1(5)(e) of the draft law, adding Article 4( 4) in the Law on the Bank Guarantee Fund, as commented in 
point 10 of the specific remarks in the explanatory memorandum  (p. 15 of the joint document containing the draft law and 
the explanatory memorandum). 
29  ECB Opinion CON/2006/39 of 2 August 2006 at the request of  Poland’s Sejm Marshall on a draft law amending the Law 
on Narodowy Bank Polski. 
30  See Article 1(14) of the draft law am ending Article 17(5) of the Law on the Bank Guarantee Fund, as commented in point 
12 of the specific remarks in the expl anatory memorandum (p. 16 of the joint do cument containing the draft law and the 
explanatory memorandum). 
31  Article 69(3) of the Law on NBP.