EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 18 July 2007 
at the request of the German Ministry of Finance 
on a draft law amending the Law on investment and other laws  
(CON/2007/21) 
 
Introduction and legal basis  
On 14 June 2007 the European Central Bank (ECB) received a request from the Federal Ministry of 
Finance for an opinion on the draft law ame nding the Law on investment and other laws (Gesetz zur 
Änderung des Investmentgesetzes und zur Anpassung anderer Vorschriften) (hereinafter the ‘draft law’). 
The ECB’s competence to deliver an  opinion is based on Article 105(4) of the Treaty establishing the 
European Community and the third, fourth and si xth 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 provisions1, as the draft law relates to national central banks (NCBs), the 
collection, compilation and distribution of monetary, financial, banking, payment systems and balance of 
payments statistics, as well as to rules applicable to  financial institutions insofar as they materially 
influence the stability of financial institutions and markets. In accordance with  the first sentence of 
Article 17.5 of the Rules of Procedure of the Europ ean Central Bank, the Governing Council has adopted 
this opinion. 
 1.  Purpose of the draft law 
1.1 The draft law aims at enhancing competitiveness of the investment fund industry in Germany. To 
this end, it envisages a large number of measures, in particular, deregula tion, modernisation of 
open-ended property funds, promotion of product innovation and improved investor protection and 
corporate governance. 
1.2 The draft law will align the Law on investment with Council Directive 85/611/EEC of 
20 December 1985 on the coordinati on of laws, regulati ons and administrative provisions relating 
to undertakings for collective invest ment in transferable securities (UCITS)
2. As a consequence, 
investment management companies ( Kapitalanlagegesellschaften ) will no longer qualify as credit 
institutions or be subject to the German Law on banking. This entails important changes in their 
regulation and supervision. Henceforth, investme nt management companies will be exclusively 
                                        
1  OJ L 189, 3.7.1998, p. 42.  
2  OJ L 375, 31.12.1985, p. 3.  
 
2 subject to supervision by the Federa l Financial Supervisory Authority ( Bundesanstalt für 
Finanzdienstleistungsaufsicht (BaFin )) as sole regulator and supervisory authority, since the draft 
law abolishes the Deutsche Bundesbank’s supervisi on of investment management companies, as 
well as their supervisory reporting requirements vis-à-vis the Bundesbank. 
1.3 For instance, investment manage ment companies will no longer be obliged to report their intention 
of forming a branch in another Member Stat e or member of the European Economic Area3. The 
same would apply to changes related to branches4. Furthermore, investment management 
companies would no longer be required to provid e the Deutsche Bundesbank with annual financial 
statements, management reports, audit reports5 and to notify reductions in their start-up capital6. 
Similarly, investment management companies would not have to transmit their prospectus7, interim 
reports, annual, semi-annual and dissolution reports on the funds under their management8. 
Moreover, the Deutsche Bundesbank would no longer be informed of the nomination of an auditor9, 
and the auditors of the investment manageme nt companies would no longer have any duties 
towards the Deutsche Bundesbank10. As far as queries and investig atory powers regarding the 
prosecution of unauthorised investment deals by i nvestment management companies are concerned, 
the supervisory powers rest with the BaFin and the Deutsche Bundesbank would not play any role 
in this context11. 
1.4 The draft law also restricts the rules concerni ng information exchange between the BaFin and the 
Deutsche Bundesbank. The amended § 18 of the Law on investment provides that the BaFin must provide the Deutsche Bundesbank with informatio n and documents which it has received on the 
basis of the Law on investment only if this information is indispen sable for the Deutsche 
Bundesbank to comply with its obligation of ensuri ng the stability of the financial system and if the 
Deutsche Bundesbank cannot obtain such information in another manner.  
1.5 Furthermore, the draft law intends to abolis h the need for prior consultation of the Deutsche 
Bundesbank by the Ministry of Finance with regard to the issue of the latter’s statutory regulations 
containing more specific rules in the fields of accounting, valuation of any unit classes or any sub-
funds
12, interim reports13, derivatives14, nature of risk management systems15 etc.  
                                        
3  Article 1 of the draft law amending first sentence of § 12(1) of Law on investment. 
4  Article 1 of the draft law amending first and th ird sentences § 12(4) of the Law on investment. 
5  Article 1 of the draft law amending § 19 of the Law on investment. 
6  Article 1 of the draft law amending § 97 of the Law on investment. 
7  Article 1 of the draft law amending § 42(6) of the Law on investment 
8  Article 1 of the draft law amending § 45 of the Law on investment. 
9  Article 1 of the draft law amending § 19 of the Law on investment. 
10  Article 1 of the draft law amending § 19 of the Law on investment. 
11  Article 1 of the draft law amending § 19 of the Law on investment. 
12  Article 1 of the draft law amending first se ntence of § 34(3) of the Law on investment. 
13  Article 1 of the draft law amending § 44 of the Law on investment. 
14  Article 1 of the draft law amending the first sent ence of § 51(1), (2), (3) of the Law on investment. 
15  Article 1 of the draft law amending the firs t sentence of § 119 of the Law on investment. 
 
3 1.6 In addition, several constraints deriving  from the German Law on stock corporations ( Aktiengesetz ) 
would no longer apply to investment stock companies. 
 
2. Financial stability and prudential role of a central bank 2.1 General observations   
2.1.1 Article 105(5) of the Treaty establishing the Eu ropean Community assigns to the European System 
of Central Banks the task of contributing to the smooth conduct of policies pursued by the competent authorities relating to the prudential supe rvision of credit institutions and the stability of 
the financial system. The ECB has consistently favoured the involvement of central banks in 
prudential supervision due to their pivotal role in  the financial system, in particular regarding 
implementing monetary policy and ensuring the proper functioning of payment systems
16. 
Moreover, maintaining a close involvement by NCBs  in prudential supervision is an important 
condition for allowing the Eurosystem to contribute adequately to monitoring the risks to financial 
stability in the euro area, in accordance with Article 105(5) of the Treaty, and to safeguard a 
smooth coordination between the central banking f unctions exercised at the Eurosystem level and 
the supervisory functions carried out at national level. 
2.1.2 In this respect, the access of central banks  to prudential information and cooperation between 
financial supervisory authorities and central banks are essential17. In particular from a financial 
stability perspective, the central bank would inevitably need to be involved in any crisis in financial 
markets. In that context, the ready availability of relevant information and the ability to interpret it 
are crucial. 
2.1.3 In view of these considerations, the ECB s upports the coordination a nd cooperation framework 
currently in force between the BaFin and the De utsche Bundesbank, encompassing matters relating 
to the stability of the German financial system, th e development of supervisory practice, as well as 
aspects of the day-to-day supervision of credit a nd financial services institutions. This is in line 
with the ECB’s view that maintaining the close i nvolvement of NCBs in pr udential supervision is a 
mandatory condition to allow the Eurosystem to c ontribute adequately to monitoring the risks to 
financial stability in the euro area18. 
 2.2 Specific observations  
2.2.1 The ECB notes with concern that the draft law – pa rticularly with regard to the abolishment of the 
direct reporting of information to the Deutsche Bundesbank and the prior consultation of the Deutsche Bundesbank by the Ministry of Fina nce – would introduce considerable legal 
                                        
16  See, e.g. paragraph 2.1.2 of ECB Opin ion CON/2006/15 of 9 March 2006 at the reque st of the Polish Minister of Finance 
on a draft law on the supervision of financial instituti ons and ECB Opinion CON/2006/20 of 25 April 2006 on the Dutch 
draft law concerning financia l sector supervision.  
17  See, e.g. paragraph 2.3 and 2.4 of ECB Opinion CON/ 2006/15 and paragraph 2.4 and 2.5 of ECB Opinion CON/2006/20. 
18  See e.g. paragraph 5 of ECB Opinion CON/2001/35 of 8 No vember 2001 at the request of the German Ministry of 
Finance on a draft law establishing an inte grated financial serv ices supervision. 
 
4 impediments to the Deutsche Bundesbank’s access to  information and information sharing on all 
matters relating to financial stability. Given the e nhanced integration of financial services, the ECB 
deems that it is necessary to maintain the Deutsch e Bundesbank’s involvement in the definition of 
the scope of information to be reported by institu tions and its up-to date access to the information 
that may be needed to perform its functions. The central bank should have the means to assess 
possible systemic implications for the money and capital markets as well as for payment and settlement systems stemming from cross-sectoral linkages and from the behaviour of complex financial groups. 
2.2.2 The ECB is not in favour of the introduction of the condition in § 18 of the draft law that the 
Deutsche Bundesbank may acquire information fro m the BaFin only if there are no other means 
available to obtain such information. The introduc tion of this condition coul d materially impair the 
Deutsche Bundesbank’s discharge of its obligati ons covered by its ESCB-related tasks, in 
particular in the field of financial stability
19. In addition, the ECB proposes clarifying in the draft 
law that the information currently reported to the Deutsche Bundesbank is necessary and 
appropriate for the fulfilment of its tasks and that this information should continue to be received 
from the BaFin under § 18. 
 3. Statistical reporting requirements  
The draft law does not have an impact on th e Deutsche Bundesbank’s statistical reporting 
requirements. In this regard, the ECB understands that the amendment made to § 18 of the Law on 
the Deutsche Bundesbank, which acknowledges th e role of the Deutsche Bundesbank in the 
collection of statistics from investment companie s and investment stock companies, is a mere 
technical adaptation since these companies would no longer qualify as credit institutions.  
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 18 July 2007. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET 
                                        
19  Moreover, even the explanatory memo attached to the am endment of § 18 of the law does not specify how the term ‘by 
other means’ has to be interpreted, i.e.  whether it requires the Deutsche Bundes bank to seek the information from ‘public 
sources’ only or whether Deutsche B undesbank has to liaise with other publ ic authorities w ho might possess the 
information in question.