EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 7 April 2010 
on the restructuring of the Central Bank and Financial Services Authority of Ireland 
(CON/2010/30) 
 
Introduction and legal basis  
On 22 February 2010 the European Central Bank (ECB)  received a request from the Irish Minister for 
Finance (hereinafter the ‘Minister’) for an opinion on dr aft heads (hereinafter the ‘draft heads’) relating to 
a proposed draft law entitled ‘the Central Bank of Irela nd Bill 2010’ (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 thir d indent of Article 2(1) of Council Decision 
98/415/EC of 29 June 1998 on the consultation of the European Ce ntral Bank by national authorities 
regarding draft legislative provisions1, as the draft law relates to the Ce ntral Bank and Financial Services 
Authority of Ireland (CBFSAI). In accordance with th e 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 heads  
The purpose of the draft heads is to provide a framework pursuant to which the draft law will be prepared. 
The draft heads implement a decision of the Irish Gove rnment of 16 June 2009 approving the reform of 
the internal structures of the CBFSAI
2.  
The draft law will amend certain provisions of the Central Bank Ac t 1942 (CBA) to provide, among other 
things, that: (a) the CBFSAI will be renamed the Centra l Bank of Ireland (hereinafter the ‘Bank’); (b) the 
Bank will be a single fully-integrated structure, re placing the two-pillar structure of the existing CBFSAI 
with a unitary board called the Central Bank Commissi on (hereinafter the ‘Commission’), which will be 
chaired by the Governor; (c) the Irish Financial Services Regulatory Authority (IFSRA) which is a constituent part of the CBFSAI and responsible at presen t for the regulation of financial institutions, will 
be dissolved; (d) the posts of Chie f Executive of the IFSRA and Consum er Director will be abolished; 
and (e) two new posts, Head of Fi nancial Regulation, responsible fo r the regulatory and supervisory 
functions and objectives of the Bank, and Head of Ce ntral Banking, responsible for the performance of 
                                                      
1  OJ L 189, 3.7.1998, p. 42. 
2  See Opinion CON/2009/89, paragraph 2.1.1, which specifically  anticipated the present propos ed reform of the internal 
structures of the CBSFAI.  All ECB opinions are pub lished on the ECB’s webs ite at www.ecb.europa.eu. 
 
2 central banking functions, will be  established and there will be new enhanced accountability and 
oversight mechanisms. The Commission is to consis t of a minimum of 10 and maximum of 12 members. 
4 members are to be ex-officio members: (i) the Gove rnor of the Bank; (ii) the Head of Central Banking 
(who is to be appointed by the Commission with consen t of the Minister); (iii) the Head of Financial 
Regulation (who is to be appointed by the Commissi on with consent of the Minister); and (iv) the 
Secretary General of the Irish Department of Fina nce. The other members (at least 6 and up to 8 in 
number) are to be appointed by the Irish Minister of Finance from amongst people who, in his opinion, 
have relevant knowledge of accountan cy, banking, consumer interests, corporate governance, economics, 
financial regulation, financial services, law, and social policy.  
According to the draft heads, sections 19, 20, 21 and 22 of the CBA, as regards the Governor's 
appointment and tenure of office, prohibition on sh areholding and removal fro m office, continue to 
apply3. The current Chief Executive of the Office of the Fina ncial Regulator is specifically stated to be the 
first Head of Financial Regulation. As regards the cu rrent Head of Central Banking, the draft heads state 
that there should be a transition arrange ment for the present Director General. 
The procedures of the Commission (relating to meetings  and procedural issues) are to be the same as 
currently apply to the Board of the CBFSAI. The Gove rnor remains solely responsible for the functions 
related to the European System of Central Banks ( ESCB). The Bank will be responsible for the prudential 
supervision of credit institutions and the stability of the financial system. Moreover, Head 8 of the draft 
heads states that the Bank will ‘assume the functions and powers of the Consumer Director’, so the Bank 
will be responsible for the protection of consumer interests, noting that  such powers are already contained 
in the CBA.   
 2. General observations  2.1 Consolidation of Ireland’s central bank statutes 
 As stated in previous opinions
4, without a consolidated central ba nk statute the legal structure for 
Ireland’s central bank is lacking in transparen cy. The requirements for legal clarity and 
transparency suggest that the Irish Government  should take the first suitable opportunity for a 
consolidation exercise, and the ECB welcomes th e indication from the consulting authority that 
such an exercise is envisaged. Consolidation of Ireland’s central bank statutes would greatly assist 
the ECB in responding to consultations from the Irish authorities on draft legislative provisions 
within the ECB’s field of competence as well as ensuring that Irish legislation, including the 
statutes of Ireland’s central bank, is compatible with the Treaty on European Union (TEU) and the 
TFEU (hereinafter together the ‘Treaties’), as well as  the Statute of the European System of Central 
Banks and of the European Central Bank (her einafter the ‘Statute of the ESCB’).  
                                                      
3  With one small amendment, however, to section 21(2) of the CBA, involvi ng the deletion of the words ‘if the other 
members have passed a unanimous resolution requesting the President to remove the Governor from office’. The effect is 
that the Government may ask the Presiden t to remove the Governor for stated se rious misconduct on its own initiative.   
4  See, for example, paragraph 17 of Opinion CON/2002/16 and paragraph 9 of Opinion CON/2003/24. 
 
3 2.2 Reform of supervision in Ireland   
2.2.1 The ECB understands that the draft law is the firs t step in the legislative reform of the Irish central 
banking and financial regulatory regime, and that  further legislation will be introduced to: 
(a) enhance the regulatory powers and functions of  the Bank, and (b) consolidate all legislation 
relating to the Bank. The ECB notes that the draft law and such further legislation should be the 
subject of separate consultations. 
2.2.2 The ECB welcomes the purpose of the draft heads. The ECB has consistently favoured the 
involvement of central banks in prudential supe rvision. Previous ECB opinions on draft national 
legislation to reform the institutional framework fo r prudential supervision in Member States have 
noted that central banks have been closely in volved in the prudential supervision of credit 
institutions, due to their pivotal role in the financial system, in particular regarding the 
implementation of monetary policy and ensuri ng the proper functioning of payment systems5. 
Previous ECB opinions have also noted that maintaining the close involvement of national central banks (NCBs) in prudential supervision is an im portant condition for allowing the Eurosystem to 
contribute adequately to monitoring the risks to fi nancial stability in the eu ro area, in accordance 
with Article 127(5) of the TFEU, and to safegua rd smooth cooperation between the central bank 
functions exercised at Eurosystem level and the s upervisory functions carried out at national level
6. 
Such involvement should not prejudice the pr imary objective of the ESCB of price stability. 
2.2.3 The ECB welcomes the establishm ent of institutional frameworks in  Member States that recognise 
the essential role of NCBs in promoting th e soundness and security of credit and financial 
institutions and the stability of the financial system as a whole. Thus, the ECB welcomes the 
proposed restructuring of the CBFSAI so as to make  the Bank fully and directly responsible for the 
supervision of credit a nd financial institutions. 
 3. Specific observations   
3.1 Central bank  independence   
The new framework should ensure that the cent ral bank will be a fully independent institution 
functioning in compliance with the central bank in dependence principle and with the role of the 
central bank as part of the ESCB. The draft heads are not sufficiently clear as to whether Ireland’s 
central bank will be a fully independent instituti on entrusted with ESCB-related tasks as well as 
with other tasks that should not interfere with the ESCB’s objectives and tasks. Therefore, the ECB 
has concerns as regards the new design of the Irish  central bank which should be clarified once the 
proposed bill has been published. As stated in the ECB’s convergence reports, the central bank 
must be a fully independent institution with a prec isely defined mandate. In particular, the central 
                                                      
5  See Opinion CON/2003/23, paragraph 6. 
6 See Opinion CON/2006/39, paragraph 2.3; Opinion CON/2006/ 15, paragraph 2.1.2; Opinion CON/2001/10, paragraph 4; 
and Opinion CON/2001/35, paragraph 5.  
 
4 bank, its decision-making bodies and their members must  be independent and mu st not seek or take 
instructions from the Government as far as the ESCB-related tasks and objectives are concerned7. 
More specifically, for ESCB-related tasks not onl y the Governor, but Ireland’s central bank as a 
whole as an institution, and the Commission whic h will be responsible and accountable for the 
Bank in the achievement of its primary objec tive of price stability, and for managing and 
controlling the Bank, must be i ndependent and not take instruc tions from the Government. Any 
other member of the central bank’s decision-making bodies involved in the performance of ESCB-tasks should also enjoy the same personal inde pendence safeguards as the Governor. Although the 
draft heads provide for an independent governor so lely responsible for the ESCB-related tasks, the 
Governor may not be seen in isolation from the cen tral banking structure. Therefore, the new setup 
must ensure respect of the central bank’s i ndependence and must clarify the roles of the 
Commission and the Governor.  
Assuming that the above interpretation will be clar ified in the proposed bill and expecting to be 
consulted thereon, in the interim the ECB has a num ber of reservations regarding the draft heads.  
3.1.1 Head 7 of the draft heads proposes the replacement  of Section 6A(1) and (2) of the CBA as regards 
the objectives of the Bank. The draft law should expressly provide that the secondary objectives of the Bank set out in the new Section 6A(2) (hereina fter the 'secondary objectives'), including the 
new objective to support national ec onomic policy development, shoul d be without prejudice to the 
primary objective of maintaining price stability set out in Articles 127(1) and 282(2) of the Treaty 
and Article 2 of the Statute of the ESCB. Furthermore, the draft bill should expressly provide that the secondary objectives must be consistent and not  interfere with the Bank’s obligation to support 
the general economic policies of the European Union with a view to contributing to the 
achievement of the objectives of that Union as laid down in Article 3 of the Treaty on European Union (TEU), which is itself an objective expressed  to be without prejudice to the objective of 
maintaining price stability.   
3.1.2 According to Head 7, the new Section 6A(2)(e) will provide that one of the other objectives of the 
Bank will be ‘the discharge of such other functions  and powers as are conferred on it by law’. The 
ECB reminds the consulting authority that functi ons of the Bank must be performed in a manner 
that is fully compatible with the Treaties and the Statute of the ESCB. The ECB recommends that 
the draft law should clarify that the Bank’s objec tive to discharge ‘such ot her functions and powers 
as are conferred on it by law’ is subject to the requirements of the Treaties and the Statute of the ESCB.  
3.1.3 The new Section 6A(2) will state that ‘the Commi ssion is to be responsible and accountable for the 
performance of the Bank in the achievement of its ob jectives’. In order to eliminate any legal risks 
associated with the independent discharge of th e Bank’s ESCB-related tasks, the Commission’s 
responsibility and accountability should be specified to  be without prejudice to the Governor’s sole 
                                                      
7  See ECB Convergence Report of May 2008, pp. 17-18. 
 
5 responsibility for the performance of the Bank’s ob jectives relating to ES CB-related obligations 
and functions and should not compromise the ability to fulfil those obligations and functions independently. The draft law should expressly clarify that no member of the Commission, other than the Governor, has decision-making powers on ESCB-related matters. 
3.1.4 Head 8 states that ‘subject to certain excep tions, the functions and powers … of the Governor 
(excluding ESCB functions) … are to be transfe rred to the Bank’. While the ECB welcomes the 
clarification that the Governor’s ESCB-related f unctions will not be transferred to the Bank (as 
further clarified by the statement in Head 14 th at ‘the Governor will c ontinue to be solely 
responsible for all ESCB-related f unctions’), it is unclear which of  the Governor’s functions and 
powers
8 (albeit outside of his ESCB-related functions) are intended to be transferred to the Bank. 
Therefore, at this stage, the ECB is not able to  properly assess the full impact of this draft head. 
Moreover, this provision should be  amended as it might give the impression that the Bank is a 
dependent supervisory authority entruste d with ESCB-related tasks and objectives. 
3.1.5 Head 8 contains a further statement that ‘the Commission is to ensure that the existing powers and 
functions of the Bank under Section 5A and Sectio n 5B (the core functions of the Bank under the 
existing provisions) are properly discharged by the Bank’. As stated above at paragraph 3.1.2, and 
according to Section 5A(4) of the CBA, ‘the Bank is  required to perform its functions and exercise 
its powers in a manner consistent with the [Trea ties] and the ESCB Statute’. The ECB trusts that 
Section 5A(4) of the CBA will continue to appl y. Also, the ECB recommends that it should be 
clarified that the Commission’s responsibility for ensuring the proper discharge by the Bank of its 
ESCB-related functions is without prejudice to  the Governor’s sole responsibility for the 
performance of the functions imposed, and the ex ercise of powers conferred, on the Bank under the 
Treaties or the Statute of the ESCB and should not compromise the ability to fulfil those functions and the obligations under the Treaties or the Stat ute of the ESCB independently. For reasons of 
legal certainty, the last sentence should be clarif ied with regard to the scope of the functions 
covered by it, and its refere nce to ESCB-related tasks. 
3.1.6 Head 11 proposes that only a minority of the members of the Commission will exercise their 
function ex officio, the remaining (at least six) members being appointed by the Minister. Head 13 states that the current provisions of the CBA regarding removal from membership are to be the same as currently apply to the Board of the CBFSA I. According to Section 25(4) of the CBA, the 
Minister of Finance may remove from office a di rector (being any of the (at least 6) directors 
appointed by him as above) for proven misconduct or  incompetence, or in order to enable the 
Board to function effectively, or in order to fac ilitate a restructuring of the Board and IFSRA so as 
to enable a closer working relationship betw een them. Of the ex officio members of the 
Commission, one will be the Secretary General of the Department of Finance, and the other two 
will be the Head of Central Banking and the Head of  Financial Regulation, both to be appointed by 
the Commission with the consent of the Minister . As a result the Minister’s influence over the 
                                                      
8  The legislative provision which specifies the Governor’s f unctions and powers are set out in Section 19A of the CBA.  
 
6 central bank’s supervisory role will be greatly increased and the operational independence of such 
supervisory role will be endangere d. The legislative framework must  be redrafted so as to ensure 
the operational independence of th e central bank’s supervisory role , in line with international 
standards for the operational independence of financ ial supervisors. In particular, the legislative 
framework should provide that the members of th e Commission have appropriate qualifications and 
technical expertise, and provide for the avoidan ce of conflicts of interests. The legislative 
framework must provide for autonomous deci sion-making of the Commission’s members in 
fulfilment of the supervisory mandate. Moreover,  the nomination of persons implementing the 
policies of the Commission (Head of Financial Regul ation and Head of Central Banking) should be 
within the autonomous judgement of the Commission. 
3.1.7 Head 12 proposes that ‘The Commission is to  manage and control the Bank’. As stated at 
paragraph 3.1.3 above, the ECB recommends the dr aft law should clarify that the Commission’s 
obligation to manage and control the Bank is wit hout prejudice to the exclusive authority of the 
Governor in relation to ESCB-re lated matters and should not co mpromise the ability to fulfil 
obligations in that field independently. Furthermore, it is important that the other members of the Commission do not seek to influence or to give inst ructions to the Governor in his capacity as the 
sole member responsible for the perfo rmance of Bank’s ESCB-related tasks. 
3.1.8 Head 13 states that certain pr ovisions relating to membership of the Commission are to be the same 
as those that currently apply to th e board of the CBSFAI. To the ex tent that any provisions in the 
draft law relating to the Governor differ from t hose relating to the other Commission members, the 
ECB recommends that the draft law should clarify that, in the event of any conflict between the 
conditions applicable to all members of the Commi ssion and those applying to the Governor, the 
Governor should be bound by the provisions applyi ng specifically to him or her. Moreover, to the 
extent that the other members of the Commission other than the Governor would be involved in the achievement of the ESCB-related tasks and the pr imary objective of price stability, the draft bill 
should provide safeguards for their personal i ndependence similar to those provided for the 
Governor. 
3.1.9 Head 14 proposes that ‘The Commission will delega te to the Governor such functions and powers 
relating to the day-to-day management of the Bank,  the Heads of Function and staff of the Bank as 
the Commission deems appropriate to ensure the efficient and effective management of the Bank 
and the exercise of its powers, functions and obligat ions’. As stated above at paragraphs 3.1.3 and 
3.1.6, the ECB recommends that the draft law s hould clarify that the Commission’s authority to 
delegate to the Governor is without prejudice to the Governor’s exclusive authority in relation to 
ESCB-related matters and should not compromise th e ability to fulfil obligations in that field 
independently. 
 
7 3.1.10 Head 15 states that Section 19 of the CBA will continue to apply. Section 19(6) and (7) of the 
CBA provide for the automatic termination of office of the Governor for reasons such as 
bankruptcy, imprisonment or holding shares in a financial institution. Head 15 also states that Section 21 of the CBA (regarding removal of the G overnor from office) will continue to apply. 
This Section allows for the Governor’s remova l from office on grounds of permanent incapacity 
due to ill-health and for one or more specifi ed grounds of serious misconduct. To ensure 
compliance with the conditions for dismissal of a Governor in Article 14.2 of the Statute of the ESCB, Sections 19 and 21 need to reflect the lang uage used in Article 14.2 which states that a 
Governor ‘may be relieved from office only if he  no longer fulfils the conditions required for the 
performance of his duties or if he has been guilty of serious misconduct’. 
3.1.11 Head 18 relates to the Head of Central Banki ng and the Head of Financial Regulation. Although it 
is clear from this head that the current Chief Ex ecutive of the Office of the Financial Regulator is 
to be the first Head of Financial Regulation and that  his first term is to run for the remainder of his 
contract with IFSRA, the ECB recommends that  the draft law should have similar clarity as 
regards the position of Head of Central Banking, as Head 18(3) simply states that ‘there should be a transition arrangement for the present Director General of the Bank’. According to Section 22A of the CBA (relating to the Director General of  the Bank carrying out certain responsibilities of the 
Bank), the Director General is required to carry  out the Governor’s ES CB-related responsibilities 
whenever: (a) the Governor is unable to carry out  those responsibilities beca use of absence because 
of ill-health or any other reason, or (b) the o ffice of Governor is vacant. The ECB reminds the 
consulting authority that, in the context of personal independence, the rules on security of tenure of 
office of the Governor apply equally to othe r members of NCB decision-making bodies who are 
involved in the performance of ESCB-related tasks
9, so the Director General has the same 
independence as the Governor in the performan ce of ESCB-related tasks. The ECB therefore 
emphasises that the present Director General must re main and must be able to see out his full term 
of office. In order to safeguard the independent exercise of the Bank’s ESCB-related functions, the 
ECB recommends that the draft law retains Secti on 22A of the CBA, so that the Head of Central 
Banking will continue to carry out the Gove rnor’s ESCB-related responsibilities when the 
Governor is unable to do so or wh en the Governor’s office is vacant.  
 Head 18(7) also proposes that the Governor shou ld be able to engage in other remunerative 
employment with the consent of the Commission.  The draft law should provide for safeguards 
against conflicts of interest that could jeopard ise the personal independen ce of the Governor. As 
stated in the ECB Convergence Report of May 2008, ‘as a matter of principle, membership of a 
decision-making body involved in the performance of ESCB-related tasks is incompatible with the 
exercise of other functions that might create a conflict of interest. In particular, members of such decision-making bodies may not hold an office or have an interest that may influence their 
                                                      
9  See Opinions CON/2006/44, CON/2004/16,  CON/2006/32, CON/2004/35 and CON/2007/6. 
 
8 activities, whether through office in the executive or legislative branches of the state or in regional 
or local administrations, or through involvement in a business organisation’10. 
3.1.12 Head 22 states that the Bank prepares a nnual accounts in accordance with Section 6H, which 
stipulates that the form of statement of accounts must be approved by the Minister after consulting the Bank. Head 22, and consequently Section 6H, should reflect the Bank’s obligation to comply with the Eurosystem’s regime for financial repor ting of the Bank operations pursuant to Article 26 
of the Statute of the ESCB. Moreover, under Sec tion 6H, the Comptroller and the Auditor General 
will have the power to audit the Bank’s accounts. Such powers should be without prejudice to the 
audit by the Bank’s external auditors. 
3.1.13 Head 23 states that ‘The Bank is to prepare an annual estimate of income from levies, subvention 
from the Bank and any other income and expenditure in relation financial regulation. This is to be 
submitted to the Minister not later than 2 months before the end of the preceding year. The Minister is to approve these’. As noted in the 1998 European Monetary Institute (EMI) 
Convergence Report, and reiterated in paragraph 8 of Opinion CON/2002/16, where third parties, 
and particularly the government, are in a position, di rectly or indirectly, to exercise influence on 
the determination of an NCB’s budget, the releva nt statutory provisions should contain a safeguard 
clause to ensure that this does not impede th e proper performance of the NCB’s ESCB-related 
tasks. More specifically, in order to eliminate the potential exposure of the Bank to liabilities 
resulting from funding and budgetary decisions in respect of financial re gulation (including in 
respect of the Registrar of Credit Unions
11), the ECB recommends that the draft law should clarify 
that the Governor has the sole right to determ ine any funding and budgetary decisions pertaining 
not only to the Bank’s ESCB-related tasks and th eir implementation, but also to financial 
regulation (including in respect of the Registrar of Credit Unions), which may have implications for the Bank’s independence, in particular its in stitutional and financial independence, or which 
may be deemed otherwise incompatible with th e exercise by the Governor of the Bank’s ESCB-
related functions. The Governor  could be granted an explicit right to oppose any funding, 
budgetary and staffing decisions in respect of fina ncial regulation (including in respect of the 
Registrar of Credit Unions) which might have such implications.  
3.1.14 Head 24 states that ‘The Bank is to have th e power to impose levies and fees for the purpose of 
funding the regulation of financial service provide rs as set out in Sections 33J and 33K. The 
proceeds of the levies and fees are to be applied to the associated costs and overheads of those 
functions set out in Schedule 2 of the Central Bank Act 1942 and functions previously carried out 
by the Consumer Director and currently carried out by the Registrar of Credit Unions’. The ECB 
recommends that the draft law should clarify that  proceeds from such levies and fees raised will 
not be applied so as to apply central bank fund ing to non-central banking functions, thereby having 
a negative impact on the performance of ESCB-related obligatio ns and functions. 
                                                      
10 CR 2008 p. 20. 
11  See head 33 of the draft heads. 
 
9 3.1.15 Head 26 states that ‘where the proceeds of the levies and fees are likely to be insufficient to meet 
the total costs of the financial regulation func tions, then the Bank may provide additional funds 
from the general fund to subsidise the funding of  the financial regulation functions. The same 
safeguards are to apply as do currently, i.e. approval of the Minister and confirmation by the Governor that such subsidisation will not affect th e exercise of his ESCB functions’. In addition, as 
stated in Section 5A(4) of the CBA, the Bank is required to perform its functions and exercise its 
powers in a manner consistent with [the Treaties]  and the ESCB Statute. Although it is proposed 
that the draft law will contain these safeguards, the ECB reiterates the concerns expressed in 
paragraph 7 of ECB Opinion CON/2002/16 as re gards central bank independence and the 
uncertainty as to whether the Governor would enjoy a sufficient degree of control over any 
decisions by the Bank to provide funding for the financial regulation functions, and whether this 
would affect the performance of the ESCB-related tasks. The ECB therefore repeats its recommendation under paragraph 3.1.13 of this opi nion that the Governor should be granted an 
explicit right to oppose any funding, budgetary and staffing decisions in respect of financial 
regulation (including in respect of the Regist rar of Credit Unions) which might have such 
implications. 
3.1.16 Head 27 (dealing with Co-operation in the Coll ection of Levies) states that ‘the Bank may co-
operate with a list [of] persons to be prescribed by the Minister (including the Pensions Board, The 
Financial Services Ombudsman and the National Cons umer Agency) for the collection of levies 
under the Central Bank Acts, the Pensions Board legi slation and any other legislation. This means 
that the Bank or a prescribed body may collect the various industry levies as the agent of the 
others. The purpose of this is to encourage ad ministrative efficiencies for both the regulators and 
the industry. Costs associated with the collection of levies on behalf of other bodies are to be met by the Principal.’ The ECB recommends that the draft law should clarify that proceeds from such 
levies and fees raised will not be applied in su ch a way as could result in applying central bank 
funding to non-central banking functions, thereb y having a negative impact on the performance of 
ESCB-related obligatio ns and functions. 
3.2 Monetary financing   
3.2.1 As set out in paragraph 3.1.14, Head 24 states th at ‘the Bank is to have the power to impose levies 
and fees for the purpose of funding the regulatio n of financial service providers as set out in 
Sections 33J and 33K. The proceeds of the levies an d fees are to be applied to those functions set 
out in Schedule 2 of the Central Bank Act 1942 and functions previously carried out by the 
Consumer Director and currently carried out by the Registrar of Credit Unions, and associated costs. This is to include overheads and other asso ciated costs’. The ECB understands that the draft 
head proposes that the Bank may impose such levies  and fees for funding its regulatory activities. 
In this regard, the ECB reminds the consulting auth ority that the tasks perfo rmed by the Bank must 
comply with the monetary financing prohibition in Article 123(1) of the TFEU which prohibits, 
among other things, overdraft facilities or any other type of credit facility with the national central 
 
10 banks in favour of ‘bodies, offices or agencies, central governments, regional, local or other public 
authorities, other bodies governed by public law, or public undertakings of Member States’. The ECB recommends that the draft law should clarify that proceeds from such levies and fees will not 
be applied in such a way as might constitute m onetary financing as prohib ited under Article 123(1) 
of the TFEU.  
3.2.2 As set out in paragraph 3.1.16, Head 27 provid es for cooperation in the collection of levies, with 
the Bank acting as the agent for the collection of levies on behalf of other public bodies, with the costs associated with the collection of levies on beha lf of other bodies to be met by the principal. 
Under Article 21.2 of the Statute of the ESCB, th e ECB and the national central banks may act as 
fiscal agents for public sector bodies.
12  The Bank may therefore act as fiscal agent through 
cooperation with public sector bodies in the coll ection of levies, on an agency, but not on a 
principal basis. Taking the above into account, the ECB has two comments. First, the Bank may only act as fiscal agent for public sector bodies. Th e ECB therefore recommends that the draft law 
should clarify that the Minister may only prescribe pa rties who fall within the definition of ‘public 
sector bodies’ as persons for whom the Bank, as fis cal agent, may cooperate in the collection of 
levies. Second, the ECB notes that Head 27 also re fers to the cooperation by  the Bank with persons 
for ‘the collection of levies under the Central Bank Acts’. The ECB understands that levies and 
fees collected under the CBAs will be collected in  connection with the performance of central 
banking tasks only, and not in connection with the performance of the tasks of other public bodies. 
The monetary financing prohibition in Article 123 TFEU applies to Head 27 in this respect. As 
supplemented, in particular, by Article 1(b)( ii) of Council Regulation (EC) No 3603/93 of 13 
December 1993 specifying definitions for the application of the prohi bitions referred to in Articles 
104 and 104b (1) of the Treaty
13, the financing by an NCB of (a) the performance of functions by 
other public sector bodies, or (b) the public sector’s obligations vis-à-vis third parties, is prohibited. Therefore, national legislation authoris ing or requiring NCBs to finance such functions, 
without any corresponding activity or function on th e part of the NCB, would not be compatible 
with the prohibition on monetary financing.
14 Moreover, under Article 271(d) TFEU the ECB is 
responsible for ensuring the compliance by NCBs with their obligations under the Treaties, which 
includes compliance with the prohibition of moneta ry financing. For these reasons, in order to 
avoid any risk of a breach of the prohibition of m onetary financing by the Bank, the draft law will 
need to clarify that any levies collected by the Bank for other public bodies, whether under the 
CBAs or otherwise, are collected by the Bank as agen t for and on behalf of such other bodies. In 
particular, Irish law needs to clarify that such other public bodies, acting as principals, have the 
                                                      
12  Public sector bodies are to be unde rstood within the meaning of Article 21.1 of  the Statute of the ESCB which reads as 
follows: ‘In accordance with Ar ticle 123 of the Treaty on the F unctioning of the European Uni on, overdraft facilities and 
any other type of credit facility with the European Central Bank or with the national central banks of the Member States 
(hereinafter referred to as ‘national central banks’) in fa vour of Union institutions, bodies, offices or agencies, central 
governments, regional, local or other public authorities, othe r bodies governed by public law, or public undertakings of 
Member States shall be prohibited, as shall the purchase directly from them by the European Central Bank or national 
central banks of debt instruments’.  
13  OJ L 332, 31.12.1993, p. 1. 
14  See Opinions CON/2005/50 and CON/2005/1.  
 
11 necessary power to impose levies and fees for the pur pose of performing their respective tasks, to 
avoid any possible ambiguity as to whether funds belonging to the Bank are used to finance other public sector bodies and/or their obligations vis-à-vis third parties.  
3.2.3 Head 28 relates to the transfer to the Nationa l Consumer Agency (NCA) of the specific function of 
the Consumer Director to give information to consumers relating to financial services. Head 30 
proposes for the secondment and potential transfer of IFSRA staff to the NCA in order to implement the transfer of that function. Head 30 further provides that ‘the seconded staff currently 
contribute to a Central Bank superannuation sch eme and provision is to be made for the 
preservation of the rights of staff transferring to the employment of the Agency’. In order to ensure 
full compliance with the prohibition of monetary financing, the ECB recommends that the draft 
law should clarify that no resources of the Bank will be applied towards the pa yment of pensions in 
respect of Bank staff seconded or transferred to  the NCA pursuant to Head 30 following such 
secondment or transfer, other than solely in r espect of ensuring rights and entitlements already 
accrued by those Bank staff up to the time of secondment or transfer.  
 
4. Final observations  
The ECB notes that the publication of the draft law would require a further ECB consultation by the 
consulting authority under Article 2(1) of Council Decision 98/415/EC. The ECB reserves its position to 
further opine on the draft legislative provisions  of the proposed bill when it is published.  
 This opinion will be published on the ECB’s website.    Done at Frankfurt am Main, 7 April 2010. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET