EN ECB-PUBLIC  
 
 OPINION OF THE EUROPEAN CENTRAL BANK  
of 31 January 2020   
on changes to the governance of De Nederlandsche Bank and the formal establishment of the 
Financial Stability Committee  
(CON/20 20/6) 
 
Introduction and legal basis  
On 20 December 20 19 the European Central Bank (ECB) received a request from the Minister for Finance 
of the Netherlands  for an opinion on a draft law  on the amendment of The Bank Act  19981 (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  and the third indent  of Article  2(1) of Council Decision 98/415/EC2, as 
the draft law relates to De Nederlandsche Bank  (DNB) . In accordance with the first sentence of 
Article  17.5 of the Rules of Procedure of the ECB, the Governing Council has adopted this opinion.  
 
1. Purpose of the draft law 
1.1 The draft law introduces changes to the internal procedures for the nomination and appointment of 
the members of the  Executive Board, Supervisory Board3 and Bank Council4 of DNB . In addition,  
the draft law strengthens the current  legal basis for the existing Financial Stability Committee  (FSC) .  
1.2 Under the existing provisions of The Bank Act 1998 , the President  of DNB  and the other three to 
five members of the Executive Board of DNB , which  is the main decision -making body responsible 
for the management of DNB,  are appointed by the Crown for a term of seven years.  The existing 
provisions provide that the Supervisory Board, a fter consult ing the Executive Board, draws up a 
shortlist of three recommended persons5 with respect to every such appointment  of the Executive 
Board and of the Supervisory Board . The draft law amends these provisions to clarify that the 
shortlist shall comprise ‘in principle’ three persons . 
1.3 As explained in the Explanatory Note to the draft law, the inclusion of the phrase ‘in principle’ in 
certain  provisions encourage s a situation in which multiple individuals are considered for a position 
                                                 
1  Bankwet 1998 . 
2  Council Decision 98/415/EC of 29  June 1998 on the consultation of the European Central Bank by national 
authorities regarding draft legislative provisions ( OJ L 189, 3.7.1998, p. 42). 
3  According to Article 13(6) of The Bank Act 1998 , the Supervisory Board: ( i) oversees the general course of business 
within DNB and the policy pursued by the Governing Board in the imple mentation of DNB’s tasks ou tside the 
framework of the ESCB,  (ii) advises the Governing Board, and ( iii) adopts the annual accounts with the approval of 
the Dutch State as DNB’s sole shareholder.   
4  According to Article 15(1) , (2) and (5) of The Bank Act 1998 , the Bank Council is an internal body of DNB. The 
Governor of DNB reports to the Bank Council about general economic and financial developments and discusses the 
policy of DNB . 
5  Articles 12  to 12b of The Bank Act 1998 . 
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2 and can therefore contribute towards enhancing divers ity in the composition of the respective  body. 
The idea behind the change is that in exceptional cases it can be difficult to find a sufficient number 
of suitable candidates that are available for the position. This could be the case where the position 
is demanding and requires a very specific job profile in which specialist knowledge must be 
combined with extensive managerial experience. For this reason , the draft law introduces the 
phrase ‘in principle’ in order to allow a deviat ion from the standard , if necessary . In the event that a 
list contains fewer than the number of candidates  that ‘in principle ’ is required , the bylaws of DNB 
will require that the statement of reasons  accompanying the list explicitly gives  the reasons for this. 
1.4 Under the existing provisions of The Bank Act 1998  and the bylaws of DNB , the four -year term of 
the members of the Supervisory Board may be renewed twice6. Under the draft law it is clarified that 
reappointments to the Supervisory Board may take place in accordance with the bylaws  of DNB , 
and that the list for each vacancy drawn up by the Supervisory Board shall include ‘in principle’ 
three nominees  (currently this list should include exactly three nominees), as outlined  in paragraph 
1.3 of this opinion . According to the Explanatory Note to the draft law,  the bylaws of DNB will be 
amended in the light of the draft law so as to comply with the amended Dutch Corporate 
Governance Code with regard to the period of office of Supervisory Board members. Although the 
Code applies to listed companies, DNB voluntarily appl ies the Code , and, a s a result, in the future a 
Supervisory Board member will serve a maximum of two terms of four years and two terms of two 
years.  
1.5 Under the existing provisions of The Bank Act 1998 , nine to eleven out of the eleven to thirteen 
members of the Bank Council of DNB are appointed by the Bank Council for renewable terms of 
four years , each from a shortlist of two persons for each vacancy drawn up by the Executive Board. 
The draft law clarifies  that th is shortlist comprises ‘in principle’ two persons , as outlined in 
paragraph  1.3 of this opinion .   
1.6 The draft law provides for a  FSC, in which representatives of DNB,  the Authority for the Financial 
Markets, the Netherlands Bureau for Economic Policy Analysis  (NBEPA)  and the Ministry of 
Finance shall hold discussions and exchange information concerning macroeconomic and financial 
developments with the objective of identifying risks to the stability of the financia l system  and 
suggesting  possible approaches to solve or mitigate those risks.  The FSC  shall have the power to 
make recommendations  in that regard . The FSC shall publish its recommendations unless 
publication could pose a risk to the stability of the financ ial system. The representatives of the 
NBEPA and the Ministry of Finance shall not take part in the decision -making process leading to the 
establishment of recommendations. The FSC shall meet at least twice a year  and shall be chaired 
by the President of DNB . An account  of those meetings shall be issued to  the Minister f or Finance , 
who will  in turn  send copies of the minutes and the FSC’s recommendations to  both Houses of the 
Dutch Parliament.  
1.7 As noted in the Explanatory Note to the draft law, the FSC was  established in 2012. At present, the 
FSC is established under a Ministerial Decree  issued by the Minister for Finance7. The draft law 
                                                 
6  Article 11(4) of the bylaws of DNB.   
7  Decree by the Minister of Finance of 2 November 2012 for establishment of the Financial Stability Committee 
(Netherlands Government Gazette (Stcrt.) 2012, no 22730).  
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3 intends to provide the FSC with a legal basis in primary legislation  (in The Bank Act 1998 ) in order 
to do justice to the importance of the FSC, further to recommendations by the Financial Stability 
Board (FSB) and the International Monetary Fund (IMF).  
 
2. Observations   
2.1 The ECB understands that the Executive Board  of DNB  is responsible for the performance of the 
DNB’s  ESCB -related tasks . The ECB takes note of the explanation in the Explanatory Note to the 
draft law that the increased flexibility as to  the number of nominees for the Executive Board is 
motivated  by practical considerations . This does not constitute  a major change, and does not 
conflict with the principle of central bank  independence under Article 130 of the Treaty . 
2.2 The ECB understands that t he Supervisory Board and Bank Council of DNB are expressly excluded 
from the performance of the ESCB -related tasks  of DNB8. Nevertheless , and as a general remark , 
neither  the Supervisory Board nor the Bank Council may seek to influence the Executive Board  of 
DNB  in the exercise of any of its ESCB -related tasks.  Under Article 130 of the Treaty, when 
exercising its powers and carrying out the tasks and duties conferred upon it by the Treaty and the 
ESCB Statute, neither a national central bank, nor any member of its decision -making bodies shall 
seek or take instructions from, inter alia, any government of a Member S tate ‘or from any other 
body’, which includes statutory bod ies such as the Supervisory Board  or the Bank Council  of DNB9.  
2.3 Regarding the FSC , the main purpose of the draft law is to establish its legal basis in primary 
legislation . The draft law will also make NBEPA a full member of the FSC.  The ECB welcomes that 
the Netherlands will strengthen the legal basis of the FSC,  and thereby  strengthen the FSC’s role in 
identify ing risks to the stability of the financial system and mak ing recommendations  in that re gard. 
This is also  in line with the recommendations of the FS B and the IMF . 
2.4 The draft law does not materially alter the FSC’s mandate or tasks. It does not confer any new task s 
on DNB . Therefore,  the issue of assessing whether the conferral of new tasks on a national central 
bank complies with the prohibition of monetary financing does not arise  in the case at hand .  
 
This opinion will be published on the ECB’s website.  
 
 
Done at Frankfurt am Mai n, 31 January 2020 . 
 
[signed ] 
 
The President of the ECB  
Christine  LAGARDE  
                                                 
8  This is evidenced by limiting the Supervisory Board’s role to Article 4 of The Bank Act 1998 , whereas the ESCB -
related tasks  of DNB are laid down in Articles 2, 3 and 7 of The Bank Act 1998 . 
9  See paragraph 2.3 of Opinion CON/2019/12.  All ECB opinions are published on the ECB’s website at 
www.ecb.europa.eu .