EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 4 April 2008  
at the request of the Finnish Ministry of Finance 
on a draft government proposal for a law on  the Financial and Insurance Supervisory 
Authority and certain related draft laws 
(CON/2008/16) 
 
Introduction and legal basis  
On 13 February 2008, the European Central Bank (ECB)  received a request from the Finnish Ministry of 
Finance for an opinion on a draft government proposal including a draft law on the Financial and Insurance Supervision Authority (hereinafter, the ‘dra ft law’), as well as certain other related draft laws
1. 
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 Ce ntral Bank by national authorities regarding draft 
legislative provisions2, as the proposal concerns Suomen Pankki and contains provisions on 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 
European Central Bank, the Governing Council has adopted this opinion. 
 1. Purpose of the draft law 
The purpose of the draft law is to merge the exis ting Financial Supervision Authority (FSA), which 
supervises financial markets with the Insurance Supervisory Authority (IS A), which supervises the 
insurance and pensions industry. The FSA and the IS A will form a new consolid ated supervisor under the 
name ‘Financial and Insurance Supervision Authority’ (FISA)
3 which will begin to operate on 
                                                 
1  The Law on supervision fees of the Financial and Insurance Supervision Authority (a new dr aft law) and amendments to 
the following: the Law on credit institutions (121/2007), the Law on commercial banks and other credit institutions in the 
form of a limited company (1501/2001), the Law on savings  banks (1502/2001), the Law on co operative banks and other 
credit institutions established as cooperatives (1504/2001), th e Law on the operation of a foreign credit institution or 
financial institution in Fi nland 1608/1993), the Law on temporary suspension of the operations of a deposit bank 
(1509/2001), the Law on supervision of financial and insura nce conglomerates (699/2004), th e Law on investment firms 
(922/2007), the Law on the right of a foreign investment firm to provide investment services in Finland (580/1996), the 
Law on mutual funds (48/1999), the Law on the operations of a foreign management company in Finland (225/2004), the 
Law on securities markets (495/1989), the Law on pawn shops  (1353/1992), as well as certain other laws relating to 
financial markets. 
2  OJ L 189, 3.7.1998, p. 42.  
3  The Finnish name is ‘ Finanssivalvonta ’. The word ‘insurance’ is added in the E nglish translation of the name of the new 
authority, in order to avoid confusion with the present FSA (‘ Rahoitustarkastus ’). 
2 1 January 2009. The FISA will have a similar orga nisational structure to the FSA, and its powers will 
largely be a combination of those curren tly exercised by the FSA and the ISA.  
The new elements of the FISA’s structure and pow ers, in particular, relate to the following:  
(a) The FISA’s objectives and tasks . The FISA’s objective will be ‘to promote the stability of the 
operations of credit, insurance and pension ins titutions and other supervised entities, thereby 
contributing to financial stability and to safegua rding of the interests of the insured, while 
otherwise maintaining confidence in financial market activity’4. The draft law also contains some 
tasks that are new or formulated in a more de tailed way than the tasks of the FSA and the ISA5. In 
particular, the draft law will include comprehensiv e provisions in the area of customer protection, 
combining existing provisions from a number of separate acts6. Further, some entities currently 
supervised by FSA and the ISA will be remove d from the scope of the FISA’s supervision7. 
(b) Organisational framework and governance of the FISA . As is the case for the current FSA, the 
FISA will be established within the organisa tional structure of Suomen Pankki. The FISA’s 
governing bodies will be similar to those of th e current FSA, namely: (i) the Parliamentary 
Supervisory Council (which is also one of the governing bodies of Suomen Pankki)8; (ii) the 
FISA’s Board, which will have powers to decide  on the direction of supervisory activity; and 
(iii) the FISA’s Director General who will exercise most of the direct supervisory powers. The key 
new elements introduced into the framework are as follows:  
– as regards the FISA’s Board:  (i) the composition of the Board will now include three 
nominees proposed for appointment by the Suomen Pankki, the Ministry of Finance and the Ministry of Social Affairs and Health, r espectively, as well as two members appointed 
directly by the Parliamentary Supervisory Council
9; (ii) any of the Board members will be 
eligible to be appointed as Board Chairman or Vice-Chairman10; (iii) certain administrative 
                                                 
4  See Section 1 of the draft law.  
5  See the FISA’s activities listed in Section 3 of the draft law. Certain further adjustments concern, inter alia, the FISA’s 
supervisory powers specified in Chapter 3 of the draft law. 
6  See Chapter 5 of the draft law.  
7  I.e. pawn shops and certain boards and committees, such as the Traffic Insu rance Board and the Treatment Insurance 
Board (see Section 4 of the draft law).  
8  See Sections 9 and 11 of the Law on Suomen Pankki (214/1998) (hereinafter , the ‘Law on Suomen Pankki’) provides that 
Suomen Pankki’s governing bodies are the Parliamentary Supervisory Council, supervising the administration and 
activities of Suomen Pankki, and the Board. 
9  See Sections 8 and 9 of the draft law. Currently, the Bo ard of the FSA is composed of six members and three deputy 
members appointed by the Parliamentary Supervisory Council for a period of three years. Two members and one deputy 
member are appointed on the basis of a proposal by the Mini stry of Finance, one member  and a deputy member on the 
basis of a proposal by the Suomen Pankki and one member a nd deputy member on the basis of a proposal by the Ministry 
of Social Affairs and Health. The direct or generals of the FSA and the ISA are ex officio  members of the Board. The 
Board of the ISA is appointed in a similar way, and its compos ition is in practice the same as that of the current FSA (see 
Sections 8 and 9 of the Law of 27 June 2003 on the Financia l Supervision Authority (587/2003) (hereinafter, the ‘current 
Law on the FSA’)).  
10  See the third paragraph of Section 9 of the draft law. Curre ntly the Board Chairman and Vice-Chairman are appointed by 
the Parliamentary Supervisory Council from among Board members nominated by Suomen Pankki and the Ministry of 
Finance (see Section 8(3) of the current Law on the FSA). 
3 responsibilities of the Board will be broadened11; and (iv) the Parliamentary Supervisory 
Council will decide on Board members’ compensation12;  
– as regards the FISA’s Director General:  (i) the Director General will be appointed by the 
Parliamentary Supervisory Council on a proposal of the Board13; the Director General will 
have a fixed term of office of five years14; (ii) the Director General will be entitled to 
participate in the FISA’s Board meetings, but not as a voting member as is the case now15; 
and (iii) the provisions regarding submission of  decisions falling within the scope of the 
Director General’s competence for consideration by the Board will be made clearer16.  
(c) The FISA’s financing:  the draft law proposes a funding mechanism aiming at ensuring that 90% of 
the FISA’s operational costs are funded by fees collected from the superv ised entities, while the 
remaining 10% of such costs will be contributed by Suomen Pankki. According to the explanatory 
memorandum to the draft law, this Suomen Pankki ’s contribution to the FISA’s financing will 
ultimately decrease the amounts of profit distributions provided by Suomen Pankki to the State budget
17. 
(d) Cooperation with other authorities:  the FISA’s obligation to disclose information to Suomen 
Pankki or to the Government will be broader. In pa rticular, the FISA will be obliged to disclose any 
information that may have a significant e ffect on ‘financial market developments’18. Certain new 
detailed administrative and cost-sharing rules will also be introduced in  the areas where closer 
cooperation with other European Economic Area supervisory authorities is required under the 
provisions implementing Capital Requirements Directives19. 
 
                                                 
11  See Section 10 of the draft law.  
12  See Section 8(9) of the draft law. The cu rrent law on the FSA is silent on this issue. 
13  See Section 8(4) of the draft law. Currently the Director  General of the FSA is appointed by the President of the 
Republic. 
14  The Parliamentary Supervisory Council will have the power to issue a warni ng and suspend the Director General from 
duty; the Director General may be suspended if they are pros ecuted or under investigation for an offence (Sections 8 and 
11 of the draft law). 
15  See Section 9 of the draft law and Section 9 of the current Law on the FSA. 
16  Under Section 13 of the draft law: (1) the matters listed in  Subsection 1 (e.g. granting an authorisation to a supervised 
entity) will be provided by the Director General to the Boar d ‘for information’; (2) any Board member may require that 
such matter is taken up by the Board ‘for consideration’; and (3) the Board is entitled to take a decision on the matter if it 
may significantly affect the stability of financial markets or otherwise significantly affect their development. 
17  See Section 70 of the draft law and Chapter 5.6 ‘Covering the costs of supervision’ of  the explanatory memorandum. 
18  See the fifth paragraph of Section 71 of the draft law. Th e fourth paragraph of Section 36 of the current Law on the FSA 
only specifies the duty to provide info rmation on matters that may jeopardise financial stability or cause major 
disruptions to the operation of the financial system. 
19  See Chapter 6 of the draft law. The ‘Capital Require ments Directives’ are Directive 2006/48/EC of the European 
Parliament and of the Council of 14 J une 2006 relating to the taking up and pursu it of the business of credit institutions 
(recast) (OJ L 177, 30.6.2006, p. 1), as last amended by Di rective 2007/64/EC (OJ L 319, 5.12.2007, p. 1), and Directive 
2006/49/EC of the European Parliament and of the Council of  14 June 2006 on the capital adequacy of investment firms 
and credit institutions (recast) (OJ L 177, 30.6.2006, p. 201). The Capital Requirement s Directives have been 
implemented in Finland by the Law on credit institutions (121/2007) and certain other laws. 
4 2. General comment  
2.1 The ECB broadly welcomes the general aim of the draft law to strengthen the supervisory structure 
in Finland, by ensuring that it is appropriately equipped to respond to risks emerging in financial markets, particularly in cross-sectoral domestic activity and in a cross-border context. The ECB has 
recognised in its previous opinions that the nature  and scope of risk in the financial sector is 
widening, due to closer links between credit ins titutions, insurance companies, investment firms 
and pension funds, as demonstrated by the emerge nce of hybrid financial products, the increased 
use of risk transfer instruments and the growing role of financial conglomerates
20. 
2.2 Moreover, the ECB notes that, like the FSA, FISA will operate in connection with Suomen Pankki. 
Indeed, central banks have traditionally been clo sely involved in the prudential supervision of 
credit institutions due to their pivotal role in th e financial system, in particular regarding the 
implementation of monetary policy and ensuring  the proper functioning of payment systems21. 
Moreover, the maintenance of a close involvement  of euro area national central banks (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 area22, in accordance with 
Article 105(5) of the Treaty, and to safeguarding smooth coordination between the central banking 
functions exercised at Eurosystem level and th e supervisory functions carried out at national 
level23. 
2.3 In this context, the ECB makes a number of co mments relating to specific provisions of the draft 
law, with a view to ensuring the operational in dependence of the proposed supervisory authority24 
and the appropriate scope of central bank involve ment in supervision and oversight policies.  
 3. Objectives and governance of the supervisory authority 3.1 The ECB broadly welcomes the objectives assigned to the FISA, as well as the clear statement that 
the FISA will operate in c onnection with Suomen Pankki
25. Such cooperation would be particularly 
important as regards the FISA’s contribution to fi nancial stability, which is also a task performed 
by Suomen Pankki26. 
                                                 
20  See, e.g. paragraph 5 of ECB Opinion CON/2004/16 of 11 May 2004 at the request of  the Italian Ministry of Economic 
Affairs and Finance on a draft law on the protection of savings. 
21  See paragraph 6 of ECB Opinion CON/2003/23 of 24 October 2003 at the request of the Ministry of Finance of the 
Netherlands on a draft law on provisions concerning the me rger of De Nederlandsche Bank and the Pensions and 
Insurance Supervisory Authority Foundation.  
22  See paragraph 4 of ECB Opinion CON/2001/10 of 25 May 2001 at  the request of the Austrian Ministry of Finance on a 
draft law establishing and organising the financial market supervisory author ity [title shortened]. 
23  See paragraph 5 of ECB Opinion CON/2001/35 of 8 November 2001 at the request of the German Ministry of Finance on 
a draft law establishing an integrated  financial services supervision. 
24  See paragraphs 3.1 and 3.2 of 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. See also the Bank for International Settlements (BIS), Core 
Principles for Effective Banking Superv ision, October 2006, Principle 1 (availab le on the BIS website  (www.bis.org)). 
25  Section 1 of the draft law. 
26  Section 3 second paragraph, subparag raph 3 of the Law on Suomen Pankki. 
5 3.2 The ECB notes that the proposals set out in the draft law seek to establish a sound decision-making 
structure within the FISA. Further to its earlier recommendations27, the ECB would like to 
underline that granting the Director General full membership of the FISA’s Board would enhance 
the quality of the decision-making process. It shoul d also increase the acceptance and credibility of 
Board decisions in the market place and the FISA ’s commitment to implementing the decisions.  
3.3 The ECB welcomes the introduction of a provision providing for a fixed term of office for the 
FISA’s Director General. It unders tands that certain general safegua rds against dismissal before the 
lapse of the statutory term in office will apply to  the Director General on the basis of Finnish law 
governing Suomen Pankki staff28. The ECB considers nevertheless that appropriate express 
safeguards should be introduced against unfair dismis sal before expiry of the statutory term of 
office, both in relation to the FISA’s Director General and its Board members. As a minimum, it is recommended to include in the draft law a list of  the possible grounds for dismissal of Board 
members and of the Director General, as well as a clarification regarding the applicable court 
review procedure. The draft provisions regardi ng suspension from office should also be reviewed 
to take into account the issues raised in this paragraph.  
 4. FISA’s relationship with Suomen Pankki 4.1 Central bank independence safeguards 
 Like the FSA, the FISA will be a body operating in connection with Suomen Pankki. It will form 
part of Suomen Pankki’s organisational structur e, as regulated by the Law on Suomen Pankki and 
other relevant provisions. As a c onsequence, all FISA’s acts or omi ssions will be attributable to 
Suomen Pankki as the sole legal person liable for such acts or omissions. However, the practical 
influence of Suomen Pankki’s Board on decisions of the FISA’s Board and Director General will 
be limited to nomination of one FISA Board memb er. In the above context, the ECB would like to 
remind the consulting authority of its views expres sed in its previous opinions in circumstances 
where national laws provide for supervisory author ities to share legal personality with an NCB but 
be governed by a separate decision-making b ody, independent from the NCB’s governing bodies 
responsible for the conduct of core central bank tasks. The ECB has noted in particular that: 
(i) such a structure, together with the potentia l exposure of an NCB to liabilities resulting from the 
supervisory authority’s activity, could be seen as a threat to the NCB’s overall institutional and 
financial independence
29; and (ii) it is important to ensure that decisions adopted by such 
supervisory authorities do not endanger the finances of the NCB as a whole30. The ECB notes that 
                                                 
27  See paragraph 6 of ECB Opinion CON/2002/ 23, of 18 September 2002, at the request of the Finnish Ministry of Finance 
on a draft proposal concerning a revision of the Act on the Financial Supervision Authority. 
28  Section 26 of the Law on civil servants of Suomen Pankki  (1166/1998) includes a general rule, pursuant to which an 
employee may be dismissed in cases of serious breach or negligence in their duties. 
29  See paragraph 6 of ECB Opinion CON/2002/16 of 5 June 2002 at the request of the Irish Department of Finance on a 
draft Central Bank and Financial Authority of Ireland Bill, 2002. 
30  See the ECB Convergence Report, December 2006, ‘Introduct ion and executive summary’, Section 2 (Compatibility of 
national legislation with the Treaty), Subsection 2.3.1 (Central bank indepe ndence) under the heading ‘Financial 
independence – Financial liability fo r supervisory authorities’, p. 28. 
6 Suomen Pankki may face risks in relation to the operation of FISA (both as regards its internal 
management and the adopted supe rvisory policies and decisions) that will not be limited to its 
potential financial liability, but may also include, in particular, reputational and operational risks 
relating to diminished effectiveness of central bank operations, e.g. in the event of disputes arising 
between the supervised entities and the supervisor. 
4.2 Taking the above into account, the institutional framework proposed by the draft law should be 
reviewed to ensure that Suomen Pankki’s  institutional and fi nancial independence31 will be 
protected under the proposed reform. In this rega rd, the ECB’s comments relate to five separate but 
inter-related dimensions, which will require further consideration indi vidually and in terms of their 
inter-relationships, with a view to finding a balanced solution. 
(a) Institutional set-up 
 Some Member States with similar supervisory structures as proposed in the draft law have 
adopted institutional frameworks which adequate ly protect their NCBs from risks to their 
institutional and financial i ndependence. Such frameworks rely, inter alia, on: (i) a 
sufficiently strong representation of the NCB in the supervisory authority’s governing 
body32, which may include the NCB governor acting as ex officio Chair33; or (ii) a duty to 
obtain the governor’s approval on  key supervisory decisions relating to the stability of the 
financial system34. Having regard to central bank in dependence requirements, the ECB 
recommends that one of these institutional mechan isms is introduced into the Finnish legal 
framework35. One important safeguard in this respect could be statutory recognition of the 
current practice of appointing the FISA’s Bo ard member nominated by Suomen Pankki as 
Chair. 
(b) Budgetary arrangements  
 FISA’s revenues and expenses will be include d in Suomen Pankki’s annual accounts, while 
the FISA’s Board will be obliged to submit the FISA’s annual budget to the Board of 
Suomen Pankki for confirmation36. The ECB understands that the FISA’s Board is entitled to 
                                                 
31  See Article 108 of the Treaty. 
32  In Estonia, for instance, Eesti Pank’s President is an ex officio  member of the Financial Supervision Authority’s 
supervisory board, while further two members in the six-person  board are appointed by Eesti Pank’s Board on a proposal 
by Eesti Pank’s President (Section 8 of the Law of 9 Ma y 2001 on the Financial Superv ision Authority). Cf. the 
supervisory structures in Austria, Belgium and Latvia  described in footnotes 58, 60 and 61 to ECB Opinion 
CON/2006/15 of 9 March 2006 at the request of the Polish Mini ster of Finance on a draft law on the supervision of 
financial institutions. 
33  In France, for example, the Commission Bancaire is chaired by the President of the Banque de France (Articles L. 613-3 
and L. 613-7 of the French Financial and Monetary Code ). Cf. paragraph 3.1.1 of the ECB Opinion CON/2006/15.  
34  The Irish Financial Services Regulatory Authority is requir ed to consult the Governor of the Central Bank and Financial 
Services Authority of Ireland, and may act only with the agreement of the G overnor on any matter relating to the 
financial stability of the State’s financial system, including (but not limited to) the issue, revocation and suspension of a 
licence or other authority. See Sections 33C(9), (9A) and (9B) of the Cent ral Bank Act 1942, as ame nded. Some elements 
of such structure are also present in Denmark and Hungary (see the detailed description in footnotes 64 and 66 to ECB 
Opinion CON/2006/15). 
35  This recommendation is related to the ECB’s concerns regarding the reimbursement m echanism, as explained in 
paragraph 4.2(c) of this opinion. 
36  See Section 10 of the draft law. 
7 independently determine, inter alia, the FISA ’s specific objectives and strategic directions, 
including their budgetary implications, while  Suomen Pankki’s powers are limited to 
returning the FISA’s budget to the FISA’s Bo ard for reconsideration. The ECB recommends 
that the Board of Suomen Pankki should be given the explicit power to oppose any budgetary proposals submitted by the FISA’s Boar d and to decide on essential changes to the 
FISA’s budget if this is necessary in view of  the budget’s implications for Suomen Pankki’s 
independence and its capacity to pursue central banking tasks
37. 
(c) The reimbursement mechanism and its financial implications 
 The ECB notes that the draft law provides fo r a reimbursement mechanism under which the 
State would ultimately cover any damages paid by Suomen Pankki as a result of errors or omissions in the performance of the FISA’s superv isory tasks, to the extent that such damage 
exceeds the amount of remaining profit distributable to the State
38. As stated in the 
explanatory memorandum to the draft law, th e reimbursement mechanism is intended to 
cater for exceptional situations where Suomen  Pankki’s exposure to  financial liability 
resulting from the FISA’s supervisory liability could jeopardise Suomen Pankki’s financial 
position39. The ECB understands from the explanatory memorandum that, under the 
reimbursement mechanism, Suomen Pankki will in  the first place pay the damages to third 
parties, but ultimately Suomen Pankki will carry  the burden of the payment of such damages 
only up to the amount of profits distributable to  the State. If the damages payable by Suomen 
Pankki exceed the amount of profits distributable to the State, Suomen Pankki (i) will not distribute any profit, as damages have been pa id equal to such amount, and (ii) will be 
reimbursed by the State for the part of the damage s paid in excess of the distributable profits 
‘without undue delay’. The ECB understands that , due to the nature of this scheme, the 
reimbursement will not occur until Suomen Pankki ’s accounts for the year have been closed 
and the distributable profit duly determined . Although the ECB welcomes the intention 
underlying these provisions preventing supervis ory liability from being detrimental to 
Suomen Pankki’s finances as a whole, the ECB remains concerned that the proposed 
reimbursement mechanism, in the light of the proposed FISA institutional framework
40, is 
not sufficient to ensure the NCB’s financial independence. The ECB would therefore suggest 
giving further consideration to the proposed reimbursement mechanism. One solution would 
be to ensure that compensation for damage suffe red by third parties as a result of errors or 
omissions in the performance of FISA’s superv isory tasks is paid directly from the State 
budget. Another possibility, taking into acc ount the function of the reimbursement 
                                                 
37  See paragraph 8 of ECB Opinion CON/2002/16. 
38  According to Section 69 of the draft law, Suomen Pankki is liable for damage arising from an error or omission by the 
FISA as provided for in the Law on tort liability, but the Government will reimburse  Suomen Pankki, without undue 
delay, for any payment made in compensation of such damage, to the extent the compensation exceeds the amount of 
profits distributable to the State by Suomen Pankki a ccording to Section 21(2) of the Law on Suomen Pankki.  
39  See chapter 3.2 ‘Administration – Basic structure of the governance model’ of the explanatory memorandum.  
40  See paragraph 4.2(a) of this opinion. 
8 mechanism as a measure intended to ensure S uomen Pankki's financia l independence, would 
be to include express provisions in the draft law specifying that expenses relating to the 
FISA’s supervisory liability will be reimbursed by the State immediately after such expenses 
have been incurred and presented for repayment by Suomen Pankki. 
(d) Transfer of ISA’s liabilities and commitments to Suomen Pankki 
 The draft law further provides for a transfer to Suomen Pankki of, inter alia, ‘liabilities and 
commitments’ of the current ISA41. In line with its previous opinions42, the ECB notes that 
provisions making an NCB a legal successor to the liabilities of a separate supervisory authority raise issues of compliance with the monetary financing prohibition in Article 101 
of the Treaty. The ECB notes that the ISA is currently , unlike the FSA, a legal entity distinct 
from Suomen Pankki, and that Suomen Pankki  will take over the existing liabilities and 
commitments of the current ISA without bein g insulated from the financial obligations 
resulting from the prior activities of such a previously independent public body. This arrangement would be incompatible  with Article 101 of the Treaty
43. The ECB therefore 
recommends specifying in the draft law that th e State will meet any financial obligations 
incurred by Suomen Pankki as a result of it bei ng substituted for the ISA and that the State 
should not have any recourse to Suomen Pankki in relation to its liability in this respect44. 
(e) Auditing and reporting regime 
 The draft law is silent with regard to the a uditing and reporting regime  applicable to FISA. 
As Suomen Pankki’s annual accounts are audite d by independent external auditors under 
Article 27.1 of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘ESCB Statute’), the ECB assumes that the auditors’ mandate will be extended to the FISA. However, this poi nt should be clarified expressly in the draft 
law.  
4.3 Central bank role in relation to oversight  
 Article 105(5) of the Treaty assigns the ESCB the task of contributing to the smooth conduct of 
policies pursued by the competent authorities rela ting to the prudential supervision of credit 
institutions and the stability of the financial system. The ECB understands that this task is 
recognised in Section 3 of the Law on Suomen Pankki, which specifies that Suomen Pankki 
                                                 
41  See the first paragraph of Section 76 of the draft law.  
42  See paragraphs 8 to 12 of the ECB Opinion CON/2005/24 of 15 July 2005 at the request of the Ministry of Finance of the 
Czech Republic on a draft law on the integration of financial market supervisors.  
43  See the ECB Convergence Report, May 2007, Chapter 2 (Frame work for analysis), Subsection 2.2.4.1 (Prohibition on 
monetary financing) under the heading ‘Assumption of public se ctor liabilities’, p. 22. Nati onal legislation requiring an 
NCB to take over the liabilities of a previously independent publ ic body as a result of a national reorganisation of certain 
tasks and duties (for example, in the context of a transfer to  the NCB of certain supervisory tasks previously carried out 
by the State or independent public authorities or bodies) w ithout insulating the NCB from financial obligations resulting 
from the prior activities of such previously independent pub lic bodies is incompatible with the monetary financing 
prohibition. 
44  See paragraphs 8 and 10 to 11 of ECB Opinion CON/2005/24. 
9 participates in maintaining the reliability and efficiency of the payment system and overall 
financial system and participates in their development.  
4.4 More specifically, an oversight function is inhere nt in a central bank’s task of promoting a sound 
market infrastructure to safeguard  the effectiveness of monetary policy and the overall stability of 
the financial system. As expressed in its earlier  opinions, the ECB understands that Section 3, 
second paragraph, subparagraph 3 of the Law on Suomen Pankki provides the legal basis for 
Suomen Pankki’s oversight function. The ECB notes that it would be helpful to include an explicit 
reference in the Law on Suomen Pankki to the ove rsight function regarding securities clearing and 
settlement systems and market infrastructure45. In the context of the current reform, the ECB 
recommends that the tasks of Suomen Pankki and the FISA relating to the oversight and 
supervision of payments and securities clearing a nd settlement systems and market infrastructure, 
are specified more explicitly in the legislation, in particular by referring explicitly to Suomen 
Pankki’s responsibility for oversight of all such systems and infrastructures operating in Finland46.  
4.5 Exchange of information 
Under Section 71(5) of the draft law, the FISA will be obliged to disclose, without undue delay, to 
the Ministry of Finance, the Ministry of Social Affairs and Health and Suomen Pankki any information on ‘matters that, according to the FISA’s judgement, may have significant effect on financial stability or other financial market de velopments, or cause major disruptions in the 
operation of the financial system’. The ECB notes th at this provision clarifies that the FISA is 
under a legal obligation to disclose supervisor y information to Suomen Pankki. However, 
extending the disclosure of confidential informa tion to central government administration should 
not impair the FISA’s operational independen ce and should comply with Community law. 
4.6 As emphasised in previous ECB opinions
47, central banks provide valuable input to the supervisory 
process and their access to supervisory informa tion benefits the conduct of monetary policy 
operations, the oversight of payment systems and th e pursuit of financial stability. Transmission of 
supervisory information and data, primarily in aggregated form, is necessary for effective 
monitoring of financial stability and for assessing th e prevailing conditions in the financial system 
as a whole as well as for the efficacy of the response when a financial crisis occurs. The ECB 
would therefore welcome insertion of an explicit pr ovision in the draft law stipulating that FISA 
has a duty to exchange information with Suomen Pankki in relation to all ESCB-related tasks.  
                                                 
45  See paragraphs 17 and 18 of ECB Opinion CON/2003/22 of 15  October 2003 at the request of the Finnish Ministry of 
Finance on a draft governmental proposal to amend the Suomen Pankki Act and ot her related acts; also paragraphs 14 
and 15 of ECB Opinion CON/2004/1 of 20 January 2004 at th e request of the Economic Committee of the Finnish 
Parliament on the governmental pr oposal to amend the Suomen Pankki  Act and other related acts. 
46  See paragraph 3.2 of ECB Opinion CON/2006/20 of 25 Apr il 2006 on the Dutch draft law concerning financial sector 
supervision and paragraph 2.8 of ECB Opinion CON/2006/53 of 16 November 2006 at the request of the Polish Minister 
for Finance on a draft law amending the Law on trading in financial instruments. See also the BIS Committee on 
Payment and Settlement Systems, ‘Central Bank Oversight  of Payment and Settlement Systems’, May 2005, p. 1 
(available on the BIS we bsite (www.bis.org)).  
47  See, e.g. paragraph 2.4. 1 of ECB Opinion CON/2006/15. 
10 4.7 The ECB recommends that the provisions regard ing exchange of information between the FISA 
and Suomen Pankki and between the FISA and othe r administrative bodies (domestic or foreign) 
are combined with express safeguards ensuring the effectiveness of the confidentiality rules 
applicable to the ESCB, as specified  in Article 38 of the ESCB Statute.  
 This opinion will be published on the ECB’s website.    Done at Frankfurt am Main, 4 April 2008. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET