EN ECB -PUBLIC  
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 1 December  2017  
on conferring upon Lietuvos bankas the function of a fiscal agency of the International Monetary 
Fund  
(CON/20 17/53) 
 
Introduction and legal basis  
On 20 November 2017 the European Central Bank (ECB) r eceived a request from Lietuvos bankas , 
following correspondence with the Ministry of Finance,  for an opinion on a draft law on Lithuania’s  
membership of  the International Monetary Fund (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/EC1, as 
the draft law relates to Lietuvos bankas.  In accordance with the first sentence of A rticle  17.5 of the Rules 
of Procedure of the European Central Bank, the Governing Council has adopted this opinion.  
 
1. Purpose of the draft law  
1.1 The purpose of the draft law is to establish the principles and procedure s for the fulfilment of the 
obligations related to Lithuania’s membership of the International Monetary Fund (IMF) .  
1.2 The draft law provides that the Lithuanian Parliament shall decide on the change of the amount of 
Lithuania’s  quota in the IMF.  
1.3 The draft law  further provides as follows:  (a) accor ding to Article V(1) of the Articles of Agreement 
of the International Monetary Fund (here inafter the ‘IMF Articles of Agreement’),  Lietuvos bankas is 
a fiscal agency of the IMF  that executes the IMF’s financial operations on behalf of Lithuania, and 
Lietuvos bankas uses its financial assets to execute these financial operations ; (b) in accordance 
with Article XI II(2)(a) of the IMF Articles of Agreement, Lietuvos bankas i s the depository of the 
IMF; (c) the special drawing rights (SDRs) allocated to Lithuania by the IMF are part of the official 
foreign reserves of Lietuvos bankas , which are manage d, use d and disposed of  in accordance with 
the Law on Lietuvos bankas2; (d) Lietuvos bankas decide s on participation in the IMF’s financial 
initiatives for which the financial assets of Lietuvos bankas  are to be used;  and (e) the Government 
of Lithuania decides on Lithuania’s participation in the IMF financial initiatives  for which State 
budgetary funds are to be used.  
                                                 
1  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).  
2  Lietuvos Respublikos Lietuvos bankos įstatymas, Nr. I-678, Valstybės žinios, 1994- 12-23, Nr. 99- 1957.  
ECB -PUBLIC  
2 1.4 The draft law provides that Lithuania shall be r epresented in the Board of Governors of the IMF by 
the Chairman of the Board of Lietuvos bankas as Lithuania’ s governor , with the Minist er of Finance 
as the alternate g overnor. The draft law further provides that Lietuvos bankas and the Ministry of 
Finance shall cooperate in accordance with a mutually agreed procedure, coordinate Lithuania’s  
position and exchange information on all matters concerning its membership of the IMF.  
1.5 Finally, the draft law provides that within 30 business days from the entry into force of the draft law 
Lietuvos bankas shall take over the rights and obligations relating to the performance of the 
functions of the fiscal agency of the IMF from the Ministry of Finance, and  shall return to the State 
budget the amount paid by the Ministr y of Finance for Lithuania’s quota at the IMF corresponding 
to the balance of the IMF accounts No 1 and No 2,  presently held with Lietuvos bankas , at the date 
of entry into force of the draft law . 
 
2. New tasks of Lietuvos bankas  
2.1 While Lietuvos bankas already  acts as the IMF’s depository3, the draft law  considerably expands its 
role in discharging Lithuania’s obligations under the IMF Articles of Agreement  by conferring upon it  
a number of new IMF-related tasks.  
2.2 The ECB underlines that a proposed conferral of  tasks on a national central bank (NCB) in the 
European System of Central Banks ( ESCB ) must be assessed  against the prohibition on monetary 
financing under Article 123 of the Treaty. For the purposes of that prohibition, Article 1(1)(b)(ii) of 
Council Regulation (EC) No 3603/934 defines ‘other type of credit facility’, inter alia, as ‘any 
financing of the public sector’s obligations vis -à-vis third parties’.  
Ensuring that Member States implement a sound budgetary policy is one of the key objectives of  
the monetary financing prohibition, which  may not be circumvented5. Therefore, the task of 
financing measures , which  are normally the responsibility of the Member States , and which are  
financed from their budgetary sources rather than by the NCBs, must not be entrusted to NCBs. To 
decide what constitutes financing of the public sector’s obligations vis -à-vis third parties, which can 
be translated as the provision of central bank financing outside the scope of central bank tasks , it is 
necessary to carry out, on a case -by-case basis, an assessment of whether the task to be 
undertaken by an NCB is a central bank task or a government task, i.e. a task within the 
responsibility of the Member States. In other words, adequate safeguards must be in place to 
ensure that  circumventions of the objective of the monetary financing prohibition of maintaining a 
sound budgetary policy of Member States do not take place.  
2.3 As part of its discretion in the exercise of its duty, on the basis of Article 271(d) of the Treaty and 
Article 35.6 of the Statute of the European System of Central Banks and of the European Central 
Bank (hereinafter the ‘Statute of the ESCB’), to ensure that NCBs honour the obligations laid down 
                                                 
3  See paragraph 2 of the Resolution No 264 of the Government of the Republi c of Lithuania of 14 April 1992 on 
admission to the International Monetary Fund and the World Bank.  
4  Council Regulation (EC) No 3603/93 of 13 December 1993 specifying definitions for the application of the 
prohibitions referred to in Articles 104 and 104b(1) of the Treaty (OJ L 332, 31.12.1993, p. 1).  
5  Article 123 of the Treaty also serves the objective of maintaining price stability and reinforces central bank 
independence.  
ECB -PUBLIC  
3 by the Treaty, the Governing Council has endorsed safeguards of th at kind in the form of criteria for 
determining what may be seen as falling within the scope of a public sector’s obligation within the 
meaning of Article 1(1)(b)(ii) of Regulation (EC) No 3603/93 or, in other words, what constitutes a 
government task as f ollows:  
First, central bank tasks are in particular those tasks that are related to the tasks that have been 
conferred upon the ECB and the NCBs by the Treaty and the Statute of the ESCB. These tasks are 
mainly defined in Article 127(2), (5) and (6) and A rticle 128(1) of the Treaty, as well as Article 22 
and Article 25.1 of the Statute of the ESCB.  
Second, as Article 14.4 of the Statute of the ESCB allows NCBs to perform ‘other functions’, new 
tasks, i.e. tasks that are not related to tasks that have been conferred upon the ECB and the NCBs, 
are not precluded per se. However, new tasks that are undertaken by an NCB and which are 
atypical of NCB tasks or which are clearly discharged on behalf of and in the exclusive interest of 
the government or of other public sector entities should be considered government tasks.  
Third, an important criterion for qualifying a new task as atypical of an NCB task or as being clearly 
discharged on behalf of and in the exclusive interest of the government or other public sect or 
entities is the impact of the task on the institutional, financial and personal independence of that 
NCB.  
In particular, the following aspects should be taken into account:  
(a) whether the performance of the new task creates conflicts of interest with exi sting central 
bank tasks which are not adequately addressed and does not necessarily complement those 
existing central bank tasks. If a conflict of interest arises between existing and new tasks, 
sufficient safeguards to mitigate that conflict should be in place. The complementarity 
between a new task and the existing central bank tasks should not be interpreted broadly, so 
as to lead to the creation of an indefinite chain of ancillary tasks. Such complementarity 
should be examined also in relation to the f inancing of those tasks;  
(b) whether without new financial resources the performance of the new task is disproportionate 
to the NCB’s financial or organisational capacity and may have a negative impact on the 
capacity to perform properly the existing central b ank tasks;  
(c) whether the performance of the new task fits into the institutional set -up of the NCB in the 
light of central bank independence and accountability considerations;  
(d) whether the performance of the new task harbours substantial financial risks;  
(e) whet her the performance of the new task exposes the members of the NCB decision- making 
bodies to political risks which are disproportionate and may also have an impact on their 
personal independence and, in particular, on the guarantee of term of office set out in 
Article  14.2 of the Statute of the ESCB.  
2.4 On the basis of the criteria set out above, the following paragraphs assess whether the new task s 
of Lietuvos bankas are in line with the monetary financing prohibition.  
ECB -PUBLIC  
4 2.4.1  Tasks related to the tasks conferred up on the ECB and the NCBs by the Treaty and the Statute of 
the ESCB 
The Treaties acknowledge the role that the NCBs and the ECB play vis -à-vis the IMF. The basic 
tasks to be carried out through the ESCB include holding  and manag ing the official foreign 
reser ves of the Member States6. Under the Statute of the ESCB,  the ECB and the NCBs may 
establish relations, where appropriate, with international organisations and conduct all types of 
banking transactions in their relations with such organisations , including borrowing and lending 
operations7. The ECB and the NCBs may act as fiscal agents for, inter alia, central governments8. 
The NCBs are allowed to perform transactions in fulfilment of their obligations towards international 
organisations9. The ECB may hold and manage IMF reserve positions and SDRs and provide for 
the pooling of such assets10. Against this background, the new tasks to be conferred upon Lietuvos 
bankas are related to those  conferred upon the ECB and the NCBs by the Treaty and the Statute of 
the ESCB.  
2.4.2  Tasks  which are atypical of NCB tasks  
 The ECB notes that the NCBs in the Eurosystem and the ESCB play an important role in 
representing their respective countries in the IMF, within the framework of the country -based 
membership structure of the IMF.  In accordance with Article V(1) of the IMF Articles of 
Agreement11, each member country must designate the agencies through which it will deal with the 
IMF. In the majority of the euro area Member States  the NCBs are designated as such agencies. 
Furthermor e, the NCBs play an important role in representing their Member States in the decision -
making bodies of the IMF. Governor s of the individual NCB s of a  majority of euro area Member 
States12 serve as that Member State’s g overnor on the IMF’s Board of Governor s, while those of 
the remainder serve as  an alternate governor on the IMF’s Board of Governors. Moreover, in 
several cases the g overnor of an NCB is an  alternate member of  the International Monetary and 
Financial Committee (IMFC). In addition, many NCBs ar e closely involved in the selection 
procedure for the election of the Executive Director representing their country in the IMF's 
Executive Board and the selection of the respective Alternate Executive Director(s) to be appointed 
by the elected Executive Di rector, and in some cases the NCBs make the selection. In this context , 
the new task s conferred upon Lietuvos bankas  by the draft law  are not atypical of a n NCB task . 
2.4.3  Tasks clearly discharged on behalf of and in the exclusive interest of the government  
The membership structure of the IMF is country based. Article V(1) of the IMF Articles of 
Agreement states that each member shall deal with the Fund only through its t reasury, central 
                                                 
6  See the third indent of Article 127(2)  of the Treaty.  
7  See the first and f ourth indents of Article 23 of the Statute of the ESCB.  
8  See Article 21. 2 of the Statute of the ESCB.  
9  See Article 31.1 of the Statute of the ESCB.  
10  See Article 30.5 of the Statute of the ESCB.  
11  See Section 1 of Article V of the IMF Articles of Agr eement, which provides that each member country must deal 
with the Fund only through its Treasury, central bank, stabilisation fund or other similar agency, and that the Fund 
must deal only with or through the same agencies.  
12  This is currently the case i n respect of Belgium, Estonia, Germany, Latvia, Lithuania, the Netherlands, Austria, 
Slovakia, Slovenia, Finland and Portugal.  
ECB -PUBLIC  
5 bank, stabili sation fund, or other similar fiscal agency, and the Fund shal l deal only with or through 
the same agencies. To this end, the draft law designates Lietuvos bankas as a fiscal agency of the 
IMF, which shall carry out financial operations of the IMF on behalf of Lithuania. Therefore, the new 
tasks conferred on Lietuvos  bankas may be considered as performed exclusively in Lithuania’s 
interest s.  
2.4.4  Extent to which performance of the new task creates conflicts of interest with existing central bank 
tasks 
The new task s conferred upon Lietuvos bankas  by the draft law do not cr eate any conflicts of 
interest with the other central bank tasks that it perform s, and i ndeed complement its existing task  
of managing , using and dispos ing of its official foreign reserves13.  
2.4.5  Extent to which performance of the new task is disproportionate to the financial or organisational    
capacity of Lietuvos bankas  
 The principle of financial independence requires that the Member States may not put their NCBs in 
a position where they have insufficient financial resources to carry out both their ESCB -related 
tasks  and their national tasks, from an operational and financial perspective. Lietuvos bankas will 
have to fulfil the financial obligations related to the IMF quota assigned to Lithuania. As provided 
under the draft law , Lietuvos bankas will use its  own financial assets for carrying out the financial 
operations of the IMF on behalf of Lithuania14. The ECB understands that the quota allocated to 
Lithuania by the IMF is 441,6 million SDRs  (currently equivalent to about EUR 554 m illion15) while 
the financ ial assets managed by Lietuvos bankas amount to about EUR 14,5 billion16. Such 
financing by Lietuvos bankas results in it having foreign claims that  have all the characteristics of 
reserve assets. Furthermore, it is not expected that the performance of a fi scal agency task by 
Lietuvos bankas and its  participation in the IMF’s financial operations  will create disproportionate 
operational burdens  for Lietuvos bankas.  Taking this into account, the new task s assigned to 
Lietuvos bankas are not disproportionate t o its financial or organisational capacity.   
2.4.6  Extent to which performance of the new task fits into the institutional set -up of Lietuvos bankas , in 
the light of central bank independence and accountability considerations  
The performance of the new tasks is not problematic from the perspective of the institutional set -up 
of Lietuvos bankas , and does not raise any accountability or personal and institutional 
independence concerns. Lietuvos bankas will decide on participation in financial initiatives of the 
IMF to be implemented using its financial assets17 and the Chairman of its Board will represent 
Lithuania in the Board of Governors of the IMF18.  
                                                 
13  See Article 8(1)(3) of the Law on the Bank of Lithuania.  
14  See Article 4( 2) of the draft law.  
15  Based on the information provide d in the explanatory memorandum of the draft law.  
16  Based on the annual report of Lietuvos bankas of 2016.  
17  See Articles 6 and 7 of the draft law.  
18  See Article 8 of the draft law.  
ECB -PUBLIC  
6 2.4.7  Extent to which the performance of tasks harbours substantial financial risks  
The explanatory memorandum of the dr aft law indicates  that the conferral of the new task s upon 
Lietuvos bankas will expose it to credit and foreign exchange risks19. Given the basic task of NCBs  
to hold and manag e the official foreign reserves of the Member States , Lietuvos bankas is well 
placed to manage these financial  risks arising from its participation in IMF financial operations.  
2.4.8  Extent to which performance of the new task exposes members of the decision- making bodies of 
Lietuvos bankas  to disproportionate political risks and impacts on their personal independence 
 The performance of the tasks conferred under the draft law does not expos e the members of the 
decision- making bodies of Lietuvos bankas  to disproportionate political risk s or impact upon their 
personal independence.  
2.4.9  Conclusion 
The ECB considers that the IMF -related tasks  to be conferred upon Lietuvos bankas under the 
draft law a re central banking task s. These new task s are related to the tasks conferred upon the 
ECB and the NCBs by the Treaty and the Statute of the ESCB , and a m ajority of euro area NCBs  
perform such tasks . While t hese  tasks, within the country -based system of the IMF, are performed 
exclusively in the interest s of Lithuania,  this does not create conflicts of interest with existing central 
bank tasks and is not disproportionate to the financial or organisational capacity of Lietuvos 
bankas.  While  the conferral of these  new task s will expose Lietuvos bankas  to additional credit and 
foreign exchange risks, it is well placed to manage financial risks arising from parti cipation in the 
IMF’s financial operations  in view of its existing task of holding  and managing its  official foreign 
reserves . Furthermore, the new task fit s into the institutional set -up of Lietuvos bankas, also in the 
light of central bank independence and accountability considerations , and does not expos e the 
members of its  decision -making bodies to disproportionate political risk or impact upon their 
personal independence.  
 
3. Return of funds paid by Ministry of Finance in respect of  Lithuania’s IMF quota  
3.1 Lietuvos bankas shall be required within 30 business days from the entry into force of the draft law 
to return to the State budget the amount paid by the Ministry of Finance for Lithuania’s IMF quota , 
corresponding to the balance of the IMF accounts No 1 and No 2 held within Lietuvos bankas on 
the date of the entry of the draft law20. The ECB notes that Lietuvos bankas , when making 
payments to the S tate budget , must comply with the monetary financing prohibition under 
Article  123 of the Treaty, which is subj ect to certain exemptions contained in Article 123(2) of the 
Treaty, Article 21.2 of the Statute of the E SCB and Regulation (EC) No 3603/93. In particular, 
Article 7 of Regulation (EC) No 3603/93 provides that the financing by NCBs of obligations falling 
upon the public sector vis -à-vis the IMF is not regarded as a credit facility within the meaning of 
Article 123 of the Treaty. Recital 14 of Regulation (EC) No 3603/93 clarifies the rationale behind 
this exemption by stating that it is appropriate to author ise the financing by the NCBs of obligations 
                                                 
19  See page 2 of the explanatory memorandum to the draft law.  
20  See Article 10(3)(2) of the draft law.  
ECB -PUBLIC  
7 falling upon the public sector vis -à-vis the IMF because such financing ‘results in foreign claims 
which have all the characteristics of reserve assets’. Therefore, the exemption in Article 7 of 
Regulation (EC) No 3603/93 must be interpreted in line with this rationale21. 
3.2 Reserve assets have been defined as those external assets that are readily available to and 
controlled by monetary authorities for meeting balance of payments financing needs, for 
interventions i n exchange markets to affect the currency exchange rate, and for other related 
purposes, such as maintaining confidence in the currency and the economy, and serving as a basis 
for foreign borrowing22. Under this definition reserve assets must be foreign cur rency assets and, 
other than gold bullion, must be claims on non- residents. In this respect, the payment by Lietuvos 
bankas to the State budget of the amount corresponding to the balance of the IMF accounts No 1 
and No 2 will result in Lietuvos bankas taki ng over from the Ministry of Finance the foreign currency 
claims, denominated in SDR, against non- resident persons (the IMF) that have all the 
characteristics of reserve assets23. 
3.3 Based on the foregoing, the ECB considers that the transfer to the State budg et by Lietuvos 
bankas of the amount of funds paid by the Ministry of Finance for Lithuania’s quota at the IMF, as 
referred to in paragraph 3.1, complies with Article 7 of Regulation (EC) No 3603/93 and does not 
infringe the monetary financing prohibition24.  
 
This opinion will be published on the ECB’s website.  
 
 
Done at Frankfurt am Main, 1 December  2017.  
 
[signed]  
 
The President of the ECB  
Mario DRAGHI  
                                                 
21  Consistent with this interpretation, see Opinions CON/2005/29 and CON/2013/16. With regard to the issue of NCBs’ 
financing of IMF quota increases, see Opinions CON/2012/65 and CON/2011/97.  All ECB opinions are publ ished on 
the ECB’s website at www.ecb.europa.eu.   
22  See International Monetary Fund, Balance of Payments and International Investment Position Manual, 6th edn., 
2009, pp. 111- 18. 
23  Point 2.1(c) in the ‘Assets’ table in Annex IV to Guideline (EU) 2016/2249 of the European Central Bank of 
3 November 2016 on the legal framework for accounting and financial reporting in the European System of Central 
Banks (ECB/2016/34) (OJ L 347, 20.12.2016, p. 37) lists under ‘other claims’ any ‘general arrangements to borr ow, 
loans under special borrowing arrangements, deposits made to trusts under the management of the IMF’ as 
‘Receivables from the IMF’.  
24  See also Opinions CON/2009/100, CON/2010/40 and CON/2011/10.