EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 16 April 2009 
at the request of the Cypriot Ministry of Fina nce on draft provisions on payment services and 
systems  
(CON/2009/36) 
 
Introduction and legal basis  
On 11 March 2009 the European Central Bank (ECB) received a request from the Cypriot Ministry of 
Finance for an opinion on draft provisions on paymen t services and systems (hereinafter the ‘draft 
provisions’). 
The ECB’s competence to deliver an  opinion is based on Article 105(4) of the Treaty establishing the 
European Community and on the third and fifth indent s of Article 2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft 
legislative provisions1, as the draft provisions relate to the Central Bank of Cyprus (CBC) and to payment 
and settlement systems. 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 and contents of the draft provisions 
1.1 The main purpose of the draft provisions is to transpose into Cypriot legislation Directive 
2007/64/EC of the European Parliament and of  the Council of 13 November 2007 on payment 
services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 
2006/48/EC and repealing Directive 97/5/EC2. This objective is to be achieved mainly through 
adopting (i) the Law on payment services (hereinafter the ‘Law’) and (ii) the CBC Directive laying 
down the licensing and prudential supervision requ irements applicable to domestic payment 
institutions, as well as through  amendments to the Law on the prevention and suppression of 
money laundering activities of 20073.  
1.2 As stated in the explanatory memorandum accompanying the consultation request, the draft 
provisions go beyond transposition of Directiv e 2007/64/EC. In particular, the Law goes beyond 
Article 2(1) and (2) of Directive 2007/64/EC and extends the national scope of application to (i) payment services where only one payment service provider (either that of the payer or that of the payee) is located in the Community, as well as (ii) to payment services provided in a currency 
                                                 
1 OJ L 189, 3.7.1998, p. 42.  
2 OJ L 319, 5.12.2007, p. 1. 
3  Law 188(I)/2007, Episimi Efimerida tis Dimokratias , Annex I(I), No 4154 of 31.12.2007. 
other than the euro or the currency  of a Me mber State outside the euro are a (see S ection 3 of the 
Law). Moreover, in deviation from  Article 52( 2) of Directive 2007/6 4/EC, t he Law extends,  
subject to t he contracting parties’  agreement to the contrary, the scope of application of  
Article 52(2) to pa yment tr ansactions involving currency  conversion (see Sectio n 45 of the L aw).  
1.3 On the basis of Article 1(2) of Council Decisi on 98/415/EC, t his opinio n only covers those draft  
provisions t hat directly  relate to paymen t systems and the C BC. While acknowledging th e 
importance of Directive 2007/6 4/EC fo r the establis hment of the  Single Eur opean Pay ments Area 
(SEPA), this opinion does not assess the overall transposition of the Directive in  Cyprus.  
 
2. General observations  
The ECB welco mes the draft provisions t hat fulfil t he regulator y conditions needed for  the in troduction  of 
the SEPA. They  will com prehensively  govern the operati on of the pay ment services market in  Cyprus and  
ensure close cooperation between the CBC and  the Mi nistry of Financ e in transposing Directive 
2007/ 64/EC.  
 
3. New tasks a nd sufficient human and material re sources 
The draft provisions will entrust the CBC with new payment institution aut horisation and supervision 
tasks (see, in particular, Titles III and X of the Law, read in conjunction with the C BC Directive).  
Significantly , these new t asks al so extend to the as sumption by  the CBC of  supervisory  functions in 
connection with the prevention and suppression of  money  laundering by pay ment institutions (see 
amended Section 59(1) of  the Law on t he preven tion and suppression of m oney laundering a ctivities of 
2007).  In order for the CB C to be  in a position to pe rform its new tasks in parallel with its E urosystem -
related tasks  and other tasks assigned to the CB C by  national law it i s essential that the CBC has 
sufficient human and material resource s4. 
 
This opini on will be publis hed on t he ECB’s website.  
 
 
Done at Frankfurt am  Main, 16  April 2 009. 
 
[signed ] 
 
The Vice-President of the ECB 
Lucas D. PA PADEMOS 
                                                 
4  See also p aragraph 3.1 of ECB Opinion CON/2009/27 of 24 March 2009 at the request of  the Slovenian Min istry of 
Finance on a draft law on p ayment services and s ystems. 
2