EN 
 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 27 August 2007 
at the request of the Polish Minister for Finance  
on a draft law amending the Law on the Bank Guarantee Fund 
(CON/2007/26) 
 Introduction and legal basis
 
On 5 July 2007 the European Central Bank (ECB) recei ved a request from the Polish Minister for Finance 
for an opinion on a draft law amending the La w of 14 December 1994 on the Bank Guarantee Fund 
(hereinafter the ‘draft law’)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 draft law relates to Narodowy Bank Polski (NBP) and to rules applicable to 
financial institutions insofar as they materially influe nce 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 1.1 The draft law amends the current legal framewo rk for the financing, governance, regulation and 
supervision of the Bank Guarantee Fund (hereina fter the ‘Fund’), which is a public law body 
established by statute to manage the national depos it-guarantee scheme in Poland. The Fund’s main 
tasks include: 
(i) specifying, for a given year, the amount of money to be separated by the banks
3 in 
connection with the obligations to establish a fund for protection guaranteed assets, as well 
                                                 
1  Consolidated text: Dz.U. of 19 April 2007 No 70, Item 474. 
2  OJ L 189, 3.7.1998, p. 42. 
3  Participation in the deposit-guarantee sc heme operated by the Fund is mandatory  for all banks established in Poland, 
including cooperative banks, but not for the Polish variety of credit unions operating on the basis of the Law of 
14 December 1995 on cooperative savings and loan associations (Dz.U. of 4 January 1996 No 1, Item 2, as amended). 
Branches of non-EU banks must, and branches  of EU credit institutions may, be covered by the scheme to the extent that 
their home country schemes do not ensure deposit guarantees at the level establishe d in Polish law (Articles 2(3) and 2b 
of the Law of 14 December 1994 on the Bank Guarantee Fund (hereinafter ‘Law on the Bank Guarantee Fund’)). For 
simplicity, the entities covered by the mandatory deposit-guara ntee scheme operated by the Fund are referred to in this 
opinion as ‘commercial banks’. 
2 as administering the collection of the necess ary amounts from such accounts and ensuring 
pay-outs of the guaranteed deposits  in case of their unavailability4; and 
(ii) providing repayable financial assistance, unde r statutorily defined conditions, to commercial 
banks threatened with insolvency by, among ot her things, issuing credit facilities, guarantees 
and endorsements to such commercial banks, acquiring specified types of their loan 
portfolios and other receivables, or crediting the acquisition of bank shares or stocks5.  
The Fund’s operations are financed by, among othe rs, annual contributions paid by the commercial 
banks6. In addition, NBP has a statutory obligati on to subsidise the commercial banks’ annual 
contributions, currently at the level of 50 %7.  
1.2 The draft law is aimed at introducing the follo wing key changes to the model described above: 
(i) changes to the method of financing the Fund,  by abolishing NBP’s annual contributions and 
changing the current formula for calcula ting the commercial banks’ contributions8; and (ii) changes 
to the Fund’s governance, legal status, regulation and supervision, in particular increasing the 
competences of the Minister for Finance and limiting the current competences of NBP9.  
 
                                                 
4  Article 4(1) and Articles 21 to 36 of the Law on the Bank Guarantee Fund. Contributions provided by commercial banks, 
in case of the involuntary liquidation of a bank participating in the scheme, are collected by the Fund and paid into a 
dedicated account held with NBP, from which the relevant am ounts are provided to the liquidator or administrator for the 
fulfilment of deposit guarantees (Article 28(3) and Article 29( 1) together with Article 22(3) of the above Law; and 
paragraph 33 of the Annex to the Regulation of the Counci l of Ministers of 28 February 1995 on the adoption of the 
Statute of the Bank Guarantee Fund (Dz.U. of 6 March 1995  No 21, Item 113, as ame nded, hereinafter the ‘Fund 
Statute’)).  
5  Article 4(2) and Articles 19 to 20a of the Law on the Bank Gu arantee Fund; paragraph 4 of the Regulation of the Council 
of Ministers of 22 September 1999 on the trade by the Ba nk Guarantee Fund in the receivables acquired from banks 
threatened with insolvency (Dz.U. of 8 October 1999 No 80, Item 904). 
6  Hence, the Polish deposit-guarantee scheme repr esents a mixed model financed both by the ex post cover for guaranteed 
deposits provided by the commercial banks  in the event of the involuntary liquidation of a bank, and by a number of ex 
ante sources, which include, in addition to the commercial banks’ annual contributions, c ontributions to the Fund’s 
statutory fund paid in equal parts by NBP and the Minister for Finance, as well as income  received by the Fund from its 
investments in government or NBP secur ities and from participation units in mone y market funds (Articles 13(1) to (3), 
15, 16(3) and 45 of the Law on the Bank Guarantee F und; and paragraphs 27 to 31 of the Fund Statute).  
7  In 1998 NBP’s subsidy covered 30% of the commercial ba nks’ contributions. This was later raised to 40 % for 
1999-2000, and 50 % for later years (paragraphs (3a) and (3b), as added to Article 13 of the Law on the Bank Guarantee 
Fund by the amending laws of 20 February 1997 (Dz.U. of  14 March 1997 No 24, Item 119) and of 6 May 1999 (Dz.U. 
of 6 May 1999 No 40, Item  399), respectively). 
8  Article 1(10)(a) and (b) of the draft law, amending paragraph (1) and adding a ne w paragraph (1a) to Article 13 of the 
Law on the Bank Guarantee Fund. At the same time, the draf t law proposes abolishing the cu rrent general exemption of 
the Fund from corporation tax obligations; s ee the amendments in Article 1(12) and Article 2 of the draft law (repeal of 
Article 18 of the Law on the Bank Guarantee Fund and th e related amendments to Article 17 of the Law of 
15 February 1992 on corporation tax (consolidated text: Dz.U. of 13 July 2000 No 54, Item 654, as amended)). 
9  See the amendments in Article 1(2) to (9), (11) and (14) and (15) of the draft law (amendments to Articles 3(4) and (5), 
4(2a) and (3), 6, 7(2) and (3), 8(1), 9(1), 17(3), 34(4), 38(7) and 44 of the Law on the Bank Guarantee Fund and 
amendments to Article 2(1) of the Law of 23 December 1994 on the Supreme Chamber of Control (consolidated text: 
Dz.U. of 17 August 2001 No 85 , Item 937, as amended)). 
3 2. Financial resources of the Fund  
2.1 Compliance with the monetary financing prohibition  
The ECB recalls its stance on the prohibition on  monetary financing, as expressed in the 
2006 Convergence Report where the ECB specified that national legislation which provides for the financing by a national central bank (NCB) of a public sector national deposit insurance scheme for 
credit institutions would not be compatible with th e monetary financing prohibition, if it is not 
short term, does not address urgent  situations, systemic stability aspects are not at stake, and 
decisions do not remain at the NCB’s discretion
10. The ECB further noted that: (i) Article 43 of the 
Law on Narodowy Bank Polski11 and Article 15(6) of the Law on the Bank Guarantee Fund, which 
give NBP the power to grant credit to the Fund; as well as (ii) Article 13(3b) of the Law on the 
Bank Guarantee Fund, which provides for annual payment on behalf of NBP to the Fund, are incompatible with the Treaty provisions on monetary financing
12. 
2.2  It is proposed that the draft law will abolis h the annual subsidies contributed by NBP to the 
financing of the Fund13. It is explained that this proposal is  motivated by the n eed to ensure full 
compatibility of the Law on the Bank Guarantee Fund with the monetary financing prohibition in Article 101(1) of the Treaty
14. The ECB welcomes this amendment, as the abolition of the annual 
NBP subsidies will ensure that non-compliance with  the monetary financing prohibition in this 
particular regard will be eliminated.  
2.3  However, the second incompatibility with the monetary financing prohibition identified in the 
Convergence Report in relation to the financing of the Fund (i.e. NBP’s right to extend credit to the 
Fund) is not addressed by the draft law. In particular, Article 15(6) of the Law on the Bank Guarantee Fund provides that one source of financ ing of the Fund is ‘funds from a credit facility 
extended by NBP on the conditions agreed with the Fund’. In its present form, the Law on the Bank 
                                                 
10  See the ECB Convergence Report, December 2006, ‘Introduction and executive summary’, Section 2 (‘Compatibility of 
national legislation with the Treaty’), Subsection 2.4 (‘Prohi bition on monetary financing and privileged access’), under 
the heading ‘Financial support fo r deposit insurance and investor  compensation schemes’, p. 30. 
11  Law on Narodowy Bank Polski of 29 August 1997 (consolidated  text: Dz.U. of 1 April 2005 No  1, Item 2, as amended). 
12  See ECB Convergence Report, December 2006, Chapter 2 (‘Co mpatibility of national legislation with the Treaty’), 
Section 7 (‘Poland’), Subsection 7.3 (‘Mone tary financing and privileged access’),  p. 229. In the same passage it is 
pointed out that in its current formulation NBP’s right to i ssue refinancing credit to commercial banks is incompatible 
with the monetary financing prohibition. 
13  Article 1(10)(c) of the draft law, repealing paragraphs (3) and (3a) of Article 13 of the Law on the Bank Guarantee Fund. 
14  See the third paragraph of the explanatory memorandum  accompanying the draft law, and the second and third 
paragraphs of the letter of Minister for Fina nce of 26 July 2007 requesting the ECB’s opinion. 
4 Guarantee Fund specifies certain further cond itions regarding this source of financing15. These 
conditions, however, fall short of ensuring compatibility with the prohibition on monetary 
financing specified by the Treaty. The Fund is a p ublic law body established by statute to manage 
the national deposit-guarantee scheme in Poland, hence it qualifies as a body governed by public 
law within the meaning of Article 101(1) of the Treaty. NBP’s extension of credit to the Fund under Articles 15(6) and 34(3) of the Law on the Bank Guarantee Fund and Article 43 of the Law 
on Narodowy Bank Polski constitutes a ‘credit facility’ within the m eaning of Article 101(1) of the 
Treaty. Therefore, the ECB considers that these provi sions remain incompatible with Article 101 of 
the Treaty. 
2.4 Calculation of the commercial bank contributions   
The draft law proposes changing the current formula for calculating the annual contributions of 
commercial banks to the Fund
16. The change is explained as being necessary in order to adapt the 
Polish deposit-guarantee scheme to the new risk -measurement and capital requirements framework 
introduced by the Capital Requirements Dir ectives, as recently implemented in Poland17.  
2.5 As already noted by the ECB, deposit protection is an important element of the financial safety net 
and therefore contributes to safeguarding financial stability18. Further, according to international 
standards, sound funding arrangements are critic al to the effectiveness of deposit-guarantee 
schemes and the maintenance of public confidence in the banking system19. At the same time, 
Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on  
                                                 
15  The President of NBP may extend credit to the Fund if: (i ) the amounts of claims receiv ed under the deposit-guarantee 
scheme exceed the amounts which the co mmercial banks are obliged to transfer  to the Fund in the event of the 
involuntary liquidation of a bank participating in the scheme (in accordance with rules set out in Articles 15(2), 25(2), 
28(2)(2) and 29(1) of the Law on the Bank Guarantee Fund); a nd (ii) the Fund’s own financial resources have been 
exhausted. The amount of such credit extended by NB P may not exceed half the Fund’s receipts from annual 
contributions payable by the commercial banks. The credit ma y only be used to fulfill the Funds’ task of protecting 
guaranteed deposits. Any funds recovered by the Fund from the insolvent estates of  liquidated commercia l banks must be 
applied in the first place to the repayment of money paid out under NBP’s credit arrangements and the restoration of the 
Fund’s assets derived from th e contributions of NBP and the Minister for Finance to the Fund’s statutory fund 
(Articles 15(6), 16(2), 34(3) and 35(2) of the Law on th e Bank Guarantee Fund; Article 43 of the Law on Narodowy 
Bank Polski; and paragraph 33(1) and (2)(6) of the Fund Statute).  
16  Article 10(13)(a) and (b) of the draft law, amending Artic le 13(1) and (2) of the Law on the Bank Guarantee Fund. Under 
the current formula, each commercial bank’s contribution is computed as a specified percentage of the risk-weighted 
balance sheet assets, guarantee s and endorsements, as well as certain othe r risk-weighted non-balance sheet obligations. 
The draft law proposes to link the level of each bank’s contribu tions not to its risk-weighted assets and obligations but to 
the level of its capital requirements, as defined under the regime introduced by Directive 2006/48/EC of the European 
Parliament and of the Council of 14 June 2006 relating to th e taking up and pursuit of the bus iness of credit institutions 
(recast) (OJ L 177, 30.6.2006, 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), 
hereinafter referred to jointly as th e ‘Capital Requirements Directives’.  
17  The Capital Requirements Di rectives (see footnote 16) have  been implemented in Poland by the Law of 26 January 2007 
amending the Law on banking (Dz.U. of 9 March 2007 No 42, Item 272) and by re solutions of the Banking Supervision 
Commission (Nos 1 to 6/2007 of 13 March 2007). In the nint h paragraph of the explanatory memorandum accompanying 
the draft law, and in the second and four th paragraphs of the letter of Minister  for Finance of 26 July 2007 requesting the 
ECB’s opinion, it is stated that the changes in the calc ulation method proposed by the draft law are linked to the 
implementation of the Capital Requirements Directives.  
18  Paragraph 8 of ECB Opinion CON/2005/50 of 1 December 2005 at the request of Národná banka Slovenska on a draft 
law amending the Act No 118/1996 Coll. on the protection of ba nk deposits and on amendments to certain laws, as last 
amended. 
19  Financial Stability Forum, ‘Guidance for Developing Effective Deposit In surance Systems’, Sept ember 2001, point V.4 
(‘Funding arrangements’), p. 26. 
5 deposit-guarantee schemes20 does not prescribe a method for financing deposit-guarantee schemes, 
as long as: (i) the costs of financing are borne, in principle, by credit institutions themselves; (ii) the financing capacity of the scheme is in proportion to credit institutions’ liabilities; and 
(iii) the stability of the banking system of the Member State concerned is not jeopardised
21. Any 
change to the current system should respect these principles. 
 3. Governance, regulation and supervision of the Fund  
3.1 Under the current provisions, the Fund’s governing bodies are: (i) the Fund Council, whose 
members are appointed by the President of NBP, the Minister for Finance and the Polish Banks Association; and (ii) the Management  Board, appointed by the Fund Council
22. The Council of 
Ministers, acting on requests of the Minister for Finance in agreement with the President of NBP, 
has legislative competence over the ge neral regulation of the Fund’s activities23. The Minister for 
Finance exercises overall supervision of the Fund,  based on the criteria of legality and compliance 
with the Fund Statute24.  
3.2 The draft law is aimed at making certain changes to the current regime which, among other things, 
would result in: (i) reducing the number of the Fund  Council’s members appointed by the President 
of NBP from four to three, and limiting the role of the President of NBP in the selection of the 
Fund Council’s Chairman25; (ii) eliminating the current requirement for candidates for the Fund’s 
Management Board to have five years professional experience in banking26; (iii) assigning the 
regulatory powers for the Fund to the Minister fo r Finance, who will have to seek the opinion of 
the President of NBP in certain cases27; and (iv) strengthening the supervisory powers exercised 
                                                 
20  OJ L 135, 31.5.1994, p. 5. 
21  See the twenty-third recital of Directive 94/19/EC. 
22  The President of NBP appoints four members of the Fund C ouncil (until 1998 – three members), the Minister for Finance 
and the Polish Banks Association each appoint three Fund Counc il members (Articles 5(1), 6(3) and 9(1) to (3) of the 
Law on the Bank Guarantee Fund). 
23  See Articles 3(4), 4(2a) and (3) of the Law on the Bank Gu arantee Fund. Additionally, on sp ecific issues listed in the 
Law, the regulatory competence is exercised by the Minister for Finance or the President of NBP (see footnote 27).  
24  Article 3(5) of the Law on the Bank Guarantee Fund. 
25  The Fund Council’s Chairman is currently appointed by th e Prime Minister on the joint recommendation of the Minister 
for Finance and the President of NBP; the draft law provides for appointment by the Minister for Finance after consulting 
the President of NBP (Article 1(6) of the draft law, amending Article 6(2) to (3) of the Law on the Bank Guarantee 
Fund). 
26  Under the proposed provision, candidates would only have  to have ‘appropriate’ highe r education and professional 
experience (Article 1(9) of the dr aft law, amending Article 9(2) of the Law on the Bank Guarantee Fund).  
27  Under the provisions of the draft la w, the President of NBP would express a non-binding opinion on draft regulations 
presented by the Minister for Finance in relation to: (i) the adoption of the Fund Statute; (ii) the conditions for the Fund’s 
trading in the loans acquired from commercial banks threatened  with insolvency; (iii) any additional tasks of the Fund 
concerning the provision of assistance to commercial banks; (iv) the remuneration of the Fund Council’s members; and 
(v) the commercial banks’ reporting obligations to the Fund (Article  1(3)(a), (5)(b) and (c), (6) and (14) of the draft law, 
amending Articles 3(4), 4(2a) and (3), 6(4) and 38(7) of the Law on the Bank Guarantee Fund). Currently, proposals for 
regulations in the above areas must either  be agreed between the Minister for Finance and the President of NBP or they 
are adopted exclusively by NBP (in the case of regulations re ferred to under (iv) and (v) above). Additionally, the draft 
law eliminates the President of NBP’s right to give an opi nion on draft regulations relating to the emergency rates of 
commercial banks’ contributions to the Fund, as set by the C ouncil of Ministers (Article 1(13) of the draft law, amending 
Article 34(4) of the Law on the Bank Guarantee Fund).  
6 over the Fund by the Minister for Finance  by, among other things, allowing the Minister to request 
information and documents directly from the Fund’s  staff and contractors and not merely from the 
governing bodies of the Fund28. Furthermore, supervision of the Fund by the Supreme Chamber of 
Control (the state auditing body) is introduced29. 
3.3 The ECB repeats its earlier observation that central  banks are in general in the best position to take 
on responsibility for financial stability, given thei r insight into money and financial market 
developments and their involvement in pa yment systems and monetary policy operations30. At the 
same time, deposit-guarantee schemes are a key element of the financial safety net. Therefore, the governance framework should ensure that the importa nt function of such schemes is carried out 
professionally and efficiently
31. Moreover, effective coordination with the overall role of central 
banks in safeguarding financial stability should be  ensured. This aim may be achieved through, 
among other things, maintaining an adequate leve l of involvement of the central bank in the 
governance and regulation of the national deposit-guarantee scheme.  
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 27 August 2007.  
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET 
                                                 
28  Article 1(4) of the draft law, adding a new Ar ticle 3a to the Law on the Bank Guarantee Fund. 
29  Under the current rules, the Fund’s financial statements are audited by authorised auditors selected by a tender procedure 
by the President of NBP, having sought the opinion of th e Fund Council (Article 17(2) of the Law on Bank Guarantee 
Fund). In order to allow the parallel exercise of auditing co mpetences by the Supreme Chamber of Control, the draft law 
proposes to change the definition of the Fund’s public law status  (Article 1(15) and Article 3 of the draft law, respectively 
amending Article 44 of the Law on Bank Guarantee Fund and Article 2(1) of the Law of 23 December 1994 on the 
Supreme Chamber of Control (consolidated text: Dz.U . of 17 August 2001 No 85, Item 937, as amended)). 
30  See e.g. paragraph 7 of ECB Opinion CON/2001/10 of 25 May 20 01 at the request of the Austrian Ministry of Finance on 
a draft Federal law establishing and orga nising the financial market supervisory authority (title shortened). Cf. also 
Article 3(2)(6) of the Law on Narodowy Bank Polski (see footnote 11 above). 
31  See Financial Stability Forum, ‘Gui dance for Developing Effective Deposit In surance Systems’, September 2001, point 
V.1(c) (‘Basic governance arrangement s’), p. 19. According to these re commendations, the governing body of a  
deposit-guarantee scheme should include individuals with the requisite knowledge  to allow them to understand the 
environment in which the scheme operates.