EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 8 January 2010 
on the merger of the banking and insura nce licensing and supervisory authorities 
(CON/2010/4) 
 
Introduction and legal basis  
On 28 December 2009 the European Central Bank (ECB) received a request from the French Ministry for 
Economic Affairs, Industry and Employment for an opinion on a draft order merging the banking and 
insurance licensing and supervisory authorities  (hereinafter the ‘draft order’). 
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 and si xth indents 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 law relates to the Banque de France and to 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 order 
1.1 The draft order is mainly aimed
2 at merging the four banking and insurance licensing and 
supervisory authorities3 and creating in France one new supervisory authority, the Prudential 
Control Authority (hereinafter the ‘Authority’), endowed with the necessary powers for the exercise 
of its tasks. The Authority will become the si ngle licensing and supervisory authority for the 
banking, payment services and investment servi ces sector, as well as for the insurance sector4. Its 
                                                 
1  OJ L 189, 3.7.1998, p. 42. 
2  On the basis of the authorisation granted to the French Government by Article 152(2) of Law No 2008-776 of 4 August 
2008 on the modernisation of the economy ( Journal Officiel de la République française  No 0181 of 5 August 2008). 
3  The Insurance and Mutual Insuran ce Societies Supervisory Authority ( autorité de contrôle des assurances et des 
mutuelles ), the Insurance Companies Committee ( comité des entreprises d’assurance ), the Credit Institutions and 
Investment Firms Committee ( comité des établissements de crédit et des entreprises d’investissement ) and the Banking 
Commission ( commission bancaire ). 
4  Articles L.612-1 to L.612-3 of the French Monetary and Fina ncial Code, as proposed by the draft order. The Authority 
will also be entrusted with other tasks, in particular concer ning the control of the marketing of financial products in 
cooperation with the French Financial Market Authority (Articles L.612-30 to L.612-33 of the French Monetary and 
Financial Code, as proposed by the draft order). 
2 objectives will include maintaining the stability of the financial system and protecting customers, 
insured parties and beneficiaries5. 
1.2 The Authority consists of a co llege sitting in plenary session, in r estricted session, in sectoral sub-
colleges, and, where appropriate, in a specialist committee. It also includes a Sanctions Committee. 
Unless expressly provided otherwise, the powers conferred on the Authority are exercised by the 
college6. The college in plenary session is expressly en trusted with the tasks of: (i) considering 
national and international matters  of a general scope common to the banking and insurance sectors 
and analysing risks within these sectors in the light of the economic situation, (ii) deliberating on 
control priorities, and (iii) adopting the Author ity’s organisational and functioning principles, 
budget and internal rules. Individual matters are cons idered by the college in  restricted session, the 
banking sector sub-college, the insurance sector sub-college or if appropriate a specialist 
committee. As a rule, each sectoral sub-college will have the necessary authority to consider 
individual and general sector-sp ecific matters; the restricted session is competent for individual 
matters concerning financial c onglomerates and significant mergers and acquisitions involving 
entities belonging to both sectors. Moreover, taking into account their impact on financial stability, the scrutiny of matters concerning one of the two sectors may be attributed to the college by the 
president (plenary session for general matters or restricted session for individual matters)
7. 
1.3 The Authority will be closely connected to the Banque de France. The Governor of the Banque de 
France, or the Deputy-Governor he will designate to represent him, will be the president of the 
college of the Authority (plenary, restricted session and banking sector sub-college). The vice-
president will chair the insurance sector sub co llege, in which the Governor of the Banque de 
France, or his designated deputy, will also be a member8. As the Authority’s president, the 
Governor of the Banque de France will adopt the agenda for the college’s different configurations9. 
For the purposes of fulfilling the tasks entrusted to  the Authority, the Authority’s president will 
                                                 
5  Article L.612-1 of the French Monetary and Financial Code, as  proposed by the draft order. The draft order also provides 
that in performing its tasks, the Author ity takes into account the objectives of financial stability throughout the European 
Economic Area (EEA) and convergent im plementation of national and Community  provisions having regard to the good 
practices and recommendations emanating from Community supervisory mechan isms. It cooperates with the competent 
authorities of other States. In particular , within the EEA, it  participates in structures to supervise cross-border groups. 
6 Article L.612-4 of the French Monetary and Fi nancial Code, as proposed  by the draft order. 
7  Article L.612-11 of the French Monetary and Fi nancial Code, as proposed  by the draft order. 
8  On the composition of colleges and commissions, see Article s L.612-5 et seq. of the Fren ch Monetary and Financial 
Code, as proposed by the draft order. In particular, to take account of the strong specificities of the insurance profession, 
the vice-president of the college in plenary session must have  professional experience in the insurance field and will as a 
rule chair the insurance sector sub-college; the president may al so delegate to him the presidency of the college or of one 
of its configurations or committees. Four members of th e college in plenary session are the Accounting Standard 
Authority’s president, a member of the Council of State, a member of the Court of Cassation and a council member of the 
Court of Auditors. Three members, among which the vice-presid ent will be chosen, will be appointed on account of their 
expertise in the fields of client protec tion, quantitative and actuarial expertise or any other fields under the Authority’s 
responsibility. Four members will be appointed based on their e xpertise in the fields of insurance, mutual insurance, 
pensions and reinsurance, whereas four other members will be appointed based on their expertise in the fields of banking 
operations, payment services or invest ment services. The Sanctions Committee is competent to order a disciplinary 
sanction once disciplinary proceedings have  been initiated by one of the college configurations; its composition is 
completely different from that of the college. 
9  Article L.612-11 of the French Monetary and Fi nancial Code, as proposed  by the draft order. 
3 have standing to bring pro ceedings before any court10. The Authority’s staff will consist of the 
Banque de France staff and civil servants assigned to the Banque de France11. The Authority’s 
budget will be annexed to the Banque de France’ s budget. The Authority will receive financial 
resources from the Banque de France, within the limit of the proceeds of the contribution for 
supervision costs12, the balance of which will be carried forward each year, and additional 
contributions that the Banque de France may allocate to the Authority13. 
1.4 Pursuant to the draft order, the Authority is an independent administrative authority14. Moreover, 
the draft order ensures the functional independence of the Authority, which means that the necessary resources for the performance of its task s will be managed in an autonomous manner. A 
secretary-general will be appointed by decree of the Minister for Economic Affairs, following a proposal from the Authority’s president. The Secretary-General will organise and direct the Authority’s departments. Followi ng a proposal from the Secretary-General, the Authority’s college 
will adopt departmental organisation principles, de termine the ethical rules applying to staff and 
establish the general framework for staff recrui tment and employment in accordance with the 
provisions applying to statutory staff and to civil servants
15. The Authority will adopt its budget, 
following a proposal from the Secretary-General.  The college will set up an internal audit 
committee responsible for checking, in particul ar, the proper use of the Authority’s resources16. 
 2. General observations  
2.1 In line with Article 127(5) of the Treaty, which provides that the European System of Central 
Banks (ESCB) must contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the 
financial system, the ECB has stressed the importance of having the central banks closely involved in prudential supervision
17. Against this background, the ECB welcomes that the draft order ensures 
that the Banque de France will be closely involv ed in the Authority, in particular through its 
Governor, or designated Deputy-Governor , acting as the Authority’s president. 
2.2 Furthermore, the nature and scope of systemic risk is widening due to the closer links between 
credit institutions, insurance companies, inv estment firms and pension funds. Traditional 
boundaries between the banking, insurance and sec urities segments of the financial system are 
increasingly blurred, as demonstrated by the emerge nce of hybrid financial products, the increased 
                                                 
10  Article L. 612-15 of the French Monetary and Financial Code, as proposed by the draft order. 
11  Article L.612-18 of the French Monetary and Fi nancial Code, as proposed  by the draft order. 
12  This contribution will have to be paid to the Banque de Fran ce by the persons supervised by  the Authority in accordance 
with Article L.612-20 of the French Monetary and Financial Code, as proposed by the draft order. 
13  Article L.612-17 of the French Monetary and Financial Code, as proposed  by the draft order. 
14  Article L.612-1 of the French Monetary and Fi nancial Code, as proposed  by the draft order. 
15  Article L. 612-19 of the French Monetary and Financial Code, as proposed by the draft order. 
16  Article L. 612-17 of the French Monetary and Financial Code, as proposed by the draft order. 
17 See ‘The role of central banks in prudential supervis ion’, ECB, 22.3.2001, available on the ECB’s website at 
www.ecb.europa.eu. 
4 use of risk transfer instrument s, such as credit derivatives, between the sectors, and the growing 
role of financial conglomerates18. The integration of micro-prudential supervisory tools under the 
draft order acknowledges the growing importance of financial groups that combine different types 
of financial services. This should help to addr ess specific prudential concerns concerning such 
groups and to ensure an overall level playing fiel d between competing intermediaries. This should 
also facilitate a more effectiv e assessment of risk s in the financial system as a whole. 
2.3 Closely involving ESCB national central banks (NCB) in prudential supe rvision may support their 
contribution to the macro-prudential oversight of th e financial sector. In this respect, the financial 
crisis demonstrates the need to strengthen superv ision and regulation of the financial system as a 
whole. With respect to the insu rance sector in particular, experience has shown that insurance 
companies are important for systemic fina ncial stability because of  their size, their 
interconnectedness with the financial sector and the economic function of insurance products. In 
view of the systemic relevance of the insurance sect or for financial stability, insurance is part of the 
macro-prudential oversight to be exercised by  the proposed European Systemic Risk Board 
(ESRB). In the context of the establishment of th e ESRB, which will be responsible for the conduct 
of macro-prudential oversight in the EU19, the framework established by the draft order is likely to 
enhance the ability of the Banque de France to contribute analytical support to the ESRB, in 
particular through its Governor acting as a member with voting rights20. In this respect, the 
involvement of the Banque de France in the Aut hority, in particular through its Governor or 
Deputy-Governor acting as the Authority’s preside nt, is positive. The ECB understands that the 
proposed framework will allow the Governor of th e Banque de France to perform, independent of 
any external influence, his duties as the Governor  and as a member of the ECB’s decision-making 
bodies as required by the Treaty. 
 3. Central bank independence and monetary financing  3.1 Member States must ensure that NCBs have su fficient financial resources to carry out their ESCB-
related tasks. In this respect, the ECB understa nds that the functions to be performed by the 
Governor of the Banque de France, or the Deput y Governor as the case may be, will be conducted 
in a manner that is fully compatible with th e Banque de France’s ins titutional and financial 
independence and with the Governor ’s personal independence, which is designed to safeguard the 
proper performance of their tasks under the Treaty and the Statute of the European System of Central Banks and of the European Central Ba nk (hereinafter the ‘Statute of the ESCB’). 
                                                 
18 See, e.g. paragraph 5 of 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. 
19 See Opinion CON/2009/88 of 26 October 2009 on a proposal for a regulation of the European Parliament and of the 
Council on Community macro-prudential oversight of the financ ial system and establishing a European Systemic Risk 
Board and a proposal for a Council decision entrusting the Eu ropean Central Bank with specific tasks concerning the 
functioning of the European Systemic Risk Board. 
20  Input will also be provided by a hi gh level representative of the Authorit y to the General Board of the ESRB. 
5 3.2 Situations where financial s upervisory authorities are placed within an NCB do not pose problems 
from the perspective of the financial independence of  central banks if such authorities are subject to 
the NCB’s independent decision-making21. The draft order provides that the Authority is an 
independent administrative authority22; however, the Authority will not have legal personality and 
the ECB understands that, as was the case for th e Banking Commission, the State and not the 
Banque de France will be liable for the activities of the Authority and that Banque de France’s 
finances will thus not be burdened by a liability for the Authority’s decisions. 
3.3 Moreover, the ECB expects that care will be taken to ensure that the Banque de France, in view of 
the possible appointment of its staff members to  the Authority, has sufficient financial and 
personnel resources both in terms of qua ntity and quality to continue to carry out all its tasks, and in 
particular, that its capacity to carry out ESCB-related tasks will not be affected. 
3.4 The ECB notes that the draft order contains a provision according to which the duties of a college 
member may be terminated by reasoned decree of the Minister for Economic Affairs under the conditions it provides
23. The draft order, as submitted to the ECB, does not specify clearly that this 
provision does not apply to the Governor of the Ba nque de France as the Authority’s president. The 
ECB suggests clarifying the draft order in this respect24. 
3.5 The ECB notes that it is important to safeguard compliance with the prohibition of monetary 
financing under Article 123 of the Treaty, which is essentially designed to prevent central bank 
financing of the public sector. The Authority will be primarily financed by the proceeds of the 
contribution for supervision costs, which, in principle, would alleviate monetary financing 
concerns. Moreover, the draft order also provides that the Banque de France may allocate additional 
contributions to the Authority25. The provision of such financial resources by the Banque de France 
to the Authority under the draft order does not a ppear to present monetary financing concerns 
insofar as the Banque de France will be financ ing the performance of a legitimate financial 
supervisory task under French law. This particular  task will also facilitate  the performance by the 
Banque de France of its ESCB-relate d task under Article 127(5) of the Treaty to contribute to the 
smooth conduct of policies pursued by the Authorit y relating to the prudential supervision of credit 
institutions and the stability of the financial system. In this respect, it is crucial that the Banque de 
France is in a position to make a meaningful contribution to the conduct of supervisory and 
stability-related policies by the Authority. The E CB considers that the role envisaged for the 
Banque de France under the draft order goes in the ri ght direction as the Governor is the president 
                                                 
21  The ECB’s Convergence Report 2008, p. 21 and 22. 
22  Article L.612-1 of the French Monetary and Fi nancial Code, as proposed  by the draft order. 
23  Article L.612-5, I., sixth paragraph, of the French Monetary and Financial Code, as proposed by the draft order. 
24  The draft order could for example expressly state that the provision only applies to member s mentioned in paragraphs 3° 
to 8° as in the case of the third paragraph of the same Article; that would exclude the president of the Authority, 
mentioned in paragraph 1°. 
25  Article L.612-17 of the French Monetary and Financial Code, as proposed  by the draft order. 
6 of the Authority’s college26. Also, the Banque de France’s provisi on of staff to the Authority should 
serve to enhance the Banque de France’s contribu tion to the Authority’s supervisory and stability-
related policies27. 
3.6. The ECB notes that national legislation requiring an NCB to take over the liabilities of a previously 
independent public body as a result of a national re organisation of certain tasks and duties without 
insulating the NCB from financial obligations resu lting from the prior activities of such previously 
independent public bodies is incompatible with the monetary financing prohibition28. The draft 
order provides that ‘all assets, rights and obligat ions of the Insurance and Mutual Insurance 
Societies Supervisory Authority … are transferred by force of law and full ownership to the Banque 
de France on behalf of the [Authority]’29. However, the draft order also specifies that ‘the Authority 
shall take over the respective rights and obligations  of [the four merged banking and insurance 
licensing and supervisory authorities]’30. Based on this provision, and on the fact that the Authority 
is an independent administrative authority separate from the Banque de France, the ECB understands that, under French law, Banque de Fr ance will not be liable for any activities of the 
Insurance and Mutual Insurance Societies Superv isory Authority undertaken prior to the coming 
into force of the draft order. 
 4. Ethical rules applying to the Authority’s staff The draft order provides that Authority staff are subj ect to the ethical rules adopted by the Authority’s 
college and that, if necessary, because of their involve ment in the Banque de France duties, staff members 
could be subject to the Banque de France’s ethical rules
31. The draft order provides that the Authority’s 
college determines the ethical rules applying to st aff and establishes the general framework for staff 
recruitment and employment in accordance with the provisions applying to the Banque de France staff 
and to civil servants32. It is not clear from the above provisions whether the ethical rules applying to the 
Authority staff are determined in accordance with  the Banque de France’s ethical rules. The ECB 
recommends stating this explicitly in the draft order and expects that the ethical rules adopted by the 
Authority will not materially deviate from those applicable to the Banque de France’s staff.  
 
                                                 
26  An enhancement of the Banque de France’s role in the co mposition of the college or in the nomination process of its 
members could be beneficial, for instan ce by making the Banque de France’s representation in the Authority’s college 
stronger. 
27 Taken in isolation, the provision of staff might not have  been sufficient to overcome monetary financing concerns. 
28 The ECB’s Convergence Report 2008, p. 23 and 24. See also  paragraphs 8 to 12 of Opinion CON/2005/24 of 15 July 
2005 at the request of the Ministry of Finance of the Czech Re public on a draft law on the integration of financial market 
supervisors and paragraph 4(2)(d) of Opinion CON/2008/16 of 4 April 2008 at the request of the Finnish Ministry of 
Finance on a draft government proposal for a law on the Fi nancial and Insurance Superv isory Authority and certain 
related draft laws. 
29  Article 24-III(4) of the draft order. 
30  Article 24-III of the draft order. 
31  Article L.612-18-III of the French Monetary and Fi nancial Code, as proposed by the draft order. 
32  Article L.612-19 of the French Monetary and Fi nancial Code, as proposed  by the draft order. 
7 5. Audit of the Authority’s accounts 
As the Banque de France’s annual accounts are aud ited by independent external auditors under 
Article 27.1 of the Statute of the ESCB, the ECB unde rstands that the auditors ’ mandate will be extended 
to the audit of the Authority’s accounts, as they will not be distinct from the Banque de France’s accounts 
and as they will be held by the NCB. 
 6.  The appropriate time to consult the ECB 6.1 In cases of particular urgency that do not a llow for a normal consultation period, the consulting 
authority may indicate urgency in the consultation request and ask for a shorter time limit for the 
ECB’s opinion to be adopted. This does not prejudice the national authorities’ duty under Articles 127(4) and 282(5) of the Treaty to consult the ECB on national draft legislative provisions 
falling within its fields of competence in due c ourse of the national legislative process. The second 
sentence of Article 4 of Decision 98/415/EC states that the ECB must be consulted ‘at an appropriate stage’ in the legislative process. This implies that the consultation should take place at a 
point in the legislative process that affords the E CB sufficient time to examine the draft legislative 
provisions and to adopt its opinion in the require d language versions and which also enables the 
relevant national authorities to take the ECB’s opini on into consideration before the provisions are 
adopted. In this respect, as noted by the Court of Justice, the obligation to consult the ECB under the Treaty is intended ‘essentially to ensure that the legislature adopts the act only when the body 
has been heard which, by virtue of the specific functions that it exercises in the [Union] framework 
in the area concerned and by virtue  of the high degree of expertise th at it enjoys, is particularly well 
placed to play a useful role in  the legislative process envisaged.
33’ Given that the consulting 
authority set the ECB a short time limit within which to submit its opinion and that the only reason given was the tight timetable established by the consulting authority, the ECB considers that the minimum consultation period of one month provide d for in Article 3(1) of Decision 98/415/EC 
applies.  
6.2 According to Article 3(4) of Decision 98/4 15/EC, Member States are obliged to suspend the 
process for the adoption of draft legislative provision pending submission of the ECB’s opinion. This means that the adopting authority must have a real opportunity to consider the ECB’s opinion in a meaningful manner prior to taking its decision on the substance.  
 
                                                 
33  Case C-11/00 Commission of the European Communities v European Central Bank  [2003] ECR I-7147, paragraphs 110 
and 111. 
8 This opinion will be published on the ECB’s website. 
  Done at Frankfurt am Main, 8 January 2010. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET