EN 
 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 17 January 2008 
at the request of the Polish Minister for Finance  
on a draft law amending the Law on the Bank Guarantee Fund 
(CON/2008/5) 
 Introduction and legal basis
 
On 22 October 2007 the European Central Bank (ECB) received a request from the Polish Minister for 
Finance for an opinion on a draft law amending th e Law 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 constitutes an updated version of  amendments to the national deposit-guarantee 
scheme in Poland, as managed by the Bank Guarantee Fund (hereinafter the ‘Fund’)
3. The ECB has 
already been consulted on an earlier version of  such amendments, relating to the method of 
financing, governance and supervision of the Fund, as described in detail in an earlier ECB 
opinion4.  
                                                 
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 the ‘Law on the Bank Guarantee Fund’)). For 
ease of reference, the entities covered by the mandatory depos it-guarantee scheme operated by the Fund are referred to in 
this opinion as ‘commercial banks’. 
4  See paragraphs 1.1 to 1.2 of ECB Opinion CON/2007/26 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. 
2 1.2 Compared with the original version of the draf t law, the current version introduces the following 
new elements:  
(i) NBP’s right to extend credit facilities to the F und is restricted to short-term credit facilities 
extended at NBP’s discretion to enable the F und to repay guaranteed de posits, only in so far 
as the Fund’s own resources are not sufficient and only where the stability of the banking 
system is threatened5. 
(ii)  New rules are introduced on the Fund’s manage ment of its financial resources. In particular, 
any balance sheet surplus of the Fund should, as a rule, be allocated to its ‘assistance fund’ 
supporting the Fund’s ope rations to the benefit of distressed but still solvent commercial 
banks, rather than to the Fund’s core r esources securing the repayment of guaranteed 
deposits in the event of a bank insolvency6. Wider powers are also given to the Fund as 
regards the offering of financial support fo r the consolidation and modernisation of 
cooperative banks7. 
(iii)  The draft law, similarly to the previously  consulted provisions, cont ains proposals to amend 
the Fund’s governance, regulation and supervisi on. However, amendments  in this area now 
ensure that NBP’s existing powers as regards th e governance and regulation of the Fund are 
largely maintained8. 
 
2. The ECB’s comments 
2.1 General comments 
 The ECB welcomes the draft law in so far as it continues to propose abolishment of the annual 
subsidies contributed by NBP to the financ ing of the Fund and incorporates earlier ECB 
recommendations related to the need to maintain  effective coordination of the deposit-guarantee 
scheme with the overall role of the central  bank in safeguarding financial stability9. In particular, 
the ECB welcomes the general aim of the draft law to preserve or strengthen the specific regulatory functions exercised in relation to the Fund by the President of NBP
10.  
                                                 
5  See Article 1(9) and (12) of the draft law. At the same  time, the draft amendments related to abolishing NBP’s non-
repayable annual subsidies for the Fund, as well as the changed method for calc ulating the commercia l banks’ financial 
contributions, are maintained (see Article 1(1) and (8) of the draft law). 
6  See Article 1(10) of the draft law. Th e statutory application of the Fund’s various  resources is regulated in paragraphs 28 
to 31 of the Statute of the Bank Guarantee Fund (see the Annex to the Regulation of the Council of Ministers of 
28 February 1995 on the adoption of the Statute of the Bank Guarantee Fund, Dz.U. of 6 Ma rch 1995 No 21, Item 113, as 
amended (hereinafter the ‘Fund Statute’)).  
7  See Article 2 of the draft law. 
8  See Articles 1(2) to (7), (11), (12) and (15) of the dr aft law. Among other things these amendments increase the 
regulatory and supervisory powers exer cised in relation to the Fund by the Minister for Finance. Auditing powers 
exercised by the Supreme Chamber of Control, a state audit body, are also strengthened (Article 3 of the draft law). 
9  See paragraphs 2.2 and 3.3 of ECB Opinion CON/2007/26.  
10  Under the provisions of the Law on the Bank Guarantee Fund, as amended by the current version of the draft law, the 
President of NBP will: (1) agree with the Minister for Fina nce on the regulatory proposals submitted to the Council of 
Ministers for: (i) changes to the Fund Statute, (ii) additiona l tasks of the Fund concerning the provision of assistance to 
commercial banks, and (iii) emergency rates for commercial ba nks’ financial contributions to the Fund; (2) submit a non-
3  
2.2 Compatibility of NBP’s extension of credit fac ilities to the Fund with the monetary financing 
prohibition 
 The ECB recalls its stance on the prohibition  on monetary financing, as expressed in 
its Convergence Report of December 2006. In the Re port, the ECB stated that national legislation 
which provides for the ‘financing by NCBs [na tional central banks] of a public sector national 
deposit insurance scheme for credit institutions … would not be compatible with the monetary 
financing prohibition, if it is not short term, do es not address urgent situations, systemic stability 
aspects are not at stake, and decisions do not remain at the NCB’s discretion’11. In the Report, the 
ECB further noted that the current Article 43 of the Law on Narodowy Bank Polski12 and 
Article 15(6) of the Law on the Bank Guarantee Fund, which give NBP the power to grant credit to the Fund, are incompatible with the Treaty provision on monetary financing
13. 
2.3 The draft law will amend the conditions under wh ich NBP may grant credit facilities to the Fund. 
Under the amended Article 34(3) of the Law on the Bank Guarantee Fund, such credit facilities 
may only be given for a short term, and only when: (i) the stability of the banking system is threatened; and (ii) the total amount of claims submitted for the repayment of guaranteed deposits 
exceeds the Fund’s accumulated resources
14. Further, Article 15(6) of the Law on the Bank 
Guarantee Fund, establishing the sources of finan ce of the Fund, is amended to reflect the 
amendments to Article 34(3) of the same Law15. Other related provisions of the Law on the Bank 
Guarantee Fund, specifying the mode of appli cation and repayment of NBP’s credits, are not 
affected; in particular, the Law continues to sti pulate that NBP’s credit facilities may only be used 
to fulfill the Fund’s task of protecting guara nteed deposits, hence excl uding the use of NBP’s 
credits to finance any of the Fund’s other operati ons (such as giving support to distressed but still 
                                                                                                                                                             
binding opinion on draft regulations by the Minister for Finan ce relating to the conditions for the Fund’s trading in loans 
acquired from commercial banks threatened  with insolvency; (3) set the remuneration of the Fund Council’s members in 
agreement with the Minister for Finance; and (4) estab lish the commercial banks’ repor ting obligations to the Fund 
(Article 3(4), Articles 4(2a) and 34(4) (as amended by Article 1(5) and (12) of the draft law) and Articles 4(3), 6(4) and 
38(7) of the Law on the Bank Guarantee Fund). At the same tim e, President of NBP will retain his current powers related 
to the appointment of the Fund Council’s me mbers and the selection of the Fund’s auditors (Articles 6(3) and 17(2) of the 
Law on the Bank Guarantee Fund). The President of NBP will also  have a new right to receive, together with the Minister 
for Finance, quarterly reports on the activities and finances of the Fund (Article 7(2)(3a) of the Law on the Bank 
Guarantee Fund, as added by Ar ticle 1(6) of the draft law). 
11  See the ECB Convergence Report, December 2006, ‘Introduc tion and executive summary’, Section 2 (Compatibility of 
national legislation with the Treaty), S ubsection 2.4 (Prohibition on monetary fina ncing and privileged access), under the 
heading ‘Financial support for deposit insurance and investor compensation schemes’, p. 30. 
12  Law on Narodowy Bank Polski of 29 August 1997 (consolidated  text: Dz.U. of 1 April 2005 No  1, Item 2, as amended 
(hereinafter the ‘Law on NBP’)). 
13  See the ECB Convergence Report, December 2006, Chapter 2 (Compatibility of national legislation with the Treaty), 
Section 7 (Poland), Subsection 7.3 (Monetary financing and pr ivileged access), p. 229. 
14  The proposed wording of Article 34(3) of the Law on the Ba nk Guarantee Fund, as amended by Article 1(12) of the draft 
law. 
15  The proposed wording of Article 15(6) of the Law on the Ba nk Guarantee Fund, as amended by Article 1(9) of the draft 
law, specifies ‘short-term credit facility extended by NBP pursu ant to Article 34(3) [of the Law]’ as one of the sources of 
finance of the Fund. 
4 solvent commercial banks)16. At the same time, the draft law amends Article 43 of the Law on NBP 
so that it will now only provide that ‘Narodowy Bank Polski may extend credit facilities to the 
Bank Guarantee Fund’, without referring to any cond itions that must be agreed with the Fund’s 
management before such lending may take place17. According to the consulting authority, the new 
regulation of conditions under which NBP’s cred it facilities may be extended to the Fund is 
intended to ensure full compliance of the Law on the Bank Guarantee Fund with the monetary 
financing prohibition under Ar ticle 101(1) of the Treaty18. 
2.4  The ECB reiterates its position that the granting of a credit facility by NBP to the Fund falls under 
the prohibition contained in Article 101(1) of the Treaty. The Fund qualifies as a ‘body governed by public law’ covered by Article 101(1) of th e Treaty, since it has been established as a legal 
person by the Law on the Bank Guarantee Fund, whil e its organisation and the exercise of its public 
functions and powers in relation to commercial banks is based on the provisions of this Law and of 
relevant secondary legislation
19. The Fund is also subject to pub lic supervisory and auditing powers 
exercised by the Minister for Finance and NBP, as well as, in line with amendments introduced by 
the draft law, by the Supreme Chamber of Control20. The characterisation of the Fund as a body 
covered by the Treaty prohibition on monetary financing is unaffected by the provisions of the draft 
law which, from the point of view of the Polish administrative and budgetary regime, classify the 
Fund as a non-state body outside the scope of the public finance sector21.  
2.5 While, subject to the conditions specified above , the provision of credit to funds vested with a 
deposit guarantee function may be justified22, it needs to be ensured th at the proposed amendments 
to the Law on the Bank Guarantee Fund incorporate a ll such specified conditions . In this regard, the 
following needs to be noted. 
(i) The conditions that: (1) the NCB crediting of the deposit guarantee scheme has a short-term 
character; and (2) the crediting decision remains at the discretion of the NCB, are both already incorporated in the amended provisions of the Law on the Bank Guarantee Fund
23. 
                                                 
16  Articles 16(1)(2) together with Article 15(6) and Article  4(1) and (2) of the Law on the Bank Guarantee Fund. Any 
amounts recovered by the Fund from the insolvent estates of liquidated commercial banks must  be applied in the first 
place to the repayment of money paid out under NBP’s cred it facility and to the restor ation of the Fund’s original 
statutory assets (Article 35(2) of the Law on the Bank Guarantee Fund). 
17  Article 43 of the Law on NBP as am ended by Article 4 of the draft law. 
18  See the second paragraph of the letter of Minister for Finance of 15 October 2007 requesting the ECB’s opinion. 
19  See Article 3(1) to (4) of the Law on the Bank Guarantee F und and paragraph 1 of the Fund St atute. See also the relevant 
secondary legislation adopted on basis of the provisions referred to in footnote 10 above. 
20  See footnotes 8 and 10 above. 
21  The proposed wording of Article 44 of the Law on the Bank Guarantee Fund, as amended by Article 1(13) of the draft 
law. 
22  See paragraph 2.2 of this Opinion and paragraphs 10 to 14 of ECB Opinion CON/2001/32 of 11 October 2001 at the 
request of the Portuguese Ministry of Finance on a draft d ecree law amending the legal framework of credit institutions 
and financial companies. 
23  See amendments introduced by Article 1(9) and (12) and Article 4 of the draft law. 
5 (ii) The condition that the NCB credit addresses urge nt situations is not incorporated. To this 
effect, the wording of the amended Article 34(3) of the Law on the Bank Guarantee Fund 
needs to specify that credit fac ilities should only be granted for urgent needs of the Fund.  
2.6. As regards the condition that credit may only be extended if syst emic stability aspects are at stake, 
the ECB notes that NBP’s credit facilities may only  be extended to perform the Fund’s task of 
protecting guaranteed deposits. In this context,  the ECB understands that the above-mentioned task 
in principle should be financed by way of increased financial contributions from commercial banks
24 rather than by way of credit facilities extended by NBP. To this effect, the list of funding 
sources in Article 15 of the Law on the Bank Gu arantee Fund could expressly provide that NBP 
credit facilities may only be extended in th e absence of any other available sources25. 
2.7 Moreover, to rule out any breach of the monetary  financing prohibition, it may be useful to specify 
explicitly in Article 34 of the Law of the Bank Gu arantee Fund that the credit facilities extended by 
NBP to the Fund are based on ade quate collateral and are granted without prejudice to Article 101 
of the Treaty26. 
2.8 Finally, the proposed amendments to Article 43 of the Law on the NBP are not fully compatible 
with the monetary financing prohibition as long as th ey do not include an explicit cross-reference to 
the provisions of the Law on the Bank Guarantee Fund specifying the conditions that may justify 
the extension of credit to the Fund. The ECB cons iders that such an explicit cross-reference is 
necessary to avoid doubt and to ensure legal interpretation that complies with the monetary 
financing prohibition27. 
 This opinion will be published on the ECB’s website.  Done at Frankfurt am Main, 17 January 2008. 
[signed] 
The President of the ECB 
Jean-Claude TRICHET 
                                                 
24  In a way specified in Article 34(4) of the Law on the Bank Guarantee Fund. 
25  Article 15(6) of the Law on the Bank Guarantee Fund lists cr edit facilities extended by NBP among financial resources of 
the Fund. Special status of such credit  facilities as the ‘last resort’ source of funding currently stems from systemic 
interpretation of the Article 34(3) in conjun ction with Article 34(1)-(2) of the Law.  
26  See paragraph 13 of the ECB Opinion CON/2001/32. Under cu rrent Polish law, any credit facility agreement must, in 
particular, specify ‘the mode of securing the repayment of  the credit’ (Article 69(2)(6) of the Law on banking of 
29 August 1997 (consolidated text: Dz.U. of 12 June 2002 No 72, Item 665, as amended, hereinafter, the ‘Law on 
banking’)). The provisions of the Law on  banking cover all types of credit faci lity agreements, incl uding agreements 
related to credit facilities ex tended by NBP to the Fund. 
27  The draft law will amend with the same effective date th e respective provisions of both the Law on the Bank Guarantee 
Fund and the Law on NBP, which may facilit ate their consistent interpretation (Ar ticle 1(9) and (12) and Article 4 in 
conjunction with Article 7 of the draft law). Nevertheless, intr oduction of an express cross-reference will ensure that any 
divergent application is excluded.