EN ECB-PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 4 October 2011 
on reform of the deposit guarantee scheme 
(CON/2011/76) 
 
Introduction and legal basis  
On 1 August 2011, the Dutch Ministry of Finance pub lished a draft general ad ministrative regulation 
(hereinafter ‘the draft regulation’) for public cons ultation, which intends to transform the Dutch deposit 
guarantee scheme into an ex-ante funded scheme with risk-based contributions. This public consultation 
was open for response until 11 September 2011. 
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 sixth 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 regulation relates to De Nederlandsche Bank (DNB) 
and to rules applicable to financial institutions in sofar as they materially influence the stability of 
financial institutions and markets.  
The ECB should be consulted on this draft regul ation, particularly because ECB Opinion CON/2011/60 
on the Law which the draft regulation will implement2 advised changes in the Dutch deposit guarantee 
scheme to ensure compliance with Treaty provisions on the prohibition on monetary financing. Since the 
ECB was informed that the Dutch Ministry of Fina nce does not intend consulting the ECB on this matter, 
the ECB has decided to submit this own-initiative opinion. 
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 legislation 
The draft regulation amends the Decree on special prudential measures, investor compensation and 
deposit guarantees pursuant to the Law on financial s upervision and to the Decree on prudential rules 
pursuant to this Law
3. Such amendments concern the financi ng of the Dutch Deposit Guarantee Scheme 
(Dutch DGS) which is presently operated by DNB. If a credit institution is no longer able to meet its 
obligations vis-à-vis depositors, the Dutch DGS is activated and the costs are apportioned among other 
participating credit institutions. The Dutch DGS is f unded on an ex-post basis by contributions from the 
                                                 
1  OJ L 189, 3.7.1998, p. 42. 
2  All ECB opinions are ava ilable at www.ecb.europa.eu. 
3  Staatsblad  2006, 507 and 519. 
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2 member credit institutions and DNB advances amounts needed for its operation. The main aim of the 
draft regulation is to transform the financing of the Dutch DGS from ex-post to ex-ante. Hence, the draft 
regulation establishes the Foundation for the Depo sit Guarantee Fund (hereinafter the ‘Foundation’) 
which will be financed though contributi ons imposed on member credit institutions4 and will reimburse 
DNB for the Dutch DGS’ operating costs5 and for advance payouts in respect of guaranteed deposits6. 
The draft regulation regulates such various contributions  to be made by member credit institutions of the 
Dutch DGS, including one-off contributions7, basic regular contributions8 and ex-post contributions if the 
Dutch DGS has insufficient funds available9.  
 2. General observation The ECB should be consulted on future substantial amendments to the draft regulation. No further 
consultation will be required if the amendments in essence aim to accommodate the concerns expressed 
by the ECB in this opinion. Moreove r, given the current legislative in itiative at Union level for the recast 
of Directive 94/19/EC of the European Parliame nt and of the Council of 30 May 1994 on deposit-
guarantee schemes (hereinafter ‘draft recast DGS Directive’)
10, the ECB understands that the relevant 
national legislation will, as necessary, be  aligned with this future Directive11. 
 
3. Specific observations 3.1 Prohibition on monetary financing and operation of the Dutch DGS 
3.1.1  The ECB supports the establishment of ex-ante funded deposit guarantee schemes, given their 
relevance to financial stability, insofar as an  exclusive reliance on DGS members’ ex-post 
contributions may be a source of procyclicality
12, and credit institutions will participate in deposit 
protection costs. The ECB points out in this context that the recast DGS Directive will, inter alia , 
harmonise a target level of ex-ant e financing, fixed at a certain  percentage level of covered 
deposits. Against this background, the ECB welcomes  the Dutch Ministry of Finance’s replacement 
of the current ex-post funding arrangements for the Dutch DGS with ex-ante funding arrangements. 
However, at the same time it is important fo r the national provisions on funding of the deposit 
guarantee schemes to comply with the monetary financing prohibition under Article 123 of the 
                                                 
4  See Sections 23f-23m of the draft regulation. 
5  See Section 23o of the draft regulation. 
6  See Section 23n of the draft regulation. 
7  See Section 23f of the draft regulation. 
8  See Section 23g-h of the draft regulation. 
9  See Section 23r of the draft regulation. 
10  OJ L 135, 31.5.1994, p. 5. 
11  See proposal for a Directive of the Eu ropean Parliament and of the Council on Deposit Guarantee Schemes [recast] – 
Council Presidency compromise proposal of 14 J une 2011, available on the Council’s website at 
http://register.consilium.europa.eu. 
12  See Commission’s staff working document ‘Summary of the impact assessment. Accompanying document to the 
proposal for a DIRECTIVE …/…/EU of the European Parlia ment and of the Council on Deposit Guarantee Schemes 
[recast]’, p. 5, available on the Commi ssion’s  website at www.ec.europa.eu. 
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3 Treaty. This provision prohibits central banks from providing overdraft facilities or any other type 
of credit facility to the public sector, including an y financing of the public sector’s obligations vis-
à-vis third parties13. Hence, ECB Opinion CON/2011/60 advised the Dutch authorities14 that 
advance payments by DNB in the context of the operation of the Dutch DGS are incompatible with 
the monetary financing prohibition and that conse quently relevant Dutch legislation needs to be 
amended.  
3.1.2 Section 22 of the draft regulation provides th at DNB will make arrangeme nts for the establishment 
of the Foundation and that the Foundation will re imburse DNB its costs in connection with the 
operation of the Dutch DGS. Further, Section 23n of  the draft regulation provides that if DNB has 
paid out amounts related to the operation of the DGS, the Foundation will reimburse DNB as soon 
as possible for the total of those amounts up to an  amount equal to the funds present in the Dutch 
DGS. Finally, Section 23o of the draft regulation provides that the Foundation reimburses the costs DNB has borne in connection with the DGS. The ECB understands that these provisions imply that 
DNB will finance, until it is reimbursed by the Foundation: (a) the Dutch DGS’ tasks, such as 
payouts of the guaranteed deposits, and (b) the cost s of operating the Dutch DGS. Further, the ECB 
understands that the limit ‘up to an amount equal to the funds present in the deposit guarantee fund’ 
in Section 23n may lead to a situation where DN B has made payments in the context of the 
operation of the Dutch DGS which will need first to be reimbursed throug h ex-post contributions 
from the member credit institutions of the Dutch DGS and can only be reimbursed to DNB subject 
to the availability of such contributions. The dr aft legislation does not provide for any backstop 
financing if ex-post contributions from member cr edit institutions are unavailable or insufficient
15. 
3.1.3 The above described forms of advance financ ing of the deposit guarantee scheme by the central 
bank are incompatible with the monetary financ ing prohibition. The only compatible forms of 
central bank financing of deposit gua rantee schemes are: (a) intraday credit in line with the general 
rules on provision of such credit by the central bank, and (b) short-term  emergency liquidity 
financing under strict conditions  established in the ECB’s Conve rgence Reports, i.e. if such 
funding is short term, addresses urgent situations, systemic stability aspects are at stake and decisions are at the NCB’s discretion
16. These conditions need to be listed in national law17 in the 
cases where emergency liquidity financing of the DGS is foreseen by the national legal system. 
3.1.4 Consequently, the ECB pro poses the following amendments:  
(a) clarifying in Section 22 that the Foundation is financed by the dedicated contributions from 
the member credit institutions of the Dutch DGS  and by other listed funding sources, which 
will not include advance financing by DNB;  
                                                 
13  See Article 1(b)(ii) of Council Regulation (EC) No 3603/93 of 13 December 1993 specifying definitions for the 
application of the prohibitions referred to in Articles 104 and 104(b)(1) of the Treaty (OJ L 332, 31.12.1993, p. 1). 
14  See paragraph 4.2 of ECB Opinion CON/2011/60; see also E CB Annual Report 2010, p. 120 and paragraphs 2.2 to 2.3 of 
ECB Opinion CON/2007/26.  
15  See also paragraphs 3.1.4(d) and 3.2.2 of this opinion. 
16  See ECB’s Convergence Report, May 2010, p. 25.  
17  See paragraphs 2.2 to 2.8 of ECB Opinion CON/2008/5.  
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4 (b)  specifying in Section 23n that the Foundati on transfers the necessary amounts to DNB before 
DNB makes payments related to the performance of the Dutch DGS’ tasks. Alternatively, it 
should provide expressly that any advance payments by DNB are only intraday. If in addition short-term emergency liquidity fina ncing of Dutch DGS operations by DNB is 
foreseen, conditions for such financing referred to  in paragraph 3.1.3 of  this opinion should 
be expressly listed in the Dutch law;  
(c) specifying in Section 23o that sufficient funds  will be made available to DNB for fulfilling 
its mandatory task of operating the Dutch DGS, in order to protect DNB’s financial 
independence; 
(d) specifying funding sources available to the Foundation if ex-post contributions by the 
member credit institutions are insufficien t to cover the needs of the Dutch DGS.  
 
3.2 Financing of the Dutch DGS by its member credit institutions 
3.2.1  One-off contribution 
Section 23f of the draft regulation provides that  an entity which become s a credit institution 
following entry into force of the Decree will pay a one-off amount to the Foundation. The ECB 
understands from the explanatory memorandum
18 that existing credit institutions will pay the same 
contribution under Section III to provide the Foundati on with starting capital, both contributions to 
be laid down by ministerial regulation. The ECB re quests further clarification of the determination 
and size of these contributions, and reassurance that  this does not conflict with the principle of a 
level playing field. The ECB points in this cont ext to the draft recast DGS Directive which aims, 
inter alia , at harmonising the level of contributions paid to the national deposit guarantee schemes 
with a view to achieving a level playing field19. 
3.2.2.  Ex-post contributions by member c redit institutions and backstop financing  
Section 23r of the draft regulation provides for ex -post contributions by member credit institutions 
of the Dutch DGS if the Foundation does not have sufficient funds to reimburse DNB for incurred costs and advance payments in connection with  the DGS. As stated in an earlier ECB opinion
20, an 
ex-ante funding scheme should also include the possibility to call on the private sector for 
additional financial support, as pre-collected funds fr om the industry may be insufficient in a crisis 
situation. This principle of ex-post financi ng from the private sector should promote additional 
market discipline and address the risk of moral hazard. At the same time, the ECB notes that 
additional temporary financing going beyond the ex-post contributions by the member credit 
institutions may be needed in a severe crisis requi ring, e.g. activation of deposit guarantees for a 
major credit institution. The draft regulation does not provide for financing to bridge this financial 
                                                 
18  See explanatory memorandum, p. 38. 
19  See recital 6 of the draft recast DGS Directive. 
20  See ECB Opinion CON/2011/12. 
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5 gap. As already indicated in paragraph 3.1.4(d) above, the ECB invites the Dutch Ministry of 
Finance to expressly regulate this issue.  
 3.3.  DNB’s financial independence  
The ECB refers to the principle of financia l independence under which an NCB must have 
sufficient means not only to perform its ESCB-rela ted tasks, but also its national tasks, e.g. 
financing its administ ration and own operations
21. Previous ECB opinions pointed out that 
allocation to the NCBs of specific non-ESCB related tasks (e.g. tasks in the area of financial supervision or consumer protection) needs to be  accompanied by the allocation of adequate human 
and financial resources allowing for such tasks to be carried out in a manner which will not affect 
the NCBs’ operational capacity to carry out their ESCB-related tasks
22. In particular, the ECB has 
advocated a prudent approach in this respect when reimbursement arrangements are proposed in 
the national legislation as a mode of financing the non-ESCB related tasks23. The ECB considers 
that the draft regulation raises concerns in this  respect to the extent that, as developed above, 
advance financing by the DNB of the Dutch DGS operations is foreseen by the draft regulation 
other than as intraday or short-term emergency liquidity financing, and in particular in the 
circumstances where DNB would not be full y reimbursed for such advance financing. 
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 4 October 2011. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET 
                                                 
21  See the ECB’s Convergence Report, May 2010, p. 21. 
22  See for instance paragraph 3 of ECB Opinion CON/2007/8. 
23  See for instance paragraph 4.2(c) of ECB Opinion CON/2008/16.