EN ECB -PUBLIC  
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 10 May 2019  
on the tax on banks’ financial assets and the interest rate benchmark for consumer credit 
agreements  
(CON/2019/ 18) 
 
Introduction and legal basis  
On 20 March 2019 the European Central Bank (ECB) received a request from Ministerul Finanțelor 
Publice ( the Romanian Ministry of Public Finances ) for an opinion on a draft Government Emergency 
Ordinance on the amend ment  and supplementation  of three legislative acts in relation to the tax on 
banks’ financial assets and the interest rate benchmark for  consumer credit agreements  (hereinafter the 
‘draft ordinance’) . On 29 March 2019 the draft ordinance was adopted with amendments by the 
Romanian government (hereinafter the ‘government ordinance’)1 and is currently subject to the 
parliamentary approval procedure.  
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 indent s of Article  2(1) of Council Decision 
98/415/EC2, as the government ordinance relates  to Banca Naţională a României (BNR) and 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 government ordinance  
1.1 The government ordinance was introduced to revise certain  features of the tax on banks’ financial 
assets which was introduced in late December 20183 and to replace the interest rate benchmark  
referenced in consumer credit agreements with variable interest rates denominated in Romanian 
lei4.  
                                                 
1  Ordonanţ a de urgenţ ă a Guvernului nr.  19/2019 pentru modificarea şi completarea unor acte normative, publicată în  
Monitorul Oficial al României , Part ea I, nr. 245 din 29 martie 2019.  
2  Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42).  
3  Government Emergency Ordinance 114/2018 of 28 December  2018 on the establishment of certain measures in the 
field of public investment and of certain fiscal and budgetary measures, the amendment and supplementation of 
certain legislative acts and the prolongation of certain time limits ( Ordonanţa de urgenţă a Guvernului  nr. 114/2018 
privind instituirea unor măsuri în domeniul investiţiilor publice şi a unor măsuri fiscal -bugetare, modificarea şi 
completarea unor acte normative şi prorogarea unor termene, publicată în Monitorul Oficial al României , Partea I, nr. 
1116 din 29 decembrie 2018).  
4  By virtue of Government Emergency Ordinance 50/2010 of 9 June 2010 on credit agreements for consumers 
(Ordonanţa  de urgenţă a Guvernului  nr. 50/2010 privind contractele de credit pentru consumatori, publicată în 
Monitorul Oficial al României , Partea I, nr. 389 din 11 iunie 2010) and Government Emergency Ordinance 52/2016 of 
14 September  2016 on credit agreements offered to consumers for immovable property, as well as for amending and 
completing Governm ent Emergency Ordinance 50/2010 on credit agreements for consumers ( Ordonanţa de urgenţă 
ECB -PUBLIC  
2 1.2 The tax on banks’ financial assets  
The objectives underly ing the revised features of th is tax are to increase financial intermediation, 
reduce the cost of credit for households and stimulate savings. The government ordinance thus 
aims to encourage credit institutions to contribute to achieving these objectives by : (a) increasing 
lending to non- financial corporations and households ; and ( b) reducing the difference between 
interest rates for loans granted to non- financial corporations and households and the interest rates 
for deposits made by non- financial corporations and households5. 
1.3 The tax on banks’ financial assets is levied on credit institutions which are Romanian legal entities, 
including their foreign branches, and Romanian branches of foreign legal entities. The proceeds of 
the tax are considered State budget revenue and the t ax expense will be  deductible when 
establishing the banks’ fiscal result in accordance with the Law on the Fiscal Code6. 
1.4 Following the amendments introduced by the government ordinance, the tax base is represented 
by the banks’ financial assets at net value  as recorded in the balance sheet at the end of the 
semester or of the year for which the tax is due, from which the following categories of financial 
assets are subtracted: (a) cash; (b) cash balances with central banks  at net value, excluding non-
perfor ming exposures ; (c) non- performing exposures  at net value; (d) debt securities issued by the 
public administration at net value, excluding non- performing exposures ; (e) loans and credit 
advances to the public administration at net value, excluding non- performing exposures ; (f) loans to  
the non- governmental sector  which are guaranteed by the central public administration at net 
value, excluding non- performing exposures ; (g) loans to credit institutions, related receivables and 
amounts to be depreciated at net value, excluding non- performing exposures ; (h) deposits with 
credit institutions, related receivables and amounts to be depreciated at net value, excluding non-
performing exposures ; (i) nostro accounts with credit institutions and related receivables  at net 
value, excluding non- performing exposures ; (j) reverse- repo operations and borrowed securities, 
related receivables and amounts to be depreciated at net value, excluding non- performing 
exposures . 
1.5 Following the amendments introduced by the government or dinance, the tax rate is either 0.4% of 
the tax base per year for banks with a market share above or equal to 1%, or 0.2% of the tax base 
per year for banks with a market share below 1%. For this purpose , a bank’s market share is 
calculated as the ratio be tween the total value of the bank’s assets and the total amount of 
aggregate assets for the banking system , including branches . 
1.6 Following the amendments introduced by the government ordinance, the tax on banks’ financial 
assets is limited to the accounting  profit as recorded at the end of the semester or year for which 
the tax is due. Moreover, banks that register losses at the end of the semester or year for which 
this tax is due will not be subject to it. Additionally, b anks on which lending restrictions have been 
                                                                                                                                                             
a Guvernului  nr. 52/2016 privind contractele de credit oferite consumatorilor pentru bunuri immobile, precum şi 
pentru modificarea şi completarea Ordonanţei  de urgenţă a Guvernului  nr. 50/2010 privind contractele de credit 
pentru consumatori, publicată în Monitorul Oficial al României , Partea I, nr. 727 din 20 septembrie 2016).  
5  Preamble to the government ordinance and Explanatory memorandum to the government or dinance as submitted to 
Parliament.  
6  Legea nr. 227/2015 privind Codul fiscal, publicată în Monitorul Oficial al României , Partea I , nr. 688 din 10 
septembrie 2015.  
ECB -PUBLIC  
3 imposed by the  supervisory authority for the period in which those restricti ons apply  will not be 
subject to this tax .    
1.7 Furthermore, in line with its stated objectives, the government ordinance introduces two categories 
of tax deductions: ( a) a tax deduction of up to 50% in return for contributing to increasing financial 
intermediation by increasing lending to non- financial corporations and households in accordance 
with an annually -established governmental target; and ( b) a tax deduction of up t o 50% in return for 
reducing interest rate margins, either below an annually -established reference margin rate or in line 
with an annually -established governmental target. For this purpose t he interest rate margin is the 
difference between the weighted average interest rate for loans denominated in lei to non- financial 
corporations and households and the weighted average interest rate for deposits denominated in 
lei received from non- financial corporations and households.  
1.8 Accordingly, as regards the first c ategory of tax deduction, the government ordinance provides for 
a pro- rata tax reduction of up to 50% , if the balance of loans to non- financial corporations and 
households  at the end of the semester  or year for which the tax is due increases in relation to the 
balance of the same type of credits at the end of the preceding year. The tax d eduction is 
proportional to the ratio between the increase in lending to non- financial corporations and 
households and the lending increase target established for the year for which the tax is due. If 
lending to non- financial corporations and households decreases, there is  no tax deduction. In 
addition,  the benchmark against which the increase in lending is calculated for the following year 
will not be reduced, but instead m aintained at the level of the balance of loans at the end of the 
year preceding the year in which lending to non- financial corporations and households decreased 
until the balance of loans to non- financial corporations and households at the end of the semes ter 
or year for which the tax is due exceeds  that benchmark.  
1.9 As for the second category of tax d eduction, the government ordinance provides for : (a) a tax 
deduction of 50%, if the interest rate margin for the semester  or year for which the tax is due is 
below or equal to the reference interest rate margin established for the year for which the tax is 
due; or ( b) a pro- rata tax d eduction of up to 50%, if the interest rate margin calculated at the end of 
the semester  or year for which the tax is due decreases  in relation to the interest rate margin 
calculated at the end of the preceding year. The tax deduction is proportional to the ratio between 
the decrease in the interest rate margin and the margin decrease target established for the year for 
which the tax is due. If the interest rate margin increases, there is  no tax deduction. In addition, the 
benchmark against which the decrease in the interest rate margin is calculated for the following 
year will not be increased, but  instead maintained at the level of t he interest rate margin at the end 
of the year preceding the year in which the interest rate margin increased until the interest rate 
margin at the end of the semester  or year for which the tax is due falls short of that benchmark.  
1.10 In addition to thes e tax  deductions, the governm ent ordinance provides for an exemption from the 
tax for the first semester in any of the following cases: ( a) where  the lending increase target has 
been fully met; ( b) where the margin decrease target has been fully met; ( c) where the aggregated 
percentage of the lending increase and of the interest -margin decrease is at least 100%.  
1.11 Finally, the governm ent ordinance specifies that the lending increase target, the margin decrease 
target and the reference interest rate margin are established annually by the Romanian 
ECB -PUBLIC  
4 government, upon the proposal of Ministerul Finanțelor Publice on the recommendation of 
Comitetul Național pentru Supravegherea Macroprudențială ( the National Committee for 
Macroprudential Oversight ). For 2019, the government ordinance sets the lending increase target 
and the margin decrease target at 8% and the reference interest rate margin at 4 %. 
1.12 The interest rate benchmark for  consumer credit agreements  
The government ordinance aims to increase the transparency of the interest rate benchmark 
referenced in consumer credit agreements wit h variable interest rates denominated in lei by 
replacing the Romanian Interbank Offer Rate with a new benchmark  calculated exclusively on the 
basis of interbank transactions7. 
1.13 The government ordinance stipulates that the new interest rate benchmark is  to be published each 
working day on BNR’s website.  
1.14 The government ordinance further stipulates that the new interest rate benchmark  will be  an 
average of interest rates weighted against the volumes of interbank market transactions. The 
benchmark  is calcul ated at the end of each quarter  as an arithmetic mean of the daily interest rates 
deter mined for the preceding quarter  and is applied by each credit institution for the following 
quarter.       
 
2. Observations  regarding tax on banks’ financial assets    
2.1 Need for impact assessment  
The ECB has consistently advised that the introduc tion of special tax es on bank s or financial 
institutions should be preceded by a  comprehensive impact assessment8. A comprehensive impact 
assessment of the tax on banks’ financial assets i s necessary to ensure that the benefits of the 
fiscal measure outweigh its costs not only in view of the potential ly negative effects on financial 
stability and the economy, but also in view of the potential implications for bank lending conditions 
and for  the transmission of monetary policy.  In this respect , the ECB notes  that the use of timely 
and meaningful impact assessment s was also emphasised, albeit more broadly, in Council 
Recommendation of 13 July 2018  on the 2018 National Reform Programme of Romania and 
delivering a Council opinion on the 2018 Convergence Programme of Romania9, according to 
which Romania should take action to i ncrease the predictability of decision- making by enforcing the 
systematic and effective use of regulatory impact assessment s and stakeholder consultations  and 
involvement in the design and implementation of reforms . 
2.2 Effects on financial stability  
Without prejudice to the government’s objective of increasing financial intermediation, the 
introduction of the tax would benefit fr om a prior impact assessment  so as to mitigate potential risks 
to financial stability . Given  the incentive mechanism introduced by the government ordinance, such 
                                                 
7  Explanatory memorandum to the government ordinance as submitted to Parliament.  
8  See paragraph 3.2.2 of Opinion CON/2010/62, paragraph 3.3 of Opinion CON/2011/31,  paragraph 2.2 of Opinion 
CON/2013/44 and paragraph 2 of Opinion CON/2016/1.  All ECB opinions are published on the ECB website at 
www.ecb.europa.eu.  
9  Council Recommendation of 13  July 2018 on the 2018 National Reform Programme of Romania and delivering a 
Council opinion on the 2018 Convergence Programme of Romania (OJ C 320, 10.9.2018, p. 98) . 
ECB -PUBLIC  
5 an assessment should also take into account the risk that  the provision of credit to non- finan cial 
corporations and households might be steered by the potential tax benefits. Such an assessment 
should also consider whether the design of the tax gives  credit institutions an incentive to change 
their risk profile by restructuring their portfolios. The provision of credit should primarily rely on a 
robust prudential system and full compliance with requirements for the creditworthiness of 
borrowers10. This latter  approach would contribute to an appropriate distribution of loans in the 
economy, and this i n turn would safeguard banks’ balance sheet s from future potential losses. 
Over time , this approach would also aid in fostering sustainable financial stability , and contributing 
to the safety and soundness of banks.  Finally, the incentives created by the revised tax must be 
aligned with macroprudential policy objectives and measures implemented in Romania.  
2.3 Effects on the Romanian economy  
A thorough and timely impact analysis of the practical implications of the government ordinance is 
warranted,  also in vie w of the fact that introducing ad hoc taxes on banks may create uncertainty 
for their business and eventually pose risks to the provision of credit , which could adversely affect 
long-term growth in the real economy11. In line with the stance maintained in t he past12, the ECB 
cautions against incentives in loan provision that may lead to distortions in the efficient allocation of 
loan supply and further sectoral imbalances in the real economy.  
2.4 Implications for bank lending conditions and for the transmission of monetary policy  
An inefficient allocation of credit is detrimental not only to financial stability and the real economy 
but also to the monetary policy transmission mechanism. The government ordinance introduces tax 
deductions for banks that lend more,  or at low margins , to the real sector. Any measure aim ed at 
stimulating lending activity, if not appropriately designed, may cause distortions in the allocation of 
credit. Such measures may result in  banks becom ing overly lenient with regard to their lendi ng 
standards in order to meet their lending volume targets. At the opposite extreme, in an attempt to 
meet their targets in terms of margin compression, banks may disproportionately tilt their lending 
supply away from relatively riskier but still creditwor thy borrowers involving high risk premia,  e.g. 
small and medium -sized enterprises , which rely solely on bank lending and have no access to 
capital market finance. The likelihood that such side effects materialise depends on the details of 
the calibration a nd on the credit risk and demand conditions that each intermediary is facing.  
2.5 While the tax introduced by the government ordinance is designed to have a lower impact on banks 
which lend more to the real economy, it can nonetheless be expected to have an overall adverse 
impact on their profitability. Since retained earnings are an important source of capital, a tax on 
banks’ activity could have implications o n their intermediation capacity that should not be 
neglected. Thus, the impact assessment should als o take into account the overall equilibrium 
effects of the fiscal measure, even more so in a country relying on the presence of foreign 
intermediaries who can more easily avoid the increased tax burden by geographically reallocating 
their assets.  
                                                 
10  See paragraph 3.2 of Opinion CON/2011/31.  
11  See paragraph 2.1 of Opinion CON/2016/1 and paragraph 3.2.2 of Opinion CON/2010/62.  
12  See paragraph 3.1 of Opinion CON/2011/31.  
ECB -PUBLIC  
6 2.6 Finally, the cost -benefit analysis should also consider the financing conditions for the real sector 
that play an important role in the monetary policy transmission mechanism and might de facto 
represent an intermediate target for central banks. The same applies to the volume of lending to 
the real economy, which can be explicitly utilised as an intermediate target of monetary policy 
measures. Consequently, the incentive mechanism provided for under the government ordinance, 
which is targeting financing conditions and lending activity, should be assessed to determine 
whether it may  have any implications on BNR ’s toolbox . 
 
3. Observations regarding interest rate benchmark for consumer credit agreements  
3.1 The ECB welcomes the government ordinance’s aim to introduce a transaction- based benchmark  
for consumer credit agreements with variable interest rates  denominated in lei (the ‘new 
benchmark’) . This  is in line with the principles underlying the Union regulatory framework on 
financial  benchmarks , in particular  Regulation (EU)  2016/1011 of the European Parliament and of 
the Council13, and other recognised international best practice14. Where the input data is  
transaction- based data, less discretion can be exercised in providing input data and therefore the 
opportunity to manipula te the data is reduced15.  
3.2 However, the government ordinance should take into account the fact that actual transaction- based 
input data are to be used only where available and appropriate. If transaction data is in sufficient or 
inappropriate to accurately and reliably represent the market or economic reality that the 
benchmark is intended to measure, input data which is not transaction data may also be used, 
including estimated prices, quotes and committed quotes, or other values16. 
3.3 Furthermore,  the compatibi lity of the government ordinance with Regulation (EU) 2016/1011 and 
related provisions of  Directive 2014/17/EU of the European Parliament and of the Council17 and 
Directive 2008/48/EC of the European Parliament and of the Council18 should be ensured. Without  
prejudice to the European Commission’s competence to monitor the implementation of Union law , 
the ECB notes that , although interest rate benchmarks are referenced in consumer credit 
agreements with variable interest rates denominated in foreign currencies  or denominated in lei 
(such as the new benchmark) , the government ordinance does not introduce information 
requirements concerning the names of the respective benchmarks and of their administrators and 
the potential impact  of the means by which the benchm arks are determined on the consumer19.  
                                                 
13  Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as 
benchmarks in financial instruments and financial contract s or to measure the performance of investment funds and 
amending Directives 2008/48/EC and 2017/14/EU and Regulation (EU) No 596/2014 (OJ L 171, 29.6.2016, p. 1).   
14  See the Board of the International Organization of Securities Commissions (OICU -IOSCO), P rinciples for Financial 
Benchmarks (July 2013), available at www.iosco.org.  
15  Recital 26 of  Regulation (EU) 2016/1011.  
16  Article 11(1) and Annex I of Regulation (EU) 2016/1011.  
17  Directive 2014/17/EU of the European Parliament and of the Council of 4 Fe bruary 2014 on credit agreements for 
consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and 
Regulation (EU) No 1093/2010 (OJ L 60, 28.2.2014, p. 34).  
18  Directive 2008/48/EC of the European Parliament and  of the Council of 23 April 2008 on credit agreements for 
consumers and repealing Council Directive 87/102/EEC (OJ L 133, 22.5.2008, p. 66).  
19  See Article 5(1) , third subparagraph,  of Directive 2008/48/EC and Article 13(1) , second subparagraph, point (ea) of 
Directive 2014/17/EU .  
ECB -PUBLIC  
7 3.4 The ECB further  notes that the government ordinance does not specify key features of the new 
benchmark , such as the name (and acronym) and the administrator of the new benchmark , nor 
does it specify the full methodolo gy for the determination of the new benchmark  or where such 
details are to be made available.  If the administrator  of the new benchmark envisaged under the 
government ordinance were  to be BNR , the ECB notes  that Regulation (EU) 2016/1011 does not 
apply to central banks20, as central banks already meet principles, standards and procedures which 
ensure that they exercise their activities with integrity and in an independent manner21. 
Accordingly , if BNR were to be the designated administrator the government ordinance should not 
impinge on BNR’s discretion to develop the methodology for determining the new benchmark so as 
to ensure its  accuracy, integrity and reliability. When central banks provide benchmarks, it is their 
responsibility to establish appropriate i nternal procedures in order to ensure the accuracy, integrity, 
reliability and independence of those benchmarks , taking into account international best practice 
where relevant and appropriate22. The ECB would need to be consulted under Articles 127(4) and 
282(5) of the Treaty with regard to draft national legislation that confers further tasks on BNR in this 
respect.   
 
This opinion will be published on the ECB’s website.  
 
Done at Frankfurt am Main, 10 May 2019.  
 
[signed]  
 
The President of the ECB  
Mario DRAGHI  
                                                 
20  Article 2(2)(a) of Regulation (EU) 2016/1011.  
21  Recital 14 of  Regulation (EU) 2016/1011.  
22  See the Board of the International Organization of Securities Commissions (OICU -IOSCO), Principles for Financial 
Benchmarks (July 2013), available at www.iosco.org.