OPINION OF THE EUROPEAN CENTRAL BANK
at the request of the Ministry of Justice of the Republic of Austria
under Articles 109l (2) and 109f (6) of the Trea ty establishing the European Community and
Article 5.3 of the Statute of the European Mone tary Institute on a draft legislative proposal
concerning a Regulation of th e Federal Government on the use of the monetary policy
instruments of the European Central Bank as a basis for determining ch anges in the base and
reference interest rates (Regulation on the base and reference interest rates)
CON/98/59
1. On 27 November 1998 the European Central Bank  (ECB) received a request from the Ministry
of Justice of the Republic of Austria for an ECB Opinion on a draft legislative proposal
concerning a Regulation of the Federal Government on the use of the monetary policyinstruments of the European Central Bank as a basis for determining changes in the base and
reference interest rates (Regulation on the base  and reference interest rates) (hereinafter
referred to as the draft legislative proposal).
2. In accordance with Article 109l (2) of the Treaty establishing the European Community
(hereinafter referred to as the Treaty), the E CB has taken over the advisory functions of the
European Monetary Institute (EMI), which went  into liquidation upon the establishment of the
ECB on 1 June 1998. The ECBs competence to deliv er an opinion is based on Article 1.1, first
indent, of the Council Decisi on (93/717/EC) of 22 November 1993 on the consultation of the
EMI by the authorities of the Member States on draft legislative provisions, as the draft
legislative proposal contains provisions con cerning currency legislation. In accordance with
Article 17.5, first sentence, of the Rules of Pr ocedure of the ECB, the ECB Opinion has been
adopted by the Governing Council of the ECB.
3. The ECB notes that the draft legislative proposal  is an implementing regulation for Article 1 of
the Austrian Federal Law, dated 14 August 1998, changing certain provisions in the Austrian
legislation as ancillary measures for the introduction of the euro (Erstes Euro-Justiz-
Begleitgesetz), on which the EMI was consulte d and delivered an Opinion on 13 February 1998
(hereinafter referred to as the Austrian Federa l Law). Article 1 (1) of the Austrian Federal
Law stipulates that references in national laws  and regulations to the discount rate, which is
currently announced by the Oesterreichische Nati onalbank, shall be replaced by a base interest
rate on 1 January 1999. Article 1 (2) of the Austrian Federal Law specifies that references innational laws and regulations to the lombard rate, which is currently announced by theOesterreichische Nationalbank, shall be replaced by a reference interest rate on 1 January 1999.The first base interest rate on 1 January 1999 shall be identical to the discount rate of31 December 1998, whereas the first reference interest rate on 1 January 1999 shall be identicalto the lombard rate of 31 December 1998. Under Article 1 (3) of the Austrian Federal Law, theFederal Government is required, by means of a Regulation, to determine, and, respectively, toadjust such base and reference interest rates after having consulted the OesterreichischeNationalbank.
4. The ECB notes that Section 1 (1) of the draft le gislative proposal provides for the interest rate
on the deposit facility of the ECB to be the rate  used to determine the basis for calculating
changes in the base interest rate . According to Section 1 (2) of the draft legislative proposal, the
interest rate on the marginal lending facility of the ECB shall be the rate used as a basis for
determining changes in the reference interest rate.
5. The ECB notes that, according to the Explan atory Memorandum to the draft legislative
proposal, the Oesterreichische Nationalbank has recommended the solution set out in the draft
legislative proposal on the basis of the following considerations: first, the discount and lombard
rates, as currently announced by the Oesterreichische Nationalbank, mark the lower and upperlimits of the short-term money market rates in Austria and this function will be fulfilled by the
interest rates on the deposit facility (lower limit of the money market rate) and on the marginal
lending facility (upper limit of the money market rate) in Stage Three of Economic andMonetary Union (EMU). Second, viewed in te rms of their stability and the frequency of
changes, the facilities mentioned were also clos er to the discount and lombard rates than the
interest rates on the regular two-week or th ree-month tenders of the European System of
Central Banks (ESCB).
6. The ECB welcomes the fact that the Oesterreic hische Nationalbank was consulted on the draft
legislative proposal and that the draft legislativ e proposal takes the form of a Regulation of the
Federal Government, which will enter into force on 1 January 1999.
7. The ECB does not have any objections to the draft legislative proposal.
8. The ECB confirms that it has no objections to this ECB Opinion being made public by the
competent national authorities at their discretion.
Done at Frankfurt am Main on 16 December 1998.
The President of the ECB
[signed]
Willem F. Duisenberg