EN ECB -PUBLIC  
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 16 November  2018  
on the implementation of the recommendations of the convergence report into the Law on  
Българска народна банка (Bulgarian National Bank ) 
(CON/20 18/53) 
 
Introduction and legal basis  
On 23 October 2018 the European Central Bank (ECB) received a request from the Minister for  Finance 
for an opinion on a draft law amending the Law on the Bulgarian National Bank (hereinafter the ‘draft law’ ). 
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 indent of Article  2(1) of Council Decision 98/415/EC1, as 
the draft law relates to Българска народна банка (Bulgarian National Bank (BNB)) . 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 Introduction  
As noted in t he explan atory memorandum accompanying the draft law , the draft law  aims to bring 
the Law on the Bulgarian National Bank  (hereinafter the ‘Law on BNB’)2 in line with Articles 130 and 
131 of the Treaty and with the Statute of the European System of Central Banks and of the 
European Central Bank (hereinafter the ‘ Statute of the ESCB ’). The draft law has been prepared on 
the basis of the assessment and recommendations for Bulgaria contained in the Convergence 
Report  of the European Commission and th e Convergence Report of the ECB3 and aims to fully 
reflect the requirements of Union law in BNB’s regulatory framework4. With regard to the 
requirements for legal integration of BNB into the Eurosystem, t he explanatory memorandum states 
that the legal fram ework must be prepared and enter into force on the date on which the Member 
State with a derogation adopts the euro, which is why the draft law does not contain any proposals 
for changes in this area5. 
                                                 
1  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) . 
2  Published in Darjaven Vestnik  No 46, 10 June 1997.  
3  See p. 1 of the Explanatory memorandum.  
4  See p. 3 of the Explanatory memorandum.  
5  See p. 1 of the Explanatory memorandum.  
ECB -PUBLIC  
2 1.2 Personal independence  
The draft law amends Article 14( 1) of the Law on BNB  by providing that a member of BNB ’s 
Governing Council may be relieve d from office  only if  he no longer fulfils the conditions required for 
the performance of his duties or if he has been guilty of serious misconduct. The draft law also  
amends Article 14( 3) of the Law on BNB  to provide that the decision to relieve the Governor of BNB  
from office may be referred to the Court of Justice on grounds of infringement of the Treaties  or of 
any rule of law relating to their application.  
1.3 Institutional independence  
The draft law amends Article 44 of the Law on BNB  to provide that when exercising their powers and 
carrying out their duties under the Law, BNB, the Governor of BNB and BNB’s Governing Council 
must be independent  and must not seek or tak e instructions  from EU institutions, bodies, offices or 
agencies, from the Council of Ministers or from the governments of other Member States of the 
European Union, or from any other bodies or institutions . This provision is further amended to 
provide that EU institutions, bodies, offices or agencies, the Council of Ministers or the governments 
of other EU Member States, or any other bodies or institutions , must not exercise  influence over 
BNB, the Governor of BNB or BNB’s  Governing Council.  
1.4 Prohibition of  monetary financing  
The draft law amends Article 45(1) of the Law on BNB to stipulate that BNB m ust not provide any 
loans or guarantees to the Council of Ministers, municipalities, other government or municipal 
institutions, public organisations or undert akings, EU institutions, bodies, offices or agencies, central 
governments, regional, local or other public authorities, other bodies governed by public law, or 
public undertakings of Member States, and m ust not purchase debt instruments directly from them.  
In addition, the draft law replaces Article 45(3) of the Law on BNB, which currently provides for the 
possibility to extend credits to the government under certain conditions, with a provision which 
prohibits BNB to purchase, either on the primary or on t he secondary market, debt instruments 
issued by the Bulgarian State or Bulgarian municipalities, or from Bulgarian government or municipal 
institutions, or public organisations or undertakings . 
1.5 Confidentiality  
The draft law amends  Article s 13(1) and 23(2) of the Law on BNB to clarify that the Governor  of 
BNB, BNB’s  Governing Council and the employees of BNB are bound by an obligation to maintain 
professional secrecy . 
1.6 Other amendments  
The draft law also provides for some other changes to the Law on BNB that are not related to the 
Convergence Reports  of the Commission and the ECB6, namely: (i) a provision which  empowers 
BNB to issue an ordinance  laying down the face value, form and design of banknotes and coins put 
into circulation by BNB; (ii) a provi sion that all BNB employees must not have been convicted of a 
premeditated crime or debarred from holding a  relevant position by a court, and that th ese facts 
must be established internally ; and (iii)  other amendments , mostly of editorial nature.  
                                                 
6  See p. 3 of the Explanatory memorandum.  
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3 2. General observati ons 
2.1 The ECB welcomes the Bulgarian government’s efforts to achieve the required level of legal  
convergence by reference to the recommendations for Bulgaria contained in the Convergence 
Reports of the Commission and the ECB . 
2.2 The ECB notes that the compatibi lity of Bulgarian  legislation, including the Law on BNB  and the Law 
on counter -corruption and unlawfully acquired assets forfeiture7, with Article s 130 and 131 of the 
Treaty will be assessed in the ECB’s next Convergence Report.   
 
3. Specific observations  
3.1 Personal independence  
The ECB welcomes that the draft law removes the text in Article 14(1) of the Law on BNB according 
to which a member of the Governing Council could be relieved from office where he/she is in 
practice unable to perform his/her duties for m ore than six months . Such a ground for relieving a 
member of the Governing Council from office was in addition to the two grounds provided for in 
Article 14.2 of the Statute  of the ESCB8. The ECB moreover welcomes that the  draft law modifies 
the second gro und for relieving a member of the Governing Council  from office and now  refers only 
to serious misconduct.  
3.2 Institutional independence  
The ECB welcomes the amended Article 44 of the Law on BNB which clarifies that BNB, the 
Governor of BNB and BNB’s Governin g Council must be independent and must not seek or take 
instructions from national institutions, Union institutions and any other bodies or institutions9. The 
clarification that such national and Union institution s must not exercise influence over BNB, the  
Governor of BNB and BNB’s  Governing Council further aligns the Law on BNB with Article 130 of 
the Treaty.  
3.3 Prohibition of monetary financing  
The ECB welcomes the amended Article 45(1) of the Law on BNB which now prohibits  both the 
lending by BNB to a rang e of public sector entities and purchases  by BNB  of debt instruments from 
such entities10. The ECB further welcomes that the list of the relevant public sector entities is 
expanded to include central governments, regional, local or other  public authorities,  other bodies 
governed by public law, public undertakings of Member States and EU institutions and bodies , in 
order to fully mirror the wording of Article 123(1)  of the Treaty . 
Article 45(2) of the Law on BNB provides that the prohibition under Article 45( 1) of the Law on BNB 
must not apply to the extension of credits to state- owned and municipal credit institutions  in 
emergency cases of liquidity risk that may affect the stability of the financial system. It is 
recommended that the scope of this exemption addressed to state -owned and municipal credit 
institutions is brought into line with the scope of the exemption under Article 123(2) of the Treaty , 
                                                 
7  Published in Darjaven Vestnik  No 7, 19 January 2018.  
8  See the ECB’s Convergence Report 2018, paragraph 7.1.2.2.  
9  See the ECB’s Convergence Report 2018, paragraph 7.1.2.1.  
10  See the ECB’s Convergence Report 2018, paragraph 7.1.4.  
ECB -PUBLIC  
4 which provides that the prohibition of monetary financing under Article 123(1) of the Treaty must not 
apply to publicly owned credit institutions which, in the context of the supply of reserves by central 
banks, must  be given the same treatment by national central banks as private credit institutions11. 
The prohibition of monetary financing prohibits the direct purchase of public sector debt, but such 
purchases in the secondary market are allowed, in principle, as long as such secondary market 
purchases are not used to circumvent the objective of Article 123 of the Treaty12. For this reason, in 
accordance with the proposed revised Article 45(1) of the Law on BNB , Article 45(3)  of the Law on 
BNB should be reformulated to clarify that BNB may not purchase debt instruments ‘directly’ from 
the relevant public sector entities, and the references to the primary or secondary markets should be 
deleted . 
3.4 Confidentiality  
While the ECB considers the amendments to Article 13(1) and Article 23(2) of the Law on BNB  may 
be helpful to ensure clarity, it is noted that under Article 37 of the Statute, professional secrecy is an 
ESCB- wide matter. Therefore, the ECB assumes that the confidentiality rules of the Law on BNB are 
without prejudice to the confidentiality obligations towards the ECB and the ESCB13. 
 
 
This opinion will be published on the ECB’s website.  
 
 
Done at Frankfurt am Mai n, 16 November  2018 . 
 
[signed]  
 
The President of the ECB  
Mario DRAGHI  
                                                 
11  See the ECB’s Convergence Report 2018, paragraph 7.1.4.  
12  See the ECB’s Convergence Report 2018, paragraph 7.1.4.  
13  See the ECB’s Convergence Report 2018, paragraph 7.1.3.