EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 23 February 2010  
on the introduction of a seven-day deposit facility 
(CON/2010/18) 
 
Introduction and legal basis  
On 8 February 2010 the European Central Bank (E CB) received a request from Latvijas Banka for an 
opinion on draft amendments to the Regulation on the use of Latvijas Banka’s monetary policy 
instruments (hereinafter the ‘draft legislation’). 
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 Article 2(2)  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 legislation relates to instruments of monetary policy in a Member State that has 
not adopted the euro. In accordance wi th 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 main objective of the draft legislation is to amend the Regulation on the use of Latvijas Banka’s 
monetary policy instruments (hereinafter the ‘Regul ation’), introducing a standing seven-day deposit 
facility. 
 2. Observations 2.1 The consulting authority has informed the ECB th at the draft legislation is to be adopted by 
11 March 2010. In view thereof, the consulting authority would seem to invoke the exemption provided for in Article 3(2) of Council Decisi on 98/415/EC, which allows for a reduction of the 
minimum time limit for submission of the ECB’s opinion of one month in case of extreme urgency, and asks the ECB to deliver its opinion by 24 February 2010. The ECB, however, wishes to draw the consulting authority’s attention to the f act that the second sentence of Article 4 of 
Decision 98/415/EC states that the ECB must be consulted ‘at an appropriate stage’ in the legislative process. This implies that the consulta tion should take place at a point in the legislative 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2 process that affords the ECB suffici ent time to examine the draft legislative provisions and to adopt 
its opinion in the required language versions and which also enables the relevant national 
authorities to take the ECB’s opinion into cons ideration before the legislative provisions are 
adopted. 
2.2 Although Member States that have  not adopted the euro retain thei r powers in the field of monetary 
policy, it is nevertheless beneficial for them to gradually achieve consistency with the operational 
framework for the implementation of the ECB’s monetary policy so that credit institutions 
operating in their territories can become acquain ted with the requirements that will apply once 
these Member States have adopted the euro. Such gradual harmonisation prior to the adoption of 
the euro will contribute to the smooth integration of the national central bank into the Eurosystem. 
In this context, the ECB draws Latvijas Banka’s attention to the fact that a seven-day deposit 
facility does not exist in the operational framework  for the implementation of the ECB’s monetary 
policy, which comprises an overnight deposit fac ility. Thus, such a seven-day deposit facility will 
need to be phased out at the latest when Latv ia adopts the euro. The ECB understands that such 
phasing out could be performed expeditiously.  
2.3 The ECB previously commented on the Regulation and other regulations in the field of monetary 
policy instruments2. In its opinions, the ECB emphasises the need to further align the Latvian 
minimum reserves regime with Eurosystem standa rds and makes the point that Latvian credit 
unions should also be subject to reserve requireme nts when Latvia adopts the euro. The ECB notes 
that all comments previously made on the Latv ian minimum reserves regime still remain valid. 
2.4 The ECB understands from the Explanatory Note to the draft legislation that the introduction of the 
seven-day deposit facility is aimed at facilitating li quidity management in view of the continuous 
rise in the liquidity surplus related to the new policy of the Latvian Treasu ry to exchange their 
funds for lats exclusively off-market at Latv ijas Banka. The ECB underlines the importance of 
conducting these off-market transactions at prevailing ma rket conditions so that they do not lead to 
any preferential treatment of the Latvian Treasury and are fully in line with Article 124 of the 
Treaty.  
 This opinion will be published on the ECB’s website.   
                                                 
2  See ECB Opinions CON/2006/49, CON/2007/12, CON/2008/89 and CON/2006/11. All ECB op inions are published on 
the ECB’s website at www.ecb.europa.eu. 
3 Done at Frankfurt am Main, 23 February 2010. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET