OPINION OF THE EUROPEAN CENTRAL BANK
At the request of the Ministry of Finance of the Netherlands on a draft legislative proposal
concerning the protection of credit institutions and other financia l institutions against liabilities
resulting from the closure of payment and security settlement systems on 31 December 1999
(CON/99/13)
1. On 23 August 1999 the European Central Bank (ECB) received a request from the Ministry of
Finance of the Netherlands on a draft legislativ e proposal concerning th e protection of credit
institutions and other financial institutions agai nst liabilities resulting from the closure of payment
and security settlement systems on 31 December 1999.
2. The ECB’s competence to deliver an opinion is based on Article 105 (4), second indent, of the
Treaty establishing the European Community and Ar ticle 2 (1), fifth and sixth indents, of Council
Decision (EC) No. 98/415 of 29 J une 1998 on the consultation of the European Central Bank by
national authorities regarding draft legislative pr ovisions, as the legislative proposal deals with
payment systems and settlement systems, as well as  with the stability of fi nancial institutions and
markets. In accordance with Article 17.5, first se ntence, of the Rules of Procedure of the
European Central Bank, this opinion has been adopted by the Governing Council of the ECB.
3. Following the conclusions of the informal mee ting of the ECOFIN Council of Ministers on 16 to
18 April 1999 on ways of dealing with possible pr oblems during the changeover to the year 2000,
the Ministry of Finance of the Netherlands has prep ared a draft legislative decree. This draft takes
as given that the TARGET payment system of the ESCB and TOP, the national giro grosspayment system of De Nederlandsche Bank N.V., will be closed on 31 December 1999. Otherpayment systems and security settlement systems linked to TARGET and TOP will also be closed
on 31 December 1999. These closures might have legal consequences for credit and otherfinancial institutions participatin g in payment or security settlement systems as obligations due on
31 December 1999 cannot be performed. The obligations  concern instructions given by clients to
credit and other financial institutions, as well as ob ligations of the said institutions themselves to
transfer money or securities by way of payment or security settlement systems on 31 December
1999.
4. The draft legislative provisions address these legal consequences by holding credit and other
financial institutions harmless from failure to tran sfer money or securities via payment or security
settlement systems on 31 December 1999. Specifica lly, Section 1 of the draft legislative
provisions clarifies that the transfer of mone y or securities by credit institutions and other
financial institutions on 30 December 1999, instead of on 31 December 1999, is neither a breachof contract, nor a wrongful act on the part of th e clients, credit institutions and other financial
institutions involved.  This protection means, for transactions governed by Dutch law, that neither
the clients, nor the credit institutions and other financial institutions are liable for possible losses
suffered by creditors on account of this earlier perf ormance. Contractual parties are, of course,
free to agree on other solutions inter se . The draft legislative provisions will enter into force on
the day after the date of publicati on. According to Section 2 of the draft, the legislative provisions
will, however, apply retroactively as from 30 Decem ber 1999 in the event of it entering into force
on a later date.
5. The ECB welcomes the effort made by the aut horities of the Netherlands to reduce the legal
uncertainty which might result under Dutch law from the closure of payment and securitiessettlement systems on 31 December 1999. The legislative proposal takes into account thecommuniqué of the central bank governors, e ndorsed by ECOFIN ministers at their informal
meeting in Dresden on 17 April 1999, which urged th e Member States to take appropriate means
ensuring that the performance of any contractual obligations of credit institutions or other agents
in the financial markets shall neither become due nor enforceable on 31 December 1999. TheECB also notes that in shifting the performance of the said obligations to 30 December 1999, the
draft legislative provisions limit the number of transactions on the first days of the year 2000.
This is in line with in ternationally given advice. In doing so, the ECB finds that the draft
legislative provisions could contribute to mainta ining the stability of fi nancial institutions and
markets during the changeover to the year 2000.
6. The ECB has one drafting comment regarding the draft legislative proposal. In its opinion, the
words “Section 212 A, sub a of the Insolvency Ac t” in the fifth line of Section 1, paragraph 2
should read: “Section 212 A, sub b of the Insolvency Act”.
7. The ECB confirms that it has no objections to th is ECB Opinion being made public by competent
national authorities at their discretion.
Done at Frankfurt am Main on 14 September 1999.
The President of the ECB
[signed]
Willem F. Duisenberg