EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 25 March 2010 
on independence, confidentiality and the prohibition of monetary financing 
(CON/2010/25) 
 
Introduction and legal basis  
On 25 February 2010 the European Central Bank (ECB)  received a request from the Bulgarian Minister 
of Finance for an opinion on a draft law amending the Law on Българска  народна  банка  (Bulgarian 
National Bank) 1 (hereinafter the ‘Law on BNB’), the Law on the prevention and disclosure of conflicts of 
interest2 (hereinafter the ‘Law on conflicts of interest’) and the Administrative Procedure Code3 
(hereinafter the ‘Code’) (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/EC of 
29 June 1998 on the consultation of the European Ce ntral Bank by national authorities regarding draft 
legislative provisions4, as the draft law relates to Българска  народна  банка  (Bulgarian National Bank) 
(BNB). In accordance with the first sentence of Arti cle 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 
The main purpose of the draft law is to address th e observations made in the ECB’s Convergence Report 
of May 2008
5 on legal convergence, the European Co mmission’s Convergence Report of 20086 and 
Opinions CON/2008/73 and CON/2009/137. In particular, the draft law:  
(a) aligns the Law on BNB with the institutional a nd personal independence requirements in Article 
130 of the Treaty, and Article 7 and Article 14.2 of the Statute of the European System of Central Banks and of the European Central Bank (hereina fter the ‘Statute of the ESCB’), with the 
                                                 
1 Published in Darjaven vestnik No 46,  10.6.1997. 
2 Published in Darjaven vestnik  No 94, 31.10.2008 (in force as of 1.1.2009). 
3  Published in Darjaven vestnik  No 30, 11.4.2006. 
4 OJ L 189, 3.7.1998, p. 42. 
5 See the ECB’s Convergence Report, May 2008, pp. 229-231. 
6 COM(2008) 248 final, available on the Co mmission’s website at  www.ec.europa.eu. 
7  All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 
 
2 confidentiality requirement in Article 37 of the Statute of the ESCB and with the prohibition of 
monetary financing in Article 123 of the Treaty; 
(b) updates the references in the Law on BNB to reflect the wording of the Treaty; 
(c) brings the Law on conflicts of interest into line with the requirements for dismissal of members of 
BNB’s decision-making bodies, as set out in Article 14.2 of the Statute of the ESCB. 
 2. General observations  2.1 The ECB welcomes the Bulgarian authorities’ efforts to achieve the required level of legal 
convergence by following the recommendations in  the ECB’s Convergence Report of May 2008. 
Bulgaria is a Member State with a derogation as referred to in Article 139 of the Treaty and must 
therefore comply with Article 131 of the Treaty
8. In the Convergence Report of May 2008, the 
ECB identified incompatibilities and inconsistencie s between Bulgarian legislation, on the one 
hand, and the Treaty and the Statute of the ESCB, on the other hand. The draft law relates to these incompatibilities and inconsistencies in the areas of central bank independence, confidentiality and 
the prohibition of monetary financing. 
2.2 The draft law does not address the other identifie d incompatibilities relating to monetary policy, the 
collection of statistics, official foreign reserve management, payment systems, the issue of banknotes and coins, the appointment of independent  auditors, financial re porting, exchange rate 
policy and international cooperation. In this resp ect, the Law on BNB requires further adaptation to 
ensure BNB’s full integration into the Eurosystem. 
 3. Specific observations 3.1 Institutional independence  
The proposed amendment to Article 44 of the Law on BNB brings this provision into line with 
Article 130 of the Treaty and Article 7 of the St atute of the ESCB regarding the principle of 
institutional independence. 
                                                 
8 See the ECB’s Convergence Report, May 2008, p. 26: ‘To comp ly with Article [131] of the Treaty, national legislation 
had to be adjusted to ensure its compatibility by the date  of establishment of the ESCB (as regards Sweden) and by 1 
May 2004 or 1 January 2007 (as regards the Member States whic h joined the EU on these dates). Nevertheless, statutory 
requirements relating to the full legal integration of an NCB in to the Eurosystem need only enter into force at the moment 
that full integration becomes effectiv e, i.e. the date on which the Member State with a derogation adopts the euro’.  
 
3 3.2 Personal independence  
 Grounds for dismissal of Governing Council members  
The proposed amendment to Article 14(1) of the Law on BNB on the grounds for dismissal of a 
Governing Council member9 fully aligns this Article with Article 14.2 of the Statute of the ESCB. 
The ECB also welcomes proposed Article 3(2) of the Law on conflict of interests, since it removes 
the grounds for dismissal of BNB’s Governing Co uncil members that are inconsistent with the 
grounds for removal set out in Article 14.2 of the Statute of the ESCB. 
 Minimum term of office for Governing Council members  
The proposed amendment to Article 14(2) of th e Law on BNB removes the incompatibility with 
the Statute of the ESCB regarding the minimum term of office for the members of BNB’s Governing Council and is in line with Article 14.2 of the Statute of the ESCB.  
 Right of judicial review 
 
Proposed Article 14(3) of the Law on BNB grants jurisdiction to the Supreme Administrative Court 
(SAC) over decisions to dismiss any Governi ng Council member, including BNB’s Governor. 
The ECB welcomes this proposed amendment to the extent that it relates to the Governing Council 
members other than the Governor10. Furthermore, the ECB fully supports the draft law’s 
amendments to the Code, which ensure the SAC’s jurisdiction to decide on dismissal issues related 
to those BNB Governing Council members. Concer ning the Governor, the jurisdiction of the SAC 
under proposed Article 14(3) of the Law on BNB sh ould be without prejudice to the jurisdiction of 
the Court of Justice of the European Union under Article 14.2 of the Statute of the ESCB11. In this 
context, the ECB notes that Article 14(3) of the Law on BNB, which will become Article 14(4) under the draft law, confirms the competence of th e Court of Justice of the European Union with 
regard to dismissal issues rela ted to the Governor. In addition, Article 14(3) of the Law on BNB 
constitutes an exception from the proposed Article 14 (3) of the draft law, exempting the Governor 
from the scope of the latter. Therefore, proposed Ar ticle 14(3) of the draft law should clarify this 
point.  
3.3  Confidentiality  
The draft law amends Articles 4(2), 13(1) a nd 23(2) of the Law on BNB and introduces the 
requirement of non-disclosure for information that  constitutes professional secrets for BNB, its staff 
                                                 
9  In particular, this draft law provision states: ‘The competen t authority under Article 12 may only remove a member of the 
Governing Council from office if they no longer fulfil the conditions required for the performance of their duties or if 
they have been found guilty of serious misconduct’. 
10  See the ECB’s Convergence Report, May 2008 , p. 20: ‘National legislation should also provide for a right of review by 
the national courts of a decision to dismiss any other memb er of the decision-making bodies of the NCB involved in the 
performance of ESCB-related tasks. This right can either be a matter of general law or can take the form of a specific 
provision. Even though it may be said that this right is availa ble under the general law, for legal certainty reasons it could 
be advisable to provide specifica lly for such a right of review’. 
11  The current Article 14(3) of the Law on BNB will become Article 14(4) of the Law on BNB, should the draft law be 
adopted. 
 
4 and the members of its Governing Council, which is  in line with Article 37 of the Statute of the 
ESCB. 
However, the proposed amendment to Article 4(2) of the Law on BNB does not remove the 
exception, in the cases provided for by the La w on the protection of classified information12, from 
the obligation not to disclose banking, professional or commercial secret information. As stated in the Convergence Report of May 2008
13, and in view of the proposed amendments to Articles 4(2), 
13(1) and 23(2) of the Law on BNB, the ECB assu mes that the exception in Article 4(2) in 
conjunction with Articles 13(1) and 23(2) of the Law on BNB is without prejudice to the 
confidentiality obligations vis-à-vis the European System of Central Banks and the ECB. The ECB 
recommends clarifying this explicitly in this provision. 
3.4 Monetary financing  
The ECB welcomes the proposed amendment to Arti cle 45(1) of the Law on BNB to remove the 
inconsistency with Article 123(1) of the Treaty re garding the range of public sector entities covered 
by the prohibition of monetary financing. While th e range of public sector entities is identical with 
the list of such entities enumerated in Article 123 of the Treaty, the ECB suggests slightly redrafting the proposed Article 45(1) to ensure  that it accurately reflects the prohibition of 
monetary financing to cover both (a) lending ‘to’ the range of public sector entities, and 
(b) purchases of debt instruments ‘from’ the range of public sector entities. 
The prohibition of monetary financing prohibits th e 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 Treaty. For this reason the 
word ‘direct’ should be inserted in the amendm ent to Article 45(1) of the Law on BNB. 
Finally, acknowledging the particularities arisi ng from the currency-board regime, i.e. the 
prohibition on BNB extending credit to credit ins titutions other than in the context of emergency 
liquidity operations, the ECB reiterates
14 the need to bring Article 45(2) of the Law on BNB into 
line with Article 123(2) of the Treaty. Such alignment would certainly be mandatory on the 
introduction of the euro in Bulgaria. 
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main , 25 March 2010. [signed] 
The President of the ECB 
Jean-Claude TRICHET 
                                                 
12  Published in Darjaven vestnik No 45, 30.4.2002. 
13 See the ECB’s Convergence Report, May 2008, p. 230. 
14 See the ECB’s Convergence Report, May 2008, p. 230.