EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 9 March 2006 
at the request of the Polish Minister of Finance  
on a draft law on the supervision of financial institutions 
(CON/2006/15) 
 
On 7 February 2006 the European Central Bank (ECB ) received a request from the Polish Minister of 
Finance for an opinion on a draft law on the supervisi on of financial institutions (hereinafter the ‘draft 
law’). 
The ECB’s competence to deliver an op inion is based on the third, fifth and sixth indents of Article 2(1) 
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 law relates to a national central 
bank (NCB), namely Narodowy Bank Polski (NBP), the oversight of payment and settlement systems and 
rules applicable to financial institutions insofar as they materially influence the stability of financial 
institutions and markets. In accordance with the first sen tence 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 The draft law proposes to establish a new instituti onal framework for the supervision of banking, 
capital markets, insurance and pension funds in Poland
2. Under the current model financial 
supervision is conducted by three separate colle giate bodies: (i) for banking supervision: the 
Banking Supervision Commission (Komisja Nadz oru Bankowego) (hereinafter the ‘Banking 
Commission’)3, which is chaired by the NBP’s President  and which operates with the assistance of 
its executive arm, the General Inspectorate of Ba nking Supervision, a separate organisational unit 
within the structure of NBP4; (ii) for capital markets supervision: the Securities and Exchange 
Commission (Komisja Papierów Warto ściowych i Gie łd) (hereinafter the ‘Securities 
                                                 
1  OJ L 189, 3.7.1998, p. 42. 
2  Article 1 of the draft law. 
3  Article 25(1) of the Law on NBP of 29 August 1997 on Nar odowy Bank Polski (consolidated  text: Dz. U. 2005 No 1, 
Item 2, as amended) (hereinafter th e ‘Law on NBP’). Entities operating on the basis of the Law on cooperative savings 
and loan associations of 14 December 1995 (Dz. U. 1996 No 1, Item 2, as amended)  are not included within the scope of 
the Banking Commission’s supervision.  
4  Articles 25(1) and 29(1) of the Law on NBP. 
 
2 Commission’)5; and (iii) for insurance and pension funds  supervision: the Insurance and Pension 
Funds Supervisory Commission (Komisja Nadzoru Ubezpiecze ń i Funduszy Emerytalnych) 
(hereinafter the ‘Insurance Commission’)6.  
1.2 Under the draft law, it is proposed to ultim ately dissolve all three of the abovementioned 
supervisory bodies7 and transfer their competences to a newly established integrated supervisor, 
namely the President of the Financial Supervisor y Authority (hereinafter the ‘FSA President’ and 
the ‘FSA’, respectively)8. The FSA President will be the central government administrative body 
responsible for the supervis ion of financial institutions9, i.e. a single-person decision-making organ, 
with the FSA functioning as its executive arm. Th e FSA is to be financed by contributions from 
supervised entities10. In the case of banking supervision, this  is a change from the current regime 
under which banking supervision is financed by NBP. 
1.3 The draft law will transfer supervisory respons ibilities from the current supervisors to the FSA 
President in two stages, beginning with the inte gration of the supervision of capital markets, 
insurance and pension funds from 1 April 200611 and concluding with the transfer of responsibility 
for banking supervision from the Banking Commission to the FSA President from 1 January 2008
12. The delay in the transfer of responsibility for banking supervisio n is related to the 
implementation of the Capital Requirements Directive in the Polish banking sector13. 
1.4 The draft law’s provisions for the organisationa l merger of the supervisory authorities are not 
accompanied by any provisions for integrated superv isory methods or procedures; it is stated that 
such measures are not necessary in view of the exis ting level of financial ma rket consolidation in 
Poland14. However, the declared aim of the supe rvisory reform is to pursue the following 
advantages: (i) improved efficiency of the superv isory authority’s operations, (ii) facilitation of 
Poland’s participation in EU-level supervisory structures, (iii) lower operational costs for the 
integrated supervisor, (iv) decreased administ rative burdens for the supervised entities, and 
(v) facilitated supervision over financial conglomerates15. 
 
                                                 
5  Article 3(1) of the Law of 29 July 2005 on supervisi on of the capital market (Dz. U. 2005 No 183, Item 1537). 
6  Article 2(3) of the Law of 22 May 2003 on insurance and pension funds supervision and the Insurance Ombudsman 
(Dz. U. 2003 No 124, Item 1153, as amended). The intere sts of the insurance and pension fund beneficiaries are 
represented by the Insurance Ombudsman (Article 5(1) of this  law), a function which is also covered by the current 
reform (Article 44(1) of the draft law). 
7  Article 44 of the draft law. 
8  Article 2(2) of the draft law. 
9  Article 2(1) of the draft law. 
10  Articles 16 and 18 of the draft law. 
11  Article 56 of the draft law. 
12  Article 56(2) in conjunction with Article 53(1)(2) of the draft law. 
13  As stated in the fifth paragraph of  the consultation request  from the Minister for Finance of 7 February 2006. 
14  As stated in the fourth paragraph of the consultation request from the Minister for Finance of 7 February 2006. 
15  As stated in the first, third and fourth paragra phs of the Explanatory Memorandum to the draft law. 
 
3 2. Financial stability and prudential role of a central bank 
2.1 General observations 
2.1.1 The ECB notes that Article 105(5) of the Tr eaty establishing the European Community assigns to 
the European System of Central Banks the task of contributing to the smooth conduct of policies 
pursued by the competent authorities relating to th e prudential supervision of credit institutions and 
the stability of the financial system. 
2.1.2 In line with the above, the ECB has consistent ly favoured the involvement of central banks in 
prudential supervision, expressing the view that  an institutional fra mework in which the 
Eurosystem’s responsibilities for monetary policy in the euro area are coupled with extensive (i.e. 
both micro and macro-prudential) supervisory res ponsibilities of NCBs in domestic markets, and 
with enhanced cooperation at a euro area-wide leve l, is most appropriate for tackling the changes 
triggered by the introduction of the euro16. Past ECB opinions on draft national legislation 
reforming the institutional framework for pruden tial supervision in Member States have noted: 
(i) central banks have traditionally been closely involved in the prudential supervision of credit 
institutions due to their pivotal role in the fina ncial system, in particular regarding implementing 
monetary policy and ensuring the proper functioning of payment systems17; and (ii) maintaining a 
close involvement of NCBs in prudential superv ision is an important condition for allowing the 
Eurosystem to contribute adequately to monitoring the risks to financial stability in the euro area18, 
in accordance with Article 105(5) of the Treaty, and to safeguard a smooth coordination between 
the central banking functions exercised at the Eu rosystem’s level and the supervisory functions 
carried out at national level19. 
2.1.3 The ECB recognises that the nature and scope of risk in the financial sector is widening, due to 
closer links between credit institutions, insurance companies, investment firms and pension funds. 
The traditional borders between the banking, secu rities and insurance sectors of the financial 
market are becoming increasingly blurred, as demonstrated by the emergence of hybrid financial products, the increased use of risk transfer inst ruments and distribution agreements between the 
three sectors, and the growing role of financia l conglomerates. In this context, the ECB has 
welcomed institutional frameworks established in Member States that rec ognise the essential role 
of central banks in promoting the safety and soundn ess of financial institutions  and the stability of 
the financial system as a whole
20.  
                                                 
16  Cf. European Central Bank, ‘The role of central banks in prudential supervision’, 30 March 2001, available on the ECB 
website (www.ecb.int). 
17  See, e.g. paragraph 6 of ECB Opini on CON/2003/23 of 24 October 2003 at the request of the Ministry of Finance of the 
Netherlands on a draft law on provisions concerning the me rger of De Nederlandsche Bank and the Pensions and 
Insurance Supervisory Authority Foundation.  
18  See, e.g. paragraph 4 of ECB Opini on CON/2001/10 of 25 May 2001 at the request of the Austrian Ministry of Finance 
on a draft Federal law establishing and organising the fi nancial market supervisory authority [title shortened]. 
19  See, e.g. paragraph 5 of ECB Opinion CON/2001/35 of 8 November 2001 at the request of the German Ministry of 
Finance on a draft law establishing an inte grated financial serv ices supervision. 
20  See, e.g. paragraph 5 of ECB Opinion CON/2004/16 of 11 May 2004 at the request of  the Italian Ministry of Economic 
Affairs and Finance on a draft law on the protection of savings. 
 
4 2.1.4 Maintaining NBP’s close involvement in prudentia l supervision will be all the more desirable as it 
is necessary for Poland’s adoption of the euro, to enable NBP to contribute adequately to 
monitoring the risks to financial stability in the eu ro area. This is of particular importance in a 
context in which the nature and scope of these risk s are affected by the introduction of the single 
currency and the consequent enhanced integration of financial markets. As already noted by the 
ECB in the specific context of Member States pr eparing for the introduction of the euro, the 
independence, credibility and experience that NCBs  can contribute to the monitoring of financial 
stability should be recognised as an important institutional asset21. Also, given that banking activity 
accounts for a large proportion of the Polish financial market, and that banks remain key agents of 
financial intermediation in Pola nd, providing most of the cred it to the economy and channelling 
most of the population’s savings, while the role of the capital markets remains secondary22, the 
ECB believes that the systemic arguments in fa vour of maintaining a strong involvement by NBP 
in banking supervision are relevant . In this context, the draft law is seen as a proposal to create a 
body functioning as chiefly a banking supervisor, fro m whose operations NBP would be insulated.  
2.1.5 In line with its previous opinions, the ECB considers that more effective coordination between 
supervision of all financial sectors could be pursu ed also with means that do not imply a reduced 
role of the central bank in this field23. 
2.2 Legislative recognition of the centr al bank’s financial stability role  
2.2.1 With the establishment of an independent FSA , it becomes important to delineate the financial 
stability role of NBP more explicitly. Under the ex isting provisions of Polish law, the financial 
stability role of NBP is implicitly reflected in its objective to ‘establish the necessary conditions for 
the development of the banking system’24. In practical terms, NBP’s fi nancial stability role is also 
implicitly reflected in the existing institutional arrangements linking NBP with the Banking Commission.  
2.2.2 In keeping with the position taken by the ECB in previous opinions on draft national legislation 
proposing supervisory reforms, the ECB considers th at central banks are in general in the best 
position to take on responsibility for financial stability , given their insight into money and financial 
market developments and involvement in paymen t systems and monetary policy operations. This 
applies both to the normal conduct of business and in crisis situations
25. Central banks’ remit on 
systemic stability means that they concentrate on the potential impact of macro-economic shocks or 
                                                 
21  See paragraph 7 of ECB Opinion CON/2004/31 of 22 Septem ber 2004 at the request of Ná rodná banka Slovenska on a 
draft law on supervision of the financial market and on amendmen ts to certain laws. 
22  Cf. European Central Bank, ‘Financial Sectors in  the EU Accession Countries’, 19 August 2002, p. 171; and  ‘Banking 
structures in the new EU Member Stat es’, 31 January 2005, p. 38. Both publicat ions are available on the ECB website 
(www.ecb.int). 
23 See paragraph 4 of the ECB Opinion CON/2001/10. 
24  Article 3(2)(6) of the Law on NBP. 
25  See, e.g. paragraph 7 of Opinion CON/2001/10. 
 
5 disturbances and of other common factors influencin g the stability of financial system as a whole26. 
Explicit legislative recognition of NBP’s financia l stability role would be consistent with the 
approach taken in many Member States which have adopted a supervis ory model based on an 
independent financial supervisory authority27. Hence, the ECB recommends amending the draft law 
to clarify that NBP has formal responsibility for contributing to financial stability by monitoring 
and assessing the financial system as a whole, as a separate function from hands-on supervision and financial regulation. 
2.3 Duty of cooperation between central bank and FSA  
As a general point, the ECB notes the emphasis placed by the Basel Core Principles for Effective 
Banking Supervision
28 on the maintenance of a system of cooperation and sharing of relevant 
information among the various official agencies, both domestic and foreign, responsible for the 
safety and soundness of the financial system29. As noted in its previous opinions30, the ECB 
considers that it would be helpful to state in the dr aft law the basic principle that, in order to carry 
out their respective responsibilities effectively, th ere should be close cooperation between the FSA 
and NBP in all fields of common interest. This pr inciple should be further reflected in a general 
provision stipulating a duty of cooperation, whose ultimate purpose would be to put in place effective and practical arrangements for cooperati on and information-sharing between NBP and the 
FSA. Such legislative provisions have been introdu ced in a number of Member States which have 
adopted supervisory models based on an independent  financial supervisory authority, including, for 
example, Belgium
31, Germany32, Estonia33, Hungary34 and Austria35. For this reason, the ECB 
                                                 
26  See, e.g. paragraph 10 of Opinion CON/2004/31. 
27  Belgium : Article 23 of the Statutes of the Nationale Bank van België/Banque Nationale de Belgique; Estonia : Article 
2(5) of the Law on Eesti Pank; Ireland : Section 6A(2)(a) of the Central Bank Act 1942; Hungary : Article 4(7) of Law No 
LVIII of 2001 on Magyar Nemzeti Bank; Malta : Section 4(2)(c) of the Central Bank of Malta Act; Finland : Point 3 of the 
Section 3(2) of the Law on Suomen Pankki (214/1998). 
28  Basel Committee on Banking Supervision, ‘Core Principl es for Effective Banking S upervision’, September 1997, 
available on the Bank for International Settlement s website (www.bis.org). 
29  See Section II, Principle 1 fifth indent of  the Basel Core Principles (see footnote 28). 
30  See, e.g. paragraph 8 of ECB Opinion CON/2001/10. 
31  The Commissie voor het Bank, Financie- en Assurantiewezen/Commission bancaire, financière et des assurances (the 
Banking, Finance and Insurance Commiss ion) and the Nationale Bank van Belg ië/Banque Nationale de Belgique 
collaborate closely on all issues  of common interest and in particular with regard to international cooperation in respect 
of prudential matters, inter-sectoral aspe cts of prudential policy relating to the providers of financial services, macro-
prudential analyses and legal studies. See Article 117 § 1 of the Law of 2 August 2002 on the supervision of the financial 
sector and on financial services. 
32  The Bundesanstalt für Finanzdienstleis tungsaufsicht (Federal Financial Supe rvisory Authority or BaFin) and the 
Deutsche Bundesbank are required to work together, and this cooperation includes ongoing monitoring of credit 
institutions by the Deutsche Bundesbank, including anal ysing and assessing documents, audit reports and annual 
accounts submitted by credit institutions, conducting and analys ing banking audits to determine the capital adequacy and 
risk management procedures of credit in stitutions and evaluating audit findings. See Article 7(1) of the German Law on 
banking (Kreditwesengesetz – KWG).  
 
6 recommends subjecting in the draft law the FSA Pr esident to an express duty of co-operation with 
NBP on all issues of common interest. 
2.4 Information-sharing between central bank and FSA  
2.4.1 Central bank access to prudential information is essential for the conduct of macro-prudential 
monitoring, the oversight of payment systems and the safeguarding of other market infrastructures, 
which are essential for the smooth conduct of mone tary policy. In particular from a financial 
stability perspective, should there be a crisis in financial markets, the central bank would inevitably 
be involved. In that context, the ready availab ility of relevant information and the ability to 
interpret it are important. The Consolidated Banking Directive provides that information subject to 
confidentiality and professional secrecy require ments may be shared between supervisory 
authorities and central banks, and vice versa, for the purposes of the exercise of their respective 
tasks36. As emphasised in previous ECB opinions37, central banks provide valuable input to the 
supervisory process, while access by central banks to supervisory information benefits the conduct 
of monetary policy operations, the oversight of  payment systems and the pursuit of financial 
stability. Provisions authorising the exchange of information between central banks and 
supervisory authorities have therefore been include d in the legislation of virtually all Member 
States which have adopted supervisory models based on an independent financial supervisory 
authority38. 
                                                                                                                                                             
33  Eesti Pank is required to cooperate with  the Financial Supervision Authority in or der to ensure financial stability and it 
has the right to obtain information necessary for the performance  of its functions. S ee Section 2(5) of the Eesti Pank Act. 
The Supervision Authority may enter into bilateral or mu ltilateral agreements for coope ration with Eesti Pank, the 
Ministry of Finance or any other state agency, if such cooperation is necessary for the attainment of the objectives of 
financial supervision. The Financial S upervision Authority, the Ministry of Finance and Eesti Pank are required to 
cooperate, on the basis of a written agreement, in the collectio n and analysis of reports, the drafting of legislation and the 
exchange of information on events which have a substantial impact on the financ ial sector. See Section 50 of the Law on 
the Financial Supervision Authority. 
34  In course of performing its tasks, th e Hungarian Financial Supervisory Authorit y is required to cooperate with Magyar 
Nemzeti Bank. See Article 6/C(1) of Law No CXXIV of 1999 on  the Financial Supervisory Au thority. This cooperation 
is curried out on the basis of a signed Memo randum of Understanding, updated every year.  
35  Within the scope of its federal statutory duties and its du ties within the ESCB, the Oeste rreichische Nationalbank (OeNB) 
is required to cooperate with the Fina nzmarktaufsicht (Financial Market Au thority or FMA) by providing mutual 
assistance. Both the OeNB and the FMA are required to repor t to each other observations and findings of a fundamental 
nature or of particular importance in the area of banking. Se e Sections 5, 7 and 8 of the Fe deral Law on the institution and 
organisation of the Financial Market Authority; and S ections 79(1) and 80(1) of the Federal Law on banking. 
36  Article 30(8) of Directive 2000/12/EC of the European Parl iament and of the Council of 20 March 2000 relating to the 
taking up and pursuit of the business of credit  institutions (OJ L 126, 26.5.2000, p. 1). 
37  See, e.g. paragraph 9 of ECB Opinion CON/2001/10. 
38  See, e.g. Belgium : Article 56 of the Statutes of the Nationale Bank van België/Banque Nationale de Belgique; Denmark : 
Article 354(5) of the Law on financial se rvices; Article 22 of the Law on deposit guarantees and investors; Article 20 of 
the Law on Danmarks Nationalbank; Estonia : Section 2(5) of the Law on Eesti Pank;  Sections 48(2), 54(2) of the Law on 
the Financial Supervision Authority; Ireland : Sections 33C(1)(c) and 33C(8) of the Central Bank Act 1942; Latvia : 
Article 6 of the Law on Latvijas Banka; Article 10 of th e Law on the Financial and Ca pital Market Commission; 
Luxembourg : Article 33(2) of the Law of 23 December 1998 concerning monetary status and the Banque centrale du 
Luxembourg; Article 16, third paragraph of the Law of 23 December 1998 on the establishment of a commission for the 
supervision of the financial sector; Hungary : Article 44 of Law No LVIII of 2001 on Magyar Nemzeti Bank; Malta : 
Section 38A of the Central Bank of Malta Act; Secti on 18 of the Malta Financia l Services Act; Austria : Articles 79 to 80 
of the Law on banking; Finland : Section 26 of the Law on Suomen Pankki, No 214/1998. 
 
7 2.4.2 It is understood that there is currently no speci fic legal framework for the exchange of information 
between NBP and the Banking Commission since, as a practical matter, NBP’s President chairs 
both institutions. While the draft law provides, for example, that the FSA President is responsible for performing periodic assessments of the financia l condition of banks and presenting these to the 
body responsible for monetary policy
39, it does not provide for an ongoi ng exchange of information 
between NBP and the FSA. Since the draft law pl ans a new supervisory authority separate from 
NBP, the ECB recommends expressly providing in th e draft law for the exchange of information 
between NBP and the FSA. Furthermore, the ECB recommends expressly removing possible legal obstacles to information sharing between the indepe ndent financial supervisor  and NBP, stipulating 
that information subject to confidentiality and professional secrecy requirements may be shared 
between the supervisory authorit y and the central bank, and vice versa, for the purposes of the 
exercise of their respective tasks. In drafting the provisions relating to the exchange of information 
between NBP and the FSA, it may be helpful to u se, as a minimum standard, the example of the 
existing Polish provisions (which are retained unde r the draft law) regarding information-sharing 
between NBP and the Securities Commission or  the Insurance Commission, respectively
40, in the 
context of the supplementary supervision of fi nancial conglomerates (imp lementing the relevant 
Community legislation41). 
2.4.3 Following Poland’s adoption of the euro, information-sharing may involve a cross-border 
dimension, since information concerning Eurosy stem-related tasks may need to be conveyed to 
other NCBs of the Eurosystem and to the ECB. A provision reflecting this particular aspect would 
be welcome. This suggestion is in line with  the recommendations made by the Economic and 
Financial Committee in its ‘Report on financial crisis management’42, to remove any legal 
impediments to the cross-border exchange of in formation between superv isors and central banks. 
The continuity of current arrangements with foreign supervisors should also be secured. 
 3. Institutional relationship between NBP and the FSA 3.1 The existing institutional model for prudential supervision in Poland 
3.1.1 The ECB would like to express its very positive assessment of the existing institutional model for 
the prudential supervision of credit institutions in  Poland. In particular, the following institutional 
elements ensure that there is the necessary degr ee of involvement in banking supervision on the 
                                                 
39  Article 3(1)(a)(c) of the draft law. 
40  Articles 22 to 23 of the Law on supervision of the capital market (see footnote 5 above) and Article 17(6) of the law on 
insurance supervision (see foot note 6 above), respectively. 
41  Articles 12 of the Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the 
supplementary supervision of credit institu tions, insurance undertakings and investme nt firms in a financial conglomerate 
and amending Council Directives 73/239/EEC, 79/267/EEC,  92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, and 
Directives 98/78/EC and 2000/12/EC of the European Parlia ment and of the Council (OJ L 35, 11.2.2003, p. 1).  
42  Economic Paper No 156, the Economic  and Financial Committee, ‘Report on financial crisis management’, 
17 April 2001, available on the European Commission website (www.europa.eu.int). 
 
8 part of the central bank: (i) NBP’s Preside nt chairs the seven-person Banking Commission43; 
(ii) the Banking Commission’s decisions are implemented and coordinated by the General 
Inspectorate of Banking Supervision, which is structured as the executive arm of the Banking 
Commission and is a separate organisational unit of NBP, institutionally autonomous and 
subordinate to the Banking Commission44; (iii) the General Inspector of Banking Supervision is 
appointed and dismissed by NBP’s President in agreement with the Minister of Finance45; and 
(iv) there are staff cooperation arrangements in place between NBP depart ments and the General 
Inspector of Banking Supervision. This structure gr eatly facilitates the flow of information between 
NBP and the Banking Commission, allowing NBP to fulfil its role of promoting the safety and soundness of financial institutions and the stability of the financial system as a whole. From a more 
specific Eurosystem perspective, th is structure, which shares a number of institutional features with 
the French banking supervisory model
46, is particularly well designed to facilitate an NCB’s 
contribution to the prudential supervision of cred it institutions and the stability of the financial 
system, as required, also in the future euro accessi on context, under Article 105(5) of the Treaty.  
3.1.2 Assuming, nevertheless, that an independent fi nancial supervision author ity will be established in 
Poland without the benefit of the existing institu tional relationship betw een NBP and the Banking 
Commission, the ECB wishes to point out that Member States which have adopted supervisory 
models based on an independent financial supervisor y authority have used a variety of institutional 
arrangements to ensure that the NCB can make  its necessary contribution to the conduct of 
prudential supervision and financial stability . The ECB considers th at these institutional 
arrangements make an important contribution to wards ensuring the smooth interaction between 
central banks and supervisory authorities.  
3.2 Central bank appointment of members to the FSA’s decision-making body  
3.2.1 The ECB understands that under the draft law, the FSA President, in his capacity as the central 
government administrative body responsible for the integrated supervision of the banking, capital 
markets and insurance/pension funds sectors, will be a single-person decision-making body for 
virtually all financial supe rvisory matters in Poland47. The FSA President is to be appointed, from 
among qualified persons, by the Council of Minister s’ President for a six-year term in office48, with 
narrowly defined grounds for possible dismissal49. The appointment of the FSA President is not 
                                                 
43  Article 26(1)(1) of the Law on NBP. 
44  Articles 25(1) and 29(1) of the NBP Law on NBP.  
45  Article 29(3) of the Law on NBP. The General Inspect or of Banking Supervision is a member of the Banking 
Commission, see Article 26(1)(7) of the Law on NBP. 
46  In France, the prudential supervision of credit institutions  is carried out by the Commission Bancaire. The Banque de 
France’s Governor chairs the Commission Bancaire, and the Banque de France provides the General Secretariat of the 
Commission Bancaire with staff and resources necessary for carrying out on-site inspections  of credit institutions. See 
Articles L. 613-3 and L. 613-7 of the Fr ench Financial and Monetary Code. 
47  Article 2 of the draft law. 
48  Article 4(1) of the draft law. 
49  Article 5 of the draft law. Such grounds include cases where the FSA President: (1) has received a final sentence for an 
intentionally committed offence; (2) has received a final sentence of imprisonment for an unintentionally committed 
 
9 subject to the provisions regulating open compe titions for management positions in the Polish 
government50. From the draft law provisions, it is not entirely clear to whom and how the FSA 
President will be accountable – a single reference to annual reports to be issued by the FSA 
President51 is not linked to any procedure for submit ting or reviewing such reports. The legal 
framework proposed by the above quoted provisions does not provide for conformity with the applicable institutional standards that a market s upervisor such as the FSA President needs to be 
embedded in; further consideration in this regard is recommended. A particular concern that needs 
to be expressed in this context re lates to the prosecutorial powers th at the FSA President is to have 
in civil proceedings related to the banking, cap ital market, insurance and pension funds markets
52. 
3.2.2 The ECB further understands that the tasks of  the FSA President will be carried out with the 
assistance of the FSA staff and the FSA Vice-Presidents53. The FSA Vice-Presidents will be 
appointed by the Council of Ministers’ President upon the nomination of the FSA President54 and 
may apparently be dismissed at the sole di scretion of the Council of Ministers’ President55. The 
FSA Vice-Presidents will not form a board or any other collegiate body and will not have the 
powers of an organ of the government admi nistration. As regards banking supervision 
responsibilities during the transitional period in wh ich the FSA will exist alongside the Banking 
Commission, i.e. until 31 December 2007, the FSA President will be a member of the Banking Commission in the capacity of Deputy Chairman an d will also appoint one additional person as a 
Banking Commission member
56. 
3.2.3 In line with the position taken by the ECB in previous opinions57, and in light of the widespread 
practice in the European Union on decision-making in supervisory matters, it would be desirable to 
allow for the establishment of a formal board acting on the basis of collegiality in the draft law. In 
this respect, the ECB notes that in many Member  States which have adopted supervisory models 
based on an independent financia l supervisory authority, the centr al bank either provides members 
of the decision-making body of the supervisory authority or plays an institutional role in the appointment and dismissal of its members. In so me cases there is cross-membership between the 
decision-making bodies of the central bank and the supervisory authority. Such provisions have 
                                                                                                                                                             
offence; (3) has resigned from office; (4) has lost Polish citizenship; or (5) has become unable to fulfill duties in office 
because of prolonged illness lasting more than nine months. 
50  Article 11(2)(1) of the draft law. 
51  Article 4(2) of the draft law. 
52  Article 3(2) of the draft law. 
53  Article 6(1) of the draft law. 
54  Article 6(2) of the draft law. 
55  Article 6(3) of the draft law. 
56 Article 53(4) of the draft law. 
57  See, e.g. paragraph 14 of ECB Opinion CON/2005/34 of 6 October 2005 at the request of the Italian Ministry of 
Economy and Finance on an amendment to the draft law on the protection of savings concerning the Banca d’Italia. 
 
10 been introduced, for example, in Belgium58, Estonia59, Latvia60, Austria61, and Finland62. Such an 
approach would retain some of the advantages of the existing institutional framework for the 
supervision of credit institutions in Poland, and provide a practical means of exchanging 
information between NBP and the FSA63.  
3.2.4 Having regard to the above, the ECB proposes considering the inclusion in the draft law of 
provisions establishing a collegiate decision-maki ng body as the FSA’s sole organ and a body of 
central government administration. The ECB also proposes including an appropriate number of NBP representatives in such a collegiate body, with th e full right to participate in its meetings and 
deliberations, to vote and to share in all informa tion available to the FSA. Such inclusion of the 
NBP representatives in the FSA’s collegial body w ould need to be effected with appropriate 
consideration given to the inde pendence safeguards relating to the members of the NBP staff or 
governing bodies.  
3.3 Central bank involvement in major supervisory decisions  
In a number of Member States which have adopt ed supervisory models based on an independent 
financial supervisory authority, the central ba nk has been given an explicit role in major 
supervisory decisions, including decisions relatin g to issuing or revoking authorisations and 
licences. Such legislative provisions have been introduced, for example, in Denmark
64, Ireland65, 
and Hungary66. Such provisions would assist NBP in the performance of its financial stability tasks.  
                                                 
58  Three of the seven members of the Management Co mmittee of the Commissie voor het Bank, Financie- en 
Assurantiewezen/Commission bancai re, financière et des assurances (the Ba nking, Finance and Insurance Commission) 
are required to be appointed from among the members of  the Board of Directors of the Nationale Bank van 
België/Banque Nationale de Belgique. See the third indent of Article 49 § 6 of the Law of 2 August 2002 on the 
supervision of the financial sect or and on financial services. 
59  Of the six members of the Estonian Fi nancial Supervision Authority’s Supervisor y Board, the Governor of Eesti Pank is 
an ex officio member and two of the remaining fi ve members are appointed and remove d by the Executive Board of Eesti 
Pank on the Governor’s proposal. S ee Section 8 of the Law on the Fi nancial Supervision Authority. 
60  The Chair and the Deputy Chair of the Council of the La tvian Financial and Capital Ma rket Commission (FCMC) are 
appointed by the Parliament for a period of six years upon a joint proposal of the Governor of Latvijas Banka and the 
Minister for Finance. One of the grounds for dismissal of the Ch air and their Deputy by the Parliament is if an application 
for dismissal is submitted jointly by the Governor of Latvij as Banka and the Minister for Finance. The FCMC’s Chair 
appoints and removes the other members of  the FCMC Council, and is required to  co-ordinate their decision with the 
Latvijas Banka’s Governor and the Mini ster for Finance. The Governor or De puty Governor of Latvijas Banka may 
participate in FCMC Council meetings. See Articles 13(3), 13(4), 14(4) and 16(2) of the Law on the Financial and 
Capital Market Commission. 
61  The Oesterreichische Nationalbank (OeNB) nominates th e Deputy Chair of the Supervis ory Board, as well as two 
additional members of the eight-member Supervisory Board and one member of the two-member Executive Board of the 
Austrian Finanzmarktaufsicht (Financial  Market Authority or FMA), who are a ppointed by the Federal Minister for 
Finance (in the case of the Supervisory Board members) a nd the Federal Government (in the case of the Executive Board 
members). The Federal Minister for Finance is required to c onsult the OeNB prior to the dismissal of a member of the 
FMA Supervisory or Executive Boards nominated by the OeNB, except in case of imminent danger. See Sections 5, 7 
and 8 of the Federal Law on the establishment and organisation of the Financial Market Authority. 
62  Suomen Pankki proposes to nominate one of the six memb ers and one of the three deputy members of the Board of 
Directors of the Finnish Financial S upervisory Authority. See Section 9 of  the Law on the Financial Supervisory 
Authority. 
63  See paragraph 5 of Opinion CON/2001/10. 
64  A representative of Danmarks Nationalbank is a member of the Financial Business Council which, inter alia , takes 
decisions in supervisory cases of importance as well as in cases which are significant for financial entities and holding 
companies in general. See Article 345 of the Law on financial services (LBKG 2005-06-21, No 613). 
 
11 3.4 Financial Stability Committee 
 Another institutional mechanism for encour aging cooperation between  central banks and 
independent financial supervisory authorities which the ECB has welc omed in past opinions is the 
establishment of a financial stability/ market committee as a body to foster cooperation and 
information-sharing between the authorities, in cluding the finance ministry, which are jointly 
responsible for financial system stability and regulation67. 
3.5 Operational involvement of central banks in financial supervision  
 Yet another mechanism which has been used in  some Member States to encourage cooperation 
between central banks and indepe ndent financial supervisory auth orities involves the allocation of 
certain operational tasks to the central bank, includi ng on-site inspections and reviews of the capital 
adequacy and risk management systems of supervised institutions68. 
 4. Oversight of payment and securities settlement systems 4.1  The ECB notes that NBP enjoys exclusive li censing and supervisory rights over payment systems 
in Poland
69. Additionally, the legislation currently in force grants to a representative of NBP’s 
President the right to participate, without the right to vote, in meetings of the Securities 
Commission whenever issues concerning the supe rvision of securities settlement systems (SSSs) 
are discussed70. NBP’s President also has a right to give  an opinion at any time when the approval 
of the establishment of a new SSS (with certain  exclusions) is issued by the Securities 
Commission71. The impact of the draft law on these NBP competences is not entirely clear. While 
winding up the Securities Commission (and hence eliminating NBP’s right to participate in its meetings), the draft law appears to retain the a dvisory role of NBP’s President, even though the 
relevant reference to the Securities Commission in the current legislation is not explicitly replaced 
                                                                                                                                                             
65  The Irish Financial Services Regulatory Authority is requir ed to consult the Governor of the Central Bank and Financial 
Services Authority of Ireland, and ma y act only with the agreement of the Governor on any matter relating to the 
financial stability of the state’s financial system, including (but not limited to) the issue, revocation and suspension of a 
licence or other authority.  See Sections 33C(9), (9A) and (9B) of  the Central Bank Act 1942, as amended. 
66  Where prescribed by law, the Hungarian Financial Superv isory Authority must consult with or obtain the consent of 
Magyar Nemzeti Bank prior to issuing or revoking authorisat ions and licences. See Article 6/C(2) Law No CXXIV of 
1999 on the Financial Supervisory Authority. 
67  See paragraph 7 of Opinion CON/2001/10 (Austria). Sim ilarly, Hungary created a Financial Stability Committee 
comprising its newly established Financial Services Authorit y, Magyar Nemzeti Bank and the Ministry of Finance, to 
cooperate actively and discuss financial stability issues. 
68  Germany : Law on banking (numerous provisions); Austria : Law on banking (numerous provisions). Also, in Ireland  the 
Governor of the central bank has been given independent powers to investigate businesses and carry out on-site 
inspections of licensed credit and financ ial institutions. See, e.g. in the case of  banks, Section 17A of the Central Bank 
Act 1971.  
69  Article 16(1) of the Law on se ttlement finality in payment and securities settlement systems and on the supervision of 
such systems (Dz. U. 2001 No 123, Item 1351, as amended). 
70  Article 8(6) of the Law on supervisi on of capital markets. At the same time, the General Inspector of Banking 
Supervision is a member of Securities Commission, see Article 8(5)(5) of the Law on supervision of capital market (see 
footnote 5). 
71  Article 16.2 of the Law on settlemen t finality (see footnote 69 above). 
 
12 by a reference to the FSA President. The ECB recommends clarifying the NBP’s role in SSS 
oversight, in accordance with th e principles set out below.  
4.2 As noted in previous ECB opinions72, payment systems and SSSs are interlinked, particularly in 
view of the use of the ‘delivery versus paymen t’ mechanism, under which settlements of securities 
and transfers of funds take place  simultaneously. There is therefore a strong argument in favour of 
the model used in some Member States of inte grating the oversight of payment and securities 
settlement systems, and for the NCB to perform th is function. Settlement of both legs of such 
transactions should be subject to similar safeguard s in order to avoid asymmetries with systemic 
implications. In order to safeguard the effectiv eness of monetary policy and the overall stability of 
the financial system, the NCBs’ oversight responsibiliti es mean that they must ensure that SSSs are 
sufficiently protected against systemic disrupti ons. The framework for the NCBs’ conduct of this 
function, although informal, has been effective and successful. A growing number of NCBs see a 
benefit in formalising their oversight role. The majority of NCBs carry out this function on the 
basis of their general statutory laws, without any explicit detailed legal provisions. At the 
Community level, the general legal basis for this activity is provided by the Treaty and the Statute  
of the European System of Central Banks and of the European Central Bank73, with more detailed 
policies introduced by the Eurosystem’s common oversight policy, as defined by the Governing Council.  
4.3 In view of the widespread practice of Memb er States referred to above, the ECB recommends 
giving NBP responsibility for the oversight func tion over SSSs, including access to all information 
and data relevant for the performan ce of such oversight tasks.  
 5. Monetary financing and monetary policy independence 5.1 Monetary financing 
5.1.1 According to the relevant Polish provisions, as amended by the draft law, the FSA President will 
have the  competence to request a supervised bank to commission an audit from an indicated 
external auditor in cases w here irregularities are established in the audit conducted on the bank’s 
own behalf. The costs of such an audit ordered by the FSA President will be borne by NBP, unless 
the audit reveals relevant irregularities (in which case the costs of the audit will be borne by the 
supervised bank)
74. Similarly, audit costs will be borne by NBP where an audit is demanded by the 
FSA President to clarify doubts as to the credibility of financial statements of dependent entities or 
                                                 
72  See, e.g. paragraphs 10 to 14 of ECB Opinion CON/2003/14 of 7 August 2003 at the request of the Banca d’Italia on a 
draft regulation on payment systems, pa yment infrastructures and payment inst ruments; paragraphs 13 to 16 of ECB 
Opinion CON/2005/24 of 15 July 2005 at the request of the Mi nistry of Finance of the Cz ech Republic on a draft law on 
the integration of financial market supervisors. 
73  Article 105(2) of the Treaty and Articles 3.1 and 22 of the Statute. 
74  Article 135(2)(3) of the Law on banking of 29 August 1997 (c onsolidated text: Dz. U. of 2002, No 72, Item 665, as 
amended), as amended by Ar ticle 23 of the draft law. 
 
13 of entities having close links with a domestic ba nk operating in a holding structure and where the 
results of the audit do not support such doubts75.  
5.1.2 By virtue of the prohibition of monetary fina ncing established under Article 101 of the Treaty, 
overdraft facilities or any other type of credit f acility with NCBs in favour of public sector bodies 
is prohibited76. In this regard, the ECB wishes to recall its position77 that in assessing the 
compatibility of any financing arrangement with th e prohibition of monetary financing, not only is 
a strict literal interpretation relevant, but it is also relevant to consider the purpose of the provision. 
The overall aim of the prohibition of monetary fina ncing is to prevent NCBs from financing the 
public sector. Further, in line with relevant secondary Community law78, any financing of the 
public sector’s obligations vis-à-vis third parties c onstitutes an ‘other type of credit facility’ for the 
purposes of the prohibition of monetary financ ing. Consequently, the monetary financing 
prohibition applies to national legislation conferri ng on central banks the task of financing third 
parties where such financing does not relate to an y of the tasks and functions of the central bank, 
but is a responsibility of the State. The prohib ition of such financing arrangements must be 
interpreted strictly, subject only to certain expr ess and limited exemptions contained in Community 
law79. For an NCB to bear the costs of audits inde pendently ordered by a financial supervisor, in 
circumstances where the NCB has no meaningful involvement in the supervisory decision-making 
process, must be considered an instance of the NCB’s financing of the public sector’s obligations 
vis-à-vis third parties, which is not covered by any of the statutory exemptions80. In this context, 
the ECB recommends that appropriate amendments be made to the draft law so that this activity of 
the FSA President will not be financed by NBP. 
5.2 Monetary policy competence of NBP 
 Under the draft law, the FSA President will be responsible for evaluating the impact of monetary, 
tax and supervisory policies on the development of banks81. In order to avoid any ambiguity with 
respect to NBP’s exclusive competences in the area of monetary policy, it is suggested that the 
reference to monetary policy in th is provision should be deleted. 
 
                                                 
75  Article 141h(2)(3) of the Law on banking, as  amended by Article 23 of the draft law. 
76  Article 101(1) of the Treaty and Article 21.1 of the Statute. 
77  See paragraph 9(i) of ECB Opinion CON/2003/27 of 2 December  2003 at the request of the Austrian Federal Ministry of 
Finance on a draft Federal law on  the National Foundation for Research, Technology and Development. 
78  Article 1(1)(b)(ii) of Council Regulation (EC) No 3603/ 93 of 13 December 1993 specifying the definitions for the 
application of the prohibitions referred to in  Articles 104 and 104b(1) of the Treaty (OJ  L 332, 31.12.1993, p. 1) . 
79  See paragraph 6 of ECB Opinion CON/2005/1 of 3 February 2005 at the request of the Italian Ministry of Economic 
Affairs and Finance on a draft law amending Law Decree No  7 of 25 January 1999, as converted by Law No 74 of 
25 March 1999, concerning urgent provisions on Italian participation in the Intern ational Monetary Fund’s interventions 
to confront severe financial crises of its member countries. 
80  Article 101(2) of the Treaty and Articles 2 and 5 to 7 of Regulation (EC) No 3603/93. 
81  Article 3(1)(1)(c) of the draft law. 
 
14 6. Specific issues 
6.1 Implementation of the Capital Requirements Directive  
 The ECB notes that a smooth transposition of the Capital Requirements Directive (CRD) is taken 
into account by the draft law proposal as a factor  affecting the implementation of the proposed 
supervisory reform; it is for this reason that the transfer of banking superv ision responsibilities to 
the FSA President is only foreseen as of 1 January 200882. In this context, the ECB wishes to recall 
the long-term and far-reaching nature of the CR D reform, the residual uncertainty about its 
influence on the level of capital in the banking  system and the need to develop appropriate 
supervisory guidance over time in line with evolvi ng industry practices and experiences of national 
supervisors. The resulting institutional challenges in implementing the CRD are not expected to 
end with the CRD’s transposition into national law, since continuing challenges for national 
supervisors may be expected to arise beyond that  date. Against this background, the ECB assumes 
that all precautionary measures are arranged by the Polish authorities so that the implementation of 
the supervisory reform does not affect negativel y the implementation of the new capital adequacy 
regime. 
6.2 Advisory committee membership 
 The ECB notes that the draft law plans to incl ude within the FSA an advisory committee, a 15-
member body appointed by the Council of Mini sters’ President, with at least six members 
recommended by the Tripartite Commission for Social and Economic Issues83, which is a body 
consisting of representatives of em ployers, employees and government administration with a basic 
task of conducting social dialogue regardi ng labour remuneration and social benefits84. Assuming 
that the draft law’s proposed reform is im plemented, the ECB recommends including in the 
Advisory Committee, in order to provide the A dvisory Committee with a broad range of banking 
and financial expertise, the representatives of banking, financial, in surance and consumer 
protection bodies. Under the same assumption, the ECB recommends that the Advisory Committee 
members should be covered by the same confiden tiality requirements as would apply to the FSA 
management and staff under the draft law85. 
6.3 Continuity of staff experience 
 The ECB notes that the draft law provides for the tr ansfer of the staff of the current supervisory 
bodies to the FSA, whereby these employees are to  become employees of the FSA (in accordance 
with the proposed timing for the tran sfer of the supervisory responsibilities)86. However, the 
                                                 
82  As stated in the fifth paragraph of  the consultation request  from the Minister of Finance of 7 February 2006. 
83  Article 12(1) of the draft law. 
84  Articles 1(3) and 4(1) of the Law of 6 July 2001 on the Tr ipartite Commission for Social and Economic Issues (Dz. U. 
2001 No 100, Item 1080,  as amended). 
85  Article 10 of the draft law. 
86 Article 43(1)(2) of the draft law. 
 
15 employment relationship of such employees is to expire after six months from the last day of the 
month in which the FSA is established (or in the case of the employees of the General Inspectorate 
of Banking Supervision, on 30 J une 2008), unless they receive an offer of new employment and 
remuneration conditions within such period and accept it87. While not commenting in any way on 
the legal safeguards for the stability of employme nt in national supervisory administration, the 
ECB would like to recall the Polish legislator’s d eclared aim of finding, under the newly proposed 
structure, the appropriate application for th e accumulated competences and experiences of the 
existing supervisory bodies88. 
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 9 March 2006. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET  
 
                                                 
87 Article 50 of the draft law. 
88  As stated in the third paragraph of the consultation request from the Minister for Finance of 7 February 2006.