GS/LD/97/490
OPINION OF THE EUROPEAN MONETARY INSTITUTE
CON/97/18
at the request of the Portuguese Ministry of Finance under Article 109f (6) of the Treaty establishing
the European Community (the “Treaty”) and Article 5.3 of the Statute of the EMI on a draft Decree-
Law (the “draft law”) containing amendments to the Organic Law of the Banco de Portugal (the
“Bank”)
1. On 28 July 1997 the EMI received a request for an opinion on the draft law from the Portuguese
Ministry of Finance. An Explanatory Memorandum was also submitted to the EMI. The present
opinion is based on an unofficial English translation of the official draft in the Portuguese
language submitted to the EMI by the consulting authority.
2. The EMI’s competence to deliver an opinion is based on Article 1.1, second indent, of the
Council Decision (93/717/EC) of 22 November 1993 on the consultation of the EMI by the
authorities of the Member States on draft legislative provisions, as the draft law contains a
complete new set of provisions on the Bank with a view to the implementation of the Treaty and
in particular Article 108 thereof.
3. The EMI welcomes the timely and accurate adaptation of the statute of the Bank. As mentioned
in the EMI’s 1995 and 1996 reports on “Progress towards convergence” (the “1995 and 1996
Convergence Reports”), timely adaptation is necessary to enable the EMI and other Community
institutions to assess, in accordance with their reporting obligations under the Treaty, progress
made towards the fulfilment of the legal requirements for Stage Three.
4. The EMI notes with particular satisfaction the comprehensive fashion in which the adaptation of
the Bank’s statute is foreseen in the draft law, whilst at the same time the different situations are
accommodated which may occur dependent on the moment at which Portugal adopts the single
currency. The draft law is basically in line with the EMI’s views on the adaptation of statutes of
the EU central banks to the Treaty and the ESCB/ECB Statute as expressed in the 1995 and
1996 Convergence Reports and the overall assessment of the present adaptation is therefore
positive.
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5. Central bank independence needs to be achieved at the latest at the date of establishment of the
ESCB. The draft law contains a number of articles providing for central bank independence,
which are consistent with the EMI’s views on this topic. These provisions will apply as from the
enactment of the draft law and irrespective of whether Portugal adopts the single currency as
from the starting date of Stage Three or at a later stage. This is welcomed by the EMI.
6. The draft law provides for the integration of the Bank in the ESCB both if Portugal becomes a
fully participating Member State at the starting date of Stage Three and if Portugal would not
adopt the single currency at the starting date of Stage Three. The EMI welcomes this approach.
For the situation in which Portugal becomes a fully participating Member State, the draft law
provides for a complete new statute for the Bank, which in general complies with the EMI’s
views on measures required for national central banks to become an integral part of the ESCB,
and therefore deserves a positive appraisal. The EMI would, however, like to raise the following
detailed comments:
(a) Article 4 of the new s tatute states that “ The capital of the Bank shall be 200 million
escudos ”. If Portugal adopts the single currency, the Bank would have to comply with the
requirement, laid down in Article 4 of the draft Council Regulation on the introduction of the
euro, to have its unit of account in euro. Therefore, the EMI would favour that the Bank’s
statute already anticipates the future denomination of its capital in euro.
(b) Article 6 retains for the Bank “ the exclusive right to issue banknotes ” and “ the exclusive
right to put in circulation metal coins ”. The EMI notes that in Stage Three other participating
national central banks and the ECB may also issue euro banknotes with legal tender status within
the Community and thus also in Portugal, and that therefore the legal monopoly of banknote
issuance should be adapted in all participating Member States so as to legally permit banknote
issuance by other full ESCB participants (but only such participants; see Article 105a of the
Treaty and Article 16 of the ESCB/ECB Statute) without this being contrary to existing national
law. The legal monopoly for banknote issuance may, however, in the transitional period still  be
restricted  to banknotes in national currencies note: this should say, “currency units” and
this restriction may be retained until such banknotes loose their legal tender status. The same
would apply, mutatis mutandis , to the exclusive right granted in the draft law to the Bank with
regard to metal coins.
(c) The provisions in Articles 8 and 9 of the dr aft law concerning banknotes should properly
specify that these apply only to banknotes denominated in Portuguese Escudos; the regime to be
applied to euro banknotes should be common to all participating Member States.
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(d) Article 21 (a) suggests the pos sibility of exchange controls “ whenever required ”; for the
sake of legal certainty the draft should make clear that such exchange controls may only be
adopted in accordance with the Treaty.
(e) The EMI welcomes in particular Article 32.2 of the new statu te of the Bank, which provides
for the primacy of the ESCB responsibilities of the Governor and therefore constitutes an
effective legal tool to achieve a smooth and complete integration of the Bank in the ESCB.
(f) Article 53 of the new statute does not  appear to contemplate monetary income sharing within
the ESCB; this provision will, of course, have to be applied in the context of Article 32 of the
ESCB Statute on the allocation of monetary income of NCBs.
7. The EMI has no objection to this opinion b eing made public.
15 August 1997