OPINION OF THE EUROPEAN MONETARY INSTITUTE
at the request of the Finnish  Ministry of Finance under Article 109f (6) of the Treaty
establishing the European Comm unity (the “Treaty”) and Articl e 5.3 of the Statute of the EMI
as regards draft legislative proposals concerning the Act on the Bank of Finland, the Act on the
Repeal of the Currency Act and the Act on Coins
CON/98/06
1. On 26 January 1998 the EMI received a request from the Finnish Ministry of Finance for an
opinion on draft legislative propos als concerning the Act on the Bank of Finland (the “New
Act”), the Act on the Repeal of the Currency Act (the “Repeal Currency Act”) and the Act onCoins (the “Coins Act”) (the “legislative propos als”). The Finnish Mini stry of Finance also
submitted an explanatory memorandum on the Gove rnment Proposal to Parliament on the Act
on the Bank of Finland and Cert ain Related Acts (the “Memorandum”). A complete set of the
legislative proposals translated into English by  the consulting authority was received by the
EMI on 29 January 1998, and the present opinion is issued on the basis of those translations.
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 legi slative proposals, as the legislative proposals
contain new provisions concer ning Suomen Pankki (the “B ank”) with a view to the
implementation of the Treaty and, in  particular, Article 108 thereof.
3. The EMI recalls earlier legislative amendments regarding the laws which are now subject to
further revisions. Finland has already changed its Currency Act in order to enable it toparticipate in the Exchange Rate Mechanis m of the European Monetary System. Draft
legislation to this effect was submitted to the EMI for consultation on 9 November 1995 and theEMI delivered its opinion on 11 December 1995 (CON/ 95/16). Draft legislation concerning the
statute of the Bank was submitted to the EMI for consultation on 10 April 1996 and the EMIdelivered its opinion on 17 May 1996 (CON/96/05) (the “1996 Opini on”). As a result of the
latter legislative amendments, a revised Act on th e Bank of Finland was adopted by the Finnish
Parliament and entered into force on 1 January 1998 (the “Current Act”). The EMI noted in its
1996 Opinion that the draft legislation concerni ng the Current Act was a step towards the
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fulfilment of the requirements of the Treaty a nd of the Statute of th e European System of
Central Banks and of the European Central Ba nk (the “ESCB Statut e”) and that further
adaptations would be necessary to qualify for participation in EMU. 
4. The EMI notes that the New Act represents a comprehensive revision of the Current Act. It
welcomes the further adaptations suggested in the legislative proposals and, in particular, the
aspects to which reference is made in the Memorandum. Once enacted, and subject to thefollowing, the legislative proposals would contri bute to the completion of the legal adaptations
required for participation in Stage Three of EMU as referred to in the EMI’s 1995 and 1996reports on “Progress Towards Convergence” (the “1995 and 1996 Convergence Reports”), as
well as in the EMI’s report on “Legal Convergence in the Member States of the EuropeanUnion - As at August 1997”, which was pub lished on 27 October 1997 (the “1997 Report”).
5. Central bank independence needs to be achieved at the latest by the date of the establishment of
the European Central Bank (the “ECB”) and of  the European System of Central Banks (the
“ESCB”). The timetable for the adaptation of na tional legislation regarding the independence of
national central banks (“NCBs”) in view of Articles 107 and 108 of the Treaty is addressed in
the 1995 Convergence Report (pages 89-90): 
“[...] NCBs should become effec tively independent by the date of the establishment of the
ESCB. Clear support for this view can be found in Article 109e (5) [of the Treaty], whichexpressly states that the process leading to NCB independence should be commenced during
the second stage. [...] Before the start of Stage Three, the ECB’s Governing Council will
have to decide upon the policy framework of the ESCB. At this crucial stage, it is important
that the Governors, who will sit on the Governing Council [of the ECB], come from fully
independent NCBs.”
Section 31 of the New Act stipulates that th e New Act will enter into force on the date of
Finland’s entry into the single currency area in accordance with Article 109l of the Treaty,
which would be the appropriate date of entry into  force for provisions regarding the integration
of the Bank into the ESCB. Furthermore, Sec tion 31, paragraph 2, provides that Section 16 of
the New Act will enter into force on an earlier da te in 1998, which has yet to be specified, and
repeal Section 18 of the Current Act. Section 16 of the New Act (and Section 18 of the Current
Act) can be found under the heading “Dismissal of a member of the Board”. The EMI agreesthat Section 16 of the New Act contains provisions which addr ess the topic of the personal
independence of individual members of a decisi on-making body of the Bank involved in the
performance of tasks and duties conferred upon the ESCB by the Treaty and the ESCB Statute
(“ESCB-related tasks”) and, therefore, needs to be effective by the date of the establishment ofthe ESCB. However, the new paragraph 2 of Section 15, which provides a most welcome
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clarification that the independen ce and the powers of the Governor of the Bank in respect of the
performance of his or her duties as a member of the Governing Council of the ECB are laid
down in the Treaty and the Statute, must also be mentioned together with Section 16 of the
New Act for early entry into force,  namely at the latest by the date of the establishment of the
ESCB. In addition, this early date of entry into force has to cover also Sections 4 and 17 (as the
latter may amend Section 19 of the Current Act as suggested under item 7(h) below).
6. The EMI notes from the Memorandum that the legislative proposals will be presented to the
Finnish Parliament in the latter part of February and, as a more general remark on the timing forthe adoption of the legislative proposals, the EM I recalls its statement in the 1997 Report that,
“[i]n order to comply with Article 108, th e national legislative procedures must be
accomplished in such a way that the compatibility of  national legislation is ensured at the latest
at the date of the establishment of the ESCB.”  The EMI will have to report to the EU Council
under Article 109j (1) of the Treaty before th e end of March 1998. According to this Treaty
provision, such report “shall include an examin ation of the compatibility between each Member
State’s national legislation, incl uding the statutes of its nati onal central bank, and Articles 107
and 108 of this Treaty and the Statute of the ESCB”. Although due consideration will be given
to the legislation of Member States which has been submitted to the EMI for consultation and isnow in the final stages of the respective nationa l legislative procedures, the reporting obligation
of the EMI will have to be based on the legal position of the Member State in questionprevailing at the time of the report’s publication.
7. With regard to the substantive aspects of the legislative proposals, the EMI welcomes in
particular the following proposed legal provisions:
(a) Status of the Bank
The EMI welcomes the fact that the New Act pr ovides clarification that, from the start of
Stage Three of EMU, the Bank will form an integral part of the ESCB (as proposed inSection 1, paragraph 2, of the New Act) and that the Bank shall act in accordance withthe guidelines and instructions of the ECB (as required by Article 14.3 of the ESCB
Statute).
(b) Objective of the Bank
The EMI also welcomes the reformulati on of the statutory objective of the Bank
(Section 2, paragraph 2, of the New Act), wh ich is now fully consistent with Article
105 (l) of the Treaty and Article 2 of the ES CB Statute. The EMI al so notes that the
subsidiary objective (contained in Section 2, paragraph 2, of the New Act) shall bewithout prejudice to the objective to maintain price stability and shall apply in
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accordance with the Treaty (which should be read as a reference to Article 2 of the ESCB
Statute and Articles 2 a nd 3(a) of the Treaty).
(c) Independence and integration of the Bank
The EMI also notes that the provision presently entitled “Co-operation with other
authorities” (Section 5 of the Current Act) has been amended to contain a prohibition on
instructions to the Bank in its performance of ESCB-related tasks (Section 4, paragraph1, of the New Act) and that th is prohibition on seeking or taking instructions is to cover
all entities “other than the [E CB]”. As indicated under 5 above, it is necessary that this
aspect of the New Act enters into fo rce at the establishment of the ESCB.
(d) Prohibition of public financing
As indicated in the 1996 Opinion, any potentia l discrepancy between provisions on the
prohibition of public financing and either  Article 104 of the Treaty or the Council
Regulation (EC 3603/93) of 13 December 1993 should be avoided, and the EMI
welcomes the further consideration given to  this aspect (Section 6 of the New Act).
(e) Collateral
The EMI welcomes the deletion of the provision that the Bank may “temporarily rescind
the collateral requirement” and the fact that the New Act clearly stipulates that the Bank
is to hold adequate collateral in connection with the granting of credit (Section 7 of the
New Act; compare Article 18.1, second indent, of the ESCB Statute).
(f) Independence of the Governor
The declaration and reference to the Treaty and the ESCB Statute with regard to the
independence and the powers of the Governor of  the Bank in respect of the performance
of his or her duties as a member of the Governing Council of the ECB is seen as a
positive clarification (Section 15 of the New Act).
(g) Dismissal of Board members
The EMI welcomes the wording chosen in respect of the grounds of dismissal for amember of the Board (Section 16, paragraph 1, of the New Act), which is fully consistent
with Article 14.2 of the ESCB Statute, a lthough Section 30 of the New Act, presently
entitled “Impeachment”, should be consistent with Section 16 and refer to “serious”misconduct as a basis for charges broug ht against a member of the Board.
(h) Limitations on other professional activities of Board members
The EMI notes that Section 17 of the Ne w Act and Section 19 of the Current Act
stipulate that a member of the Board shall not have any secondary occupation unless the
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Parliamentary Supervisory Council, upon appli cation, grants a permit authorising him or
her to have such a secondary occupation, provided that no secondary occupation will begranted if it would disqualify the Board me mber from his or her position, jeopardise the
confidence placed in his or her activities as a member of the Board, or otherwise impedethe appropriate performance of his or her duties (which includes all ESCB-related tasks
and covers any secondary occupation (or pos ition) which could negatively affect the
required independence of a Board member involved in the performance of such tasks).Such limitations are necessary as a means of avoiding possible conflicts of interest and,
to the extent it is not already clear that  the Parliamentary Supervisory Council may not
grant a Board member a permit for any secondary occupation (or position) which couldnegatively affect either the performance by such Board member of ESCB-related tasks orhis or her personal independence, additional wording to this effect must be introduced
(which clarification could be added at the end of the third paragraph of Section 17 of the
New Act). In view of the suggested amendm ent to clarify the limitation of any secondary
occupation (or position), Section 17 of the New Act (as amended) must also be included
in Section 31, paragraph 2, as a Section cont aining legal provisions which enter into
force by the date of the establishmen t of the ESCB (see also item 5 above).
(i) Operations, base rates and other interest rates
Finally, the EMI welcomes the deletion of the Bank’s right to determine the base rate and
other interest rates (as specified in Secti on 6, paragraph 2, the Current Act). In addition,
the EMI notes from the Memorandum that the Finnish Government will present aseparate proposal to the Parliament for a la w on the transfer of matters concerning the
base rate to the Ministry of Finance and it is the EMI’s understanding that the saidproposal will be presented to the Parliament following the present legislative proposalsand enter into force on 1 January 1999.
8. As already indicated in the 1996 Opinion, and provided that th e powers of the Parliamentary
Supervisory Council are limited to the tasks expre ssly enumerated in Sec tion 11 of the New Act
and, furthermore, provided that these superv isory (and other) powers are without prejudice to
the exclusive competence of the Board as regard s all ESCB-related tasks, then the division of
competences between the Parliamentary Superv isory Council and the Board would not appear
to be incompatible with  the Treaty. In particular, the EMI welcomes the deletion of Section 16,
paragraph 4, of the Current Act, according to wh ich the Board is obliged to report regularly to
the Parliamentary Supervisory Council on monetary policy and its implementation.
9. Instead, Section 14, paragraph 4, of the New Ac t provides that “[t]he Governor and other
members of the Board shall be obliged to pr ovide the Parliamentary Supervisory Council with
information on a regular basis concerning the execution of monetary policy and other activities
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of the Bank [...].” Moreover, the Parliament ary Supervisory Council is also obliged under
Section 11, paragraph 1, fifth i ndent, of the New Act to “submit to Parliament reports on
monetary policy and other activities of the Bank [...]”, as necessary. In order to achieveconsistency between these two provisions, it is necessary to reformulate the latter provision
(Section 11, paragraph 1, fifth indent ) to clarify that the submission of reports to the Parliament
also refers to “the execution of monetary policy”. In addition, the Bank shall be obliged, underSection 27 of the New Act, “to provide any c oncerned Committee of Parliament with all the
information that is necessary for the perfor mance of the Committee’s tasks”. According to
Section 10 of the New Act (and Section 12 of th e Current Act), the Parliamentary Supervisory
Council is to consist of nine members elected by Parliament. The topic of consultation and
dialogue between NCBs and political representatives is addressed in the 1996 ConvergenceReport (page 101):
“The crucial issue is whether a national in stitution has any formal mechanism at its
disposal to ensure that its views influence th e final decision. An explic it statutory obligation
for an NCB to consult political authorities provides for such a mechanism and is thereforeincompatible with the Trea ty and the [ESCB] Statute. 
A dialogue between NCBs and their respective political authorities, even when based on
statutory obligations to provide informati on and exchange views, is not incompatible with
the Treaty and the [ESCB] Statute, provided that:
- this does not result in interference with th e independence of the members of decision-
making bodies of NCBs;
- the ECB’s competences and accountability at the Community level as well as the special
status of a Governor in his/her capacity as  a member of its d ecision-making bodies are
respected; and
- confidentiality requirements resulting from [ESCB] Statute provisions are observed .”
While the EMI welcomes the deletion of the oblig ation for the Board “to report regularly to the
Parliamentary Supervisory Council on monetary policy” (Section 16, paragraph 4, of theCurrent Act), Section 11, paragraph 1, fifth inde nt, and Section 27 of the New Act should still
be critically assessed in the light of the above considerations. The said provisions of the New
Act would not be incompatible with the Treaty and the ESCB St atute if the obligations under
these provisions on the part of the Board and the Bank respectively to provide informationrelate exclusively to past activities, and provided  that the criteria in the text quoted above from
the 1996 Convergence Report are respected. In th is connection, the EMI also notes Section 4,
paragraph 2, of the New Act and suggests that a dditional text should be introduced to clarify
the fact that the obligation on the part of the Ba nk to “co-operate as n ecessary with the Council
of State and other authorities” shall be “without prejudice to paragraph 1” of the said Section 4.
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More generally, the EMI notes the legal provisions on the exchange of information contained in
the New Act in respect of the activities of the Bank (compare Section 11, paragraph 1, fourthand fifth indents, Section 12, paragraph 2, Section 14, paragraph 4, and Section 27 of the New
Act). In view of the importance of complia nce with confidentiality requirements under the
Treaty and the ESCB Statute (compare Article s 10.4 and 38 of the ESCB Statute), the latter
requirements need to be expressly acknowledg ed to avoid any appearance of incompatability
between the New Act and the Treaty and the ESCB Statute.
10. The 1996 Opinion addressed the entitlement of the Parliamentary Supervisory Council to
discharge the Board from liability, and stated that  “[t]o secure the independence of the Board
on monetary policy decisions, it would be advisable to state that the discharge of liability of the
Board cannot be refused by the Parliamentary Supervisory Council in relation to the conduct ofmonetary policy”. Section 11, paragraph 1, second indent, of the New Act provides that the
Parliamentary Supervisory Council shall decide on the discharge of the Board from liability for
“matters concerning [the] internal management of  the Bank [...]”. In addition, paragraph 2, third
indent, of the said Section entitles the Parlia mentary Supervisory Council “to decide on the
issuance of warnings to members of the Board and [the settlement of] other issues related to
their service”. The EMI welcomes the stipula tion that the basis upon which the Parliamentary
Supervisory Council may refuse to discharg e the Board from liability shall be “matters
concerning [the] internal management of the Ba nk”, and notes that a refusal to discharge the
Board from liability would require the Parliament ary Supervisory Council to refer the matter to
a public prosecutor or bring an action concerning  the matter on behalf of the Bank within a
prescribed time period. It should be clearly stat ed in the New Act that the provisions on the
discharge of the Board from liability only cover matters outside the scope of ESCB-relatedtasks and that the grounds for dismissal of a memb er of the Board would only be those to which
reference is made in Section 16 of the New Ac t. With such clarification, the legislative
proposals concerning the discharge of the Board from liability would not seem to be
incompatible with the Treaty. In a similar manne r, the issuance of warnings to members of the
Board and the settlement of other issues related to their service should also be restricted to
aspects of their duties outside the scope of ES CB-related tasks. Accordingly, the introduction of
a clarification in the New Act along the lines indicated above is required if the legislative
proposals referred to in this item 10 are maintain ed since they could otherwise negatively affect
the independence of the Board or individual Board members involved in the performance of
ESCB-related tasks.
11. In the same spirit, the EMI would interpret S ection 11, paragraph 3, four th indent, of the New
Act, when read in conjunction with Section 15, pa ragraph 3, as a reference to the establishment
by the Parliamentary Supervisory Council of  purely administrative rules which must not
infringe upon the independence of the Board or that of its decision-making procedures in
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relation to ESCB-related tasks (compare Secti on 13, paragraph 3, fourth indent, and Section 17,
paragraph 2, of the Current Act, where there is a clear reference to the Bank’s “administrative”
rules).
12. The EMI welcomes the Repeal Currency Act a nd, in particular, the abolition of the provisions
of Section 4 of the Currency Act on the determination of the external value of the markka. TheEMI also welcomes the amendments and reference to Community law until 31 December 2001in respect of Section 7 of the Currency Act, wh ich stipulates that th e Ministry of Finance
decides on the face value and the characteristic s of coins, and the abolition of the first
paragraph of the said Section 7, under which the St ate has the exclusive right to mint coins for
its own account.
13. Finally, the Coins Act does not reflect the provis ion of the Treaty that the issuance of coins by
Member States is subject to approval by the EC B of the volume of the issue (Article 105a (2),
first sentence of the Treaty). A reference to this provision has to be introduced.
14. The EMI has no objection to this opinion being made public.
12 February 1998