EN ECB -PUBLIC  
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 11 December 2020   
on Greece’s adherence to the New Arrangements to Borrow with the International Monetary Fund  
(CON/20 20/32) 
 
Introduction and legal basis  
On 23 November 2020 the European Central Bank (ECB) received a request from the Greek Ministry of 
Finance for an opinion on a draft law on New Arrangements to Borrow (NAB) with the International 
Monetary Fund (IMF) (hereinafter the ‘draft law’)1. 
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/EC2, as 
the draft law relates to the Bank of Greece . In accordance with the first sentence 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 ratifies Decision No. 16645 – (20/5) of the Executive Board of the IMF on the NAB  of 
16 January 2020 . As clarified  in the explanatory memorandum to the draft law, t he NAB w as first 
introduced by Decision No. 11428 -(97/6)  of the Executive Board  of the IMF  of 27 January 1997 (the 
‘NAB Decision’) , in order to enable the IMF to more effectively fulfill its role in the international 
monetary sy stem.  Decision No. 16645 amends the NAB Decision and changes the credit  
arrangements of NAB participants . The amendments to the NAB Deci sion and the changes in the 
credit arrangements of NAB participants will become effective when the following conditions are 
met, but not earlier than 1 January 2021: (a) participants representing 85 % of total credit 
arrangements have agreed to  the amendments to the NAB Decision; and (b) participants 
representing 85 % of total credit arrangements have agreed to the changes in credit arrangements, 
including each participant whose credit arrangement is be ing changed . If a participant has not 
agreed to the proposed changes in credit arrangements by 31 December 2020, or at any later date 
as determined by the Executive Board of the IMF, the proposed change to the credit arrangement 
of such participant will be  deemed to have been withdrawn, and the credit arrangement of such 
participant will remain unchanged.  Greece did not adhere to the NAB when they were first 
introduced  by the NAB Decision , but it now intends to take the necessary steps in order to adhere 
to that Decision , as amended . The draft law further stipulates that the Greek Minister for Finance 
                                                 
1 Κύρωση της υπ’ αριθμ . 16645 - (20/5) απόφασης της 16 Ιανουαρίου 2020 του Εκτελεστικού Συμβουλίου του 
Διεθνούς Νομισματικού Ταμείου σχετικά με τις Νέες Συμφωνίες Δανεισμού (New Arrangements  to Borrow ). 
2 Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42).  
ECB -PUBLIC  
2 will declare  to the IMF the adherence of Greece to the NAB D ecision as amended (as required by 
paragraph 3(c) of the NAB Decision) and will sign any relevant a greement .  
1.2 The draft law authorises the Bank of Greece  to provide loans  to the Greek State for the provision of  
Greece’s  resources to the IMF in accordance with the credit arrangement of Greece and the terms 
of the NAB D ecision as applicable at any given moment. The draft law further authori ses the 
Governor of the Bank of Greece  and the Greek Minister for Finance, as a representative of the 
Greek State, to sign the relevant loan agreement.  The draft law  stipulates that the loan  is paid by 
the Bank of Greece  directly to the IMF, in accord ance with  the instructions of the Minister for 
Finance, and that th is loan will be repaid to the Bank of Greece  by the IMF, at the time and in the 
form and currency set out in the NAB Decision and in accordance with the other terms of the NAB  
Decision  as applicable at any given moment.   
 
2. Monetary financing prohibition  
2.1 Article 123(1) of the Treaty  prohibits  the national central banks from granting  overdraft facilities or 
any other type of credit facility to public authorities and bodies of the Member States . The monetary 
financing prohibition is however subject to certain exemptions laid down in Council Regulation (EC) 
No 3603/933. In particular, Article 7 of Regulation (EC) No 3603/93 provides that the financing by 
national central banks of obligations falling upon the public sector vis-à-vis the IMF is not regarde d 
as a credit facility within the meaning of Article 123 (1) of the Treaty. Recital 14 of Regulation (EC) 
No 3603/93 clarifies the rationale behind this exemption, stating that it is appropriate to authorise 
the financing by the central banks of obligations  falling upon the public sector vis-à-vis the IMF 
because such financing ‘results in foreign claims which have all the characteristics of reserve 
assets’. Therefore, the exemption in Article 7 of Regulation (EC) No  3603/93 must be interpreted in 
line with this rationale4. 
2.2 Reserve assets are defined as those external assets that are readily available to and controlled by 
monetary authorities for meeting balance of payments financing needs, for interventions in 
exchange markets to affect the currency exchange  rate, and for other related purposes, such as 
maintaining confidence in the currency and the economy, and serving as a basis for foreign 
borrowing5. Under this definition, reserve assets must be foreign currency assets and, except in the 
case of gold bull ion, must be claims on non -residents6.  
2.3 In the case under consideration, the ECB understands that  the Bank of Greece will provide a loan 
to the Greek State in order for the latter to contribute to the IMF the resources corresponding to 
Greece’s participati on in the NAB. For this purpose, the Bank of Greece will credit  the IMF ’s 
account with the Bank of Greece  on behalf of the Gr eek State . The ECB understands that Greece’s 
participation in the NAB will result in an SDR -denominated claim of the Bank of Greece against the 
                                                 
3  Council Regulation (EC) No 3603/93 of 13 December 1993 specifying def initions 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).  
4  See e.g. Opinions CON/20 20/27 and CON/20 17/4. All ECB Opinions are available on EUR -Lex.  
5  See International Monetary Fund, Balance of Payments and International Investment Position Manual (Sixth ed., 
2009), paragraph 6.64.  
6  See paragraph  2.2 of Opinion CON/2020/27 and paragraph  3.2 of Opinion CON/2017/4.  
ECB -PUBLIC  
3 IMF, using the funds stemming from the loan to the Greek State .  
2.4 The ECB has considered past cases where national central banks ( NCB s) directly finance d the 
NAB-related obligations of the ir respective Member State s vis-à-vis the IMF as falling within the 
exemption in Article 7 of Regulation (EC) No  3603/93  given that the financing arrangements 
resulted in foreign claims having all the characteristics of foreign reserve assets7. However, 
technically, these financing arrangements did not involve any formal loan by the NCB directly to the 
Member State  which could be seen as tantamount to a credit facility within the meaning of 
Article  123(1) of the Treaty8.  
2.5 In this context , the ECB  notes that Member States have put in place a variety of arrangements to 
ensure the performance of their respective rights and obligations arising from their membership in 
the IM F. NCBs finance their respective Member States’ obligations and commitments vis -à-vis the 
IMF under different constructions  which are governed by their respective national law s9. From this 
perspective , the ECB consider s that t he provision of loans by the Bank of Greece  for the purpose 
of financing Greece’s provision of financial resources to the IMF in accordance with the credit 
arrangement of Greece and the terms of the NAB  Decision , as amended , as set out in the draft 
law, would  fall within the exemption under Article 7 of Regulation (EC) No 3603/93 , because using 
these funds would result  in SDR -denominated claims against the IMF that have the characteristics 
of reserve assets . Therefore, these loans are not regarded as a credit facility within the meaning of 
Article 123 of the Treaty.     
 
3. Miscelanneous issue  
The draft law does not stipulate whether the loan to be provided as set out in the draft law will bear 
interest or not. The ECB invites the consulting authority to  consider related remuneration aspects when 
promulgating the  ministerial decision authorised to be issued under the draft la w in order to regulate 
specific matters for the implementation of the NAB Decision  as amended . 
 
This opinion will b e published on EUR -Lex.  
 
 
Done at Frankfurt am Main, 11 December 2020 . 
 
[signed]  
 
The President of the ECB  
Christine  LAGARDE  
                                                 
7  For example, see Opinions CON/2020/27, CON/2017/4, CON/2011 /10, CON/2010/74, CON/2010/40, and 
CON/1997/16.  
8  Article 1(1)(b)(iii) of Regulation (EC) No 3603/93.  
9  See paragraph 1.5 of Opinion CON/2016/22.