EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 3 December 2004 
at the request of Česká národní banka 
on a draft law amending the Act on transfers of  funds, electronic means of payment and payment 
systems and certain other laws including the Act on Česká národní banka and the Act on banks 
(CON/2004/37) 
 1. On 5 October 2004, the European Central Bank (ECB) received a request from Česká národní 
banka  (ČNB) for an opinion on a draft law amending the Act No 124/2002 Coll., on transfers of 
funds, electronic means of payment and payment systems (the Payment Systems Act), as last amended by Act No 257/2004 Coll. (hereinafter the ‘Payment Systems Act’),  and, inter alia , the 
Act No 6/1993 Coll. on Česká národní banka, as amended (hereinafter the ‘ ČNB Act’) and the Act 
No 21/1992 Coll., on banks, as amended  (hereinafter the ‘Banking Act’)  (hereinafter the ‘draft 
law’). 
2. The ECB’s competence to deliver an opinion is based on the second, third, fifth and sixth indents 
of Article 2(1) and on Article 2(2) of C ouncil Decision 98/415/EC of 29 June 1998 on the 
consultation of the European Central Bank by na tional authorities regarding draft legislative 
provisions
1, as the draft law concerns means of payment, a national central bank, payment and 
settlement systems, rules applicable to financial in stitutions insofar as they materially influence the 
stability of financial institutions and markets a nd an instrument of monetary policy of a non-
participating Member State, i.e. minimum rese rve requirements. In accordance with the first 
sentence of Article 17.5 of the Rules of Procedur e of the ECB, the Governing Council has adopted 
this opinion. 
3. To implement Directive 2000/46/EC of the Eu ropean Parliament and of the Council of 
18 September 2000 on the taking up, pursuit of and prudential supervision of the business of 
electronic money institutions2 (hereinafter the ‘E-money Directive’), the draft law provides for the 
creation of electronic money institutions (ELMIs),  which will be regulated in the Czech Republic 
pursuant to the Payment Systems Act and, to the extent not provided otherwise in the Payment 
Systems Act, by the Banking Act. The draft law also amends the ČNB Act, providing for ČNB to 
supervise ELMIs and other issuers of electronic money and enabling ČNB to issue electronic 
money. Finally, the draft law also concerns sever al items which do not relate to ELMIs, including: 
                                                      
1  OJ L 189, 3.7.1998, p. 42. 
2  OJ L 275, 27.10.2000, p. 39. 
2 (i) the insertion of provisions into the ČNB Act enabling ČNB to adopt measures relating to 
minimum reserve requirements; and (ii) an increase in the penalty interest rate for breach of minimum reserve requirements.  
4. Pursuant to Article 1(2) of Decision 98/415/EC, Me mber States do not have to consult the ECB on 
the transposition of Community directives into national law. The ČNB was not therefore legally 
obliged to consult the ECB regarding the draft law in as far as it implements the E-money Directive. While the ECB notes that the competen t authority for verifying the transposition of 
Community directives into national law is the Commission, the ECB nevertheless welcomes the opportunity to deliver its opinion on the draft law insofar as its provisions fall under one or more of 
its fields of competence. 
5. The ECB notes that electronic money may have signif icant implications for monetary policy in the 
future. For reasons of monetary policy effectiven ess and taking into account the need for a level 
playing field, it is important to ensure that price stability, the unit-of-account function of money, the efficient functioning of payment systems and confidence in payment instruments are given full 
consideration in the development of this important means of payment.  
6. The ECB welcomes the provisions of the draft law pursuant to which ČNB will supervise ELMIs 
and other issuers of electronic m oney. This is consistent with ČNB’s overall responsibility for the 
supervision of credit institutions. As noted in  paragraph 14 of ECB Opinion CON/2002/1 of 
4 January 2002 at the request of the Finnish Ministry of Finance on a draft proposal concerning the revision of the Credit Institution Act, draft national legislation implementing the E-money 
Directive ‘may have implications for the smoot h functioning of payment systems and the stability 
of financial markets…. [C]entral banks’ traditiona l focus on systemic risk, together with their 
knowledge of money and securities markets and mark et infrastructures and their function in the 
oversight of payment and settlement systems, places them in a unique position to identify threats to 
the stability of the financial system.’ 
7. The draft law defines ELMIs. In particular, the Payment Systems Act provides that certain Articles 
of the Banking Act will apply to ELMIs, as appropr iate, unless otherwise provided in the Payment 
Systems Act. This means that ELMIs will not require a banking licence to issue electronic money in the Czech Republic, but that they will be re gulated, as appropriate, unless otherwise provided in 
the Payment Systems Act, by certain Articles of the Banking Act
3. However, it is not 
unambiguously clear from the draft law that ELMIs will be considered ‘credit institutions’ in the 
Czech Republic, as defined in Article 1(1) of Di rective 2000/12/EC (hereinafter the ‘Consolidated 
Banking Directive’), which has been duly implem ented into Czech law in the Banking Act.  
                                                      
3 The term ‘bank’ here refers to the legal term laid down in Article 1(1) of the Banking Act,  which transposes the concept 
of ‘credit institution’ in implementati on of Article 1(1) of Directive 2000/12/EC of the European Parliament 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), as last amended by Directiv e 2004/39/EC (OJ L 145, 30.4.2004, p. 1). 
3 8. As noted in paragraph 11 of ECB Opinion CON/ 2002/1, ‘the ECB would like to stress that 
Article 1(4) of [the E-money Directive] provid es that Member States shall prohibit persons or 
undertakings that are not credit institutions fro m carrying on the business of issuing electronic 
money. Furthermore, the Council of the European  Union stated in its common position concerning 
the proposal for [the E-money Directive]4 that even though the Member  States have the option to 
waive the application of some or all of the provisions of [the E-money Directive] and the 
application of [the Consolidated Banking Direc tive], this does not affect the nature of the 
institutions concerned; they remain credit institu tions, as defined in Article 1, point 1, first 
subparagraph of [the Consolidated Banking Dir ective]. In addition, according to the common 
position, the competence of monetary authorities to impose minimum reserve requirements is not affected. The question of which types of institutio n are regarded as credit institutions is important 
for the ECB notably in the context of the Eu ropean System of Cent ral Banks’ operations.’ 
9. While the ECB appreciates that it is possible for the Czech legislator to ensure that all relevant 
provisions of Community law applicable to banks are and will remain applicable to ELMIs, it is 
nonetheless of the opinion that Community law would be consistently applie d if Czech law did not 
merely apply certain Articles of the Banking Ac t to ELMIs, as appropriate, but actually included 
them within the definition of ‘credit institutions’,  as defined by the Consolidated Banking Directive 
and duly implemented into Czech law. 
10. A related issue arises in respect of how the draft law implements the waiver provision laid down in 
Article 8 of the E-money Directive. Article 18a(g) of the Payment Systems Act authorises ‘other entities’ [to issue electronic money] ‘on the basis of a permit from Česká národní banka’. Under the 
draft law, the entities affected are clearly intended  to be a separate category of entity from either 
ELMIs or banks (Article 18a(d) and Article 18a(a) of the Payment Systems Act respectively). As 
noted in paragraph 7 of ECB Opinion CON/2002/1, ‘ according to Article 19.1 of the Statute of the 
European System of Central Banks and of the Eu ropean Central Bank, the ECB may require credit 
institutions established in the Member States to  hold minimum reserves on accounts with the ECB 
and the national central banks in pursuance of monetary policy objectives. [The Consolidated 
Banking Directive] defines electronic money institu tions as credit institutions.’ The ECB notes that 
these ‘other entities’ authorised to issue electronic money are potentially subject to ECB minimum 
reserve requirements because Article 2(1) of Regulation ECB/2003/9 of 12 September 2003 on the application of minimum reserves
5 provides that credit institutions as defined in the Consolidated 
Banking Directive shall be subject to reserve re quirements, without referring to the relevant 
definitions under national laws. The ECB is not generally in favour of provisions which risk 
creating a new type of entity in application of Ar ticle 8 of the E-money Directive. The ECB is of 
                                                      
4  Common Position (EC) No 8/2000 adopted by the Council on 29 November 1999 with a view to adopting a Directive of 
the European Parliament and of the Council on the taking-up, pursuit of and prudential s upervision of the business of 
electronic money institutions (OJ C 26, 28.1.2000, p. 1). 
5  OJ L 250, 2.10.2003. 
4 the opinion that these other entities should also fall within the definition of ‘credit institutions’ as 
provided in the Consolidated Banking Directiv e and duly implemented into Czech law.  
11. The ECB notes that under the draft law, ČNB is one of the entities given the right to issue 
electronic money pursuant to Article 18a of the Payment Systems Act. At the same time Article 18b(4) of the Payment Systems Act provides that ČNB should be the supervisory authority 
for the activities of electronic money institutions. If ČNB performed the roles of both issuer of 
electronic money and supervisor of ELMIs, it w ould combine the functions of service provider, 
supervisory authority and overseer. This would be challenging fr om the point of view of policy, 
since ČNB would simultaneously regulate and perhaps compete with private issuers of electronic 
money. To address this situation, ČNB would need to formulate a clear policy as to how these 
activities will be conducted as well as set up a proper organisational framework to deal with it. The 
ECB would suggest that prior to fulfilling such manifold roles, ČNB should adopt and publish its 
policies. 
12. The draft law specifically excludes ELMIs from bei ng participants in payment systems designated 
under Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems
6 (hereinafter the ‘Settlement 
Finality Directive’ or ‘SFD’), although not ex cluding ELMIs from participating in payment 
systems as such, since a wider prohibition on ELMIs participating in any payment system would be 
disproportionate and could upset the level playin g field between ELMIs and banks, for example. 
The ECB considers that the ques tion of whether ELMIs can be ex cluded from participation in SFD-
designated systems may be due to different opinions regarding whether the SFD defines 
‘participants’ to include, together with several ot her categories, credit institutions, as defined in the 
Consolidated Banking Directive, and therefore including ELMIs. At least one Member State has 
already implemented the E-money Directive in such  a manner that ELMIs are not credit institutions 
for these purposes. As a result it is unclear whethe r ELMIs may participate in a system designated 
under the SFD or not. The potential systemic risk wh ich would be created in these circumstances is 
the reason given for the exclusion of ELMIs fro m participating in such systems. The ECB 
considers that this situation is regrettable, and that a reference to credit institutions in national 
legislation should be understood as a reference to credit institutions as defined in the Consolidated 
Banking Directive, and therefore as including ELMIs.  
13. The ECB takes note of the proposed insertion of Article 26a into the ČNB Act, which enables ČNB 
to issue implementing measures laying down th e rules for the amount of required minimum 
reserves, their remuneration and the amount of in terest payable in case of failure to maintain 
required minimum reserves. The ECB welcomes these provisions as contributing to a more effective minimum reserve system for the purposes of implementing monetary policy in the Czech 
Republic. 
                                                     
 
6  OJ L 166, 11.6.1998, p. 45. 
5 14. The ECB confirms that it has no objection to the competent national authorities making this 
opinion publicly available at their discretion. This opinion will be published on the ECB’s website 
six months after the date of its adoption. 
  Done at Frankfurt am Main, 3 December 2004. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET