EN ECB -PUBLIC  
OPINION OF THE EUROPEAN CENTRAL BANK  
of 5 January 2022  
on Ireland’s adherence to the New Arrangements to Borrow with the International Monetary Fund 
(CON/20 22/1) 
Introduction and legal basis  
On 9 December 2021 the European Central Bank (ECB) received a request from the Irish Minister for  
Finance  for an opinion on the Bretton Woods Agreement s (Amendment) Bill 2021  (hereinafter the ‘draft 
law’).  
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/EC1, as 
the draft law relates to the Central Bank of Ireland (CBI) . 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. P
urpose of the draft law
1.1 The draft  law provides a legal basis for Ireland to formally adhere to the  International Monetary Fund
(IMF)’s Decision on the New Arrangements to Borrow (NAB), and approve its terms2, and makes 
provision for the Minister for  Finance to make payments out of the Irish State’s Central Fund , to the 
Catastrophe Containment and Relief Trust operated by the IMF and other such trusts established by 
the IMF.   
1.2 Under the draft law  the CBI, on behalf of the Irish State,  and in its capacity as Ireland's fiscal agent 
to the IMF , is authorised to make payments to the IMF arising from a ‘call’ by the IMF, within the 
meaning of the NAB Decision. According to the explanatory memorandum accompanying the draft 
law, the CBI ’s financ ing of a call will be made out of the CBI’s investment funds , result ing in claims 
in the form of a loan or promissory note per paragraph 8(a) of the NAB Decision. Under the draft law 
any moneys received by or on behalf of the Irish State in accordance with the NAB Decision shall be 
paid to the CBI.  
1 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). 
2 New Arrangements to Borrow Decision No. 11428- (97 /6), January 27, 1997, as amended by various decisions 
including Decision No. 16645 – (20/5) of the Executive Board of the IMF on the NAB of 16 January 2020 of which 
Ireland is currently a prospective participant. The NAB is a credit arrangement between the IMF and a group of 
members and institutions to provide supplementary resources to the IMF when these are needed to forestall or cope 
with an impairment of the international monetary system. In 2010, Ireland agreed, in principle, to participate in the NAB 
by providing a bilateral loan facility, however, Ireland did not proceed to formally adhere due to entry into the EUIM F 
programme. See ECB Opinion CON/2010/15 on Ireland’s bilateral borrowing agreement with the IMF.  All ECB 
Opinions are available on EUR -Lex. 
ECB -PUBLIC  
2 1.3 According to the explanator y memorandum accompanying the draft law, the CBI would provide the 
necessary finance to fulfil Ireland’s obligations under the NAB Decision on the proviso that the 
Minister guarantees the CBI’s participation in the NAB credit arrangement. Under the draft l aw the 
Minister for Finance has the discretion to guarantee  either or both the payment to the CBI of the 
principal of, and any interest on, any moneys advanced by the CBI arising from a call by the IMF, 
limited to the total amount due to the CBI by the IMF under the NAB Decision.  The draft law requir es 
the CBI to repay moneys paid by the Minister for Finance under a guarantee  as and when such 
money s are recovered by the CBI .  
1.4 Under the draft law the Minister  for Finance may make payments out of the Irish State’s Central Fund 
not in excess of ( a) EUR 50 million in respect of the IMF’s Catastrophe Containment and Relief Trust 
(CCRT), ( b) EUR 50 million in respect of each individual IMF trust fund established under Article V 
Section 2(b) of the IMF Articles of Agreement, ( c) EUR 75 million in respect of the Poverty Reduction 
and Growth Trust (PRGT) and ( d) EUR 325 million in respect of all IMF trust funds, the PRGT and 
the CCRT.  
 
2. Monetary financing prohibition  
2.1 Article 123(1) of the Treaty prohibits national central banks (NCBs) 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 
NCBs of obligations falling upon the public sector vis -à-vis the IMF is not regarded 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 
NCBs  of obligations falling upon the public sector vis -à-vis the IMF because such f inancing “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 mainta ining 
confidence in the currency and the economy, and serving as a basis for foreign borrowing
5 . Under 
this definition, reserve assets must be foreign currency assets and, except in the case of gold bullion, must be claims on non- residents.
6 
2.3 The draft l aw empowers the CBI to make payments on behalf of the Irish State to the IMF , arising 
from a call by the IMF for the Irish State to provide the resources pursuant to the NAB. The payments 
 
3   Council Regulation (EC) No 3603/93 of 13 December 1993 specifying 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).   
4   See for example Opinions CON/2020/32, CON/2020/27, and CON/2017/4. 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/2020/32,  paragraph 2.2 of Opinion CON/2020/27 and paragraph 3.2 of Opinion 
CON/2017/4.  
ECB -PUBLIC  
3 will result in an SDR -denominated claim of the CBI against the IMF i n the form of a loan or promissory 
note.  Consequently, t he advancing of monies  by the CBI to the IMF on behalf of the Irish State  under 
the NAB , as set out in the draft law, falls within the exemption of Article 7 of Regulation (EC) No 
3603/93 because this financing results in foreign claims that have all the characteristics of reserve 
assets.    
 
3. Financial independence  
3.1 From the perspective of the  financial independence required of an NCB in the European System of 
Central Banks (ESCB) under Article 130 of the Treaty, pursuant to which Member States may not 
put their NCBs in a position where they have insufficient financial resources to carry out their ESCB 
or Eurosystem- related tasks7, the ECB welcomes the  guarantee that could be provided by  the 
Minister for Finance under the draft law with respect to the repay ment of either or both of the principal 
and any interest on moneys advanced by the CBI arising from a call by the IMF8. However, the ECB 
notes that the draft law does not currently explicitly cover exchange rate risk on moneys advanced 
by the CBI.   
 
This opinion will b e published on EUR -Lex.  
 
 
Done at Frankfurt am Main, 5  January 2022.  
 
[signed]  
 The President of the ECB  
Christine  LAGARDE  
 
7  ECB Convergence Report 2020, p. 20 to 21 and 26 to 29. 
8 See paragraph 3.1 of Opinion CON/2020/37.