EN ECB -PUBLIC  
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 26 October 2020  
on the provision of short- term liquidity  from  Banca Naţională a României to the Bank D eposit 
Guarantee Fund 
(CON/20 20/24) 
 
Introduction and legal basis  
On 9 September 2020  the European Central Bank (ECB) received a request from Banca Naţională a 
României  (BNR) for an opinion on a draft law amending the Law on deposit guarantee schemes and the 
Bank Deposit Guarantee Fund (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 and sixth indents of Article 2(1) of Council Decision 
98/415/EC ,2 as the draft law relates to BNR and rules applicable to financial institutions insofar as they 
materially influence the stability of financial institutions and markets . 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  mainly aims at providing the Fondul de Garantare a D epozitelor Bancare (Bank 
Deposit Guarantee Fund,  hereinafter the ‘ Fund’ ), as the statutory deposit guarantee scheme 
officially recognised in Romania,  with the necessary liquidity for its interventions in emergency 
situations. Accordingly , the draft law introduc es the possibility for the Fund to access short -term 
repurchase ( repo)  facilities from the BNR . 
1.2 The draft law stipulates that , for the purpose of ensuring financial stability , BNR may , in emergency 
situations,  in order to cover the liquidity needed for the payment of compensations, grant financing 
to the Fund through repo transactions secured by financial instruments accepted as eligible 
collateral for monetary policy operations conducted by BNR. Such financing may be granted only 
exceptionally and on a  case -by-case basis, with a maturity that cannot exceed 90 days . 
                                                 
1  Legea nr. 311/2015 privind schemele de garantare a depozitelor şi Fondul de garantare a depozitelor bancare  
(Monitorul Oficial , Partea I nr. 918 din 11.12.2015). According to the explanatory memorandum attached to the 
consultation request, the amending legislative proposal  was submitted by BNR to the Ministry of Finance in order to 
initiate the legislative process. BNR is authorised under Article 129 of Law N o 311/2015 to issue regulations 
necessary for the application of the legislative provisions regarding the activities of  the Fund.   
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 1.3 The Fund has the status of a legal person of public interest , the main objective of which is to 
guarantee deposits  in accordance with the relevant statutory provisions .3 It is managed by a seven -
member Supervisory Board comprising five BNR  representatives , of whom one shall be appointed 
Chairperson, and two representatives of  the Ministry of Finance, as well as by  an Executive Board 
consisting of a minimum three members  mandated to ensure the operati onal management of the 
Fund.4 The Supervisory Board of the Fund supervises the activity of the Executive Board’s 
members and the way in which they fulfil the objectives established in their mandates.5 
1.4 As a deposit guarantee scheme, the Fund has the following financial resources : (a) annual and 
extraordinary contributions of the participating credit institutions ; (b) loans from credit institutions, 
financial companies, other deposit guarantee schemes  and from other institutions ; (c) exceptional 
loans from the Government , as specified further ; and (d) other resources .6,7 In exceptional 
situations, when the available financial resources of the Fund are insufficient to cover 
compensation payouts, the Gov ernment, through the Ministry of Finance, shall make available to 
the Fund within five working days the necessary amounts in the form of a loan, under the terms 
and conditions established in an agreement.8 Amongst others, the Fund’s Supervisory Board 
analy ses and proposes to BNR for approval (i) the budget for the activities of the statutory deposit 
guarantee scheme; (ii)  the annual target level of the Fund’s financial resources as a deposit 
guarantee scheme; (iii) the level of the annual contribution of each participating credit institution; 
(iv) the imposition of extraordinary contributions and their level; and (v) requesting  the above loans 
to ensure adequate financial means of the deposit guarantee scheme.9  
   
2. Observations regarding the p rohibition of monetary financing  
2.1 In line with previous opinions, the ECB reiterates its view that national legislation which provides for 
the financing by a national central bank (NCB) of a deposit guarantee scheme would be compatible 
with the monetary financing prohibition laid down in Article 123(1) of the Treaty only if it were short 
term, addressed urgent situations, systemic stability aspects were at stake, and decisions were at 
the NCB’s discretion.10 The ECB welcomes the fact that  the wording of  the draft law reflects  these 
criteria  when providing  the possibility for the Fund to access short -term financing from BNR in 
emergency situati ons. In addition, the ECB expects that the provision of short -term financing to the 
Fund will be conducted in a manner compatible with BNR’s institutional and financial 
independence, as a safeguard for the proper performance of the BNR’s tasks under the Tr eaty and 
the Statute of the European System of Central Banks and of the European Central Bank .11 
                                                 
3  See Articles 91 and 92 of  Law No 311/2015.  The Fund shall also operate as the administrator of the bank resolution 
fund in compliance with the legislation on the recovery and resolution of credit institutions .  
4  See Articles  94 and 100 of Law N o 311/2015.   
5  See Article 98(1) of Law N o 311/2015.   
6  Such as donations, sponsorships, financial assistance, receipts from the recovery of receivables from deposit 
guarantee schemes, and income from the investment of available financial resources.   
7  See Article 114 of Law N o 311/2015.   
8  See Article 119  of Law N o 311/2015.   
9  See Article 98(2)  of Law N o 311/2015.   
10  See the ECB’s Convergence Report  2020,  p. 35, and the ECB Opinions cited therein.  
11  See paragraph 3.1 of ECB Opinion CON/2015/40 All ECB Opinions are published on EUR -Lex. 
ECB -PUBLIC  
3 2.2 As the Treaty prohibits the NCB s from granting overdraft facilities or any other type of credit facility  
to the public sector, this opinion  further considers whether the Fund is a ‘body governed by public 
law’ within the meaning of Article 123(1) of the Treaty.  To this end,  it first clarifies the concept of 
‘body  governed by public law ’ and then analyses whether the Fund is covered by this concept . 
2.3 Notwithstanding the absence of a specific definition of the concept of ‘body governed by public law’  
in Council Regulation (EC) No 3603/93 ,12 other areas of Union law13 and the related case- law of 
the Court of Justice of the European Union14 provide guidance on its  interpretation for the purposes 
of the monetary financing prohibition.15 Accordingly, a body is ‘governed by public law’ within the 
meaning of Article 123(1) of the Treaty  if it has all of the following characteristics: (a)  it is 
established for the specific purpose of meeting needs in the general interest, not having an 
industrial or commercial character; (b)  it has legal personality; and (c)  it is closely dependent on the 
public sector entities  referred to in Article 123(1) of t he Treaty . A close dependence on those public 
sector entities  is presumed when a body is financed, for the most part, by them;  or is subject to 
management supervision by them;  or has  an administrative, managerial or supervisory board, more 
than half of whose members are appointed by them . 
2.4 As it is apparent from paragraph 1.3 above, the first two conditions  are met in respect of the Fund  
since (a) it has been  established for the purpose of meeting needs in the general interest –  the 
Romanian statutory deposit guarantee scheme; and (b) it has legal personality . To guarantee 
deposits as a statutory deposit guarantee scheme is in the general interest insofar as the 
establishment and functioning of deposit guarantee schemes increas e the stability of the banking 
system and the protection of depositors .16  
2.5 As further follows from paragraphs 1.3 and 1.4 above, the Fund appears closely dependent on 
BNR  since  the majority of the members of the Supervisory Board of the Fund, including the 
Chairperson, are BNR representatives . In addition, the management of the Fund is subject to 
BNR’s supervision  and, while BNR does not finance the Fund for the most part, it ap proves  the 
budget of the Fund and its financial resources as a deposit guarantee scheme.  However, the 
Fund’s close dependence on BNR  does not meet  the third condition regarding a close dependence 
                                                 
12  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).  
13  See, for instance,  Article 2(2) of Directive 2003/98/EC of the European Parliament and of the Council of 
17 November 2003 on the re- use of public sector information (OJ L 345, 31.12.2003, p. 90)  and Article 2(1)(4) of 
Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and 
repealing Directive 2004/18/EC (OJ L 94, 28.3.2014, p. 65) .  
14  See, for instance, J udgment of  the Court of Justice of  5 October 2017, ‘LitSpecMet’ UAB,  C-567/15, EU:C:2017:736, 
paragraphs 28 et seq. ; Judgment  of the Court of Justice of 12 September 2013,  IVD GmbH & Co. KG , C-526/11, 
EU:C:2013:543, paragraphs 19 et seq.; Judgment of the Court of Justice of 11 June 2009, Hans & Christophorus 
Oymanns GbR, Orthopädie Schuhtechnik , C-300/07, EU:C:2009:358, paragraphs 48 et seq. ; and the case- law cited 
therein.   
15  Similarly, the concept of ‘public undertaking’ has been defined for the purposes of the monetary financing prohibition 
by reference to the definition provided for by Article 2 of  Commission Directive 80/723/EEC of 25 June 1980 on the 
transparency of financial relations between Member States and public undertakings (OJ L 195, 29.7.1980, p. 35), 
now replaced by Article 2(c) of  Commission Directive 2006/111/EC of 16 November 2006 on the transparency of 
financial relations between Member States and public undertakings as well as on financial transparency within 
certain undertakings (OJ L 318, 17.11.2006, p. 17) . See, in this regard, Article 8(1) of Council Regulation (EC) 
No 3603/93 and Recital 15 thereof.  
16  See Recital 3 to Directive 2014/49/EU of the European Parliament and of the Council of 1 6 April 2014 on deposit 
guarantee schemes  (OJ L 173, 12.6.2014, p. 149).  
ECB -PUBLIC  
4 on public sector entities because the NCB s do not form part of the public sector  for the purposes of 
the monetary financing prohibition.17  
2.6 In light of the foregoing, the ECB is of the view  that the Fund does not qualify as a ‘body governed 
by public law’ within the meaning of Article 123(1) of the Treaty  and, therefore, BNR is not 
generally precluded from providing short -term liquidity to the Fund.  Against this background, the 
possibility for the Fund to access short -term repo facilities  from the BNR under the conditions 
specified under paragraph 2.1 abov e is in line with the monetary financing prohibition . 
 
This opinion will b e published on EUR -Lex.  
 
 
Done at Frankfurt am Main, 26 October  2020.  
 
[signed]  
 
The President of the ECB  
Christine  LAGARDE  
                                                 
17  See Article 8(2) of Council Regulation (EC) No 3603/93.