EN ECB -PUBLIC  
 
 OPINION OF THE EUROPEAN CENTRAL BANK  
of 30 March  2020  
on the provision of emergency liquidity assistance by Li etuvos bankas  
(CON/20 20/11)  
 
Introduction and legal basis  
On 26  March 2020 the European Central Bank (ECB) received a request from Lietuvos bankas  for an 
opinion on a draft law initiated by Lietuvos bank as to amend the Law on the Lietuvos bank as1 (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 and sixth indents of Article 2(1) of Council Decision 
98/415/EC2, as the draft law relates to Lietuvos bankas and rules applicable to financial institut ions 
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 la w 
1.1 The purpose of the draft law is to enable Lietuvos bankas to extend emergency liquidity assistance 
(ELA)  beyond only credit institutions to a broader range of financial institutions experiencing 
temporary liquidity problems. As noted in the explanatory memorandum accompanying the draft 
law, access for a wider range of financial market participants to ELA will contribute to the business 
continuity of those institutions when they are solvent but face temporary liquidity problems  and are 
unable to borrow from the market due to a disruption in financial markets . This will contribute to the  
overall  maintenance of financial stability in Lithuania.  
1.2 The draft law expands the range of institutions to which Lietuvos bankas may grant loa ns secured 
by adequate collateral , in accordance with the terms and conditions established by Lietuvos 
bankas , to include  financial institutions  and insurance and reinsurance undertakings.  As clarified in 
the explanatory memorandum , this means that under the draft law Lietuvos bankas may grant 
loans to not only credit institutions but also to payment  institutions , electronic money institutions, 
and companies providing securities, insurance, leasing and other financial services.   
                                                 
1  1994 m. gruodžio 1 d. Lietuvos Respublikos Lietuvos banko įstatymas Nr . I-678, Valstybės žinios , 1994,  Nr. 99-
1957, 2001, Nr . 28-890 ( su vėlesniais pakeitimais ir papildymais ). 
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 draft law retains the e xisting requirement that Lietuvos bankas may grant such loans without 
prejudice to the requirements derived from Lietuvos bankas’ participation in the European System 
of Central Banks (ESCB) , and notably those resulting from operations on behalf of public entities.   
1.4 As noted in the explanatory memorandum, the draft law is particularly relevant to the current 
situation in which quarantine has been enforced in Lithuania, which may cause the financial 
situation of financial market participants and other persons dependent on their activities to 
deteriorate. The explanatory memorandum also notes that the right of a central bank to grant loans 
to a broader range of financial institutions  other  than credit institutions is provided for in the central 
bank laws  of other Member States, including Belgium, Germany,  Greece, Ireland, Latvia and 
Slovenia.  
 
2. Observations   
2.1 The provision of ELA refers to the provision by a Eurosystem national central bank ( NCB ) of central 
bank money and/or any assistance that may lead to an increase in the provision of central bank 
money to a solvent financial institution or a group of solvent financial institutions that fac es 
temporary liquidity problems, where this operation i s not  part of the single monetary policy3.  
2.2 The ECB welcomes that the draft law confirms that ELA should be provided by Lietuvos bankas 
without prejudice to the requirements derived from Lietuvos bankas’ participation in the ESCB, thus 
providing a safeguar d to ensure compliance with the requirements relating to the provision of ELA 
by NCBs in the ESCB pursuant to the Treaty and the Statute of the E uropean System of Central 
Banks  and of the E uropean Central Bank (hereinafter the ‘Statute  of the ESCB ’)4. 
2.3 The ECB notes the possibility under the draft law  for Lietuvos bankas  to provi de ELA to non -bank 
financial institutions in Lithuania experiencing liquidity problems. The inclusion of  financial 
institutions  in the list of potential ELA recipients is consistent  with the Eurosystem Agreement on 
emergency liquidity, which explicitly refers to the possible provision of ELA by an  NCB to a financial 
institution or a group of financial institutions facing liquidity problems5. The flexibility of the provision 
of ELA by Lietuvos bankas introduced by the draft law is of particular relevance in the context of 
the ongoing COVID -19 pandemic .  
2.4 The r esponsibility for the provision of ELA lies with the NCB concerned. This means that any costs 
and risks arising from the provision of ELA are incurred by the relevant NCB. However, pursuant to 
Article 14.4 of the Statute  of the ESCB , the Governing Council  of the ECB  may restrict ELA 
operations if it finds that the se interfere with the objectives and tasks  of the ESCB . The Governing 
Council must be informed of such operations in a timely manner in order for it to adequately assess 
such interference. A procedure to this end has been in place since 1999 and its key features are 
                                                 
3  See paragraph 1.2 of the Eurosystem Agreement on emergency liquidity assistance (17 May 2017), available on the 
ECB’s  website at www.ecb.europa.eu.  
4  See paragraph 10 of Opinion CON/2005/60. All ECB opinions are published on the ECB ’s website at 
www.ecb.europa.eu.  
5  See paragraph 1.2 of the Eurosystem Agreement on emergency liquidity assistance ( 17 May 2017) . 
ECB -PUBLIC  
3 summarised in the Eurosystem Agreement on Emergency  Liquidity Assistance  of 17 May 20176. 
Strict compliance with the ELA procedures  is of utmost importance.  
2.5 In view of compliance with the monetary financing prohibition under Article 123 of the Treaty , it is 
reiterated that ELA may only be extended to  illiquid but solvent credit institutions  or financial 
institutions . The financing by an NCB of insolvent credit institutions or financial institutions would 
not be compatible with the monetary financing prohibition since the financing of insolvent credit 
institutions  or financial institution s constitutes  a government task7. 
2.6 With regard to financial independence , as required of an ESCB central bank under Article 130 of 
the Treaty, the ECB recalls that an  NCB within the ESCB is required to have sufficient financial 
resources not only to perform its ESCB -related tasks  but also its national tasks , including the 
provision of ELA . Member States may not put their NCBs in a position where they have insufficient 
financial resources and inadequate net equity to carry out their ESCB or Eurosystem -related tasks, 
as applicable. Losses incurred by an NCB in the exercise of its national tasks could negatively 
impact the exercise of ESCB -related tasks. As a consequence, the NCB may not have sufficient 
financial resources to perform the ESCB -related tasks required of it under the Treaty and the 
Statute of the ESCB . For all these reasons, financial independence under the Treaty implies that 
an NCB should always be sufficiently capitalised8. 
 
This opinion will be published on the ECB’s website.  
 
 
Done at Frankfurt am Main, 30 March 2020.  
 
[signed]  
 
The President of the ECB  
Christine  LAGARDE  
                                                 
6  The ECB/ Eurosystem Agreement on emergency liquidity assistance (17 May 2017) . 
7  See paragraph 2.1 of Opinion CON/ 2016/55; paragraph 5 of Opinion CON/ 2013/26;  paragraph 4.1 of Opinion 
CON/ 2008/58 and paragraph 4.2 of Opinion CON/2008/46.   
8  See ECB Convergence Report  2018 , p. 25, available on the ECB ’s website at www.ecb.europa.eu ; see also 
paragraph 2.5 of Opinion CON/ 2016/55; paragraph 2.1 of Opinion CON/ 2012/69 and paragraph 3.3 of Opinion 
CON/ 2014/24.