EN ECB -PUBLIC  
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 16 April  2018   
on the conversion of Swiss franc loans  
(CON/20 18/21) 
 
Introduction and legal basis  
On 31 January 2018 the European Central Bank (ECB) received a request from the National Assembly of 
the Republic of Slovenia ( hereinafter the ‘National Assembly ’) for an opinion on a draft law on relations 
between lenders and borrowers concerning credit agreements in Swiss francs (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/EC1, as the draft law relates to Banka Slovenije 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 purpose of the draft law  is to restructure consumer loans denominated in, or linked to,  Swiss 
francs ( hereinafter ‘Swiss franc  loans’) , by requiring credit institutions established in Slovenia to 
conver t Swiss franc  loans concluded between 28 June 2004 and 31 December 2010 into loans 
denominated in euro.   
1.2 The draft law aims to place borrowers of Swiss franc  loans in the same position that they would 
have been in had their loans  been denominated in euro from inception. T o this  end, t he draft law 
sets out the following conversion mechanis ms: 
(i) the principal amount of the Swiss franc  loans will be converted into euro at the exchange 
rate set out in the credit  agreement applicable on the date the Swiss franc  loans were 
drawn by the borrowers. In case the principal amount was paid out in euro at the time of 
drawdown then, for the purposes of the conversion, the actual amount as paid out in euro 
is to be taken into account ; 
(ii) the agreed interest rate, comprising the London interbank offered rate ( LIBOR ) and a 
margin agreed in the loan agreement , will be converted into another  interest rate, 
comprising the euro interbank offered rate (EURIBOR ) at the date on which the loan was 
drawn and the same margin  agreed in the loan agreement . The agreed period for 
                                                 
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).  
ECB -PUBLIC  
2 recalculations of the interest rate remain s unaltered. According to the explanatory 
memorandum  on the draft law , using EURIBOR in the conversion mechanis m protects the 
legitimate business interests of credit institutions  by enabling the usual  interest rates for 
euro denominated loans to be taken into account ; 
(iii) the lender is required to prepare a new loan repayment schedule calculated in accordance 
with the measures set out above and using the same methodology as for the original 
repayment schedule;  
(iv) the instalments  that have already  been paid by the borrower in line with the original 
repayment schedule will be converted into euro at the exchange rate applicable on the 
date of payment of each instalment. In case the instalments were repaid in euro then, for 
the purposes of the conversion, the actual amount of the instalments  as repaid in euro is to 
be considered. Paid instalments will serve as  the basis for settling the amounts due under 
the new loan repayment schedule, whereby the same order for settling obligations as 
under the original loan agreement is to be used  for settling the amounts ; 
(v) if the total amount of instalments alread y paid by the borrower and converted in euro (as 
described in point (iv) above ) is higher than the total amount of converted instalments 
calculated according to the new  loan repayment schedule (referred to in point (iii) above) , 
this amount will be considered an ‘overpayment ’. Depending on the amount of this 
overpayment, it will be treated as follows:  
a. if the amount of the overpayment does not exceed the sum of converted instalments 
that are still to be paid in line w ith to the new repayment schedule, the overpayment 
will be proportionally distributed for the settlement of future outstanding instalments, 
and the loan agreement  will remain in force;   
b. if the amount of the overpayment exceeds the total sum of a converted Swiss franc  
loan that the borrower has to repay in line with the new repayment schedule, then the 
lender must return this overpayment to the borrower within 30 days from the date the 
borrower confirm s the conversion proposal  and the loa n agreement will be terminated.  
1.3 Conversion of Swiss franc  loans applies not only to outstanding loans but also to (i) fully repaid 
loans ; (ii) loans that were repaid early ; (iii) loans that were converted to euro prior to the entry into 
force of the draft law ; (iv) loans that were acquired by  new creditors ; and (v ) loan agreements that 
were terminated early by the lenders.  The draft law requires  lender s to prepare new repayment 
schedules and sets out  supplementary  conversion rules for each of these categories. With respect 
to loans that were acquired by new  creditors , the draft law provides that the original lenders remain 
responsible in relation to  borrowers for the conversion, unless they can ensure that the party 
acquiring the outstanding b alance takes this conversion into account . 
1.4 The lender must prepare a new repayment schedule and recalculat e the existing Swiss franc  loans  
and submit these to the borrower along with the conversion proposal within 15 days of the entry 
into force of the draft law. The borrow er must confirm or reject the conversion proposal within 
30 days  of its receipt . 
ECB -PUBLIC  
3 1.5 The conversion procedures under  the draft law are to be supervised by Banka Slovenije,  which is 
also to act as the competent  minor offence authority in case of breaches  of the provisions of the 
draft law.   
1.6 The draft law provides that the lender, although required to propose  and perform the conversion of 
Swiss franc  loans  for the borrower , also has the right to challenge the conversion before a court 
within six months following the conversion, provided that the lender disclosed to the borrower all 
relevant information regarding the risks pertaining to loans  in the relevant foreign currency  in a 
manner that fulfils the standard of ‘informed consent ’ at the time t he loan agreement was 
concluded. The draft law sets out criteria for informed consent, which are based on, inter alia, the 
reasoning of the Court of Justice of the European Union in a recent judgment2 concerning the 
interpretation of Council Directive 93/13/EEC on unfair terms in consumer contracts in relation to 
foreign currency denominated loans3. 
1.7 According to the explanatory memorandum, the objective pursued by the draft law is to implement 
the constitutional principle of the ‘welfare state’ and to introduce sanctions for  breaches of 
obligations arising under contractual relationships, thereby providing legal protection for consumers 
who have taken out Swiss franc  loans . The explanatory memorandum questions the legality of 
linking credit  agreements to Swiss franc , in particular in a euro area country with a stable currency,  
where loans were granted  mainly in euro. The explanatory memorandum  argues that the use of  
currency clauses , the risk of which is predominantly borne by borrowers,  is an unfair practice used 
by credit institutions , in particular  combined with the lack of informed consent by the  borrowers of 
Swiss franc  loans.   
1.8 The draft law and explanatory memorandum are accompanied by an assessment of the financial 
impact of the draft law prepared by the Frank Association (Združenje Frank) , a consumer 
organisation representing the interests of borrowers . The assessment is  based on a sample of 
approximately 10% of currently outstanding Swiss franc  loans. According to the assessment , the 
‘overpayments’ by borrowers arising from 16,000 Swiss franc  loans that were granted in Slovenia4 
would amount to around EUR 488 million if the draft law is  not adopted. This amount represents 
the costs that would be redistributed among the 14 credit institutions granting Swiss franc  loans to 
consumers  with the adoption of the draft law . The assessment indicates that the average maturity 
of Swiss franc loans is 252 months and that most of the loans are in the middle of the repayment 
period. The assessment estimates that the total amount of overpayments would be distributed over 
a period of 10 years and that the average burden per bank would be approximately EUR 3. 5 million 
a year. The distribution of the burden would, however, vary  from bank to bank, and would be 
greater for foreign- owned credit institutions  which granted the majority of Swiss franc  loans.  
 
                                                 
2  Ruxandra Paula Andriciuc and Others v  Banca Româneascã SA , C-186/16,  ECLI:EU:C:2017:703.  
3  Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ L 95, 21.4.1993, p. 29).  
4  According to the assessment , it is estimated that between 16, 000 and 20,000 Swiss franc  loans were granted.  
ECB -PUBLIC  
4 2. General observations   
2.1 Prior to the global financial crisis, borrowing in foreign currencies by households and non- financial 
corporations was popular in several Member States5. As previously noted by the ECB6, the lower 
interest rates applicable to foreign currency loans compared to loans in  the domestic currency 
increased the demand for such loans. According to the documentation included in the explanatory 
memorandum  and the draft law , the majority of Swiss franc  loans were and still are mortgage loans  
and were granted by foreign- owned credit institutions .  
2.1.1  The ECB notes that the draft law anticipates that the conversion of the outstanding and already 
terminated Swiss franc  loans to loans denominated in euro will be voluntary only for borrowers.  The 
ECB also notes that the draft law prov ides for the possibility for credit institutions to challenge the 
conversion after it has been implemented, res toring the parties to the position they were in under 
the terms of the original Swiss franc  loan, if the y can prove in court that the borrower entered into 
the Swiss franc  loan on the basis of informed consent, as  defined in the draft law.  
2.2 Legal aspects on retroactivity  
2.2.1  As previously noted by the ECB, introducing measures with retroactive effect undermines legal 
certainty and is not in line with the principle of legitimate expectations7, and may also interfere with 
acquired rights.  
2.2.2  Article 23(1) of Directive 2014/17/EU of the European Parliament and of the Council8, which 
applies to credit agreements in  existence from 21 March 20169, stipulates th at Member States shall 
ensure that an appropriate regulatory framework is in place for credit agreements in respect of 
foreign currency  loans to ensure,  at a minimum , that (a) the consumer has a right to convert the 
credit agreement into an alternative currency under specified conditions or (b) there are other 
arrangements in place to limit the exchange rate risk to which the consumer is exposed under the 
credit agreement. Article 23(5) of Directive 2014/17/EU allows Member States to further regulate 
foreign currency loans provided that  such regulation is not applied with retroactive effect. The 
retroactive effect of the draft law is not  in line with the general aim of A rticle 23(5) of Directive 
2014/17/EU10, which reflects one of the general principles of Union law, namely the principle of 
legal certainty11 that supports the limitation of  retroactiv e laws12. 
                                                 
5  For further information on lending in foreign currencies in the Union see the Annex to Recommendation of the 
European System Risk Board (ESRB/2011/1)  of 21 September 2011 on lending in foreign currencies (OJ C 342, 
22.11.2011, p.1).  
6  See paragraph 2.2 of  Opinion CON/2014/59, paragraph 2.1 of Opinion CON/2015/26, paragraph 2.1 of Opinion 
CON/2015/32, paragraph 2.2 of Opinion CON/2016/39 and paragraph 2.1 of Opinion CON/2016/50. All ECB 
opinions are available on the ECB website at www.ecb.europa.eu .  
7  See paragraph 3.2 of Opinion CON/2014/59, paragraph 2.2 of Opinion CON/2015/26, paragraph 3.2 of Opinion 
CON/2015/32, paragraph 3.1 of Opinion CON/2016/39, paragraphs 3.1 and 3.2 of Opinion CON/2016/50, and 
paragraphs 4.1 to 4.3 of Opinion CON/2017/9.  
8  Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for 
consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and 
Regulation (EU) No 1093/2010 (OJ L 60, 28.2.2014, p. 34).  
9  See Article 43(1) of the Directive 2014/17/EU.  
10  See the paragraphs of the Opinions referred to in footnote 7 . 
11 See, for example, Gottfried Heinrich, C -345/06, ECLI:EU:C:2009:140.  
12 See, for example, Ditta Angelo Tomadini Snc  v Amministrazione delle finanze dello Stato, C -84/78, 
ECLI:EU:C:1979:129.  
ECB -PUBLIC  
5 2.2.3  It is for the Slovenian  authorities to assess whether the retroactive character of the draft law also 
complies  with Slovenian  legal and constitutional principles.  
 
3. Specific observations  
3.1 Eligibility criteria  
3.1.1  The draft law does not prescribe specific criteria for borrowers to be eligible to participate in the 
conversion, which raises some concerns with regard to the purpose of the draft law.  
3.2 Effects on the banking sector  
3.2.1  The implementation of the draft law is expected to entail financial costs for the Slovenian banking 
sector. C redit institutions may be affected to different degrees to the extent that they have 
concluded Swiss franc  loans between 28 June 2004 and 31 December 2010 . This, in turn, is 
expected to ha ve a negative impact on the profitability, capitalisation and future lending capacity of 
the banking sector as a whole.   
3.2.2  As regards the possibility for credit institutions  to reverse the conversion if they can prove the loans 
were concluded based on borrowers’ informed consent, it is noted that this option can only be 
exercised on an ex post basis before the national  court, which creates additional litigation costs for 
the Slovenian banking sector and the risk of being unable to recover the relevant amounts from 
borrowers. It should also be noted that the conversion will lead to a one- off increase in operational 
costs for the affected credit institutions  in Slovenia, in part icular due to the restructuring of existing 
hedges , refinancing measures , and the costs associated with the obligation to recalculate the 
Swiss franc  loans in order to notify each borrower individually thereof.   
3.3 Effects on the financial stability  
3.3.1  The ECB has pointed out on several occasions the risks associated with foreign currency loans13. 
In particular, foreign currency loans  have constituted a major risk to financial stability in several 
Member States, where the share of foreign currency loans is relati vely high.  The ECB points , in this 
respect , to the analysis of such risks made by the ESRB  in Recommendation ESRB/2011/114.  
3.3.2  As regards the long- term effects on financial stability, when introducing measures in relation to 
settling and converting foreign currency loans, due consideration should always be given to fair 
burden sharing among all stakeholders  in order to avoid moral hazard in the future15. The 
explanatory memorandum argues that the interest s of credit institutions are taken into account  in 
the draft law , for example, in the conversion process  higher interest rates are to be used for the 
preparation of the new repayment schedules, reflecting common practices  in euro denominated 
loans. However, the draft law provides for the replacement of LIBOR  with EURIBOR for 
recalculation purposes, whereas the original  loan- based margin remains the same, which appears 
                                                 
13  See in particular the ECB Financial Stability Review of June 2010 and, in respect of the foreign currency loans in 
Hungary, Opinions CON/2011/87, CON/2012/27, CON/2014/59, CON/2014/72 and CON/2014/76, and in respect of 
the foreign currency loans in Poland, Opinion CON/2015/26.  
14  However thi s does not seem to be the case in Slovenia.  
15  See paragraph 3.4 of Opinion CON/2014/59, paragraph 3.3 of Opinion CON/2014/87 and paragraph 3.3.4 of Opinion 
CON/2015/26.  
ECB -PUBLIC  
6 to potentially deviate from the common practices of credit institutions  which typically apply a higher 
loan-based margin for euro denominated loans than for Swiss franc  denominated loans.  
3.3.3  Given that Slovenia only joined the euro area in 2007, the conversion of any loans from Swiss franc  
into euro between 2004 and 2007 could result in an unequal treatment of other  customers, 
depending on exchange rate development s between the Slovenian tolar  and Swiss franc during 
this period. A reconciliation method may therefore be needed to reflect exchange rate 
development s between the tolar, Swiss franc and euro during this period.  
3.4 Effects on the Slovenian economy  
3.4.1  As the ECB has noted previously16, the conversion of Swiss franc  loans with retroactive effect, as 
envisaged by the draft law, could have negative effects if it were to lead to a deterioration of foreign 
investor sentiment due to a perceived increase in legal uncertainty and country risk.  
 
4. Conferral of new task s on Banka Slovenije  
4.1 New task of Banka Slovenije 
4.1.1  The draft law confers the task of supervising the conversion procedures  in relation to credit 
institutions on Banka Slovenije17 and designates Banka Slovenije as the competent minor offence 
authority in case of a breach of the provisions of the draft law. The draft law does not spec ify in 
detail the scope of this  new task. The ECB understands that the Banka Slovenije’s supervisory task 
in this respect w ould esse ntially require Banka Slovenije to supervis e the compliance of credit 
institutions with the requirements of the draft law in relation to the restructuring of their  private 
contractual relationships with individual  customers in the context of the conversion of Swiss franc  
denominated loans into euro denominated  loans.  Banka Slovenije has been designated as the  
competent minor offence authority  in relation to breaches of the draft law , within the scope of the 
performance of its prudential supervisory tasks  over credit institutions18, and also has, to a certain 
extent , an existing customer protection role19. However,  Banka Slovenije  has no comparable 
responsibilities  in respect of  the supervisi on of the compliance of credit institutions with the legal 
requirements  relating to the restructuring of privately negotiated loan contracts by credit institutions 
with their customers . The draft law therefore confers a new task upon Banka Slovenije.   
4.1.2  The ECB underlines that a proposed conferral of  new tasks on a national central bank (NCB) in the 
European System of Central Banks  must be assessed against the prohibition on monetary 
financing under Article 123 of the Treaty. For the purposes of that prohibition, Article 1(1)(b)(ii) of 
Council Regulation (EC) No 3603/9320 defines ‘other type of credit facility’, inter alia, as ‘any 
financing of the public sector’s obligations vis -à-vis third parties’.  
                                                 
16  See paragraph 3.4.1 of Opinion CON/2015/26, paragraph 3.3.3 of Opinion CON/2016/39 and paragraph 3.5 of 
Opinion CON/2016/50.  
17  For other consumer providers which are not credit institutions supervised by Banka Slovenije, the relevant 
supervisory duties are conferred on the Slovenian Market Inspectorate (Tržni inšpektorat Republike Slovenije) .  
18   Article 38 0 of the Law of 2015 on banking.  
19  See Law of 2016 on consumer credit . 
20  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).   
ECB -PUBLIC  
7 Ensuring that Member States implement a sound budgetary policy is one of the key objectives of 
the monetary financing prohibition, which may not be circumvented21. Therefore, the task of 
financing measures, which are normally the responsibility of the Member States, and which are 
financed from their budgetary sources rather than by the NCBs, must not be entrusted to NCBs. To 
decide what constitutes financing of the public sector’s obligati ons vis -à-vis third parties, which can 
be translated as the provision of central bank financing outside the scope of central bank tasks, it is 
necessary to carry out, on a case- by-case basis, an assessment of whether the task to be 
undertaken by an NCB is a central bank task or a government task, i.e. a task within the 
responsibility of the Member States. In other words, adequate safeguards must be in place to 
ensure that circumventions of the objective of the monetary financing prohibition of maintaining a  
sound budgetary policy of Member States do not take place.  
4.1.3  As part of its discretion in the exercise of its duty, on the basis of Article 271(d) of the Treaty and 
Article  35.6 of the Statute of the European System of Central Banks and of the European Cent ral 
Bank (hereinafter the ‘Statute of the ESCB’), to ensure that NCBs honour the obligations laid down 
by the Treaty, the Governing Council has endorsed safeguards of that kind in the form of criteria for 
determining what may be seen as falling within the scope of a public sector’s obligation within the 
meaning of Article 1(1)(b)(ii) of Regulation (EC) No 3603/93 or, in other words, what constitutes a 
government task as follows:  
First, central bank tasks are in particular those tasks that are related to the tasks that have been 
conferred upon the ECB and the NCBs by the Treaty and the Statute of the ESCB. These tasks are 
mainly defined in Article 127(2), (5) and (6) and Article 128(1) of the Treaty, as well as Article  22 
and Article 25.1 of the Statute of th e ESCB.  
Second, as Article 14.4 of the Statute of the ESCB allows NCBs to perform ‘other functions’, new 
tasks, i.e. tasks that are not related to tasks that have been conferred upon the ECB and the NCBs, 
are not precluded per se. However, new tasks that are undertaken by an NCB and which are 
atypical of NCB tasks or which are clearly discharged on behalf of, and in the exclusive interest of 
the government or of other public sector entities should be considered government tasks.  
Third, an important criterion for qualifying a new task as atypical of an NCB task or as being clearly 
discharged on behalf of and in the exclusive interest of the government or other public sector 
entities is the impact of the task on the institutional, financial and personal independence of that 
NCB.  
In particular, the following aspects should be taken into account:  
(a)  whether  the performance of the new task creates conflicts of interest with existing central 
bank tasks which are not adequately addressed and does not necessarily complement those 
existing central bank tasks. If a conflict of interest arises between existing and new tasks, 
sufficient safeguards to mitigate that conflict should be in place. The complementarity 
between a new task and the existing central bank tasks should not be interpreted broadly, so 
                                                 
21  Article 123 of the Treaty also serves the objecti ve of maintaining price stability and reinforces central bank 
independence.  
ECB -PUBLIC  
8 as to lead to the creation of an indefinite chain of ancillary t asks. Such complementarity 
should be examined in relation to the financing of those tasks;  
(b) whether without new financial resources the performance of the new task is disproportionate 
to the NCB’s financial or organisational capacity, and may have a negative impact on the 
capacity to perform properly the existing central bank tasks;  
(c)  whether the performance of the new task fits into the institutional set -up of the NCB in the 
light of central bank independence and accountability considerations;  
(d)  whether the performance of the new task harbours substantial financial risks;  
(e)  whether the performance of the new task exposes the members of the NCB decision- making 
bodies to political risks which are disproportionate and may also have an impact on the ir 
personal independence and, in particular, on the guarantee of term of office set out in 
Article  14.2 of the Statute of the ESCB.  
4.1.4  On the basis of the criteria set out above, the following paragraphs assess whether the new task  of 
Banka Slovenije is  in line with the prohibition of monetary financing.  
4.2 Tasks related to the tasks conferred upon the ECB and the NCBs by the Treaty and the Statute of 
the ESCB  
4.2.1  Supervising the compliance of credit institutions with the requirements of the draft law  in relation to  
the restructuring of  private ly negotiated loan contract s with their customer s is not among the basic 
central banking tasks listed in Article 127(2) or (5) of the Treaty or otherwise conferred upon the 
NCBs by the Statute of the ESCB. The new task conferred on Banka Slovenije does not form part 
of the prudential supervisory tasks of Banka Slovenije.  Thus , the new task conferred on Banka 
Slovenije under the draft law is not directly related to the tasks conferred on the ECB and the NCBs 
by the Treaty and the Statute of the ESCB. Consequently, a careful assessment of the conferral of 
this task on Banka Slovenije is required in order to determine whether it constitutes a government 
task, and whether the related funding gives rise to monetary financing concerns22.  
4.3 Tasks which are atypical of NCB tasks  
4.3.1  The new task conferred on Banka Slovenije by the draft law relates to the supervision of the 
compliance by credit institutions with the requirements under  the draft law relating to the 
restructuring of private ly negotiated loan agreements between credit institutions and their 
customers. Banka Slovenije’s new task can be seen, to a certain extent, as being related to the 
protection of consumers.  
4.3.2  It is necessary to analyse whether th is new task is a typical of NCB t asks. While the majority of  
NCBs do not appear to have been assigned tasks of this nature,  the ECB has identified two 
Member States where NCBs have been given similar tasks. In Cyprus23 and Hungary24, the NCBs 
                                                 
22  See, for example, paragraph 3.4.1 of Opinion CON/2017/12, paragraph 2.2.1 of Opinion CON/2017/32, 
paragraph 3.1 of Opinion CON/2017/43 and paragraph 3.1 of Opinion CON/2017/52.  
23  The Central Bank of Cyprus was entrusted with sanctioning powers in relation to the compliance of credit institutions 
with restrictions regarding the variation of the interest rates on credit facilities imposed by Cypriot Law  160(I)/1999 
and supervisory tasks relating also to civil law aspects in the area of payment services and mortgage credit. In 
connection with the performance of these tasks the Central Bank of Cyprus may also request and review privately 
negotiated contracts between credit institutions and their customers.    
ECB -PUBLIC  
9 have been given tasks relating to the supervision of the compliance by credit institutions with the 
legal requirements in relation to the restructuring of private, contractual loan agreements between 
credit institutions and their customers.  In the case of Hungary , these t asks are substantiall y similar  
to the tasks to be conferred on Banka Slovenije under the draft law. In addition, the NCBs in 
Croatia25, the Czech Republic26, Ireland27, Italy28 and Slovakia29 have been given similar 
supervisory tasks relating more generally to consumer protection and the transparency of loan 
arrangements . In this regard, also taking into account the consumer protection roles which are 
currently fulfilled by numerous ESCB NCBs in the field of financial services30, the new task does 
not appear to be completely atypical of NCB  tasks. However , the new task would be consider ed as 
atypical if Banka Slovenije’s supervisory role would extend to the resolution of disputes between 
contractual parties, which is a matter that is usually handled by the courts . 
4.4 Task s clearly discharged on behalf of and in the exclusive interest of the government  
4.4.1  According to the explanatory memorandum, the objective of  the draft law is to implement the 
constitutional principle of the ‘ welfare state’ and to introduce sanction s for breaches of obligations 
arising under contractual relationships , there by providing legal protection to a number of 
consumers who have taken out Swiss franc  loans. The draft law is therefore intended to provide 
protection to consumers of financial services . As previously noted by the ECB31 the NCB ‘is best 
placed to assess the terms and conditions of loan contracts entered into by consumers  and the 
impact of the new legal measures on financial institutions. Within the scope of its tasks, the [NCB]  
can contribute to the prevention and mitigation of systemic risks to financial stability ’. Due to the 
retroactive application of the draft law , it is not clear whether  the draft law would effectively 
guarantee the fulfilment of the objective of protecting consumers of financial services. Thus, there 
is a potential risk that, in carrying out its supervisory functions, Banka Slovenije would act 
exclusively in the interest of another public entity.  
                                                                                                                                                             
24  Magyar Nemzeti Bank has a supervisory role in connection with the compliance by credit institutions with legal 
requirements relating to the conversion of foreign currency denominated consumer loans, including loans 
denominated in Swiss francs, as defined in applicable laws (e.g. Law XXXVIII of 2014 and Law XL of 2014,  both as 
amended by Law LXXVIII of 2014, Law XXVII of 2014, Law LII of 2015 (amending Law XL of 2014) and Law CXLV 
of 2015). The performance of these supervisory t asks involves the verification of compliance by credit institutions, 
which includes also the review of privately negotiated contracts between credit institutions and their customers. See 
Opinion CON/2014/72.  
25   Hrvatska narodna banka carries out oversight over credit institutions’ compliance with the Law on c redit institutions, 
which includes compliance with internal bylaws of credit institutions governing the relationship with their clients, 
contracts concluded and consumer protection provisions.  
26  Česk a Narodni Banka has been assigned tasks related to consumer protection, including supervision of compliance 
by supervised entities of the observance of the prohibition of unfair business practices and supervision of rules 
regarding consumer discrimination or the obligation to inform about prices.   
27  See, for example, paragraph 3.4.2 of Opinion CON/2017/12.  
28  Banca d'Italia has been assigned with tasks in relation to the supervision, from a transparency perspective, of the 
terms of banking and financial agreements between credit institutions  and non- credit institution lenders.  
29  Narodna Banka Slovenska has powers in the are a of the protection of financial consumers, which include a 
preliminary assessment of unfair commercial practices of supervised entities and unacceptable conditions in 
contracts for the provision of financial services. The scope of this supervision does not include the adjudication of 
disputes between the supervised entities and their customers.  
30  See for example, paragraph 3.4.2 of Opinion CON/2017/12.  
31  See, for example, paragraph 3.2 of Opinion CON/2014/72.  
ECB -PUBLIC  
10 4.5 Extent to which performance of the new task creates conflicts  of interest with existing central bank 
tasks 
4.5.1  It may be considered that the new task at  least partially complement s other similar  existing 
supervisory and consumer protection tasks  of Banka Slovenije. As with other consumer protection 
tasks, sufficient mitigation measures must be put in place to ensure that in the event of a conflict s 
of interest supervisory considerations prevail32.  
4.6 Extent to which performance of the new task is disproportionate to the financial or organisational 
capacity of Banka Slove nije 
4.6.1  The principle of financial independence requires that Member States may not put their NCBs in a 
position where they have insufficient resources to carry out both their ESCB -related tasks and their 
national tasks, from an operational and financial pers pective. Furthermore, when allocating specific 
new tasks to NCBs, each NCB concerned should have sufficient financial and human resources at 
its disposal to ensure that the tasks can be carried out without impact ing on the NCB’s financial or 
operational capacity to perform its ESCB tasks33. In order to ensure that Banka Slovenije’s capacity 
to perform its ESCB -related tasks is not impaired, Banka Slovenije must, therefore, be in a position 
to avail itself o f the necessary resources to carry out its duties under the draft law. At this early 
stage, it is difficult to predict what additional resources Banka Slovenije will require in order to 
perform its new supervisory task under the draft law . However,  it is likely that Banka Slovenije will 
have to dedicate additional human, technical and financial resources to implement this new  
supervisory task. This may impose an additional  burden on existing NCB  and supervisory  tasks 
performed by Banka Slovenije. While supervised entities are requir ed to pay fees to Banka 
Slovenije in respect of the performance of its  supervisory tasks under the Law on c onsumer 
credit34, the draft law does not provide for Banka Slovenije to be reimbursed for the costs of 
carrying out this new task. The ECB invites the  consulting authority to consider the impact of the 
draft law on the resources of Banka Slovenije.  
4.7 Extent to which performance of the new task fits into the institutional set -up of Banka Slovenije,  in 
the light of central bank independence and accountability considerations  
4.7.1  The potential impact of the new task on the institutional, financial and personal independence of 
Banka Slovenije must also be taken into consideration.  
4.8 Extent to which the perfor mance of tasks harbours substantial financial risks  
4.8.1  The draft law does not contain any specific provisions on liability in relation to the exercise of 
Banka Slovenije’s powers under the draft law or the failure to exercise such powers. Banka 
Slovenije’s p otential liability in respect of the performance of the new task will thus be subject to the 
rules on liability for damages caused in the exercise of public authority pursuant to the Law on 
banking and the general liability regime under Slovenian law. The general liability regime would 
also apply with respect to any potential damages in connection with decisions of Banka Slovenije 
                                                 
32  See paragraph 3.1 of Opinion CON/2015/21 and paragraph 2.2.2 of Opinion CON/2016/31.  
33  See, for example, paragraph 2.2.5. of Opinion CON/2017/32, paragraph 3.3.2. of Opinion CON/2017/43 and 
paragraph 3.3.2 of Opinion CON/2017/52.  
34   See Article 79 of the Law on c onsumer credit (Zakon o potrošni ških kreditih) .  
ECB -PUBLIC  
11 delivered in supervisory proceedings pursuant to the draft law which are later declared to be  invalid 
in the court s. 
4.9 Extent to which the performance of the new task exposes members of the decision- making bodies 
of Banka Slovenije to disproportionate political risks and impacts on their personal independence  
4.9.1  Due to the sensitivity of the subject matter and the high degree of  public attention being given to 
the restructuring of Swiss franc  loans  in Slovenia,  due consideration should be given to any 
disproportionate political risk or impact on the personal independence of  the members of the 
decision -making bodies of Banka S lovenije that may arise in the performance of the new task.  In 
this re spect, consideration might  be given to the possibility of conferring this task on a separate 
government agency to which Banka Slovenije could provide technical support in view of its 
expertise and experience in dealing with the Slovenian banking sector 35. 
4.10 Conclusion  
4.10.1  The following should be noted as regards the compatibility of the draft law with the prohibition on 
monetary financing. The new task of Banka Slovenije of supervising  the compliance of credit 
institutions with the requirements under the draft law in relation to the restructuring of privately 
negotiated loan agreements between credit institutions and their customers can be regarded as a 
central bank task. However, as  the new task conferred upon Banka Slovenije by the draft law must 
not adversely affect its capacity to carry out its NCB or ESCB- related tasks , careful consideration 
should be given to its impact on Banka Slovenije’s operational capacity. In addition,  careful 
consideration should be made of any disproportionate political risk or impact on the personal 
independence of the members of the decision- making bodies of Banka Slovenije that may arise in 
the performance of the new task.  
 
This opinion will be published on the ECB’s website.  
 
 
Done at Frankfurt am Main, 16 April 2018 . 
 
[signed]  
 
The President of the ECB  
Mario DRAGHI  
                                                 
35  See, for example, Opinion CON/2017/19.