OPINION OF THE EUROPEAN CENTRAL BANK
at the request of the Luxembourg Minister of Fi nance under Articles 109l (2) and 109f (6) of the
Treaty establishing the European Community and Article 5.3 of the St atute of the European
Monetary Institute on draft regulations by the Institut belgo-luxembou rgois du change on the
recording of foreign payments and on the establishment of the balance of payments
1. On 15 September 1998 the European Central Bank (ECB) received a request from the
Luxembourg Minister of Finance for an ECB Opin ion on draft regulations by the Institut belgo-
luxembourgois du change (hereinafter referred to as IBLC) on the recording of foreign
payments and on the establishment of the balance of payments (hereinafter referred to as the
Draft Regulations).
2. In accordance with Article 1091(2) of the Tr eaty establishing the European Community
(hereinafter referred to as the Treaty), the E CB has taken over the advisory functions of the
European Monetary Institute (EMI), which went  into liquidation upon the establishment of the
ECB on 1 June 1998. The ECBs competence to deliv er an opinion is based on Article 1.1, third
indent, of the Council Decision (93/717/EC) of 22 November 1993 on the consultation of the EMI
by the authorities of the Member States on draft legislative provisions, as the Draft Regulations
contain provisions concerning the collecti on, compilation and dissemination of monetary,
financial, banking and balance of payments statistics. In accordance with Article 17.5, first
sentence, of the Rules of Procedure of the E CB, this ECB Opinion has been adopted by the
Governing Council of the ECB. 
3. The ECB notes that the objective of the Draft Regulations is to update the existing regulations of
the IBLC regarding the collection of the statistical information necessary for the production of the
balance of payments of the Belgian-Luxembourg Economic Union and the current account ofLuxembourg.
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4. The ECB welcomes the Draft Regulations since the definitions and classifi cation principles given
in the proposed Draft Regulations are compliant  with the IMF Balance of Payments Manual
(5th edition) released in October 1993 and the ha rmonisation proposals defined by the EMI. This
relates in particular to the residence criterion, th e principles underlying th e classification of the
resident entities, and the breakdown by instrument s. At the same time, the ECB would like to put
forward the following im portant technical points.
5. In Draft Regulation L3, the definitions for a p aiement avec létranger and for the pays de la
contrepartie non résidente might be confusing. It is understood that the reporting of payments
between residents, which are neither to be comp iled within the balance of payments nor in the
international investment position, may be request ed for checking purposes. Nonetheless, it should
be stressed that the corresponding data must be  clearly isolated from those recorded in the
statistics (see neutral codes in Annex 1 to proposed Draft Regulation L3).
6. In Annex 1 of proposed Draft Regulation L3, opti ons are included amongst portfolio investment,
while other derivatives are recorded in another chapter, which is not fully compliant with the
agreed harmonisation proposals on derivatives and migh t also be confusing. It has to be stressed
that, since a change in international standards as defined by the IMF may be made in the near
future, derivatives may soon have to be isolated as a separate item of the financial account.
7. No specific information is requested in Draft Re gulation L2 regarding transactions of Monetary
Financial Institutions with their branches and subsidiaries abroad. This should not reduce the
ability of the IBLC to identify transactions be tween direct investors and direct investment
enterprises, as requested in Chapter 18 of the 5th edition of the IMF Balance of Payments Manual.
8. Article 15 of  Draft Regulation L2 makes a speci al case of holding companies that follow the
rules of the law of 31 July 1929. This special treatme nt is welcome as long as it allows the correct
identification and recording of transactions with  non-residents by this category of institutions.
9. The annex of Draft Regulation L2 is not exac tly identical to the annex of the Kingdom of
Belgiums Regulation B2. In particular, commercial loans are not distinguished, which may giverise to difficulties in establishing the quarterly  breakdown on instruments (i ncluding trade credits)
as requested by the EMIs report entitled Statistical Requirements for Stage Three of Monetary
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Union  Implementation Package (July 1996), here inafter referred to as the Implementation
Package, approved by the ECB Governing Council in September 1998.
10. Although the Implementation Package does not request any country breakdown, it states this
question is not resolved yet, as regards the quarterly and annual balance of payments. Inaccordance with recent discussions on this topic, th e ECB would be in favour of leaving open the
possibility to request this kind of information fr om reporting agents. Draft Regulation L1 states in
its article 5 that residents will have to report th is type of information to the credit institution in
charge of the payments, and Draft Regulation L2, article 7 paragraph 2 requests this informationfrom credit institutions for their own transactions. However, it is noted that the information which
credit institutions should report on their own assets  and liabilities, as described in Article 17 of
Draft Regulation L2, does not in clude such a country breakdown. 
11. The classification of the Monetary Financial Ins titutions (hereinafter referred to as MFIs) is
important not only due to their role in the coll ection system in Luxembourg, but also for the
sectoral breakdown requested for the quarterly a nd annual balance of payments and for the annual
international investment position. The classification must comply with the definition of MFIs for
statistical purposes and the criteria set out in  Annex 4 of the General Documentation on ESCB
monetary policy instruments and procedures published by the ECB in September 1998. A list of
MFIs for statistical purposes is now available fo r information on the ECBs internet site. In this
regard, the branch of the National Bank of Belgium in Luxembourg will no longer exist as fromthe end of December 1998, which may be mentioned in the Draft Regulations. Financial servicesof Post and Telecommunications s hould not be considered as MFIs , but as part of the General
Government sector. The sectoral  breakdown (including the MFIs) applies to portfolio investment
and other investment in the financial acc ount. Moreover, the MU/non-MU split for direct
investment abroad and for portfolio investment (assets and liabilities) is also a major requirement
for the ECBs monthly key items. The ECB is pleased to note that the economic and sectoral
classifications given in Annex 1 and 2 to th e proposed Draft Regulation L3 appear to be
compliant with both requirements on s ectoral breakdown and MU/non-MU split.
12. The ECB is pleased to note that the timeliness re quired (Draft Regulation L1 article 5 paragraph
7, Draft Regulation L2 article 4 paragraph 1, Draft Regulation L4 article 3, Draft Regulation L5article 5) is fully compliant with the deadlines described in the Implementation Package, approved
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by the ECB Governing Council last September, for monthly, quarterly and annual balance of
payments as well as for the annual international investment position.
13. Article 2 of Draft Regulation L4 states that individual answers to the survey are not to be
disseminated outside the IBLC and the Servi ce Central de la Statistique et des Etudes
Economiques (STATEC). This should not prejudice the possibility for the ECB to becommunicated information made available to th ese institutions, under the conditions prescribed
by Community law.
14. Finally, the ECB notes that, as opposed to th e project submitted recently by the Kingdom of
Belgium, no mention has been made of the possib ility of enforcing adequate verification. Such a
regulation would in the view of the ECB be a usef ul means of ensuring the quality of the reporting
on balance of payments transactions. 
15. The ECB confirms that it has no objection to this ECB Opinion being made public by the
competent national authorities at their discretion.
Done at Frankfurt am Main on 5 November 1998.
The President of the ECB
[signed]
Willem F. Duisenberg