EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 7 January 2010  
on certain measures concerning banking and financial regulation 
(CON/2010/3) 
 
Introduction and legal basis  
On 8 December 2009 the European Central Bank (ECB) received a request from th e French Ministry for 
Economic Affairs, Industry and Employment for an  opinion on certain provisions of a banking and 
financial regulation draft law relating to the establishm ent of the Financial Regulation and Systemic Risk 
Council (hereinafter the ‘FRSR’), the regime for co vered bonds and an amendment to a provision of the 
French Monetary and Financial Code  relating to the Banque de France  (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 si xth indents of Article 2(1) of Council Decision 
98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities 
regarding draft legislative provisions1, as the draft law relates to the Banque de France and to rules 
applicable to financial institutions insofar as they materially influence the stability of financial institutions 
and markets. In addition, the Eurosystem shall cont ribute to the smooth conduct of policies relating to the 
prudential supervision of credit ins titutions and the stability of the fi nancial system under Article 127(5) 
of the Treaty. 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 FRSR will replace the panel of financial sector supe rvisory authorities2. It is composed of the 
Governor of the Banque de France, the President of the Prudential Supervisory Authority assisted 
by the Vice-president, the President of the Financ ial Market Authority and the President of the 
Accounting Standards Authority or their deputies3; the FRSR is chaired by the Minister for Finance 
or his representative. 
In addition to playing a coordinating role, the FR SR is entrusted with tasks relating to macro-
prudential supervision and financial stability and inte rnational and European standards that apply to 
                                                 
1  OJ L 189, 3.7.1998, p. 42. 
2  Article L.631-2 of the French Monetary and Financial Code. 
3  Article L.631-2 of the French Monetary and Financial Code as propos ed by the draft law. 
2 the financial sector. The FRSR’s tasks are to: (i) foster cooperation and the exchange of 
information between the institutions represented by its members; (ii) examine French financial 
sector and market status reports from a macro-pruden tial point of view and evaluate systemic risks 
inherent in it, taking account of the opinions and recommendations of the European Systemic Risk 
Board (ESRB); (iii) facilitate c ooperation on and coordination of work  in relation to international 
and European standards applicable to the financia l sector, and with the power to issue opinions or 
position statements when necessary4. The FRSR performs such tasks without prejudice to the 
remits of the institutions represented by its member s. The FRSR meets at least three times a year, 
upon the proposal of one of its members. In the performance of its tasks, the FRSR may consult representatives of credit institutions, investment comp anies, insurance companies, mutual societies 
and welfare institutions
5. 
1.2 The draft law defines a new category of covere d bonds, ‘home bonds’, in addition to the mortgage 
bonds. Under the draft law, companies issuing ho me bonds and mortgage bonds, i.e. the housing 
finance companies or the mortgage companies, ma y subscribe to, acquire or hold their own bonds 
for the sole purpose of using them to colla teralise Banque de France credit operations in 
accordance with the procedures and terms laid dow n by the Banque de France for its monetary 
policy and intraday credit operations, where the company is unable to cover all its liquidity 
requirements using other means at its disposal . The draft law provides for the conditions under 
which such transactions are to be conducted. Co mpliance with these conditions will be certified by 
a specific auditor, who will also have to draft a report for the Prudential Supervisory Authority6. 
1.3 The draft law amends a provision of the French Monetary and Financial Code7 relating to the 
Banque de France, in order to allow the Banque de  France to also disclose to insurance companies 
that are authorised to engage in credit insuran ce transactions in France information it holds on the 
financial situation of any enterprise. Such discl osure may only be made once the Banque de France 
has established how this information will be provi ded and established the disclosure obligations of 
the companies. Currently, the Banque de France  may only disclose such information to other 
central banks and institutions that carry out duties similar to those of the Banque de France, and to 
credit and financial institutions. The ECB understa nds that access to information held by the 
Banque de France on the financial situations of en terprises is granted to insurance companies that 
are authorised to engage in credit insurance transactions in France, in order to allow them to better 
manage the inter-enterprise credit risk, and that th is new provision is aimed at developing credit 
insurance for small and medium- sized enterprises. 
 
                                                 
4  Article L.631-2-1 of the French Monetary and Financial Code as proposed by the draft law. 
5  Article L.631-2-2 of the French Monetary and Financial Code as proposed by the draft law. 
6  Article L.515-32-1 of the French Monetary a nd Financial Code as proposed by the draft law. 
7  Article L. 144-1 of the French Monetary and Financial Code. 
3 2. Establishment of the FRSR  
2.1 The establishment of national financial stab ility committees can enhance the ability of national 
central banks and supervisory authorities to contri bute analytical support to the European Systemic 
Risk Board (ESRB). The tasks performed by these committees should complement the activities 
performed by the ESRB, therefore it is particular ly important to develop appropriate synergies. 
However, it is necessary to avoid such national committees being entrusted with tasks and powers 
that potentially conflict with those of the ESRB, and which may undermine the effectiveness of the 
newly-established European macro-prudential supe rvisory body. Moreover, the legal frameworks 
of these committees should appropriately reflect the roles of central banks, should not constrain the 
independence of the governors of the central banks  or unduly affect the quality and impartiality of 
their contributions as members of the ESRB. Lastly, in view of the importance of ensuring the effectiveness of macro-prudential supervisory arrangements at the EU level, it is essential to 
safeguard the ability of the ESRB to perform its tasks independently and to guarantee an 
authoritative and effective channel for transmitti ng the warnings and recommendations issued by 
the ESRB. 
2.2 The ECB welcomes the emphasis in the draft law on the complementary nature of the FRSR and 
ESRB tasks, and particularly since it expressly pr ovides that the FRSR will take account of the 
ESRB’s opinions and recommendations when perfo rming its macro-prudential supervision and 
financial stability related tasks, moreover the scope  of latter being expressly limited to the French 
financial sector and markets. The ECB draws attention to the importance of clarifying the FRSR’s organisational rules at an early stage to ensure th at the role of the central bank is appropriately 
reflected and that the independence of the Governor  of the Banque de France, as well as the quality 
and impartiality of his contribution as a futu re member of the ESRB, is not affected. 
2.3 The Memorandum of Understanding on cooperati on between Financial Supervisory Authorities, 
Central banks and Finance Ministries of the Eur opean Union on cross-border financial stability  
(MoU) that entered into force on 1 June 2008
8 provides for the establishment in each Member State 
of a domestic standing group, i.e. a national leve l group consisting of the financial supervisory 
authorities, central banks and finance ministries, with the objective of enhancing preparedness under normal market conditions and facilitating the ma nagement and resolution of financial crises. 
Following the conclusion of the MoU, the French authorities designated the panel of financial sector supervisory authorities as the national domest ic standing group (part of its general mandate, 
laid down in 2005, is to facilitate exchanges of in formation and the coordination of the control of 
financial groups). For legal certainty purposes, th e related tasks, i.e. ‘enhance preparedness under 
normal market conditions and facilitate the manageme nt and resolution of a financial crisis’, could 
be included in the list of tasks entrusted to the FRSR, as detailed in the draft law. 
 
                                                 
8  See Council conclusions of 9 October 2007.  
4 3. Using home bonds as collateral for the Ba nque de France’s monetary policy and intraday 
credit operations  
With respect to the provisions of the draft law for the use of home bonds as collateral with the 
Banque de France, ‘in accordance with the pro cedures and terms laid down by [the Banque de 
France] for its monetary policy and intraday credit operations,’ the ECB reite rates that it remains at 
the sole discretion of the Eurosystem to determ ine the conditions of eligibility for the use of 
covered bonds or other assets as collateral and the acceptance of specific assets as collateral for 
monetary policy and intraday credit operations. Moreover, the draft law should expressly clarify 
that the procedures and terms laid down by th e Banque de France for its monetary policy and 
intraday credit operations provide for the consis tent implementation of the guidelines of the ECB’s 
Governing Council. The draft law could for instance  refer to ‘the proce dures and terms laid down 
by [the Banque de France] for its monetary polic y and intraday credit operations pursuant to the 
guidelines of the ECB’s Governing Council’. 
 
4.  Disclosure of information held by the Banque de France on the financial situations of 
enterprises 
With regard to the possibility for the Banque de  France to disclose information it holds on the 
financial situation of any enterprise9, the ECB stresses the need to ensure that the financial 
independence of the Banque de Fr ance is not endangered as the result of any liability that might 
arise from the disclosure of such information. 
 
5. The appropriate time to consult the ECB 
5.1 In cases of particular urgency that do not a llow for a normal consultation period, the consulting 
authority may indicate urgency in the consultation request and ask for a shorter time limit for the 
ECB’s opinion to be adopted. This does not prejudice the national authorities’ duty under Article 127(4) and 282(5) of the Treaty to consu lt the ECB on national draft legislative provisions 
falling within its fields of competence in due c ourse of the national legislative process. The second 
sentence of Article 4 of Decision 98/415/EC states that the ECB must be consulted ‘at an appropriate stage’ in the legislative process. This  implies that the consultation should take place at 
a point in the legislative process that affords the ECB sufficient time to examine the draft 
legislative provisions and to adopt its opinion in  all required language ve rsions, and which also 
enables the relevant national authorities to take the ECB’s opinion into consideration before the 
provisions are adopted. In this respect, as noted by the Court of Justice, the obligation to consult the 
ECB under the Treaty is intended ‘essentially to ensu re that the legislature adopts the act only when 
the body has been heard which, by virtue of the specific functions that it exercises in the [Union] 
                                                 
9  To be extended under the draft law to insurance companies that  are authorised to engage in  credit insurance transactions 
in France. 
5 framework in the area concerned and by virtue of the high degree of expertise that it enjoys, is 
particularly well placed to play a useful role in the legislative process envisaged’10. Given that the 
consulting authority set the ECB an extremely shor t time limit within which to submit its opinion 
and that the only reason given was that the c onsulting authority had established a very tight 
timetable, the ECB considers that the minimum co nsultation period of one month provided for in 
Article 3(1) of Decision 98/415/EC applies.  
5.2 According to Article 3(4) of Decision 98/41 5/EC, Member States are obliged to suspend the 
process for the adoption of draft legislative provision pending submission of the ECB’s opinion. This means that the adopting authority must have a real opportunity to consider the ECB’s opinion 
in a meaningful manner prior to taking its deci sion on the substance. The ECB also emphasises 
that, in accordance with Article 4 of Decision 98/ 415/EC, the opinion received from the ECB has to 
be brought to the knowledge of the adopting authority if the latter is an authority other than that 
which has prepared the legislative provisions concerned.  
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 7 January 2010. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET 
 
                                                 
10  Case C-11/00 Commission of the European Communities v European Central Bank  [2003] ECR I-7147, paragraphs 110 
and 111.