EN  
ECB -PUBLIC   
OPINION OF THE EUROPEAN CENTRAL BANK  
of 18 July 2019  
on the conversion of Swiss franc loans  
(CON/20 19/27) 
 
Introduction and legal basis  
On 15 May 2019 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 Proced ure 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 . To 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  will be converted into an other  interest rate, comprising the 
interbank interest rate in the euro area at the date on which the loan wa s drawn and the 
same margin agreed in the loan agreement . The agreed period for recalculations of the 
interest rate  remain s unaltered . According to the explanatory memorandum  on the draft 
law, using the interbank interest rate in the euro area in the conversion mechanis m 
                                                 
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).  
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2 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 ; 
(v) the creditor shall prepare a new  amortisation plan for existing credit s which have been 
repaid ahead of schedule , taking any overpayments into account ; 
(vi) 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 conver ted instalments 
that are still to be paid in line with 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 th e loa n agreement will be terminated.  
1.3 The c onversion of Swiss franc  loans applies  to loans  concluded between 28 June 2004 and 31 
December 2010, irrespective of th e current credit balance . The draft law requires  lender s to 
prepare new repayment schedules and sets out  supplementary  conversion rules . With respect to 
loans that were acquired by new  creditors , the draft law provides that the original lenders are 
required to pay the new creditor s the differenc e calculated by c omparing the original amount to  the 
amount a borrower would owe the new creditor had the amount transferred  been  calculated 
according to the new amortisation plan .  
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 30 days of the entry 
into force of the draft law. The borrower must confirm or reject the conversion proposal within 
30 days  of its receipt . 
ECB -PUBLIC  
3 1.5 The conve rsion 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 breach es 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 . The creditor may  challenge th e conversion  if the credit 
agreement or the documentation  shows that certain criteria had been  complied with at the time the 
relevant credit agreements were concluded.   A creditor may challenge the conversion if, prior to 
concluding the credit agreement, the borrower signed all of the following  documents: (i) a 
document stating a contractual condition governing the repayment of the ob ligation in a foreign 
currency , drawn up in clear and understandable language ; (ii) a document stating he or she was 
informe d of all elements that could affect the scope of his or her obligation; (ii i) a document stating 
that he or she was given a warning on the possibility of exchange rate changes and of risks arising 
from a Swiss fra nc denominated transaction; (i v) a document stating that he or she  was shown 
calculations on the economic effects of possible exchange rate fluctuations on his or her total 
obligation to repay under the agreement; (v)  a document containing an example of an actual 
foreign currency  credit i n the past period showing risks associated with foreign currency credit; and 
(vi) a document showing that the creditor offered the borrower insurance for currency risks or used 
an upper limit risk, thereby preventing significant imbalance in the rights and  obligations of the 
parties. Even if a creditor complies with the above criteria, t he court shall also assess (i) the 
existence of a significant imbalance between the parties when a conversion is contested, and (ii) if 
the creditor should have known the agreement creates a significant imbalance between the parties 
as a result of which the condition is unfair and thus unlawful.  The explanatory memorandum to the 
draft law sets out criteria for informed consent  in relation to point (ii) , which are based on, inter alia, 
the reasoning in a judgement of the Court of Justice of the European Union2 concerning the 
interpretation of Council Directive 93/13/EEC3. 
1.7 Additionally, the draft law addresses the issue of conversion of transferred credit s. Creditors who 
have transferred their loans to third parties are required to pay the transferee the difference  
calculated by comparing the amount of the transferred credit  to the amount a borrower would owe 
the transferee of the receivable  had the amount transferred been  calculated according to the new 
amortisation plan on the day the receivable was transferred. If the borrower’s debt to the transferee 
of the receivable is lower than th at calculated difference, the creditor shall pay the borrow er the 
difference.  
1.8 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 sanction s for  breaches of 
obligations arising under contractual relation ships, there by 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  
                                                 
2  Judgement of the Court of Justice of 20 September 2017, Andriciuc and Others , 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).  
ECB -PUBLIC  
4 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.   
 
2. General observations   
2.1 The ECB issued an opinion on a similar Slovenian draft law [which was never enacted into law ] in 
20184. 
2.2 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 f ranc loans were  and still are mortgage loans  
and were granted by foreign -owned credit institutions .  
2.2.1  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  the borrowers.  
The ECB also notes that the draft law provides 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.  
2.3 Legal aspects on retroactivity  
2.3.1  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.  
2.3.2  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 that 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 agreeme nt. 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 
                                                 
4 See Opinion  CON/2018/21 . All ECB opinions are published on the ECB ’s website at www.ecb.europa.eu . 
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, for example,  paragraph 2.1 of Opinion CON/2018/21 .  
7  See, for example, paragraph 2.2 of Opinion CON/2018 /21. 
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.  
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5 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. 
2.3.3  It is for the Slovenian  authorities to assess whether the retroact ive character of the draft law also 
complies  with Slovenian  legal and constitutional principles13. 
 
3. Specific observations  
3.1 Eligibility criteria  
3.1.1  The draft law does not prescribe any specific criteria for borrowers  to be eligible to participate in the 
conversion . For example , the draft law does not  impose an upper limit to the amount of the credit 
extended which would limit the risk of moral hazard14.  
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 have a negative impact on the profitability, capitalisation and future lending capacity of 
the banking sector as a whole15. It is worth mentioning that determining the extent of  such impact  is 
difficult  since  the draft law has not benefited from an impact assessment conducted by the 
competent national authorities.   
3.2.2  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 particular 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 thereof16.  
3.2.3  An additional  concern is  that the  draft law puts the entire  burden of conversion of Swiss franc 
denominated loans into euro denominated loans on the originator credit institutions  even if, in the 
interim,  originators had already transferred the loans (as non-performing loans , ‘NPLs’ ) to third 
parties , as is the case of  numerous Slovenian credit institutions. Such provisions in the draft law 
represent an important impediment to the effective and resolution of NPLs as the originator credit 
institutions would  not have been able to effectively transfer  NPLs off their balance sheet . The 
reasoning  behind NPL transfer s is inter alia to remove uncertainty with regard to potential future 
losses associated with the transferred asset s.  
3.2.4  The ECB has been a strong proponent of the development of secondary markets for credit 
institution assets, particularly NPLs, as reflected in the EU Council’s action plan to tackle NPLs in 
                                                 
10  See the paragraphs of the Opinions referred to in footnote 7. 
11 See, for example, judgement of the Court of Justice of the European Union of 10 March 2009, Heinrich , C-345/06, 
ECLI:EU:C:2009:140.  
12 See, for example, judgement of the Court of Justice of the European Union of 16 May 1979, Tomadini , C-84/78, 
ECLI:EU:C:1979:129.  
13  See paragraph 2. 2.3 of Opinion CON/2018/21.  
14  See paragraph 3.1.1 of Opinion CON/2018/21.  
15  See paragraph 3.2.1 of Opinion  CON/2018/21.  
16  See paragraph 3.2.2 of Opinion CON/2018/21.  
ECB -PUBLIC  
6 Europe17, as the ECB has previously noted18. As part of a comprehensive s olution to NPL 
resolution, the development of secondary markets may contribute to reducing NPLs. Looking 
ahead, well -functioning secondary markets may also prevent stocks of NPLs building up in the 
future.  Moreover, a well -functioning secondary market may have a positive effect on financial 
stability to the extent that it could facilitate the transfer of the risks of NPLs off credit institutions' 
balance sheets. The presence of significant volumes of NPLs on credit institutions' balance sheets 
reduces their  ability to fulfil their function as providers of credit to the real economy and hampers 
the operational flexibility and overall profitability that are essential to a well -functioning banking 
sector. It is essential that the legal framework applicable to s econdary markets enables the efficient 
transfer of NPLs off the balance s heet of credit institutions , an aspect with regard to which the draft 
law may introduce uncertainty19.  
3.2.5  As a c onsequence of the draft law , Slovenian credit institutions w ill incur new losses with regard to 
NPLs already removed from their balance sheet s. As the ECB has pointed out on previous  
occasions20, the ability of financial institutions to effectively manage credit risk depends on a 
reliable, predictable and stable legal framewo rk that adequately balances the interests of both the 
creditor and the debtor. In this respect, it is important to carefully consider the impact of the draft 
law in order to ensure legal certainty, and to prevent moral hazard from arising in the relationsh ip 
between creditor and debtor. If credit institutions  are deprived of efficient tools to work out NPLs in 
an effective and timely manner, this could result in unnecessarily high levels of NPLs and private 
sector debt, which in turn have an adverse impact on financial stability and could undermine future 
credit supply . 
3.2.6  Additionally, the Slovenian credit institutions that transferred their NPL portfolio  to third parties , 
have also handed over all relevant documentation regarding the transferred loans to the new 
creditors who were fully aware of the nature of the loans  prior to th at transaction. The draft law 
could therefore interfere  with the commercial agreement s between the credit institutions and the 
purchasers of loans and cause disproportionate operational costs for credit institutions.  
3.2.7  To conclude, the draft law must carefully balance the benefits of creating well -functioning 
secondary markets for NPLs again st the impetus to protect debtors21. In addition, t he draft law 
would benefit from a thorough impact assessment.  
3.3 Effects on the financial stability  
3.3.1  The ECB has pointed out on several occasions the risks associated with foreign currency loans22. 
In particular, foreign currency loans  have constituted a major risk to financial stability in several 
                                                 
17        See the Council's press release of 11 July 2017 on the ‘Council conclusions on Action plan to tackle non -performing 
loans in Europe’, available on the Council's website at: http://www.consilium.europa.eu . 
18        See paragraph 1.1. of Opinion CON/2018/54.  
19 See paragraph 2.2.1 and 2.2.2 of Opinion CON/2018/31.  
20        See, for example,  paragraph 2.2.4 of the Opinion CON/2019/8 . 
21       See paragraph  2.2.3 of the Opinion CON/2018/31.  
22  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.  
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7 Member States, where the share of foreign currency loans is relatively high.  The ECB points , in this 
respect , to the analysis of such risks made by the ESRB  in Recommendation ESRB/2011/123.  
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 al l stakeholders  in order to avoid  moral hazard in the future24. 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 practice s in euro denominated 
loans. However, the draft law provides for the replacement of the previously agreed interest rate 
with the interbank in terest rate in the euro area for recalculation purposes, whereas the original  
loan-based margin remains the same, which appears 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  As the ECB has noted previously25, 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 th is 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 previously26, 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  both 
foreign and domestic investor sentiment , and trust in the system,  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 Slovenije   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 specify in 
detail the scope of th is new task. The ECB understands that the Banka Slovenije’s supervisory task 
in this respect would e ssentially require  Banka Slovenije to  supervis e the compliance of credit 
institutions wit h 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 bee n designated as the 
competent minor offence authority  in relation to breaches of the draft law , within the  scope of the 
                                                 
23  However this does not seem to be the case in Slovenia.  
24  See, for example , paragraph 3.3.2 of Opinion CON/2018/21 . 
25  See, for example,  paragraph 3.3.3 of Opinion CON/2018/21.  
26  See, for example,  paragraph 3.4.1 of Opinion CON/2018/21 .  
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8 performance of its prudential supervisory tasks  over credit institutions27, and also has, to a certain 
extent , an existing customer protection role28. 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 private ly 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  3603/9329 defines ‘other type of credit facility’, inter al ia, as ‘any 
financing of the public sector’s obligations vis -à-vis third parties’.  
4.1.3  Ensuring that Member States implement a sound budgetary policy is one of the key objectives of 
the monetary financing prohibition, which may not be circumvented30. 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 sect or’s obligations 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 pro hibition of maintaining a 
sound budgetary policy of Member States do not take place.  
4.1.4  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 Central 
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 fallin g 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 the 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, ne w tasks that are undertaken by an NCB and which are 
                                                 
27   Article 3 80 of the Law of 2015 on b anking.  
28  See Law of 2016 on consumer credit . 
29  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).   
30  Article 123 of the Treaty also serves the objecti ve of maintaining price stability and reinforces central bank 
independence.  
ECB -PUBLIC  
9 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 impo rtant 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 p ersonal 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 
as to lead to the creation of an indefinite chain of ancillary tasks. Such complementarity 
should be examined in relation to the financing of those tasks;  
(b) whether without new financial resources the perf ormance 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 in stitutional 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 o f the NCB decision -making 
bodies to political risks which are disproportionate and may also have an impact on their 
personal independence and, in particular, on the guarantee of term of office set out in 
Article  14.2 of the Statute of the ESCB.  
4.1.5  On the basi s 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  As previously noted by the ECB31, 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 t his 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 concerns.  
                                                 
31  See, for example,  paragraph 4.2.1 of Opinion CON/2018/21.  
ECB -PUBLIC  
10 4.3 Tasks which are atypical of NCB tasks  
4.3.1  As previously noted by the ECB32, 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  As previously noted by the ECB33, it is necessary to analyse whether th is new task is atypical of 
NCB tasks. 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 Cyprus34 
and Hungary35, the NCBs 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 
tasks are substantiall y similar  to the tasks to be conferred on Banka Slovenije under the draft law. 
In addition, the NCBs in Croatia36, the Czech Republic37, Ireland38, Italy39 and Slovakia40 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 services41, 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 courts42. 
4.4 Task s clearly discharged on behalf of and in the exclusive interest of the government  
                                                 
32  See paragraph 4.3.1 of Opinion CON/2018/21.  
33  See paragraph 4.3.2 of Opinion CON/2018/21.  
34  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 ta sks 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.    
35  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 task s 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.  
36   Hrvatska narodna banka carries out oversight o ver 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.  
37  Česka N arodni 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.   
38  See, for example, paragraph 3.4.2 of Opinion CON/2017/12.  
39  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.  
40  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 no t include the adjudication of 
disputes between the supervised entities and their customers.  
41  See for example, paragraph 3.4.2 of Opinion CON/2017/12.  
42  See paragraph 4.3.2 of Opinion CON/2018/21.  
ECB -PUBLIC  
11 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 ECB43, 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.  
4.5 Extent to which performance of the new task creates conflicts  of interest with existing central bank 
tasks  
4.5.1  As previously noted by the ECB44, 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 of interest supervisory considerations prevail .  
4.6 Extent to which performance of the new task is disproportionate to the financial or organisati onal 
capacity of Banka Slovenije  
4.6.1  As previously noted by the ECB45, 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 perspective. 
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 o ut 
without impact ing on the NCB’s financial or operational capacity to perform its ESCB tasks.  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 a n additional  burden 
on existing central bankin g and supervisory  tasks performed by Banka Slovenije. While supervised 
entities are required to pay fees to Banka Slovenije in respect of the performance of its  supervisory 
tasks under the Law on c onsumer credit46, 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.  
                                                 
43  See, for example, paragraph 4.4.1 of Opinion CON/2018/21 . 
44  See, for example,  paragraph 4. 5.1 of Opinion CON/2018/21.  
45  See, for example,  paragraph 4.6.1 of Opinion CON/2018/21.  
46   See Article 79 of the Law on c onsumer credit (Zakon o potrošniških kreditih) .  
ECB -PUBLIC  
12 4.7 Extent to which performance of the new task fits into the institut ional 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 considera tion. 
4.8 Extent to which the performance 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 potential 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. As previously noted by the ECB47, the 
general liability regime would also apply with respect to any potential damages in connection with 
decisions of Banka Slovenije 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 person al independence  
4.9.1  As previously noted by the ECB48, 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 o f the members of the decision -making bodies of Banka Slovenije that may arise in 
the performance of the new task.  In this re spect, considerati on 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.  
4.10 Conclusion  
4.10.1  As previously noted by the ECB49, 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 Sloveni je 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 d isproportionate 
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.  
 
                                                 
47  See paragraph 4.8.1 of Opinion CON/2018/21.  
48  See paragraph 4.9.1 of Opinion CON/2018/21.  
49  See paragraph 4.10.1 of Opinion CON/2018/21.  
ECB -PUBLIC  
13  
Done at Frank furt am Main, 18 July  2019. 
 
[signed]  
 
The President of the ECB  
Mario DRAGHI