EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 4 November 2005 
at the request of the Polish Minister of Finance  
on a draft law amending the Foreign Exchange Law 
(CON/2005/44) 
 1. On 24 August 2005 the European Central Bank (ECB) received a request from the Polish Minister 
of Finance for an opinion on a draft law (herei nafter the ‘draft law’) amending the Foreign 
Exchange Law of 27 July 2002
1 (hereinafter the ‘Foreign Exchange Law’) and the Penal Treasury 
Code of 10 September 19992. 
2. The ECB’s competence to deliver an opinion is based on Article 105(4) of the Treaty establishing 
the European Community, and in particular on the fi rst, second and third 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 provisions3, as the draft law concerns currency 
matters, means of payment and Narodowy Bank Po lski (NBP). In accordance with the first 
sentence of Article 17.5 of the Rules of Procedur e of the European Central Bank, the Governing 
Council has adopted this opinion.  
General comments  
3. Because of its interest in the application in th e ten Member States that acceded to the European 
Union on 1 May 2004 of the provisions of the Treat y concerning the free movement of capital and 
payments4, the ECB has closely monitored developments in Polish foreign exchange regulation. In 
particular, the ECB took note of the comprehensiv e reform brought about by the introduction of the 
Foreign Exchange Law with effect from 1 October 2002.  
4. The ECB welcomes the fact that the draft law fu rther enhances the free movement of capital by 
eliminating certain procedural requirements impo sed on credit institutions in connection with the 
existing regime for granting general or individual foreign exchange permits for foreign exchange 
transactions. The ECB also welcomes the fact th at the draft law introduces a greater degree of 
transparency for the application of the ru les for granting foreign exchange permits.  
                                                           
1  Dziennik Ustaw  (Dz. U.) (Journal of Laws) 2002 No 141, Item 1178, as amended. 
2  Dz. U. 1999 No 83, It em 930, as amended. 
3  OJ L 189, 3.7.1998, p. 42. 
4  In this opinion reference is only made to the applicable provisions of the Treat y regarding the free movement of capital 
and payments. No reference is made to corresponding provi sions of the Agreement on th e European Economic Area of 
2 May 1992, as adjusted by the Protocol of 17 March 1993 (OJ L 1, 3.1.1994, p. 3). 
2 Specific comments regarding the draft law  
5. It is a general principle under the existing provisions of the Foreign Exchange Law that foreign 
exchange permits are automatically awarded if there is no threat to State security, public order, the 
balance of payments or other fundamental interests of the State5. The draft law would amend this 
provision to state that foreign exchange permits ar e awarded if there is no threat to State security, 
public order, the balance of payments and no infri ngement of restrictions concerning turnover in 
foreign exchange convertible instruments arising from other acts and decisions by international 
organisations of which Poland is a member6. The ECB has three specifi c remarks regarding this 
key provision of the draft law. 
6. First , the ECB welcomes the proposed deletion of ‘oth er fundamental interests of the State’ as a 
ground for denying a foreign exchange permit7. This undefined and imprec ise criterion falls outside 
the list of exceptions to the free movement of capital permitted under Article 58 of the Treaty.  
7. Second , regarding the criterion of a ‘threat to State security or public order’, the ECB would 
emphasise that the retention of this criterion, while  in line with the ‘measures which are justified on 
grounds of public policy or public security’ that Member States are allowed to take under Article 
58(1)(b) of the Treaty, should not, in accordance w ith Article 58(3) of the Treaty, constitute ‘a 
means of arbitrary discrimination or a disguised restriction on the free movement of capital and 
payments […]’. It is recalled that in accordance  with case-law of the Court of Justice, while 
Member States are still, in principle, free to de termine the requirements of public policy and public 
security in the light of their national needs, th ese concepts must, in th e Community context and 
where they are, in particular, used as a justifi cation for derogating from the fundamental principle 
of free movement of capital, be interpreted stri ctly, so that their scope cannot be determined 
unilaterally by each Member State without being subject to control by the institutions of the 
Community8.  
8. Third , as regards the wording ‘threat to the balance of payments’, which the draft law proposes to 
retain, it is noted that this criterion remains outside  the scope of the exceptions in Article 58 of the 
Treaty, and as such should only be considered as relevant in the extraordinary circumstances 
envisaged by Articles 119 and 120 of the Treaty. In this regard, the ECB notes that under the 
Foreign Exchange Law the Polish Council of Mini sters, after inviting NBP’s Monetary Policy 
Council to express its opinion, may introduce special restrictions on cross-border foreign exchange 
operations where indispensable to ensure a stable balance of payments in situations of general 
instability, a sudden collapse or a threat  arising out of any of the foregoing9. This description of the 
                                                           
5  Article 6(1) of the Foreign Exchange Law. 
6  Article 1(5) of the draft law in conjunction with Article 10(1)(1) of the Foreign Exchange Law. 
7  Article 1(5) of the draft law.  
8  See Case C-54/99 Église de scientologie de Paris and Scientology International Reser ves Trust  v The Prime Minister  
[2000] ECR I-1335, Paragra ph 17-19 (citing Case 36/75 Rutili  v Minister for the Interior  [1975] ECR 1219, paragraphs 
26-27). 
9  Articles 10(1), 10(3) and 62 of the Foreign Exchange Law. 
3 circumstances in which special restrictions may be introduced on grounds of balance of payments 
difficulties generally corresponds with the grounds specified in Articles 119 and 120 of the Treaty, 
which refer to situations where a Member State is  in difficulties or is seriously threatened with 
difficulties as regards its balance of payments, or where a sudden crisis in the balance of payments 
occurs. The ECB notes, however, that Articles 119 and 120 of the Treaty will cease to apply from the beginning of the third stage of economic and m onetary union, meaning that Poland will only be 
allowed to rely on these exemptions from the fr ee movement of capital until such time as it adopts 
the euro. Given that the Foreign Exchange Law al ready provides that certain provisions authorising 
the introduction of special restrictions are rende red void from the day of Poland’s accession to the 
EU
10, the ECB suggests that it might be helpful to introduce a parallel provision clarifying that the 
abovementioned provision authorising the introduction of special restrictions on grounds of balance 
of payments difficulties will be rendered void from the date on which Poland adopts the euro. 
Finally, as regards the period before Poland adopts the euro, the ECB would emphasise the 
Community’s competence to give final judgment as regards the compatibility with Articles 119 and 
120 of the Treaty of any special restrictions introduced on balance of payments grounds.  
9. The draft law amends the Foreign Exchange Law to provide that certain restrictions applicable to 
the turnover in foreign exchange  convertible instruments do not apply where one of the parties 
involved, ‘acting for its own account’, is a bank or financial institution ‘operating in the country’ 
under supervision by supervisory authorities authorised  to supervise certain financial institutions on 
the basis of separate provisions of law11. The ECB has two specific remarks regarding this 
provision. 
10. First , the ECB understands that the requirement for a bank or financial institution which avails 
itself of this less onerous treatment to ‘operate in the country’ means that the bank or financial 
institution in question should operate in the territory of the Republic of Poland12. Insofar as the 
concept of a bank or financial in stitution for the purposes of this provision is limited to Polish 
banks and financial institutions, to  the exclusion of credit and financial institutions operating in 
other Member States, this amended provision would place banks and fina ncial institutions from 
other Member States at a disadvantage. Under Article 12 of the Treaty, any discrimination on grounds of nationality within the sc ope of application of the Treaty,  including the Treaty provisions 
on the free movement of capital, is prohibite d. The ECB would therefore recommend an 
amendment to the draft law clarifying that all EU credit and financial institutions recognised in 
accordance with the single licence arrangement s under Community law and operating under the 
supervision of the competent authorities of the Me mber States are included within the concept of 
banks and financial institutions for the purposes of this provision. 
                                                           
10  Article 62 of the Foreign Exchange Law. 
11  Article 1(2)(a) of the draft law, amending Article 3(3) of the Fo reign Exchange Law. 
12  Article 2(1)(4) of the Foreign Exchange Law. 
4 11. Second , because the term ‘financial institution’ is no t defined in the Foreign Exchange Law, the 
scope of entities covered by this concept is not en tirely clear. In particular, the requirement for 
supervision by the authorities entitled to supervi se certain financial institutions is insufficiently 
precise to remove all doubt as to exactly which fina ncial institutions are covered. Since there is no 
standard definition of a ‘financ ial institution’ under Polish law13, it would be helpful to clarify this 
term in the Foreign Exchange Law so as to avoi d any misinterpretation regarding the scope of 
financial services providers covered by the relevant  exemptions from foreign exchange restrictions. 
This might be done by reference to a specific definition already contained in certain existing 
statutory provisions (e.g. in Polish banking law) . While drafting an appropriate definition lies 
within the Polish authorities’ discretion, the ECB notes that the principle of non-discrimination as it 
applies to financial institutions from other Memb er States is one of the fundamental Community 
principles inherent in Treaty14. 
12. The Foreign Exchange Law states that, as a general rule, the exportation an d dispatch abroad of 
foreign exchange gold or foreign exchange platin um is subject to the requirement to obtain a 
foreign exchange permit. However, there are a numb er of exemptions to this general rule, including 
(i) permission for residents conducting a business ac tivity in the area of processing and trading in 
precious metals to export foreign exchange gold or platinum relating to such activities, and 
(ii) permission for the export of gold coins issued by the NBP15. The ECB notes that the 
abovementioned exemptions do not cover all possible situations where a resident may wish to rely 
on the freedom guaranteed by Article 56 of the Treat y in order to export or dispatch abroad foreign 
exchange gold and platinum. Furthermore, it woul d be helpful for the sake of completeness to 
extend the exemption for gold coins issued by th e NBP to gold coins issued by other national 
central banks in the European System of Central Banks. 
13. Following the observations in paragraph 12, and as a more general remark, the ECB is of the view 
that, while the Foreign Exchange Law has already b een significantly liberalised in order to ensure 
                                                           
13  The definition of a ‘financial institution’ contained in Ar ticle 4(1)(7) of the Banking Law of 29 August 1997 (Dz. U. 
2002 No 72, Item 665, as amended) repr oduces the definition laid down in Di rective 2000/12/EC of the European 
Parliament and of the Council of 20 March 2000 relating to th e taking up and pursuit of the business of credit institutions 
(OJ L 126, 26.5.2000, p. 1). Other statutor y definitions of ‘financial institution’ in clude those contained in Article 4(1)(7) 
of the Commercial Companies Code of 15 September 2000 (D z. U. 2000 No 94, Item 1037, as amended) and in 
Article 2(10) of the Act on Individual Pension Account s of 20 April 2004 (Dz. U. 2004 No 116, Item 1205). 
14 The importance of the application of the pr inciple of non-discrimination with regard to credit institutions should be taken 
into account with regard to Article 15(2) of the Foreign Exchange Law, where the ECB sees no reason for excluding 
credit institutions from other Member States from the scope of the exemption in respect of agreements for the sale of 
foreign means of payment acquired within  the framework of foreign exchange market operations, as concluded by a 
registered business entity with a Polish bank. 
15  See Article 9(2) of the Foreign Exchange Law; Paragra phs 6(1) and 8 of the Regulation of 3 September 2002 of the 
Minister of Finance on general foreign exchange permits (D z. U. 2002 No 174, Item 1273, as  amended) (hereinafter, the 
‘General Foreign Exchange Permits Re gulation’). Similarly, under the Fore ign Exchange Law the exportation and 
dispatch abroad of domestic or foreign means of payment with an aggregate value in excess of EUR 10 000 is stated, as a 
general rule, to be subject to the re quirement to obtain a foreign exchange permit (see Article 9(3) of the Foreign 
Exchange Law). However, there are a number of exceptions to this general rule which render it practically ineffective, 
since residents and non-residents are permitted to export or dispatch abroad domestic or foreign means of payment 
exceeding EUR 10 000 where the money e ither (i) is withdrawn from a bank account or purchased from a bank with 
means accumulated in a bank account or (ii) comes from other sources, provided that the means of payment are declared 
in a written form to the customs authorities or the border gu ard exercising customs control (see Paragraphs 4, 4a and 4b 
of the General Foreign Exch ange Permits Regulation). 
5 the free flow of capital, it might be helpful to consider further streamlining and simplifying the 
Foreign Exchange Law at some point in the future. For example, at a certain stage in the process of 
liberalisation it may be more practical to provide fo r general rules of a permissive nature instead of 
establishing detailed lists containing exemptions from general rules of a restrictive nature. The 
latter approach carries the risk of inadvertently reta ining restrictions in relation to certain categories 
of entities that are not covered by the relevant exemptions. Moreover, indi vidual foreign exchange 
permits cannot be considered as an effective legal tool for achieving full liberalisation as they are 
issued on a discretionary basis and cannot ensure legal certainty as far as compatibility with the 
Treaty is concerned.  
14. The draft law requires residents and non-residents exporting domestic or foreign means of payment 
or foreign exchange gold or fore ign exchange platinum with a total value exceeding EUR 10 000 to 
present to the customs or border authorities, without being requested to do so, documents confirming that they are authorised to export the items concerned (or a foreign exchange export permit)
16. Similarly, the draft law requires residents and non-residents crossing the Polish border to 
declare to the customs or border authorities the importation into Poland of domestic or foreign 
means of payment as well as foreign exchange gol d or platinum with a value in excess of 
EUR 10 00017. The imposition of such obligations may be justified insofar as a prior declaration, 
unlike a prior authorisation, does not have the ef fect of suspending transactions by making them 
conditional in each case on the consent of the admini strative authorities, but rather allows national 
authorities to exercise effective supervision in order to prevent infringements of their laws and 
regulations18. As a general remark, however, and in line with case-law of the Court of Justice, the 
ECB notes that it will be important to ensure that  such prior declaration requirements do not have 
the effect of suspending transactions in contravention of Article 56 of the Treaty. 
15. Under the Foreign Exchange Law, the transfer of  money abroad or a settlement in Poland with a 
non-resident is subject to certain procedural re quirements (e.g. the requirement to document the 
legal basis for the transfer or settlement)19. Insofar as these requirements might be regarded as an 
obstacle to the free movement of capital and pa yments under the Treaty, the ECB would refer to 
the remarks already made in paragraph 14 of this  opinion concerning the case-law of the Court of 
Justice. In this regard the ECB would welcome the further enhancement of the free movement of 
capital that would result from the removal of cer tain procedural requirements imposed by these 
provisions of the Foreign Exchange Law, as this possibility has been introd uced by the draft law 
and has been indicated in the statement of r easons provided by the Minister of Finance. 
                                                           
16  Article 1(9) of the draft law. See also the regulation issu ed by the Minister for Finance under Article 21 of the Foreign 
Exchange Law. 
17  Article 1(8) of the draft law.  
18  Joined cases C-358/93 and C-416/93 Bordessa and Others  [1995] ECR I-361, paragraphs 24-31; Joined cases C-163/94, 
C-165/94 and C-250/94 Lucas Emilio Sanz de Lera, Raimundo Diaz Jim ẻnez and Figen Kapanoglu  [1995] I-4821, 
paragraphs 23-30; Case C-302/97 Konle  v Austria  [1999] ECR I-3099, paragraphs 44-46. 
19  See Articles 26-27 of th e Foreign Exchange Law.  
6 16. This opinion will be published on the ECB’s website. 
  Done at Frankfurt am Main, 4 November 2005. 
 
[ signed ] 
 
The President of the ECB 
Jean-Claude TRICHET