Opinion of the European Monetary Institute on a consultation from the Belgian Ministry of Finance under Article 109f(6) of the Treaty establishing the European Community (the “Treaty”) and Article 5.3 of the Statute of the EMI as elaborated in the Council Decision of 22nd November 1993 (93/717/EC) on a proposed reform of the National Bank of Belgium’s Organic Law (CON/96/10)
Date: 1996-09-09
Institutions: European Monetary Institute
Subjects: Belgium, European System of Central Banks, banking secrecy, central bank, euro, paper money, payment system, securities

OPINION OF THE EUROPEAN MONETARY INSTITUTE

on a consultation from the Belgian Ministry of Finance under Article 109f(6) of the Treaty establishing

the European Community (the “Treaty”) and Article 5.3 of the Statute of the EMI as elaborated in the

Council Decision of 22nd November 1993 (93/717/EC) on a proposed reform of the National Bank of

Belgium’s Organic Law

CON/96/10

1.

The  consultation  was  initiated  on  1st  August  1996  by  the  Belgian  Ministry  of  Finance  which

requested  an  opinion  from  the  EMI  within  one  month  of  receipt  of  the  consultation,  i.e.  by

6th  September  1996.  For  this  purpose,  the  Ministry  of  Finance  submitted  the  text  of  the  draft

legislation together with explanatory memoranda to the EMI.

2.

The EMI’s competence to deal with the request  for  consultation  is  based  on  Article  1,  second

indent,  of  the  Council  Decision  of  22nd  November  1993  (93/717/EC),  as  the  draft  legislation

concerns the statute of the National Bank of Belgium (the “Bank”).

3.

In accordance with Article 108 of the Treaty, the draft legislation intends to adapt the statute of

the Bank to the requirements of Stage Three of EMU. The main elements of the draft legislation

are the following:

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The introduction of the principle that the Bank in Stage Three will be an integral part  of

the ESCB and will be subject to guidelines and instructions from the ECB.

A  reference  to  the  primary  objective  of  price  stability  and  the  secondary  objectives

mentioned in Article 2 of the Statute of the ESCB/ECB.

An enumeration of the main tasks to be pursued within the framework of the ESCB under

the auspices of the ECB and a description of the instruments which may be used to that

effect.

The lightening of the organisational structure of the Bank which up until now includes five

organs:  the  Governor,  the  Direction  Committee  (Executive  Board),  the  Council  of

Regency,  the  College  of  Censors  and  the  General  Council.  It  is  felt  that  this  structure,

which finds its roots in the history of the Bank, may now be adjusted to the Bank’s future

role as an integral part of the ESCB. The draft legislation entails that the General Council

will  be  dissolved  and  that  its  tasks  will  be  assigned  to  the  Council  of  Regency  and  the

College of Censors.

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The possibility for the Bank to perform non-ESCB-related tasks. The Bank may decide to

establish 100% owned or majority controlled subsidiaries for the accomplishment of these

tasks.  The  agreement  of  the  Government  on  the  establishment  of  such  entities  will  be

required if a task has been attributed to the Bank by law.

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The  right  of  the  Government’s  Commissioner  to  review  the  legality  of  the  Bank’s

activities  will  be  suppressed  as  far  as  ESCB-related  tasks  are  concerned.  However,  a

representative  of  the  Ministry  of  Finance  will  remain  in  charge  of  the  supervision  of  the

legality of the Bank’s activities with regard to non-ESCB-related tasks.

A  revision  of  the  regime  of  allocation  of  monetary  income  between  the  Bank  and  the

State in order to maintain the existing financial autonomy of the Bank.

The  insertion  of  a  provision  on  the  Bank’s  role  as  overseer  of  payment  systems  and

securities settlement systems.

A  provision  on  secrecy  and  communications  between  the  relevant  authorities  in  order  to

implement provisions of the European Parliament and Council Directive of 29th June 1995

(95/26/EC), the “post-BCCI Directive”.

4.

The  EMI  welcomes  the  draft  legislation  both  in  terms  of  timing  as  well  as  content.

Article  109e(5)  calls  for  a  timely  adaptation  of  statutes  of  NCBs  in  order  to  comply  with  the

requirements  for  Stage  Three  of  EMU.  The  draft  legislation  meets  this  requirement.  The  draft

also correctly recognises that there are in fact three stages in the process of legal convergence

with a view to Stage Three.

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It  follows  from  Articles  108  and  109e(5)  of  the  Treaty  that  central  bank  independence

needs to be achieved at an early stage and at the latest at the date of establishment of the

ESCB. This is, inter alia, to ensure that a Governor in his/her capacity as member of the

Governing  Council  of  the  ECB  will  be  independent  upon  the  establishment  of  the

ESCB/ECB,  i.e.  at  the  moment  that  important  policy  decisions  need  to  be  taken  by  the

Governing Council of the ECB in preparation of Stage Three.

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Other statutory provisions ensuring the necessary degree of integration of the Bank in the

ESCB would need to become effective from the starting date of Stage Three onwards.

Finally,  certain  provisions  would  only  need  to  become  effective  once  the  transition  to

monetary union in all its relevant aspects has been completed. For example, provisions on

banknotes  need  to  acknowledge  that  the  transition  from  national  banknotes  to  euro

banknotes will occur later than the starting date of Stage Three.

The draft legislation accommodates these three stages of legal convergence through Article 46

which allows Government, on a proposal from the Bank, to decide on the appropriate moment of

effectiveness of individual provisions in a gradual and flexible manner. The EMI notes that this

Article does not yet define the provisions which need to become effective from the date of the

establishment of the ESCB/ECB onwards. As stated above, these should be all provisions with

an impact on the Bank’s independence.

5.

On the substance, the EMI notes with particular satisfaction that the draft legislation contains a

clear and unambiguous recognition of the Bank’s status as an integral part of the ESCB in Stage

Three.  Although  Article  108  of  the  Treaty  requires  the  removal  of  inconsistencies  between

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statutes  of  national  central  banks  and  the  Treaty  and  the  Statute  of  the  ESCB/ECB,  the  draft

legislation  shows  that  legal  clarity  is  enhanced  if  a  statute  of  a  national  central  bank  refers,

where  appropriate,  to  a  central  bank’s  integration  within  the  ESCB  and  the  consequences

thereof.

On the independence of the Bank, the EMI notes with satisfaction that features of central bank

independence  of  an 

institutional,  personal,  functional  and  financial  nature  have  been

accomplished through the following provisions:

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The prohibition of instructions as laid down  in  Article  107  of  the  Treaty  and  Article  7  of

the Statute of the ESCB/ECB is incorporated in Article 4 of the draft legislation. Although

the  Treaty  and  Statute  Articles  are  directly  applicable  on  this  point,  incorporation  in  the

draft legislation nevertheless increases the legal clarity thereof.

The  role  of  the  Council  of  Regency,  which  is  partly  composed  of  representatives  of

different  sectors  of  society,  is  restricted  to  advisory  tasks  without  an  ex  ante  right  of

consultation on ESCB-related tasks.

A right of the Government’s Commissioner to review the legality of the Bank’s activities

on ESCB-related tasks is suppressed.

The  private  shareholders  of  the  Bank  will  not  have  the  possibility  of  influencing  the

performance of ESCB-related tasks.

The  grounds  for  dismissal  of  the  Governor  which  are  derived  from  Article  14.2  of  the

ESCB/ECB Statute have been extended to other members of the Executive Board, whilst

their respective terms of office are also in line with Article 14.2.

The incompatibilities  of  functions  of  the  Governor  and  other  members  of  the  Executive

Board  as  laid  down  in  Articles  32  and  33  of  the  draft  legislation  are  broad  enough  to

prevent the risk of conflicts of interests.

The draft legislation unambiguously reflects the statutory  objective  of  the  ESCB  and  the

Bank’s role in the achievement thereof.

The  draft  legislation  acknowledges  explicitly  in  Article  20  that  the  performance  of  non-

ESCB-relates tasks is, in accordance with Article 14.4 of the Statute of the ESCB/ECB,

subject to the ECB’s Governing Council’s views on their compatibility with ESCB-related

tasks. Again, although the latter Article prevails over national legislation, incorporation of

this provision in national legislation certainly contributes to legal clarity.

The above construction aims at ensuring the independence of the Bank as required by the Treaty

and the Statute of the ESCB/ECB. The fact that a representative of the Ministry of Finance will

be  able  to  review  the  legality  of  the  Bank’s  activities  undertaken  in  the  performance  of  non-

ESCB-related tasks is not incompatible with the Treaty and the Statute of the ESCB/ECB, whilst

the possibility to assign non-ESCB-related tasks to separate legal entities may even be regarded

as emphasising the independence of the Bank as far as ESCB-related tasks are concerned. Such

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assignment  does,  of  course,  not  affect  the  ECB’s  powers  under  Article  14.4  of  its  Statute  to

assess the compatibility of the former tasks with the latter.

6.

Furthermore,  the  EMI  notes  with  satisfaction  that  the  draft  legislation  also  elaborates  on

individual tasks which the Bank will perform as an integral part of the ESCB and that it closely

follows,  where  appropriate,  the  text  of  the  Treaty  and  the  ESCB/ECB  Statute  in  this  respect.

Such  an  elaboration  serves  completeness  and  legal  clarity  and  in  particular  avoids  confusion

which may arise if the same issues are addressed in different manners in the Treaty on the one

hand and in the statute of an NCB on the other hand, although it is at the same time recognised

that  the  Treaty  and  the  ESCB/ECB  Statute  do  not  require  harmonisation  of  statutes  of  NCBs

and national peculiarities may continue to exist.

7.

The EMI has several remarks on individual provisions of the draft legislation.

Article 4

The EMI understands the reference to Articles 7 to 9 to be to the objectives and the tasks of the

ESCB  and  therefore  also  to  embrace  Chapter  II  of  the  draft  Legislation.  The  question  arises

whether  it  would  not  be  appropriate  to  refer  to  Chapter  II  in  its  totality  in  order  to  avoid

confusion.

Article 17

The general reference to “agreements on international monetary cooperation” raises the question

whether  it  would  not  be  appropriate  to  make  clear  that  this  Article  can  only  cover  those

agreements which do not fall under the competence of Community institutions and organs.

Article 26

It  might  clarify  the  draft  legislation  to  add  that  the  Board  determines  the  general  policy  of  the

Bank “with due respect to the provisions of Chapter II” of the draft legislation or similar words.

Article 35

The  EMI  confirms  accounting  rules  and  standards  within  the  ESCB  under  Article  26  of  the

Statute of the ESCB/ECB and methods for the determination of monetary income under Article

32  of  the  Statute  of  the  ESCB/ECB  are  still  under  consideration  and  will  be  adopted  by  the

Governing Council of the ECB. The EMI therefore welcomes the caution in the above Article on

matters addressed in the draft legislation where such ECB decisions may have an impact.

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Article 39

It should be recalled that Article 15.2 of the Statute of the ESCB/ECB requires the publication of

consolidated financial statements of the ESCB on a weekly basis.

8.

The present opinion does not prejudge reports which the EMI is required to draft under Article

109j of the Treaty and Article 7 of its Statute.

9. 

The EMI agrees that this opinion may be made public by the consulting authority.

9th September 1996