Opinion of the European Monetary Institute on a consultation from the Netherlands 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 22 November 1993 (93/717/EC) (the “Decision”) on a draft Bank Act 1998 (the “draft Act”) containing new provisions on De Nederlandsche Bank NV (the “Bank”) (CON/97/08)
Date: 1997-06-04
Institutions: European Monetary Institute
Subjects: European System of Central Banks, Netherlands, central bank, payment system

GS/LD/97/307

OPINION OF THE EUROPEAN MONETARY INSTITUTE

on  a  consultation  from  the  Netherlands  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 22 November 1993 (93/717/EC) (the “Decision”) on a draft Bank

Act 1998 (the “draft Act”) containing new provisions on De Nederlandsche Bank NV (the “Bank”)

CON/97/08

1.

The above consultation was initiated by the Netherlands  Ministry  of  Finance  on  15  April  1997

which submitted the draft Act together with an Explanatory Memorandum in English to the EMI.

2.

The  EMI’s  competence  to  deliver  an  opinion  is  based  on  Article  1.1,  second  indent,  of  the

Decision, as the draft Act contains a complete new set of provisions on the Bank with a view to

the implementation of the Treaty and particularly Article 108 thereof.

3.

The EMI welcomes the timely and accurate adaptation of the statute of the Bank. As mentioned

in  the  EMI’s  1995  and  1996  reports  on  “Progress  towards  convergence”  (the  “1995  and  1996

Convergence Reports”), timely adaptation is necessary to enable the EMI and other Community

institutions  to  assess,  pursuant  to  their  reporting  obligations  under  the  Treaty,  progress  made

towards the fulfilment of the legal requirements for Stage Three.

4.

The  EMI  notes  with  particular  satisfaction  the  Bank’s  independence  will  now  be  de  iure

formalised through a deletion of the Minister of Finance’s right to give instructions to the Bank

as from the date of the establishment of the ESCB/ECB. This is in line with the EMI’s views on

central bank independence as expressed in the 1995 and 1996 Convergence Reports.

5.

The  EMI  also  welcomes  that  the  supervisory  powers  of  a  Government  representative  in  the

Supervisory Board and his/her ancillary competence to obtain information have been restricted to

non-Treaty  related  activities  of  the  Bank.  However,  this  restriction  has  to  be  derived  from  the

reference in Article 13, section 1, to Article 2, section 1, of the draft Act and may be less clear

than intended. It seems, on the one hand, obvious that this reference, inter alia, embraces Article

3  but  not  Article  4.  However,  as  both  Articles  refer  to  payment  systems,  it  may,  on  the  other

hand, be questioned where the borderline of the Government representative’s powers lies in this

respect.  Such  uncertainty  may  be  resolved  through  reference  in  Article  13,  section  1,  to

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“activities performed in the framework of the ESCB” or similar words rather than to “activities

performed in order to achieve the objective described in Article 2, section 1”.

6.

Furthermore, the EMI notes with satisfaction that the recitals of the draft Act explicitly mention

that the Bank will become an integral part of the ESCB. This is such an important observation

that it might merit an explicit reference in the draft Act itself, for example in Article 2, Section 1,

although,  admittedly,  the  last  sentence  of  Article  5  covers  this  point  as  well,  but  in  a  more

general, less explicit sense.

7.

An  explicit  reference  to  the  integration  of  the  Bank  in  the  ESCB  may  also  accommodate  the

following  concern.  As  mentioned  in  the  1995  and  1996  Convergence  Reports,  there  is  no

prescribed  method  of  adaptation.  Adaptations  may  range,  in  a  spectrum,  from  deletions,  to

references to Treaty Articles, to incorporations of (parts of texts) of Treaty Articles into statutes

of  national  central  banks.  The  method  which  has  been  chosen  in  the  present  case  has  an

advantage and a disadvantage. An advantage is that the draft Act provides for a full text of the

new statute of the Bank without cross-references to Treaty Articles. This supports legal clarity.

The  disadvantage  of  this  method  is  that  it  may  sometimes  seem  that  national  legislators  or

national  central  banks  would  still  have  an  own  responsibility  in  areas  which  have  actually  been

transferred  to  the  competence  of  the  ESCB/ECB.  An  example  of  this  disadvantage  might  be

Article 3, section 1a, of the draft Act which states that the Bank “in the implementation of the

Treaty” shall, inter alia, “co-define and implement monetary policy”. With a view to the fact that

in accordance with Article 12.1 of the ESCB/ECB Statute:

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the Governing Council will define monetary policy;

the Executive Board will implement such policy; and

the national central banks may be involved in the execution of monetary policy operations,

the words “co-define and implement monetary policy” may, certainly when read in isolation, be

confusing. It is recognised that the level of confusion is expected to be low as the recitals, the

first  sentence  of  Article  3,  Section  1,  the  last  sentence  of  Article  5  and  the  Explanatory

Memorandum  are  clear  and  unambiguous  as  far  as  the  Bank’s  status  is  concerned.  However,

legal clarity would nevertheless be supported if:

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Article 2.1 would also refer to the integration of the Bank in the ESCB;

the word “co-define” in Article 3, Section 1(a), would be replaced by an expression which

better reflects the actual situation; and

the  last  four  words  of  Article  3,  Section  1(a),  would  read  “execute  monetary  policy

operations”, it being recognised that the Dutch text of the draft Act already uses the word

“execute” (“tenuitvoerleggen”) rather than implement.

8.

Finally,  the  EMI  notes  that  the  draft  la w  contains  in  Article  8,  section  3,  an  obligation  for  the

Bank to provide uncollateralised intra-day credit to Government. Although this is presently not in

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contradiction with rules at a Community level and particularly not with the Council Regulation of

13 December 1993 (EC/3603/93), it may not be excluded that such rules will be amended in this

respect in the future. Such an amendment would imply that Article 8, section 3, of the draft Act

would  have  to  be  adapted.  The  need  for  such  an  adaptation  may  be  avoided  by  deletion  of

Article  8,  section  3,  which  would  in  any  case  not  prevent  Government  and  the  Bank  to  act  as

they deem fit, provided that Treaty requirements are being respected.

9.

The EMI confirms that it has no objection to this opinion being made public.

4 June 1997