Opinion of the European Monetary Institute at the request of the Banco de España under Article 109f (6) of the Treaty establishing the European Community (the “Treaty”) and Article 5.3 of the Statute of the EMI on draft provisions in the draft Annual Financial Law (“the draft provisions”) containing amendments to the Law of Autonomy of Banco de España (the “Bank”) (CON/97/25)
Date: 1997-11-10
Institutions: European Monetary Institute
Subjects: Spain, board of directors, central bank, convergence criteria, institutional activity, national law

OPINION OF THE EUROPEAN MONETARY INSTITUTE

CON/97/25

at the request of the Banco de España under Article 109f (6) of the Treaty establishing the European

Community  (the  “Treaty”)  and  Article  5.3  of  the  Statute  of  the  EMI  on  draft  provisions  in  the  draft

Annual  Financial  Law  (“the  draft  provisions”)  containing  amendments  to  the  Law  of  Autonomy  of

Banco de España  (the “Bank”).

1.

On 2nd October 1997 the EMI received a request for an opinion on the draft provisions from the

Banco de España, acting on behalf of the Ministry of Economy and Finance, sent together with

an unofficial English translation of the official draft in the Spanish language.

2.

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

Council  Decision  (93/717/EC)  of  22  November  1993  on  the  consultation  of  the  EMI  by  the

authorities  of  the  Member  States  on  draft  legislative  provisions,  as  the  draft  law  contains  new

provisions on the Bank with a view to the implementation of the Treaty and in particular Article

108 thereof.

3.

The proposed amendments to the Law of Autonomy of the Bank have the purpose of extending

the  scope  of  the  exclusion  of  the  voting  rights  of  the  two  members  of  the  Bank’s  decision

making bodies which are not independent from the Government to cover all ESCB-related tasks,

and to extend the period of service of those  members of these decision-making bodies who are

not dependent on the Government beyond the five-year period established in Article 14.2 of the

ESCB  Statute.  The  draft  provisions  are,  thus,  fully  in  line  with  the  criteria  which  the  EMI  has

developed in its  1995 and 1996 reports on “Progress towards convergence” (the “1995 and 1996

Convergence  Reports”)  as  regards  the  independence  of  central  banks,  and  therefore  the  EMI

welcomes the proposal and its timeliness. However, the arrangement foreseen for the application

of  the  new  regime  provides  for  the  possibility  of  extension  of  the  term  of  office  of  current

members  of  the  Governing  Council  for  three  years;  whilst  the  EMI  appreciates  the  temporary

and exceptional nature of that possibility, it would draw the attention of the consulting authority to

the inconsistency of that renewal period with the five-year period of Article 14.2, first paragraph,

of the ESCB Statute.

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4.

Article  25.5  of  the  current  statute  of  Banco  de  España  provides  for  a  system  of  simultaneous

replacement of members of the Governing Council entailing the possibility of initial and individual

terms of office below the period foreseen in Article 14.2 of the Statute of the ESCB in the case

of  a  substitution  before  the  normal  expiry  of  the  term.  The  EMI  would  like  to  emphasise  that

each individual member of a decision-making body involved in the performance of ESCB-related

tasks should, in accordance with Article 14.2 of the Statute of the ESCB, have the same security

of tenure, and would therefore welcome a review of that renewal system.

5.

The  EMI  would  like  to  recall  that  the  necessary  legal  adaptations  to  the  Treaty  should  also

facilitate the integration of NCBs within the ESCB. In its report on “Legal Convergence in EU

Member  States”,  which  was  released  in  August  1997,  inter  alia  to  the  consulting  authority,  the

EMI stated that:

“In  order  to  comply  with  Article  108,  the  national  legislative  procedures  must  be
accomplished  in  such  a  way  that  the  compatibility  of  national  legislation  is  ensured  at  the

latest at the date of the establishment of the ESCB. Moreover, adaptations of NCB statutes

in the field of central bank independence need also to become fully effective at the latest by

the  date  of  the  establishment  of  the  ESCB,  whilst  adaptations  aiming  at  the  integration  of

NCBs  in  the  ESCB  would  need  to  become  effective  only  at  the  start  of  Stage  Three  for

Member  States  without  a  derogation  or  at  the  start  of  their  full  participation  in  Monetary

Union for Member States with a derogation or with a special status.”

The  EMI  thus  considers  that  the  draft  provisions  constitute  an  appropriate  step  in  the  direction

indicated  in  EMI’s  reports,  but  additional  adaptations  would  be  required.  In  that  respect,  six

member states have recently adopted, or are in the process of adopting, legislative texts which

would permit the integration of their NCBs within the ESCB. A timely and accurate revision of

the  Law  of  Autonomy  of  the  Bank  would  be  necessary  to  complete  the  legislative  adaptation

initiated  with  the  draft  provisions,  and  to  enable  the  EMI  and  other  Community  institutions  to

assess,  in  accordance  with  their  reporting  obligations  under  the  Treaty,  the  progress  made

towards the fulfilment of the legal requirements for Stage Three.

In the Annex to the “Legal Convergence Report” of 1997 containing an analysis of the statutes

of each NCB, the EMI listed those provisions from the Law of Autonomy of the Bank that, in

EMI’s  view,  would  need  amendment  in  order  for  the  Bank  to  become  an  integral  part  of  the

ESCB, and these are articles 7, 8, 9, 11, 12 and 15. The EMI would thus welcome that the draft

provisions be timely complemented so as to adapt also those other articles in line with the above

criteria, and to receive thereto for consultation the projected texts. In addition, it would be highly

convenient, at least from a perspective of legal clarity, that the provision in the Preamble of the

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Law 13/94 of Autonomy of Banco de España concerning the eventual integration of the Bank in

the ESCB is shadowed by an appropriate sentence in Article 1 of the text of the Law which sets

the overall status and legal framework of the Bank.

6.

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

10 November 1997