Opinion of the European Monetary Institute at the request of the Italian Ministry of the Treasury under Article 109f (6) of the Treaty establishing the European Community (the “Treaty”), Article 5.3 of the Statute of the EMI and Council Decision 93/717/EC of 22 November 1993, concerning a draft legislative decree implementing Article 108 of the Treaty (the “Draft Legislative Decree”) (CON/97/32)
Date: 1998-02-17
Institutions: European Monetary Institute
Subjects: Italy, euro, foreign-exchange reserves, issuing of currency, monetary integration, national law

OPINION OF THE EUROPEAN MONETARY INSTITUTE

at the request of the Italian Ministry of the Treasury under Article 109f (6) of the Treaty
establishing the European Community (the “Treaty”), Article 5.3 of the Statute of the EMI

and Council Decision 93/717/EC of 22 November 1993, concerning a draft legislative decree

implementing Article 108 of the Treaty (the “Draft Legislative Decree”)

(CON/97/32)

1.

On  29  December  1997,  the  EMI  received  a  request  for  an  opinion  on  the  Draft  Legislative

Decree  from  the  Italian  Ministry  of  the  Treasury.  An  Explanatory  Memorandum  was  also

submitted to the EMI. This opinion is based on the English translation of the draft submitted to

the EMI by the consulting authority.

2.

The EMI’s competence to deliver an opinion is based on Article 1.1, first and 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 Legislative Decree

contains  provisions  concerning  the  introduction  of  the  euro  and  the  status  and  powers  of  the

national central bank.

3.

The  EMI  welcomes  the  initiative  of  the  Italian  government  to  continue  its  preparation  for  the

move  of  the  Community  towards  Stage  Three  and,  in  particular,  for  the  establishment  of  the

ESCB  and  the  introduction  of  the  euro.  This  initiative  is  aimed  at  ensuring  the  timely

implementation  of  the  measures  necessary  to  comply  with  the  Treaty  and  the  Statute  of  the

ESCB  (the  “Statute”).  More  specifically,  the  EMI  notes  with  satisfaction  that  the  Draft

Legislative  Decree  amends,  or  eliminates  from  the  Italian  legal  system,  the  provisions  which,

according  to  the  analysis  contained  in  the  EMI’s  Report  on  Legal  Convergence  published  in

October  1997,  are  incompatible  with  the  Treaty  and  the  Statute  requirements  or  which  do  not

recognise  clearly  enough  the  transfer  of  monetary  competence  from  the  national  to  the

Community level in Stage Three.

4.

In  conformity  with  the  analysis  contained  in  its  1997  Report,  the  EMI  considers  that  the

independence of Banca d’Italia is enhanced by the legislative changes arising from the adoption

of  Article  3;  that  the  competences  relating  to  the  issuing  of  banknotes  and  coins  are  clearly

defined by Articles 4 and 5 and by their reference to the Treaty; that Article 6 ensures certainty

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by  clarifying  that  the  instruments  of  monetary  policy  in  Stage  Three  are  those  defined  by  the

Statute  and  by  the  legal  instruments  implementing  it;  that  Article   8  allows  Banca  d’Italia  to

derogate  from  the  rules  on  annual  accounts  as  long  as  it  is  in  conformity  with  the  rules

established for the ESCB. All these Articles address in a satisfactory way the points made in the

EMI’s  Report  on  Legal  Convergence  published  in  October  1997.  The  EMI  particularly

welcomes the provision in Article 9.2 which will ensure the necessary flexibility in Stage Two B

and  will  allow  Banca  d’Italia  and  the  ESCB  to  start  the  testing  of  operations  ahead  of  Stage

Three, so as to enable the ECB to be fully operational starting on 1 January 1999.

5.

However, the EMI considers that some further amendments are necessary in order to meet fully

the  requirements  of  the  Treaty.  In  the  first  place,  at  the  end  of  Article  6.5,  where  the  Article

refers  to  the  “management  of  its  patrimony  and  personnel”,  a  reference  to  the  provisions

contained in Chapter IV of the Statute of the ESCB should be added. This will clarify that, for

these transactions which have effects similar to those of monetary policy operations, the relevant

ECB provisions will be of application.

6.

Moreover, the independence of the national central banks, which according to the Treaty has to

be fully achieved at the moment of the establishment of the ECB and ESCB, has to be evaluated

in  the  framework  of  the  tasks  which  Article  3  of  the  Statute  attributes  to  the  ESCB.  One  of

them is “hold and manage the official foreign reserves of the Member States”. This means that,

starting  from  mid-1998,  Banca  d’Italia  should  independently  manage  the  Italian  official  foreign

reserves.  Therefore,  the  legislation  concerning  the  management  of  foreign  reserves  assets

should be modified to ensure, from the establishment of the ESCB, the independent management

of such reserves.

7.

On foreign reserve assets, the EMI recognises that the aim of Article 7 is to modify the national

legislation  relating  to  foreign  reserves  in  such  a  way  as  to  have  it  comply  with  the  obligations

arising  from  the  Statute.  However,  the  wording,  in  the  English  translation,  refers  twice  to

“foreign exchange reserves” instead of “foreign reserve assets” as in Article 30 of the Statute.

Since the scope of Article 30 is to provide the ECB with foreign reserve assets, including gold,

the EMI suggests to delete, in the Italian text, the words “in valuta” and “in valuta estera” from

Article 7.

8

It  should  be  made  clear  that  the  objective  of  Article  8.2  is  to  provide  the  Ministry  with

information exclusively on the financial status of Banca d’Italia. In order to avoid the impression

that  the  detail  of  every  operation  has  to  be  reported,  a  procedure  which  could  jeopardise  the

independence  of  Banca  d’Italia,  the  EMI  suggests  modifying  the  words  “on  the  operations

carried out” and clarifying that reporting is limited to the accounts situation.

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9.

Finally,  the  absence  of  conflicts  of  interest  between  ESCB-related  tasks  and  their  other

occupations  of  the  members  of  the  Board  of  directors  of  Banca  d’Italia  involved  in  the

performance of ESCB-related tasks needs to be further ensured. This objective should be kept in

mind when, according to Article 10, the Statute of Banca d’Italia will be amended.

The  EMI  confirms  that  it  has  no  objection  to  this  opinion  being  made  public  by  the  competent  Italian

authorities at their discretion.

17 February 1998