Opinion of the European Monetary Institute at the request of the Banco de España (the “Bank”) 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 Law amending Law 13/1994 of 1st June of Autonomy of Banco de España (“the draft Law”) (CON/98/05)
Date: 1998-02-23
Institutions: European Monetary Institute
Subjects: European System of Central Banks, Spain, banking secrecy, central bank, euro, financial stability, financial supervision, paper money, price stability

OPINION OF THE EUROPEAN MONETARY INSTITUTE

CON/98/05

at  the  request  of  the  Banco  de  España  (the  “Bank”)  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 Law amending Law 13/1994 of 1st June of Autonomy of Banco de España (“the

draft Law”)

1.

On 23rd January 1998 the EMI received a request from the Banco de España, acting on behalf

of the Ministry of Economy and Finance, for an opinion on the draft Law, 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 ensuring

“the full integration of the Banco de España into the European System of Central Banks”,

and acknowledge, inter alia, the new competencies that the third stage of monetary union entails.

New texts are provided for Articles 1 to 4, 7 to 12, 15, 18, 21, 23 and 26.2 of the Law 13/1994 of

1st  June    of  Autonomy  of  Banco  de  España;  with  regard  to  the  Law  26/1988  of  29th  July,  on

Discipline  and  Intervention  of  Credit  Institutions  Articles  4(n),  5(g)  and  10(b)  ensuring

compliance  with  minimum  reserves  are  abrogated,  and  amendment  is  made  of  its  Article  18.

Finally,  two  provisions  of  laws  dated  1962  and  1987  are  also  abrogated.  It  is  foreseen  that  the

draft Law is to be effective “as from the date of Spain’s participation in the third stage of

Economic  and  Monetary  Union,  provided  that  Spain  is  not  a  Member  State  with  a

derogation”.

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The  EMI  welcomes  the  content  of  the  draft  Law,  which  complements  the  provisions  of  Law

66/1997  of  30th  December  1997  that  adapted  the  statute  of  the  Bank  to  the  requirements  of

independence as seen by the EMI in its previous reports on legal convergence.

4.

The EMI welcomes in particular the new paragraph 3 of Article 1, which declares the Bank to

be an integral part of the ESCB; this statement establishes the overall framework under which

the  Bank  is  to  act,  and  serves  as  a  ground  for  the  detailed  amendments  introduced  in  the

remainder of the text and for its interpretation.

Subject to the comments in paragraph 5 below, the new wording foreseen for Articles 2 to 4, 7

to 12, 15, 18, 21, 23 and 26.2 of the current statute of the Bank is in line with the criteria which

the  EMI  has  developed  in  its  1997  report  on  “Legal  convergence  in  the  Member  States  of  the

European Union”. Abrogation of the exclusive right of the Bank to issue legal tender banknotes

as established in Article 18 of the Decree-Law 18/1962 on Nationalisation and Reorganisation of

the  Bank,  is  consistent  with  the  new  text  foreseen  for  banknote  issuance  in  Article  15  of  the

statute  of  the  Bank  for  the  third  Stage  of  EMU.  The  abrogation  of  the  second  additional

provision of Law 33/1987 of 23rd December, establishing a system of interim instalments in the

payment of annual profits of the Bank to the Treasury, facilitates the operation of Articles 32, 33
and 51 of the Statute of the ESCB1.

5.

The  new  wording  of Article 7.2 in the draft law provides for the support of the Bank, without

prejudice to its main objective to maintain price stability, to the general economic policies in the

Community, as envisaged in Article 105 of the Treaty, as well as the general economic policy of

the Government. The EMI notes that the functions of the Bank are defined in the new Articles

1.3 and 7 of the draft law. Therefore, any support by the Bank to national economic policy has to

be  confined  to  those  areas  that  do  not  conflict  with  Article  2  of  the  Statute  of  the  ESCB.

However,  it  would  be  welcome  that  Article  7.2  explicitly  addresses  this  issue  in  order  to  avoid

any misinterpretation of this provision.

The proposed new Article 9 changes the terminology of the system currently applied in Spain to

impose  reserve  requirements  on  credit  institutions,  named  “Coeficiente  de  caja”  (“Cash

coefficient”), introduces the term “Reservas mínimas” (“Minimum reserves”) used by Article 19

of the Statute of the ESCB, and recognises the competence of the ECB in this area; in addition,

the  disciplinary  mechanism  provided  for  the  enforcement  by  the  Bank  of    the  current

“Coeficiente  de  caja”  is  abrogated,  so  as  to  recognise  in  this  domain  the  new  competencies  of

the  ECB.  Even  if  this  is  not  explicitly  provided,  the  EMI  understands  that  these  legislative

1  De  Nederlandsche  Bank  is  of  the  opinion  that,  in  addition  to  the  comments  below,  the  possibility  for  the
Government to dismiss a member of the Governing Council upon mere incrimination for an intentional crime by a
Court of Justice, under Article 25.4(d) of the statute of the Bank, without a conviction, would be incompatible with
Article 14.2 of the Statute of the ESCB.

                                                
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changes will produce the effect of termination of the current Spanish system of “Coeficiente de

caja”,  irrespective  of  the  potential  adoption  by  the  ECB  of  an  ESCB-wide  system  of  reserve

requirements;  this  effect  is  fully  in  line  with  EMI’s  report  “General  documentation  on  ESCB

monetary  policy  instruments  and  procedures”  of  September  1997  which  states  that  “national

central  banks  will  apply  the  necessary  provisions  to  ensure  that  their  national  minimum

reserves systems are terminated by 31 December 1998 at the latest“. The EMI has therefore

no objection to this specific part of the draft Law.

The  EMI  notes  that  the  wording  of  Article  10  of  the  draft  Law  does  not  explictily  and

unambigously  recognise  that  the  information  to  be  given  by  the  Governor  to  Parliament  and

Government is an ex post information, subject to the secrecy rule of Article 38 of the Statute of

the  ESCB  and  without  prejudice  to  the  independence  of  the  Governor  in  his/her  capacity  as

member of the Governing Council of the ECB, and therefore considers that, in order to enhance

legal clarity and certainty, it should be revised.

Although this does not pertain to the domain of Article 108 of the Treaty, the EMI would like to

suggest to revise the wording of Article 15.4 of the draft law to take into account the fact that

the rights on the designs for the euro banknotes will in all likelihood pertain to the ECB, and not

to  NCBs,  and  with  the  possibility  of  future  adoption  by  the  ECB  of  common  ESCB-wide  rules

for  commercial  reproduction  of  euro  banknotes  that  will  not  require  cumbersome  case-by-case

authorisations by NCBs.

6. With regard to the timing for the adoption of the proposed legislative changes the EMI would like

to recall that in its report on “Legal Convergence in EU Member States” of August 1997, it was

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.”

The EMI will have to report to the Council under Article 109j(1) of the Treaty before the end  of

March 1998. According to this Treaty provision, such report “shall include an examination of

the compatibility between each Member State’s national legislation, including the statutes

of its national central bank, and Articles 107 and 108 of this Treaty and the Statute of the

ESCB”.  Although  legislation  of  Member  States  having  been  submitted  for  consultation  to  the

EMI and being in the last steps of the national legislative procedure will be duly considered, the

reporting  obligation  of  the  EMI  will  have  to  be  based  on  the  legal  situation  of  Member  State

existing at the time when the report is to be issued.

7.

The EMI has no objection to this opinion being made public by the consulting authorities.

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 23 February 1998