Opinion of the European Monetary Institute at the request of the Belgian Ministry of Finance under Article 109f (6) of the Treaty establishing the European Community, Article 5.3 of the Statute of the EMI and Council Decision 93/717/EC of 22 November 1993 on a draft law amending protection measures relating to bank deposits and financial instruments as well as Royal Decree No 175 of 3 June 1935 on the establishment of a Discount and Guarantee Institute and the establishment of a Protection Fund for Bank Deposits and Financial Instruments (the “draft law”) (CON/98/04)
Date: 1998-03-17
Institutions: European Monetary Institute
Subjects: Belgium, European System of Central Banks, bank, bank deposit, central bank, financial instrument, financial stability

OPINION OF THE EUROPEAN MONETARY INSTITUTE

17 March 1998

at the request of the Belgian Ministry of Finance under Article 109f (6) of the Treaty
establishing the European Community, Article 5.3 of the Statute of the EMI and Council

Decision 93/717/EC of 22 November 1993 on a draft law amending protection measures

relating to bank deposits and financial instruments as well as Royal Decree No 175 of 3 June

1935 on the establishment of a Discount and Guarantee Institute and the establishment of a

Protection Fund for Bank Deposits and Financial Instruments (the “draft law”)

(CON/98/04)

1.

On 20 January 1998, the EMI received a request for an opinion on the above draft law from the

Ministry  of  Finance  of  Belgium.  The  request  contained  the  draft  law,  an  explanatory

memorandum as well as the Annual Report 1996 of the Discount and Guarantee Institute.

2.

The EMI’s competence to deliver an opinion is based on Article 1.1, second and fifth indents, of

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

provisions:  (i)  concerning  the  status  and  powers  of  the  National  Bank  of  Belgium;  and  (ii)

affecting the stability of financial institutions and markets.

3.

On 23 December 1994, the Belgian legislator adopted a law implementing Directive 94/19/EC of

the  European  Parliament  and  Council  dated  30  May  1994  on  guarantee  schemes  for  bank

deposits.  The  draft  law  intends  to  establish  similar  provisions  on  the  protection  of  investors  in

financial  instruments,  thus  implementing  Directive  97/9/EC  of  3  March  1997  on  investor

compensation schemes. The draft law intends to do so in a harmonised manner, combining the

law  of  23  December  1994  which  implemented  Directive  94/19/EC  of  30  May  1994  on  deposit

guarantee schemes and the draft law in one consolidated law. In addition, the draft law provides

for the dissolution of the Discount and Guarantee Institute and the establishment of a Protection

Fund  for  Bank  Deposits  and  Financial  Instruments,  the  management  of  which  would  also  be

assigned, with the approval of the Ministry of Finance, to the National Bank of Belgium.

4.

The EMI notes that the Belgian legislative authorities are not obliged to consult the EMI on the

draft law as far as it seeks to implement Directive 97/9/EC of 3 March 1997 on the protection of

investors in financial instruments. This follows from Article 2.2 of Council Decision 93/717/EC

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of 22 November 1993 which states that the legislative authorities of the Member States do not

need  to  consult  the  EMI  on  provisions  with  the  exclusive  purpose  of  the  transposition  of

Community Directives into the law of Member States. The EMI will therefore not react on the

content of the draft law insofar as it involves the implementation of Community law.

5.

The only question relevant for the present consultation from the EMI’s point of view is whether

it  is  compatible  with  the  Bank’s  future  ESCB-related  tasks  that  the  National  Bank  of  Belgium

would  manage  the  Protection  Fund  for  Bank  Deposits  and  Financial  Instruments.  In  this

connection,  Article  14.4  of  the  Statute  of  the  ESCB/ECB  is  relevant,  and  states  that  national

central  banks  may  perform  functions  other  than  those  specified  in  that  Statute  unless  the

Governing  Council  of  the  ECB  finds,  by  a  majority  of  two-thirds  of  the  votes  cast,  that  these

interfere with the objectives and tasks of the ESCB. The EMI reviewed the future tasks of the

Protection Fund on the basis of the draft law and the 1996 Annual Report of the Discount and

Guarantee  Institute.  The  EMI  understands  that  the  Bank  will  collect  contributions  to  the  Fund

from  market  participants  in  the  financial  sector,  manage  these  funds  and,  where  appropriate,

distribute funds to holders of bank deposits and/or investors in financial instruments if institutions

with which they hold such deposits and/or instruments become insolvent. In accounting terms, all

these activities remain in the accounts of the Fund and will not be reflected in the accounts of

the  National  Bank  of  Belgium,  which  is  expected  only  to  receive  a  fee  for  its  management

services.

The EMI undestands that it is possible that the Fund's balances might be held on an account with

the  National  Bank  of  Belgium.  While  it  is  expected  that  the  Fund's  balances  will  always  be  in

credit, the EMI understands that lending (if any) to the Fund will be based on adequate collateral.

With a view to the above, and without prejudice to the ECB Governing Council’s views in this

respect, the EMI does not anticipate that the tasks of the National Bank of Belgium, insofar as

they do not entail the use of the Bank’s funds, would interfere with the objectives and tasks of

the ESCB and would thus be prohibited under Article 14.4 of the ESCB/ECB Statute.

6.

The EMI would appreciate obtaining a copy of any agreements concluded between the National

Bank of Belgium and the Protection Fund for Bank Deposits and Financial Instruments relating

to the performance of the Bank’s functions with respect to the Fund.

7.

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

17 March 1998

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