Opinion of the European Monetary Institute on a consultation from the Belgian 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) on a proposed derogation from the law of 24 August 1939 on the National Bank of Belgium and a modification of the law of 22 February 1998 on the Organic Status of the National Bank of Belgium (CON/98/22)
Date: 1998-05-15
Institutions: European Monetary Institute
Subjects: Belgium, European Central Bank, Luxembourg, central bank, euro, external debt, foreign currency, foreign-exchange reserves, gold, money

OPINION OF THE EUROPEAN MONETARY INSTITUTE

on a consultation from the Belgian 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) on a proposed

derogation from the law of 24 August 1939 on the National Bank of Belgium and a

modification of the law of 22 February 1998 on the Organic Status of the National Bank of

Belgium

CON/98/22

1.

On 6 April 1998, the EMI received a request for an opinion concerning the Belgian 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)  on  a  proposed  derogation  from  the  law  of  24  August  1939  on

the  National  Bank  of  Belgium  (the  “24  August  1939  Law”)  and  a  modification  of  the  law  of

22 February  1998  on 

the  Organic  Status  of 

the  National  Bank  of  Belgium 

(the

“22 February 1998 Law”).

2.

The  EMI’s  competence  to  deal  with  the  request  for  consultation  is  based  on  Article  1,  second

indent,  of  the  Council  Decision  of  22  November  1993  (93/717/EC),  as  the  draft  legislation

concerns the statute of the National Bank of Belgium (the “Bank”). This consultation is based on

an unofficial English translation made by the EMI.

3.

The  EMI  takes  note  of  Article  2  of  the  draft  law  authorising  the  National  Bank  of  Belgium  to

transfer  to  the  State  the  amount  existing  on  1  April  1998  of  the  capital  gain  resulting  from  the

conduct  of  sales  of  gold  and  recorded  in  a  special  unavailable  reserve  account  on  the  balance

sheet  of  the  Bank,  without  prejudice  to  the  recognised  rights  of  Luxembourg,  on  condition  that

these  funds  are  used  to  repurchase  part  of  the  government  debt  denominated  in  foreign

currency.  According  to  the  Explanatory  Memorandum,  this  transfer  will  occur  in  1998.

Therefore, this measure is taken as a derogation from Article 20 bis of the 24 August 1939 Law,

as Article 30 of the 22 February 1998 Law, containing corresponding provisions to Article  20 bis,

will  enter  into  force  only  as  from  the  introduction  of  the  single  currency  in  Belgium.  The  EMI

notes,  however,  that  Article  2  of  the  draft  law  does  not  state  in  itself  that  the  transfer  of  the

capital gain above will occur in 1998. From this stand point, the EMI would like to remind that

following  the  transfer  of  the  foreign  reserve  assets  to  the  ECB  on  4  January  1999  pursuant  to

Article 30 of the ESCB/ECB Statute, Article 31.2 makes NCB’s operations with their remaining

- 2 -

foreign reserve assets, inclusive of gold, above a certain threshold subject to the prior approval of

the ECB.

4.

Given  the  provisions  of  Article  2  of  the  draft  law  explained  above,  Article  3  of  the  draft  law

deletes Article 15 of the 22 February 1998 Law which allows, within certain limits, the issue of

gold  coins  for  collection  or  commemorative  purposes  with  legal  tender  status  by  the  Bank  and

organise  the  transfer  of  the  net  revenue  resulting  from  the  issue  of  such  coins  to  the  State  in

order to decrease the State debt in foreign currencies.

5.

In line with Article 3 of the draft law, Article 37 of the 22 February 1998 Law, as modified by

Article 4 of the draft law, refers now to the issuance of coins for numismatic or commemorative

purposes by the State and not by the Bank any more. Assuming that these coins will have legal

tender  status,  the  EMI  reminds  that  the  volume  of  such  issuance  of  coins  by  the  State  will  be

subject to the ECB’s approval pursuant to Article 105a (2) of the Treaty. The EMI also takes

note  of  the  provisions  of  Article  37  stipulating  an  obligation  to  transfer  to  the  State  the  capital

gain on the disposal of gold assets in relation to the issuance of such coins, up to the amount of

the  unused  balance  of  2.75%  of  the  weight  of  the  gold  held  as  part  of  the  Bank’s  assets  on

1 January 1987.

6.

Finally,  the  arrangements  envisaged  in  the  draft  law  are,  in  the  EMI’s  opinion,  not  inconsistent

with the prohibition of monetary financing as laid down in Article 104 of the Treaty.

7.

The EMI agrees that this opinion may be made public by the consulting authority.

15 May 1998

K:\SL-JUL division\01_ecb legal acts\04_opinions\archives 1994-1998 (emi)\1998\con_98_22\en_con_98_22.doc