Opinion of the European Central Bank at the request of the German Ministry of Justice under Article 109f (6) of the Treaty establishing the European Community (the "Treaty") and Article 5.3 of the Statute of the EMI on a draft FIBOR ("Frankfurt Interbank Offered Rate") Transition Regulation (CON/98/32)
Date: 1998-06-22
Institutions: European Central Bank
Subjects: Euribor, Germany, financial stability, interest, money, national law

OPINION OF THE EUROPEAN CENTRAL BANK

at the request of the German Ministry of Justice under Article 109f (6) of the Treaty

establishing the European Community (the “Treaty”) and Article 5.3 of the Statute of the EMI

on a draft FIBOR (“Frankfurt Interbank Offered Rate”) Transition Regulation.

CON/98/32

1. 

On 29 May 1998 the EMI has received a request from the German Ministry of Justice for an

opinion on a draft “FIBOR” (“Frankfurt Interbank Offered Rate”) Transition Regulation.

2.

In  accordance  with  Article  109l  (2)  of  the  Treaty,  the  ECB  has  taken  over  the  advisory

functions of the EMI which has gone into liquidation upon the establishment of the ECB on 1

June 1998. The ECB’s competence to deliver an opinion is based on Article 1.1 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 regulation contains rules which, in

the  context  of  national  change-over  legislation,  deal  with  provisions  that  have  an  impact  on

financial markets and, thus, fall within the consultative competence of the ECB.

3. 

The aim of the draft regulation is to provide for the replacement of the FIBOR with the interest

rate  that  most  closely  corresponds  to  its  function.  Reference  variables  for  interest  rates  and

other  services  which  refer  to  the  FIBOR  for  loans  of  one  to  twelve-month  funds  shall  be

replaced by the “Euro Interbank Offered Rates” (EURIBOR) for loans of one to twelve-month

funds  as  fixed  for  the  respective  maturities.  Reference  variables  for  interest  rates  and  other

services which refer to the FIBOR for overnight loans shall be replaced by the “Euro Overnight

Index  Average”  (EONIA).  Furthermore,  provisions  are  made  for  the  replacement  of  the  so-

called  “old  FIBOR”  for  three-month  and  for  six-month  funds.  The  legal  basis  for  the  draft

regulation is to be found in §3, paragraph 2, No. 2 of the Discount Rate Transition Act.

4. 

The Discount Rate Transition Act was part of the Act on the Introduction of the Euro, on which

the European Monetary Institute has given its opinion, dated 16 December 1997 (CON/97/24).

In this opinion, the EMI stated it “favoured a rate representing the whole euro area as it is of the

opinion that only this could have a corresponding function in the third stage to that performed

at  the  moment  by  the  FIBOR  in  relation  to  the  Deutsche  Mark”.  In  line  with  this,  the  ECB

welcomes  the  approach  taken  in  the  draft  regulation  and  considers  it  to  be  a  relevant

contribution for the change-over to Monetary Union.

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5.

It  should  be  noted  that  in  the  Explanatory  Memorandum  to  the  draft  regulation  on  §  2,

paragraph  1,  first  sentence,  reference  is  made  to  the  EURIBOR  which  should  be  a  reference

rather to EONIA.

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

22 June 1998