Opinion of the European Central Bank at the request of the Italian Ministry of the Treasury, Budget and Economic Planning under Articles 109f (6) and 109l (2) of the Treaty establishing the European Community (hereinafter referred to as the "Treaty"), Article 5.3 of the Statute of the European Monetary Institute and Council Decision 93/717/EC of 22 November 1993 on a draft legislative decree implementing Article 108 of the Treaty concerning the Ufficio Italiano dei Cambi (hereinafter referred to as the "Draft Legislative Decree") (CON/98/35)
Date: 1998-07-31
Institutions: European Central Bank
Subjects: Italy, central bank, foreign-exchange reserves, national law

OPINION OF THE EUROPEAN CENTRAL BANK

at  the  request  of  the  Italian  Ministry  of  the  Treasury,  Budget  and  Economic  Planning  under

Articles 109f (6)  and  109l (2)  of  the  Treaty establishing  the  European  Community (hereinafter

referred to as the “Treaty”), Article 5.3 of the Statute of the European Monetary Institute and

Council  Decision  93/717/EC  of  22 November  1993  on  a  draft  legislative  decree  implementing

Article 108 of the Treaty concerning the Ufficio Italiano dei Cambi (hereinafter referred to  as

the “Draft Legislative Decree”)

(CON/98/35)

1.

On 10 July 1998 the European Central Bank (hereinafter referred to as the “ECB”) received a

request for an opinion from the Italian Ministry of the Treasury, Budget and Economic Planning

on  the  Draft  Legislative  Decree.  An  explanatory  note  was  also  submitted  to  the  ECB.  This

opinion is based on the English translation of the Draft Legislative Decree submitted to the ECB

by the consulting authority.

2.

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

of  the  European  Monetary  Institute  (hereinafter  referred  to  as  the  “EMI”),  which  went  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, 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

status  and  powers  of  the  national  central  bank.  In  accordance  with  Articles  12.4  and  47.1,

second  indent,  of  the  Statute  of  the  European  System  of  Central  Banks  and  of  the  European

Central  Bank  (hereinafter  referred  to  as  the  “Statute”),  this  Opinion  has  been  adopted  by  the

Governing Council with the contribution of the General Council.

3.

The  ECB  considers  the  Draft  Legislative  Decree  to  be  another  step  towards  ensuring  full

compliance with the Treaty and the Statute. By cutting the remaining links between the Ufficio

Italiano  dei  Cambi  (hereinafter  referred  to  as  the  “UIC”)  and  the  Italian  Ministry  of  the

Treasury, Budget and Economic Planning and by making it clear in its organisational structure

that  the  UIC  is  an  instrumental  entity  of  the  Banca  d’Italia,  the  Draft  Legislative  Decree

eliminates from the Italian legal system those provisions which could be seen to jeopardise the

independence  of  the  Banca  d’Italia  when  holding  and  managing  the  Italian  official  foreign

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reserves, where this independence is required by Article 107 of the Treaty. However, the ECB

regrets  the  fact  that  the  obligation  to  implement  Article  108  in  respect  of  the  UIC  was  not

fulfilled by the date of the establishment of the European System of Central Banks (hereinafter

referred to as the “ESCB”).

4.  With regard to the new organisational structure of the UIC, the ECB welcomes the objective of

Article 2.1, which establishes the legal nature of the UIC as an instrumental entity of the Banca

d’Italia to which the latter assigns  implementation tasks.  However, the  wording  of  Article 2.1

and its title in particular give the wrong impression that the UIC has a role and tasks of its own

within the ESCB. On the contrary, the general principle is that the tasks assigned to the ESCB

by the Treaty and the Statute have to be fulfilled exclusively by the ECB and by the  national

central banks (hereinafter referred to as the “NCBs”). Even though the UIC is an entity entirely

controlled by the Banca d’Italia, it is the Banca d’Italia  which is  responsible  for  fulfilling  the

obligations arising from the Treaty and the Statute or from guidelines and instructions issued by

the  ECB.  Therefore,  the  Draft  Legislative  Decree  cannot  directly  assign  the  task  of

implementing ECB guidelines and instructions on the management of official foreign reserves

to  the  UIC,  since  the  Treaty  assigns  this  task  to  the  Banca  d’Italia.  To  better  reflect  this

situation, the ECB suggests that the reference to the ESCB in the title of Article 2 be deleted (in

addition to the fact that the second and third paragraphs do not refer to ESCB tasks) and that the

first paragraph be reworded. 

5. 

The ECB takes note of Article 3 of the Draft Legislative Decree, which gives the Governor of

the Banca d’Italia the exclusive power to appoint the Board of Directors of the UIC and which

applies to the members of the Board of Directors the same criteria as those which are applicable

to  the  members  of  the  Board  of  Directors  of  the  Banca  d’Italia  to  protect  their  independence

from  external  interference.  However,  the  protection  they  enjoy  against  revocation,  combined

with  their  number,  seems  to  conflict  with  the  principle  of  instrumentality:  in  the  event  of  a

divergence of views between the Banca d’Italia and the UIC, the former has no means by which

to  impose  its  will  on  its  instrumental  entity.  This  outcome  would  render  the  assignment  of

implementing functions for the ESCB to the UIC unacceptable. The number of Board members

should  therefore  be  modified  in  order  to  grant  the  Banca  d’Italia  effective  control  over  its

instrumental entity.

6.  Moreover, the ECB recognises that it will normally be within the powers of the Banca d’Italia to

comply with its obligations to the ECB through its instrumental entity. However, one exception

to  this  general  rule  relates  to  the  management  of  the  ECB’s  own  foreign  reserves.  The  ECB

currently proposes the appointment of the Banca d’Italia (and all other participating NCBs) to

act  as  its  agent  for  the  management  of  its  foreign  reserves.  If  the  Banca  d’Italia  wishes  to

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request that this agency function be delegated to the UIC, the ECB will at least wish to review

the terms of the agreement between the Banca d’Italia and the UIC as mentioned in Article 2.1.

7. 

Article  2.1  also  needs  to  be  reworded  from  the  point  of  view  of  the  collection  of  statistical

information. In fact, the reference to “gathering data on foreign exchange for fact finding and

statistical  purposes”  might  cause  difficulty  in  the  euro  area.  A  clear  reference  to  “balance  of

payments and international investment position statistics” would clarify the concept and comply

with the Treaty.

8. 

The ECB welcomes Article 4, which provides for the treatment of the Balance Sheet of the UIC

to be the same as that foreseen for the Balance Sheet of the Banca d’Italia, in accordance with

Article 27 of the Statute, and for the Banca d’Italia to be responsible for the profits and losses of

the UIC. This financial regime makes it clear that the UIC is in fact operating as an instrumental

entity of the Banca d’Italia, which will even provide the Balance Sheet of the UIC as an annex

to its Balance Sheet.

9.  With regard to the functions that the UIC continues to perform, the ECB notes that such tasks,

which concern anti-money laundering measures, the combating of usury, and the transparency

and stability of financial intermediaries, are of limited scope in the spirit of Article 14.4. In this

respect,  the  ECB  understands  that  the  “highest  supervision  of  the  Ministry  of  the  Treasury,

Budget  and  Economic  Planning”  (Article  2.2)  consists  only  in  the  right  to  receive  periodic

reports  by  the  UIC  (Article  2.2,  last  sentence)  and  excludes  any  right  of  the  Ministry  of  the

Treasury,  Budget  and  Economic  Planning  to  interfere  in  the  activities  of  the  UIC.  This  is

confirmed by Article 5.2, last part, of the Draft Legislative Decree.

10.  The ECB confirms that it has no objection to this Opinion being made public by the competent

Italian authorities at their discretion.

Done at Frankfurt am Main on 31 July 1998.

For the President of the ECB

(signed)

____________________
Christian Noyer

Vice-President