Opinion of the European Central Bank at the request of the French Minister of the Economy, Finance and Industry under Articles 109l (2) and 109f (6) of the Treaty establishing the European Community (hereinafter referred to as the "Treaty") and Article 5.3 of the Statute of the European Monetary Institute (hereinafter referred to as the "EMI") on a draft decree on the modernisation of the regulation of negotiable certificates of deposit, commercial paper and medium-term notes (hereinafter referred to as the "Decree") (CON/98/40)
Date: 1998-09-04
Institutions: European Central Bank
Subjects: France, financial stability, national law, negotiable instrument, payment system

OPINION OF THE EUROPEAN CENTRAL BANK

at the request of the French Minister of the Economy, Finance and Industry under Articles 109l

(2) and 109f (6) of the Treaty establishing the European Community (hereinafter referred to as

the  “Treaty”)  and  Article  5.3  of  the  Statute  of  the  European  Monetary  Institute  (hereinafter

referred to as the “EMI”) on a draft decree on the modernisation of the regulation of negotiable

certificates of deposit, commercial paper and medium-term notes (hereinafter referred to as the

“Decree”).

CON/98/40

1. 

On 7 August 1998 the European Central Bank (hereinafter referred to as the “ECB”) received a

request  from  the  French  Minister  of  the  Economy,  Finance  and  Industry  for  an  opinion  on  a

draft  decree  on  the  modernisation  of  the  regulation  of  negotiable  certificates  of  deposits,

commercial  paper  and  medium  term  notes  (collectively  referred  to  as  “Titres  de  créances

négociables” or “TCNs”).

2. 

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

functions of the EMI, which went into liquidation upon the establishment of the ECB on 1 June

1998. The ECB’s competence to deliver an opinion on the Decree is based on Article 1.1, fifth

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, since the Decree

contains  rules  that  influence  the  stability  of  financial  institutions  and  markets.  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 of the ECB  with  the  contribution  of  the  General

Council of the ECB.

3. 

The ECB notes that the objective of the Decree is to modernise the current regulation of TCNs.

Indeed,  the  Decree  aims  at  adapting  the  regulatory  provisions  applicable  to  TCNs  to  the

regulatory  framework  established  by  the  law  96-597  of  2  July  1996  on  the  modernisation  of

financial  activities.  The  said  law  harmonises  the  status  of  market  operators,  distinguishes

between  regulated  and  over-the-counter  markets,  and  makes  provision  for  the  right  of

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investment  services  to  a  European  passport.  Moreover,  this  adaptation  is  taken  as  an

opportunity to modernise further the rules concerning the issuance of, and dealing in, TCNs in

order to open this market to the largest extent possible to European intermediaries and investors

and  to  make  negotiable  debt  instruments  attractive  in  the  market  for  certificates  of  deposit,

commercial paper and medium-term notes in euro.

The  Decree  authorises  credit  institutions  and  investment  firms  incorporated  in  the  European

Economic Area and licensed by their respective national authorities to place and deal in TCNs

as from 1 January 1999. In particular, credit institutions incorporated in other Member States

participating to the euro area will be allowed, as from 1 January 1999, to issue certificates of

deposit under the same conditions as French credit institutions. The Decree completes the list

of issuers of negotiable debt instruments by including investment firms. In addition, the Decree

abrogates all references to categories of institutions repealed by the law on the modernisation of

financial  activities:  “maison  de  titres”,  “agents  des  marchés  interbancaires”  and  “sociétés  de

bourse”. The Decree also liberalises somewhat the framework for setting up the remuneration

of TCNs and their maturity (the minimum maturity is now set at 1 day instead of 10 days), and

requests  depository  functions  to  conform  to  the  general  regulations  in  this  area.  Finally,  the

Decree  contributes  to  improving  the  availability  of  market  data  by  requiring  issuers  to

frequently submit to the Banque de France data both on amounts outstanding and on the early

redemption and purchase of own issues.

4. 

The  ECB  welcomes  the  proposal  considering  that  it  intends  to  enhance  the  French  securities

markets while maintaining their stability.

5. 

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

French authorities at their discretion.

Done at Frankfurt am Main on 4 September 1998

The Vice-President of the ECB

[signed]

Christian Noyer