Opinion of the European Central Bank of 17 February 2000 at the request of the French Ministry of Economics, Finance and Industry on two draft laws on the statute and role of the Institut d'émission des départements d'outre-mer (IEDOM) (CON/99/20)
Date: 2000-02-17
Institutions: European Central Bank
Subjects: France, French overseas department and region, monetary policy, money, national law

OPINION OF THE EUROPEAN CENTRAL BANK

of 17 February 2000

at the request of the French Ministry of Economics, Finance and Industry on two draft laws on

the statute and role of the Institut d’Émission des Départements d’Outre-Mer (IEDOM)

(CON/99/20)

1. 

On 24 November 1999 the European Central Bank (ECB) received a request from the French

Ministry of Economics, Finance and Industry for an ECB Opinion on two draft laws entitled the

“Decree  fixing  the  methods of application  of  Order  No.  99  of  1999  relating  to  the  status  and

activities  of  the  Institut  d’Émission  des  Départements  d’Outre-Mer  (IEDOM)”  and  “Order

No. 99  ...  of  ….  1999  relating  to  the  status  and  activities  of  the  Institut  d’Émission  des

Départements  d’Outre-Mer”.  Following  informal  comments  made  by  the  ECB,  the  French

Ministry of Economics, Finance and Industry submitted two revised draft laws  with a  request

for an ECB Opinion.

2. 

The  ECB’s  competence  to  deliver  an  opinion  is  based  on  Article 105 (4)  of  the  Treaty

establishing  the  European  Community  (hereinafter  referred  to  as  the  “Treaty”)  and  on

Article 2 (1),  in  particular  the first  and  third  indents,  of  Council  Decision  (EC)  No. 98/415  of

29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national  authorities

regarding  draft  legislative  provisions,  as  the  draft  laws  deal  with  currency  matters  and  the

national central bank. In accordance with Article 17.5, first sentence, of the Rules of Procedure

of the European Central Bank, this ECB Opinion has been adopted by the Governing Council of

the ECB. This ECB Opinion is based on an unofficial English translation of the official French

proposal.

3. 

The draft laws are intended to revise the regulations regarding the functioning and organisation

of  the  Institut  d’Émission  des  Départements  d’Outre-Mer  (IEDOM)  in  order  to  reflect  the

transfer of national monetary powers to the ECB which came into force on 1 January 1999. The

proposed  modifications  to  the  Statute  of  the  IEDOM  refer  in  particular  to  the  relationship

between the IEDOM and the Banque de France following the integration of the latter into the

European System of Central Banks (ESCB), the composition of the Supervisory Board and the

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management  of  the  IEDOM,  the  holding  of  accounts  and  the  flow  of  payments  between  the

Banque  de  France  and  the  IEDOM  concerning  the  latter’s  profits  and  possible  losses.  Since

1 January 1999 the IEDOM has been conducting monetary policy operations of the ESCB in the

French overseas departments of Guadeloupe, Guyana, Martinique and Réunion and the French

territorial communities of Saint-Pierre-et-Miquelon and Mayotte (hereinafter referred to as “the

geographical zone of activity”), with the latter two representing an integral part of France, but

not  forming  part  of  the  European  Community  and  therefore  not  being  subject  to  Community

law. According to the proposed reform, it is fully recognised that the implementation of ESCB

tasks in the geographical zone of activity pertains to the Banque de France under Chapter 1 of

Law  No.  93-980  of  4  August  1993,  while  the  IEDOM  becomes  an  agency  of  the  Banque  de

France to carry out those tasks in the name of and on behalf of the Banque de France, with the

exclusion of the holding and management of foreign reserve assets. For the purposes of carrying

out these tasks, credit institutions established as branches or based in the geographical zone of

activity have to open accounts at the Banque de France. These accounts are to be held by the

IEDOM as an agent acting in the name of and on behalf of the Banque de France. At the same

time, the IEDOM will also carry out its own tasks in the geographical zone of activity, such as

putting coins into circulation and other tasks of general interest entrusted to it by the State.

4. 

The ECB welcomes the intention of France to reform the IEDOM. The Statute of the European

System of Central Banks and of the European Central Bank does not allow for ESCB tasks to be

carried out by bodies other than the ECB and the 15 national central banks forming the ESCB,

so  in  that  respect  the  current  situation  needed  to  be  amended.  The  ECB  notes  that  a  special

regime may be admitted for the French overseas departments under Article 299.2 of the Treaty,

based on their remoteness, insularity, small size, difficult topography and climate and economic

dependence on few products, as is also reflected in Declaration No. 26 on the outermost regions

of the Community, annexed to the Final Act of the Treaty on European Union (the “Maastricht

Treaty”). However, it is also noted that the draft laws are not based on any specific decision of

the Council under that Article. By applying the proposed agency status it can be ensured that it

will be the Banque de France as an integral part of the ESCB and not the IEDOM which will

perform ESCB-related monetary policy operations in the geographical zone of activity. The role

of the IEDOM will become purely instrumental and will consist in putting its organisation at the

disposal  of the  Banque de  France  in the  relevant territories.  All  corresponding  regulatory  and

contractual arrangements with counterparties located in the geographical zone of activity will be

entered  into  exclusively  with  the  Banque  de  France  and  will  be  identical  to  those  applied  to

counterparties  located  in  metropolitan  France.  The  counterparties  will  open  accounts  in  the

books of the Banque de France and,  therefore, all  ESCB-related  financial transactions  will  be

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recorded immediately in the accounts and in the financial statements of the Banque de France.

Consequently,  as  far  as  ESCB-related  tasks  are  concerned,  the  ECB  has  been  ensured  by  the

Banque  de  France  that  Articles  6  to  8  of  the  draft  Government  Order  will  not  apply  as  this

would otherwise be inconsistent with the agency  status  of  the  IEDOM.  These  provisions  deal

with the settlement of losses and profits, the legal nature of the operations entered into by the

IEDOM on its own account, the methods for the presentation and settlement of accounts of the

IEDOM and their consolidation with the accounts of the Banque de France, and are linked to the

IEDOM’s own tasks.

5. 

The  ECB  welcomes  the  fact  that  the  new  draft  laws  provide  for  a  clear  allocation  of

competences between the Supervisory Board and the Director General, which take into account

the special status of the IEDOM as agent of the Banque de France. The Supervisory Board is

only vested with decision-making powers for the IEDOM’s own tasks (Article 1-VII of the draft

Decree  amending  Article  12  of  the  Decree  of  18  October  1986).  As  far  as  the  IEDOM’s

activities as an agent of the Banque de France are concerned, it is the Director General who will

manage the IEDOM and who will represent the IEDOM externally (Article 1-VIII of the draft

Decree amending Article 13 of the Decree of 18 October 1986). The ECB understands that the

reference in Article 1-VIII of the draft Decree to the Director General acting under the control

of the Supervisory Board only applies to the management of the IEDOM’s own tasks and that,

as  far  as  the  IEDOM’s  activities  as  an  agent  of  the  Banque  de  France  are  concerned,  the

Director General will act under the instructions of the Governor of the Banque de France.

6. 

The ECB understands that the IEDOM will not carry out any tasks related to the collection of

statistics related to Monetary Financial Institutions necessary for the ESCB to undertake it tasks,

as in the geographical zone of activity these activities will be performed within the framework

for reporting of statistics to the French Banking Commission.

7. 

The ECB takes the view that its responsibility for ensuring the integrity of the ESCB requires it

to  consider  the  agency  status  of  the  IEDOM  as  a  situation  which  is  acceptable  only

exceptionally,  owing  to  the  particular  nature  of  the  IEDOM,  especially  its  former  status  as  a

central bank in the geographical zone of activity. A permanent IEDOM-based structure would

require the approval of the Council in accordance with the procedure laid down in Article 299.2

of  the  Treaty.  The  ECB  stresses  that  the  particular  nature  of  the  IEDOM  does  not  warrant

consideration of its status as agent of the Banque de France as a precedent for any future cases.

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8. 

The  ECB  understands  that,  should  the  Banque  de  France  and  the  IEDOM  prepare  a  joint

agreement laying down the details of the operational mechanisms for the implementation of the

single  monetary  policy  in  the  geographical  zone  of  activity,  the  ECB  will  be  consulted

accordingly.

9. 

The ECB finally notes that the two draft laws do not provide for an application of those parts of

Community law including all ECB legal acts which are or will be necessary for the functioning

of  Economic  and  Monetary  Union  in  Saint-Pierre-et-Miquelon  and  Mayotte.  The  ECB  urges

France to prepare for the application of such legislation without further delay in order to comply

with Article 4 of the Council Decision (EC) No. 1999/95/EC of 31 December 1998 concerning

the  monetary  arrangements  in  the  French  territorial  communities  of  Saint-Pierre-et-Miquelon

and Mayotte (hereinafter referred to as the Council Decision), which requires that such is made

in agreement with the Commission of the European Communities and the ECB. 

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

competent national authorities at their discretion.

Done at Frankfurt am Main on 17 February 2000.

The President of the ECB

[signed]

Willem F. Duisenberg