Opinion of the European Central Bank of 8 August 2003 at the request of Sveriges Riksbank on a draft law amending the Sveriges Riksbank Act (CON/2003/15)
Date: 2003-08-08
Institutions: European Central Bank
Subjects: Sweden, central bank, competence of the institution, financial supervision, national law, payment system

EN

OPINION OF THE EUROPEAN CENTRAL BANK

of 8 August 2003 

at the request of Sveriges Riksbank on a draft law amending the Sveriges Riksbank Act

(CON/2003/15)

1. 

On 9 July 2003, the European Central Bank (ECB) received a request from the Sveriges Riksbank

for  an  opinion  on  a  draft  proposal  to  amend  the  Sveriges  Riksbank  Act  (lag  (1988:1385)  om

Sveriges riksbank, as amended) (the ‘legislative proposal’).

2. 

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

Treaty and the third indent of Article 2(1) of Council Decision 98/415/EC of 29 June 1998 on the

consultation of the ECB by national authorities regarding draft legislative provisions1 as the draft

legislative  proposal  relates  to  Sveriges  Riksbank.  In  accordance  with  the  first  sentence  of

Article 17.5 of the Rules of Procedure of the ECB, the Governing Council of the ECB has adopted

this opinion.

3. 

The  legislative  proposal  concerns  a  proposal  from  Sveriges  Riksbank  to  the  Swedish  Parliament

(Sveriges riksdag) to enact certain amendments to the Sveriges Riksbank Act (lagen (1988:1385)

om  Sveriges  Riksbank).  One  part  of  the  proposal  is  to  give  the  Riksbank  the  right  to  issue

regulations  and  fines  with  regard  to  the  Swedish  payment  system.  The  existing  competence  of

Sveriges  Riksbank  related  to  the  promotion  of  a  safe  and  efficient  payment  system  (Chapter  1,

Article 2 of the Riksbank Act) primarily aims at reducing systemic risk. This is achieved through

the Riksbank’s oversight of payment systems in general and the provision of settlement facilities in

its national RTGS system, RIX. The existing statutory rules provide a legal basis for the Riksbank

to issue regulations concerning the reporting obligations of institutions with regard to information

that the Riksbank considers necessary to oversee the  stability  of  the  payment  system  (Chapter  6,

Article 9 of the Riksbank Act). The existing legal provisions do not, however, extend generally to

the  Riksbank’s  competence  to  promote  a  safe  and  efficient  payment  system.  According  to  the

Riksbank’s  explanations  in  the  legislative  proposal,  possible  future  developments  with  regard  to

RIX, including the possibility of involving external parties in the running of  parts  of the system,

will  require  changes  in  the  manner  in  which  participants  in  RIX  and  other  parties  are  regulated.

Moreover,  in  the  area  of  securities  settlement,  there  is  already,  according  to  the  legislative

proposal, a need for increased cooperation between Sveriges Riksbank’s payment system, RIX, and

1 

OJ L 189, 3.7.1998, p. 42.

                                                
the  Swedish  system  for  the  settlement  of  securities  transactions,  the  Securities  Register  Centre

(Värdepapperscentralen,  VPC).  In  addition,  the  legislative  proposal  includes,  as  part  of  the

promotion  of  a  safe  and  efficient  payment  system,  a  reference  to  the  Riksbank’s  current  task  of

providing banknotes and coins within Sweden (for which Sveriges Riksbank has a monopoly under

Chapter  9,  Article  13  of  the  Constitution  Act  (regeringsformen)).  Also  in  this  latter  respect,  the

Riksbank  notes  that  the  envisaged  changes  to  the  Swedish  arrangements  for  the  handling  of

banknotes  and  coins,  whereby  third  parties  (not  wholly  owned  by  the  Riksbank)  will  manage

certain operational tasks, entail new control and regulation requirements. 

4. 

In view of these considerations, the Riksbank proposes that Chapter 1, Article 2, of the Riksbank

Act  incorporate  a  general  right  for  the  Riksbank  to  issue  regulations  concerning  its  task  of

promoting a safe and efficient payment system. It is also proposed that a new Article 2(a) be added

to  Chapter  11  of  the  Riksbank  Act  specifying  that  the  Riksbank  may  when  necessary  order  or

prohibit  actions  by  third  parties,  in  order  to  ensure  compliance  with  regulations  issued  under

Chapter 1, Article 2, of the Riksbank Act. Under this proposed provision, the Riksbank may order

parties to act to ensure compliance with a regulation issued to promote the safety and efficiency of

the payment system or, conversely, prohibit a certain action in breach of such a regulation. In each

case, the Riksbank may prescribe that non-compliance with such orders will be punishable through

the payment of a fine. 

5. 

Article 105(2) of the Treaty and Article 3.1 of the Statute of the European System of Central Banks

and of the European Central Bank (the Statute of the ESCB) include as a basic central bank task the

promotion  of  the  smooth  operation  of  payment  systems.  For  the  national  central  banks  of  the

Member States that have adopted the euro, which together with the ECB constitute the Eurosystem,

these  Articles  provide  a  legal  basis  for  the  oversight  of  payment  systems.  In  addition,  the

competence of the Eurosystem for the oversight of payment systems results from Article 22 of the

Statute  of  the  ESCB,  which  includes  a  reference  to  the  ECB’s  regulatory  power.  According  to

Article 22 of the Statute of the ESCB, ‘the ECB and national central banks may provide facilities,

and the ECB may  make regulations, to ensure efficient and sound clearing  and  payment  systems

within the Community and with other countries.’ Article 34 of the Statute of the ESCB refers to the

ECB’s  power  to  make  regulations  and  states  that  such  ‘[a]  regulation  shall  have  general

application. It shall be binding in its entirety and directly applicable in all Member States.’2 Within

the  Eurosystem,  oversight  activities  are  generally  performed  at  the  level  of  the  national  central

banks,  in  line  with  the  common  oversight  policy  defined  for  the  Eurosystem  by  the  Governing

Council of the ECB. The aim of the oversight of clearing and payment systems is the maintenance

of systemic stability, the promotion of efficiency and the safeguarding of the transmission channel

for monetary policy. In particular, payment arrangements are of crucial importance for the conduct

of monetary policy in both a strategic and operational sense. This approach excludes interference

from any Community or national body, other than a central bank acting within the framework of

2 

Article 34.2, first paragraph, of the ESCB Statute.

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the Eurosystem or the European System of Central Banks (ESCB), in the Eurosystem’s oversight

competence.

6. 

According  to  Chapter  1,  Article  2,  of  the  Sveriges  Riksbank  Act,  it  is  a  basic  task  of  Sveriges

Riksbank to promote a safe and efficient payment system. As explained in the legislative proposal,

the  aim  of  Sveriges  Riksbank  in  performing  this  task  is  to  reduce  systemic  risk.  In  this  respect,

Article  2  of  Chapter  1  of  the  Sveriges  Riksbank  Act  provides  the  legal  basis  for  the  Riksbank’s

payment systems oversight function. The ECB welcomes and supports Sveriges Riksbank’s aim of

further formalising its oversight function and clarifying and enhancing its regulatory powers in this

field.  This  is  particularly  important  since  the  present  formulation  of  the  statutory  basis  for  the

Riksbank to issue such regulations appears to limit their scope to specific reporting obligations of

institutions.  From  the  ECB’s  perspective,  granting  Sveriges  Riksbank  such  extended  regulatory

powers will also facilitate the regulation of participants’ and other parties’ activities in the Swedish

TARGET component RIX. This might prove particularly useful, and in some situations necessary,

irrespective  of  Sweden’s  adoption  of  the  euro  and  Sveriges  Riksbank’s  integration  into  the

Eurosystem, if in the future RIX were, for example, to involve external third parties in the running

of  parts  of  the  system.  The  ECB  understands  that  the  Riksbank’s  payment  systems  oversight

function also covers securities clearing and settlement systems. However, for the sake of clarity, it

would be advisable to make an explicit reference in the Sveriges Riksbank Act to the Riksbank’s

securities clearing and settlement systems oversight function.  

7. 

The proposed amendments will thus make it possible for Sveriges Riksbank to carry out one of its

main tasks in a more effective manner. They will also bring the Sveriges Riksbank Act further in

line with the Statute of the ESCB, in particular with the above-mentioned Article 22 of the Statute,

which  will  facilitate  Sveriges  Riksbank’s  adherence  to  the  Eurosystem  oversight  regime  in  the

future. In this connection, one could mention that the ECB has so far not issued a regulation on the

conduct of oversight under Article 22 of the Statute of the ESCB. The majority of national central

banks  carry  out  this  function  on  the  basis  of  their  own  statutes  and/or  organic  laws  without  any

additional  explicit  and  detailed  statutory  provisions.  The  ECB  would  also  point  out  the  need  to

consider  the  consistency  of  any  future  regulation  that  Sveriges  Riksbank  may  adopt  under

Chapter 1, Article 2, of the amended Sveriges Riksbank Act with the Eurosystem oversight policy.

For central banks of Member States that have adopted the euro, such consistency is an important

requirement.

8.  When  it  comes  to  the  handling  of  banknotes  and  coins,  the  legislative  proposal  indicates  that

Sveriges  Riksbank  intends  to  transfer  the  distribution  and  storage  of  cash  recorded  on  the

Riksbank’s balance sheet to third parties in the private cash distribution sector, in order to improve

the  efficiency  of cash  handling. This implies  giving  greater  responsibility  to  third  parties  for  the

tasks traditionally carried out by the Riksbank and their subsidiaries. In this respect, new regulatory

needs arise as the Riksbank has to be able to influence the cash handling procedures and security

standards. Moreover, conditions have to be laid down in order to exercise supervision of the third

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parties that may be involved in the cash handling. From the ECB’s point of view, the right to issue

regulations and to stipulate penalties for non-compliance will enhance the power of the Riksbank to

regulate and control third parties in view of their possible involvement in cash handling as a part of

the ongoing structural change in this field. Against the above background related to the promotion

of the smooth operation of the Swedish payment system, and taking into account Article 16 of the

Statute of the ESCB, the ECB has no  objections  to the  proposed amendments  with  regard to  the

handling of banknotes and coins.

9. 

Another  aspect  of  the  legislative  proposal  relates  to  Sveriges  Riksbank’s  management  of  the

Swedish gold and currency reserve. According to the existing provisions of the first paragraph of

Article 7 of Chapter 7 of the Sveriges Riksbank Act, the ‘Riksbank may, with or without interest

compensation, 

receive  deposits  of  currencies  or  gold 

from  other  sovereign  states,

intergovernmental bodies and Swedish and foreign banks.’ The same provision also states that the

‘Riksbank  may  make  such  deposits  with  Swedish  and  foreign  banks.’  The  legislative  proposal

includes a suggestion to amend this provision in order to somewhat extend the  range  of possible

counterparties  for  such  deposits,  without  negatively  affecting  the  high  level  of  requirements

regarding soundness and credit worthiness. In addition to the legal technical change with regard to

the terminology for referring to foreign banks, the proposed changes would entail the addition of

explicit references to the International Bank of Reconstruction and Development (IBRD), the Bank

for International Settlements (BIS) and other central banks. 

10.  These suggestions for amendments of the legal  provisions  concerning  the  Riksbank’s  deposits in

the form of currencies or gold are partly intended to represent a terminological adjustment without

any substantive change compared to the current practice of Sveriges Riksbank and, in this respect,

the ECB has no objections. To the extent that the legislative proposal entails an extension of the

range of possible counterparties for deposits, such as for the IBRD, the ECB would agree with the

proposal  to  add  explicit  references  to  the  Riksbank  Act  clarifying  who  the  Riksbank’s  potential

counterparties  are.  As  a  general  observation,  the  ECB  notes  and  appreciates  that  the  Riksbank

applies,  and  will  continue  to  apply,  very  high  standards  with  regard  to  the  soundness  and  credit

worthiness of parties that are accepted as counterparties for its gold and currency deposits in any

specific case. 

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11.  The  ECB  confirms  that  it  has  no  objection  to  the  competent  national  authorities  making  this

opinion publicly available at their discretion. This opinion will be published on the ECB’s website

six months after the date of its adoption.

Done at Frankfurt am Main on 8 August 2003.

Member of the Executive Board of the ECB

Member of the Executive Board of the ECB

[signed]

[signed]

Tommaso PADOA-SCHIOPPA

Gertrude TUMPEL-GUGERELL

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