Opinion of the European Central Bank of 4 September 2003 at the request of the Belgian Ministry of Finance on a draft proposal for a royal decree implementing Article 118 of the Law of 2 August 2002 relating to the prudential supervision of the financial sector and of financial services (CON/2003/19)
Date: 2003-09-04
Institutions: European Central Bank
Subjects: Belgium, central bank, financial stability, financial supervision, national law

EN

OPINION OF THE EUROPEAN CENTRAL BANK

of 4 September 2003

at the request of the Belgian Ministry of Finance

on a draft proposal for a royal decree implementing Article 118 of the Law of 2 August 2002

relating to the prudential supervision of the financial sector and of financial services

(CON/2003/19)

1. 

On 7 August 2003 the European Central Bank (ECB) received a request dated 31 July 2003 from

the Belgian Ministry of Finance for an opinion on a draft royal decree implementing Article 118 of

the  Law  of  2  August  2002  relating  to  the  prudential  supervision  of  the  financial  sector  and  of

financial services (hereinafter the ‘draft decree’).

2. 

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

Treaty establishing the European Community and the third, fifth and sixth indents 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, since the draft decree establishes the methods of

cooperation – in particular the methods, content and financing of the efficient pooling of various

activities – between the Nationale Bank van België/ Banque Nationale de Belgique (NBB) and the

Belgian  Banking,  Financial  and  Insurance  Commission  (BFIC)2  in,  inter  alia,  the  fields  of

prudential  policy,  payment,  clearing  and  settlement  systems,  and  international  relations.  In

accordance  with  the  first  sentence  of  Article  17.5  of  the  Rules  of  Procedure  of  the  European

Central Bank, the Governing Council of the ECB has adopted this opinion.

3. 

On  18  March  2002  the  ECB  was  consulted  on  a  draft  Belgian  law  relating  to  the  prudential

supervision of the financial sector and financial services (hereinafter the ‘Law’). The ECB gave its

opinion on 24 April 2002 (CON/2002/13). The  Law  was  adopted  on  2  August  2002 and  entered

into  force  on  1 June  2003.  Article  117(1)  of  the  Law  establishes  the  principle  of  cooperation

between the NBB and the BFIC in relation to issues of common interest, and lists certain specific

areas of cooperation. Further, Article 118 of the Law states that the King of Belgium may, in the

absence of any relevant agreement between the NBB and the BFIC, establish the methods of this

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2

OJ L 189, 3.7.1998, p. 42.
The  BFIC  will  be  established on  1  January  2004  and  will  result  from  the  integration  of  the  current  Belgian  insurance
supervisory authority into the current Belgian banking and finance supervisory authority.

                                                     
cooperation by royal decree3. The purpose of the draft decree is to lay down such methods on the

basis  of  Article  118  of  the  Law.  The  ECB  broadly  welcomes  the  draft  decree  in  view  of  its

objective, i.e. increasing the efficiency and effectiveness of the NBB and the BFIC through mutual

cooperation in fields of common interest, while at the same time observing their respective powers

and responsibilities and guaranteeing the confidentiality of any information exchanged.

4. 

The  ECB  welcomes  the  fact  that  Article  2  of  the  draft  decree  states  that  the  methods  of  this

cooperation do not alter the respective powers of the NBB4 and the BFIC, and that each remains

fully  responsible  for  its  respective  decisions  and  actions.  As  the  ECB  mentioned  in  its  opinion

CON/2002/13, this is particularly important for the tasks that the NBB has to execute pursuant to

the  Treaty  and  the  Protocol  on  the  Statute  of  the  European  System  of  Central  Banks  and  of  the

European Central Bank within the framework of the European System of Central Banks (ESCB).

The ECB emphasises that cooperation between the NBB and the BFIC should  not  impinge  upon

the independent execution of the above tasks by the NBB, nor upon the fact that, in executing these

tasks,  the  NBB  might  be  obliged  to  keep  certain  information  confidential  vis-à-vis  the  BFIC  as

well.

5. 

The ECB also welcomes the fact that Article 2 of the draft decree states that the draft decree does

not affect the agreements or memoranda already concluded between the NBB and the BFIC. This is

particularly  relevant  to  the  Memorandum  of  understanding  on  co-operation  between  payment

systems overseers and banking supervisors in stage three of economic and monetary union and the

Memorandum  of  understanding  on  high-level  principles  of  co-operation  between  banking

supervisors and  central  banks  of  the  European  Union  in  crisis  management  situations,  to  which

both the NBB and the BFIC are also signatories.

6. 

The ECB further notes with respect to Article 2 of the draft decree that according to Article 117(3)

of  the  Law,  the  Financial  Stability  Committee  (FSC),  which  will  deal  with  issues  of  common

interest to the  NBB  and the  BFIC  and  which  will  be  made  up  of  the  management  boards  of  the

NBB and the BFIC, will decide by double majority (i.e. within the FSC itself and separately within

the  NBB  and  the  BFIC)  on  the  determination  and  management  of  the  activities  to  be  jointly

exercised.  The  ECB  emphasised  in  its  opinion  (CON/2002/13)  the  risk  that,  under  specific  but

possibly remote circumstances, this mechanism might result in the decision-making process being

obstructed  in  cases  where  the  FSC’s  view  differed  from  that  of  the  NBB  and/or  the  BFIC.  As

Article 2 of the draft decree confirms that the respective powers of the NBB and the BFIC remain

unaffected, the ECB assumes that the necessary safeguards exist or will be put in place to ensure

that the NBB can continue to pursue its tasks within the framework of the ESCB independently. 

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4

See ECB opinion CON/2002/13 for the obligation to consult the ECB when measures on the basis of Article 118 of the
Law were proposed.
The  ECB  would  again  like  to  draw  attention  to  the  fact  that  it  considers  that  the  inclusion  in  the  NBB’s  Statute  and
Organic Law of the task of contributing to the stability of the financial system (see opinion CON/2002/13) is beneficial.
This is also relevant to distinguish between the respective powers of the NBB and the BFIC in the context of the draft
decree.

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7. 

As  regards  cooperation  between  the  NBB  and  the  BFIC  in  the  field  of  payment,  clearing  and

settlement systems (see Article 5 of the draft decree), the ECB points out that on 1 August 2003 a

joint  task  force  of  the  ESCB  and  the  Committee  of  European  Securities  Regulators  (CESR)

launched a public consultation procedure regarding standards applicable to clearing and settlement

systemsin  the  European  Union.  The  outcome  of  this  procedure  might  result  in  changes  to  the

general standards currently applicable to such systems. Consistent with the objective of the entire

draft  decree,  Article  5  of  the  draft  decree  also  appears  only  to  lay  down  the  methods  of  close

cooperation  between  the  NBB  and  the  BFIC  with  regard  to  payment,  clearing  and  settlement

systems and does not affect the respective (oversight) tasks of the NBB and the BFIC in this field.

The ECB nevertheless assumes that the Belgian authorities are aware of the fact that Article 5 of

the  draft  decree,  if  enacted,  may  need  to  be  revised  to  take  into  account  the  results  of  the  work

undertaken by the ESCB/CESR task force.

8. 

The ECB welcomes the fact that Article 20 of the draft decree states that the NBB and the BFIC

shall  treat  as  confidential  all  information  exchanged  between  them  in  the  context  of  their

cooperation which does not fall under the professional secrecy by which they are both bound. The

ECB notes in this respect that, according to the explanatory memorandum to the draft decree, the

professional  secrecy  obligations  applicable  to  the  NBB  and  the  BFIC  are  no  obstacle  to  such

exchange of information, since the Law provides that these institutions may exchange information

covered by these obligations in so far as this information is necessary for the accomplishment of

their  respective  tasks.  This  reflects  the  standpoint  adopted  in  various  European  Union  directives

according  to  which  the  duty  of  professional  secrecy  does  not  prevent  the  transmission  of

information between the competent authorities. The ECB would nevertheless draw attention again

to its remarks in paragraph 4 regarding the NBB’s independence and confidentiality obligations in

relation to tasks executed within the framework of the ESCB.

9. 

The ECB emphasises that, notwithstanding the two explicit statements made in Articles 2 and 20 of

the  draft  decree  (see  paragraphs  4  and  8  of  this  opinion),  it  is  equally  important  to  adopt  and

implement  internal  measures  in  order  also  to  respect  in  practice  the  distinct  powers  and

responsibilities  of  the  NBB  and  the  BFIC  and  their  respective  secrecy  and  confidentiality

obligations.  Such  measures  would  in  particular  concern  cooperation  between  the  NBB  and  the

BFIC  in  the  fields  of  prudential  policy  (Article  4  of  the  draft  decree),  payment,  clearing  and

settlement systems (Article 5 of the draft decree), processing of external confidential information

(Article  6  of the  draft  decree),  legal  services  (Articles  8  and  9  of  the  draft  decree),  international

activities (Article 10 of the draft decree), information technology (Article 12 of the  draft  decree)

and archives (Article 16 of the draft decree). These measures could, for example, be implemented

by  establishing  and  monitoring  the  effective  operation  and  enforcement  of  so-called  ‘Chinese

walls’ or ‘firewalls’. These could, inter alia, regulate and restrict access by employees of the NBB

and the BFIC to computer files and documents containing information relating to the independent

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and/or  confidential  execution  of  the  respective  tasks  entrusted  to  these  institutions.  The  ECB

assumes that the NBB and the BFIC will take the measures necessary to achieve this.

10.  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 4 September 2003.

The President of the ECB

[signed]

Willem F. DUISENBERG

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