Opinion of the European Central Bank of 4 August 2005 at the request of Národná banka Slovenska on a draft law amending the Act No 566/1992 Coll. On Národná banka Slovenska, as amended, and on amendments to certain laws (CON/2005/26)
Date: 2005-08-04
Institutions: European Central Bank
Subjects: Slovakia, central bank, financial stability, financial supervision, money, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 4 August 2005  

at the request of Národná banka Slovenska on a draft law amending the Act No 566/1992 Coll. on 

Národná banka Slovenska, as amended, and on amendments to certain laws 

(CON/2005/26) 

1.  On  20  June  2005  the  European  Central  Bank  (ECB)  received  a  request  from  Národná  banka 

Slovenska (NBS) for an opinion on a draft law amending the Act No 566/1992 Coll. on Národná 

banka Slovenska, as amended, and on amendments to certain laws (hereinafter the ‘draft law’).  

2. 

The ECB’s competence to deliver an opinion is based on the first and third indents of Article 2(1) 

of Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank 
by national authorities regarding draft legislative provisions1, as the draft law contains provisions 

concerning  currency  matters  and  a  national  central  bank  (NCB).  In  accordance  with  the  first 

sentence  of  Article 17.5  of  the  Rules  of  Procedure  of  the  European  Central  Bank,  the  Governing 

Council has adopted this opinion. 

3.  According  to  the  general  part  of  the  proposal  report  accompanying  the  draft  law,  the  draft  law’s 

main objective is to reflect the change in NBS’s competence in relation to integrated supervision of 

the  whole  financial  market  in  the  Slovak  Republic.  This  aim  is  to  be  achieved  in  particular  by 

amending  the  Act  No  566/1992  Coll.  on  Národná  banka  Slovenska,  as  amended  (hereinafter  the 

‘NBS Act’). In this regard it is recalled that the ECB was consulted and issued an opinion in 2004 

on  the  transfer  of  responsibility  for  the  supervision  of  the  non-banking  financial  sector  (capital 

markets,  insurance  and  pensions)  from  the  Slovak  Financial  Market  Authority  to  NBS  from 
1 January  20062.  Furthermore,  the  draft  law  contains  miscellaneous  (in  some  cases  recasted) 

provisions of the NBS Act relating to, inter alia: (i) the submission by NBS of periodic reports on 

monetary developments to the National Council of the Slovak Republic (hereinafter the ‘National 

Council’); (ii) the designation of NBS as the Slovak national centre for the analysis and monitoring 

of  counterfeit  euro  banknotes  and  coins;  (iii)  the  conduct  of  open  market  operations  and  the 

collateralisation  of  credit  operations  by  NBS;  (iv)  the  performance  of  fiscal  agency  functions  by 

NBS for the Slovak Republic; and (v) certain initial preparations for the future introduction of the 

euro as the currency of the Slovak Republic. 

1  
2  

OJ L 189, 3.7.1998, p. 42. 
See  ECB  Opinion  CON/2004/31  of  22  September  2004  at  the  request  of  Národná  banka  Slovenska  on  a  draft  law  on 
supervision of the financial market and on amendments to certain laws. 

 
 
 
                                                      
4.  Under existing provisions of Slovak law, NBS has the task of supervising the safe functioning of 

the banking system and of contributing to the stability of the financial system as a whole. In line 

with  NBS’s  wider  supervisory  responsibilities,  the  draft  law  provides  that,  in  the  area  of  the 

financial market, NBS will contribute to the stability of the financial system as a whole as well as to 

the secure and sound functioning of the financial market in the interests of sustaining the credibility 

of  the  financial  market,  the  protection  of  clients  and  respect  for  competition  rules.  As  noted  in 

paragraph  10  of  ECB  Opinion  CON/2004/31,  the  ECB  ‘favours  recognising  in  the  supervisory 

framework the clear distinction between the two goals of financial stability and investor protection.’ 

The  ECB  therefore  welcomes  these  provisions  of  the  draft  law,  which  will  adequately  balance 

NBS’s  macro  and  micro-prudential  responsibilities  in  the  areas  of  financial  stability  and  the 

protection of investors.  

5. 

The ECB takes note that the draft law further adjusts the competences and composition of NBS’s 

Bank  Board  (hereinafter  the  ‘Board’),  increasing  the  number  of  Board  members  from  eight  to 

eleven  in  order  to  broaden  the  representation  of  specialists  from  the  field  of  supervision  of  the 

capital  market,  insurance  and  pensions,  and  widening  the  Board’s  competences  to  include  the 

supervision and regulation of the Slovak financial market.  

6. 

The draft law amends Article 3 of the NBS Act relating to the submission by NBS of semi-annual 

and annual reports on monetary developments to the National Council. The ECB understands that 

the  reports  are  submitted  to  the  National  Council  for  information  purposes  only,  and  that  the 
deliberations3  of  the  National  Council  thereon  do  not  imply  that  the  reports  are  required  to  be 

adopted or approved by the National Council.  

7. 

The ECB notes that pursuant to the draft law, Article 7(9) of the NBS Act will stipulate that unless 

Article 14.2 of the Statute of the European System of Central Banks and of the European Central 

Bank  provides  otherwise,  a  member  of  the  Board  may  only  be  removed  from  office  in  the  event 

that: (a) they have been legally sentenced by a court for an intentional criminal offence; (b) they no 

longer fulfil the preconditions for performing the office of a member of the Board; or (c) they have 

taken  up  an  office,  occupation,  employment,  or  activity  that  is  incompatible  with  membership  of 

the  Board  or  have  otherwise  breached  the  provisions  of  the  NBS  Act  governing    conflicts  of 

interest.  

8.  As  noted  on  page  27  of  the  ECB  Convergence  Report  2004,  ‘NCB  statutes  must  ensure  that 

Governors  may  not  be  dismissed  for  reasons  other  than  those  mentioned  in  Article  14.2  of  the 

Statute.  […]  The  NCB  statutes  should  either  contain  grounds  for  dismissal  which  are  compatible 

with those laid down in Article 14.2 of the Statute, or omit any mention of grounds for dismissal 

since  Article  14.2  is  directly  applicable.’    The  report  goes  on  to  say  that  ‘Personal  independence 

would be jeopardised if the same rules for the security of tenure of office of Governors were not 

also applied to other members of the decision-making bodies of NCBs involved in the performance 

3  

Article 2(2)(ch) of the Act No 350/1996 Coll. on the rules of procedure of the National Council of the Slovak Republic, as 
last amended. 

2 

 
                                                      
of ESCB-related tasks. Various Treaty and Statute provisions require comparable security of tenure. 

Article  14.2  of  the  Statute  does  not  restrict  the  security  of  tenure  of  office  to  Governors,  whilst 

Article  108  of  the  Treaty  and  Article  7  of  the  Statute  refer  to  any  members  of  decision-making 

bodies of NCBs rather than to Governors specifically. This applies in particular where a Governor 

is  primus  inter  pares  between  colleagues  with  equivalent  voting  rights  or  where  such  other 

members may have to deputise for the Governor.’ Therefore, the ECB would strongly recommend 

referring to Article 14.2 of the Statute when stating the reasons for dismissal of a Board member.  

9. 

The ECB also takes note of the provisions of the draft law pursuant to which NBS will fulfil the 

functions and tasks of national centres for the analysis and monitoring of counterfeit euro banknotes 
and coins4. In this regard the ECB notes that NCBs in certain other Member States have also been 

given this particular task. 

10.  Regarding  the  conduct  of  open  market  operations  and  the  collateralisation  of  central  bank  credit 

operations, the ECB notes  that NBS is  currently only entitled to purchase from (or sell to) banks 

bills of exchange maturing within six months and government bonds (or other securities guaranteed 

by the Government), which it may hold for a maximum period of one year, and to provide banks 

with  loans  secured  by  such  securities.  Under  the  draft  law  NBS  will  be  entitled  to  deal  in  any 

securities it has specified with banks, foreign banks and other financial institutions. NBS will also 

be entitled to accept assets it has specified as security in its credit operations. The ECB welcomes 

this more flexible statutory framework, which is more in line with the statutory framework for the 

Eurosystem’s monetary policy and intraday credit operations. In this regard, it is noted that Article 

18.1  of  the  Statute  provides  that  the  NCBs  may  operate  in  the  financial  markets  by  buying  and 

selling  outright  (spot  and  forward)  or  under  repurchase  agreement  and  by  lending  or  borrowing 

claims and marketable instruments, and may conduct credit operations with credit institutions and 

other market participants, with lending being based on adequate collateral. 

11.  The  ECB  takes  note  that  the  draft  law  amends  the  provisions  of  the  NBS  Act    regarding  the 

operations  of  NBS  with  the  Slovak  Republic.  In  particular  the  draft  law  provides  that  NBS  may 

maintain the accounts of the State Treasury and provide additional services to, and cooperate with, 

the  State  Treasury  and  the  Agency  for Debt  and Liquidity  Management,  subject  to  more  detailed 

regulation contained in separate legislation, primarily Act No 291/2002 on the State Treasury and 

on  amendments  to  certain  laws  (hereinafter  the  ‘State  Treasury  Act’).  Article  11(1)  of  the  State 

Treasury  Act  provides  that  NBS  maintains  the  ‘single  account’  of  the  State  Treasury,  which  is  a 

memorandum account containing a summary of the balances of all accounts of the State Treasury 

held  with  NBS.  NBS  also  maintains  a  State  Treasury  settlement  account  to  cover  and  meet 

liabilities arising from participation in the payment system pursuant to Act No 510/2002 Coll. on 

the  payment  system  and  on  amendments  to  certain  laws,  as  amended,  and  the  State  Treasury’s 

foreign exchange accounts, including the account holding funds of the European Communities, the 

4  

This  provision  implements  Articles  4  and  5  of  Council  Regulation  (EC)  No  1338/2001  of  28  June  2001  laying  down 
measures necessary for the protection of the euro against counterfeiting (OJ L 181, 4.7.2001, p. 6). 

3 

 
                                                      
balances of which are recorded in the single account5. NBS is also authorised: (i) to carry out cross-
border transfers6 for, and to enable cash withdrawals and deposits7 by, clients of the State Treasury; 

(ii) to provide additional services to, and to cooperate with, the State Treasury and the Agency for 
Debt  and  Liquidity  Mangement  in  their  respective  fields  of  competence8;  and  (iii)  to  carry  out 

foreign currency transfers for the Agency for Debt and Liquidity Mangement on behalf of the State 
Treasury9. Finally, the State Treasury Act provides that agreements between the State Treasury and 

NBS govern the holding of accounts of the State Treasury with NBS, clearing on such accounts and 

the  conduct  of  additional  services  by  NBS  for  the  State  Treasury,  including  the  conditions  and 

means  of  remuneration  on  credit  balances  of  the  State  Treasury’s  accounts  held  with  NBS  and 
recorded in the single account10.  

12.  The operations conducted by NBS with the Slovak Republic are, generally speaking, operations of 

a kind that are performed by most, if not all, NCBs within the European System of Central Banks 

(ESCB). This is is in accordance with Article 21.2 of the Statute, which provides that the ECB and 

the  NCBs  may  act  as  fiscal  agents  for  Community  institutions  or  bodies,  central  governments, 

regional,  local  or  other  public  authorities,  other  bodies  governed  by  public  law,  or  public 

undertakings of Member States. The ECB notes that both the draft law and the State Treasury Act 

contain important safeguards ensuring the compatibility of such operations with the prohibition on 

monetary  financing  contained  in  Article  101(1)  of  the  Treaty  establishing  the  European 

Community.  In  particular,  the  draft  law  provides  that  NBS  may  execute  payments  from  the 

accounts  of  the  State  Treasury  only  up  to  the  amount  of  any  credit  balance  on  such  accounts.  In 

addition,  the  State  Treasury  Act  provides  that  the  accounts  of  the  State  Treasury  held  with  NBS 
must have a credit balance11. The ECB welcomes these provisions, which exclude the possibility of 

contravening  the  Treaty  prohibition  on  overdraft  facilities  or  any  other  type  of  credit  facility  by 

NBS  in  favour  of  the  State  Treasury  as  laid  down  in  Article  102.  Regarding  additional  services 

provided by NBS to the State Treasury and the  Agency for Debt and Liquidity Management, the 

ECB notes that these activities are permissible insofar as they form part of an NCB’s fiscal agency 

function under Article 21.2 of the Statute, together with the other relevant provisions of Community 
law12.  The  ECB  notes  that  the  services  currently  provided  by  NBS  to  the  State  Treasury  and  the 

Agency  for  Debt  and  Liquidity  Management  do  not  appear  to  go  beyond  the  scope  of  what  is 

permissible.  Finally,  regarding  the  detailed  contractual  provisions  agreed  between  the  State 

See Article 21(1) of the State Treasury Act. 
See Article 6(1)(n) of the State Treasury Act. 
See Article 12(4) of the State Treasury Act. 
See Article 17(n) of the State Treasury Act. 
See Article 19(2) of the State Treasury Act. 
See Article 21(1) of the State Treasury Act. 
See Article 11(2) of the State Treasury Act. 

5  
6  
7  
8  
9  
10  
11  
12   More detailed provisions defining the scope of the Treaty prohibition on monetary financing, including with respect to the 
performance of a NCB’s fiscal agency function, are contained in Council Regulation (EC) No 3603/93 of 13 December 
1993 specifying the definitions for the application of the prohibition referred to in Articles 104 and 104b(1) of the Treaty 
(OJ L 332, 31.12.1993, p. 1). 

4 

 
                                                      
Treasury and NBS on the holding, clearing and remuneration of the State Treasury’s accounts with 

NBS, the ECB understands that these contracts fully comply with the abovementioned safeguards 

and provisions of Community law. 

13.  The ECB takes particular note of the draft law’s provisions regarding the future introduction of the 

euro as the currency of the Slovak Republic. In particular, the ECB welcomes the fact that NBS has 

been given the task of ensuring the performance of preparatory activities for the introduction of the 

euro as the monetary unit and legal tender in the Slovak Republic. The ECB emphasises the strong 

synergy between this task  of NBS under Slovak law and the responsibility of the ECB’s General 

Council (of which the Governor of NBS is a member) under Article 47.3 of the Statute to contribute 

to the necessary preparations for irrevocably fixing the exchange rates of the currencies of Member 

States with a derogation against the euro. The ECB also notes that, under the draft law, NBS must 

ensure that the Slovak side of euro coins contains the inscription ‘Slovakia’ or ‘Slovak Republic’. 

This provision is in line with the recent conclusions of the Council (ECOFIN) at its meeting held in 

Luxembourg on 7 June 2005, which concluded that since euro coins circulate throughout the euro 

area, Member States should put a clear indication of the issuing Member State on the national side 

of euro coins by means of a Member State’s name or an abbreviation of it. Finally, the ECB notes 

that  the  draft  law  excludes  the  application  to  euro  banknotes  and  coins  of  certain  provisions  of 

national  law  that  would  otherwise  apply  to  banknotes  and  coins,  such  as  Article  3(6)(i)  of 

Act No 63/1993 Coll. on state symbols of the Slovak Republic and their use. 

14.  This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 4 August 2005. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

5