Opinion of the European Central Bank of 11 August 2005 at the request of the Spanish Secretary of State for the Economy on a draft royal decree on the arrangements for the payment of the Banco de España’s profits to the Treasury (CON/2005/30)
Date: 2005-08-11
Institutions: European Central Bank
Subjects: Spain, Treasury, central bank, national law, payment, profit

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 11 August 2005 

at the request of the Spanish Secretary of State for the Economy on a draft royal decree on the 

arrangements for the payment of the Banco de España’s profits to the Treasury 

(CON/2005/30) 

1. 

On 26 July 2005, the European Central Bank (ECB) received a request from the Spanish Secretary 

of State for the Economy for an opinion on a draft royal decree on arrangements for the payment of 

the Banco de España’s profits to the Treasury (hereinafter the ‘draft royal decree’). 

2. 

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

the European Community and on the third indent 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  royal  decree  concerns  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. 

The  draft  royal  decree  is  based  on  the  power  granted  to  the  Government  by  the  second  final 

provision of Law 12/1998 of 28 April amending the Law of Autonomy of the Banco de España to 

determine, by way of government regulation, the rules for the payment of the Banco de España’s 

profits to the Spanish Treasury. 

4. 

The draft royal decree would replace Royal Decree 1080/2002 of 22 October which applied from 

the  financial  year  2002  until  the  financial  year  2004.  Royal  Decree  1080/2002  in  turn  replaced 

Royal  Decree  1746/1999  of  19  November,  which  applied  until  the  financial  year  2001.  The 

provisional nature of these Royal Decrees was a precaution triggered by the need to evaluate the 

application of Decision ECB/2001/16 of 6 December 2001 on the allocation of monetary income of 
the national central banks of participating Member States from the financial year 20022. 

5. 

Both Royal Decree 1746/1999 and Royal Decree 1080/2002 were the subject of consultation with 

the ECB. They established the same schedule for payment to the Treasury of profits accrued to the 

Banco de España and recorded by it, as follows:  

- 

In November of each year, 70% of the profits accrued and recorded by 30 September of the 

same financial year. 

1  
2  

OJ L 189, 3.7.1998, p. 42. 
OJ L 337, 20.12.2001, p. 55. 

 
 
 
                                                           
- 

- 

In February of each year, 90% of the profits accrued and recorded by 31 December of the 

preceding financial year, discounting the instalment paid in November. 

The  remaining  profits,  following  approval  by  the  Government  of  the  Banco  de  España’s 

accounts for the financial year. 

6. 

The ECB has already had the opportunity to comment on the rules for the distribution of the Banco 
de España’s profits to the Treasury in ECB Opinions CON/99/16 and CON/2002/143.  

7. 

The draft royal decree introduces two changes to the current arrangements for the payment of the 

Banco  de  España’s  profits  to  the  Treasury,  as  follows:  (i)  the  second  payment  of  profits  to  the 

Treasury  would  be  delayed  from  February  to  March;  and  (ii)  profits  could  be  excluded  from 

payment to the Treasury upon authorisation by the Council of Ministers. 

8. 

The ECB notes that the deferral to March of the following financial year of the second payment of 

profits  to  the  Treasury  is  a  change  of  a  purely  technical  nature  that  would  nevertheless  relieve 

operational pressures relating to closure of the Banco de España’s accounts.  

9. 

The  ECB  welcomes  the  amendment  proposed  by  the  draft  royal  decree  to  enable  the  Council  of 

Ministers to authorise the exclusion from payment to the Treasury of part of the Banco de España’s 

profits. In this respect, the ECB recalls that according to the doctrine expressed by the European 

Monetary  Institute  (EMI)  and  the  ECB  in  their  convergence  reports,  the  principle  of  financial 

independence of central banks requires that the ‘NCBs should be in a position to avail themselves 
of  the  appropriate  means  to  ensure  that  their  ESCB-related  tasks  can  be  properly  fulfilled4.’  The 

NCBs must also, at all times, have sufficient financial means to carry out their other functions, i.e. 

to  perform  their  national  tasks,  to  meet  their  international  obligations  and  cover  properly  their 
administrative and operational expenses5. It should be noted that Article 28.1 and Article 30.4 of 

the Statute of the European System of Central Banks and of the European Central Bank provide for 

further  calls  on  the  NCBs  to  make  further  contributions  to  the  capital  of  the  ECB  and  to  make 

further  transfer  of  foreign  reserves.  The  principle  of  financial  independence  requires  that 
compliance  with  these  provisions  leaves  an  NCB’s  ability  to  perform  its  functions  unimpaired6. 

Therefore, the ECB welcomes the flexibility afforded by the draft royal decree which would allow 

the Banco de España to be able to retain part of its profits, thereby enabling it to build up financial 

reserves that should help to guarantee the availability of appropriate independent financial means to 

meet its obligations. 

3  

4  
5  

6  

ECB  Opinion  CON/99/16  of  28  October  1999  at  the  request  of  the  Banco  de  España  on  a  draft  Royal  Decree  on  the 
arrangements  for  the  payment  of  the  Banco  de  España’s  profits  to  the  Treasury  and  ECB  Opinion  CON/2002/14  of 
25 April 2002 at the request of the Spanish Secretary of State for the Economy, Energy and Small and Medium-Sized 
Enterprises  on  a  draft  Royal  Decree  on  the  arrangements  for  the  payment  of  the  Banco  de  España’s  profits  to  the 
Treasury. 
Page 295 of the EMI’s Convergence Report, March 1998. 
See Paragraph 6 of ECB Opinion CON/2003/22 of 15 October 2003 at the request of the Finnish Ministry of Finance on 
a draft government proposal to amend the Suomen Pankki Act and other related acts. 
See page 28 of the ECB’s Convergence Report 2004. 

2 

 
                                                           
10.  The ECB notes that the draft royal decree establishes no procedures in relation to the authorisation 

to retain part of the Banco de España’s profits. In this respect, the ECB has expressed the view in a 

previous  opinion  that  financial  independence  requires  that  rules  on  the  distribution  of  NCBs’ 
profits should not afford ad hoc discretion to third parties, and in particular to political authorities7. 

The ECB therefore welcomes the inclusion of a safeguard clause in Article 2(2) of the draft royal 

decree, which states that the rules laid down in the draft royal decree ‘shall not limit in any way the 

appropriate performance of tasks attributed to the Banco de España within the European System of 

Central Banks.’ Nevertheless, the ECB suggests that the provisions on the exclusion of part of the 

Banco de España’s profits from distribution to the Spanish Treasury should be made more specific. 

It would, in particular, be appropriate if they establish the procedure leading to authorisation by the 

Council  of  Ministers,  including  the  role  of  the  Banco  de  España  in  initiating  such  procedure  in 

order to create additional legal certainty and avoid any exercise of discretion in this context. 

11.  As stated by the ECB in its previous opinions on this matter, the proposed measures do not conflict 

with the current ECB regime for the issue of euro banknotes and the allocation of monetary income 

of  NCBs  of  the  participating  Member  States,  established  under  Decision  ECB/2001/15  of 
6 December 2001 on the issue of euro banknotes8 and Decision ECB/2001/16. 

12.  Decision ECB/2001/16 lays down a transitional period for the allocation of monetary income to the 

NCBs,  which  lasts  until  the  financial  year  2007.  The  ECB  notes  that  the  draft  royal  decree  will 

apply until 2007, in order to reflect the duration of such transitional period. 

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

Done at Frankfurt am Main, 11 August 2005. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

7  
8  

See page 29 of the ECB’s Convergence Report 2004 and Paragraph 6 of ECB Opinion CON/2002/14.  
OJ L 337, 20.12.2001, p. 52. 

3