Opinion of the European Central Bank of 4 November 2005 at the request of the Polish Minister of Finance on a draft law amending the Foreign Exchange Law (CON/2005/44)
Date: 2005-11-04
Institutions: European Central Bank
Subjects: Poland, financial supervision, foreign currency, free movement of capital, money, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 4 November 2005 

at the request of the Polish Minister of Finance  

on a draft law amending the Foreign Exchange Law 

(CON/2005/44) 

1. 

On 24 August 2005 the European Central Bank (ECB) received a request from the Polish Minister 

of  Finance  for  an  opinion  on  a  draft  law  (hereinafter  the  ‘draft  law’)  amending  the  Foreign 
Exchange Law of 27 July 20021 (hereinafter the ‘Foreign Exchange Law’) and the Penal Treasury 
Code of 10 September 19992. 

2. 

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

the European Community, and in particular on the first, second 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  provisions3,  as  the  draft  law  concerns  currency 

matters,  means  of  payment  and  Narodowy  Bank  Polski  (NBP).  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.  

General comments 

3. 

Because  of  its  interest  in  the  application  in  the  ten  Member  States  that  acceded  to  the  European 

Union on 1 May 2004 of the provisions of the Treaty concerning the free movement of capital and 
payments4, the ECB has closely monitored developments in Polish foreign exchange regulation. In 

particular, the ECB took note of the comprehensive reform brought about by the introduction of the 

Foreign Exchange Law with effect from 1 October 2002.  

4. 

The  ECB  welcomes  the  fact  that  the  draft  law  further  enhances  the  free  movement  of  capital  by 

eliminating  certain  procedural  requirements  imposed  on  credit  institutions  in  connection  with  the 

existing regime for granting general or individual foreign exchange permits for foreign exchange 

transactions.  The  ECB  also  welcomes  the  fact  that  the  draft  law  introduces  a  greater  degree  of 

transparency for the application of the rules for granting foreign exchange permits.  

1  
2  
3  
4  

Dziennik Ustaw (Dz. U.) (Journal of Laws) 2002 No 141, Item 1178, as amended. 
Dz. U. 1999 No 83, Item 930, as amended. 
OJ L 189, 3.7.1998, p. 42. 
In this opinion reference is only made to the applicable provisions of the Treaty regarding the free movement of capital 
and payments. No reference is made to corresponding provisions of the Agreement on the European Economic Area of 
2 May 1992, as adjusted by the Protocol of 17 March 1993 (OJ L 1, 3.1.1994, p. 3). 

 
 
 
                                                           
Specific comments regarding the draft law 

5. 

It  is  a  general  principle  under  the  existing  provisions  of  the  Foreign  Exchange  Law  that  foreign 

exchange permits are automatically awarded if there is no threat to State security, public order, the 
balance of payments or other fundamental interests of the State5. The draft law would amend this 

provision to state that foreign exchange permits are awarded if there is no threat to State security, 

public  order,  the  balance  of  payments  and  no  infringement  of  restrictions  concerning  turnover  in 

foreign  exchange  convertible  instruments  arising  from  other  acts  and  decisions  by  international 
organisations  of  which  Poland  is  a  member6.  The  ECB  has  three  specific  remarks  regarding  this 

key provision of the draft law. 

6. 

First, the ECB welcomes  the proposed deletion of ‘other fundamental interests of the State’ as a 
ground for denying a foreign exchange permit7. This undefined and imprecise criterion falls outside 

the list of exceptions to the free movement of capital permitted under Article 58 of the Treaty.  

7. 

Second,  regarding  the  criterion  of  a  ‘threat  to  State  security  or  public  order’,  the  ECB  would 

emphasise that the retention of this criterion, while in line with the ‘measures which are justified on 

grounds of public policy or public security’ that Member States are allowed to take under Article 

58(1)(b)  of  the  Treaty,  should  not,  in  accordance  with  Article  58(3)  of  the  Treaty,  constitute  ‘a 

means  of  arbitrary  discrimination  or  a  disguised  restriction  on  the  free  movement  of  capital  and 

payments  […]’.  It  is  recalled  that  in  accordance  with  case-law  of  the  Court  of  Justice,  while 

Member States are still, in principle, free to determine the requirements of public policy and public 

security  in  the  light  of  their  national  needs,  these  concepts  must,  in  the  Community  context  and 

where they are, in particular, used as a justification for derogating from the fundamental principle 

of  free  movement  of  capital,  be  interpreted  strictly,  so  that  their  scope  cannot  be  determined 

unilaterally  by  each  Member  State  without  being  subject  to  control  by  the  institutions  of  the 
Community8.  

8. 

Third, as regards the wording ‘threat to the balance of payments’, which the draft law proposes to 

retain, it is noted that this criterion remains outside the scope of the exceptions in Article 58 of the 

Treaty,  and  as  such  should  only  be  considered  as  relevant  in  the  extraordinary  circumstances 

envisaged  by  Articles  119  and  120  of  the  Treaty.  In  this  regard,  the  ECB  notes  that  under  the 

Foreign  Exchange  Law  the  Polish  Council  of  Ministers,  after  inviting  NBP’s  Monetary  Policy 

Council to express its opinion, may introduce special restrictions on cross-border foreign exchange 

operations  where  indispensable  to  ensure  a  stable  balance  of  payments  in  situations  of  general 
instability, a sudden collapse or a threat arising out of any of the foregoing9. This description of the 

5  
6  
7  
8  

9  

Article 6(1) of the Foreign Exchange Law. 
Article 1(5) of the draft law in conjunction with Article 10(1)(1) of the Foreign Exchange Law. 
Article 1(5) of the draft law.  
See  Case  C-54/99  Église  de  scientologie  de  Paris  and  Scientology  International  Reserves  Trust  v  The  Prime  Minister 
[2000] ECR I-1335, Paragraph 17-19 (citing Case 36/75 Rutili v Minister for the Interior [1975] ECR 1219, paragraphs 
26-27). 
Articles 10(1), 10(3) and 62 of the Foreign Exchange Law. 

2 

                                                           
circumstances in which special restrictions may be introduced on grounds of balance of payments 

difficulties generally corresponds with the grounds specified in Articles 119 and 120 of the Treaty, 

which  refer  to  situations  where  a  Member  State  is  in  difficulties  or  is  seriously  threatened  with 

difficulties as regards its balance of payments, or where a sudden crisis in the balance of payments 

occurs. The ECB notes, however, that Articles 119 and 120 of the Treaty will cease to apply from 

the beginning of the third stage of economic and monetary union, meaning that Poland will only be 

allowed to rely on these exemptions from the free movement of capital until such time as it adopts 

the euro. Given that the Foreign Exchange Law already provides that certain provisions authorising 

the introduction of special restrictions are rendered void from the day of Poland’s accession to the 
EU10, the ECB suggests that it might be helpful to introduce a parallel provision clarifying that the 

abovementioned provision authorising the introduction of special restrictions on grounds of balance 

of  payments  difficulties  will  be  rendered  void  from  the  date  on  which  Poland  adopts  the  euro. 

Finally,  as  regards  the  period  before  Poland  adopts  the  euro,  the  ECB  would  emphasise  the 

Community’s competence to give final judgment as regards the compatibility with Articles 119 and 

120 of the Treaty of any special restrictions introduced on balance of payments grounds.  

9. 

The draft law amends the Foreign Exchange Law to provide that certain restrictions applicable to 

the  turnover  in  foreign  exchange  convertible  instruments  do  not  apply  where  one  of  the  parties 

involved, ‘acting for its own account’, is a bank or financial institution ‘operating in the country’ 

under supervision by supervisory authorities authorised to supervise certain financial institutions on 
the  basis  of  separate  provisions  of  law11.  The  ECB  has  two  specific  remarks  regarding  this 

provision. 

10.  First,  the  ECB  understands  that  the  requirement  for  a  bank  or  financial  institution  which  avails 

itself  of  this  less  onerous  treatment  to  ‘operate  in  the  country’  means  that  the  bank  or  financial 
institution  in  question  should  operate  in  the  territory  of  the  Republic  of  Poland12.  Insofar  as  the 

concept  of  a  bank  or  financial  institution  for  the  purposes  of  this  provision  is  limited  to  Polish 

banks  and  financial  institutions,  to  the  exclusion  of  credit  and  financial  institutions  operating  in 

other  Member  States,  this  amended  provision  would  place  banks  and  financial  institutions  from 

other  Member  States  at  a  disadvantage.  Under  Article  12  of  the  Treaty,  any  discrimination  on 

grounds of nationality within the scope of application of the Treaty, including the Treaty provisions 

on  the  free  movement  of  capital,  is  prohibited.  The  ECB  would  therefore  recommend  an 

amendment  to  the  draft  law  clarifying  that  all  EU  credit  and  financial  institutions  recognised  in 

accordance  with  the  single  licence  arrangements  under  Community  law  and  operating  under  the 

supervision of the competent authorities of the Member States are included within the concept of 

banks and financial institutions for the purposes of this provision. 

10  
11  
12  

Article 62 of the Foreign Exchange Law. 
Article 1(2)(a) of the draft law, amending Article 3(3) of the Foreign Exchange Law. 
Article 2(1)(4) of the Foreign Exchange Law. 

3 

                                                           
11. 

Second,  because  the  term  ‘financial  institution’  is  not  defined  in  the  Foreign  Exchange  Law,  the 

scope  of  entities  covered  by  this  concept  is  not  entirely  clear.  In  particular,  the  requirement  for 

supervision  by  the  authorities  entitled  to  supervise  certain  financial  institutions  is  insufficiently 

precise to remove all doubt as to exactly which financial institutions are covered. Since there is no 
standard definition of a ‘financial institution’ under Polish law13, it would be helpful to clarify this 

term  in  the  Foreign  Exchange  Law  so  as  to  avoid  any  misinterpretation  regarding  the  scope  of 

financial services providers covered by the relevant exemptions from foreign exchange restrictions. 

This  might  be  done  by  reference  to  a  specific  definition  already  contained  in  certain  existing 

statutory  provisions  (e.g.  in  Polish  banking  law).  While  drafting  an  appropriate  definition  lies 

within the Polish authorities’ discretion, the ECB notes that the principle of non-discrimination as it 

applies  to  financial  institutions  from  other  Member  States  is  one  of  the  fundamental  Community 
principles inherent in Treaty14. 

12.  The  Foreign  Exchange  Law  states  that,  as  a  general  rule,  the  exportation  and  dispatch  abroad  of 

foreign  exchange  gold  or  foreign  exchange  platinum  is  subject  to  the  requirement  to  obtain  a 

foreign exchange permit. However, there are a number of exemptions to this general rule, including 

(i) permission for residents conducting a business activity in the area of processing and trading in 

precious  metals  to  export  foreign  exchange  gold  or  platinum  relating  to  such  activities,  and 
(ii) permission  for  the  export  of  gold  coins  issued  by  the  NBP15.  The  ECB  notes  that  the 

abovementioned exemptions do not cover all possible situations where a resident may wish to rely 

on the freedom guaranteed by Article 56 of the Treaty in order to export or dispatch abroad foreign 

exchange  gold  and  platinum.  Furthermore,  it  would  be  helpful  for  the  sake  of  completeness  to 

extend  the  exemption  for  gold  coins  issued  by  the  NBP  to  gold  coins  issued  by  other  national 

central banks in the European System of Central Banks. 

13.  Following the observations in paragraph 12, and as a more general remark, the ECB is of the view 

that, while the Foreign Exchange Law has already been significantly liberalised in order to ensure 

13  

14 

15  

The  definition  of  a  ‘financial  institution’  contained  in  Article  4(1)(7)  of  the  Banking  Law  of  29  August  1997  (Dz.  U. 
2002  No  72,  Item  665,  as  amended)  reproduces  the  definition  laid  down  in  Directive  2000/12/EC  of  the  European 
Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions 
(OJ L 126, 26.5.2000, p. 1). Other statutory definitions of ‘financial institution’ include those contained in Article 4(1)(7) 
of  the  Commercial  Companies  Code  of  15  September  2000  (Dz.  U.  2000  No  94,  Item  1037,  as  amended)  and  in 
Article 2(10) of the Act on Individual Pension Accounts of 20 April 2004 (Dz. U. 2004 No 116, Item 1205). 
The importance of the application of the principle of non-discrimination with regard to credit institutions should be taken 
into  account  with  regard  to  Article  15(2)  of  the  Foreign  Exchange  Law,  where  the  ECB  sees  no  reason  for  excluding 
credit  institutions  from  other  Member  States  from  the  scope  of  the  exemption  in  respect  of  agreements  for  the  sale  of 
foreign  means  of  payment  acquired  within  the  framework  of  foreign  exchange  market  operations,  as  concluded  by  a 
registered business entity with a Polish bank. 
See  Article  9(2)  of  the  Foreign  Exchange  Law;  Paragraphs  6(1)  and  8  of  the  Regulation  of  3  September  2002  of  the 
Minister of Finance on general foreign exchange permits (Dz. U. 2002 No 174, Item 1273, as amended) (hereinafter, the 
‘General  Foreign  Exchange  Permits  Regulation’).  Similarly,  under  the  Foreign  Exchange  Law  the  exportation  and 
dispatch abroad of domestic or foreign means of payment with an aggregate value in excess of EUR 10 000 is stated, as a 
general  rule,  to  be  subject  to  the  requirement  to  obtain  a  foreign  exchange  permit  (see  Article  9(3)  of  the  Foreign 
Exchange Law). However, there are a number of exceptions to this general rule which render it practically ineffective, 
since  residents  and  non-residents  are  permitted  to  export  or  dispatch  abroad  domestic  or  foreign  means  of  payment 
exceeding  EUR  10  000  where  the  money  either  (i)  is  withdrawn  from  a  bank  account  or  purchased  from  a  bank  with 
means accumulated in a bank account or (ii) comes from other sources, provided that the means of payment are declared 
in a written form to the customs authorities or the border guard exercising customs control (see Paragraphs 4, 4a and 4b 
of the General Foreign Exchange Permits Regulation). 

4 

                                                           
the  free  flow  of  capital,  it  might  be  helpful  to  consider  further  streamlining  and  simplifying  the 

Foreign Exchange Law at some point in the future. For example, at a certain stage in the process of 

liberalisation it may be more practical to provide for general rules of a permissive nature instead of 

establishing  detailed  lists  containing  exemptions  from  general  rules  of  a  restrictive  nature.  The 

latter approach carries the risk of inadvertently retaining restrictions in relation to certain categories 

of entities that are not covered by the relevant exemptions. Moreover, individual foreign exchange 

permits cannot be considered as an effective legal tool for achieving full liberalisation as they are 

issued  on  a  discretionary  basis  and  cannot  ensure  legal  certainty  as  far  as  compatibility  with  the 

Treaty is concerned.  

14.  The draft law requires residents and non-residents exporting domestic or foreign means of payment 

or foreign exchange gold or foreign exchange platinum with a total value exceeding EUR 10 000 to 

present  to  the  customs  or  border  authorities,  without  being  requested  to  do  so,  documents 

confirming  that  they  are  authorised  to  export  the  items  concerned  (or  a  foreign  exchange  export 
permit)16. Similarly, the draft law requires residents and non-residents crossing the Polish border to 

declare  to  the  customs  or  border  authorities  the  importation  into  Poland  of  domestic  or  foreign 

means  of  payment  as  well  as  foreign  exchange  gold  or  platinum  with  a  value  in  excess  of 
EUR 10 00017. The imposition of such obligations may be justified insofar as a prior declaration, 

unlike  a  prior  authorisation,  does  not  have  the  effect  of  suspending  transactions  by  making  them 

conditional in each case on the consent of the administrative authorities, but rather allows national 

authorities  to  exercise  effective  supervision  in  order  to  prevent  infringements  of  their  laws  and 
regulations18. As a general remark, however, and in line with case-law of the Court of Justice, the 

ECB notes that it will be important to ensure that such prior declaration requirements do not have 

the effect of suspending transactions in contravention of Article 56 of the Treaty. 

15.  Under the Foreign Exchange Law, the transfer of money abroad or a settlement in Poland with a 

non-resident  is  subject  to  certain  procedural  requirements  (e.g.  the  requirement  to  document  the 
legal basis for the transfer or settlement)19. Insofar as these requirements might be regarded as an 

obstacle to the free movement of capital and payments under the Treaty, the ECB would refer to 

the remarks already made in paragraph 14 of this opinion concerning the case-law of the Court of 

Justice. In this regard the ECB would welcome the further enhancement of the free movement of 

capital  that  would  result  from  the  removal  of  certain  procedural  requirements  imposed  by  these 

provisions of the Foreign Exchange Law, as this possibility has been introduced by the draft law 

and has been indicated in the statement of reasons provided by the Minister of Finance. 

16  

17  
18  

19  

Article 1(9) of the draft law. See also the regulation issued by the Minister for Finance under Article 21 of the Foreign 
Exchange Law. 
Article 1(8) of the draft law.  
Joined cases C-358/93 and C-416/93 Bordessa and Others [1995] ECR I-361, paragraphs 24-31; Joined cases C-163/94, 
C-165/94  and  C-250/94  Lucas  Emilio  Sanz  de  Lera,  Raimundo  Diaz  Jimẻnez  and  Figen  Kapanoglu  [1995]  I-4821, 
paragraphs 23-30; Case C-302/97 Konle v Austria [1999] ECR I-3099, paragraphs 44-46. 
See Articles 26-27 of the Foreign Exchange Law.  

5 

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

Done at Frankfurt am Main, 4 November 2005. 

[ signed ] 

The President of the ECB 

Jean-Claude TRICHET 

6