Opinion of the European Central Bank of 30 December 2005 at the request of the Estonian Parliament on a draft law amending the Eesti Pank Act (CON/2005/59)
Date: 2005-12-30
Institutions: European Central Bank
Subjects: Estonia, Eurosystem, central bank, money, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 30 December 2005 

at the request of the Estonian Parliament on a draft law amending the Eesti Pank Act 

(CON/2005/59) 

1. 

On  7  November  2005  the  European  Central  Bank  (ECB)  received  a  request  from  Riigikogu  (the 

Estonian  Parliament)  for  an  opinion  on  a  draft  law  amending  the  Eesti  Pank  Act  (hereinafter  the 

‘draft law’). 

2. 

The ECB’s competence to deliver an opinion is based 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 law contains provisions concerning 

the  national  central  bank.  In  accordance  with  the  first  sentence  of  Article  17.5  of  the  Rules  of 

Procedure of the European Central Bank, the European Central Bank has adopted this opinion. 

3. 

The ECB understands that the main objective of the draft law,which will enter into force at the date 

established by a decision of the Council of the European Union on the abrogation of the derogation 

of the Republic of Estonia pursuant to the procedure provided by Article 122(2) of the Treaty, is to 

bring the Eesti Pank Act into line with the Treaty establishing the European Community and the 

Statute  of  the  European  System  of  Central  Banks  and  of  the  European  Central  Bank.  In  the 
Convergence Report 20042, the ECB noted that Estonian law, and in particular the Eesti Pank Act, 

does not anticipate Eesti Pank’s legal integration into the Eurosystem and therefore there is a need 

to  adapt  the  law  to  comply  with  the  requirements  under  Article  109  of  the  Treaty.  In  its 

Convergence  Report  the  ECB  also  strongly  recommended  that,  for  reasons  of  legal  certainty,  a 

change should be made to Article 111 of the Estonian Constitution.  

4. 

The ECB generally welcomes the draft law and, in particular the adaptions which are made with a 

view  to  the  future  inclusion  of  Eesti  Pank  in  the  Eurosystem.  However,  the  ECB  would  like  to 

point out some provisions which still require some further refinements. In this context it should be 

noted  that  Article  109  of  the  Treaty  requires  Member  States  to  ensure  that  national  legislation  is 

compatible with the Treaty and the Statute; any incompatibilities must therefore be removed. The 

Treaty and the Statute do not prescribe the manner in which national legislation must be adapted. 

Legislation may be adapted by making references to the Treaty and the Statute, by incorporating 

1  
2  

OJ L 189, 3.7.1998, p. 42.  
Convergence Report 2004, p. 36. 

 
 
 
                                                      
provisions  thereof  while  referring  to  them,  by  deleting  incompatibilities  or  by  a  combination  of 

these methods. 

5. 

The ECB notes that Article 1 of the draft law states that Eesti Pank is a member of the European 

System of Central Banks (ESCB). The ECB understands that Eesti Pank, in performing the tasks of 

the ESCB, shall act in accordance with the guidelines and instructions of the ECB. Therefore the 

ECB would welcome it if the reference to the legislation of the ECB in the draft Article 1(3) of the 

Eesti Pank Act were to be placed immediately after the reference to the Statute, in order to reflect 

the hierarchy of legal acts.  

6. 

The ECB welcomes Article 2 of the draft law which states that Eesti Pank’s primary objective is to 

maintain price stability. The ECB notes that Eesti Pank’s other objectives have been amended so as 

to  bring  them  into  line  with  Community  law.  In  this  context,  however,  although  the  draft  law 

already contains a general reference to the Treaty, the ECB would welcome a specific reference to 

Article 105(1) of the Treaty. This would reinforce the ECB’s understanding that compliance with 

the objectives under the draft Article 2(1) of the Eesti Pank Act takes priority over compliance with 

the objectives under the draft Article 4(4) of the Eesti Pank Act, which implies that support of the 

general economic policies of the Community takes priority over support of the economic policy of 

the  Estonian  Government.  It  is  also  noted  that  the  list  of  Eesti  Pank’s  tasks  still  contains  some 

imperfections:  first,  the  wording  of  the  draft  Article  2(2)(2)  does  not  follow  the  wording  of 

Article 105(2) of the Treaty and the third indent of Article 3(1) of the Statute; and second, in the 

light of the NCB’s functional independence, it is recommended that the draft Article 2(2)(8) of the 

Eesti Pank Act should also refer to Article 2(2) of the Eesti Pank Act.  

7. 

The  ECB  notes  the  improved  wording  of  Article  3  of  the  draft  law  and  welcomes  the  clear 

reference to the principle of central bank independence. The ECB also welcomes the introduction 

of  Article  16  of  the  draft  law,  which  stipulates  that  the  holding  and  management  of  foreign 

exchange reserves shall be organised pursuant to law, the Statute of Eesti Pank, and the guidelines 

of the Governing Council of the ECB. Similarly, Article 17 of the draft law on the preparation of 

the annual report brings the Eesti Pank Act into line with Article 26.4 of the Statute.  

8. 

The  ECB  notes  that  according  to  Article  10(4)  of  the  Eesti  Pank  Act,  a  Deputy  Governor  may 

deputise for the Governor in his absence. In this context, the ECB welcomes that the draft law now 

also provides for the independence of the Deputy Governors by establishing a term of office of five 

years and by extending the scope of Article 10(3) of the Eesti Pank Act to also include the Deputy 

Governors.  The  draft  law  does  not  make  it  clear  whether  Deputy  Governors  can  be  reappointed, 

and the ECB would welcome clarification of this point. The ECB would also welcome clarification 

of  whether,  under  Article  10(4)  of  the  Eesti  Pank  Act,  the  Supervisory  Council  may  designate  a 

substitute for the Governor only from among the Deputy Governors.  

9. 

Article 19 of the draft law states that the Deputy Governors who are in office on the date of entry 

into force of the draft law will each be deemed to have been appointed for a term of five years from 

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that date. This regime raises some concerns with regard to the stability of the governance system, 

as  their  terms  of  office  will  all  expire  at  the  same  time.  Under  Article  50  of  the  Statute,  the 

members  of  the  ECB’s  Executive  Board  were  initially  appointed  for  less  than  a  full  term,  as  a 

transitional measure. A similar provision concerning the Deputy Governors would be welcome.  

10.  The ECB notes that the draft law does not change Article 11(1) of the Eesti Pank Act. Under the 

first  indent  of  Article  11(1)  of  the  Eesti  Pank  Act,  the  Governor  of  Eesti  Pank  is  exclusively 

responsible for, among other things, shaping monetary and banking policies. This provision does 

not  recognise  the  responsibilities  of  the  ECB’s  decision-making  bodies.  It  is  therefore 

recommended  that  the  words  ‘monetary  and’  should  be  deleted  from  the  first  indent  of 

Article 11(1) of the Eesti Pank Act.  

11.  The ECB notes that Article 12 of the draft law amends Article 14 of the Eesti Pank Act and sets out 

the  rights  of  Eesti  Pank  in  order  to  achieve  the  objectives  stipulated  in  Article  2  of  the  Act. 

Although the list of rights largely complies with the Statute, the article would clearly benefit from 

references  to  the  Statute,  as  the  current  wording  fails  to  refer  to  the  ECB’s  competencies  with 

regard to open market and credit operations, minimum reserves, clearing and payment systems, etc. 

Also,  it  would  be  preferable  for  the  list  of  rights  in  Article  12  of  the  draft  law  to  provide  for 

implementing measures for the other instruments of monetary control referred to in Article 20 of 

the Statute.  

12.  The  ECB  welcomes  Article  13  of  the  draft  law  which  brings  the  Eesti  Pank  Act  into  line  with 

Article  106  of  the  Treaty  and  Article  16  of  the  Statute.  For  the  sake  of  clarity,  it  would  be 

preferable to refer to banknotes and coins as ‘euro banknotes and coins’ throughout the draft law.  

13.  The  ECB  notes  that  Article  14  of  the  draft  law  repeals  Article  15(5)  of  the  Eesti  Pank  Act.  The 

ECB  understands  that  there  will  be  no  need  to  quote  the  exchange  rate  of  the  Estonian  kroon 

against foreign currencies, once the euro has been introduced as the legal tender in Estonia.  

14.  Article 18 of the draft law aims to bring the Eesti Pank Act into line with the Official Statistics Act. 

Against this background, the ECB notes that certain obligations of NCBs relating to the collection 

of statistical information arise from Article 5.2 of the Statute, which is not referred to in the draft 

law. Therefore, the draft law should be amended so as to refer to the Statute.  

15.  There is one issue which was highlighted in the ECB’s Convergence Report 20043 which the draft 

law does not address. Namely, the seventh indent of Article 9(2) in conjunction with Article 31(1) 

of  the  Eesti  Pank  Act,  which  provides  that  the  Supervisory  Board  is  to  appoint  independent 

auditors for Eesti Pank’s accounts, does not recognise the Community’s and ECB’s competence in 

this field under Article 27.1 of the Statute. Furthermore, the last sentence of  Article 31(1) of the 

Eesti  Pank  Act  does  not  recognise  the  powers  of  Eesti  Pank’s  Supervisory  Board  nor  the 

Community’s and ECB’s competence.  

3  

Convergence Report 2004, p. 221. 

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

Done at Frankfurt am Main, 30 December 2005. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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