Opinion of the European Central Bank of 7 January 2008 at the request of the Czech Ministry of Finance on a draft law concerning the distribution of powers between the Ministry of Finance and Česká národní banka to prepare and submit certain draft laws to the Government (CON/2008/2)
Date: 2008-01-07
Institutions: European Central Bank
Subjects: Czechia, legislative power, monetary policy, national law, single monetary policy

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 7 January 2008 

at the request of the Czech Ministry of Finance  

on a draft law concerning the distribution of powers between the Ministry of Finance and  

Česká národní banka to prepare and submit certain draft laws to the Government 

(CON/2008/2) 

Introduction and legal basis 

On 12 November 2007 the European Central Bank (ECB) received a request from the Czech Ministry of 

Finance for an opinion on a draft law amending Law No 2/1969 Coll. on the establishment of ministries 

and  other  central  administrative  bodies  of  the  Czech  Republic,  as  amended  (hereinafter  the  ‘Law  on 

competences’), and Law No 6/1993 Coll. on Česká národní banka, as amended (hereinafter the ‘Law on 

ČNB) (hereinafter the ‘draft law’). 

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

European Community and 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 relates to Česká národní banka (ČNB). 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. 

1.  

Purpose of the draft law 

Under the draft law, the Law on competences is amended to extend the Ministry of Finance’s competence 
to cover the areas of the single currency of the European Communities and payment systems2. The Law 

on ČNB will be amended so that ČNB will no longer have the exclusive power to prepare and submit to 

the Government draft laws on currency, circulation of money, the money market, payment systems and 

on  the  status,  competence,  organisation  and  activities  of  ČNB.  Draft  laws  in  these  areas,  with  the 

exception  of  payment  systems,  will  be  prepared  and  submitted  by  ČNB  jointly  with  the  Ministry  of 

1  
2  

OJ L 189, 3.7.1998, p. 42. 
Pursuant to Article 4(1) of the Law on competences, the Ministry of Finance is the central administrative body for, inter 
alia,  the  financial  market  and  the  protection  of  consumer  interests  on  the  financial  market,  save  for  financial  market 
supervision to the extent entrusted to ČNB, and also for foreign exchange affairs. In areas falling within its competence, 
the Ministry of Finance is responsible for preparing draft laws. 

 
 
 
 
                                                 
Finance3.  In  the  areas  of  the  single  currency,  payment  systems,  the  regulation  of  electronic  money 

issuance and foreign exchange management, ČNB will assist the Ministry of Finance in preparing draft 
laws.4 

2. 

General observations  

The ECB has several concerns in relation to the proposed redistribution of legislative power between the 

Ministry of Finance and ČNB as provided for under the draft law, which are set out below.  

3. 

The Ministry of Finance’s competences 

3.1  The single currency  

3.1.1  According  to  the  proposed  amendment  to  Article  4  of  the  Law  on  competences,  the  Ministry  of 

Finance  is  the  central  administrative  body  for,  inter  alia,  ‘the  single  currency  of  the  European 

Communities’.  The  scope  of  this  provision  should  be  limited  to  facilitating  the  preparation  and 

introduction of the euro in the Czech Republic. The wording of the draft law should therefore be 

revised  to  make  it  clear  that  it  only  applies  to  the  preparation  and  introduction  of  the  single 

currency. This would help to avoid any possible misunderstanding about the interpretation of the 

provision, which could be considered as conflicting with the Community legal framework. In this 

regard,  the  ECB  underlines  that  one  of  the  basic  tasks  to  be  carried  out  through  the  European 

System  of  Central  Banks  (ESCB)  is  to  define  and  implement  the  monetary  policy  of  the 
Community5. According to Article 106 of the Treaty, the ECB has the exclusive right to authorise 

the issue of banknotes within the Community, and the ECB and the national central banks (NCBs) 

may issue such notes, whereas Member States may issue coins subject to approval by the ECB of 

the volume of the issue.  

3.1.2  As a more general remark, it should be emphasised that the adoption of the single currency by a 

Member State with a derogation is subject to Articles 121 and 122 of the Treaty. In this respect, the 

ECB  notes  that  the  ECB’s  convergence  reports,  on  the  progress  made  in  the  fulfilment  by  the 

Member States of their obligations regarding the achievement of economic and monetary union, are 

required  to  include  an  examination  of  the  compatibility  between  the  national  legislation  of  such 

Member States and Articles 108 and 109 of the Treaty. 

3  
4  

5  

See Part II, Section II, paragraph 1 of the draft law. 
See Part II, Section II, paragraph 3 of the draft law. Such obligatory assistance of ČNB is already required with respect to 
the preparation of draft laws in the area of the financial market. 
See Article 105(2), first indent, of the Treaty establishing the European Community, which is mirrored in Article 3.1, first 
indent, of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘ESCB 
Statute’). 

2 

 
 
 
                                                 
3.2  Payment systems  

According  to  the  proposed  amendment  to  Article  4  of  the  Law  on  competences,  the  Ministry  of 

Finance is the central administrative body for, inter alia, ‘payment systems, without prejudice to the 

fields  of  competence  of  Česká  národní  banka  pursuant  to  other  legislation’.  The  ECB  notes  that, 

upon  the  future  abrogation  of  the  Czech  Republic’s  derogation,  this  provision  could  result  in  a 

conflict with the Community legal framework in this area. In particular, one of the basic tasks to be 
carried  out  through  the  ESCB  is  the  promotion  of  the  smooth  operation  of  payment  systems6. 

Moreover, the ECB and NCBs may provide facilities, and the ECB may make regulations, to ensure 
efficient and sound clearing and payment systems within the Community and with other countries7. 

3.3  Foreign exchange affairs  

3.3.1  Under Article 4 of the Law on competences, the Ministry of Finance is the central administrative 

body for, inter alia, ‘foreign exchange affairs including the state’s claims and obligations towards 

foreign entities’. In general, the ECB notes in this context that a ‘Member State with a derogation 

may retain national legislation which provides that the government is responsible for the exchange 

rate  policy  of  that  Member  State,  with  a  consultative  and/or  executive  role  being  granted  to  the 

NCB. However, by the time that Member State adopts the euro, such legislation has to reflect the 

fact  that  responsibility  for  the  euro  area’s  exchange  rate  policy  has  been  transferred  to  the 

Community  level  in  accordance  with  Article  111  of  the  Treaty.  Article  111  assigns  the 
responsibility for such policy to the EU Council, in close cooperation with the ECB’8.  

3.3.2  The ECB would also like to point out that Articles 35 and 36 of the Law on ČNB assign a wide 

range  of  responsibilities  related  to  foreign  exchange  management  to  ČNB.  Therefore,  an 

amendment  to  Article  4  of  the  Law  of  competences  could  be  considered  in  order  to  better 

distinguish the responsibilities of the two authorities in this area. 

4. 

Legislative powers concerning ČNB as the central bank 

Under  the  proposed  amendment  to  Article  37(1)  of  the  Law  on  ČNB,  together  with  the  Ministry  of 

Finance ČNB will ‘prepare and submit to the Government draft laws … concerning the status, fields of 

competence,  organisation  and  activities  of  Česká  národní  banka  as  the  central  bank  of  the  Czech 

Republic’. The ECB notes that the draft law implies that legislation in certain areas in which ČNB does 

not act as the central bank can be submitted to the Government only by the Ministry of Finance, and not 

ČNB. The Ministry of Finance can, for example within its powers as the central administrative body in 

charge of the financial market, independently submit to the Government draft laws concerning the status, 

fields of competence, organisation and activities of ČNB to the extent this is without prejudice to ČNB’s 

position as the central bank. Where based on such laws ČNB is entrusted with additional tasks or its tasks 

6  
7  
8  

Article 105(2), fourth indent, of the Treaty, which is mirrored in Article 3.1, fourth indent, of the ESCB Statute. 
Article 22 of the ESCB Statute. 
See the ECB’s Convergence Report 2007, p. 26, available on the ECB’s website at www.ecb.int. 

3 

 
 
                                                 
are  being  changed,  the  ECB  would  reiterate  that  Member  States  may  not  put  their  NCBs  in  a  position 

where they have insufficient financial resources to carry out their ESCB- or Eurosystem-related tasks, as 
applicable9.  Therefore,  the  ECB  expects  that,  when  extending  or  otherwise  changing  ČNB’s  tasks, 

sufficient  financial  and  personnel  resources  will  be  available  to  ČNB,  both  in  terms  of  quantity  and 

quality to carry out all its tasks, and in particular that its capacity to carry out ESCB-related tasks will not 
be affected10. 

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

Done at Frankfurt am Main, 7 January 2008. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

9  
10 

See the ECB’s Convergence Report 2007, p. 19, available on the ECB’s website at www.ecb.int.  
See for example ECB Opinion CON/2007/8 of 21 March 2007 at the request of the Czech Ministry of Industry and Trade 
on certain provisions of a draft law amending the Law on consumer protection relating to Česká národní banka. 

4