Opinion of the European Central Bank of 19 November 2008 at the request of the Romanian Parliament on a legislative proposal regarding the use of Banca Naţională a României's foreign reserves for tourism development and modernisation (CON/2008/72)
Date: 2008-11-19
Institutions: European Central Bank
Subjects: Romania, central bank, foreign-exchange reserves, tourism

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 19 November 2008  

at the request of the Romanian Parliament 

on a legislative proposal regarding the use of Banca Naţională a României's foreign reserves for 

tourism development and modernisation 

(CON/2008/72) 

Introduction and legal basis 

On  10  October  2008  the  European  Central  Bank  (ECB)  received  a  request  from  the  Romanian 

Parliament’s Senate Commission for Budget, Finance, Banking and Capital Markets for an opinion on a 

legislative  proposal  regarding  the  use  of  Banca  Naţională  a  României’s  foreign  reserves  for  tourism 
development and modernisation1 (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 
provisions2, as the draft law relates to Banca Naţională a României (BNR). 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 

The draft law will allocate EUR 3 billion from Romania’s foreign reserves, managed by BNR, to 
set up the Fund for Development and Modernisation of Tourism (hereinafter the ‘Fund’)3. In return, 

BNR  is  to  receive  interest  equal  to  the  average  capitalisation  of  the  foreign  reserves  for  the  last 
three  years4.  Casa  de  Economii  şi  Consemnaţiuni  C.E.C.  -  S.A.  (CEC  BANK  –  S.A.),  a  State-

owned  undertaking  operating  as  a  bank,  will  manage  the  Fund.  It  will  grant  credit  to  eligible 

borrowers  including  tourist  accommodation  structures  i.e.  graded  hotels  or  guest  houses,  tour 
operators and other public and private law entities involved in the development of ecotourism5. The 

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Draft law registered at the Romanian Senate under L528/03.09.2008. 
OJ L 189, 3.7.1998, p. 42.  
See Article 1(1) of the draft law. 
See Article 2(1) of the draft law. 
See Article 3(1) of the draft law. 

 
 
 
 
                                                 
credit may be granted for a maximum period of 20 years with a grace period of up to five years, 
except for the interest rate6. 

2.   General observations 

2.1  The draft law affects the manner in which BNR manages its foreign reserve holdings by requiring a 

part to be controlled by an outside body (CEC BANK – S.A) and used as funding for the loans to 

the  tourism  sector.  In  this  respect,  the  draft  law  is  incompatible  with  the  requirement  to  ensure 

BNR’s independence under Article 108 of the Treaty, as well as with the prohibition on monetary 

financing specified in Article 101 of the Treaty. For the above reasons, the ECB does not support 

the draft law. The ECB notes that the Romanian Legislative Council and the Senate Commission 

for Economy, Industry and Services have also issued negative opinions on the draft law and have 
voiced concerns regarding its impact on BNR’s independence7.   

2.2  The compatibility of a Member State’s national legislation with the provisions of the Treaty and the 

Statute of the European System of Central Banks and of the European Central Bank (hereinafter the 

‘ESCB Statute’) on central bank independence and the prohibition on monetary financing must be 

ensured  upon  accession  to  the  European  Union.  As  already  emphasised  in  the  ECB’s 
2008 Convergence Report8 and in a previous ECB opinion concerning BNR9, the incompatibilities 

of the Romanian legislation with the Treaty and the ESCB Statute should have been addressed by 

1 January 2007, in line with Article 109 of the Treaty. However, instead of addressing the current 

incompatibilities, the draft law introduces new incompatibilities by limiting BNR’s independence 

and by breaching the prohibition on monetary financing. The draft law is, therefore, fundamentally 

incompatible  with  the  Treaty’s  provisions  on  economic  and  monetary  union  (EMU)  and  its 

enactment  could  trigger  infringement  proceedings  before  the  Court  of  Justice  of  the  European 

Communities.  

2.3  Moreover, the ECB would like to emphasise that, although Member States with a derogation do not 

yet participate in EMU, they have a legal duty to adapt the statutes of their national central banks 

(NCBs)  ‘to  ensure  compatibility  with  the  Treaty  and the  Statute  in  respect  of  Eurosystem-related 
tasks’10.  In  this  respect,  any  legislative  reform  should  aim  to  gradually  achieve  consistency  with 

Eurosystem  standards.  In  this  case,  it  should  facilitate  the  convergence  of  the  Romanian  legal 

framework,  necessary  for  Romania  to  become  a  full  participant  in  EMU  without  the  need  for 

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10  

See Article 6(1) of the draft law. 
Both opinions are available on the Romanian Senate’s website at www.senat.ro. 
See ECB Convergence Report, May 2008, pp. 246 to 249, available on the ECB’s website at www.ecb.europa.eu. 
See  paragraph  2.1  of  ECB  Opinion  CON/2008/31  of  21  July  2008  at  the  request  of  the  Romanian  Parliament  on  a 
legislative proposal amending Law 312/2004 on the Statute of Banca Naţională a României. 
See ECB Convergence Report, May 2008, p. 26. 

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subsequent  legislative  reforms11.  In  particular,  Article  105(2)  of  the  Treaty  defines  holding  and 

management of the official foreign reserves of the Member States as a basic task to be carried out 

through the ESCB. This Treaty provision entails that the competence to take decisions on the use of 

an NCB’s assets remain with the NCB. The adoption of legislation that would impose a compulsory 

allocation of part of a Member State’s foreign reserves in contradiction with the assignment of this 

task to the NCB would be inconsistent with the Treaty, as it would deprive the NCB to that extent 

of one of its basic tasks under the Treaty and transfer from the NCB to a third party a competence 

that the Treaty clearly assigns to the NCBs. 

3. 

Specific observations 

Central bank independence 

3.1.  Article 108 of the Treaty, reinforced by Article 7 of the ESCB Statute, provides for the principle of 

independence  of  the  central  banks  within  the  ESCB.  It  ensures  that  the  primary  ESCB 
objective of price stability12 is served by fully independent central banks with a precisely defined 
mandate13.  In  particular,  central  bank  independence  crucially  upholds  credibility  of  the  central 
bank’s monetary policy, which is a key condition for controlling inflationary expectations14. Also 
contributions  which  the  ESCB  provides  to  stability  of  the  financial  system15  are  rooted  in 
independent  and  credible  standing  of  the  ESCB  central  banks.  Hence,  in  ensuring  BNR’s 

participation  in  the  ESCB  in  compliance  with  the  applicable  Community  law  provisions  it  is  of 

utmost  importance  to  design  an  institutional  structure  that  guarantees  BNR’s  functional, 
institutional, personal and financial independence16.  

3.2 

In  particular,  BNR’s  financial  independence  would  be  jeopardised  if  it  could  not  autonomously 

avail  itself  of  sufficient  financial  resources  to  fulfil  its  mandate,  the  key  element  of  which  is  the 
price stability objective. As noted in the ECB Convergence Reports17, Member States may not put 

their  NCBs  in  a  position  where  they  have  insufficient  financial  resources  to  carry  out  their 

functions. In this regard, NCBs must have sufficient means not only to perform their ESCB-related 

tasks but also their own national tasks, e.g. financing their administration and own operations, and 

covering  their  operational  risks.  The  concept  of  central  bank  independence  should  therefore  be 

assessed from the perspective of whether any third party is able to exercise influence, not only over 

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See, similarly, paragraph 3.4 of the ECB Opinion CON/2008/34 of 4 August 2008 at the request of the Swedish Ministry 
of  Finance  on  a  report  concerning  the  financial  independence  of  Sveriges  Riksbank.  Nevertheless,  statutory 
requirements relating to the full legal integration of an NCB into the Eurosystem need only enter into force at 
the moment that full integration becomes effective, i.e. the date on which the Member State with a derogation 
adopts the euro. 
See Article 105(1) of the Treaty and Article 2 of the ESCB Statute. 
See paragraph 2.1 of ECB Opinion CON/2007/14 of 24 May 2007 at the request of the Hungarian Ministry of Finance on 
a draft law amending the Law on the Magyar Nemzeti Bank. 
See paragraph 6 of ECB Opinion CON/2004/35 of 4 November 2004 at the request of the Hungarian Ministry of Finance 
on a draft law amending the Law on Magyar Nemzeti Bank. 
See Article 105(5) of the Treaty and Article 3.3 of the ESCB Statute. 
See paragraph 2.3 of ECB Opinion CON/2008/31. 
See ECB Convergence Report, December 2006, p. 27; ECB Convergence Report, May 2008, p. 20. 

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performance  of  an  NCB’s  tasks,  but  also  over  its  ability  to  fulfil  its  mandate,  understood  both 
operationally in terms of manpower, and financially in terms of appropriate financial resources18.  

3.3  Under the draft law, part of BNR’s foreign reserve holdings would be taken outside BNR’s control 

and management, and hence BNR would not have the possibility to hold and manage such part of 

the foreign reserve holdings in an independent manner. Such draft law provisions are incompatible 

with the principle of central bank financial independence under Article 108 of the Treaty. 

Compliance with the prohibition on monetary financing 

3.4  Article 101 of the Treaty provides that ‘overdraft facilities or any other type of credit facilities with 

the ECB or with the central banks of the Member States … in favour of … central governments, 

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

undertakings  …  shall  be  prohibited  …’.Article  21.1  of  the  ESCB  Statute  mirrors  this  provision. 

Council Regulation  (EC)  No  3603/93  of  13  December  1993  specifying  definitions  for  the 
application  of  the  prohibitions  referred  to  in  Articles  104  and  104b(1)  of  the  Treaty19  (now 

Articles 101  and  103(1)  of  the  Treaty)  further  clarifies  the  precise  scope  of  application  of  the 

monetary  financing  prohibition.  It  specifies  that  the  prohibition  under  Article  101  of  the  Treaty 
includes  any  financing  of  the  public  sector’s  obligations  vis-à-vis  third  parties20.  The 

abovementioned  Community  law  provisions  are  therefore  intended  to  prohibit  NCBs  from 
financing the public sector21.  

3.5  The draft law provisions allocating a part of BNR’s foreign reserve holdings as a contribution to 

the Fund so that they can be invested in tourism development and modernisation, i.e. with the view 

to providing credit to a specified national economic  sector, and hence accepting a commensurate 

level  of  market  and  credit  risk,  constitute  a  breach  of  the  monetary  financing  prohibition  under 

Article 101  of  the  Treaty.  Such  allocation  of  foreign  reserve  holdings  is  not  connected  with  any 

statutorily-defined BNR objectives or tasks. Noting that State support to the tourism sector is the 
declared purpose of the draft law22, the draft law’s allocation of BNR’s foreign reserves needs to be 

considered  as  funding  of  credit  facilities  that  would  otherwise  have  to  be  financed  at  the  State’s 

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22  

See e.g. paragraph 9 of ECB Opinion CON/2004/16 of 11 May 2004 at the request of the Italian Ministry of Economic 
Affairs and Finance on a draft law on the protection of savings. See also paragraph 3.3 of ECB Opinion CON/2008/20 of 
21 May 2008 at the request of the Polish Minister for Finance on a draft law amending the Law on trading in financial 
instruments and other legislation. 
OJ L 332, 31.12.1993, p. 1. 
See Article 1(1)(b)(ii) of Regulation (EC) No 3603/93. 
See paragraph 9 of ECB Opinion CON/2003/27 of 2 December 2003 at the request of the Austrian Federal Ministry of 
Finance on a draft Federal law on the National Foundation for Research, Technology and Development. 
See fifth paragraph of the explanatory memorandum to the draft law. 

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expense,  following  normal  budgetary  procedures,  i.e.  financing  of  the  public  sector’s  obligations 

vis-à-vis third parties, as prohibited by Regulation (EC) No 3603/93.  

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

Done at Frankfurt am Main, 19 November 2008. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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