Opinion of the European Central Bank of 17 March 2009 at the request of the Italian Ministry of Economic Affairs and Finance on a draft Ministerial decree on the management of the Treasury availability account held with the Banca d'Italia (CON/2009/23)
Date: 2009-03-17
Institutions: European Central Bank
Subjects: Italy, Treasury, central bank, money-market liquidity, national law, public debt

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 17 March 2009 

at the request of the Italian Ministry of Economic Affairs and Finance  

on a draft Ministerial decree on the management of the Treasury availability account held with the 

Banca d'Italia  

(CON/2009/23) 

Introduction and legal basis 

On  6  February  2009  the  European  Central  Bank  (ECB)  received  a  request  from  the  Italian  Ministry  of 

Economic Affairs and Finance (MEF) for an opinion on a draft Ministerial decree on the management of 

the Treasury availability account held with the Banca d'Italia (hereinafter the ‘draft decree’). 

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  decree  relates  to  the  Banca  d’Italia.  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 decree 

1.1  The  draft  decree  contains  implementing  provisions  required  by  Article  5(5)  of  the  Law  on 

consolidation  of 

legislative  provisions  and  regulations  on  public  debt  (hereinafter 

the 

‘2003 Consolidated Law’), which regulates the Treasury availability account held with the  Banca 
d’Italia2.  Article  2(39)  of  the  2008  Budget  Law3  amended  Article  5(5)  to  improve  the  current 

remuneration  regime,  in  particular  in  connection  with  the  liquidity  forecasts,  thus  facilitating  the 

implementation of monetary policy, as also indicated in the explanatory memorandum to the draft 

decree.  

1  
2 
3  

OJ L 189, 3.7.1998, p. 42.  
Presidential Decree No 398 of 30 December 2003 (Gazzetta Ufficiale della Repubblica italiana No 57, 9.3.2004, S.O.). 
Law No 244 of 24 December 2007 (Gazzetta Ufficiale della Repubblica italiana No 300, 28.12.2007, S.O.). 

 
 
 
 
                                                 
1.2  On  entry  into  force  of  the  2008  Budget  Law,  Decree-Law  No  248  suspended  the  application  of 
Article 2(39) on the new remuneration regime4, pending ECB Opinion CON/2008/105. The opinion 

analysed whether the proposed changes to Article 5(5) of the 2003 Consolidated Law contravene 

the  objectives  of  the  monetary  financing  prohibition  under  Article  101  of  the  Treaty.  It  also 

analysed the implications for monetary policy implementation.  

2.  General observations 

2.1  The  draft  decree  is  required  to  implement  the  reform  improving  the  remuneration  regime  and 

liquidity  management.  The  ECB  welcomes  the  ongoing  efforts  to  improve  the  management 

procedures (OPTES) for deposit balances held by the MEF with the Banca d’Italia. The draft decree 

represents  a  significant improvement  compared to  past practices. Its scope is limited to  monetary 

policy implementation. In the light of the stance taken in its Opinion CON/2008/10, the ECB also 

considers that, pending appropriate amendments to Article 5(5) of the 2003 Consolidated Law also 

from the point of view of the legislation’s compliance with the monetary financing prohibition, in 

particular with regards to the remuneration of the Treasury account, the issue remains open and the 
ECB's views in its past opinion remain unchanged6. Given the importance of this matter, the ECB 

expects  therefore  to  be  consulted  on  any  further  legislative  initiatives  addressing  remuneration, 

which the ECB understands are under preparation, as also announced in the last paragraph of the 

explanatory memorandum to the draft decree.  

2.2  Article 4 of the draft decree refers to public debt management operations to be performed by the 
Banca d’Italia in the form of auctions, credit or debit transfers or bilateral negotiations7. Taking into 

account  the  express  recognition  in  Article  21.2  of  the  Statute  of  the  European  System  of  Central 

Banks and of the European Central Bank of the provision of fiscal agency services as a legitimate 
function traditionally performed by central banks8, the ECB notes that provision by central banks of 

fiscal agency services should comply with the monetary financing prohibition, provided that such 

services  remain  within  the  field  of  the  fiscal  agency  function  and  do  not  constitute  central  bank 
financing of public sector obligations vis-à-vis third parties9 or central bank crediting of the public 

4  

5  

6  
7  
8  

9  

See  Article  42  of  Decree-Law  No  248  of  31  December  2007  containing  provisions  on  the  extensions  of  deadlines 
provided for by law and urgent measures in financial matters, converted into Law No 31 of 28 February 2008 (Gazzetta 
Ufficiale della Repubblica italiana No 51, 29.2.2008, S.O.). 
ECB Opinion CON/2008/10 of 21 February 2008 at the request of the Italian Ministry of Economic Affairs and Finance 
on some provisions of the Law on the State annual and pluriannual budget (2008 Budget Law). 
See paragraph 3.4 of ECB Opinion CON/2008/10. 
See Article 4(1) to (3), together with Article 3(1) and recital 17 of the draft decree. 
See the ECB’s Convergence Report of May 2008, p. 24, stating that ‘The purpose of Article 21.2 of the Statute was to 
enable NCBs, following transfer of the monetary policy competence to the Eurosystem, to continue to conduct the fiscal 
agent  service  traditionally  provided  by  central  banks  to  governments  and  other  public  entities  without  automatically 
breaching the monetary financing prohibition.’ 
I.e. one of the prohibited forms of monetary financing; see Article 1(1)(b)(ii) of Council Regulation (EC) No 3603/93 of 
13 December 1993 specifying definitions for the application of the prohibitions referred to in Articles 104 [now 101] and 
104b(1)  [now  103(1)]  of  the  Treaty  (OJ  L  332,  31.12.1993,  p.  1).  See  the  ECB’s  Convergence  Report  of  May  2008, 
p. 233, which states with reference to the provision by Česká národní banka of administrative and financial support to the 

2 

 
                                                 
sector outside the narrowly defined exceptions specified in Regulation (EC) No 3603/9310. Against 

this background, the ECB trusts that the tasks assigned to the Banca d’Italia under the draft decree 

will  be  performed  in  compliance  with  the  prohibition  on  monetary  financing  laid  down  in 

Article 101 of the Treaty and Regulation (EC) No 3603/93. 

3. 

Specific observations 

3.1  OPTES procedures 

3.1.1  In its Opinion CON/2008/1011, the ECB, in supporting any attempt to reduce forecasting errors in 

liquidity management, generally welcomed the draft 2008 Budget Law in so far as it attempted to 

make the forecasts of government deposits at the Banca d’Italia more reliable, given the particular 

nature  of  the  management  procedures  (OPTES)  for  government  deposits  in  Italy.  Therefore,  it 
urged the Italian government to implement the proposed reform  as soon as possible12. Moreover, 

the ECB indicated that, without knowing in detail the rules for liquidity management, which would 

be  regulated  by  a  later  MEF  decree,  it  was  not  possible  to  conclusively  assess  the  future 
government  deposit  management  procedures13.  This  opinion  assesses  those  detailed  rules  as  laid 

down in the draft decree.  

3.1.2  The ECB expects the resulting OPTES procedures as a relevant step to address the most immediate 

liquidity  management  weaknesses  in  the  current  OPTES  scheme.  This  includes  providing  for 

symmetrical  conduct  of  OPTES  operations,  both  liquidity  providing  and  liquidity  absorbing, 

without  the  MEF’s  intervention  and  a  mechanism  for  steering  more  precisely  the  end-of-day 

balance on the availability account with a view to preventing same day forecasting errors. 

3.1.3  The ECB recommends introducing quickly the remaining legal acts, as detailed below, required to 

define a fully functional OPTES framework. Only at that stage will a comprehensive evaluation of 

the  framework  be  possible.  The  ECB  also  recommends  modifying  the  OPTES  scheme,  in  the 

medium term so that the banking system rather than the Banca d’Italia holds almost all government 

deposits  at  the  end  of  the  day.  Such  a  scheme  would  not  only  be  the  most  robust  solution  for 

reducing  forecast  errors  on  government  deposits,  but  would  also  lead  to  a  reduced  size  and 

fluctuations in the banking system’s refinancing needs. 

Financial  Arbitrator,  an  administrative  body  entirely  independent  from  the  central  bank,  ‘constitutes  a  form  of  central 
bank financing of the public sector’s obligations’. 
See  Article  4  (non-extendable  intra-day  credits),  Article  5  (crediting,  under  specified  conditions,  the  public  sector’s 
account with cheques issued by third parties) and Article 6 (holding, within specified limits, coins issued by and credited 
to the public sector) of Regulation (EC) No 3603/93.  
See paragraph 3.5.1 of ECB Opinion CON/2008/10. 
See paragraph 3.5.2 of ECB Opinion CON/2008/10. 
See paragraph 3.5.3 of ECB Opinion CON/2008/10. 

10  

11  
12  
13  

3 

 
 
                                                                                                                                                             
3.2 

Implementation of monetary policy 

3.2.1  The  draft  decree  by  itself  is  not  sufficient  to  enable  one  to  judge  whether  the  measures  to  be 

implemented  for  the  management  of  government  deposits  will  reduce  forecasting  errors  and 

improve  overall  the  scheme  for  the  management  of  government  deposits  as  outlined  above.  The 

detailed  rules  will  only  be  further  clarified  in  a  subsequent  technical  decree,  as  mentioned  in  the 
explanatory memorandum14. Without knowing the details of this technical decree, it is not possible 

for the ECB to conclusively assess future government deposit procedures in Italy. 

3.2.2  The  ECB  notes  that  the  current  draft  decree  further  supports  the  changes  initiated  by  the 

2008 Budget  Law,  which  the  ECB  assessed  favourably  in  ECB  Opinion  CON/2008/10.  In 

particular, the draft decree is more explicit regarding the conduct of lending operations, which once 

introduced could greatly improve the performance of OPTES with respect to avoiding forecasting 

errors and biases.   

3.2.3  Article 3 of the draft decree does not prevent the MEF from still exercising discretionary influence 

over  the  Banca  d’Italia’s  conduct  of  liquidity  operations  under  OPTES.  These  operations  must 

follow an automatic procedure, which initiates transactions once the balances are above or below 

the forecast threshold sent to Banca d’Italia. In particular, as stated in ECB Opinion CON/2008/10, 

the procedures should in any event leave no scope for the liquidity operations under OPTES to be 

specified in accordance with interest rates. 

3.2.4  The  explanatory  memorandum  mentions  that  a  subsequent  ministerial  decree,  as  referred  to  in 

Article 6 of the draft decree, will specify the financial assets that can be used as guarantees in the 

context of lending operations. The ECB urges the MEF to adopt provisions on the financial assets 

to  be  used  in  these  operations  as  soon  as  possible  to  implement  the  changes  provided  for  by  the 

2008 Budget Law which aim to reduce forecasting errors in the OPTES procedures. 

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

Done at Frankfurt am Main, 17 March 2009. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

14  

Such a decree would be similar to Ministerial Decree No 64302 of 16 June 2006, which specifies in detail the current 
OPTES procedures. 

4