Opinion of the European Central Bank of 14 May 2009 on broadening the Banque Centrale du Luxembourg’s oversight role by a draft law on payment services, electronic money institutions and settlement finality in payment and securities settlement systems (CON/2009/46)
Date: 2009-05-14
Institutions: European Central Bank
Subjects: Luxembourg, banking supervision, central bank, competition, electronic money, national law, payment system

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 14 May 2009  

on broadening the Banque Centrale du Luxembourg’s oversight role by a draft law on payment 

services, electronic money institutions and settlement finality in payment and securities 

settlement systems  

(CON/2009/46) 

Introduction and legal basis 

On  9  April  2009  the  European  Central  Bank  (ECB)  received  a  request  from  the  Banque  Central  du 

Luxembourg  (BCL)  for  an  opinion  on  a  draft  law  on  payment  services,  electronic  money  institutions 

and  on  settlement  finality  in  payment  and  securities  settlement  systems  (hereinafter  the  ‘draft  law’), 

which also amends the Law of 23 December 1998 on monetary status and on the Banque Centrale du 

Luxembourg (hereinafter the ‘Organic Law of the BCL’).  

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

European  Community  and  the  second,  third  and  fifth  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 provisions1,  as  the  draft  law  contains provisions  on means  of  payment,  the 

BCL and payment and settlement systems. 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 provisions 

1.1  The main purpose of the draft law is to implement in national law Directive 2007/64/EC of the 

European  Parliament  and  of  the  Council  of  13  November  2007  on  payment  services  in  the 

internal  market  amending  Directives  97/7/EC,  2002/65/EC,  2005/60/EC  and  2006/48/EC  and 
repealing Directive 97/5/EC2. In addition: 

(a)  Article 58(3) of the draft law requires the BCL to notify the Conseil de la concurrence (the 

Competition  Council)  when  it  detects  any  infringement  of  competition  rules  related  to 

access to payment systems; 

(b)  Articles  107  to  110  of  the  draft  law  broaden  the  scope  of  the  BCL’s  oversight  role  in 

respect of payment instruments and payment and settlement systems; 

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2  

OJ L 189, 3.7.1998, p. 42.  
OJ L 319, 5.12.2007, p. 1.  

 
 
 
 
                                                 
(c)  Article 124(1) and (4) of the draft law emphasises the BCL’s responsibility for promoting 

the smooth operation of payment systems under Article 105(2) of the Treaty; and 

(d)  Article 124(3) and (5) of the draft law relates to the appointment of an independent auditor 

for  the  BCL  and  removes  the  reciprocity  requirement  with  respect  to  the  exchange  of 

confidential  information  between  the  BCL,  the  Commission  de  surveillance  du  secteur 

financier  (CSSF,  the  Financial  Sector  Supervisory  Commission),  the  Commissariat  aux 

Assurances  (the  Insurance  Commission)  and  the  Service  central  de  la  statistique  et  des 

études économiques (STATEC, the National Statistical Institute).  

1.2  This opinion only addresses the provisions of the draft law relating to the BCL and payment and 

settlement  systems  that  go  beyond  the  strict  implementation  of  Community  directives.  While 

acknowledging  the  importance  of  Directive  2007/64/EC  for  the  establishment  of  the  Single 

European  Payments  Area  (SEPA),  implementation  of  this  Directive  in  national  law  is  not 

addressed in this opinion. Similarly, the implementation of Directive 98/26/EC of the European 

Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities 
settlement systems3 and of Directive 2000/46/EC of the European Parliament and of the Council 

of 18 September 2000 on the taking up, pursuit of and prudential supervision of the business of 
electronic money institutions are not considered in this opinion4.  

2. 

General observations  

The  ECB  welcomes  the  draft  law  which  will  comprehensively  govern  payment  services,  electronic 

money,  and  payment  and  settlement  systems  in  Luxembourg.  Also,  implementation  of  Directive 

2007/64/EC will fulfil the regulatory preconditions for the introduction of SEPA.  

3. 

Specific observations  

3.1  Notification by the BCL to the Conseil de la Concurrence  

Regarding  the  requirement  for  the  BCL  to  inform  the  Conseil  de  la  Concurrence  of  any 
infringement of competition rules related to access to payment systems5, it should be made clear 

that  the  BCL  is  not  responsible  for  the  enforcement  of  competition  policy,  which  remains 

exclusively within the competence of the Conseil de la Concurrence.  

3.2  The BCL’s role with respect to payment instruments and payment and settlement systems  

The BCL’s role with respect to payment instruments and to payment and settlement systems is 

broadened in the two following respects. 

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4  

5  

OJ L 166, 11.6.1998, p. 45. 
OJ L 275, 27.10.2000, p. 39. See also the proposal for a Directive of the European Parliament and of the Council on 
the taking up, pursuit and prudential supervision of the business of electronic money institutions, amending Directives 
2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC (COM(2008) 627 final). 
Article 58(3) of the draft law.  

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First, the CSSF is currently the authority responsible for the prudential supervision of payment 

and securities systems. This responsibility is without prejudice to the tasks and competences of the 

European System of Central Banks pursuant to the Treaty and the Statute of the European System 

of Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB’). As a 

result, all systems in which the BCL participates are considered to be designated as ‘systems’ from 

the moment the BCL gives notice of such systems to the European Commission. Under the draft 

law,  the  BCL  is  given  the  exclusive  power  to  designate  systems  as  payment  and  settlement 
systems and the Ministry of Finance is responsible for their notification to the Commission6.  

Second, under Article 124 of the draft law, the BCL is competent to ‘ensure the efficiency and 

safety  of  payment  systems  and  securities  settlement  systems,  as  well  as  the  safety  of  payment 

instruments’  and  ‘the  means  of  coordination  and  cooperation  employed  for  the  performance  of 

these  tasks  [is]  subject  to  agreement  between  the  BCL  and  the  CSSF,  respecting  the  legal 

competences  of  the  parties’.  In  addition,  under  the  draft  law,  the  BCL  may  require  payment 

systems,  securities  settlement  systems  and  issuers  of  payment  instruments  to  provide  any 

information  relating  to  the  operation  of  these  systems  or  relating  to  payment  instruments  that 

would be necessary in order to assess their efficiency and safety. 

3.2.1  The  ECB  welcomes  these  amendments  since  (a)  they  clarify  the  division  of  competencies 

between the CSSF and the BCL as far as payment instruments, payment systems and securities 

settlement systems are concerned, in line with Article 105(2) of the Treaty and Article 3.1 of the 

Statute  of  the  ESCB,  and  (b)  they  broaden  the  BLC’s  oversight  role  to  cover  all  payment  and 

settlement systems, regardless of their designation under Directive 98/26/EC. The draft law takes 

into  account  the  ECB’s  recommendations  in  Opinion  CON/1999/19,  Opinion  CON/2008/42  and 
Opinion CON/2008/177 and by doing so, further facilitates the BCL’s effective performance of its 

financial stability role, which is supported by its authority to supervise the liquidity management of 
market operators8.  

3.2.2  For the sake of clarity, an express reference to the concept of ‘oversight’, which is recognised as a 
separate function under the Maastricht Treaty9 could be made in Article 2(5) of the Organic law of 
the BCL10. In addition, since the scope of the BCL’s oversight role is broadened, it is necessary to 

ensure  that  the  BCL  is  provided  with  sufficient  human  and  financial  resources,  both  in  terms  of 

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Articles 107 to 110 of the draft law. 
All  ECB  opinions  are  available on the ECB’s  website at www.ecb.europa.eu/ecb/legal/opinions/html/index.en.html.  In 
Opinion CON/1999/19, the ECB stated that the division of competence between the CSSF and the BCL would directly 
infringe the payment system oversight competence of the ECB and would create a situation of conflict between the BCL 
and  the  CSSF  in  relation  to  the  oversight  function.  The  ECB  also  stated  that  this  would  not  allow  for  an  adequate 
distinction to be made between the function of prudential supervision, on the one hand, and those of payment systems 
oversight,  on  the  other  hand.  See  also  paragraph  4.8  of  Opinion  CON/2008/42  and  paragraph  4.4  of  Opinion 
CON/2008/17. 
See paragraph 4.3 of Opinion CON/2008/42. 
See the ‘Eurosystem Oversight Policy Framework’ of February 2009, and in particular its Section 3, available on the 
ECB’s website at www.ecb.europa.eu.  
In Article 27(3) of the Organic law of the BCL, the reference to Article 2(6) should be to Article 2(5). 

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quantity and quality, to carry out its new tasks without affecting its capacity to carry out its other 
Eurosystem-related tasks11.  

3.2.3  According  to  the  explanatory  memorandum  to  the  draft  law12,  the  agreements  to  be  entered  into 

between  the  BCL  and  the  CSSF  under  Article  2(5)  of  the  Organic  Law  of  the  BCL  concern  the 

financing of the BCL’s oversight activities, as the BCL, unlike the CSSF, is not able to levy taxes 
on the financial institutions subject to its oversight. As stated in Opinion CON/2009/713, the BCL’s 

overall  independence  would  be  jeopardised  if  it  could  not  autonomously  avail  itself  of  sufficient 

financial resources to fulfil its mandate. While the ECB notes that, in the context of its oversight 

role over payment systems, securities settlement systems and payment instruments, the BCL may 

request  information  and  undertake  site  visits  to  collect  such  information,  the  ECB  regrets  that, 
despite the recommendations in Opinion CON/2008/1714, the BCL does not yet have the power to 

impose sanctions.  

3.3  Appointment of the BCL’s external auditor  

Under  Article  124(3)  of  the  draft  law,  an  external  auditor  is  appointed  for  five  financial  years. 
This provision follows the principles adopted by the ECB’s Governing Council15.  

3.4  The  exchange  of  information  between  the  BCL,  the  CSSF,  STATEC  and  the  Commissariat  aux 

Assurances  

Article 124(5) removes the reciprocity requirement with respect to the exchange of information 

between the BCL, the CSSF, STATEC and the Commissariat aux Assurances. In Article 124(5) 

of  the  draft  law,  the  phrase  ‘subject  to  reciprocity’  is  deleted.  The  explanatory  memorandum 

explains  that  deletion  of  this  condition  is  necessary  in  order  to  enable  regular  exchanges  of 

information  between  the  competent  authorities  under  normal  circumstances,  and  most 

importantly,  in  a  crisis  situation.  In  the  current  environment,  it  is  crucial  that  the  relevant 

authorities  are  able  to  exchange  information  on  any  difficulties  faced  by  financial  institutions 

(including  payment  and  securities  settlement  systems)  that  may  endanger  their  financial 

soundness and ability to discharge their obligations in the normal course of business. The ECB 

welcomes this change, which indirectly follows up on the recommendation expressed in Opinion 
CON/2009/716 as regards the harmonisation of the rules governing the exchange of confidential 

information between the BCL, on the one hand, and STATEC, on the other hand. 

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16  

See paragraph 3.1 of Opinion CON/2009/27.  
Explanatory memorandum to the draft law, p. 88. 
See paragraph 3.2. 
See paragraphs 4.2 and 4.3. 
Good  Practices  for  the  selection  and  mandate  of  External  Auditors  according  to  Article  27.1  of  the  Statute,  as 
approved  by  the  Governing  Council  of  the  ECB  on  23  October  2008,  which  is  available  on  the  ECB’s  website  at 
www.ecb.europa.eu. 
See paragraph 3.3.  

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

Done at Frankfurt am Main, 14 May 2009. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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