Opinion of the European Central Bank of 27 October 2009 on Národná banka Slovenska’s independence (CON/2009/85)
Date: 2009-10-27
Institutions: European Central Bank
Subjects: Slovakia, appointment of staff, central bank, foreign-exchange reserves, institutional activity, national law, profit

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 27 October 2009  

on Národná banka Slovenska’s independence 

(CON/2009/85) 

Introduction and legal basis 

On 20 October 2009 the European Central Bank (ECB) received a request from the National Council of 

the  Slovak  Republic  for  an  opinion  on  draft  amendments  to  Section  VI  of  the  draft  law  on  payment 

services  and  on  amendments  to  certain  laws  (hereinafter  the  ‘draft  law’).  Section  VI  of  the  draft  law 

contains draft amendments to the Law on Národná banka Slovenska (NBS). 

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 NBS. 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 

1.1  The  draft  law  introduces  a  provision on  a  possible  transfer  of  NBS’  profit  to  the  State  budget  or 

State financial assets. According to the draft provision, the Board may decide on a transfer of the 

profit balance or any part thereof to the State budget or State financial assets. 

1.2  The draft law also provides for changes in the composition of the Board and the reappointment of 

its members. The number of Board members will be reduced from 11 to five, with this reduction 

concerning  only  Board  members  appointed  by  the  Government.  The  number  of  Board  members 

will be reduced gradually, as all current Board members will remain until the end of their term of 

office.  The  draft  law  will  allow  members  of  the  Board  to  be  reappointed  without  any  limitation 

except the Governor and the Vice-Governor; under the current law, reappointment was limited to 

two consecutive terms of office. 

1.3  The draft law also introduces a provision aiming to provide for continuity in the Governor’s office, 

with  the  Governor’s  function  and  the  term  of  office  not  ceasing  before  the  effective  date  of  the 

appointment of a new NBS Governor. 

1  

OJ L 189, 3.7.1998, p. 42.  

 
 
 
 
 
                                                 
2. 

General observations 

2.1  The  statutes  of  national  central  banks  (NCBs)  and  any  amendments  thereto  must  safeguard  the 

independence of NCBs, thus ensuring the proper performance of their tasks under the Treaty and 

the Statute of the European System of Central Banks (hereinafter the ‘Statute of the ESCB’). The 

draft  law  contains  amendments  to  the  Law  on  Národná  banka  Slovenska  (NBS)  that  concern 

personal and financial independence of the central bank.  

2.2  With regard to personal independence, the amendments should safeguard the security of tenure and 

the minimum term of office of the Governor and of the other members of decision-making bodies 

involved  in  the  performance  of  ESCB-related  tasks.  Article  14.2  of  the  Statute  of  the  ESCB 

provides  that  the  NCB  statutes  must  provide  for  a  minimum  term  of  office  of  five  years  for  the 

Governor; it also protects against the arbitrary dismissal of Governors, by providing that Governors 

may  only  be  relieved  from  office  if  they  no  longer  fulfil  the  conditions  required  for  the 

performance of their duties or if they have been guilty of serious misconduct. 

2.3  One  of  the  features  of  financial  independence  that  is  most  vulnerable  to  outside  influence  is  the 

distribution of profits and the creation of financial provisions. With regard to profit allocation rules, 

an  NCB’s  statute  may  prescribe  how  profits  are  to  be  allocated.  Moreover,  even  though 

amendments to such rules are possible, it is important to shield the rules related to the distribution 

of profits from third-party interests and to ensure a legal framework that provides a stable and long-
term basis for the central bank’s functioning2. Furthermore, any decision by NCB decision-making 

bodies on allocation of profits should be taken on professional grounds and should not be subject to 

the discretion of third parties unless there is an express safeguard clause stating that this is without 
prejudice to the financial means necessary for carrying out the ESCB or Eurosystem-related tasks3. 

2.4  With regard to financial provisions and buffers, as stressed by the ECB in its convergence reports, 

an NCB must be free to independently create financial provisions to safeguard the real value of its 

capital and assets. 

3. 

Personal independence 

The new wording of Article 7(8)(a) and Article 7(8)(b) provides that the office of the Governor may cease 

only when a new Governor has been appointed. The ECB understands that this new provision is intended 

to  fill  the  gap  between  expiry  of  the  Governor’s  five  year  term  office  or  resignation  from  office,  and 

appointment of a new governor subject to Article 7(4) of the Law on NBS. The wording of this provision 

might  lead  to  a  different  interpretation,  whereby  the  office  of  the  Governor  will  cease  when  a  new 

governor is appointed, whenever this will happen, i.e. even before expiry of the five year term of office, 

or  before  resignation.  In  order  to  avoid  any  possible  misinterpretation  that  could  lead  to  breach  of 

Article 14.2 of the Statute of ESCB, rewording of this provision should be considered. 

2  
3  

See ECB Opinion CON/2007/14. All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 
See the ECB’s Convergence Report May 2008, p. 21. 

2 

 
 
                                                 
4. 

Financial independence 

4.1  Each Member State is obliged to safeguard their NCB’s financial independence, thus ensuring the 
proper  performance  of  its  tasks  under  the  Treaty  and  the  Statute  of  the  ESCB4.  In  particular,  the 

compatibility of the Law on NBS with the central bank independence requirements of Article 108 

of the Treaty and the Statute of the ESCB is of utmost importance, as NBS’ primary objective of 

price  stability  is  best  served  if  it  is  a  fully  independent  institution  with  a  precisely  defined 
mandate5. 

4.2  The ECB welcomes the new wording of Article 39(4) of the Law on NBS which stipulates that the 

profit balance of the NBS or any part thereof may be transferred to the State budget or to the State 

financial assets subject to a decision only by NBS’ Board and in accordance with the Law on the 

budgetary rules for public administration. 

4.3  NCBs must have sufficient financial means to carry out their other functions at all times, i.e. they 

must  be  able  to  perform  their  national  tasks,  to  meet  their  international  obligations  and  to  cover 
their administrative and operational expenses6. The ECB understands that the new third sentence of 

Article 39(4) of the Law on NBS must be read in conjunction with the second sentence thereof, i.e. 

any  NBS  profit  is  first  allocated  to  the  reserve  fund  and  other  funds  created  from  profit  and  is 

intended  to  cover  an  accumulated  loss  from  previous  years.  In  this  context,  it  is  understood  that 

only once the accumulated losses from previous years have been covered may any profit balance be 

transferred to the State budget or to the State financial assets, following a decision by the Board. 

This mechanism is crucial to ensure NBS’ financial independence without weakening its financial 
means  for  implementing  its  monetary  policy7.  The  draft  law  should  be  reworded  regarding 

paragraph 39(4) of the Law on NBS in this respect.  

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

Done at Frankfurt am Main, 27 October 2009. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

4  
5  
6  
7  

Opinion CON/2009/53, paragraph 2.1.  
Opinion CON/2009/26, paragraph 2.1. 
Opinion CON/2009/26, paragraph 2.3; and Opinion CON/2009/53, paragraph 2.2. 
Opinion CON/2009/53, paragraph 3.2. 

3