Opinion of the European Central Bank of 25 March 2010 on independence, confidentiality and the prohibition of monetary financing (CON/2010/25)
Date: 2010-03-25
Institutions: European Central Bank
Subjects: Bulgaria, central bank, confidentiality, conflict of interest, financing method, institutional activity, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 25 March 2010 

on independence, confidentiality and the prohibition of monetary financing 

(CON/2010/25) 

Introduction and legal basis 

On 25 February 2010 the European Central Bank (ECB) received a request from the Bulgarian Minister 

of  Finance  for  an  opinion  on  a  draft  law  amending  the  Law  on  Българска  народна  банка  (Bulgarian 
National Bank) 1 (hereinafter the ‘Law on BNB’), the Law on the prevention and disclosure of conflicts of 
interest2  (hereinafter  the  ‘Law  on  conflicts  of  interest’)  and  the  Administrative  Procedure  Code3 

(hereinafter the ‘Code’) (hereinafter the ‘draft law’). 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning of the European Union 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 provisions4, as the draft law  relates to  Българска народна банка (Bulgarian National Bank) 

(BNB). 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 main purpose of the draft law is to address the observations made in the ECB’s Convergence Report 
of  May 20085  on  legal  convergence,  the  European  Commission’s  Convergence  Report  of  20086  and 
Opinions CON/2008/73 and CON/2009/137. In particular, the draft law:  

(a) 

aligns  the  Law  on  BNB  with  the  institutional  and  personal  independence  requirements  in  Article 

130 of the Treaty, and Article 7 and Article 14.2 of the Statute of the European System of Central 

Banks  and  of  the  European  Central  Bank  (hereinafter  the  ‘Statute  of  the  ESCB’),  with  the 

1 
2 
3  
4 
5 
6 
7  

Published in Darjaven vestnik No 46, 10.6.1997. 
Published in Darjaven vestnik No 94, 31.10.2008 (in force as of 1.1.2009). 
Published in Darjaven vestnik No 30, 11.4.2006. 
OJ L 189, 3.7.1998, p. 42. 
See the ECB’s Convergence Report, May 2008, pp. 229-231. 
COM(2008) 248 final, available on the Commission’s website at www.ec.europa.eu. 
All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 

 
 
 
 
                                                 
confidentiality  requirement  in  Article  37  of  the  Statute  of  the  ESCB  and  with  the  prohibition  of 

monetary financing in Article 123 of the Treaty; 

(b) 

updates the references in the Law on BNB to reflect the wording of the Treaty; 

(c) 

brings the Law on conflicts of interest into line with the requirements for dismissal of members of 

BNB’s decision-making bodies, as set out in Article 14.2 of the Statute of the ESCB. 

2. 

General observations  

2.1  The  ECB  welcomes  the  Bulgarian  authorities’  efforts  to  achieve  the  required  level  of  legal 

convergence by following the recommendations in the ECB’s Convergence Report of May 2008. 

Bulgaria is a Member State with a derogation as referred to in Article 139 of the Treaty and must 
therefore  comply  with  Article 131  of  the  Treaty8.  In  the  Convergence  Report  of  May  2008,  the 

ECB  identified  incompatibilities  and  inconsistencies  between  Bulgarian  legislation,  on  the  one 

hand, and the Treaty and the Statute of the ESCB, on the other hand. The draft law relates to these 

incompatibilities and inconsistencies in the areas of central bank independence, confidentiality and 

the prohibition of monetary financing. 

2.2  The draft law does not address the other identified incompatibilities relating to monetary policy, the 

collection  of  statistics,  official  foreign  reserve  management,  payment  systems,  the  issue  of 

banknotes  and  coins,  the  appointment  of  independent  auditors,  financial  reporting,  exchange  rate 

policy and international cooperation. In this respect, the Law on BNB requires further adaptation to 

ensure BNB’s full integration into the Eurosystem. 

3. 

Specific observations 

3.1 

Institutional independence 

The  proposed  amendment  to  Article  44  of  the  Law  on  BNB  brings  this  provision  into  line  with 

Article  130  of  the  Treaty  and  Article  7  of  the  Statute  of  the  ESCB  regarding  the  principle  of 

institutional independence. 

8 

See the ECB’s Convergence Report, May 2008, p. 26: ‘To comply with Article [131] of the Treaty, national legislation 
had to be adjusted to ensure its compatibility by the date of establishment of the ESCB (as regards Sweden) and by 1 
May 2004 or 1 January 2007 (as regards the Member States which joined the EU on these dates). 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’. 

2 

 
 
 
                                                 
3.2  Personal independence 

Grounds for dismissal of Governing Council members 

The proposed amendment to Article 14(1) of the Law on BNB on the grounds for dismissal of a 
Governing Council member9 fully aligns this Article with Article 14.2 of the Statute of the ESCB. 

The ECB also welcomes proposed Article 3(2) of the Law on conflict of interests, since it removes 

the  grounds  for  dismissal  of  BNB’s  Governing  Council  members  that  are  inconsistent  with  the 

grounds for removal set out in Article 14.2 of the Statute of the ESCB. 

Minimum term of office for Governing Council members 

The  proposed  amendment  to  Article  14(2)  of  the  Law  on  BNB  removes  the  incompatibility  with 

the  Statute  of  the  ESCB  regarding  the  minimum  term  of  office  for  the  members  of  BNB’s 

Governing Council and is in line with Article 14.2 of the Statute of the ESCB.  

Right of judicial review  

Proposed Article 14(3) of the Law on BNB grants jurisdiction to the Supreme Administrative Court 

(SAC)  over  decisions  to  dismiss  any  Governing  Council  member,  including  BNB’s  Governor. 

The ECB welcomes this proposed amendment to the extent that it relates to the Governing Council 
members  other  than  the  Governor10.  Furthermore,  the  ECB  fully  supports  the  draft  law’s 

amendments to the Code, which ensure the SAC’s jurisdiction to decide on dismissal issues related 

to those BNB Governing Council members. Concerning the Governor, the jurisdiction of the SAC 

under proposed Article 14(3) of the Law on BNB should be without prejudice to the jurisdiction of 
the Court of Justice of the European Union under Article 14.2 of the Statute of the ESCB11. In this 

context,  the  ECB  notes  that  Article  14(3)  of  the  Law  on  BNB,  which  will  become  Article  14(4) 

under the draft law, confirms the competence of the Court of Justice of the European Union with 

regard to dismissal issues related to the Governor. In addition, Article 14(3) of the Law on BNB 

constitutes an exception from the proposed Article 14(3) of the draft law, exempting the Governor 

from the scope of the latter. Therefore, proposed Article 14(3) of the draft law should clarify this 

point.  

3.3   Confidentiality 

The  draft  law  amends  Articles  4(2),  13(1)  and  23(2)  of  the  Law  on  BNB  and  introduces  the 

requirement of non-disclosure for information that constitutes professional secrets for BNB, its staff 

9  

10  

11  

In particular, this draft law provision states: ‘The competent authority under Article 12 may only remove a member of the 
Governing Council from office if they no longer fulfil the  conditions required for the performance of their duties or if 
they have been found guilty of serious misconduct’. 
See the ECB’s Convergence Report, May 2008, p. 20: ‘National legislation should also provide for a right of review by 
the national courts of a decision to dismiss any other member of the decision-making bodies of the NCB involved in the 
performance of ESCB-related tasks. This right can either be a matter of general law or can take the form of a specific 
provision. Even though it may be said that this right is available under the general law, for legal certainty reasons it could 
be advisable to provide specifically for such a right of review’. 
The  current  Article 14(3)  of  the Law  on  BNB  will  become  Article  14(4)  of  the Law  on  BNB,  should  the  draft  law  be 
adopted. 

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and  the  members  of  its  Governing  Council,  which  is  in  line  with  Article  37  of  the  Statute  of  the 

ESCB. 

However,  the  proposed  amendment  to  Article 4(2)  of  the  Law  on  BNB  does  not  remove  the 
exception, in the cases provided for by the Law on the protection of classified information12, from 

the obligation not to disclose banking, professional or commercial secret information. As stated in 
the Convergence Report of May 200813, and in view of the proposed amendments to Articles 4(2), 

13(1)  and  23(2)  of  the  Law  on  BNB,  the  ECB  assumes  that  the  exception  in  Article  4(2)  in 

conjunction  with  Articles  13(1)  and  23(2)  of  the  Law  on  BNB  is  without  prejudice  to  the 

confidentiality obligations vis-à-vis the European System of Central Banks and the ECB. The ECB 

recommends clarifying this explicitly in this provision. 

3.4  Monetary financing 

The ECB welcomes the proposed amendment to Article 45(1) of the Law on BNB to remove the 

inconsistency with Article 123(1) of the Treaty regarding the range of public sector entities covered 

by the prohibition of monetary financing. While the range of public sector entities is identical with 

the  list  of  such  entities  enumerated  in  Article  123  of  the  Treaty,  the  ECB  suggests  slightly 

redrafting  the  proposed  Article  45(1)  to  ensure  that  it  accurately  reflects  the  prohibition  of 

monetary  financing  to  cover  both  (a)  lending  ‘to’  the  range  of  public  sector  entities,  and 

(b) purchases of debt instruments ‘from’ the range of public sector entities. 

The prohibition of monetary financing prohibits the direct purchase of public sector debt, but such 

purchases  in  the  secondary  market  are  allowed,  in  principle,  as  long  as  such  secondary  market 

purchases are not used to circumvent the objective of Article 123 of the Treaty. For this reason the 

word ‘direct’ should be inserted in the amendment to Article 45(1) of the Law on BNB. 

Finally,  acknowledging  the  particularities  arising  from  the  currency-board  regime,  i.e.  the 

prohibition on BNB extending credit to credit institutions other than in the context of emergency 
liquidity operations, the ECB reiterates14 the need to bring Article 45(2) of the Law on BNB into 

line  with  Article 123(2)  of  the  Treaty.  Such  alignment  would  certainly  be  mandatory  on  the 

introduction of the euro in Bulgaria. 

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

Done at Frankfurt am Main, 25 March 2010. 

12  
13 
14 

Published in Darjaven vestnik No 45, 30.4.2002. 
See the ECB’s Convergence Report, May 2008, p. 230. 
See the ECB’s Convergence Report, May 2008, p. 230. 

4 

[signed] 

The President of the ECB 

Jean-Claude TRICHET