Opinion of the European Central Bank of 6 August 2010 on amendments to the legal framework for the deposit-guarantee scheme (CON/2010/64)
Date: 2010-08-06
Institutions: European Central Bank
Subjects: Poland, bank deposit, financial stability, guarantee, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 6 August 2010 

on amendments to the legal framework for the deposit-guarantee scheme 

(CON/2010/64)  

Introduction and legal basis  

On 8 July 2010 the European Central Bank (ECB) received a request from the Polish Ministry of Finance 

for an opinion on a draft law (hereinafter the ‘draft law’) amending the Law of 14 December 1994 on the 
Bank Guarantee Fund1 (hereinafter the ‘Law on the Bank Guarantee Fund’).  

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  and  sixth  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 provisions2, as the draft law relates to Narodowy Bank Polski (NBP) and to the 

rules  applicable  to  financial  institutions  insofar  as  they  materially  influence  the  stability  of  financial 

institutions and markets. 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  amends  the  legal  framework  for  the  operation  of  the  national  deposit-guarantee 
scheme  operated  by  the  Bank  Guarantee  Fund  (hereinafter  the  ‘Fund’)3.  The  purpose  of  the 

amendment  includes,  but  is  not  limited  to,  the  transposition  of  Directive  2009/14/EC  of  the 

European  Parliament  and  of  the  Council  of  11  March  2009  amending  Directive  94/19/EC  on 
deposit-guarantee schemes as regards the coverage level and the payout delay4 into the Polish legal 

system by amending, inter alia, the Law on the Bank Guarantee Fund and the Law on Narodowy 
Bank  Polski  of  29  August  19975  (hereinafter  the  ‘Law  on  NBP’).  In  line  with  Article  1(2)  of 

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5  

Consolidated text: Dziennik Ustaw (Dz. U.) of 4 June 2009 No 84, item 711.  
OJ L 189, 3.7.1998, p. 42.  
Participation  in  the  deposit-guarantee  scheme  operated  by  the  Fund  is  mandatory  for  all  banks  established  in  Poland, 
including  cooperative  banks,  but  not  for  the  Polish  version  of  credit  unions  operating  on  the  basis  of  the  Law  of 
14 December 1995 on cooperative savings and loan associations (Dz. U. of 4 January 1996 No 1, Item 2). Branches of 
non-EU banks must, and branches of EU credit institutions may, be covered by the scheme to the extent that their home 
country schemes do not ensure deposit guarantees at the level established in Polish law (Articles 2(3) and 2b of the Law 
on the Bank Guarantee Fund). 
OJ L 68, 13.3.2009, p. 3. 
Consolidated text: Dz.U. of 1 April 2005 No 1, item 2. 

 
 
 
 
                                                 
Decision  98/415/EC,  this  opinion  does  not  concern  provisions  of  the  draft  law  that  have  the 

transposition of the Directive 2009/14/EC into national law as their exclusive purpose.  

1.2  The draft law amends the provisions of the Law on the Bank Guarantee Fund and of the Law on 

NBP that relate to the financing sources of the Fund and to the extension of short-term credit to the 

Fund  by  NBP.  In  this  respect,  the  draft  law:  (a) clarifies  the  procedure  and  order  of  priority 

according to which the various financing sources, including short-term credit from NBP, are drawn 
on by the Fund6; and (b) expands the criteria under which short-term credit is granted by NBP, to 
include a requirement that any such credit should cover urgent needs of the Fund7. 

1.3  The  ECB  has  already  been  consulted  on  several  amendments  to  the  Law  on  the  Bank  Guarantee 

Fund  which  introduced  extensive  adjustments  to  the  method  of  financing,  governance  and 
supervision of the Fund8. 

2. 

Compliance with the monetary financing prohibition 

2.1  Funding  arrangements  for  national  deposit-guarantee  schemes  must  comply  with  the  monetary 

financing  prohibition  under  Article  123  of  the  Treaty.  This  provision  prohibits,  inter  alia,  the 

granting  by  the  national  central  banks  (NCBs)  of  overdraft  facilities  or  any  other  type  of  credit 

facility to the public sector, including a facility in the form of financing public sector obligations 
vis-à-vis third parties9. Compliance with the monetary financing prohibition requires that the short-

term transfers from an NCB to a national deposit-guarantee scheme may only be performed subject 
to strict criteria10. As most recently expressed in the ECB’s Convergence Report of May 2010 ‘the 

costs of financing deposit guarantee schemes and investor compensation schemes must be borne, 

respectively,  by  credit  institutions  and  investment  firms  themselves.  National  legislation  which 

provides for the financing by an NCB of a national deposit insurance scheme for credit institutions 

or  a  national  investor  compensation  scheme  for  investment  firms  would  be  compatible  with  the 

monetary  financing  prohibition  only  if  it  were  short  term,  addressed  urgent  situations,  systemic 
stability aspects were at stake, and decisions were at the NCB’s discretion’11. 

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8 

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11  

See amendments introduced in Articles 7(2)(4) and 15(6) of the Law on the Bank Guarantee Fund by Article 1(4) and 
Article 1(5) of the draft law.  
See Article 16a(5) of the Law on the Bank Guarantee Fund, introduced by Article 1(6) of the draft law, which replaces 
the rules contained in the present Article 34 of the Law on the Bank Guarantee Fund, as repealed by Article 1(15) of the 
draft law.  
See Opinions CON/2007/26, CON/2008/5 and CON/2008/32. All ECB opinions are published on the ECB’s website at 
www.ecb.europa.eu.  
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 and 104b(1) of the Treaty (OJ L 332, 31.12.1993, p. 1). 
See  the  ECB’s  Convergence  Report  December  2006,  p.  30;  the  ECB’s  Convergence  Report  May  2008,  p.  24; 
paragraphs 11 to 14 of Opinion CON/2001/32; paragraphs 11 to 13 of Opinion CON/2005/50; paragraphs 2.1 to 2.3 of 
Opinion CON/2007/26; paragraphs 2.2 to 2.8 of Opinion CON/2008/5; paragraphs 2.2 to 2.4 of Opinion CON/2008/32; 
paragraph  3.2  of  Opinion  CON/2008/69;  paragraph  3.1  of  Opinion  CON/2009/10;  and  paragraph  2.2  of  Opinion 
CON/2009/51. 
See the ECB’s Convergence Report May 2010, p. 25. 

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2.2 

In this regard, the ECB notes that the proposed Article 16a(5) of the Law on the Bank Guarantee 

Fund sets out that ‘After exhausting the resources referred to in [other sections of the Law on the 

Bank Guarantee Fund] and occurrence of a threat to the financial stability, with a view to covering 

urgent needs of the Fund, Narodowy Bank Polski may, at the request of the Fund’s Management 

Board, grant the Fund the short-time credit as referred to in Article 15(6) [of the Law on the Bank 

Guarantee  Fund],  provided  that  adequate  collateral  is  ensured’.  The  ECB  welcomes  these 

amendments as they had been specifically recommended to the Polish authorities in previous ECB 
opinions12 and convergence reports13. The ECB also welcomes the maintenance of the reference to 

the  provision  of  adequate  collateral  by  the  Fund  as  an  additional  requirement  for  granting  short-
term credit by NBP, as also previously suggested by the ECB14. 

2.3  Furthermore, the ECB recommends introducing a legislative correction in proposed Article 16a of 

the  Law  on  the  Bank  Guarantee  Fund.  Under  the  currently  proposed  wording,  the  reference  to 

short-term credit from NBP appears in two separate sections of this Article. The first reference is in 

section  four  where  NBP’s  short-term  credit  is  indirectly  indicated  as  one  of  the  ‘other  sources 

referred  to  in  Article  15’,  which  are  to  be  activated  after  the  resources  referred  to  in  the  three 

preceding  paragraphs  have  been  exhausted.  The  second  reference  is  in  section  five  where  NBP’s 

short-term credit is identified as a source of financing to be activated after the resources referred to 

in the first four paragraphs of Article 16a have been exhausted. This dual reference might result in 

an incorrect interpretation of the proposed provisions following which NBP’s short-term credit may 

be  used  before  all  other  financing  sources  have  been  exhausted.  The  ECB  recommends  that  the 

final  version  of  the  draft  law  clarify  these  provisions,  for  example  by  explicitly  excluding  NBP 

short-term  credit  from  the  cross-reference  to  Article  15  contained  in  section  four  of  Article  16a, 

with  a  view  to  ensuring  that  NBP’s  short-term  credit  unambiguously  remains  the  ‘last-resort’ 
source of financing of the Fund15, only granted in compliance with the strict criteria specified in the 

ECB’s convergence reports. 

2.4  As the result of a further amendment introduced by the draft law, Article 43 of the Law on NBP 

will  include a  reference  to  the  proposed  Article  16a(5)  of  the  Law  on  the  Bank  Guarantee  Fund. 

The  ECB  understands  that  under  the  amended  provisions  NBP  will  retain  full  discretion  in 

assessing if the statutory criteria for granting short-term credit to the Fund are met, and, if this is 

the  case,  whether  to  grant  such  credit.  It  is  indeed  essential  for  compliance  with  the  monetary 

financing prohibition that the legal framework ensures that NBP is able to make its decision at its 

own discretion and in an independent manner.  

12  
13  

14  
15 

See footnote 8.  
See  ECB’s  Convergence  Report  December  2006,  p.  229;  the  ECB’s  Convergence  Report  May  2008,  p.  244;  and  the 
ECB’s Convergence Report May 2010, p. 255.  
See paragraph 2.5 of Opinion CON/2008/32.  
See paragraph 2.6 of Opinion CON/2008/5.

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3. 

Exchange of information between NBP and the Fund 

3.1  The draft law broadens the sources of information that the Fund may use in assessing the financial 

soundness of the credit institutions benefiting from the Fund’s coverage. Under the amended Law 

on the Bank Guarantee Fund: (a) NBP and the Financial Supervision Commission are required to 

inform the Fund about the financial status of the credit institutions, including actions undertaken in 
the case where a balance sheet loss or a solvency threat arises16; and (b) the Financial Supervision 

Commission  is  required  to  inform  the  Fund  about:  (i)  facts  relevant  to  the  assessment  of  the 
proposed plans for the use of the Fund’s financial assistance17; and (ii) circumstances that may lead 
to  the  activation  of  the  Fund’s  payout  guarantees18.  The  Fund  has  the  right  to  request  further 

information  relevant  to  its  tasks  from  NBP,  the  Financial  Supervision  Commission  and  other 
enumerated public authorities19. At the same time, the Law on the Bank Guarantee Fund does not 

include any legal basis for the Fund to provide information that it has collected to other authorities, 
such as NBP20.  

3.2 

In a previous opinion, the ECB recommended that ‘it is important to maintain channels for timely 

central bank access to information concerning financial market participants, relating in particular to 

crisis situations. Such access to prudential information, as possessed, inter alia, by the Fund, will 
allow NBP to properly perform its financial stability role’21. The ECB recommends that the draft 

law  introduces  an  explicit  legal  basis  for  an  agreement  allowing  for  the  sharing  with  NBP  of 

information  in  the  Fund’s  possession  that  is  relevant  to  financial  stability  and  that  is  needed  by 
NBP to: (a) fulfil its own financial stability mandate22; and/or (b) determine whether granting short-

term  credit  to  the  Fund  is  appropriate  in  view  of  the  ‘occurrence  of  a  threat  to  the  financial 

stability’ under proposed Article 16a(5) of the Law on the Bank Guarantee Fund.  

3.3  Moreover, the ECB understands that any information sharing arrangements involving the Fund and 

NBP will be subject to confidentiality safeguards laid down in the agreement entered into between 
NBP  and  the  Fund23.  In  this  context,  the  internal  confidentiality  standards  applicable  within  the 

Fund under Article 38(10) of the Law on the Bank Guarantee Fund should be strengthened so as to 

incorporate  confidentiality  obligations  applicable  specifically  to  the  members  of  the  Fund’s  staff 
and governing bodies, similar to those set out in other sectoral legislation24.  

16  
17  
18  

19  
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21  
22  
23  
24  

See Article 38(3) of the Law on the Bank Guarantee Fund. 
See Article 38(1) of the Law on the Bank Guarantee Fund. 
See  Article  38(3a)  of  the  Law  on  the  Bank  Guarantee  Fund,  introduced  by  Article  1(17)  of  the  draft  law,  which 
transposes the amendment introduced in Article 10(1) of Directive 94/19/EC by Article 1(6) of Directive 2009/14/EC. 
See Article 38(4) of the Law on the Bank Guarantee Fund. 
See Article 38a(2) of the Law on the Bank Guarantee Fund. The Fund may share the possessed information, subject to 
reciprocity and confidentiality safeguards, with counterparty deposit-guarantee schemes in the European Economic Area 
(see Article 38c in connection with Article 2b(2) of the Law on the Bank Guarantee Fund). 
See paragraph 3.3 of Opinion CON/2008/32.  
See Article 3(6a) of the Law on NBP.  
Entering into such an agreement is based on Article 38(5) of the Law on the Bank Guarantee Fund.  
See in particular Article 55 of the Law on NBP and Article 16 of the Law on supervision of the financial market (Dz. U. 
of 4 September 2006 No 157, item 1119); cf. paragraph 15 of the Annex to the Regulation of the Council of Ministers of 

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

Done at Frankfurt am Main, 6 August 2010. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

14  September  2009  on  the  adoption  of  the  Statute  of  the  Bank  Guarantee  Fund  (Dz.U.  of  5  October  2009  No  164, 
Item 1308), establishing confidentiality obligations in relation to members of the Fund’s Council. 

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