Opinion of the European Central Bank of 26 August 2010 on further measures for the restoration of budgetary balance (CON/2010/69)
Date: 2010-08-26
Institutions: European Central Bank
Subjects: Romania, central bank, national law, pay cut

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 26 August 2010  

on further measures for the restoration of budgetary balance 

(CON/2010/69) 

Introduction and legal basis 

On 19 August 2010 the European Central Bank (ECB) received a request from the Romanian Ministry of 

Public Finance for an opinion on a draft government emergency ordinance amending Law No 118/2010 
on  certain  measures  necessary  for  the  restoration  of  budgetary  balance1  (hereinafter  ‘draft  emergency 

ordinance’).  

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 provisions2, as the draft emergency ordinance relates to Banca Naţională a României (BNR). 

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 emergency ordinance 

On  1  July  2010,  the  ECB  adopted  Opinion  CON/2010/51  on  the  draft  of  Law  No  118/2010  which 

decreased the salaries of BNR’s staff and transferred directly to the State budget the amounts representing 

this decrease. In terms of substance, the ECB expressed its concerns mainly with regard to the compliance 

of these provisions with the principles of central bank independence pursuant to Article 130 of the Treaty 

and the monetary financing prohibition pursuant to Article 123 of the Treaty and invited the Romanian 

authorities to amend these provisions accordingly. 

The draft emergency ordinance is intended to bring Law No 118/2010 into line with the abovementioned 

Treaty  provisions,  to  avoid  infringement  proceedings  for  breach  of  Articles  123  and 130 of  the  Treaty. 

Consequently,  it  provides  that  all  the  amounts  representing  the  decrease  of  the  salary  rights  of  BNR’s 

staff will be reflected in BNR’s financial results.  

1  
2  

Monitorul Oficial al României No 441, 30.6.2010. 
OJ L 189, 3.7.1998, p. 42.  

 
 
 
 
 
                                                 
2. 

General observations  

The  Romanian  Ministry  of  Public  Finance  requested  the  ECB  to  deliver  an  opinion  before  28  August 

2010.  While  the  ECB  generally  appreciates  the  swift  reaction  by  the  Romanian  authorities  to  amend 

provisions on which the ECB and the European Commission have expressed serious concerns, there are 

continued  concerns  as  elaborated  below.  The  ECB  would  like  to  point  out  that,  in  cases  of  particular 

urgency which do not allow for a normal consultation period, the consulting authority may indicate such 

urgency in the consultation request and ask for a shorter deadline for the adoption of the ECB opinion. 

Therefore,  the  ECB  understands  the  reasons  for  the  application  of  an  accelerated  legislative  procedure, 

but would appreciate receiving consultations allowing more time for it to prepare its opinion in the future. 

3. 

Specific observations 

3.1  The  ECB  notes  that  the  draft  emergency  ordinance  maintains  the  decrease  of  BNR’s  salaries, 

although the Romanian State is not the formal employer of BNR staff and the Law on the Statute of 
Banca  Naţională  a  României3  clearly  provides  that  BNR’s  management  board  decides  on  BNR’s 

staff  salaries.  In  this  regard,  the  explanatory  memorandum  addresses  only  the  ECB’s  concerns  in 

Opinion CON/2010/51 regarding the monetary financing prohibition whereas BNR’s autonomy in 

staff matters is not discussed.   

In  this  context,  the  ECB  notes  that  Member  States  are  obliged  to  safeguard  the  independence  of 

their national central banks (NCBs), thus ensuring the proper performance of their tasks under the 

Treaty and the Statute of the European System of Central Banks and of the European Central Bank. 

In particular, the principle of central bank independence requires that no third party should be able 

to exercise direct or indirect influence over the NCB. As a consequence, Member States may not 

put an NCB in a position where it has limited or no control over its staff, or where the government 

of  a  Member  State  can  influence  its  policy  on  staff  matters.  This  implies  that  to  protect  BNR’s 

autonomy  in  staff  matters,  a  particular  aspect  of  the  central  bank  independence  principle,  the 

Romanian  authorities  are  under  an  obligation  to  ensure  that  any  amendment  to  the  legislative 

provisions relating to the remuneration of BNR’s staff is decided in close cooperation with BNR, 

taking due account of BNR’s views. 

3.2  Article II of the draft emergency ordinance provides that the amounts representing the decrease of 

the  ‘salary  rights  ...  not  transferred  to  the  State  budget  until  entry  into  force  of  this  emergency 

ordinance  shall  be  reflected  in  the  financial  results  of  Banca  Naţională  a  României’.  The  ECB 

understands  from  this  wording  that  certain  salary  rights  are  still  intended  to  be  and  others  have 

already been transferred to the State budget. For the latter, any such already transferred rights must 

be  transferred  back  adequately  to  avoid  any  breach  of  the  monetary  financing  prohibition  in 

Article 123 of the Treaty. 

3  

Law No 312/2004 (Monitorul Oficial al României No 582, 30.6.2004). 

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3.3  As  regards  the  funds  not  yet  transferred  to  the  State  budget,  in  Opinion  CON/2010/51  the  ECB 

stressed  that  from  an  accounting  perspective,  a  decrease  of  staff  salaries  will  de  facto  decrease 

BNR’s operational costs, hence increasing its financial results leading to a potential increase in its 

financial  resources.  However,  if  this  related  increase  of  BNR’s  financial  resources  is  directly 

transferred to the State, this would effectively mean increasing the funding of the Romanian State at 

BNR’s expense. In this respect, any direct financial transfer of this nature from BNR to the State 

budget can be assimilated to monetary financing, which is clearly prohibited under Article 123 of 

the  Treaty.  In  the  same  vein,  any  circumvention  of  the  objectives  of  the  monetary  financing 

prohibition should be avoided. 

3.4 

In  view  of  Opinion  CON/2010/51  and  to  comply  with  Article  123  of  the  Treaty,  the  draft 

emergency ordinance amends Law No 118/2010, so that all the amounts representing the decrease 

of the salary rights of BNR staff will be reflected in BNR’s financial results. The ECB understands 

that  this  does  not  amount  to  an  instruction  to  BNR  regarding  decisions  taken  in  respect  of  its 

financial results. The ECB notes that BNR  must be  fully independent in deciding how to use the 

funds resulting from the 25% decrease of salaries as it considers appropriate, in accordance with the 

Law  on  its  Statute  and  with  a  view  to  ensuring  sufficient  levels  of  its  own  financial  resources  to 

fulfil its mandate in the long term. Subject to this interpretation of the Law on BNR’s Statute, this 

particular provision complies with the principle of central bank independence, which implies that 

BNR can independently use its financial resources to fulfil its mandate.  

3.5 

If,  however,  the  main  purpose  of  the  salary  rights  cut  were  to  eventually  increase  the  financial 

resources  of  the  State  through  the  distribution  of  increased  profits  from  BNR  to  the  State,  this 

would appear to be a circumvention of the objectives of the prohibition on monetary financing. In 

addition, Article 43 of the Law on the Statute of BNR provides that BNR must transfer to the State 

budget, on a monthly basis, an 80% share of the net revenues left after deducting expenses relating 

to the financial year, including provisions for credit risk, and loss related to the previous financial 

years that remain uncovered. The ECB’s Convergence Report of May 2010 already criticised this 
Article4, as it does not rule out the possibility of an intra-year anticipated profit distribution which, 

in turn, gives rise to concerns relating to the monetary financing prohibition. As noted in past ECB 
opinions5,  it  is  indeed  of  crucial  importance  for  the  distribution  of  profits  to  be  exclusively  the 

result  of  profits  that  are  fully  realised,  accounted  for  and  audited,  which  in  turn  requires  due 

calculation of profits and losses to avoid such possibility. 

3.6  By contrast, a decrease in the operational costs of the central bank with a view to increasing its own 

financial resources to strengthen the performance of its mandate would be acceptable.  

4  
5  

Chapter 6.8. All ECB documents are available on the ECB’s website at www.ecb.europa.eu. 
See e.g. ECB Opinion CON/2008/82. 

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

Done at Frankfurt am Main, 26 August 2010. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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