Opinion of the European Central Bank of 18 April 2011 on strengthening the governance of De Nederlandsche Bank and the Authority for the Financial Markets (CON/2011/37)
Date: 2011-04-18
Institutions: European Central Bank
Subjects: Netherlands, central bank, financial supervision, governance, institutional activity, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 18 April 2011 

on strengthening the governance of De Nederlandsche Bank and the Authority for the Financial 

Markets 

(CON/2011/37) 

Introduction and legal basis 

On 28 February 2011, the European Central Bank (ECB) received a request from the Dutch Minister for 

Finance for an opinion on the draft law on strengthening the governance of De Nederlandsche Bank and 

the Authority for the Financial Markets (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 provisions1, as the draft law relates to De Nederlandsche Bank (DNB). 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 draft law will amend the 1998 Law on the Bank and the Law on financial supervision with a view to 

strengthening the governance of the financial markets supervisory authorities, i.e. DNB and the Authority 

for the Financial Markets (hereinafter collectively referred to as the ‘supervisory authorities’). 

The main issues addressed by the draft law are: (a) the expansion of the tasks of the supervisory boards of 

the supervisory authorities; (b) the limitation on the number of reappointments of the Governing Board 

members of the supervisory authorities; (c) the introduction of general profiles, job profiles and fit and 

proper tests. 

The draft law aims to enhance DNB’s governance by further improving internal ‘checks and balances’ to 

ensure sufficient safeguards within DNB to allow for conscientious decision-making. For this reason, the 

draft law amends the 1998 Law on the Bank and the Law on financial supervision, in a way which takes 

account of DNB’s independence, based on the requirements of the Treaty and the Statute of the European 

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

1  

OJ L 189, 3.7.1998, p. 42.  

 
 
 
 
                                                 
2. 

Amendments under the draft law 

2.1  The role of DNB’s Supervisory Board  

2.1.1  The ECB considers the provisions relating to the enhanced role of DNB’s Supervisory Board to be 

positive  and in  line  with  governance-related  developments  in  general.  The  provisions  ensure  that 

the relevant requirements follow current governance standards. 

2.1.2  One of the Supervisory Board’s new tasks is to draw up Governing Board profiles. There are two 

kinds of profiles. The first is a general profile or profile sketch to be drawn up under Article 1:27a 

(4) of the Law on financial supervision, which requires the Minister’s approval. This profile will 

rely,  to  the  extent  deemed  appropriate,  on  the  general  fit  and  proper  criteria  used  for  financial 

entities.  The  Supervisory  Board  will  further  refine  these  criteria,  but  will  not  go  into  detail  as 

regards  specific  functions  within  the  Governing  Board.  The  second  profile  is  the  job  profile 

referred to in Article 12(3) of the draft law. This profile will be based on the general profile and 

specify  the  suitability  requirements  and  nature  of  the  activities  to  be  carried  out  for  a  specific 

function  within  the  Governing  Board.  In  this  regard,  the  draft  law’s  explanatory  memorandum 

states that the job profile may set out the particular expertise, experience and skills needed for the 
relevant function2. In drawing up such profiles, care should be taken to ensure that the job profiles 

establish  objective  and  clearly  defined  criteria  related  to  the  performance  of  duties  in  order  to 

guarantee a level playing field for all qualified candidates.  

2.1.3  It  is  also  important  that  any  profiles  to  be  drawn  up  will  only  apply  to  future  Governing  Board 

members, and not to current ones. 

2.1.4  The  ECB  understands  that  in  supervising  DNB’s  general  affairs,  the  Supervisory  Board  will  not 

interfere with policy implementation, i.e. decisions on individual cases. The ECB understands from 
the draft law’s explanatory memorandum3 that DNB’s monetary policy and payment transactions, 

in implementation of its central bank tasks regulated under Article 3 of the 1998 Law on the Bank, 

fall  outside  the  scope  of  the  Supervisory  Board’s  internal  supervision.  Consequently,  such 

supervision  will  not  interfere  with  the  performance  of  Eurosystem-related  tasks.  Indeed, 

supervision should never interfere with the performance of any Eurosystem-related tasks provided 

for by the Treaty. 

2.1.5  Furthermore,  Article  C  of  the  draft  law,  which  amends  Article  13  of  the  1998  Law  on  the  Bank, 

requires  the  Supervisory  Board  to  perform  its  internal  supervision  role  with  due  regard  to  the 

provisions of the Treaty and the Statute of the ESCB. Hence, this provision covers the requirement 

for  Eurosystem-related  tasks  to  be  performed  independently.  In  this  respect,  the  ECB  also  notes 

that the Supervisory Board is bound by the confidentiality clause of Article 20 of the 1998 Law on 

the Bank, so that confidentiality is guaranteed.  

2  
3  

See the draft law’s explanatory memorandum, p. 8. 
See the draft law’s explanatory memorandum, p. 11. 

2 

                                                 
2.2   DNB’s Governing Board  

2.2.1  Article  12(4)  of  the  1998  Law  on  the  Bank  addresses  the  dismissal  of  DNB’s  President  and 

Executive Directors who are all members of DNB’s Governing Board. The ECB understands that 

job  profiles  are  relevant  for  the  appointments  and  potential  re-appointments  of  board  members. 

Article 12(4) of the draft law now provides for the grounds of dismissal of the President and the 

Executive  Directors  in  accordance  with  Article  14.2  of  the  Statute  of  the  ESCB.  While  the  ECB 

reiterates its support for objective profiles, any changes to a profile on the basis of which a member 

of  the  Governing  Board  was  appointed  would  not  qualify  as  a  legally  valid  justification  for  the 

dismissal of that Governing Board member insofar as she/he does not comply with the terms of an 

amended profile. Hence, the ECB welcomes the fact that this is expressly stated in the draft law’s 

explanatory memorandum. 

2.2.2  Finally, the ECB notes that Article 12(4) provides for both the possibility of removal from office 

and suspension of DNB’s President and Executive Directors. In this respect, the wording of Article 

12(4)  is  different  to  the  wording  of  Article  14.2  of  the  Statute  of  the  ESCB  and  equivalent 

provisions in the statutes of other national central banks. The ECB understands that the grounds for 

the suspension of DNB’s President and Executive Directors are the same as those for their removal, 

and  these  are  in  line  with  Article  14.2  of  the  Statute  of  the  ESCB.  Consequently,  to  avoid  any 

misunderstanding,  the  ECB  advises  the  consulting  authority  to  use  this  opportunity  to  fully  align 

the wording of Article 12(4)  with that of Article 14.2 of the Statute of the ESCB. 

2.2.3  The ECB understands that the allocation of tasks among one or more Governing Board members as 

proposed under Article 12a(1) of the draft law aims to make DNB more efficient. The ECB expects 

to be consulted with respect to the implementation of Article 12a(1) pursuant to DNB’s Articles of 

Association. It is important that the allocation of tasks among the members of the Governing Board 

must not result in a situation where decisions affecting the financial resources of the central bank 

necessary  for  the  performance  of  Eurosystem-related  tasks  will  be  taken  independently  from  the 

control of the Governing Board as a collective decision-making body.   

3. 

Amendments to the Law on financial supervision  

3.1 

Sound governance of supervision 

It is important that the provisions set out in Article 1:25b of the proposed amendment to the Law on 

financial  supervision  are  implemented  while  fully  taking  into  account  the  internationally  agreed 

principles of operational independence and sound governance of supervision. 

3.2  Budget approval   

3.2.1  Article  II(E)  of  the  draft  law  adds  new  paragraph  5  into  Article  1:30  of  the  Law  on  financial 

supervision  under  which  the  Minister  for  Finance  may  withhold  budget  approval  if  the  budget  is 

contrary to law or public interest. The ECB understands that the budget within the framework of the 

3 

 
Law  on  financial  supervision  only  concerns  the  supervisory  tasks  of  the  supervisory  authorities4. 

However, the concepts ‘contrary to law’ and ‘public interest’ are very broad and might indirectly 

also  impact  DNB’s  financial  independence  as  regards  its  Eurosystem-related  tasks.  To  safeguard 

DNB’s financial independence, the law should provide a safeguard clause so that the power of the 

Minister  for  Finance  to  withhold  the  approval  of  the  budget  and  to  set  further  criteria  for  the 

exercise  of  such  powers  is  without  prejudice  to  the  financial  means  necessary  for  carrying  out 
DNB’s Eurosystem-related tasks5.  

It is important that the provisions set out in Article 1:30(5) of the proposed amendment to the Law 

on financial supervision are implemented while fully taking into account the internationally agreed 

principles of operational independence and sound governance of supervision. 

3.2.2  In addition, the draft law’s explanatory memorandum6 only refers to international principles which 

require that supervisors always have sufficient means to carry out their supervisory tasks. The ECB 

would  like  to  see  explicitly  stated  that  in  further  elaborating  the  criteria  referred  to  in  the  first 

sentence of Article 1:30(5), the Minister will, in particular, take into account the fact that DNB will 

always need to have sufficient means to carry out its tasks. 

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

Done at Frankfurt am Main, 18 April 2011. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

4  
5  
6  

See Article 1:30 (1) of the Law on financial supervision. 
ECB’s Convergence Report May 2010, p. 22. 
See the draft law's explanatory memorandum. 

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