Opinion of the European Central Bank of 16 March 2012 on Italy’s participation in International Monetary Fund programmes in response to the financial crisis (CON/2012/20)
Date: 2012-03-16
Institutions: European Central Bank
Subjects: International Monetary Fund, Italy, central bank, loan, monetary crisis, national budget

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 16 March 2012 

on Italy’s participation in International Monetary Fund programmes  

in response to the financial crisis 

(CON/2012/20) 

Introduction and legal basis 

On 15 February 2012, the European Central Bank (ECB) received a request from the Italian Ministry of 

Economic  Affairs  and  Finance  for  an  opinion  on  a  decree-law  on  the  extension  of  deadlines  set  out  in 
legislative  provisions1,  concerning  also  Italy’s  participation  in  International  Monetary  Fund  (IMF) 

programmes in response to the financial crisis (hereinafter the ‘Decree-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  provisions2,  as  the  Decree-Law  relates  to  the  Banca  d’Italia.  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 Decree-Law 

1.1   Article 25 of the Decree-Law3 regulates the relations between Italy and the IMF with regard to the 

implementation  of  the  commitments  by  the  Italian  State  to  contribute  to  strengthening  the  tools 

available to the IMF to deal with the financial crisis. 

1.2   With  the  aim  of  strengthening  such  stabilisation  tools,  the  Heads  of  State  or  Government  of  the 

euro  area  initially  agreed  at  the  Summit  on  9  December  2011,  subject  to  confirmation  within 

10 days,  to  provide  additional  resources  for  the  IMF  of  up  to  EUR  200  billion,  in  the  form  of 
bilateral  loans,  to  ensure  that  the  IMF  has  adequate  resources  to  deal  with  the  crisis4.  The  EU 

Finance  Ministers  confirmed  such  commitment  on  19  December  2011,  and  in  particular  agreed 

that, as part of a broader international effort to improve the adequacy of IMF resources, euro area 

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Decree-Law  No  216  of  29  December  2011,  Gazzetta  Ufficiale  della  Repubblica  Italiana,  Serie  generale  No 302, 
29.12.2011, p. 8. 
OJ L 189, 3.7.1998, p. 42. 
The Decree-Law was adopted by the Italian Government on 29 December 2011 and entered into force on the same day. 
Under  the  Italian  Constitution,  the  Decree-Law  must  be  converted  into  a  law  by  the  Italian Parliament  within  60 days 
from adoption by the Government. 
Statement available on the Council’s website at www.consilium.europa.eu. 

 
 
 
 
                                                 
ECB-PUBLIC 

Member  States  would  provide  EUR  150  billion  of  additional  resources  through  bilateral  loans to 

the  IMF’s  General  Resources  Account.  They  also  agreed  to  share  the  burden  among  euro  area 

Member States on the basis of quota shares resulting from the 2010 quota reform. Since according 

to such calculations, Italy’s quota share, after the entry into force of the 14th General Review of 

Quotas,  amounts  to  3,161%,  its  share  in  the  EUR  150  billion  of  additional  resources  comes  to 
15,66%, i.e. EUR 23,48 billion5. 

1.3  The State budget will guarantee the reimbursement of the capital and interest and will cover any 

exchange rate risk on the loans provided by the Banca d’Italia under the Decree-Law6. 

2. 

General observations  

The ECB received the consultation request only on 16 February 2012 although the Decree-Law entered 

into force on 29 December 2011. As specified in the consultation request, the Decree-Law was presented 

to Parliament for conversion into law within 60 days. It was definitively approved by the Parliament on 
23  February  2012.  As underlined  in several  ECB  opinions7,  even  in  cases  of extreme  urgency  national 

authorities  are  not relieved  from  their  duty  to  consult  the  ECB  and  to  allow  sufficient  time  to  take  the 

ECB’s  views  into  account  as  laid  down  in  Articles  127(4)  and  282(5)  of  the  Treaty.  Article  3(4)  of 

Decision  98/415/EC  obliges  Member  States  to  suspend  the  process  of  adoption  of  draft  legislative 

provisions pending receipt of the ECB’s opinion. Article 4 of Decision 98/415/EC provides that the ECB 
must be consulted ‘at an appropriate stage’ in the legislative process8, ‘enabling the authority initiating 

the draft legislative provision to take into consideration the ECB’s opinion before taking its decision on 

the substance’. Member States must also ensure ‘that the opinion received from the ECB is brought to the 

knowledge  of  the  adopting  authority  if the  latter is  an  authority  other than  that  which  has  prepared  the 

legislative  provisions  concerned’.  Decree-Laws  are  legal  acts  that  enter  into  force  on  adoption  by  the 
Government9.  Therefore,  consultation  should  take  place  before  adoption.  Consulting  the  ECB  after  the 

submission of the Decree-Law to Parliament for its conversion into law is not sufficient to comply with 
the abovementioned obligation; rather, this is tantamount to a non-consultation of the ECB10. 

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See the EU Finance Ministers statement on IMF resources of 19 December 2011. 
See Article 25(3) of the Decree-Law. 
See the most recent opinions ECB Opinion CON/2012/4, CON/2012/9 and CON/2012/13. 
This implies that the consultation should take place at a point in the legislative process that affords the ECB sufficient 
time  to  examine  the  draft  legislative  provisions  and  to  adopt  its  opinion  in  all  required  language  versions,  and  also 
enables the relevant national authorities to take the ECB’s opinion into account before the provisions are adopted. 
Since  they  enter  into  force  immediately  on  adoption  by  the  Government,  they  must  later  be  ratified  by  Parliament. 
Decree-Laws are a special type of legislation as the initiating authority is also the adopting authority in the first phase of 
the legislative procedure. 
A  failure  to  properly  consult  the  ECB  on  draft  legislative  provisions  within  the  ECB’s  fields  of  competence  is  an 
infringement  of  Decision  98/415/EC  and  could  lead  to  proceedings  before  the  relevant  courts,  where  the  validity  of  a 
legal act on which the ECB should have been, but was not, consulted may be challenged. 

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3.  

Specific observations 

3.1  The tasks performed by a national central bank (NCB) must comply with the monetary financing 

prohibition  under  Article  123  of  the  Treaty  and  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 Treaty11. Pursuant to Article 7 of Regulation (EC) No 3603/93, the 

financing by NCBs of obligations falling upon the public sector vis-à-vis the IMF is not regarded as 

a  credit  facility  within  the  meaning  of  Article  123  of  the  Treaty.  The  fourteenth  recital  of 

Regulation (EC) No 3603/93 sets out the rationale of this exemption, clarifying that this financing 

results in foreign claims which have all the characteristics of reserve assets. It is thus essential that 

the terms of the bilateral loan with the IMF allow for the resulting claims of the Banca d’Italia to 

have all the characteristics of reserve assets. Provided that this is the case, the ECB considers that 

the financing by the Banca d’Italia of a bilateral loan under the Decree-Law falls within the scope 

of  Article  7  of  Regulation  (EC)  No  3603/93  and  should  therefore  not  be  regarded  as  a  form  of 
monetary financing prohibited under the Treaty12. 

3.2  The  ECB  notes  that,  as  mentioned  above,  the  EU  Finance  Ministers  Statement  of  19  December 

2011 indicates explicitly that the EUR 150 billion additional resources by the euro area Member 

States will be provided through bilateral loans to the IMF’s General Resources Account. 

3.3  The ECB recommends that when Member States and the NCBs of the European System of Central 

Banks  enter into  bilateral  loans  with  the  IMF  on  their  behalf  or in  their  own  name,  the  terms  of 

these loans are identical or, if this is not feasible for technical reasons, as uniform as possible. For 

instance,  in  the  case  of  the  euro  area,  it  should  be  ensured  that  any  euro  liquidity  injections 

resulting from the disbursements under the bilateral loan do not interfere with the implementation 

of the single monetary policy. The IMF should therefore notify the respective central bank at least 

five business days prior to drawing, which will allow for euro liquidity injections under these loans 

to be taken into account. 

3.4  The  ECB  notes  that  it  is  necessary  in  this  context  to  comply  with  the  principle  of  central  bank 

independence enshrined in Article 130 of the Treaty and Article 7 of the Statute of the European 

System  of  Central  Banks  and  of  the  European  Central  Bank,  which  includes  that  an  NCB’s 

financial independence is not to be jeopardised. 

3.5  With respect to Banca d’Italia’s payment of a bilateral loan to the IMF under the Decree-Law, the 

ECB understands that the provision of a State guarantee is meant to cover the reimbursement of the 
capital and interest and any exchange rate risk on the loans provided by the Banca d’Italia13. 

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OJ L 332, 31.12.1993, p. 1. 
See also ECB Opinions CON/2009/100, CON/2010/40 and CON/2011/10. All ECB opinions are available on the ECB’s 
website at www.ecb.europa.eu. 
The  ECB  notes  that  the  wording  of  Article 25(6)  of  the  Decree-Law  differs  from  the  wording  used  on  other  similar 
occasions,  such  as  in  Article  2(16)  of  Decree-Law  No  225  of  29  December  2010  (Gazzetta  Ufficiale  No  303, 
29.12.2010). In particular, according to paragraph 6 of the Decree-Law, guarantees are to be withdrawn from the funds 
financing a guarantee scheme for banks established in Italy under Article 8 of Decree-Law No 201 of 6 December 2011 
(Gazzetta  Ufficiale  No  284.  6.12.2011).  For  this  purpose,  the  Decree-Law  increases  the  initial  resources  of  the  fund, 
amounting to EUR 200 million per year for the period 2012-2016, by a further EUR 100 million for the year 2012. The 

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

Done at Frankfurt am Main, 16 March 2012. 

[signed] 

The President of the ECB 

Mario DRAGHI 

ECB understands that the different wording of Article 25(6) as compared to the wording used on other similar occasions 
is  due  to  accounting  reasons  and  that,  should  the  available  funds  be  insufficient  to  cover  the  State  guarantee  for  the 
reimbursement of losses incurred by capital, interest and exchange rate risk on the loans provided by the Banca d’Italia, 
an additional allocation of funds will be approved by the Italian legislator. 

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