Opinion of the European Central Bank of 31 May 2012 on the Law on Česká národní banka (CON/2012/44)
Date: 2012-05-31
Institutions: European Central Bank
Subjects: Czechia, central bank, competence of the institution, dismissal, financial supervision, financing method, national law, staff

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 31 May 2012  

on the Law on Česká národní banka 

(CON/2012/44) 

Introduction and legal basis 

On  26  March  2012,  the  European  Central  Bank  (ECB)  received  a  request  from  the  Czech  Ministry  of 

Finance for an opinion on a draft law amending Law No 6/1993 Coll. on Česká národní banka and other 

related laws (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  (TFEU)  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 Česká národní banka (CNB). 

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  is  primarily  aimed  at  addressing  certain  issues  identified  by  the  ECB  and  the  European 
Commission in their Convergence Reports2 in relation to Law No 6/1993 Coll. on Česká národní banka 

(hereinafter  the  ‘Law  on  CNB’).  To  this  end,  amendments  are  made  in  particular  to  the  provisions 

concerning  the  grounds  for  dismissal  of  the  Governor  and  other  members  of  the  Bank  Board,  the 

confidentiality  obligation  and  monetary  financing  prohibition.  The  draft  law  is  also  aimed  at 

strengthening  CNB’s  mandate  as  an  institution  responsible  for  ensuring  financial  stability  and  the  safe 

functioning of the Czech financial system. It also specifies that one of CNB’s tasks in this context is to set 

macro-prudential policy. Other proposed changes include: (a) more detailed and extended legal regulation 

of reporting and statistics, based on Union legislation; (b) legal clarification concerning the management 

of  CNB’s  assets,  including  foreign  reserves;  (c)  further  specification  of  CNB’s  powers  as  regards 

oversight  of  payment  and settlement  systems;  (d)  repeal  of  CNB’s  power to issue  provisions,  a  special 

regulatory  tool  to  be  replaced  by  decrees  or  CNB’s  communications;  (e)  necessary  adjustments  to  the 

provisions  concerning  administrative  offences  and  administrative  proceedings;  and  (f)  abolition  of  the 

Financial  Market  Committee  as  an  advisory  body  to  the  Bank  Board.  In  addition,  several  changes  are 

1  
2  

OJ L 189, 3.7.1998, p. 42.  
See, for example, the ECB’s Convergence Report May 2010. 

 
 
 
 
                                                 
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made  to  the  internal  organisation  of  the  Law  on  CNB  with  a  view  to  clarifying  issues  relating  to  its 

application and structure. The draft law does not include any changes necessary for the legal integration 

of CNB into the Eurosystem. 

2. 

Central bank independence  

2.1  General considerations 

Pursuant  to  Article  131  TFEU,  each  Member  State  must  ensure  that  its  national  legislation  is 

compatible with the Treaties and the Statute of the European System of Central Banks and of the 

European Central Bank (hereinafter the ‘Statute of the ESCB’). Adaptation of national legislation 

may  be  achieved  by  referring  to  the  Treaties  and  the  Statute  of  the  ESCB,  by  incorporating 

provisions  thereof  and  referring  to  their  provenance,  by  deleting  any  incompatibility  with  the 
Treaties and the Statute of the ESCB or by a combination of these methods3. In this context, the 

ECB notes that the amended Article 6(12) of the Law on CNB, which aims to mirror Article 14.2 

of the Statute of the ESCB, only refers to infringements of the TFEU, while under Article 14.2 of 

the Statute of the ESCB, a decision to relieve a Governor from office may be referred to the Court 

of Justice of the European Union on the grounds of infringement not only of the TFEU, but of both 

Treaties (including their annexes and protocols). Similarly, the amended Article 9 of the Law on 

CNB,  which  aims  to  mirror  the  provisions  of  Article  130  TFEU,  refers  only  to  tasks  and  duties 

conferred  by  the  TFEU  and  the  Statute  of  the  ESCB,  while  pursuant  to  Article  130  TFEU  the 

principle of central bank independence applies to tasks and duties conferred upon central banks by 

both  the  Treaties  and  the  Statute  of  the  ESCB,  thus  including  the  Treaty  on  European  Union. 

Consequently, the ECB recommends adapting Article 6(12) and Article 9 of the Law on CNB for 

the sake of consistency. 

2.2  Functional independence 

In line with Article 127(1) TFEU, the secondary objective of CNB ‘to ensure financial stability and 
the safe and sound operation of the financial system in the Czech Republic’4 should be stated to be 

without prejudice to the CNB’s primary objective to maintain price stability. 

2.3 

Institutional independence 

The  ECB  notes  that  the  draft  law  does  not  remove  the  existing  incompatibilities  of  the  Law  on 
CNB in the area of institutional independence5. In particular, Article 3 of the Law on CNB obliges 

CNB to submit a report on monetary developments to the Chamber of Deputies at least twice a year 

for review. Upon the Chamber of Deputies’ resolution, CNB must submit an extraordinary report to 

be prepared pursuant to such resolution. The Chamber of Deputies has the power to acknowledge 

the  report  or  ask  for  a  revised  report;  such  revised  report  must  comply  with  the  Chamber  of 

3    
4  
5  

See the ECB’s Convergence Report May 2012, p. 23. 
Amended Article 2(1) of the Law on CNB. 
See the ECB’s Convergence Report May 2012, pp. 302 to 303. 

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Deputies’  requirements.  These  parliamentary  powers  could  potentially  breach  the  prohibition  on 

giving instructions to national central banks (NCBs) pursuant to Article 130 TFEU and Article 7 of 

the Statute of the ESCB. In addition, Article 47(5) of the Law on CNB requires CNB to submit a 

revised  report  if  the  Chamber  of  Deputies  rejects  its  annual  financial  report.  This  revised  report 

must comply with the Chamber of Deputies’ requirements. Such parliamentary powers breach the 

prohibition on approving, annulling or deferring decisions. Article 3 and Article 47(5) of the Law 

on  CNB  are  therefore  incompatible  with  central  bank  independence  and  should  be  adapted 

accordingly. 

Under amended Article 9(1) of the Law on CNB, when carrying out CNB’s primary objective and 

when  exercising  the  powers  and  carrying  out  the  tasks  and  duties  conferred  upon  them  by  the 

TFEU and the Statute of the ESCB, CNB, the Bank Board and any member of the Bank Board are 

prohibited from seeking or taking instructions from the President of the Republic, from Parliament, 

from  the  Government,  from  administrative  authorities  of  the  Czech  Republic,  from  the  bodies, 

institutions or other entities of the Union, from Member State governments or from any other body. 

Amended Article 9(1) does not prohibit the Government from seeking to influence the members of 

CNB’s decision-making bodies in situations where this may have an impact on CNB’s fulfilment of 

its ESCB-related tasks. In this respect the Law on CNB needs to be adapted to be fully consistent 

with Article 130 TFEU and Article 7 of the Statute of the ESCB. 

2.4  Personal independence 

Article 14.2 of the Statute of the ESCB stipulates, inter alia, that NCB Governors who have been 

dismissed from office or the Governing Council may refer such a decision to the Court of Justice 

on  grounds  of  infringement  of the Treaties  or  of  any rule  of law relating  to  their  application.  As 

regards judicial review by the Court of Justice, national legislation should either refer to the Statute 

of  the  ESCB  or  remain  silent  on  the  right  to  refer  such  decision  to  the  Court  of  Justice  (as 
Article 14.2 of the Statute of the ESCB is directly applicable)6. Amended Article 6(12) of the Law 

on  CNB  does  not  apply  either  of  the  two  approaches  and  is  not  in  line  with  Article  14.2  of  the 

Statute  of  the  ESCB,  i.e.  the  date  from  which  the  Governor  may  challenge  the  decision  of 

dismissal. In addition, it is not necessary to transpose the right of the ECB to refer a decision of 

dismissal  to  the  Court  of  Justice  into  the  Law  on  CNB  since  this  right  stems  directly  from 

Article 14.2 of the Statute of the ESCB. 

As regards the members of the Board other than the Governor, as noted in the ECB’s Convergence 
Reports7,  the  draft  law  does  not  specifically  provide  for  the  right  of  national  courts  to  review  a 

decision  to  dismiss  any  member,  other  than  the  Governor,  of  the  CNB’s  Bank  Board  who  is 

involved  in  the  performance  of  ESCB-related  tasks.  Although  it  is  understood  that  this  right  is 

available  under  the  general  law,  providing  specifically  for  such  a  right  of  review  could  increase 

legal certainty. 

6  
7  

See, for example, the ECB’s Convergence Report May 2012, p. 29. 
See, for example, the ECB’s Convergence Report May 2012, p. 304. 

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2.5  Financial independence 

The ECB refers to its 2012 Convergence Report8 and the negative capital situation of CNB for a 

prolonged period of time. 

3.  Monetary financing prohibition 

3.1  The  ECB  understands  that  new  Article  34a  of  the  Law  on  CNB  aims  at  addressing  defects 

highlighted in the ECB’s Convergence Report in relation to the prohibition on monetary financing. 

The  ECB  therefore  welcomes  the  proposed  changes.  However,  the  ECB  notes  that  instead  of 

providing for an exception to the monetary financing prohibition in favour of publicly owned credit 

institutions  in  the  context  of  the  supply  of  reserves,  new  Article  34a(2)  provides  for  such  an 

exception  with  reference  to  ‘banks,  foreign  banks  and  credit  unions’.  As  noted  in  the  ECB’s 
Convergence Report9, in general, it is unnecessary to transpose Article 123 TFEU, supplemented 

by 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 Treaty10, into national legislation as 

they  are  both  directly  applicable.  If,  however,  national  legislative  provisions  mirror  these 

provisions, they may not narrow the scope of application of the monetary financing prohibition or 

extend the exemptions available under Union law. In this regard, the ECB understands that sectoral 
laws, i.e. the Law on banks and the Law on credit unions11 define that banks, foreign banks and 
credit unions are covered by the definition of credit institutions12. However, the respective national 
legislative  provisions  should  include  an  explicit  reference  to  their  provenance13.  New  Article 

34a(2) of the Law on CNB should therefore include an explicit reference to Article 123(2) TFEU. 

3.2   Article  28  of  the  Law  on  CNB  provides  that  CNB  may  purchase  from  banks  or  sell  to  them 

government bonds or other securities underwritten by the Government. The ECB notes that while 

secondary market purchases of debt instruments from the public sector are, in principle, allowed, 

Council Regulation (EC) 3603/93 clarifies in recital 7 that purchases made on the secondary market 

must not be used to circumvent the objective of Article 123 TFEU. In order to ensure compliance 

with  the  monetary  financing  prohibition  it  should  therefore  be  ensured  that,  when  applying 

Article 28,  such  purchases  remain  fully  consistent  with  the  objectives  of  Article  123  TFEU, 

namely: (a) the primary objective of price stability, (b) central bank independence, and (c) fiscal 

discipline.  

8  
9  
10  
11  
12  

13   

See the ECB’s Convergence Report May 2012, p. 304. 
See the ECB’s Convergence Report May 2012, p. 36. 
OJ L OJ L 332, 31.12.1993, p. 1. 
Law No 21/1992 Coll. on banks and Law No 87/1995 Coll. on credit unions. 
Article  4(1)  of  Directive  2006/48/EC  of  the  European  Parliament  and  of  the  Council  of  14  June  2006  relating  to  the 
taking up and pursuit of the business of credit institution (OJ L 177, 30.6.2006, p. 1) defines a credit institution as ‘an 
undertaking the business of which is to receive deposits or other repayable funds from the public and to grant credits for 
its own account’. 
See the ECB’s Convergence Report May 2012, p. 23. 

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3.3  Amended Article 30 of the Law on CNB provides that CNB keeps accounts in accordance with the 
budgetary  rules,  without  further  details.  As  noted  in  the  ECB’s  Convergence  Report14,  national 

legislation that enables an NCB to hold government deposits and to service government accounts 

does not raise concerns about the compliance with the monetary financing prohibition as long as 

such  provisions  do  not  enable  the  extension  of  credit,  including  overnight  overdrafts,  and  that 

deposits or current account balances are not remunerated above market rates. 

3.4  The ECB understands that Article 31 and new Article 31a of the Law on CNB refer to activities to 

be  carried  out  by  CNB  as  an  agent  of  the  State.  Taking  into  account  the  express  recognition  in 

Article 21.2 of the Statute of the ESCB of the provision of fiscal agency services as a legitimate 

function  traditionally  performed  by  central  banks,  the  ECB  notes  that  the  provision  by  central 
banks of fiscal agency services15 complies with the monetary financing prohibition, provided that 

such services remain  within  the  scope of the  fiscal  agency  function and  do  not  constitute central 
bank financing of public sector obligations vis-à-vis third parties16 or central bank crediting of the 
public sector outside the narrowly defined exceptions specified in Regulation (EC) No 3603/9317. 

The  ECB  considers  that  the  provision  without  remuneration  by  CNB  of  fiscal  agent  services 

provided  for  under  new  Article  31a  of  the  Law  on  CNB  does  not  raise  monetary  financing 

concerns, provided they are core fiscal agent services. As regards possible CNB activities pursuant 

to  Article  31  of  the  Law  on  CNB,  relating  to  the  management,  redemption  and  transfer  of 

government bonds, the payment of interest on such bonds and other activities as required, the law 

provides for remuneration of CNB to be agreed with the Ministry of Finance. In order to ensure full 

compliance  with  the  monetary  financing  prohibition  under  Article  123  TFEU,  it  needs  to  be 

ensured  that  such  activities  do  not  involve  any  financing  by  CNB,  even  by  means  of  bridge 

financing.  The  ECB  understands  that  under  the  arrangements  currently  in  place,  the  government 

bond  redemptions  and  coupon  redemptions  are  financed  from  government  account  balances  and 

that  the  CNB  does  not  provide  any  form  of  financing  with  the  exception  of  intraday  financing, 

which is in line with the monetary financing prohibition. 

14  
15  

16  

17  

See the ECB’s Convergence Report May 2012, p. 39. 
See the ECB’s Convergence Report May 2012, p. 38, stating that ‘The purpose of Article 21.2 of the Statute is, following 
transfer of the  monetary policy competence to the Eurosystem, to enable NCBs to continue to provide the fiscal  agent 
service traditionally provided by central banks to governments and other public entities without automatically breaching 
the monetary financing prohibition.’ See also, e.g., Opinion CON/2009/23. All ECB opinions are published on the ECB’s 
website at www.ecb.europa.eu. 
This  is  one  of  the  prohibited  forms  of  monetary  financing;  see  Article  1(1)(b)(ii)  of  Regulation  (EC)  No  3603/93 
specifying definitions for the application of the prohibitions referred to in Articles 104 and 104b(1) of the Treaty. See the 
ECB’s Convergence Report May 2008, p. 233, which states with reference to the provision by CNB of administrative and 
financial  support  to  the  Financial  Arbitrator,  an  administrative  body  entirely  independent  from  the  central  bank, 
‘constitutes a form of central bank financing of the public sector’s obligations’. 
See  Article  4  (non-extendable  intra-day  credits),  Article  5  (crediting,  under  specified  conditions,  the  public  sector’s 
account with cheques issued by third parties) and Article 6 (holding, within specified limits, coins issued by and credited 
to the public sector) of Regulation (EC) No 3603/93.  

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4. 

Legal integration of CNB into the Eurosystem 

The legal integration of NCBs into the Eurosystem requires that national legislation be adapted to 

allow for the performance of Eurosystem-related tasks and compliance with the ECB’s decisions 

once the Member State concerned has adopted the euro. The ECB draws the consulting authority’s 

attention to the fact that, to comply with Article 131 TFEU, relevant Czech legislation had to be 

adjusted  by  the  date  of  the  Czech  Republic’s  accession  to  the  Union,  i.e.  1  May  2004.  Such 

adjustments necessary to ensure full integration of CNB into the Eurosystem need only enter into 

force  on  the  date  the  Czech  Republic  adopts  the  euro.  The  ECB’s  Convergence  Report  2010 
identifies  several  provisions  of  the  Law  on  CNB  and  Law  No  2/1969  Coll.18  that  need  to  be 

adapted  to  ensure  compatibility  with  the  TFEU  and  the  Statute  of  the  ESCB  in  respect  of 

Eurosystem-related tasks.  

An NCB’s secondary objectives must be consistent and not interfere with its obligation to support 

the  Union’s  general  economic  policies  with  a  view  to  contributing  to  the  achievement  of  the 

objectives laid down in Article 3 of the Treaty on the European Union, which is itself an objective 
expressed to be without prejudice to maintaining price stability19. Therefore, amended Article 2(1) 

of  the  Law  on  CNB  should  make  it  clear  that  the  objective  in  the  area  of  financial  stability  is 
subordinate  to  the  secondary  objective  of  the  ESCB20,  which  is  provided  in  the  last  sentence  of 

amended Article 2(1).  

5. 

  CNB’s role in macro-prudential supervision 

5.1  The  ECB  welcomes  the  proposed  amendments  to  the  Law  on  CNB  which  entrust  CNB  with 

specific tasks in the area of macro-prudential policy. The ECB considers that the ECB and NCBs 

should  play  a  leading  role  in  macro-prudential  oversight  given  their  expertise  and  existing 

responsibilities  in  the  area  of  financial  stability,  as  referred  to  in  the  draft  law.  Against  this 

background,  the  ECB  would  like  to  draw  attention  to  the  Recommendation  of  the  European 

Systemic  Risk  Board  of  22  December  2011  on  the  macro-prudential  mandate  of  national 
authorities21 and more specifically to the following aspects of performance by CNB of its macro-

prudential oversight tasks. 

5.2  First,  in  order  for  CNB  to  undertake  its  tasks,  the  draft  law  entitles  CNB  to  require  necessary 

information  and  documents  in  the  form  of  statistical  statements  and  statements  for  supervisory 

purposes and additional information or reports (hereinafter the ‘statements’) from listed reporting 

18  
19  
20  
21  

Law No 2/1969 Coll, establishing ministries and other central administrative bodies of the Czech Republic. 
See Opinions CON/2010/30 and CON/2010/48. 
See Articles 127(1) and 282(2) TFEU. 
See Recommendation ESRB/2011/3 of the European Systemic Risk Board of 22 December 2011 on the macro-prudential 
mandate of national authorities (OJ C 41, 14.2.2012, p. 1). See also recital 24 of Regulation (EU) No 1092/2010 of the 
European  Parliament  and  of  the  Council  of  24  November  2010  on  European  Union  macro-prudential  oversight  of  the 
financial system and establishing the European Systemic Risk Board (OJ L 331, 15.12.2010, p. 1).  

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entities.22 Under the draft law, CNB may use these statements to carry out any of its tasks, unless 
provided otherwise in a separate legislative act.23 The ECB understands that, for the benefit of its 

macro-prudential oversight tasks, CNB would thus be authorised to require and obtain in a timely 

fashion all data and information collected from reporting entities such as all financial corporations 

and other persons who have the information in their disposal, as referred to in new Article 41 of the 

Law  on  CNB,  including  information  other  than  that  currently  collected  for  the  purpose  of 
supervising financial institutions24. 

5.3.  Second, the Law on CNB, as amended by the draft law, provides that CNB ‘shall cooperate with 
the  relevant  state  authorities  in  setting  macro-prudential  policy’25  that  it  ‘shall  be  part  of  the 

European System of Financial Supervision and cooperate with the European Systemic Risk Board 
and  with  European  Supervisory  Authorities’26  and  further  that  it  ‘shall  cooperate  and  negotiate 

agreements within the scope of its field of competence with the central banks of other countries, 

with  foreign  authorities  engaged  in  financial  market  supervision,  and  with  international 
organisations  engaged  in  financial  market  supervision’27.  The  ECB  is  of  the  view  that  these 

provisions  may  in  addition  specifically  provide  that  the  macro-prudential  authority  is  entitled  to 

exchange information with other central banks, macro-prudential authorities and with the ESRB, in 

particular on actions taken to address systemic risks at national level. 

6. 

  Statistics and reporting 

6.1  The ECB takes note of the detailed and extended legal regulation of reporting and statistics, which 

is based on Union legislation and introduces a confidentiality regime for statistical information. 

6.2  Article 5 of the Statute of the ESCB and Regulation (EC) No 2533/9828 provide the legal basis for 

the ECB, assisted by NCBs, to collect the statistical information necessary for the performance of 

ESCB tasks. Although the draft law refers to Regulation (EC) No 2533/98, certain provisions are 

not  fully  in  line  with  Article  8(4)  of  Regulation  (EC)  No  2533/98.  Under  Article  8(4),  the 

transmission of confidential statistical information collected pursuant to Article 5 of the Statute of 

the ESCB ‘shall take place (a) to the extent and at the level of detail necessary for the performance 

of  the  tasks  of  the  ESCB  referred  to  in  the  Treaty;  or  (b)  provided  that  such  transmission  is 

necessary for the efficient development, production or dissemination of statistics under Article 5 of 

the [Statute of the ESCB] or for increasing their quality’. New Article 43e and Article 43f(1)(a) and 

(c)  of  the  Law  on  CNB  limit  the  transmission  of  confidential  statistical  information  that  may  be 

22  
23  
24  
25  
26  
27   
28  

See new Article 41(1) of the Law on CNB. 
See new Article 41(2) of the Law on CNB. 
See also recommendation C(2) of Recommendation ESRB/2011/3. 
See new Article 2(2)(e) of the Law on CNB. 
See Article 2a of the Law on CNB. 
See new Article 2 (3) of the Law on CNB. 
Council Regulation (EC) No 2533/98 of 23 November 1998 concerning the collection of statistical information by the 
European Central Bank (OJ L 318, 27.11.1998, p. 8). 

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provided  by  CNB  to  the  ESCB  to  statistical  purposes.  In  this  respect,  the  draft  law  should  be 

amended  to allow  the transmission  of confidential  statistical information  also in  accordance  with 

Article 8(4)(a) of Regulation (EC) No 2533/98.  

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

Done at Frankfurt am Main, 31 May 2012. 

[signed] 

The Vice-President of the ECB 

Vítor CONSTÂNCIO 

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