Opinion of the European Central Bank of 14 November 2012 on the stabilisation of the financial market (CON/2012/88)
Date: 2012-11-14
Institutions: European Central Bank
Subjects: Germany, credit institution, financial stability, national law, public institution

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 14 November 2012 

on the stabilisation of the financial market 

(CON/2012/88) 

Introduction and legal basis 

On  31  October  2012,  the  European  Central  Bank  (ECB)  received  a  request  from  the  German  Federal 

Ministry of Finance for an opinion on a draft third law implementing measures for the stabilisation of the 

financial market (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 sixth 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 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  is  based  on  the  Law  of  17  October  2008  on  financial  market  stabilisation2  and  its 
extensions on, inter alia, the nationalisation of credit institutions and bad bank schemes3. Some of 

the provisions have subsequently been phased out. The draft law amends the Law on the Financial 

Market Stabilisation Fund and several related Laws, as well as the Law on the Restructuring Fund. 

The draft law has the following main objectives: 

(a)  Extension  of  the  operation  of  the  Financial  Market  Stabilisation  Fund.  The  explanatory 

memorandum  to  the  draft  law  points  out  that  the  transposition  of  the  proposed  directive 

establishing  a  framework  for  recovery  and  resolution  of  credit  institutions  and  investment 
firms4 may take until 2015. Until that time the national arrangements will need to remain in 
force. However, the Second Law on financial market stabilisation5 only allows new requests 

for Financial Market Stabilisation Fund measures until the end of 2012. Therefore, the draft 

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4  
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OJ L 189, 3.7.1998, p. 42.  
[2008] Bundesgesetzblatt I p. 1982. 
See  Opinions  CON/2008/57,  CON/2009/24,  CON/2009/54,  CON/2010/83  and  CON/2012/2.  All  ECB  opinions  are 
published on the ECB’s website at www.ecb.europa.eu. 
COM(2012) 280 final. 
[2012] Bundesgesetzblatt I p. 206. 

 
 
 
 
                                                 
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law  prolongs  measures  introduced  by  the  Law  on  financial  market  stabilisation  until  31 

December 2014. 

(b)  Financial  interlinking  of  the  Financial  Market  Stabilisation  Fund  and  the  Restructuring 

Fund.  Currently,  two  separate  systems  finance  the  Financial  Market  Stabilisation  Fund, 

providing  pre-emptive  recapitalisation  support  to  credit  institutions,  and  the  Restructuring 

Fund,  supporting  the  orderly  recovery  or  resolution  of  ailing  credit  institutions.  The 

Financial  Market  Stabilisation  Fund  is  backed  by  the  federal  budget  and  the  Restructuring 

Fund by the banking industry, with possible bridge financing from the federal budget. The 

draft law reduces budget risks by closer financial interconnection between both systems. In 

particular, for any possible losses resulting from future measures financed by the Financial 

Market  Stabilisation  Fund,  recourse  will  be  taken  to  the  Restructuring  Fund.  Thus,  the 

banking sector will bear the burden of future stabilisation measures. 

1.2  Furthermore,  the  draft  law  aligns  the  scope  of  institutions  eligible  for  measures  financed  by  the 

Financial Market Stabilisation Fund with the institutions eligible for restructuring measures that are 

generally  subject  to  contributions  to  the  Restructuring  Fund.  In  addition,  the  Federal  Financial 

Supervisory  Authority  (BaFin)  will  be  consulted  before  initiating  stabilisation  measures  that  may 

affect operation of the restructuring measures by BaFin in relation to a credit institution. Moreover, 

the Bundestag will need to agree to dissolve the Financial Market Stabilisation Fund. Recourse to 

the  Financial  Market  Stabilisation  Fund  for  measures  having  their  basis  until  2010  will  not  be 

subject to the debt brake. Lastly, the employment contracts of the heads of resolution agencies are 

to  be  limited  to  five  years,  and  their  renewed  appointment  will  be  subject  to  agreement  of  the 

Federal Financial Market Stabilisation Authority. 

2. 

General observations  

In  line  with  its  previous  opinions6,  the  ECB  emphasises  that  when  adopting  measures  to  deal  with  the 

financial  crisis,  Member  States  should  act  in  a  coordinated  manner.  While  the  extension  of  measures 
introduced  by  the  Law  on  financial  market  stabilisation7  is  based  on  legitimate  grounds,  the  Member 

States will ultimately need to phase out such harmonised measures to maintain a level playing field in the 
Union8. It is expected that the German legislator will have to adjust German restructuring law once the 

harmonised Union regime for the restructuring and resolution of credit institutions has been introduced. 

3. 

Financing of the Financial Market Stabilisation Fund 

The  ECB  welcomes  the  intention  to  decrease  moral  hazard  in  the  budgetary  financing  of  the  Financial 

Markets  Stabilisation  Fund  by  the  proposed  financial  interconnection  between  this  Fund  and  the 

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See Opinions CON/2008/57, CON/2009/24, CON/2009/54 and CON/2010/83. 
Article 1(5) of the draft law, amending Section 4(1)(5) of the Law on the Financial Market Stabilisation Fund. 
See, inter alia, ECB Opinion CON/2008/57. 

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Restructuring  Fund  which  is  already  financed  by  banking  industry  contributions9.  The  ECB  notes  the 

need to ensure that the financial resources of resolution funds are adequate and the contributions to such 

funds raised from credit institutions are set at a level which is appropriately calibrated to ensure financial 

stability.  

4. 

Consultation of BaFin regarding application of the stabilisation measures 

The ECB welcomes the introduction of the requirement to consult BaFin before stabilisation measures are 

introduced.  This  will  facilitate  the  optimal  selection  of  stabilisation  and  restructuring  measures  for  an 
ailing  credit  institution10.  This  is  further  justified  in  view  of  the  proposed  financial  interconnection 

between  the  Financial  Market  Stabilisation  Fund  and  the  Restructuring  Fund,  which  has  direct 

implications for the financial resources available for stabilisation and restructuring measures. 

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

Done at Frankfurt am Main, 14 November 2012. 

[signed] 

The Vice-President of the ECB 

Vítor CONSTÂNCIO 

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10  

Article 1, Section 2(1) of the draft law. 
Article 1, Section 4(1a) of the draft law. 

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