Opinion of the European Central Bank of 27 August 2013 on the macro-prudential mandate of the Banco de Portugal (CON/2013/66)
Date: 2013-08-27
Institutions: European Central Bank
Subjects: EU banking union, Portugal, banking supervision, central bank, financial stability, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 27 August 2013 

on the macro-prudential mandate of the Banco de Portugal 

(CON/2013/66) 

Introduction and legal basis 

On 17 July 2013, the European Central Bank (ECB) received a request from the Portuguese Minister of 

State  and  for  Finance  for  an  opinion  on  two  draft  decree-laws,  one  amending  the  Organic  Law  of  the 

Banco de Portugal (hereinafter the ‘draft decree-law on the BdP’) and the other amending Decree-Law 

No  228/2000  of  23  September  2000  that  established  the  National  Council  of  Financial  Supervisors 

(NCFS) (hereinafter the ‘draft decree-law on the NCFS’) (hereinafter collectively the ‘draft decree-laws’). 

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  and  sixth  indents  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 decree-laws relate to the Banco de Portugal (BdP) and 

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 decree-laws 

1.1  The draft decree-law on the BdP amends the Organic Law of the Banco de Portugal2 in order to, 

inter  alia:  (a)  provide  for  the  BdP’s  participation  in  the  Single  Supervisory  Mechanism; 

(b) expressly  state  the  banking  resolution  responsibilities  that  the  Legal  Framework  of  Credit 
Institutions and Financial Companies already conferred on the BdP3; and (c) nominate the BdP as 

the competent authority to implement macro-prudential policy. In particular, the draft decree-law 

implements Recommendation ESRB/2011/3 of the European Systemic Risk Board of 22 December 
2011 on the macro-prudential mandate of national authorities4. 

1.2  The draft decree-law on the NCFS amends Decree-Law 228/2000 of 23 September 2000 in order 

to, inter alia, expressly give the NCFS advisory functions to the BdP, and in the exercise of these 

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2  
3. 
4  

OJ L 189, 3.7.1998, p. 42. 
Law No 5/98 of 31 January 1998. 
Decree-Law No. 298/92 of 31 December 1992, as amended. 
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 a 
European Systemic Risk Board (OJ L 331, 15.12.2010, p. 1). 

 
 
 
 
                                                 
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functions,  to:  (a)  identify,  monitor  and  evaluate  risks  to  the  stability  of  the  financial  system  and 

(b) assess concrete proposals of macro-prudential policy aimed at mitigating or reducing systemic 

risks,  in  order  to  strengthen  the  stability  of  the  financial  sector.  The  main  purpose  of  the  draft 

decree-law on the NCFS is to implement Recommendation ESRB/2011/3. 

2.  Macro-prudential mandate of the Banco de Portugal 

2.1  The ECB supports the effective design of macro-prudential policy frameworks within the Member 

States, in line with the guiding principles expressed in Recommendation ESRB/2011/3. Moreover, 

the  ECB  considers  that  the  ECB  and  national  central  banks  should  play  a  leading  role  in  macro-

prudential  oversight,  given  their  expertise  and  current  responsibilities  in  the  area  of  financial 
stability5. 

2.2 

In  the  light  of  the  above,  the  ECB  welcomes  the  arrangement  whereby  the  BdP  is  the  national 
authority  responsible  for  the  conduct  of  macro-prudential  policies6,  with  the  NCFS  serving  as 

advisor, thus acting in cooperation with other authorities whose actions have a material impact on 

financial  stability,  in  particular  the  Portuguese  Securities  Market  Commission  and  the  Insurance 

and Pension Funds Supervisory Authority. 

3.4  At the same time, the ECB notes that the BdP should perform its macro-prudential tasks in such a 

way  to  not  affect:  (a)  the  BdP’s  institutional,  functional  and  financial  independence;  or  (b)  the 

performance by the European System of Central Banks of its tasks under the Treaty and the Statute 
of the European System of Central Banks and of the European Central Bank7. 

2.4  While acknowledging the limited scope of the draft decree-law on the BdP, the ECB recommends 

that either the draft-decree law on the BdP or other relevant legal acts should expressly mandate the 

BdP, in its capacity as a macro-prudential authority, to cooperate with the European Systemic Risk 

Board (ESRB) and, where needed, with the macro-prudential authorities of other Member States, in 
particular as regards the exchange of information8. 

2.5  The ECB notes the absence, in the draft decree-law on the BdP, of a specific provision regarding 

the  implementation  of  Recommendation  D4  of  Recommendation  ESRB/2011/3,  which  calls  for 

legal protection of the macro-prudential authorities and their staff when acting in good faith in the 

context of its macro-prudential mandate. This legal protection should either be provided for in the 

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7  

8  

See  paragraph  5.1  of  Opinion  CON/2012/44,  paragraph  3.1  of  Opinion  CON/2012/55,  paragraph  2.1  of  Opinion 
CON/2013/30  and  paragraph  2.1  of  Opinion  CON/2013/45.  All  ECB  opinions  are  published  on  the  ECB’s  website  at 
www.ecb.europa.eu. 
See Article 12(c) and (d) of draft decree-law on the Organic Law and Article 2(1) of draft decree-law on the NCFS. 
See  paragraph  3.2  of  Opinion  CON/2012/55,  paragraph  2.3  of  Opinion  CON/2013/30  and  paragraph  2.2  of  Opinion 
CON/2013/45. 
See  paragraph  5.3  of  Opinion  CON/2012/44,  paragraph  4.1  of  Opinion  CON/2012/55  and  paragraph  2.3  of  Opinion 
CON/2013/30.  Recommendation  B4  of  Recommendation  ESRB/2011/3  also  proposes  mandating  the  macro-prudential 
authority  for  cross-border  cooperation  and  information  exchange,  in  particular  by  informing  the  ESRB  of  the  actions 
taken to address systemic risks at national level. 

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draft decree-law on the BdP or, if it is already contained in other laws9, the ECB recommends that 

clarification be provided on how these laws should apply to macro-prudential supervision. 

2.6  The ECB welcomes the specific provisions of the draft decree-law on the BdP which, when read in 
conjunction  with  existing  provisions10,  state  the  BdP´s  independence  with  regard  to  macro-

prudential policy decisions. 

2.7  This  opinion  does  not  prejudice  the  conclusions  of  the  follow-up  assessment  of  the  above 

mentioned recommendations that the ESRB will issue in accordance with Article 17 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  a  European 
Systemic Risk Board11. 

3.  

Extension of NCFS functions 

3.1  The ECB welcomes the extension of the NCFS functions which, in line with the implementation of 
Recommendation  B2  of  Recommendation  ESRB/2011/312,  will  include  coordinating  between  the 

financial system supervisory authorities when they regulate and supervise their respective financial 

entities. 

3.2  The ECB also welcomes that the BdP, in its role as the national authority defining and carrying out 

macro-prudential  policy  for  the  national  financial  system,  will  benefit  from  the  NCFS’s  advice, 

i.e. in identifying, monitoring and assessing risks to the stability of the financial system, as well as 

from  the  NCFS’s  macro-prudential  policy  proposals  that  are  specifically  aimed  at  mitigating  or 
reducing systemic risks, in order to reinforce the stability of the financial system13. 

4.   Other issues 

4.1  The  ECB  welcomes  the  specific  provisions  intended  to  safeguard  the  BdP´s  participation  in  the 
Single  Supervisory  Mechanism14  and  notes  the  redrafting  of  the  provisions  referring  to  the 

designation of the BdP as the national resolution authority, which now include specific references 

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10  

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12  

13  
14  

See Article 12(3) of the Legal Framework of Credit Institutions and Financial Companies. The same reservations were 
raised in paragraph 2.6 of Opinion CON/2013/45.  
See  Article  16A  of  draft  decree-law  on  the  BdP  and  Article  27(2)  of  the  Organic  Law  of  the  Banco  de  Portugal. 
Recommendation  B3  of  Recommendation  ESRB/2011/3  suggests  that  Member  States  ensure  the  central  bank  plays  a 
leading  role  in  the  macro-prudential  policy  and  that  macro-prudential  policy  does  not  undermine  its  independence  in 
accordance with Article 130 of the Treaty. Recommendation E1 of that same Recommendation advises that the macro-
prudential authority, in the pursuit of its objective, should be as a minimum operationally independent, in particular from 
political  bodies  and  from  the  financial  industry,  and  Recommendation  E2  proposes  that  organisational  and  financial 
arrangements do not jeopardise the conduct of macro-prudential policy. 
OJ L 331, 15.12.2010, p. 1. 
According to Recommendation B2 of Recommendation ESRB/2011/3, if a single institution is designated as the macro- 
prudential  authority,  Member  States  should  establish  mechanisms  for  cooperation  among  all  authorities  whose  actions 
have a material impact on financial stability, without prejudice to their respective mandates.  
See Article 2(1) and (3) of draft decree-law on the NCFS. 
See Article 17(2) of draft decree-law on the BdP. 

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to  the  tasks  of  drawing  up  resolution  plans,  applying  resolution  measures,  and  arranging  for  the 
removal of potential obstacles to the application of such measures15. 

4.2  The ECB noted in its Convergence Reports16 that financing by an NCB granted independently and 

at  its  full  discretion  to  credit  institutions  would  be  incompatible  with  the  monetary  financing 

prohibition  if  it  would  be  granted  other  than  in  connection  with  central  banking  tasks  (such  as 

monetary  policy,  payment  systems  or  temporary  liquidity  support  operations),  in  particular  the 

support  of  insolvent  credit  and/or  other  financial  institutions.  To  this  end,  the  ECB  advised  that 

inserting references to Article 123 of the Treaty should be considered. Acknowledging that Article 

12(c) of the Organic Law of the Banco de Portugal currently in force already expressly safeguards 

«the requirements derived from its participation in the ESCB» when entrusting on BdP the task to 

«provide for the stability of the national financial system, performing for the purpose, in particular, 

the  function  of  lender  of  last  resort»,  the  ECB  would  recommend  inserting  a  reference  to 

Article 123  of  the  Treaty  in  order  to  avoid  any  possible  incompatibility  with  the  monetary 

financing prohibition.   

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

Done at Frankfurt am Main, 27 August 2013. 

[signed] 

The President of the ECB 

Mario DRAGHI 

15   See Article 17_A of draft decree-law on the BdP. 
16. 

See pp. 29-30. 

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