Opinion of the European Central Bank of 22 April 2014 on monitoring the use of credit ratings by market participants (CON/2014/28)
Date: 2014-04-22
Institutions: European Central Bank
Subjects: Lithuania, banking supervision, central bank, credit rating, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 22 April 2014  

on monitoring the use of credit ratings by market participants 

(CON/2014/28) 

Introduction and legal basis 

On 28 March 2014, the European Central Bank (ECB) received a request from the Lithuanian Ministry of 

Finance for an opinion on draft amendments to the Law on Lietuvos bankas (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/EC1, 

as  the  draft  law  relates  to  Lietuvos  bankas.  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  main  objective  of  the  draft  law  is  to  designate  a  competent  authority  for  the  purpose  of 
Regulation  (EC)  No  1060/2009  of  the  European  Parliament  and  of  the  Council2  (hereinafter  the 

‘Regulation’). 

1.2  The draft law amends Article 42 of the Law on Lietuvos bankas which sets out the aim, functions, 

rights and obligations of Lietuvos bankas in performance of financial market supervision. The draft 

law provides that Lietuvos bankas is to carry out the functions of a competent authority assigned to 

it by the Regulation. 

2. 

General observations 

2.1  The  ECB  understands  that  Lietuvos  bankas  has  been  performing  the  functions  of  a  competent 
authority for the purpose of the Regulation3 since 1 January 2012, when supervision of the entire 

Lithuanian financial market was integrated within Lietuvos bankas. This function was provided for 
in the Law on markets in financial instruments4 and not in the Law on Lietuvos bankas. 

1  

2  

3  
4  

Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 
Regulation  (EC)  No  1060/2009  of  the  European  Parliament  and  of  the  Council of  16  September  2009  on  credit rating 
agencies (OJ L 302, 17.11.2009, p. 1). 
Article 22(1) requires Member States to designate a competent authority for the purpose of the Regulation. 
Article 70(2)(5) of the Law on markets in financial instruments. 

 
 
 
 
 
                                                 
ECB-PUBLIC 

2.2  Article  5a(2)  of  the  Regulation  requires  sectoral  competent  authorities  in  charge  of  supervising 
credit and other financial institutions5, taking into account the nature, scale and complexity of their 

activities,  to  monitor  the  adequacy  of  their  credit  risk  assessment  processes,  assess  the  use  of 

contractual  references  to  credit  ratings  and,  where  appropriate,  encourage  them  to  mitigate  the 

impact of such references, with a view to reducing sole and mechanistic reliance on credit ratings, 

in line with specific sectoral legislation.  

2.3  The ECB understands that Lietuvos bankas’ designation as a ‘competent authority for the purpose 

of  the  Regulation’  covers  functions  of  the  ‘competent  authority’  specified  in  Article  22  of  the 

Regulation and of the ‘sectoral competent authority’ specified in Article 25a of the Regulation. 

The ECB understands that the aim of the draft law is to extend and clarify the scope of Lietuvos 

bankas’  competence  for  the  purposes  of  the  Regulation.  In  particular,  according  to  the  draft  law, 

this function of Lietuvos bankas is now provided for in the Law on Lietuvos bankas along with its 

other  functions,  rights  and  obligations  in  performance  of  the  supervision  of  all  financial  market 

participants  and  not  in  sectoral  financial  legislation  regulating  a  specific  sector  of  the  financial 

market. The enactment of the draft law should result in clarifying and enhancing Lietuvos bankas’ 

supervisory and regulatory powers in this field. 

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

Done at Frankfurt am Main, 22 April 2014. 

[signed] 

The President of the ECB 

Mario DRAGHI 

5  

Entities referred to in the first subparagraph of Article 4(1) of the Regulation, i.e. credit institutions, investment firms, 
insurance  undertakings,  reinsurance  undertakings,  institutions  for  occupational  retirement  provision,  management 
companies, investment companies, alternative investment fund managers and central counterparties.  

2