Opinion of the European Central Bank of 22 September 2015 on the designation of Lietuvos bankas as a resolution authority (CON/2015/33)
Date: 2015-09-22
Institutions: European Central Bank
Subjects: Lithuania, aid for restructuring, banking supervision, central bank, competence of the institution, economic stabilisation, financial intervention, financial stability, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 22 September 2015  

on the designation of Lietuvos bankas as a resolution authority  

(CON/2015/33) 

Introduction and legal basis 

On 13 August 2015, the European Central Bank (ECB) received a request from the Lithuanian Ministry of 

Finance (hereinafter the ‘consulting authority’) for an opinion on a draft law amending 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  and  sixth  indents  of  Article 2(1)  of  Council 
Decision 98/415/EC1,  as  the  draft  law  relates  to  Lietuvos  bankas  and  rules  applicable  to  financial 

institutions  insofar  as  they  materially  influence  the  stability  of  financial  institutions  and  markets.  For 

elements of the draft law the exclusive purpose of which is the implementation of Union law, the ECB’s 

competence  to  deliver  an  opinion  is  based  on  Article  25.1  of  the  Statute  of  the  European  System  of 

Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB ’). 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 purpose of the draft law is to implement in Lithuanian law Article 3(1) of Directive 2014/59/EU 
of  the  European  Parliament  and  of  the  Council2  that  requires  each  Member  State  to  designate 

one  or,  exceptionally,  more  resolution  authorities  empowered  to  apply  the  resolution  tools  and 

exercise the resolution powers under that Directive.  In particular, the draft law amends the Law 
on Lietuvos bankas3 to provide that Lietuvos bankas will carry out the functions assigned to the 

resolution  authority  for  financial  sector  entities  subject  to  Lithuanian  law  (including  credit 

institutions,  the  Central  Credit  Union,  certain  financial  brokerage  firms,  financial  holding 

companies,  mixed  financial  holding  companies  and  mixed  activity  holding  companies,  branches 

established  in  Lithuania  by  credit  institutions  and  financial  brokerage  firms  established  in  third 

countries  and  certain  specific  financial  institutions).  This  does  not  apply  where  the  Single 

1  

2  

3  

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). 

Directive 2014/59/EU  of the  European  Parliament  and of the Council of 15 May  2014  establishing a framework for 
the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, 
and  Directives  2001/24/EC,  2002/47/EC,  2004/25/EC,  2005/56/EC,  2007/36/EC,  2011/35/EU,  2012/30/EU  and 
2013/36/EU,  and  Regulations  (EU)  No 1093/2010  and  (EU)  No 648/2012,  of  the  European  Parliament  and  of  the 
Council (OJ L 173, 12.6.2014, p. 190). 

Nr. IX-205, 2001 03 13, Žin., 2001, Nr. 28-890 (2001 03 30).  

 
 
 
 
                                                 
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Resolution  Board  carries  out  these  functions  pursuant  to  Regulation  (EU)  No  806/2014  of  the 
European  Parliament and of the Council4. The draft law also specifies that Lietuvos bankas will 

carry  out  the  functions  assigned  to  the  national  resolution  authority  under  Regulation  (EU) 
No 806/2014. The draft law further provides that, according to the Law on financial sustainability5, 

Lietuvos  bankas  will  make  decisions  with  regard  to  the  resolution  of  financial  sector  entities.  In 

this  respect,  the  draft  law  is  a  part  of  a  package  of  draft  legislation  that  has  been  prepared  in 

order  to  transpose  Directive  2014/59/EU  and  Directive  2014/49/EU  of  the  European  Parliament 
and  of  the  Council 6  into  Lithuanian  law,  as  well  as  to  ensure  the  effective  application  of 

Regulation (EU) No 806/2014 and to ratify the intergovernmental Agreement on the transfer and 

mutualisation of contributions to the Single Resolution Fund. However, the draft Law on financial 

sustainability  which  amends 

the  existing 

law, 

transposes 

in  detail 

the  provisions  of 

Directive 2014/59/EU  and  further  defines  resolution  tools,  powers  and  processes,  has  not  been 

submitted for consultation to the ECB. 

1.2. 

The  draft  law  also  states  that  financial  market  supervision  and  the  activities  of  the  resolution 

authority  will  be  financed  from  financial  market  participants’  contributions  and  other  Lietuvos 

bankas funds. The basis for calculating contributions and the maximum contribution rates are set 

out  in annexes to the draft law,  while the  contribution level for each  year  will  be established by 

Lietuvos  bankas  after  consultation  with  the  relevant  financial  market  participants.  The  draft  law 

clarifies  that  if  the  sum  of  contributions  paid  by  financial  market  participants  under  supervision 

during  a  particular  year  is  insufficient  to  cover  the  expenses  related  to  financial  market 

supervision  and  the  functions  of  the  resolution  authority  in  relation  to  financial  sector  entities, 

Lietuvos  bankas  will  increase  the  contributions  to  be  paid  the  following  year  by  the  necessary 

amount and use part of the contributions to cover the shortfall from the previous year.  

2. 

General observations  

2.1. 

The ECB welcomes the draft law, as it strengthens the tools and procedures available to Lietuvos 

bankas for carrying out effective preventive measures, early intervention and effective resolution 

in  line  with  the  common  framework  of  intervention  powers,  rules  and  procedures  laid  down  in 

Directive 2014/59/EU. The ECB stresses that its opinion concerns the provisions of the draft law 

that may impact on the role and tasks of Lietuvos bankas as a central bank and member of the 

European System of Central  Banks (ESCB). With this in mind, the ECB must also examine the 

provisions  related  to  the  new  tasks  of  Lietuvos  bankas  under  the  draft  Law  on  financial 

sustainability,  cross-referenced  in  the  text  of  the  draft  law,  and  approved  by  the  Lithuanian 

Government  on  2  September  2015  for  submission  to  the  Lithuanian  Parliament.  The  ECB 

4  

5  
6  

Regulation (EU) No  806/2014 of the European Parliament and  of the Council of 15 July  2014  establishing uniform 
rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of 
a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (OJ L 
225, 30.7.2014, p. 1).  
Valstybės žinios, 2009, No 93-3985. 
Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes 
(OJ L 173, 12.6.2014, p. 149). 

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stresses,  however,  that  its  opinion  does  not  constitute  an  assessment  whether  Lithuania  has 

effectively discharged its obligations to implement Directive 2014/59/EU in Lithuanian law.  

2.2. 

The ECB underlines that, in the context of a proposed conferral of tasks on an ESCB member, it 

is  necessary  to  assess  such  conferral  against  the  monetary  financing  prohibition  laid  down  in 

Article 123 of the Treaty. The ECB has developed guidance, in the form of general and specific 

considerations, on the basis of which it may decide  whether a new task conferred on an  ESCB 

national central bank (NCB) is to be considered a central banking task or a government task for 

the purposes of assessing such conferral against the monetary financing prohibition.  

2.2.1.  General considerations 

First, the systematic categorisation of tasks assigned to NCBs as central banking or government 

tasks applies to genuinely new tasks that did not exist in the past or did not form an integral part 

of the central banking tasks already assigned to the NCB. In recognition of the different Member 

States’  legal  frameworks,  central  banking  traditions  and  national  set-ups,  the  tasks  currently 

discharged by an NCB as central banking tasks are not reviewed and re-categorised, but may be 

reassessed if they are subject to legislative amendments of substance. 

Second,  the  principle  of  financial  independence  requires  that  the  Member  States  may  not  put 

their NCBs in a position where they have insufficient financial resources to carry out their ESCB 

or Eurosystem-related tasks.  

Third, central banking tasks comprise in particular those tasks that are related to the tasks listed 

in Article 127(2), (5) and (6) of the Treaty. 

Fourth, new tasks conferred on an NCB which are atypical of NCBs’ tasks, or which are clearly 

discharged on behalf of and in the exclusive interest of the government or of other public entities, 

should  be  considered  as  government  tasks.  In  that  context,  a  distinction  should  be  drawn 

between  liquidity  and  solvency-related  tasks  of  NCBs.  While,  for  purposes  of  the  monetary 

financing prohibition, solvency support is  a government task, liquidity-related tasks, the  ultimate 

objective of which are to finance the economy, are central banking tasks. 

2.2.2.  Specific considerations 

Resolution tasks discharged by central banks are considered central banking tasks provided that 

they do not undermine an NCB’s independence in accordance with Article 130 of the Treaty and 
Article  7  of  the  Statute  of  the  ESCB7.  However,  the  discharge  of  these  tasks  by  central  banks 

may not extend to the financing of resolution funds or other resolution financial arrangements as 

these  are  government  tasks.  This  is  without  prejudice  to  the  following:  (i)  the  possibility  that 

central  banks  may  provide  short-term  financing  to  deposit  guarantee  schemes  under  certain 
conditions 8  and  (ii)  the  possibility  that  NCBs  may  provide  emergency  liquidity  assistance  to 

solvent credit institutions. 

An  important criterion for qualifying a  new task as a government task is therefore the  impact of 

the  task  on  the  institutional,  financial  and  personal  independence  of  the  NCB.  In  particular,  the 

following should be taken into account. 

7  
8  

See Opinion CON/2015/22. All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 

See the ECB’s 2014 Convergence Report, p. 30. 

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First,  it  should  be  assessed  whether  the  performance  of  the  new  task  creates  inadequately 

addressed  conflicts  of  interests  with  existing  central  banking  tasks,  and  does  not  necessarily 

complement those existing central banking tasks. If a conflict of interest arises between existing 

and new tasks, there should be sufficient mitigation in place to adequately address that conflict. 

Complementarity between the new task and existing central banking tasks should not, however, 

be interpreted  extensively,  so as to  lead to  the creation of an  indefinite chain  of ancillary tasks. 

Complementarity should also be examined from the point of view of the financing of those tasks. 

Second,  it should be assessed whether  without  new  financial resources the  performance of the 

new  task  is  disproportionate  to  the  financial  or  organisational  capacity  of  the  NCB  and  may 

negatively impact on its capacity to properly perform existing central banking tasks. 

Third,  it  should  be  assessed  whether  the  performance  of  the  new  task  does  not  fit  into  the 

institutional  set-up  of  the  NCB  in  the  light  of  central  bank  independence  and  accountability 

considerations. 

Fourth,  it  should  be  assessed  whether  the  performance  of  the  new  task  harbours  substantial 

financial risks. 

Fifth,  it should be  assessed  whether the performance of the new task exposes the members of 

the  NCB’s  decision-making  bodies  to  political  risks  which  are  disproportionate  and  may  also 

impact  on  their  personal  independence  and,  in  particular,  the  guarantee  of  the  term  of  office 

under Article 14.2 of the Statute of the ESCB. 

2.3. 

Any  final  assessment  on  the  qualification  of  a  task  given  to  an  NCB  as  either  falling  within  the 

scope of a central banking task or a government task will be guided by the objective of ensuring 

the  consistent  application  of  the  monetary  financing  prohibition  within  the  Eurosystem  and  the 

ESCB. 

3. 

Specific observations 

3.1. 

Conferral of resolution tasks on Lietuvos bankas 

The  draft  law  designates  Lietuvos  bankas  as  the  resolution  authority,  broadening  its  current 

functions and activities to include placing obliged entities  under resolution and taking resolution 

measures  in  respect  of  such  entities.  By  virtue  of  this  designation,  Lietuvos  bankas  carries  out 

resolution tasks and exercises resolution powers.  

In  the  light  of  the  guidance  set  out  in  paragraph  2.2,  it  must  be  assessed  carefully  whether 

Lietuvos  bankas’  new  tasks  and  responsibilities  in  this  field  could  constitute  a  breach  of  the 

monetary financing prohibition. 

3.1.1.  New tasks 

Whilst Lietuvos bankas already has a role with regard to handling distressed financial institutions, 

the draft Law on financial sustainability assigns a new role to Lietuvos bankas and makes specific 

resolution  tools  available,  such  as  the  bail-in  mechanism,  which  in  their  proposed  form  do  not 

currently exist in Lithuanian law, and gives Lietuvos bankas new resolution-related powers. The 

4 

 
draft  laws  introduce  substantial  legislative  amendments  to  Lietuvos  bankas’  existing  tasks,  and 

should therefore be assessed as new tasks in the light of the monetary financing prohibition. 

3.1.2.  Principle of financial independence  

ECB-PUBLIC 

The principle of financial independence requires NCBs to have sufficient means to carry out not 

only  their  ESCB-related  tasks  from  an  operational  and  financial  point  of  view,  but  also  their 
national tasks9. In this regard, the draft law provides for the financing of costs related to Lietuvos 

bankas’  functions  as  a  resolution  authority  from  financial  market  participants’  contributions  and 
other Lietuvos bankas funds10. While the ECB understands from the consultation request that this 

provision is only intended to refer to the administrative costs related to the functions of Lietuvos 

bankas as a resolution authority, the wording of the draft law is not limited in this way. Therefore, 

it could be interpreted more widely to cover the costs related to financing resolution actions. For 

example,  in  accordance  with  Article  43(5)  of  the  draft  Law  on  financial  sustainability,  Lietuvos 

bankas could be required to pay the salary and other costs of a special manager in the event that 

an institution under resolution fails to pay the special manager on time.  

In  order  to  avoid  a  wide  interpretation  of  what  is  meant  by  the  costs  to  be  financed  by  the 

financial  market  participants’  contributions  and  other  Lietuvos  bankas 

funds, 

the  ECB 

recommends  expressly  limiting  these  contributions  to  financing  Lietuvos  bankas’  administrative 

costs as a resolution authority. Any other expenses beyond the scope of administrative costs that 

are  related  to  financing  resolution  actions  cannot  be  financed  under  any  circumstances  by 

Lietuvos bankas. The ECB would welcome a clarifying provision to this effect.  

Furthermore,  the  ECB  understands  that,  as  a  general  principle,  all  expenses  related  to  the 

fulfilment of the functions  of the resolution authority  by  Lietuvos  bankas  will  be fully covered by 

the contributions of financial market participants. The other funds of Lietuvos bankas will only be 

used  to  cover  for  a  limited  period  any  shortfalls  related  to  expenses  arising  during  a  particular 

year,  and  Lietuvos  bankas  will  increase  the  contributions  to  be  paid  the  following  year  to  cover 

this indebtedness.  

Finally, the draft Law on financial sustainability requires Lietuvos bankas, acting as a resolution 
authority, to recover any reasonable expenses actually incurred as a result of resolution action11.  

Against  this  background,  the  new  tasks  assigned  to  Lietuvos  bankas  would  not  affect  the 

resources it currently allocates to the performance of its monetary policy tasks provided that the 

clarifying provision referred to above is introduced.  

3.1.3.  Links to tasks listed in Article 127(2), (5) and (6) of the Treaty  

Administrative  resolution  tasks  are  considered  tasks  related  to  the  tasks  referred  to  in 

Article 127(5) of the Treaty, based on the understanding that administrative resolution tasks and 

supervisory  tasks  complement  each  other,  particularly  where,  as  in  this  case,  an  NCB  has  a 

mandate  for  the  stability  of  the  financial  system  and  the  designated  resolution  authority  already 

9  
10  
11  

See the ECB’s 2014 Convergence Report, p. 25. 

See Article 4 of the draft law. 
Article 42(12) of the draft Law on financial sustainability provides that the resolution authority and the resolution fund 
must seek to recover all reasonable expenses incurred when performing resolution actions in any of the established 
means 

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carries out certain tasks relating to the supervision of financial markets, including the supervision 

of credit institutions, payment institutions, securities and insurance markets.  

3.1.4.  Atypical tasks 

A number of Member States have conferred on their NCBs a significant role in the resolution of 

financial  institutions,  whether  as  the  resolution  authority  or  as  a  competent  authority  in  the 

decision-making process for resolution. The ECB has generally welcomed the allocation of such 

tasks to NCBs provided they do not interfere financially and operationally with the performance of 
the NCB’s  ESCB-related tasks12. The resolution tasks of an NCB can therefore be regarded as 

being tasks not atypical of a central bank, particularly if, as in the case of Lietuvos bankas, it has 

a  statutory  responsibility  for  maintenance  of  financial  stability  and  the  reliability  of  the  financial 
system13. 

3.1.5.  Discharge of tasks on behalf of and in the exclusive interest of the government or of other public 

entities 

Lietuvos  bankas  is  designated  as  the  sole  resolution  authority  and  takes  resolution  measures 

acting as an administrative authority in the exercise of public functions in its own name, and not 

on behalf of any other authority. In line with Directive 2014/59/EU, Lietuvos bankas is under the 

legal  obligation  to  obtain  prior  approval  from  the  Ministry  of  Finance  before  implementing 

decisions that have a direct fiscal impact or systemic implications. There is no indication that in 

discharging its resolution function Lietuvos bankas acts exclusively in the interests of the Ministry 

of Finance or another public entity. 

3.1.6.  Extent to which conflicts of interests with existing Lietuvos bankas tasks are addressed 

3.1.6.1. The  ECB  has  repeatedly  noted14  that,  in  line  with  Directive  2014/59/EU 15,  staff  involved  in 

carrying  out  the  functions  of  a  resolution  authority  in  accordance  with  the  Directive  must  be 

structurally separate and subject to separate reporting lines from the staff involved in carrying out 
prudential banking supervision tasks pursuant to the relevant Union legislation 16 or with regard to 

the  other  functions  of  the  relevant  authority.  The  ECB  observes  that  Directive  2014/59/EU 

‘exceptionally’ allows one authority to carry out both resolution and supervisory functions on the 

condition  that  adequate  structural  arrangements  are  put  in  place  in  order  to  ensure  operational 

independence and to avoid conflicts of interest between that authority’s resolution function and its 

other functions. 

12  

13  
14  

15  
16  

See,  e.g.,  paragraph  2.3  of  Opinion  CON/2015/25,  paragraphs  2.1  and  3.2.4  of  Opinion  CON/2015/22, 
paragraph 4.1  of  Opinion  CON/2014/60,  paragraph  2.1  of  Opinion  CON/2013/73,  paragraph  2.3  of  Opinion 
CON/2011/72, paragraph 2.2 of Opinion CON/2011/83, paragraph 2.2 of Opinion CON/2011/39, paragraph 2.2. See 
also in the UK the role of the Bank of England in the Special Resolution Regime under the Banking Act 2009. 

Article 8(4) of the Law on Lietuvos bankas. 
For  example,  see  paragraph  4.3  of  Opinion  CON/2015/2,  paragraphs  5.1  and  5.2  of  Opinion  CON/2015/3,  and 
paragraph 3.3 of Opinion CON/2014/67. 
See the second subparagraph of Article 3(3) of Directive 2014/59/EU. 

See  Regulation  (EU)  No  575/2013  of  the  European  Parliament  and  of  the  Council  of  26  June  2013  on  prudential 
requirements  for  credit  institutions  and  investment  firms  and  amending  Regulation  (EU)  No  648/2012  (OJ  L  176, 
27.6.2013,  p.  1)  and  Directive  2013/36/EU  of  the  European  Parliament  and  of  the  Council  of  26  June  2013  on 
access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, 
amending  Directive  2002/87/EC  and  repealing  Directives  2006/48/EC  and  2006/49/EC  (OJ  L  176,  27.6.2013, 
p. 338). 

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3.1.6.2. Pursuant  to  the  draft  Law  on  financial  sustainability,  Lietuvos  bankas  is  required  to  ensure  the 

operational  and  organisational  independence,  including  separate  reporting  lines,  of  the  unit 

carrying out resolution functions to ensure there is no conflict of interest  between the resolution 
tasks  and  other  tasks  assigned  by  law  to  Lietuvos  bankas17.  Furthermore,  the  draft  Law  on 

financial  sustainability  requires  Lietuvos  bankas  to  adopt  and  make  public  internal  rules 

specifying  the  separation  of  these  functions,  including  rules  regarding  the  protection  of 

professional  secrecy  and  exchange  of  information  between  the  different  functional  areas.  The 

ECB  welcomes  these  provisions,  as  they  appear  to  adequately  address  potential  conflicts  of 

interests  between  resolution  and  Lietuvos  bankas’  other  tasks  and  functions.  The  ECB  would 

appreciate  being  provided  in  advance,  for  information  purposes,  with  the  internal  rules 

implementing these provisions. 

3.1.7.  Extent  to  which  the  performance  of  tasks  is  proportionate  to  Lietuvos  bankas  financial  and 

operational capacity and its ability to perform its ESCB-related tasks 

As noted above, in order to remain financially independent, NCBs must have sufficient means to 

carry  out  not  only  their  ESCB-related  tasks  from  an  operational  and  financial  point  of  view,  but 

also  their  national  tasks.  In  this  regard,  provided  that  the  necessary  amendments  clarifying  the 

draft law’s intention are introduced, the ECB welcomes the fact that Lietuvos bankas may recover 

administrative  expenses  incurred  in  carrying  out  its  resolution  tasks  from  the  institutions 

concerned. 

3.1.8.  Extent to which the performance of tasks fits into Lietuvos bankas institutional set-up in the light 

of central bank independence and accountability considerations 

As  noted  above,  before  implementing  decisions  that  have  a  direct  fiscal  impact  or  systemic 

implications,  Lietuvos  bankas  is  required  to  obtain  prior  approval  from  the  Ministry  of  Finance. 

Furthermore,  Lietuvos  bankas  has  a  duty  to  notify,  inter  alia,  the  Ministry  of  Finance  when  it 

determines  that  the  conditions  for  resolution  are  met  and  after  taking  a  resolution  action.  The 

ECB considers that the resolution tasks that Lietuvos bankas is to assume under the draft law will 

involve  much  closer  cooperation  with  the  Ministry  of  Finance  when  fiscal  funds  or  systemic 

implications are at stake than for the exercise of its supervisory or other functions. 

3.1.9.  Extent to which the performance of tasks harbours substantial financial risks 

3.1.9.1. With  regard  to  the  provisions  on  the  liability  of  Lietuvos  bankas,  the  draft  Law  on  financial 

sustainability does not contain provisions excluding or limiting the liability of Lietuvos bankas as 

resolution  authority  for  any  negligent  act  when  applying  the  resolution  tools  or  exercising 

resolution powers. Instead, the general liability regime governing Lietuvos bankas applies for any 

damage  incurred  as  a  result  of  Lietuvos  bankas  or  its  staff  acting  unlawfully  in  its  capacity  as 

resolution  authority.  Lietuvos  bankas  will  be  held  liable  if  the  person  who  has  suffered  damage 

proves fault on the part of Lietuvos bankas or its staff. This is in marked contrast to the express 

17  

See Article 44(2) of the draft Law on financial sustainability. See also page 4 of the explanatory memorandum to the 
draft law. 

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exclusion of liability for publicly-owned resolution vehicles – for example, the bridge institution  – 
whose liability is limited to wilful misconduct and gross negligence 18. 

3.1.9.2. The ECB notes that, under the Lithuanian Civil Code, the State is primarily liable for any damage 

caused by an unlawful decision or improper administrative action by a legal entity or person in the 
course  of  exercising  public  authority  on  the  State’s  behalf 19.  The  carrying  out  of  resolution 

functions  clearly  constitutes  the  exercise  of  public  authority  on  the  State’s  behalf.  For  this 

purpose  the  entity  or  person  exercising  public  authority  in  this  situation  is  Lietuvos  bankas. 

Notwithstanding  this  provision,  the  Law  on  Lietuvos  bankas  expressly  provides  that  the  State 

shall not be  liable for the  obligations of Lietuvos  bankas, and that  Lietuvos  bankas shall  not be 
liable for the State’s obligations 20. This would seem to indicate, contrary to the rule established by 

the  Civil  Code,  that  Lietuvos  bankas  would  be  fully  liable  in  its  own  right  for  carrying  out  its 

resolution  functions.  It  is  not  obvious  why  Lietuvos  bankas  should  assume  the  sole  burden  of 

those potential liabilities when the draft law requires it to obtain prior approval from the Ministry of 

Finance  before  implementing  resolution  decisions  that  have  a  direct  fiscal  impact  or  systemic 

implications.  In  this  context,  the  ECB  observes  that  by  reason  of  the  monetary  financing 

prohibition  laid  down  in  the  Treaty,  national  legislation  may  not  require  an  NCB  to  finance  the 
public  sector’s  obligations  in  relation  to  third  parties21.  Given  that  potential  liability  issues 
represent  substantial  financial  risks  for  Lietuvos  bankas22,  this  should  be  taken  into  account  in 

determining  the  body  that  is  liable  to  pay  damages  to  third  parties  and  in  assessing  Lietuvos 

bankas’  ability  to  recover  its  resolution-related  expenses.  The  ECB  considers  that  it  would  be 

useful to expressly clarify this point. 

3.1.10.  Conclusion 

The  ECB  considers  that  there  are  grounds  for  regarding  Lietuvos  bankas’  resolution  tasks  as 

central  banking  tasks,  in  the  sense  that  they  complement  Lietuvos  bankas’  existing  supervisory 

functions.  The  fact  that  Lietuvos  bankas’  administrative  resolution  functions  will  be  financed  by 

financial  market  participants  should  also  impact  positively  on  its  financial  capacity  to  assume 

those tasks. However, the ECB considers that the draft laws potentially create significant financial 

risks  for  Lietuvos  bankas  because  they  do  not  limit  its  liability  for  negligent  acts  in  its  role  as 

resolution authority. Moreover, it is not clear who should pay damages to third parties in the event 

of Lietuvos bankas or its staff acting unlawfully. Finally, insofar as Lietuvos bankas would appear 

to be exclusively liable for carrying out its resolution functions under the Law on Lietuvos bankas, 

there  is  no  obvious  reason  why  Lietuvos  bankas  should  assume  the  sole  burden  of  those 

potential liabilities when Lietuvos bankas is under the legal obligation to obtain the prior approval 

of  the  Ministry  of  Finance  before  implementing  decisions  that  have  a  direct  fiscal  impact  or 

systemic implications. 

18  
19  
20  
21  

22  

See Article 70 of the draft Law on financial sustainability. 

See Article 6.271 of the Civil Code. 
See Article 2(4) of the Law on Lietuvos bankas. 
See the ECB’s 2014 Convergence Report, p. 29. 

See paragraph 3.2.9.3 of Opinion CON/2015/22. 

8 

                                                 
ECB-PUBLIC 

3.2. 

Establishment of bridge institution and asset management vehicles 

With regard to the bridge institution tool and the asset separation tool, the draft Law on financial 

sustainability provides that the bridge institution or asset management vehicle will be established 
by the resolution authority  or the Government of Lithuania 23. Although the State is the owner of 

such  an  entity,  the  resolution  authority  will  in  all  cases  control  the  entity.  In  situations  where  a 

central bank acts as resolution authority, it should be made clear, for the avoidance of doubt, that 
the central bank will in no circumstances assume or finance any of these entities’ obligations 24. A 

central bank’s role as the founder of such an entity must remain consistent in all cases with the 

monetary  financing  prohibition  laid  down  in  Article  123  of  the  Treaty  and  supplemented  by 
Council  Regulation  (EC)  No  3603/9325.  This  prohibits  any  financing  by  a  central  bank  of  the 

public  sector’s  obligations  in  relation  to  third  parties.  Moreover,  this  role  as  founder  of  such  an 

entity  must  be  performed  without  prejudice  to  central  bank  independence,  in  particular  financial 

and  institutional  independence.  The  principle  of  financial  independence  requires  NCBs  to  have 

sufficient means to carry out not only their ESCB-related tasks from an operational and financial 
point of view, but also their national tasks26. For that reason, it should be ensured that if Lietuvos 

bankas,  as  resolution  authority,  decides  to  become  the  founder  of  such  an  entity,  it  will  be 

provided  with  sufficient  financial  and  human  resources  to  address  the  associated  operational 

burden. 

3.3. 

No role for Lietuvos bankas to provide liquidity to the Resolution Fund 

The  ECB  understands,  based  on  the  package  of  draft  legislation  including  the  draft  law,  that 

Lietuvos  bankas  is  not  authorised  to  provide  any  loan  or  financing  under  any  circumstances  to 

the Resolution Fund established under the draft Law on financial sustainability. The provision of 

such financing to the Resolution Fund would constitute a government task, and any such loan or 

financing by Lietuvos bankas would therefore breach the monetary financing prohibition laid down 
in the Treaty27.  

3.4. 

Resolution planning 

The draft Law on financial sustainability provides that recovery plans and resolution plans drawn 
up shall not assume any public financial support beyond that granted by the Resolution Fund 28. 

However,  they  shall  include,  where  applicable,  a  forward-looking  analysis  of  how  and  when  an 

institution may apply for the use of central bank liquidity in stressed conditions and the collateral 
to  be  used  in  those  circumstances29.  While  these  provisions  appear  to  be  in  line  with  the 

requirements of Directive 2014/59/EU, the ECB emphasises that they do not in any way affect the 

competence of the Eurosystem to decide independently and at its full discretion on the provision 

23  
24  
25  

26  
27  
28  
29  

See Articles 66(1) and 72 of the draft Law on financial sustainability. 
See paragraph 3.4.3 of Opinion CON/2015/25. 

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 Treaty (OJ L 332 , 31.12.1993, p. 1). 

See the ECB’s 2014 Convergence Report, p. 25. 
Ibid. 
See Articles 5(3) and 13(3) of the draft Law on financial sustainability. 

See Articles 5(2)(2) and13(2)(17) of the draft Law on financial sustainability. 

9 

                                                 
of central bank liquidity, based on the existing legal framework and within the limitations imposed 
by the monetary financing prohibition laid down in the Treaty30. 

ECB-PUBLIC 

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

Done at Frankfurt am Main, 22 September 2015. 

[signed] 

The President of the ECB 

Mario DRAGHI 

30  

See paragraph 3.2 of Opinion CON/2012/99, paragraph 3.3 of Opinion CON/2014/67 and paragraph 3.4 of Opinion 
CON/2015/22. 

10