Opinion of the European Central Bank of 16 March 2016 on the acquisition of the legal ownership of the Institut d’Émission des Départements d’Outre-Mer by the Banque de France (CON/2016/14)
Date: 2016-03-16
Institutions: European Central Bank
Subjects: France, French overseas department and region, euro area, issuing of currency, legal status, money, peripheral region

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 16 March 2016  

on the acquisition of the legal ownership of the Institut d’Émission des Départements d’Outre-Mer 

by the Banque de France 

(CON/2016/14) 

Introduction and legal basis 

On 15 February 2016 the European Central Bank (ECB) received a request from the French Ministry of 

Finance  and  Public  Accounts  for  an  opinion  on  a  draft  legislative  provision  (hereinafter  the  ‘draft  law’) 

amending the statute of the Institut d’Émission des Départements d’Outre-Mer (IEDOM, Issuing Institution 

of the Overseas Departments). 

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  first  and  third  indents  of  Article 2(1)  of  Council 
Decision 98/415/EC1, as the draft law relates to currency matters and to a national central bank (NCB). 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  IEDOM  conducts  monetary  policy  operations  for  the  European  System  of  Central  Banks 

(ESCB) in the outermost regions of France (Martinique, Mayotte, Guadeloupe, French Guiana, La 

Réunion and Saint Martin) as well as in the French overseas countries and territories that use the 
euro  (Saint  Barthélemy2  and  Saint-Pierre-and-Miquelon3)  (hereinafter  referred 

to  as 

the 

‘geographical zone of activity’). 

1.2  Under the current legal framework, the IEDOM is a national public law legal entity (établissement 

public  national),  the  status  of  which  is  governed  by  the  French  Monetary  and  Financial  Code 

(hereinafter  the  ‘CMF’).  The  entity  is  fully  owned  by  the  French  State.  However,  for  the 

implementation  of  ESCB  tasks  in  its  geographical  zone  of  activity,  the  IEDOM  is  an  agent  of  the 

Banque  de  France  (BdF)  acting  in  the  name  and  on  behalf  of  the  BdF  and  under  its  direction. 

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). 
The legal basis for the use of the euro in Saint Barthélemy is the monetary agreement between the European Union 
and the French Republic on keeping the euro in Saint-Barthélemy following the amendment of its status with regard 
to  the  European  Union  –Council  Decision  2011/433/EU  of  12  July  2011  on  the  signing  and  conclusion  of  the 
Monetary  Agreement  between  the  European  Union  and  the  French  Republic  on  keeping  the  euro  in  Saint 
Barthélemy following the amendment of its status with regard to the European Union (OJ L 89, 20.7.2011, p. 1).  
The  euro  is  used  in  Saint-Pierre-et-Miquelon  on  the  basis  of  Council  Decision  1999/95/EC  of  31  December  1998 
concerning the monetary arrangements in the French territorial communities of Saint-Pierre-et-Miquelon and Mayotte 
(OJ L  30, 4.2.1999,  p.  29).  The  ECB  reiterates  its  position  on  the  status  of  the  use  of  the  euro in  Saint-Pierre-et-
Miquelon,  as  communicated  in  Opinions  CON/1998/64  (OJ  C  127,  7.5.1999,  p.  5),  and  CON/2000/19.  All  ECB 
opinions are available on the ECB’s website at www.ecb.europa.eu. 

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According to Article L.711-9 of the CMF the IEDOM’s accounts are to be consolidated with those of 

the  BdF.  However  given  that  the  IEDOM  is  a  public  law  legal  entity  exclusively  owned  by  the 

French State, the assets and liabilities  of the IEDOM are not consolidated with those of the BdF, 

but only ‘combined’ for presentation purposes in the BdF’s annual report.    

1.3  Article L.711-2 of the CMF provides that the IEDOM acts for and on behalf, and under the authority, 

of the  BdF  when  exercising  the tasks laid  down in  Articles  L.122-1  and L.141-1 to L.141-5-1 and 

L.141-6-1  of  the  CMF  in  its  geographical  zone  of  activity.  When  the  BdF  performs  services 

requested  by  the  State  or  carried  out  for  third  parties  with  the  agreement  of  the  State,  these 
services  must  be  remunerated  in  order  to  cover  the  BdF’s  expenses4.  The  ECB  notes  that  the 

performance of such tasks by the IEDOM in its geographic zone of activity is remunerated under 

the same conditions as tasks performed by the BdF in metropolitan France (reference is made to 

Article L. 711-3 of the CMF, which remains as is).  

1.4  The purpose of the draft law is to allow the BdF to acquire the ownership of the IEDOM, with a view 

to  strengthening  the  latter’s  independence  vis-à-vis  the  French  State.  According  to  the  draft  law, 

the  IEDOM  would  become  a  private  law  legal  entity  incorporated  as  a  ‘société  par  actions 

simplifiée’  (SAS  –  simplified  joint-stock  company)  and  wholly-owned  by  the  BdF.  Pursuant  to  the 

draft law, this transformation of the IEDOM would not entail the creation of a new legal entity, nor 
constitute a dissolution (cessation d’activité)5 but rather would ensure the continuity of the IEDOM. 

From an accounting standpoint, the ECB understands that as a result of the transfer of ownership 

of the IEDOM to the BdF, the latter will recognise in its standalone accounts its shareholding in the 

IEDOM  and  the  financial  statements  of  the  two  entities  will  be  fully  consolidated.  Pursuant  to 

paragraph IV Article 44 bis of the draft law, the BdF will indemnify the French State for the transfer 

of ownership of the IEDOM and its transformation into an SAS.   

1.5  The governance structure of the IEDOM will also be substantially modified and simplified following 

its  transformation  into  an  SAS.  The  specificity  of  an  SAS  is  that,  subject  to  certain  limited 

exceptions, the governance rules are not laid down by law. As an SAS, IEDOM’s governance rules 

will be laid down in its bylaws (see Article L.227-5 of the French Commercial Code) and may also 

be part of the Decree amending the regulatory part of the CMF. Neither the draft Decree nor the 

draft bylaws were communicated to the ECB in the context of the present consultation.  

2. 

Observations regarding the transfer of ownership of the IEDOM to the BdF 

2.1  As indicated in the ECB’s previous opinion on the statute and role of the IEDOM6, the Statute of the 

European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of 

the ESCB’) does not provide for ESCB tasks being carried out by bodies other than the ECB and 

the ESCB NCBs. The ECB therefore welcomes the transfer of ownership of the IEDOM to the BdF 

and understands that the continued existence of the IEDOM, as a legal entity that is separate from 

4  
5  
6  

See Article L-141-7 of the CMF. 
See Article 44 bis (I) of the draft law. 

See Opinion CON/99/20.  

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the BdF, is justified by the special situation of the Union’s outermost regions of France and of the 

French overseas countries and territories that use the euro.   

2.2  The ECB understands that an agreement regarding the precise terms and conditions governing the 

transformation of IEDOM from a public law legal entity into an SAS is to be concluded between the 

French State and the BdF before the draft law enters into force. This agreement will, in particular, 

provide  for  an  indemnity  to  be  paid  by  the  BdF  to  the  French  State.  In  this  regard,  the  ECB 

emphasises that any provision of funds from an NCB to a Member State needs to comply with the 

limitations imposed by the Treaty, in particular with the prohibition on monetary financing laid down 

in Article 123 TFEU. From the documents at its disposal the ECB is not in a position to assess the 

way in which the indemnification provided for in the draft law will be agreed upon. The ECB would 

therefore  appreciate  receiving  a  copy  of  the  draft  agreement  between  the  French  State  and  the 

BdF prior to its entry into effect and execution.  

2.3  As  a  general  matter,  any  indemnity  to  be  paid  by  the  BdF  to  the  French  State  as  a  result  of  the 

transfer of ownership of the IEDOM should be based on a prudent and fair valuation as confirmed 

by an independent expert. 

2.4 

In  addition,  the  ECB  understands  that  the  change  in  the  status  of  the  IEDOM  that  took  place  in 

2000 following the transfer of national monetary policy powers to the ECB on 1 January 1999 did 

not entail any indemnification of the French State by the BdF, nor did it give rise to any claim to that 
effect.  The  ECB  clearly  stressed  on  that  occasion7  that  the  result  of  any  ESCB-related  financial 

transactions  should  be  recorded  immediately  and  directly  in  the  financial  statements  of  the  BdF. 

Against this background, the ECB emphasises that no indemnity should be paid by the BdF to the 

French  State  for  any  profits  and  losses  (including  undistributed  dividends  or  reserves)  related  to 

ESCB  tasks  which  were  generated  from  1  January  1999  onwards,  including  any  which  may  be 

generated after the completion of the transfer of ownership of the IEDOM to the BdF.  

2.5  As  regards  non-Eurosystem  related  assets  and  liabilities  that  will  be  transferred  to  what  will 

become  the  BdF’s  subsidiary  as  a  result  of  the  draft  law,  the  ECB  does  not  exclude  such 

indemnification  in  principle,  but  stresses  the  importance  of  a  prudent  valuation  on  the  basis  of 

which such indemnification should be based. In that respect, the valuation should amount to the fair 

value  of  the  assets  and  liabilities  effectively  transferred  to  the  BdF  (taking  due  account  of  all 

transferred  liabilities,  including  in  particular  pension  scheme-related  liabilities).  Given  the 

complexity  of  such  a  valuation  exercise,  an  independent  expert  should  be  tasked  with  its 

verification.  

3. 

Observations regarding the IEDOM’s new statute  

3.1  The draft law does not materially change the current framework as regards the IEDOM’s tasks and 

role (see paragraph 1.3 above) and no new tasks will be attributed to it as a result of the transfer of 

its ownership from the French State to the BdF. Furthermore, the tasks in the interest of the French 

State that the IEDOM will continue to perform in its geographical zone of activity will continue to be 

7  

See Opinion CON/99/20.  

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remunerated  by  the  French  State.  The  IEDOM’s  tasks  of  general  interest  are  also  identical  in 
nature to those performed by the BdF in the BdF’s own geographical zone of activity8.  

3.2  Financial independence is a key aspect of the principle of central bank independence (Article 130 

TFEU)  for  the  members  of  the  ESCB.  The  ECB  emphasises  that  any  task  undertaken  by  the 

IEDOM as the BdF’s wholly-owned subsidiary must be compatible with the BdF’s institutional and 

financial independence, to safeguard the proper performance of its tasks under the Treaty and the 

Statute of the ESCB, as well as its national tasks. Thus, following the transfer of ownership of the 

IEDOM to the BdF, any tasks undertaken in the interests of the French State may be performed by 

the  IEDOM  on  the  condition  that  the  IEDOM  continues  to  receive  appropriate  remuneration  for 

such tasks from the French State.  

3.3  As regards the governance of the IEDOM, in accordance with its new statute, the ECB understands 

that  choosing  the  SAS  as  the  most  appropriate  form  of  corporate  structure  was  justified  by  the 

flexible  organisational  and  governance  rules  associated  with  the  SAS  structure.  The  ECB  also 

understands  that  the  choice  of  the  SAS  structure  will  allow  the  IEDOM  to  continue  to  act  as  the 

BdF’s  agent  while  maintaining  the  IEDOM’s  separate  legal  personality.  However,  the  ECB  notes 

that specific governance and organisational rules will be laid down in the bylaws of the SAS which 

are not part of the present consultation. Pursuant to Article L.711-12 of the CMF the arrangements 

regarding the organisation and the bylaws of the IEDOM are to be laid down by a Decree that will 

be adopted following the adoption of the draft law. In view of the fact that the IEDOM will become a 

wholly-owned subsidiary of the BdF it would appear that Article L.711-12 of the CMF will become 

redundant and could therefore be repealed. If, however, any Decree on the arrangements for the 

operation  of  IEDOM  were  to  be  adopted,  the  ECB  would  welcome  being  consulted  on  it. 

Furthermore, the ECB expects to be provided with any other corporate arrangements relating to the 

organisation and operation of the IEDOM as an SAS. 

3.4  As regards the status of the IEDOM’s staff, the ECB notes that the proposed transformation will not 

have a direct impact on the legal regime applicable to anyone having an employment contract with 

the IEDOM. The ECB further observes that Article L.711-11 of the CMF, in accordance with which 

staff  members  seconded  to  the  IEDOM  by  the  Agence  Française  de  Développement  (AFD,  the 

French Development Agency) remain subject to the provisions applicable to them as staff members 

of  the  AFD,  is  not  amended  by  the  draft  law.  The  ECB  underlines  that,  in  line  with  Article  130 

TFEU, the legal regime applicable to the IEDOM must ensure its full independence vis-à-vis other 

offices,  bodies  or  agencies  of  the  French  State.  The  ECB  understands  that  any  of  the  IEDOM’s 

staff  that  are  on  secondment  from  the  AFD  work  entirely  under  the  direction,  control  and 

supervision  of  the  IEDOM  during  their  secondment,  both  from  an  organisational  and  functional 

perspective,  and  that,  in  relation  to  their  ESCB-related  duties  at  the  IEDOM,  they  are  subject  to 

8  

See Article L.141-7 of the CMF. 

4 

                                                 
Article 37 of the Statute of the ESCB.  

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

Done at Frankfurt am Main, 16 March 2016. 

[signed] 

The President of the ECB 

Mario DRAGHI 

ECB-PUBLIC 

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