Opinion of the European Central Bank of 24 March 2016 on payment services (CON/2016/18)
Date: 2016-03-24
Institutions: European Central Bank
Subjects: Bulgaria, credit institution, financial instrument, financial stability, money, payment system

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 24 March 2016  

on payment services 

(CON/2016/19) 

Introduction and legal basis 

On  26  January  2016  the  European  Central  Bank  (ECB)  received  a  request  from  Българска  народна 

банка (Bulgarian National Bank - BNB) for an opinion on a draft law amending and supplementing the law 

on payment services and payment systems (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  second,  third  and  sixth  indents  of  Article 2(1)  of  Council 
Decision  98/415/EC 1,  as  the  draft  law  relates  to  means  of  payment,  a  national  central  bank  (NCB)  and 

contains  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 

1.1   The  primary  purpose  of  the  draft  law  is  to  transpose  Directive  2014/92/EU  of  the  European 
Parliament  and  of  the  Council2  (hereinafter  the  ‘Payment  Accounts  Directive’  or  PAD)  into 

Bulgarian  law.  Under  the  PAD,  Member  States  must  designate  a  national  competent  authority  to 

oversee the application and enforcement of its provisions. Such competent authorities must either 

be  public  authorities  or  entities  recognised  by  national  law  or  by  public  authorities  expressly 

empowered  for  that  purpose  under  national  law.  While  such  competent  authorities  may  not  be 

payment service providers, an exception is made for national central banks. In the draft law, BNB is 

designated as the competent authority, responsible for the application and enforcement of the rules 

that implement the PAD into national legislation.  

1.2. 

In addition, the draft law introduces several amendments to the Bulgarian Law on credit institutions, 

including the following: 

• 

exempting licenced  institutions that grant loans as an ancillary service from the requirement 

to register, provided they have been granted a licence for another type of activity; 

1  

2  

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  2014/92/EU  of  the  European  Parliament  and  of  the  Council  of  23  July  2014  on  the  comparability  of  fees 
related to payment accounts, payment account switching and access to payment accounts with basic features (OJ L 
257, 28.8.2014, p. 214). 

 
 
 
 
                                                 
ECB-PUBLIC 

• 

• 

• 

• 

establishing  a  procedure  allowing  capital  instruments  to  be  classified  as  Additional  Tier  1 

instruments and Tier 2 instruments in accordance with Regulation (EU) No 575/2013 of the 
European Parliament and of the Council 3; 

introducing a fee for anyone requesting access to information from the central credit register; 

regarding the supervisory powers of BNB; 

repeal  of  BNB’s  competence  to  impose  administrative  sanctions  on  persons  who 

communicate false information regarding a bank, which may be detrimental to its reputation 

and credibility.  

2. 

General observations 

2.1  New NCB task 

The  ECB  would  like  to  recall  that  when  new  tasks  are  conferred  on  a  member  of  the  European 

System of Central Banks (ESCB), it is necessary  to  assess these tasks against the prohibition of 

monetary financing under Article 123 of the Treaty. For this purpose and in the light of that basic 

need, the ECB has developed guidance in the form of general and specific considerations on the 

basis of which the ECB may decide whether the new task conferred on an NCB is to be considered 

a  central  banking  task  or  a  government  task  for  the  purposes  of  the  monetary  financing 
prohibition4.  This  guidance  is  set  out  in  this  paragraph  2.1.  The  concrete  assessment  of  whether 

BNB’s  task  of  overseeing  the  application  and  enforcement  of  the  new  rules  in  the  draft  law  that 

relate to payment accounts is to be considered a central banking task or a government task is then 

undertaken in paragraph 3.1. 

2.1.1  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  an  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 their substance is amended. 

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. 

3  

4  

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). 
See  paragraph  2  of  Opinion  CON2015/22.  All  ECB  opinions  are  published  on  the  ECB’s  website  at 
www.ecb.europa.eu. 

2 

 
                                                 
ECB-PUBLIC 

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 to be government tasks. 

2.1.2  Specific considerations 

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

the institutional, financial and personal independence of the NCB. In particular, the following issues 

should be taken into account. 

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

addressed  conflicts  of 

interests  with  existing  central  banking 

tasks,  without  necessarily 

complementing  the  existing  central  banking  tasks.  If  a  conflict  of  interest  arises  between  existing 

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

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

however, be interpreted broadly, as this could lead to the creation of an indefinite chain of ancillary 

tasks.  The  assessment  of  the  complementarity  of  a  new  task  should  also  take  into  account  the 

financing of that task. 

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

new task places a disproportionate burden  on 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  is  aligned  with  the 

institutional  set-up  of  the  NCB,  in  particular  as  regards  central  bank  independence  and 

accountability considerations. 

Fourth, it should be assessed whether the performance of the new task entails 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 that are disproportionate and could also impact on 

their personal independence and, in particular, the guarantee of the Governor’s term of office under 

Article 14.2 of the Statute of the ESCB. 

2.2  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 the task relating to the application and enforcement of the new rules 

The ECB notes that the draft law would assign to BNB the application and enforcement of the rules 

implementing  the  PAD  into  national  law.  To  this  end,  BNB’s  Governing  Council  must  adopt  a 
regulation on the application of the new rules 5 and enforce its implementation. Furthermore, BNB is 

mandated to take the necessary measures to raise public awareness of the availability of payment 

5  

See § 27 of the draft law. 

3 

 
                                                 
ECB-PUBLIC 

accounts with basic features6 and must provide access, free of charge, to a website comparing the 
fees charged by payment service providers for the relevant payment services 7. 

3.1.1  New task 

The application and enforcement of the rules implementing the PAD is a new task, which no public 

authority in Bulgaria has previously performed. In the light of the guidance set out in paragraph 2.1 

it  must  therefore  be  assessed  carefully  whether  this  new  task  and  the  associated  responsibilities 

for BNB could constitute a breach of the monetary financing prohibition. 

3.1.2  The principle of financial independence 

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 not only their ESCB-related 
tasks,  but  also  their  national  tasks,  both  from  an  operational  and  financial  perspective 8. 

Furthermore,  when  allocating  specific  non-ESCB-related  tasks  to  the  NCBs,  additional  personnel 

and financial resources must also be allocated so that these tasks may be carried out in a manner 
that will not affect the NCBs’ operational or financial capacity to perform their ESCB-related tasks9. 

In this regard, the ECB also notes that the PAD requires Member States to ensure that the national 

authorities  in  charge  of  the  application  and  enforcement  of  its  rules  are  granted  adequate 

resources  for  the  efficient  and  effective  performance  of  their  duties.  However,  the  draft  law  does 

not specify whether the State would reimburse BNB for the costs related to the performance of this 

new task. 

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

The  application  and  enforcement  of  the  rules  implementing  the  PAD  is  a  task  related  to  the  task 

conferred  in  the  fourth  indent  of  Article  127(2)  of  the  Treaty,  as  this  task  is  ancillary  to  the 

promotion of the smooth operation of payment systems. 

3.1.4  Atypical tasks 

The  application  and  enforcement  of  the  rules  implementing  the  PAD  is  a  new  task  for  national 

authorities in the Union. The PAD provides that Member States may designate their central banks 

as competent authorities, and the ECB understands that a number of Member States intend to do 
so10. 

3.1.5  Complementarity of the new task with existing BNB tasks 

BNB is already in charge of the application of the provisions of the Law on payment services and 
payment systems11. The new rules in the draft law apply to payment service providers licenced by 

6  
7  
8  
9  
10  

11  

See § 24 of the draft law. 

See new Article 73и as set out in § 3 of the draft law. 
See the ECB’s 2014 Convergence Report, p. 25.   

See, for example, paragraph 3.1.2 of Opinion CON/2016/6. 
At  the  time  of  the  adoption  of  this  opinion,  there  were  indications  that  Member  States  were  roughly  split  in  equal 
proportion:  while  many  did  not  intend  to  designate  their  NCBs  as  the  competent  authority  under  the  PAD,  many 
others did intend to do so. This is consistent with the existing allocation of consumer protection tasks exercised by 
NCBs in those Member States. 

See Article 112 of the Law on payment services and payment systems. 

4 

                                                 
ECB-PUBLIC 

BNB, as well as to the branches and agents of payment service providers that conduct business on 
Bulgarian territory12. BNB’s new task therefore seems to complement BNB’s existing tasks. 

3.1.6  Extent to which the performance of the new task is aligned with the institutional set-up of BNB  

The  performance  of  the  new  task  appears  to  be  aligned  with  the  institutional  set-up  of  BNB.  As 

mentioned in paragraph 3.1.4, BNB is already in charge of the application of provisions regarding 

payment  services  and  systems.  Furthermore,  BNB’s  Governing  Council  is  entrusted  with  the 

adoption of a regulation on the application of the draft law’s new rules, thus allowing it to decide on 

the approach that best suits its own institutional set-up. 

3.1.7  Extent  to  which  the  performance  of  the  new  task  is  proportional  with  BNB’s  financial  and 

operational capacity and its ability to perform ESCB-related tasks 

The  draft  law  entrusts  BNB  with  the  potentially  resource-intensive  task  of  applying  and  enforcing 

the  new  rules.  Moreover,  the  draft  law  mandates  BNB  to  take  the  necessary  measures  to  raise 

public awareness of the availability of payment accounts with basic features. More importantly, the 

ECB understands that the draft law requires BNB to establish and operate a website comparing the 
fees charged by  payment  service providers 13. The ECB therefore understands  that BNB  will bear 

the cost of establishing such a website at its own expense. All such costs go beyond those relating 

to the issuance of licences, which BNB currently recovers under the existing law. 

3.1.8  Conclusion 

The  ECB  considers  that,  given  their  link  to  the  ESCB  task  of  promoting  the  smooth  operation  of 

payment  systems,  the  tasks  conferred  on  BNB  under  the  draft  law  can  be  considered  as  central 

banking tasks. As such, their financing by BNB is – in principle – in compliance with the prohibition 

of monetary financing under Article 123 TFEU. Nonetheless, given that the PAD requires that the 

national  competent  authorities  be  granted  adequate  resources  necessary  for  the  efficient  and 
effective  performance  of  their  duties 14,  the  absence  of  any  clear  commitment  from  the  State  to 

reimburse  BNB  for  the  costs  that  it  incurs  as  a  result  of  the  draft  law  raises  some  concerns  as 

regards BNB’s financial independence. Adequate provisions to implement the full extent of the PAD 

requirements should therefore be taken into account by the draft law. 

3.2  Amendments to the Law on credit institutions 

3.2.1  The  ECB  welcomes  the  amendments  to  the  Law  on  credit  institutions,  especially  insofar  as  they 

contain a clarification regarding the fees charged for accessing the central credit register, which is 
also consistent with the ECB’s previous stance15. 

3.2.2  As  regards  the  provision  exempting  licenced  institutions  that  grant  loans  as  an  ancillary  service 
from  the  requirement  to  register 16,  the  ECB  notes  that  it  should  be  ensured  that  the  credit  risk 

associated with such loans is mitigated appropriately. 

12  
13  
14  
15  
16  

See new Article 73а(2) as provided in § 3 of the draft law. 

See new Article 73и(2) as provided in § 3 of the draft law. 
Article 21(1) of PAD. 
See paragraph 3.1.6 of Opinion CON/2015/46. 

See Article 3а(9) of the draft law. 

5 

                                                 
3.2.3  The  ECB  considers  that  any  BNB  regulation  specifying  the  procedure  for  allowing  capital 

instruments  to  be  classified  as  Additional  Tier  1  instruments  and  Tier  2  instruments,  should  be 

consistent with the relevant rules of Regulation (EU) No 575/2013. 

ECB-PUBLIC 

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

Done at Frankfurt am Main, 24 March 2016. 

[signed] 

The President of the ECB 

Mario DRAGHI 

6