Opinion of the European Central Bank of 15 February 2017 on payment accounts (CON/2017/2)
Date: 2017-02-15
Institutions: European Central Bank
Subjects: Cyprus, account, banking supervision, central bank, consumer protection, foreign-exchange reserves, national law, payment system

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 15 February 2017  

on payment accounts 

(CON/2017/2) 

Introduction and legal basis 

On 23  January  2017 the  European Central  Bank (ECB)  received  a  request from the Cypriot Ministry of 

Finance for an opinion on a draft law on the comparability of fees related to payment accounts, payment 

account switching and access to payment accounts with basic features (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 and third indents  of Article 2(1)  of Council  Decision 
98/415/EC1,  as  the  draft  law  relates  to  means  of  payment  and  the  Central  Bank  of  Cyprus  (CBC).  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 Directive 2014/92/EU of the European Parliament and 
of  the  Council2  in  Cypriot  law.  Directive  2014/92/EU  requires  Member  States  to  designate  a 
national  competent  authority  to  oversee  the  application  and  enforcement  of  its  provisions3.  Such 

competent authorities must be either public authorities or bodies recognised by national law or by 

public  authorities  expressly  empowered  for  that  purpose  by  national  law.  While  such  competent 

authorities may not be payment service providers, an exception is made for national central banks.  

1.2.  The  draft law designates the  CBC as the competent  authority responsible for  the  application  and 

enforcement of the rules implementing Directive 2014/92/EU. As the competent authority, the CBC 

is required to cooperate and exchange information with the competent authorities of other Member 

States. In addition, the draft law confers a number of tasks on the CBC related to the protection of 

consumers.  In  particular,  the  CBC  is  entrusted  with  the  responsibility  of  carrying  out  supervisory 

controls over payment service providers and credit institutions, and any of their representatives or 

third  parties  to  whom  they  have  delegated  any  of  the  tasks  conferred  by  the  draft  law.  Such 

persons are obliged to make available to the CBC or surrender any books, documents or records 

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 2014/92/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). 
Directive 2014/92/EU aims to improve the transparency and comparability of fee information for payment accounts, 
facilitate  consumers  switching  payment  accounts,  and  ensure  that  every  EU  resident  has  access  to  a  payment 
account with basic features. 

 
 
 
 
                                                 
ECB-PUBLIC 

the CBC requests4. The CBC is also granted powers to impose sanctions for infringements of the 

draft law and to require consumers wishing to open a payment account with basic features to show 
a  genuine  interest  in  doing  so5.  The  draft  law  also  provides  that  consumers  wishing  to  complain 

about  credit  institutions’  refusal  to  offer  payment  accounts  with  basic  features  or  their  unilateral 

termination of framework contracts have the right to contact the CBC and the Consumer Protection 

Service, which is designated as the alternative dispute resolution body. 

1.3.  Other  responsibilities  conferred  upon  the  CBC  include  the  establishment  of  a  list  of  the  most 

representative  services  linked  to  a  payment  account  and  subject  to  a  fee,  the  definition  of  the 

responsibilities of payment service providers concerning the information they need to provide to the 

Ministry of Finance for the operation of the website on which the fees charged by payment service 

providers will be compared, and ensuring that  payment accounts with basic features are offered by 

credit institutions for a reasonable fee.  

1.4.  Finally, the draft law grants the CBC the power (i) to establish an alternative procedure in relation 

to account switching; (ii) to restrict, after consultation with the Consumer Protection Service and the 

Commission  for  the  Protection  of  Competition ,  the  number  of  credit  institutions  offering  payment 

accounts  with  basic  features  to  consumers,  provided  that  access  to  such  accounts  by  all 

consumers throughout Cyprus is guaranteed; (iii) to identify limited and specific additional cases in 

which  credit  institutions  may  be  required  or  may  choose  to  refuse  an  application  for  a  payment 

account  with  basic  features;  and  (iv)  to  identify  limited  and  specific  additional  cases  in  which  a 

framework contract for a payment account with basic features may be unilaterally terminated by a 

credit institution.  

2. 

Conferral of new tasks on the CBC 

2.1.  This  opinion  does not  address  whether the  draft law  effectively implements Directive 2014/92/EU 

into Cypriot law. The ECB will only assess those provisions of the draft law that may impact on the 

role  and  tasks  of  the  CBC  as  a  central  bank,  national  supervisory  authority  and  member  of  the 

Eurosystem and the European System of Central Banks (ESCB).  

2.2.  As noted in paragraphs 1.2, 1.3 and 1.4, the draft law confers a number of new tasks on the CBC. 

In the context of a proposed conferral of new tasks on a national central bank (NCB) in the ESCB, 

it is necessary to assess such conferral against the prohibition on monetary financing under Article 

123 of the Treaty. For the purposes of that prohibition, Article 1(1)(b)(ii) of Council Regulation (EC) 
No 3603/936 defines ‘other type of credit facility’, inter alia, as ‘any financing of the public sector’s 

obligations vis-à-vis third parties’.  

As  the  objective  of  the  monetary  financing  prohibition  of  maintaining  a  sound  budgetary  policy  of 

Member States may not be circumvented, the task of financing measures which are normally the 

responsibility  of  the  Member  States,  and  financed  from  their  budgetary  sources  and  not  by  the 

4  

5 
6  

In  exercising  this  power  the  CBC  acts  as  the  overseer  of  the  enforcement  of  the  draft  law  for  the  benefit  of 
consumers. 

See Article 16(2) of Directive 2014/92/EU. 
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). 

2 

 
                                                 
ECB-PUBLIC 

NCBs,  must  not  be  entrusted  to  NCBs  by  law.  In  order  to  decide  what  constitutes  a  form  of 

financing of the  public sector’s obligations vis-à-vis third parties –  which can be translated  as the 

provision  of  central  bank  financing  outside  the  scope  of  central  bank  tasks  –  an  assessment  of 

whether the task to be undertaken by an NCB is a central bank task or a government task, i.e. a 

task  within  the  responsibility  of  the  Member  States,  needs  to  be  carried  out  on  a  case-by-case 

basis. In other words, sufficient safeguards must be in place to ensure that circumventions of the 

objective of the monetary financing prohibition of maintaining a sound budgetary policy of Member 

States do not take place. 

2.3.  As part of its discretion in the exercise of its duty, on the basis of Article 271(d) of the Treaty and 

Article 35.6 of the Statute of the European System of Central Banks and of the European Central 

Bank (hereinafter the ‘Statute of the ESCB’), to ensure that NCBs honour the obligations laid down 

by the Treaty, the Governing Council has endorsed safeguards of that kind in the form of criteria for 

determining what may be seen as falling within the scope of a public sector’s obligation within the 

meaning  of  Article  1(1)(b)(ii)  of  Regulation  (EC)  No  3603/93  or,  in  other  words,  constitute  a 

government task as follows:  

First, central bank tasks are in particular those tasks that are  related to the tasks that have been 

conferred upon the ECB and the NCBs by the Treaty and the Statute of the ESCB. These tasks are 

mainly defined in Article 127(2), (5) and (6) and Article 128(1) of the Treaty, as well as Article 22 

and Article 25.1 of the Statute of the ESCB.  

Second, as Article 14.4 of the Statute of the ESCB allows NCBs to perform ‘other functions’, new 

tasks, i.e. tasks that are not related to tasks that have been conferred upon the ECB and the NCBs, 

are  not  precluded  per  se.  However,  new  tasks  that  are  undertaken  by  an  NCB  and  which  are 

atypical of NCB tasks or which are clearly discharged on behalf of and in the exclusive interest of 

the government or of other public sector entities should be considered government tasks.  

Third, an important criterion for qualifying a new task as atypical of an NCB task or as being clearly 

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

entities  is  the  impact  of  the  task  on  the  institutional,  financial  and  personal  independence  of  that 

NCB.  

In particular, the following aspects should be taken into account:  

(a)  Whether the performance of the new task creates conflicts of interest with existing central bank 

tasks  which  are  not  adequately  addressed  and  does  not  necessarily  complement  those 

existing  central  bank  tasks.  If  a  conflict  of  interest  arises  between  existing  and  new  tasks, 

sufficient safeguards to mitigate that conflict should be in place. The complementarity between 

a new task and the existing central bank tasks should not be interpreted broadly, so as to lead 

to  the  creation  of  an  indefinite  chain  of  ancillary  tasks.  Such  complementarity  should  be 

examined also in relation to the financing of those tasks.  

(b)  Whether without new financial resources the performance of the new task is disproportionate to 

the  NCB’s  financial  or  organisational  capacity  and  may  negatively  impact  on  the  capacity  to 

perform properly the existing central bank tasks. 

3 

ECB-PUBLIC 

(c)  Whether the performance of the new task fits into the institutional set-up of the NCB in light of 

central bank independence and accountability considerations.  

(d)  Whether the performance of the new task harbours substantial financial risks.  

(e)  Whether the performance of the new task exposes the members of the NCB decision-making 

bodies  to  political  risks  which  are  disproportionate  and  may  also  impact  on  their  personal 

independence and, in particular, on the guarantee of term of office set out in Article 14.2 of the 

Statute of the ESCB.  

2.4.  On the basis of the criteria set out above, the following paragraphs assess whether the CBC’s new 

tasks are in line with the monetary financing prohibition.  

2.4.1. 

New  tasks  related  to  the  tasks  conferred  upon  the  ECB  and  the  NCBs  by  the  Treaty  and  the 

Statute of the ESCB 

The application and enforcement of the rules implementing Directive 2014/92/EU is a new task 
for national authorities in the Union7 and is 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 systems8.  

2.4.2. 

Tasks which are atypical of NCB tasks 

The application and enforcement of the rules implementing Directive 2014/92/EU is a new task 

for national authorities in the Union. Directive 2014/92/EU permits Member States to designate 
their central banks as competent authorities, and a number of Member States have done so9.   

2.4.3. 

Impact of the tasks on the independence of the CBC 

Consideration should be given to the impact of the new tasks to be conferred on the CBC on the 

institutional, financial and personal independence of the CBC. 

2.4.3.1.  Extent  to  which  performance  of  the  new  task  creates  conflicts  of  interest  with  existing  central 

bank tasks 

The  new  rules  in  the  draft  law  apply  to  payment  service  providers,  among  them  credit 

institutions.  The  CBC  is  already  the  competent  authority  responsible  for  the  authorisation  and 
prudential supervision of payment institutions pursuant to the Law on payment services10. The 

CBC’s new task of being the competent authority for the implementation and enforcement of the 

draft law therefore seems to complement its existing tasks.  

2.4.3.2.  Extent  to  which  performance  of  the  new  task  is  disproportionate  to  the  CBC’s  financial  or 

organisational capacity 

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.  Furthermore,  when  allocating  specific  new  tasks  to  NCBs,  each  NCB  concerned 

7  

8  
9  
10  

See  paragraph  3.1.4  of  Opinion  CON/2016/19.  All  ECB  opinions  are  published  on  the  ECB’s  website  at 
www.ecb.europa.eu.  

See paragraph 3.1.3 of Opinion CON/2016/19. 
See, e.g., paragraph 3.1.4 of Opinion CON/2016/19. 

See section 80 of the Law on payment services of 2009 (128(I)/2009). 

4 

 
 
                                                 
ECB-PUBLIC 

should be able to avail itself of additional financial resources so that these tasks may be carried 

out  in  a  manner  that  will  not  affect  the  NCB’s  operational  or  financial  capacity  (including 

sufficient  human  resources)  to  perform  their  ESCB  tasks.  In  this  regard,  the  ECB  notes  that 

Directive 2014/92/EU 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  duties11.  The  draft  law  entrusts  CBC  with  the  potentially 

resource and personnel-intensive task of applying and enforcing the new rules under Directive 

2014/92/EU, including the tasks and responsibilities listed in paragraphs 1.2 to 1.4 above. The 

Cypriot  authorities  must  ensure  that  the  CBC  can  avail  itself  of  sufficient  resources,  including 

personnel,  for  the  performance  of  the  new  duties  relating  to  the  protection  of  consumers 

conferred under the draft law, so that the CBC’s capacity to perform its ESCB-related tasks is 

not affected. The draft law contains a provision permitting the CBC to determine all the costs it 

bears in relation to the carrying out of the tasks conferred on the CBC under the draft law and to 

demand the repayment of these costs from payment service providers. The draft law therefore 

provides for the reimbursement of the CBC of the costs incurred in relation to the performance 

of its new tasks.  

2.4.3.3.  Extent  to  which  performance  of  the  new  task  fits  into  the  CBC’s  institutional  set-up,  in  light  of 

central bank independence and accountability considerations 

The  performance  of  the  new  tasks  appears  to  be  aligned  with  the  institutional  set-up  of  the 

CBC. As mentioned in paragraph 2.4.3.1, the CBC is already responsible for the application of 

provisions  regarding  payment  services  and  systems,  in  the  context  of  which  the  new  tasks 

under the draft law are conferred. 

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

The  draft  law  provides  that  the  CBC  and  its  advisors,  officers  and  employees  shall  not  be 

subject  to  any  liability  in  case  of  any  legal  action,  application  or  other  legal  proceeding  for 

damages in relation to any act or omission in the performance of their duties related to the tasks 

conferred by the draft law, unless it is proven that such act or omission was done in bad faith or 

is a result of gross negligence.  

2.4.3.5.  Extent to which performance of the new task exposes members of the CBC’s decision-making 

bodies to disproportionate political risks and impacts on their personal independence 

The  performance  of  the  tasks  conferred  under  the  draft  law  does  not  appear  to  expose  the 

CBC’s decision-making bodies to any disproportionate political risk or impact on their personal 

independence.  As  mentioned  in  paragraph  2.4.3.1,  the  CBC  is  already  responsible  for  the 

application of provisions regarding payment services and systems. 

3. 

Conclusion 

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

systems, the tasks conferred on the CBC under the draft law can be considered as central banking tasks. 

11  

Article 21(1) of Directive 2014/92/EU. 

5 

 
                                                 
ECB-PUBLIC 

Their financing by the CBC is in principle in compliance with the prohibition of monetary financing under 

Article 123 of the Treaty. In line with the requirement of Directive 2014/92/EU that the national competent 

authorities must be granted adequate resources necessary for the efficient and effective performance of 

their duties, the Cypriot authorities must ensure that, in addition to the reimbursement of the CBC for the 

costs that it incurs as a result of the draft law, the CBC can avail itself of sufficient resources, including 

personnel, for the performance of the new duties relating to the protection of consumers conferred under 

the draft law, so that the CBC’s capacity to perform its ESCB-related tasks is not affected.  

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

Done at Frankfurt am Main, 15 February 2017. 

[signed] 

The President of the ECB 

Mario DRAGHI 

6