Opinion of the European Central Bank of 21 August 2017 on the designation of the Central Bank of Cyprus as the information authority and inclusion of relevant exception to bank secrecy requirement (CON/2017/32)
Date: 2017-08-21
Institutions: European Central Bank
Subjects: Cyprus, account, banking, central bank, exchange of information, money, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 21 August 2017  

on the designation of the Central Bank of Cyprus as the information authority and inclusion of 

relevant exception to bank secrecy requirement 

(CON/2017/32) 

Introduction and legal basis 

On 31 July 2017 the European Central Bank (ECB) received a request from the Ministry of Justice and 

Public Order of the Republic of Cyprus for an opinion on: (a) a draft law amending the Law on the Central 

Bank of Cyprus (hereinafter the ‘first draft law’); and (b) a draft law amending the Law on the business of 

credit institutions (hereinafter the ‘second draft law’) (hereinafter, collectively, the ‘draft laws’). 

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  laws  relate  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 laws  

1.1.  The purpose of the draft laws is to implement Article 14(5) of Regulation (EU) No 655/2014 of the 
European  Parliament  and  of  the  Council  (hereinafter  the  ‘Regulation’)2  into  Cypriot  law.  Article 

14(4)  of  the  Regulation  provides  that  in  order  to  obtain  the  account  information  referred  to  in 

paragraph 1 of that Article, the information authority in the Member State of enforcement shall use 

one  of  the  methods  available  in  that  Member  State  pursuant  to  paragraph  5  of  Article  14.  Article 

14(5) lists these methods of obtaining information and the Member States are required to make at 

least one of these methods available in their national law. The first method requires all banks in the 

territory  of  a  Member  State  to  disclose,  upon  request  by  the  information  authority,  whether  the 

debtor holds an account with them. 

1.2.  The  first  draft  law  designates  the  CBC  as  the  information  authority  for  the  purposes  of  the 

Regulation.  The  Regulation  requires  the  Member  States  to  designate  the  authority  competent  for 

the purposes of obtaining the necessary information on the debtor’s account or accounts pursuant 

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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). 
Regulation  (EU)  No  655/2014  of  the  European  Parliament  and  of  the  Council  of  15  May  2014  establishing  a 
European  Account  Preservation  Order  procedure  to  facilitate  cross-border  debt  recovery  in  civil  and  commercial 
matters (OJ L 189 27.6.2014, p. 59). 

 
 
 
 
                                                 
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to Article 143. The second draft law provides for an additional exception to bank secrecy provisions 

laid  down  in  Article  29(2)  of  the  Law  on  the  business  of  credit  institutions  in  order  to  allow  credit 

institutions in Cyprus to provide the CBC with information when acting in its capacity as information 

authority.  The  draft  laws  therefore,  when  read  together,  transpose  the  first  method  of  obtaining 

information found in paragraph (a) of Article 14(5) of the Regulation. As noted in the consultation 

request of the Ministry of Justice and Public Order of the Republic of Cyprus, the first draft law and 

second draft law are interconnected. 

2. 

Observations  

2.1.  General observations 

2.1.1. This  opinion  does  not  address  whether  the  draft  laws  effectively  implement  into  Cypriot  law  the 

provisions  of  the  Regulation  that  require  transposition  into  national  law.  The  ECB  only  assesses 

those provisions of the draft laws that may have an 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).  

2.1.2. As noted in paragraph 1.2, the draft laws confer new tasks on the CBC. The ECB underlines that, 

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

necessary  to  assess  such  a  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 3603/934 defines ‘other type of credit facility’, inter alia, as ‘any financing of the public sector’s 

obligations vis-à-vis third parties’.  

As one of the objectives of the monetary financing prohibition, which may not be circumvented, is 
ensuring  a  sound  budgetary  policy  of  Member  States5,  the  task of  financing  measures  which  are 

normally the responsibility of the Member States, and financed from their budgetary sources rather 

than  by  the  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 the 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. 

2.1.3. 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 

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Article 50(1)(b) of the Regulation. 

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 L332, 31.12.1993, p. 1). 
Article  123  of  the  Treaty  also  serves  the  objective  of  maintaining  price  stability  and  reinforces  central  bank 
independence. 

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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, what constitutes 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  have  a  negative  impact  on  the 

capacity to perform properly the existing central bank tasks; 

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

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  have  an  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.  

2.2.  Specific observations 

On the basis of the criteria set out above, the following paragraphs assess whether the new tasks 

of the CBC are in line with the monetary financing prohibition.  

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2.2.1. Tasks related to the tasks conferred upon the ECB and the NCBs by the Treaty and the Statute of 

the ESCB 

The tasks of the CBC as the information authority designated to obtain account information upon a 

request made by a court with which an application for a preservation order has been made, and the 

subsequent transmission of such information to the relevant court for the purpose of facilitating the 

enforcement of debt recovery in civil and commercial cases, are neither among the tasks conferred 

upon  the  ESCB  by  Article  127(2),  (5)  and  (6)  and  Article  128(1)  of  the  Treaty,  or  Article  22  and 
Article  25.1  of  the  Statute  of  the  ESCB6,  nor  are  they  related  to  such  tasks7.  The  draft  laws 

designate  the  CBC  as  the  information  authority  for  the  purpose  of  facilitating  the  cross-border 

enforcement  of  claims.  The  preamble  of  the  Regulation  specifically  states  that  its  objective  is  to 

establish  a  Union  procedure  for  a  protective  measure  which  enables  a  creditor  to  obtain  a 

Preservation  Order  preventing  the  subsequent  enforcement  of  the  creditor’s  claim  from  being 

jeopardised through the transfer or withdrawal of funds held by the debtor in a bank account within 
the Union8. Furthermore, these new tasks do not have a prudential supervisory dimension, as they 

do not rely on information that the CBC collects in its capacity as supervisory authority. Against this 

backdrop, the conferral of these tasks on the CBC must be closely scrutinised to assess whether 

these  tasks  constitute  government  tasks  and  whether  the  related  funding  gives  rise  to  monetary 

financing concerns. 

2.2.2. Tasks which are atypical of NCB tasks 

The  designation  of  a  competent  authority  as  the  information  authority  for  the  purposes  of  the 

Regulation is a new task for national  authorities  in the  Union. No other Member State has so far 

designated  its  NCB  as  the  information  authority  for  the  purposes  of  the  Regulation.  Most  of  the 
Member  States  have  designated  judicial  officials,  such  as  bailiffs9,  the  district  courts  or  their 
president10, or other officials involved in the administration of justice, such as the Federal Office of 
Justice11 or the Ministry of Justice12. In this respect, the new tasks conferred upon the CBC by the 

draft laws can be regarded as atypical of a central bank. 

2.2.3. Tasks clearly discharged on behalf of and in the exclusive interest of the government 

As  the  role  of  the  information  authority  is  needed  to  overcome  existing  practical  difficulties  in 
obtaining information about the location of a debtor’s bank account in a cross-border context13, the 

ECB  understands  that  this  role  is,  with  regard  to  the  draft  laws,  intended  to  alleviate  the  work 

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9  
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11  
12  

13  

See paragraph 2.4.1 of Opinion CON/2017/19. 
Similarly, the ECB considers that tasks relating to the establishment of a central register of bank account numbers 
are not central bank tasks, nor do they facilitate the enforcement of such tasks. See, e.g., Opinions CON/2015/36 
and CON/2015/46. 
See Recital (47) of the Regulation.  

e.g. in France and Belgium.  
e.g. in Italy, Latvia and Czech Republic. 
e.g. in Germany. 
e.g. in Ireland, Bulgaria and Spain. More information is available on the European Commission’s website at www.e-
justice.europa.eu. 
See recital 20 of the Regulation.  

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involved in the administration of justice, which is a government task14. The rules of the Regulation 
apply to pecuniary claims in civil and commercial matters in cross-border cases15, meaning cases 

in which the bank accounts to be preserved by the Preservation Order are maintained in a Member 

State other than the Member State of the court seised of the application for the Preservation Order 
pursuant to Article 6 thereof or the Member State in which the creditor is domiciled16. The fact that 

the CBC is the competent authority responsible for the authorisation and prudential supervision of 

credit institutions does not appear to be relevant to the new role conferred upon it by the first draft 

law  as  the  supervisor  is  not  expected  to  already  possess,  in  the  context  of  banking  supervision 

tasks, the account information that is necessary under the Regulation and will thus need to contact 

the credit institutions established in Cyprus to obtain this information. The new task of the CBC of 

being the competent authority for the collection and transmission of account information does not 

seem  to  complement  its  existing  tasks.  Therefore,  the  new  tasks  conferred  on  the  CBC  can  be 

considered as performed exclusively in the interest of the government. 

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

tasks 

Carrying  out  the  new  task  conferred  upon  the  CBC  by  the  draft  laws  does  not  appear  to  create 

conflicts of interest with other central bank tasks performed by the CBC. 

2.2.5. Extent to which performance of the  new task is disproportionate to the  financial  or  organisational 

capacity of the CBC 

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  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 tasks17. 

It is noted that the Regulation provides that the fees charged by any authority or other body in the 

Member State of enforcement which is involved in providing account information pursuant to Article 

14 thereof shall be determined on the basis of a scale of fees or other set of rules established in 
advance by each Member State and transparently setting out the applicable fees18. The first draft 

law, however, does not specify how the costs related to the collection and transmission of account 

information by the CBC are to be financed. The Cypriot authorities should in any case ensure that 

the CBC can avail itself of sufficient resources for the performance of the new duties relating to its 

role as the information authority under the first draft law, so that the capacity of the CBC to perform 
its ESCB-related tasks is not affected19. 

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18  
19  

See paragraph 2.4.3 of Opinion CON/2017/19. 
See Article 2.1 of the Regulation.  
See Article 3.1 of the Regulation. 

See paragraphs 2.1 and 2.2 of Opinion CON/2011/30. 
See Article 44 of the Regulation. 

See paragraphs 2.1 and 2.2 of Opinion CON/2011/30. 

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

of central bank independence and accountability considerations 

The performance of the new tasks does not appear to be problematic from the perspective of the 

institutional  set-up  of  the  CBC,  nor  to  raise  accountability  or  personal  and  institutional 

independence concerns. Although the information requested by the CBC from credit institutions in 

its capacity as information authority under the draft laws is not relevant to the information-gathering 

conducted  by  the  CBC  as  competent  supervisory  authority,  the  institutional  set-up  of  the  CBC 

appears to facilitate the performance of information exchange functions. 

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

Neither the first draft law, nor the Regulation, contain any specific provisions on the liability of the 

information  authority  for  the  performance  of  its  tasks.  This  is  in  contrast  with  existing  legal 

frameworks  assigning  specific  tasks  to  the  CBC,  such  as  the  Law  on  the  business  of  credit 

institutions, which excludes the liability of the CBC, and the liability of any director or officer of the 

CBC,  unless  it is proven that any  act  or omission in the  discharge of their relevant  functions and 
responsibilities was done in bad faith or was the result of gross negligence20. Along the same lines, 

Article 47A of the Law on the Central Bank of Cyprus regulates liability with regard to the task of 

macroprudential oversight. Given that liability issues could give rise to financial risks for the CBC, 

the  ECB  invites  the  consulting  authority  to  consider  introducing  a  provision  on  the  liability  of  the 

CBC  in  relation  to  the  tasks  undertaken  by  the  CBC  in  carrying  out  its  role  as  the  information 

authority for the purposes of the Regulation. 

2.2.8. Extent to which performance of the new task exposes members of the decision-making bodies of 

the CBC to disproportionate political risks and impacts on their personal independence 

The performance of the tasks conferred under the draft laws does not appear to be exposing the 

decision-making bodies of the CBC to any disproportionate political risk or to impact their personal 

independence. 

2.2.9. Conclusion 

The  ECB  considers  that  the  new  tasks  conferred  on  the  CBC  under  the  draft  laws  constitute 

government tasks for the purposes of the monetary financing prohibition. These new tasks are not 

related to those conferred upon the ECB and the NCBs by the Treaty and the Statute of the ESCB, 

are atypical for a central bank as the role of information authority in other Member States has been 

assigned to representatives from the judicial system or ministries of justice, and are performed in 

the exclusive interest of the government as they are intended to alleviate the work involved in the 

administration of justice. The ECB strongly recommends that further consideration should be given 

to the designation of the CBC as the information authority for the purposes of the Regulation. In  

20  

See Article 32 of the Business of Credit Institutions Law of 1997 (66(I)/1997) as amended. 

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any case, CBC’s liability should be properly regulated and the CBC should be fully and adequately 

reimbursed for any costs incurred in relation to the performance of its new tasks in order to ensure 

compliance with the prohibition of monetary financing. 

ECB-PUBLIC 

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

Done at Frankfurt am Main, 21 August 2017. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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