Opinion of the European Central Bank of 27 November 2017 on amendments to the decision making framework of Българска народна банка (Bulgarian National Bank) (CON/2017/51)
Date: 2017-11-27
Institutions: European Central Bank
Subjects: Bulgaria, banking supervision, central bank, competence of the institution, credit institution, decision-making, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 27 November 2017 

on amendments to the decision making framework of Българска народна банка  

(Bulgarian National Bank) 

(CON/2017/51) 

Introduction and legal basis 

On 22 November 2017 the European Central Bank (ECB) received a request from the National Assembly 

of  the  Republic  of  Bulgaria  for  an  opinion  on  a  draft  law  amending  the  Law  on  credit  institutions 

(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 indent of Article 2(1) of Council Decision 98/415/EC1, as 

the draft law relates to Българска народна банка (Bulgarian National Bank (BNB)). 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. 

Current  decision-making  framework  of  Българска  народна  банка  (Bulgarian  National 

Bank) 

1.1. 

In  accordance  with  the  Law  on  Bulgarian  National  Bank  (hereinafter  the  ‘Law  on  BNB’)2  the 

decision-making  bodies  of  BNB  are  the  Governing  Council,  the  Governor  and  the  three  Deputy 

Governors  heading  the  Issue  Department,  the  Banking  Department  and  the  Banking  Supervision 
Department3.  The  BNB  Governing  Council  comprises  seven  members  –  the  Governor  and  the 

three  Deputy  Governors  who  are  appointed  by  the  National  Assembly  and  three  other  members 
appointed by the President of the Republic4.  

1.2.  The term of office of the members of the BNB Governing Council is six years5. A member of the 

BNB Governing Council may be relieved from office by the appointing authority only if he no longer 

fulfils the conditions required for the performance of his duties, if he is practically unable to perform 
his  duties  for  more  than  six  months,  or  if  he  has  been  guilty  of  serious  misconduct6.  When 

exercising  their  competences  and  carrying  out  their  duties  under  the  Law  on  BNB,  the  Governor 

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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). 
Published in Darjaven Vestnik No 46, 10 June 1997. 
See Article 10(1) of the Law on BNB. 
See Article 11(1) and Article 12(1) to (3) of the Law on BNB. 
See Article 12(4) of the Law on BNB. 
See Article 14(1) of the Law on BNB. 

 
 
 
 
                                                 
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and  the  members  of  the  BNB  Governing  Council  must  be  independent  and  neither  BNB,  nor  the 

Governor, nor the members of the BNB Governing Council shall seek or take any instructions from 
the Council of Ministers or from any other bodies and institutions7. 

1.3.  The competences of the BNB Governing Council cover a broad range of matters, including powers 

to adopt legislative acts concerning BNB’s activities, to set rules and requirements regulating bank 

activities and to grant, refuse to grant, and withdraw licenses of banks, payment system operators, 

payment institutions and electronic money institutions under terms and procedures provided for by 
law8. 

1.4.  The  BNB  Governor  organises,  directs  and  supervises  the  activities  of  the  BNB,  other  than  those 
delegated  by  law  exclusively  to  the  Deputy  Governors9.  The  Deputy  Governors  organise,  direct 

and  are  responsible  for  the  activities  of  the  departments  which  they  head,  acting  within  the 
competencies vested in them by law or by a regulation adopted by the BNB Governing Council10. 

In  particular,  the  Deputy  Governor  heading  the  Banking  Supervision  Department  exercises 

supervision  over  the  banking  system  in  accordance  with  the  rules  provided  for  by  law  and  the 
regulations  thereunder11,  while  the  Deputy  Governor  heading  the  Banking  Department  exercises 

supervision over payment system operators, payment institutions and electronic money institutions 
in  accordance  with  the  rules  provided  for  by  law  and  the  regulations  thereunder12.  In  exercising 

these  supervisory  competences  the  Deputy  Governors  apply,  separately  and  at  their  own 
discretion, the respective measures, enforcement actions and sanctions as provided by law13. 

2. 

Purpose of the draft law 

2.1.  The draft law amends multiple provisions in the Law on credit institutions14 as well as other laws 
(the  Law  on  BNB15,  the  Law  on  the  recovery  and  resolution  of  credit  institutions  and  investment 
firms16,  the  Law  on  consumer  credit  related  to  immovable  property17,  and  the  Law  on  payment 
services and payment systems18) which relate to BNB’s decision-making framework. The proposed 

amendments  aim  to  expand  the  existing  decision-making  competences  of  the  BNB  Governing 

Council  by  assigning  to  it  some  of  the  decision-making  competences  which,  under  currently 
applicable  legislation19,  are  exercised  autonomously  by  either  the  Deputy  Governor  heading  the 

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See Article 44 of the Law on BNB. 

See Article 16(1) of the Law on BNB. 
See Article 18(1) of the Law on BNB. 
See Article 19(3) of the Law on BNB. 

See Article 20(3) of the Law on BNB. 
See Article 20(4) of the Law on BNB. 

See Article 20(3) and (4) of the Law on BNB 
Published in Darjaven Vestnik No 59, 21 July 2006. 

Published in Darjaven Vestnik No 46, 10 June 1997. 
Published in Darjaven Vestnik No 62, 14 August 2015. 

Published in Darjaven Vestnik No 59, 29 July 2016. 
Published in Darjaven Vestnik No 23, 27 March 2009. 
For example, under the currently applicable Law on credit institutions, these competences relate to the adoption of 
supervisory  measures,  such  as  the  imposition  of  requirements  in  respect  of  capital,  risk,  bank  policies  and 
operations,  the  prohibition  of  certain  activities  and  transactions,  including  in  relation  to  certain  persons,  the 
appointment  of  conservators  in  all  cases  envisaged  by  law,  and  the  imposition  of  specific  liquidity  requirements. 
Under  the  currently  applicable  Law  on  payment  services  and  payment  systems,  these  competences  relate  for 

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Banking Supervision Department or the Deputy Governor heading the Banking Department20. 

2.2.  The  consulting  authority  explains  that  the  draft  law  aims  to  improve  the  supervisory  process,  to 

protect financial services consumers and to minimise the risks for the financial system as a whole.  

2.3.  The consulting authority highlights several provisions of the draft law which aim to guarantee the 

autonomy and independence of the supervisory function from other BNB functions. Pursuant to the 

draft  law,  the  decisions  for  which  competence  is  transferred  to  the  BNB  Governing  Council  may 

only  be  adopted  upon  a  proposal  from  the  respective  Deputy  Governor.  Moreover  the  draft 

amendments  to  the  Law  on  BNB  provide  that  the  Deputy  Governors  must  exercise  their 
supervisory powers separately and independently from other BNB functions21. 

3. 

General observations 

3.1.  The  ECB  welcomes  the  intra-institutional  transfer  of  decision-making  authority  from  the  Deputy 

Governor  heading  the  Banking  Supervision  Department  and  the  Deputy  Governor  heading  the 

Banking  Department  to  the  BNB  Governing  Council.  In  this  regard,  the  ECB  would  like  to  make 

three general points. 

3.2.  Firstly,  the  simplification  of  the  current,  somewhat  complex,  governance  structure  of  the  BNB, 

consisting of several independent decision-making bodies located within the legal personality of the 

BNB,  enhances  the  BNB’s  institutional  integrity.  Crucially,  this  simplification  addresses  potential 

legal risks for BNB arising from the fact that BNB as a whole could be held accountable and liable 

for  acts  performed  by  its  constituent  parts,  which  are  outside  the  control  of  the  BNB’s  supreme 
decision-making body (the BNB Governing Council)22. 

3.3.  Secondly, BNB’s new decision-making framework reinforces the role of the BNB Governing Council 

which becomes the sole decision-making body competent to issue binding acts in different policy 
areas23  on  behalf  of  BNB.  This  change  also  supports  the  institutional  dimension  of  BNB’s 

independence, since under the draft law BNB will only be bound by supervisory acts and other acts 

addressed to third parties that were agreed by the BNB Governing Council, and not by a Deputy 

Governor in the exercise of his/her independent competences as attributed by the relevant national 

laws.  

3.4.  Thirdly,  it  has  been  widespread  practice  throughout  the  Union  for  decision-making  bodies  to  act 
with  collegiality  as  regards  supervisory  matters24.  Therefore,  the  introduction  of  a  collegiate 

decision-making  process  in  key  supervisory  areas  in  relation  to  financial  market  participants 

operating in Bulgaria is likely to strengthen the quality of BNB internal deliberations with respect to 

example  to  the  adoption  of  supervisory  measures  applicable  to  payment  institutions,  other  suppliers  of  payment 
services,  payment  systems  and  electronic  money  institutions,  the  power  to  enter  or  refuse  to  enter,  or  delete  the 
entry of, credit intermediaries in or from the register kept by the BNB. Other competences include the power to adopt 
early  intervention  measures  in  respect  of  credit  institutions,  as  well  as  the  powers  to  grant  various  permissions, 
approvals and consents. 

In some cases these decisions may also be adopted by an official authorised by the respective Deputy Governor. 
These comprise amendments to Article 20(3) and (4) of the Law on BNB. 
See  paragraph  6  of  Opinion  CON/2002/16.  All  ECB  opinions  are  published  on  the  ECB’s  website  at 
www.ecb.europa.eu. 
Notably the supervision of credit institutions and the supervision of payment systems and payment services. 
See paragraph 14 of Opinion CON/2005/34, paragraph 3.2.3 of Opinion CON/2006/15 and paragraph 3.5 of Opinion 
CON/2010/94. 

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the  exercise  of  its  supervisory  tasks.  To  ensure  that  BNB  monetary  and  supervisory  policy 

functions  are  effectively  separated,  while  at  the  same  time  allowing  the  new  overall  decision-
making  structure  to  benefit  from  synergies25,  it  could  be  considered  that  the  BNB  Governing 

Council  adopts  the  draft  acts  proposed  by  the  respective  Deputy  Governor  following  a  decision-

making procedure based on non-objection (see e.g. the non-objection procedure applicable to the 
ECB with regard to the ECB’s prudential supervisory tasks26). 

4. 

Specific observations 

4.1  The attribution of new competences to the BNB Governing Council may present a challenge to the 

effectiveness and efficiency of BNB's decision-making process, given the potentially high number 

of  individual  supervisory  decisions  that  would  need  to  be  taken.  Whilst  preserving  the  collegiate 

nature of the decision-making process, the legislator may wish to consider including an appropriate 
mechanism27 in the draft law to ensure the operational efficiency of BNB’s decision-making process 

in  relation  to  the  adoption  of  routine  executive  supervisory  decisions.  Since  the  principle  of  good 

administration requires that units of public administration carry out their tasks with a duty of care, it 

is  also  important  that  the  BNB  Governing  Council  in  the  exercise  of  these  new  responsibilities  is 

supported by adequate financial and human resources. 

4.2  The ECB would also recommend that the draft law provides for a transitional period (of at least one 

year) that would allow BNB to develop the appropriate institutional capacities necessary to ensure 

that  BNB’s  supervisory  function  is  able  to  smoothly  incorporate  the  new  decision-making 

framework.  

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

Done at Frankfurt am Main, 27 November 2017. 

[signed] 

The President of the ECB 

Mario DRAGHI 

25  
26  

27  

See paragraph 1.8 of Opinion CON/2012/96. 

See  Article  26(8)  of  Council  Regulation  (EU)  No  1024/2013  of  15  October  2013  conferring  specific  tasks  on  the 
European  Central  Bank  concerning  policies  relating  to  the  prudential  supervision  of  credit  institutions  (OJ  L  287, 
29.10.2013, p. 63).   See also Article 13g of the Decision ECB/2004/2 of the European Central Bank of 19 February 
2004 adopting the Rules of Procedure of the European Central Bank (OJ L 80, 18.3.2004, p. 33). 
For  example,  an  enabling  clause  allowing  for  the  delegation  of  limited  and  clearly  defined  executive  powers,  the 
exercise  of  which  is  subject  to  strict  review  in  the  light  of  objective  criteria  established  by  the  BNB  Governing 
Council. On the principles of delegation applicable in the context of Union administration, see, for example, Meroni & 
Co.,  Industrie  Metallurghiche  SpA  v  High  Authority  of  the  European  Coal  and  Steel  Community,  C-9/56 
ECLI:EU:C:1958:7,  and  C-10/56,  ECLI:EU:C:1958:4,  Carmine  Salvatore  Tralli  v  European  Central  Bank  C-
301/02,ECLI:EU:C:2005:306,  AKZO  Chemie  BV  and  AKSO  Chemie  UK  Ltd  v  Commission  of  the  European 
Communities,  C-5/85,  ECLI:EU:C:1986:328,  United  Kingdom  v  Parliament  and  Council,  C-270/12 
ECLI:EU:C:2014:18. 

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