Opinion of the European Central Bank of 1 December 2017 on conferring upon Lietuvos bankas the function of a fiscal agency of the International Monetary Fund (CON/2017/53)
Date: 2017-12-01
Institutions: European Central Bank
Subjects: International Monetary Fund, Lithuania, central bank, international monetary system, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 1 December 2017  

on conferring upon Lietuvos bankas the function of a fiscal agency of the International Monetary 

Fund 

(CON/2017/53) 

Introduction and legal basis 

On  20  November  2017  the  European  Central  Bank  (ECB)  received  a  request  from  Lietuvos  bankas, 

following  correspondence  with  the  Ministry  of  Finance,  for  an  opinion  on  a  draft  law  on  Lithuania’s 

membership of the International Monetary Fund (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 Lietuvos bankas. 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 establish the principles and procedures for the fulfilment of the 

obligations related to Lithuania’s membership of the International Monetary Fund (IMF).  

1.2  The draft law provides that the Lithuanian Parliament shall decide on the change of the amount of 

Lithuania’s quota in the IMF. 

1.3  The draft law further provides as follows: (a) according to Article V(1) of the Articles of Agreement 

of the International Monetary Fund (hereinafter the ‘IMF Articles of Agreement’), Lietuvos bankas is 

a fiscal agency of the IMF that executes the IMF’s financial operations on behalf of Lithuania, and 

Lietuvos bankas uses its financial assets to execute these financial operations; (b) in accordance 

with  Article  XIII(2)(a)  of  the  IMF  Articles  of  Agreement,  Lietuvos  bankas  is  the  depository  of  the 

IMF; (c) the special drawing rights (SDRs) allocated to Lithuania by the IMF are part of the official 

foreign reserves of Lietuvos bankas, which are managed, used and disposed of in accordance with 
the  Law  on  Lietuvos  bankas2;  (d)  Lietuvos  bankas  decides  on  participation  in  the  IMF’s  financial 

initiatives for which the financial assets of Lietuvos bankas are to be used; and (e) the Government 

of  Lithuania  decides  on  Lithuania’s  participation  in  the  IMF  financial  initiatives  for  which  State 

budgetary funds are to be used. 

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). 
Lietuvos Respublikos Lietuvos bankos įstatymas, Nr. I-678, Valstybės žinios, 1994-12-23, Nr. 99-1957. 

 
 
 
 
                                                 
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1.4  The draft law provides that Lithuania shall be represented in the Board of Governors of the IMF by 

the Chairman of the Board of Lietuvos bankas as Lithuania’s governor, with the Minister of Finance 

as the alternate governor. The draft law further provides that Lietuvos bankas and the Ministry of 

Finance  shall  cooperate  in  accordance  with  a  mutually  agreed  procedure,  coordinate  Lithuania’s 

position and exchange information on all matters concerning its membership of the IMF. 

1.5  Finally, the draft law provides that within 30 business days from the entry into force of the draft law 

Lietuvos  bankas  shall  take  over  the  rights  and  obligations  relating  to  the  performance  of  the 

functions of the fiscal agency of the IMF from the Ministry of Finance, and shall return to the State 

budget the amount paid by the Ministry of Finance for Lithuania’s quota at the IMF corresponding 

to the balance of the IMF accounts No 1 and No 2, presently held with Lietuvos bankas, at the date 

of entry into force of the draft law. 

2. 

New tasks of Lietuvos bankas 

2.1  While Lietuvos bankas already acts as the IMF’s depository3, the draft law considerably expands its 

role in discharging Lithuania’s obligations under the IMF Articles of Agreement by conferring upon it 

a number of new IMF-related tasks.  

2.2  The  ECB  underlines  that  a  proposed  conferral  of  tasks  on  a  national  central  bank  (NCB)  in  the 

European System of Central Banks (ESCB) must be assessed 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’.  

Ensuring that Member States implement a sound budgetary policy is one of the key objectives of 
the  monetary  financing  prohibition,  which  may  not  be  circumvented5.  Therefore,  the  task  of 

financing  measures,  which  are  normally  the  responsibility  of  the  Member  States,  and  which  are 

financed from their budgetary sources rather than by the NCBs, must not be entrusted to NCBs. To 

decide what constitutes 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, it is 

necessary  to  carry  out,  on  a  case-by-case  basis,  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.  In  other  words,  adequate  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 

3  

4  

5  

See  paragraph  2  of  the  Resolution  No  264  of  the  Government  of  the  Republic  of  Lithuania  of  14  April  1992  on 
admission to the International Monetary Fund and the World Bank. 
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). 
Article  123  of  the  Treaty  also  serves  the  objective  of  maintaining  price  stability  and  reinforces  central  bank 
independence. 

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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.  

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

of Lietuvos bankas are in line with the monetary financing prohibition. 

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

the ESCB 

The Treaties acknowledge the role that the NCBs and the ECB play vis-à-vis the IMF. The basic 

tasks  to  be  carried  out  through  the  ESCB  include  holding  and  managing  the  official  foreign 
reserves  of  the  Member  States6.  Under  the  Statute  of  the  ESCB,  the  ECB  and  the  NCBs  may 

establish  relations,  where  appropriate,  with  international  organisations  and  conduct  all  types  of 

banking  transactions  in  their  relations  with  such  organisations,  including  borrowing  and  lending 
operations7. The ECB and the NCBs may act as fiscal agents for, inter alia, central governments8. 

The NCBs are allowed to perform transactions in fulfilment of their obligations towards international 
organisations9. The ECB may hold and manage IMF reserve positions and SDRs and provide for 
the pooling of such assets10. Against this background, the new tasks to be conferred upon Lietuvos 

bankas are related to those conferred upon the ECB and the NCBs by the Treaty and the Statute of 

the ESCB. 

2.4.2  Tasks which are atypical of NCB tasks 

The  ECB  notes  that  the  NCBs  in  the  Eurosystem  and  the  ESCB  play  an  important  role  in 

representing  their  respective  countries  in  the  IMF,  within  the  framework  of  the  country-based 

membership  structure  of  the  IMF.  In  accordance  with  Article  V(1)  of  the  IMF  Articles  of 
Agreement11, each member country must designate the agencies through which it will deal with the 

IMF. In the majority of the euro area Member States the NCBs are designated as such agencies. 

Furthermore, the NCBs play an important role in representing their Member States in the decision-

making  bodies  of  the  IMF.  Governors  of  the  individual  NCBs  of  a  majority  of  euro  area  Member 
States12 serve as that Member State’s governor on the IMF’s Board of Governors, while those of 

the  remainder  serve  as  an  alternate  governor  on  the  IMF’s  Board  of  Governors.  Moreover,  in 

several cases  the governor  of  an NCB  is  an  alternate  member  of  the  International  Monetary  and 

Financial  Committee  (IMFC).  In  addition,  many  NCBs  are  closely  involved  in  the  selection 

procedure  for  the  election  of  the  Executive  Director  representing  their  country  in  the  IMF's 

Executive Board and the selection of the respective Alternate Executive Director(s) to be appointed 

by the elected Executive Director, and in some cases the NCBs make the selection. In this context, 

the new tasks conferred upon Lietuvos bankas by the draft law are not atypical of an NCB task. 

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

The  membership  structure  of  the  IMF  is  country  based.  Article  V(1)  of  the  IMF  Articles  of 

Agreement  states  that  each  member  shall  deal  with  the  Fund  only  through  its  treasury,  central 

6  
7  
8  
9  
10  
11  

12  

See the third indent of Article 127(2) of the Treaty. 
See the first and fourth indents of Article 23 of the Statute of the ESCB. 
See Article 21.2 of the Statute of the ESCB. 
See Article 31.1 of the Statute of the ESCB. 

See Article 30.5 of the Statute of the ESCB. 
See  Section  1  of  Article  V  of  the  IMF  Articles  of  Agreement,  which  provides  that  each  member  country  must  deal 
with the Fund only through its Treasury, central bank, stabilisation fund or other similar agency, and that the Fund 
must deal only with or through the same agencies. 
This  is  currently  the  case  in  respect  of  Belgium,  Estonia,  Germany,  Latvia,  Lithuania,  the  Netherlands,  Austria, 
Slovakia, Slovenia, Finland and Portugal. 

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bank, stabilisation fund, or other similar fiscal agency, and the Fund shall deal only with or through 

the same agencies. To this end, the draft law designates Lietuvos bankas as a fiscal agency of the 

IMF, which shall carry out financial operations of the IMF on behalf of Lithuania. Therefore, the new 

tasks  conferred  on  Lietuvos  bankas  may  be  considered  as  performed  exclusively  in  Lithuania’s 

interests.  

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

tasks 

The  new  tasks  conferred  upon  Lietuvos  bankas  by  the  draft  law  do  not  create  any  conflicts  of 

interest with the other central bank tasks that it performs, and indeed complement its existing task 
of managing, using and disposing of its official foreign reserves13.  

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

capacity of Lietuvos bankas 

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  both  their  ESCB-related 

tasks and their national tasks, from an operational and financial perspective. Lietuvos bankas will 

have to fulfil the financial obligations related to the IMF  quota assigned to Lithuania. As provided 

under the draft law, Lietuvos bankas will use its own financial assets for carrying out the financial 
operations  of  the  IMF  on  behalf  of  Lithuania14.  The  ECB  understands  that  the  quota  allocated  to 
Lithuania by the IMF is 441,6 million SDRs (currently equivalent to about EUR 554 million15) while 
the  financial  assets  managed  by  Lietuvos  bankas  amount  to  about  EUR  14,5  billion16.  Such 

financing by Lietuvos bankas results in it having foreign claims that have all the characteristics of 

reserve  assets.  Furthermore,  it  is  not  expected  that  the  performance  of  a  fiscal  agency  task  by 

Lietuvos  bankas  and  its  participation  in  the  IMF’s  financial  operations will  create  disproportionate 

operational  burdens  for  Lietuvos  bankas.  Taking  this  into  account,  the  new  tasks  assigned  to 

Lietuvos bankas are not disproportionate to its financial or organisational capacity.  

2.4.6  Extent to which performance of the new task fits into the institutional set-up of Lietuvos bankas, in 

the light of central bank independence and accountability considerations 

The performance of the new tasks is not problematic from the perspective of the institutional set-up 

of  Lietuvos  bankas,  and  does  not  raise  any  accountability  or  personal  and  institutional 

independence  concerns.  Lietuvos  bankas  will  decide  on  participation  in  financial  initiatives  of  the 
IMF  to  be  implemented  using  its  financial  assets17  and  the  Chairman  of  its  Board  will  represent 
Lithuania in the Board of Governors of the IMF18.  

13  
14  
15  
16  
17  
18  

See Article 8(1)(3) of the Law on the Bank of Lithuania. 
See Article 4(2) of the draft law. 
Based on the information provided in the explanatory memorandum of the draft law.  
Based on the annual report of Lietuvos bankas of 2016. 
See Articles 6 and 7 of the draft law. 
See Article 8 of the draft law. 

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2.4.7  Extent to which the performance of tasks harbours substantial financial risks 

The explanatory memorandum of the draft law  indicates that the conferral of the new tasks upon 
Lietuvos bankas will expose it to credit and foreign exchange risks19. Given the basic task of NCBs 

to  hold  and  manage  the  official  foreign  reserves  of  the  Member  States,  Lietuvos  bankas  is  well 

placed to manage these financial risks arising from its participation in IMF financial operations. 

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

Lietuvos bankas to disproportionate political risks and impacts on their personal independence 

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

decision-making  bodies of Lietuvos  bankas  to disproportionate  political  risks  or  impact  upon  their 

personal independence. 

2.4.9  Conclusion 

The  ECB  considers  that  the  IMF-related  tasks  to  be  conferred  upon  Lietuvos  bankas  under  the 

draft law are central banking tasks. These new tasks are related to the tasks conferred upon the 

ECB and the NCBs by the Treaty and the Statute of the ESCB, and a majority of euro area NCBs 

perform such tasks. While these tasks, within the country-based system of the IMF, are performed 

exclusively in the interests of Lithuania, this does not create conflicts of interest with existing central 

bank  tasks  and  is  not  disproportionate  to  the  financial  or  organisational  capacity  of  Lietuvos 

bankas. While the conferral of these new tasks will expose Lietuvos bankas to additional credit and 

foreign exchange risks, it is well placed to manage financial risks arising from participation in the 

IMF’s  financial  operations  in  view  of  its  existing  task  of  holding  and  managing  its  official  foreign 

reserves. Furthermore, the new task fits into the institutional set-up of Lietuvos bankas, also in the 

light  of  central  bank  independence  and  accountability  considerations,  and  does  not  expose  the 

members  of  its  decision-making  bodies  to  disproportionate  political  risk  or  impact  upon  their 

personal independence. 

3. 

Return of funds paid by Ministry of Finance in respect of Lithuania’s IMF quota 

3.1 

Lietuvos bankas shall be required within 30 business days from the entry into force of the draft law 

to return to the State budget the amount paid by the Ministry of Finance for Lithuania’s IMF quota, 

corresponding to the balance of the IMF accounts No 1 and No 2 held within Lietuvos bankas on 
the  date  of  the  entry  of  the  draft  law20.  The  ECB  notes  that  Lietuvos  bankas,  when  making 

payments  to  the  State  budget,  must  comply  with  the  monetary  financing  prohibition  under 

Article 123 of the Treaty, which is subject to certain exemptions contained in Article 123(2) of the 

Treaty,  Article  21.2  of  the  Statute  of  the  ESCB  and  Regulation  (EC)  No  3603/93.  In  particular, 

Article 7 of Regulation (EC) No 3603/93 provides that the financing by NCBs of obligations falling 

upon  the  public  sector  vis-à-vis  the  IMF  is  not  regarded  as  a  credit  facility  within  the  meaning  of 

Article  123  of  the  Treaty.  Recital  14  of  Regulation  (EC)  No  3603/93  clarifies  the  rationale  behind 

this exemption by stating that it is appropriate to authorise the financing by the NCBs of obligations 

19  
20  

See page 2 of the explanatory memorandum to the draft law. 
See Article 10(3)(2) of the draft law.  

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falling  upon  the  public  sector  vis-à-vis  the  IMF  because  such  financing  ‘results  in  foreign  claims 

which  have  all  the  characteristics  of  reserve  assets’.  Therefore,  the  exemption  in  Article  7  of 
Regulation (EC) No 3603/93 must be interpreted in line with this rationale21. 

3.2  Reserve  assets  have  been  defined  as  those  external  assets  that  are  readily  available  to  and 

controlled  by  monetary  authorities  for  meeting  balance  of  payments  financing  needs,  for 

interventions  in  exchange  markets  to  affect  the  currency  exchange  rate,  and  for  other  related 

purposes, such as maintaining confidence in the currency and the economy, and serving as a basis 
for foreign borrowing22. Under this definition reserve assets must be foreign currency assets and, 

other than gold bullion, must be claims on non-residents. In this respect, the payment by Lietuvos 

bankas to the State budget of the amount corresponding to the balance of the IMF accounts No 1 

and No 2 will result in Lietuvos bankas taking over from the Ministry of Finance the foreign currency 

claims,  denominated  in  SDR,  against  non-resident  persons  (the  IMF)  that  have  all  the 
characteristics of reserve assets23. 

3.3  Based  on  the  foregoing,  the  ECB  considers  that  the  transfer  to  the  State  budget  by  Lietuvos 

bankas of the amount of funds paid by the Ministry of Finance for Lithuania’s quota at the IMF, as 

referred to in paragraph 3.1, complies with Article 7 of Regulation (EC) No 3603/93 and does not 
infringe the monetary financing prohibition24.  

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

Done at Frankfurt am Main, 1 December 2017. 

[signed] 

The President of the ECB 

Mario DRAGHI 

21  

22  

23  

24  

Consistent with this interpretation, see Opinions CON/2005/29 and CON/2013/16. With regard to the issue of NCBs’ 
financing of IMF quota increases, see Opinions CON/2012/65 and CON/2011/97. All ECB opinions are published on 
the ECB’s website at www.ecb.europa.eu. 
See  International  Monetary  Fund,  Balance  of  Payments  and  International  Investment  Position  Manual,  6th  edn., 
2009, pp. 111-18. 

Point  2.1(c)  in  the  ‘Assets’  table  in  Annex  IV  to  Guideline  (EU)  2016/2249  of  the  European  Central  Bank  of 
3 November 2016 on the legal framework for accounting and financial reporting in the European System of Central 
Banks (ECB/2016/34) (OJ L 347, 20.12.2016, p. 37) lists under ‘other claims’ any ‘general arrangements to borrow, 
loans  under  special  borrowing  arrangements,  deposits  made  to  trusts  under  the  management  of  the  IMF’  as 
‘Receivables from the IMF’. 
See also Opinions CON/2009/100, CON/2010/40 and CON/2011/10. 

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