Opinion of the European Central Bank of 16 April 2018 on the conversion of Swiss franc loans (CON/2018/21)
Date: 2018-04-16
Institutions: European Central Bank
Subjects: Slovenia, banking supervision, consumer credit, credit institution, exchange-rate mechanism, financial stability, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 16 April 2018  

on the conversion of Swiss franc loans 

(CON/2018/21) 

Introduction and legal basis 

On 31 January 2018 the European Central Bank (ECB) received a request from the National Assembly of 

the Republic of Slovenia (hereinafter the  ‘National Assembly’) for an opinion on a draft law on relations 

between lenders and borrowers concerning credit agreements in Swiss francs (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  and  sixth  indents  of  Article 2(1)  of  Council  Decision 
98/415/EC1,  as  the  draft  law  relates  to  Banka  Slovenije  and  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 law 

1.1  The purpose of the draft law is to restructure consumer loans denominated in, or linked to, Swiss 

francs  (hereinafter  ‘Swiss  franc  loans’),  by  requiring  credit  institutions  established  in  Slovenia  to 

convert  Swiss  franc  loans  concluded  between  28  June  2004  and  31  December  2010  into  loans 

denominated in euro.  

1.2  The  draft  law  aims  to  place  borrowers  of  Swiss  franc  loans  in  the  same  position  that  they  would 

have been in had their loans been denominated in euro from inception. To this end, the draft law 

sets out the following conversion mechanisms: 

(i) 

the principal amount of the Swiss franc loans will be converted into euro at the exchange 

rate  set  out  in  the  credit  agreement  applicable  on  the  date  the  Swiss  franc  loans  were 

drawn by  the borrowers. In case the principal amount was paid out in euro at the time of 

drawdown then, for the purposes of the conversion, the actual amount as paid out in euro 

is to be taken into account; 

(ii) 

the  agreed  interest  rate,  comprising  the  London  interbank  offered  rate  (LIBOR)  and  a 

margin  agreed  in  the  loan  agreement,  will  be  converted  into  another  interest  rate, 

comprising the euro interbank offered rate (EURIBOR) at the date on which the loan was 

drawn  and  the  same  margin  agreed  in  the  loan  agreement.  The  agreed  period  for 

1  

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). 

 
 
 
 
                                                 
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recalculations  of  the  interest  rate  remains  unaltered.  According  to  the  explanatory 

memorandum on the draft law, using EURIBOR in the conversion mechanism protects the 

legitimate  business  interests  of  credit  institutions  by  enabling  the  usual  interest  rates  for 

euro denominated loans to be taken into account; 

(iii) 

the lender is required to prepare a new loan repayment schedule calculated in accordance 

with  the  measures  set  out  above  and  using  the  same  methodology  as  for  the  original 

repayment schedule; 

(iv) 

the  instalments  that  have  already  been  paid  by  the  borrower  in  line  with  the  original 

repayment  schedule  will  be  converted  into  euro  at  the  exchange  rate  applicable  on  the 

date of payment of each instalment. In case the instalments were repaid in euro then, for 

the purposes of the conversion, the actual amount of the instalments as repaid in euro is to 

be considered. Paid instalments will serve as the basis for settling the amounts due under 

the  new  loan  repayment  schedule,  whereby  the  same  order  for  settling  obligations  as 

under the original loan agreement is to be used for settling the amounts; 

(v) 

if the total amount of instalments already paid by the  borrower and converted  in  euro (as 

described  in  point  (iv)  above)  is  higher  than  the  total  amount  of  converted  instalments 

calculated according to the new loan repayment schedule (referred to in point (iii) above), 

this  amount  will  be  considered  an  ‘overpayment’.  Depending  on  the  amount  of  this 

overpayment, it will be treated as follows: 

a. 

if  the  amount  of  the  overpayment  does  not  exceed  the  sum  of  converted  instalments 

that  are  still  to  be  paid  in  line  with  to  the  new  repayment  schedule,  the  overpayment 

will  be  proportionally  distributed  for  the  settlement  of  future  outstanding  instalments, 

and the loan agreement  will remain in force;  

b. 

if  the  amount  of  the  overpayment  exceeds  the  total  sum  of  a  converted  Swiss  franc 

loan that the borrower has to repay in line with the new repayment schedule, then the 

lender must return this overpayment to the borrower within 30 days from the date the 

borrower confirms the conversion proposal and the loan agreement will be terminated. 

1.3  Conversion  of  Swiss  franc  loans  applies  not  only  to  outstanding  loans  but  also  to  (i)  fully  repaid 

loans; (ii) loans that were repaid early; (iii) loans that were converted to euro prior to the entry into 

force of the draft law; (iv) loans that were acquired by new creditors; and (v) loan agreements that 

were  terminated  early  by  the  lenders.  The  draft  law  requires  lenders  to  prepare  new  repayment 

schedules and sets out supplementary conversion rules for each of these categories. With respect 

to loans that were acquired by new creditors, the draft law provides that the original lenders remain 

responsible  in  relation  to  borrowers  for  the  conversion,  unless  they  can  ensure  that  the  party 

acquiring the outstanding balance takes this conversion into account. 

1.4  The lender must prepare a new repayment schedule and recalculate the existing Swiss franc loans 

and  submit  these  to  the  borrower  along  with  the  conversion  proposal  within  15  days  of  the  entry 

into  force  of  the  draft  law.  The  borrower  must  confirm  or  reject  the  conversion  proposal  within 

30 days of its receipt. 

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1.5  The conversion procedures under the draft law are to be supervised by Banka Slovenije, which is 

also to  act as the competent minor offence authority  in case  of breaches  of the  provisions of the 

draft law.  

1.6  The draft law provides that the lender, although required to propose and perform the conversion of 

Swiss  franc  loans  for  the  borrower,  also  has  the  right  to  challenge  the  conversion  before  a  court 

within  six  months  following  the  conversion,  provided  that  the  lender  disclosed  to  the  borrower  all 

relevant  information  regarding  the  risks  pertaining  to  loans  in  the  relevant  foreign  currency  in  a 

manner  that  fulfils  the  standard  of  ‘informed  consent’  at  the  time  the  loan  agreement  was 

concluded. The draft law sets out criteria for informed consent, which are based on, inter alia, the 
reasoning  of  the  Court  of  Justice  of  the  European  Union  in  a  recent  judgment2  concerning  the 

interpretation  of  Council  Directive  93/13/EEC  on  unfair  terms  in  consumer  contracts  in  relation  to 
foreign currency denominated loans 3. 

1.7  According to the explanatory memorandum, the objective pursued by the draft law is to implement 

the  constitutional  principle  of  the  ‘welfare  state’  and  to  introduce  sanctions  for  breaches  of 

obligations arising under contractual relationships, thereby providing legal protection for consumers 

who  have  taken  out  Swiss  franc  loans.  The  explanatory  memorandum  questions  the  legality  of 

linking credit agreements to Swiss franc, in particular in a euro area country with a stable currency, 

where  loans  were  granted  mainly  in  euro.  The  explanatory  memorandum  argues  that  the  use  of 

currency clauses, the risk of which is predominantly borne by borrowers, is an unfair practice used 

by credit institutions, in particular combined with the lack of informed consent by the borrowers of 

Swiss franc loans.  

1.8  The draft law and  explanatory memorandum are accompanied  by  an assessment of the financial 

impact  of  the  draft  law  prepared  by  the  Frank  Association  (Združenje  Frank),  a  consumer 

organisation  representing  the  interests  of  borrowers.  The  assessment  is  based  on  a  sample  of 

approximately  10%  of  currently  outstanding  Swiss  franc  loans.  According  to  the  assessment,  the 
‘overpayments’ by borrowers arising from 16,000 Swiss franc loans that were granted in Slovenia4 

would  amount  to  around  EUR  488  million  if  the  draft  law  is  not  adopted.  This  amount  represents 

the costs that would be redistributed among the 14 credit institutions granting Swiss franc loans to 

consumers with the adoption of the draft law. The assessment indicates that the average maturity 

of Swiss franc loans is 252 months and that most of the loans are in the middle of the repayment 

period. The assessment estimates that the total amount of overpayments would be distributed over 

a period of 10 years and that the average burden per bank would be approximately EUR 3.5 million 

a  year.  The  distribution  of  the  burden  would,  however,  vary  from  bank  to  bank,  and  would  be 

greater for foreign-owned credit institutions which granted the majority of Swiss franc loans. 

2  
3  
4  

Ruxandra Paula Andriciuc and Others v Banca Româneascã SA, C-186/16, ECLI:EU:C:2017:703. 
Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ L 95, 21.4.1993, p. 29). 

According to the assessment, it is estimated that between 16,000 and 20,000 Swiss franc loans were granted. 

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2. 

General observations  

2.1  Prior to the global financial crisis, borrowing in foreign currencies by households and non-financial 
corporations was popular in several Member States 5. As previously noted by the ECB6, the lower 

interest  rates  applicable  to  foreign  currency  loans  compared  to  loans  in  the  domestic  currency 

increased the demand for such loans. According to the documentation included in the explanatory 

memorandum and the draft law, the majority of Swiss franc loans were and still are mortgage loans 

and were granted by foreign-owned credit institutions.  

2.1.1  The  ECB  notes  that  the  draft  law  anticipates  that  the  conversion  of  the  outstanding  and  already 

terminated Swiss franc loans to loans denominated in euro will be voluntary only for borrowers. The 

ECB also notes that the draft law provides for the possibility for credit institutions to challenge the 

conversion after it has been implemented, restoring the parties to the position they were in under 

the terms of the original Swiss franc loan, if they can prove in court that the borrower entered into 

the Swiss franc loan on the basis of informed consent, as defined in the draft law. 

2.2 

Legal aspects on retroactivity 

2.2.1  As  previously  noted  by  the  ECB,  introducing  measures  with  retroactive  effect  undermines  legal 
certainty and is not in line with the principle of legitimate expectations 7, and may also interfere with 

acquired rights. 

2.2.2  Article  23(1)  of  Directive  2014/17/EU  of  the  European  Parliament  and  of  the  Council8,  which 
applies to credit agreements in existence from 21 March 20169, stipulates that Member States shall 

ensure  that  an  appropriate  regulatory  framework  is  in  place  for  credit  agreements  in  respect  of 

foreign  currency  loans  to  ensure,  at  a  minimum,  that (a)  the  consumer  has  a  right  to  convert  the 

credit  agreement  into  an  alternative  currency  under  specified  conditions  or  (b)  there  are  other 

arrangements in place to limit the exchange rate risk to which the consumer is exposed under the 

credit  agreement.  Article  23(5)  of  Directive  2014/17/EU  allows  Member  States  to  further  regulate 

foreign  currency  loans  provided  that  such  regulation  is  not  applied  with  retroactive  effect.  The 

retroactive  effect  of  the  draft  law  is  not  in  line  with  the  general  aim  of  Article  23(5)  of  Directive 
2014/17/EU10,  which  reflects  one  of  the  general  principles  of  Union  law,  namely  the  principle  of 
legal certainty11 that supports the limitation of retroactive laws 12. 

5  

6  

7  

8  

9  
10  
11 
12 

For  further  information  on  lending  in  foreign  currencies  in  the  Union  see  the  Annex  to  Recommendation  of  the 
European  System  Risk  Board  (ESRB/2011/1)  of  21  September  2011  on  lending  in  foreign  currencies  (OJ  C  342, 
22.11.2011, p.1). 
See  paragraph  2.2  of  Opinion  CON/2014/59,  paragraph  2.1  of  Opinion  CON/2015/26,  paragraph  2.1  of  Opinion 
CON/2015/32,  paragraph  2.2  of  Opinion  CON/2016/39  and  paragraph  2.1  of  Opinion  CON/2016/50.  All  ECB 
opinions are available on the ECB website at www.ecb.europa.eu.  
See  paragraph  3.2  of  Opinion  CON/2014/59,  paragraph  2.2  of  Opinion  CON/2015/26,  paragraph  3.2  of  Opinion 
CON/2015/32,  paragraph  3.1  of  Opinion  CON/2016/39,  paragraphs  3.1  and  3.2  of  Opinion  CON/2016/50,  and 
paragraphs 4.1 to 4.3 of Opinion CON/2017/9. 

Directive 2014/17/EU  of the European  Parliament  and of the Council of 4 February  2014  on credit agreements for 
consumers  relating  to  residential  immovable  property  and  amending  Directives  2008/48/EC  and  2013/36/EU  and 
Regulation (EU) No 1093/2010 (OJ L 60, 28.2.2014, p. 34). 
See Article 43(1) of the Directive 2014/17/EU. 

See the paragraphs of the Opinions referred to in footnote 7. 
See, for example, Gottfried Heinrich, C-345/06, ECLI:EU:C:2009:140. 
See, 
ECLI:EU:C:1979:129. 

for  example,  Ditta  Angelo  Tomadini  Snc  v  Amministrazione  delle 

finanze  dello  Stato,  C-84/78, 

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2.2.3  It is for the Slovenian authorities to assess whether the retroactive character of the draft law  also 

complies with Slovenian legal and constitutional principles. 

3. 

Specific observations 

3.1  Eligibility criteria 

3.1.1  The  draft  law  does  not  prescribe  specific  criteria  for  borrowers  to  be  eligible  to  participate  in  the 

conversion, which raises some concerns with regard to the purpose of the draft law.  

3.2  Effects on the banking sector 

3.2.1  The implementation of the draft law is expected to entail financial costs for the Slovenian banking 

sector.  Credit  institutions  may  be  affected  to  different  degrees  to  the  extent  that  they  have 

concluded  Swiss  franc  loans  between  28  June  2004  and  31  December  2010.  This,  in  turn,  is 

expected to have a negative impact on the profitability, capitalisation and future lending capacity of 

the banking sector as a whole.  

3.2.2  As regards the possibility for credit institutions to reverse the conversion if they can prove the loans 

were  concluded  based  on  borrowers’  informed  consent,  it  is  noted  that  this  option  can  only  be 

exercised on an ex post basis before the national court, which creates additional litigation costs for 

the  Slovenian  banking  sector  and  the  risk  of  being  unable  to  recover  the  relevant  amounts  from 

borrowers. It should also be noted that the conversion will lead to a one-off increase in operational 

costs for the affected credit institutions in Slovenia, in particular due to the restructuring of existing 

hedges,  refinancing  measures,  and  the  costs  associated  with  the  obligation  to  recalculate  the 

Swiss franc loans in order to notify each borrower individually thereof.  

3.3  Effects on the financial stability 

3.3.1  The ECB has pointed out on several occasions the risks associated with foreign currency loans 13. 

In  particular,  foreign  currency  loans  have  constituted  a  major  risk  to  financial  stability  in  several 

Member States, where the share of foreign currency loans is relatively high. The ECB points, in this 
respect, to the analysis of such risks made by the ESRB in Recommendation ESRB/2011/114.  

3.3.2  As  regards  the  long-term  effects  on  financial  stability,  when  introducing  measures  in  relation  to 

settling  and  converting  foreign  currency  loans,  due  consideration  should  always  be  given  to  fair 
burden  sharing  among  all  stakeholders  in  order  to  avoid  moral  hazard  in  the  future15.  The 

explanatory memorandum argues that the  interests of credit institutions are taken into account  in 

the  draft  law,  for  example,  in  the  conversion  process  higher  interest  rates  are  to  be  used  for  the 

preparation  of  the  new  repayment  schedules,  reflecting  common  practices  in  euro  denominated 

loans.  However,  the  draft  law  provides  for  the  replacement  of  LIBOR  with  EURIBOR  for 

recalculation purposes, whereas the original loan-based margin remains the same, which appears 

13  

14  
15  

See  in  particular  the  ECB  Financial  Stability  Review  of  June  2010  and,  in  respect  of  the  foreign  currency  loans  in 
Hungary, Opinions CON/2011/87, CON/2012/27, CON/2014/59, CON/2014/72 and CON/2014/76, and in respect of 
the foreign currency loans in Poland, Opinion CON/2015/26. 
However this does not seem to be the case in Slovenia. 
See paragraph 3.4 of Opinion CON/2014/59, paragraph 3.3 of Opinion CON/2014/87 and paragraph 3.3.4 of Opinion 
CON/2015/26. 

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to potentially deviate from the common practices of credit institutions which typically apply a higher 

loan-based margin for euro denominated loans than for Swiss franc denominated loans.  

3.3.3  Given that Slovenia only joined the euro area in 2007, the conversion of any loans from Swiss franc 

into  euro  between  2004  and  2007  could  result  in  an  unequal  treatment  of  other  customers, 

depending  on  exchange  rate  developments  between  the  Slovenian  tolar  and  Swiss  franc  during 

this  period.  A  reconciliation  method  may  therefore  be  needed  to  reflect  exchange  rate 

developments between the tolar, Swiss franc and euro during this period. 

3.4  Effects on the Slovenian economy 

3.4.1  As the ECB has noted previously16, the conversion of Swiss franc loans with retroactive effect, as 

envisaged by the draft law, could have negative effects if it were to lead to a deterioration of foreign 

investor sentiment due to a perceived increase in legal uncertainty and country risk.  

4. 

Conferral of new tasks on Banka Slovenije 

4.1  New task of Banka Slovenije 

4.1.1  The  draft  law  confers  the  task  of  supervising  the  conversion  procedures  in  relation  to  credit 
institutions on Banka Slovenije17 and designates Banka Slovenije as the competent minor offence 

authority  in  case  of  a  breach  of  the  provisions  of  the  draft  law.  The  draft  law  does  not  specify  in 

detail the scope of this new task. The ECB understands that the Banka Slovenije’s supervisory task 

in  this  respect  would  essentially  require  Banka  Slovenije  to  supervise  the  compliance  of  credit 

institutions  with  the  requirements  of  the  draft  law  in  relation  to  the  restructuring  of  their  private 

contractual relationships with individual customers in the context of the conversion of Swiss franc 

denominated  loans  into  euro  denominated  loans.  Banka  Slovenije  has  been  designated  as  the 

competent minor offence authority in relation to breaches of the draft law, within the scope of the 
performance of its prudential supervisory tasks over credit institutions 18, and also has, to a certain 
extent,  an  existing  customer  protection  role19.  However,  Banka  Slovenije  has  no  comparable 

responsibilities  in  respect  of  the  supervision  of  the  compliance  of  credit  institutions  with  the  legal 

requirements relating to the restructuring of privately negotiated loan contracts by credit institutions 

with their customers. The draft law therefore confers a new task upon Banka Slovenije.  

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

European  System  of  Central  Banks  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 3603/9320  defines  ‘other  type  of  credit  facility’,  inter  alia,  as  ‘any 

financing of the public sector’s obligations vis-à-vis third parties’. 

16  

17  

18   
19  
20  

See  paragraph  3.4.1  of  Opinion  CON/2015/26,  paragraph  3.3.3  of  Opinion  CON/2016/39  and  paragraph  3.5  of 
Opinion CON/2016/50.  

For  other  consumer  providers  which  are  not  credit  institutions  supervised  by  Banka  Slovenije,  the  relevant 
supervisory duties are conferred on the Slovenian Market Inspectorate (Tržni inšpektorat Republike Slovenije).  

Article 380 of the Law of 2015 on banking.  
See Law of 2016 on consumer credit. 
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).   

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Ensuring that Member States implement a sound budgetary policy is one of the key objectives of 
the  monetary  financing  prohibition,  which  may  not  be  circumvented21.  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. 

4.1.3  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 

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 

21  

Article  123  of  the  Treaty  also  serves  the  objective  of  maintaining  price  stability  and  reinforces  central  bank 
independence. 

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as  to  lead  to  the  creation  of  an  indefinite  chain  of  ancillary  tasks.  Such  complementarity 

should be examined 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. 

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

Banka Slovenije is in line with the prohibition of monetary financing. 

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

the ESCB  

4.2.1  Supervising the compliance of credit institutions with the requirements of the draft law in relation to 

the restructuring of privately negotiated loan contracts with their customers is not among the basic 

central  banking  tasks  listed  in  Article  127(2)  or  (5)  of  the  Treaty  or  otherwise  conferred  upon  the 

NCBs by the Statute of the ESCB. The new task conferred on Banka Slovenije does not form part 

of  the  prudential  supervisory  tasks  of  Banka  Slovenije.  Thus,  the  new  task  conferred  on  Banka 

Slovenije under the draft law is not directly related to the tasks conferred on the ECB and the NCBs 

by the Treaty and the Statute of the ESCB. Consequently, a careful assessment of the conferral of 

this task on Banka Slovenije is required in order to determine whether it constitutes a government 
task, and whether the related funding gives rise to monetary financing concerns 22.  

4.3  Tasks which are atypical of NCB tasks  

4.3.1  The  new  task  conferred  on  Banka  Slovenije  by  the  draft  law  relates  to  the  supervision  of  the 

compliance  by  credit  institutions  with  the  requirements  under  the  draft  law  relating  to  the 

restructuring  of  privately  negotiated  loan  agreements  between  credit  institutions  and  their 

customers.  Banka  Slovenije’s  new  task  can  be  seen,  to  a  certain  extent,  as  being  related  to  the 

protection of consumers.  

4.3.2  It  is  necessary  to  analyse  whether  this  new  task  is  atypical  of  NCB  tasks.  While  the  majority  of 

NCBs  do  not  appear  to  have  been  assigned  tasks  of  this  nature,  the  ECB  has  identified  two 
Member States where NCBs have been given similar tasks. In Cyprus23 and Hungary24, the NCBs 

22  

23  

See,  for  example,  paragraph  3.4.1  of  Opinion  CON/2017/12,  paragraph  2.2.1  of  Opinion  CON/2017/32, 
paragraph 3.1 of Opinion CON/2017/43 and paragraph 3.1 of Opinion CON/2017/52. 
The Central Bank of Cyprus was entrusted with sanctioning powers in relation to the compliance of credit institutions 
with restrictions regarding the  variation of the interest rates on  credit facilities imposed by Cypriot Law 160(I)/1999 
and  supervisory  tasks  relating  also  to  civil  law  aspects  in  the  area  of  payment  services  and  mortgage  credit.  In 
connection with the performance of these tasks the Central Bank of Cyprus may also request and review privately 
negotiated contracts between credit institutions and their customers.    

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have been given tasks relating  to the supervision  of the compliance  by credit  institutions  with the 

legal requirements in relation to the restructuring of private, contractual loan agreements between 

credit institutions and their customers. In the case of Hungary, these tasks are substantially similar 

to  the  tasks  to  be  conferred  on  Banka  Slovenije  under  the  draft  law.  In  addition,  the  NCBs  in 
Croatia25,  the  Czech  Republic 26,  Ireland 27,  Italy28  and  Slovakia29  have  been  given  similar 

supervisory  tasks  relating  more  generally  to  consumer  protection  and  the  transparency  of  loan 

arrangements.  In  this  regard,  also  taking  into  account  the  consumer  protection  roles  which  are 
currently  fulfilled  by  numerous  ESCB  NCBs  in  the  field  of  financial  services 30,  the  new  task  does 

not appear to be completely atypical of NCB tasks. However, the new task would be considered as 

atypical  if  Banka  Slovenije’s  supervisory  role  would  extend  to  the  resolution  of  disputes  between 

contractual parties, which is a matter that is usually handled by the courts. 

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

4.4.1  According  to  the  explanatory  memorandum,  the  objective  of  the  draft  law  is  to  implement  the 

constitutional principle of the ‘welfare state’ and to introduce sanctions for breaches of obligations 

arising  under  contractual  relationships,  thereby  providing  legal  protection  to  a  number  of 

consumers  who  have  taken  out  Swiss  franc  loans.  The  draft  law  is  therefore  intended  to  provide 
protection to consumers of financial services. As previously noted by the ECB31 the NCB ‘is best 

placed  to  assess  the  terms  and  conditions  of  loan  contracts  entered  into  by  consumers  and  the 

impact of the new legal measures on financial institutions. Within the scope of its tasks, the [NCB] 

can  contribute  to  the  prevention  and  mitigation  of  systemic  risks  to  financial  stability’.  Due  to  the 

retroactive  application  of  the  draft  law,  it  is  not  clear  whether  the  draft  law  would  effectively 

guarantee the fulfilment of the objective of protecting consumers of financial services. Thus, there 

is  a  potential  risk  that,  in  carrying  out  its  supervisory  functions,  Banka  Slovenije  would  act 

exclusively in the interest of another public entity. 

24   Magyar  Nemzeti  Bank  has  a  supervisory  role  in  connection  with  the  compliance  by  credit  institutions  with  legal 
requirements  relating  to  the  conversion  of  foreign  currency  denominated  consumer  loans,  including  loans 
denominated in Swiss francs, as defined in applicable laws (e.g. Law XXXVIII of 2014 and Law XL of 2014, both as 
amended by Law LXXVIII of 2014, Law XXVII of 2014, Law LII of 2015 (amending Law XL of 2014) and Law CXLV 
of  2015).  The  performance  of  these  supervisory  tasks  involves  the  verification  of  compliance  by  credit  institutions, 
which includes also the review of privately negotiated contracts between credit institutions and their customers. See 
Opinion CON/2014/72.  

25    Hrvatska narodna banka carries out oversight over credit institutions’ compliance with the Law on credit institutions, 
which  includes  compliance  with  internal  bylaws  of  credit  institutions  governing  the  relationship  with  their  clients, 
contracts concluded and consumer protection provisions. 

26  

27  
28  

29  

30  
31  

Česka Narodni Banka has been assigned tasks related to consumer protection, including supervision of compliance 
by  supervised  entities  of  the  observance  of  the  prohibition  of  unfair  business  practices  and  supervision  of  rules 
regarding consumer discrimination or the obligation to inform about prices.   
See, for example, paragraph 3.4.2 of Opinion CON/2017/12. 

Banca  d'Italia has  been  assigned  with  tasks  in  relation  to  the  supervision,  from  a  transparency  perspective,  of  the 
terms of banking and financial agreements between credit institutions and non-credit institution lenders. 

Narodna  Banka  Slovenska  has  powers  in  the  area  of  the  protection  of  financial  consumers,  which  include  a 
preliminary  assessment  of  unfair  commercial  practices  of  supervised  entities  and  unacceptable  conditions  in 
contracts  for  the  provision  of  financial  services.  The  scope  of  this  supervision  does  not  include  the  adjudication  of 
disputes between the supervised entities and their customers. 
See for example, paragraph 3.4.2 of Opinion CON/2017/12. 

See, for example, paragraph 3.2 of Opinion CON/2014/72. 

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

tasks 

4.5.1  It  may  be  considered  that  the  new  task  at  least  partially  complements  other  similar  existing 

supervisory and consumer protection tasks of Banka Slovenije. As with other consumer protection 

tasks, sufficient mitigation measures must be put in place to ensure that in the event of a conflicts 
of interest supervisory considerations prevail32.  

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

capacity of Banka Slovenije 

4.6.1  The principle of financial independence requires that Member States may not put their NCBs in a 

position where they have insufficient resources to carry out both their ESCB-related tasks and their 

national tasks, from an operational and financial perspective. Furthermore, when allocating specific 

new tasks to NCBs, each NCB concerned should have sufficient financial and human resources at 

its disposal to ensure that the tasks can be carried out without impacting on the NCB’s financial or 
operational capacity to perform its ESCB tasks33. In order to ensure that Banka Slovenije’s capacity 

to perform its ESCB-related tasks is not impaired, Banka Slovenije must, therefore, be in a position 

to  avail  itself  of  the  necessary  resources  to  carry  out  its  duties  under  the  draft  law.  At  this  early 

stage,  it  is  difficult  to  predict  what  additional  resources  Banka  Slovenije  will  require  in  order  to 

perform its new supervisory task under the draft law. However, it is likely that Banka Slovenije will 

have  to  dedicate  additional  human,  technical  and  financial  resources  to  implement  this  new 

supervisory  task.  This  may  impose  an  additional  burden  on  existing  NCB  and  supervisory  tasks 

performed  by  Banka  Slovenije.  While  supervised  entities  are  required  to  pay  fees  to  Banka 

Slovenije  in  respect  of  the  performance  of  its  supervisory  tasks  under  the  Law  on  consumer 
credit34,  the  draft  law  does  not  provide  for  Banka  Slovenije  to  be  reimbursed  for  the  costs  of 

carrying out  this  new task. The ECB  invites the consulting  authority to consider the  impact of the 

draft law on the resources of Banka Slovenije. 

4.7  Extent to which performance of the new task fits into the institutional set-up of Banka Slovenije, in 

the light of central bank independence and accountability considerations 

4.7.1  The  potential  impact  of  the  new  task  on  the  institutional,  financial  and  personal  independence  of 

Banka Slovenije must also be taken into consideration. 

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

4.8.1  The  draft  law  does  not  contain  any  specific  provisions  on  liability  in  relation  to  the  exercise  of 

Banka  Slovenije’s  powers  under  the  draft  law  or  the  failure  to  exercise  such  powers.  Banka 

Slovenije’s potential liability in respect of the performance of the new task will thus be subject to the 

rules  on  liability  for  damages  caused  in  the  exercise  of  public  authority  pursuant  to  the  Law  on 

banking  and  the  general  liability  regime  under  Slovenian  law.  The  general  liability  regime  would 

also apply with respect to any potential damages in connection with decisions of Banka Slovenije 

32  
33  

34   

See paragraph 3.1 of Opinion CON/2015/21 and paragraph 2.2.2 of Opinion CON/2016/31. 
See,  for  example,  paragraph  2.2.5.  of  Opinion  CON/2017/32,  paragraph  3.3.2.  of  Opinion  CON/2017/43  and 
paragraph 3.3.2 of Opinion CON/2017/52. 

See Article 79 of the Law on consumer credit (Zakon o potrošniških kreditih).  

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delivered in supervisory proceedings pursuant to the draft law which are later declared to be invalid 

in the courts. 

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

of Banka Slovenije to disproportionate political risks and impacts on their personal independence  

4.9.1  Due to the sensitivity of the subject matter and the high degree of public attention being  given to 

the  restructuring  of  Swiss  franc  loans  in  Slovenia,  due  consideration  should  be  given  to  any 

disproportionate  political  risk  or  impact  on  the  personal  independence  of  the  members  of  the 

decision-making bodies of Banka Slovenije that may  arise in the performance of the new task. In 

this  respect,  consideration  might  be  given  to  the  possibility  of  conferring  this  task  on  a  separate 

government  agency  to  which  Banka  Slovenije  could  provide  technical  support  in  view  of  its 
expertise and experience in dealing with the Slovenian banking sector 35. 

4.10  Conclusion 

4.10.1 The following should be noted as regards the compatibility of the draft law with the prohibition on 

monetary  financing.  The  new  task  of  Banka  Slovenije  of  supervising  the  compliance  of  credit 

institutions  with  the  requirements  under  the  draft  law  in  relation  to  the  restructuring  of  privately 

negotiated loan agreements between credit institutions and their customers can be regarded as a 

central bank task. However, as the new task conferred upon Banka Slovenije by the draft law must 

not adversely affect its capacity to carry out its NCB or ESCB-related tasks, careful consideration 

should  be  given  to  its  impact  on  Banka  Slovenije’s  operational  capacity.  In  addition,  careful 

consideration  should  be  made  of  any  disproportionate  political  risk  or  impact  on  the  personal 

independence of the members of the decision-making bodies of Banka Slovenije that may arise in 

the performance of the new task.  

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

Done at Frankfurt am Main, 16 April 2018. 

[signed] 

The President of the ECB 

Mario DRAGHI 

35  

See, for example, Opinion CON/2017/19. 

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