Opinion of the European Central Bank of 16 November 2018 on the implementation of the recommendations of the convergence report into the Law on Българска народна банка (Bulgarian National Bank) (CON/2018/53)
Date: 2018-11-16
Institutions: European Central Bank
Subjects: Bulgaria, Eurosystem, central bank, economic convergence, harmonisation law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 16 November 2018  

on the implementation of the recommendations of the convergence report into the Law on  

Българска народна банка (Bulgarian National Bank) 

(CON/2018/53) 

Introduction and legal basis 

On 23 October 2018 the European Central Bank (ECB) received a request from the Minister for Finance 

for an opinion on a draft law amending the Law on the Bulgarian National Bank (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/EC 1, 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. 

Purpose of the draft law 

1.1 

Introduction 

As noted in the explanatory memorandum accompanying the  draft law, the  draft law aims to bring 
the Law on the Bulgarian National Bank (hereinafter the ‘Law on BNB’) 2 in line with Articles 130 and 

131  of  the  Treaty  and  with  the  Statute  of  the  European  System  of  Central  Banks  and  of  the 

European Central Bank (hereinafter the ‘Statute of the ESCB’). The draft law has been prepared on 

the  basis  of  the  assessment  and  recommendations  for  Bulgaria  contained  in  the  Convergence 
Report  of  the  European  Commission  and  the  Convergence  Report  of  the  ECB3  and  aims  to  fully 
reflect  the  requirements  of  Union  law  in  BNB’s  regulatory  framework4.  With  regard  to  the 

requirements for legal integration of BNB into the Eurosystem, the explanatory memorandum states 

that  the legal framework must be prepared and  enter into force on the date  on  which the Member 

State with a derogation adopts the euro, which is why the draft law does not contain any proposals 
for changes in this area 5. 

1  

2  
3  
4  
5  

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 p. 1 of the Explanatory memorandum. 
See p. 3 of the Explanatory memorandum. 

See p. 1 of the Explanatory memorandum. 

 
 
 
 
                                                 
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1.2  Personal independence 

The  draft  law  amends  Article  14(1)  of  the  Law  on  BNB  by  providing  that  a  member  of  BNB’s 

Governing Council may be relieved from office only if he no longer fulfils the conditions required for 

the  performance  of  his  duties  or  if  he  has  been  guilty  of  serious  misconduct.  The  draft  law  also 

amends Article 14(3) of the Law on BNB to provide that the decision to relieve the Governor of BNB 

from office may be referred to the Court of Justice on grounds of infringement of the Treaties or of 

any rule of law relating to their application. 

1.3 

Institutional independence 

The draft law amends Article 44 of the Law on BNB to provide that when exercising their powers and 

carrying  out  their  duties  under  the  Law,  BNB,  the  Governor  of  BNB  and  BNB’s  Governing  Council 

must be independent and must not seek or take instructions from EU institutions, bodies, offices or 

agencies,  from  the  Council  of  Ministers  or  from  the  governments  of  other  Member  States  of  the 

European  Union,  or  from  any  other  bodies  or  institutions.  This  provision  is  further  amended  to 

provide that EU institutions, bodies, offices or agencies, the Council of Ministers or the governments 

of  other  EU  Member  States,  or  any  other  bodies  or  institutions,  must  not  exercise  influence  over 

BNB, the Governor of BNB or BNB’s Governing Council. 

1.4  Prohibition of monetary financing  

The draft law amends Article 45(1) of the Law on  BNB to stipulate that BNB must not provide any 

loans  or  guarantees  to  the  Council  of  Ministers,  municipalities,  other  government  or  municipal 

institutions, public organisations or undertakings, EU institutions, bodies, offices or agencies, central 

governments,  regional,  local  or  other  public  authorities,  other  bodies  governed  by  public  law,  or 

public undertakings of Member States, and must not purchase debt instruments directly from them. 

In addition, the draft law replaces Article 45(3) of the Law on BNB, which currently provides for the 

possibility  to  extend  credits  to  the  government  under  certain  conditions,  with  a  provision  which 

prohibits  BNB  to  purchase,  either  on  the  primary  or  on  the  secondary  market,  debt  instruments 

issued by the Bulgarian State or Bulgarian municipalities, or from Bulgarian government or municipal 

institutions, or public organisations or undertakings. 

1.5  Confidentiality 

The  draft  law  amends  Articles  13(1)  and  23(2)  of  the  Law  on  BNB  to  clarify  that  the  Governor  of 

BNB, BNB’s Governing Council and the employees of BNB are bound by an obligation to maintain 

professional secrecy. 

1.6  Other amendments 

The draft law also provides for some other changes to the Law on BNB that  are not related to the 
Convergence  Reports  of  the  Commission  and  the  ECB6,  namely:  (i)  a  provision  which  empowers 

BNB to issue an ordinance laying down the face value, form and design of banknotes and coins put 

into circulation by BNB; (ii) a provision that all BNB employees must not have been convicted of a 

premeditated  crime  or  debarred  from  holding  a  relevant  position  by  a  court,  and  that  these  facts 

must be established internally; and (iii) other amendments, mostly of editorial nature. 

6  

See p. 3 of the Explanatory memorandum. 

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2. 

General observations 

2.1  The  ECB  welcomes  the  Bulgarian  government’s  efforts  to  achieve  the  required  level  of  legal 

convergence  by  reference  to  the  recommendations  for  Bulgaria  contained  in  the  Convergence 

Reports of the Commission and the ECB. 

2.2  The ECB notes that the compatibility of Bulgarian legislation, including the Law on BNB and the Law 
on  counter-corruption  and  unlawfully  acquired  assets  forfeiture7,  with  Articles  130  and  131  of  the 

Treaty will be assessed in the ECB’s next Convergence Report.  

3. 

Specific observations 

3.1  Personal independence 

The ECB welcomes that the draft law removes the text in Article 14(1) of the Law on BNB according 

to  which  a  member  of  the  Governing  Council  could  be  relieved  from  office  where  he/she  is  in 

practice  unable  to  perform  his/her  duties  for  more  than  six  months.  Such  a  ground  for  relieving  a 

member  of  the  Governing  Council  from  office  was  in  addition  to  the  two  grounds  provided  for  in 
Article 14.2  of the  Statute  of the  ESCB8. The ECB moreover  welcomes that the draft law modifies 

the second ground for relieving a member of the Governing Council from office and now refers only 

to serious misconduct. 

3.2 

Institutional independence 

The  ECB  welcomes  the  amended  Article  44  of  the  Law  on  BNB  which  clarifies  that  BNB,  the 

Governor  of  BNB  and  BNB’s  Governing  Council  must  be  independent  and  must  not  seek  or  take 
instructions  from  national  institutions,  Union  institutions  and  any  other  bodies  or  institutions 9.  The 

clarification  that  such  national  and  Union  institutions  must  not  exercise  influence  over  BNB,  the 

Governor  of  BNB  and  BNB’s  Governing  Council  further  aligns  the  Law  on  BNB  with  Article  130  of 

the Treaty. 

3.3  Prohibition of monetary financing  

The  ECB  welcomes  the  amended  Article  45(1)  of  the  Law  on  BNB  which  now  prohibits  both  the 

lending by BNB to a range of public sector entities and purchases by BNB of debt instruments from 
such  entities10.  The  ECB  further  welcomes  that  the  list  of  the  relevant  public  sector  entities  is 

expanded  to  include  central  governments,  regional,  local  or  other  public  authorities,  other  bodies 

governed  by  public  law,  public  undertakings  of  Member  States  and  EU  institutions  and  bodies,  in 

order to fully mirror the wording of Article 123(1) of the Treaty. 

Article 45(2) of the Law on BNB provides that the prohibition under Article 45(1) of the Law on BNB 

must  not  apply  to  the  extension  of  credits  to  state-owned  and  municipal  credit  institutions  in 

emergency  cases  of  liquidity  risk  that  may  affect  the  stability  of  the  financial  system.  It  is 

recommended  that  the  scope  of  this  exemption  addressed  to  state-owned  and  municipal  credit 

institutions  is  brought  into  line  with  the  scope  of  the  exemption  under  Article  123(2)  of  the  Treaty, 

7  
8  
9  
10  

Published in Darjaven Vestnik No 7, 19 January 2018. 
See the ECB’s Convergence Report 2018, paragraph 7.1.2.2. 
See the ECB’s Convergence Report 2018, paragraph 7.1.2.1. 

See the ECB’s Convergence Report 2018, paragraph 7.1.4. 

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which provides that the prohibition of monetary financing under Article 123(1) of the Treaty must not 

apply to publicly owned credit institutions which, in the context of the supply of reserves by central 
banks, must be given the same treatment by national central banks as private credit institutions 11. 

The  prohibition  of  monetary  financing  prohibits  the  direct  purchase  of  public  sector  debt,  but  such 

purchases  in  the  secondary  market  are  allowed,  in  principle,  as  long  as  such  secondary  market 
purchases are not used to circumvent the objective of Article 123 of the Treaty12. For this reason, in 

accordance with the proposed revised Article 45(1) of the Law on BNB, Article 45(3) of the Law on 

BNB  should  be  reformulated  to  clarify  that  BNB  may  not  purchase  debt  instruments  ‘directly’  from 

the relevant public sector entities, and the references to the primary or secondary markets should be 

deleted. 

3.4  Confidentiality 

While the ECB considers the amendments to Article 13(1) and Article 23(2) of the Law on BNB may 

be helpful to ensure clarity, it is noted that under Article 37 of the Statute, professional secrecy is an 

ESCB-wide matter. Therefore, the ECB assumes that the confidentiality rules of the Law on BNB are 
without prejudice to the confidentiality obligations towards the ECB and the ESCB13. 

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

Done at Frankfurt am Main, 16 November 2018. 

[signed] 

The President of the ECB 

Mario DRAGHI 

11  
12  
13  

See the ECB’s Convergence Report 2018, paragraph 7.1.4. 
See the ECB’s Convergence Report 2018, paragraph 7.1.4. 

See the ECB’s Convergence Report 2018, paragraph 7.1.3. 

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