Opinion of the European Central Bank of 15 February 2019 on the licensing and supervision of providers of microcredit (CON/2019/7)
Date: 2019-02-15
Institutions: European Central Bank
Subjects: Greece, consumer protection, credit, credit institution, financial stability, financial supervision, shadow banking

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 15 February 2019  

on the licensing and supervision of providers of microcredit 

(CON/2019/7) 

Introduction and legal basis 

On 18 December 2018 the European Central Bank (ECB) received a request from the Greek Ministry of 

Finance for an opinion on a draft Law on the provision of microcredit (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 the Bank of Greece (BoG) and to the tasks conferred upon the ECB concerning 

the prudential supervision of credit institutions pursuant to Article 127(6) of the Treaty. 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 aim of the draft law is to lay down rules for the taking up, pursuit, and supervision of the activity 

of  microcredit  provision  and  to  regulate  certain  rights  and  obligations  of  both  providers  and 

recipients of microcredit. The draft law defines microcredit as the provision of non-bank, unsecured 

loans  not  exceeding  EUR  25,000  to  individuals,  socially  vulnerable  groups,  and  very  small  legal 

entities and/or ‘entities for the social and solidary economy’, to be used as working or investment 

capital, for educational purposes, or for social integration purposes. 

1.2  The  draft  law  designates  the  BoG  as  the  competent  authority  to  license  and  supervise  entities 

providing  microcredit  in  Greece.  In  particular,  the  BoG  is  empowered  to:  (a)  assess  licence 

applications, further specify the documentation required, and grant and withdraw, subject to certain 

conditions, the relevant licence; (b) conduct fit-and-proper assessments of natural or legal persons 

aiming to acquire qualifying holdings (or increase such holdings) in microcredit entities; (c) specify 

the detailed requirements concerning subscription to the initial capital of microcredit entities and set 

own funds requirements if deemed necessary; (d) maintain a register listing the microcredit entities 

licensed, or with passporting rights, to operate in Greece; (e) supervise microcredit entities in a way 

that is adequate, proportionate and responsive to their risk exposure, and issue decisions related to 

the  levying  of  an  annual  supervision  fee  payable  by  each  microcredit  entity;  and  (f)  impose 

penalties on microcredit entities in the event of infringement of the provisions of the draft law. 

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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1.3  The  draft  law  also  stipulates  that  credit  institutions  within  the  meaning  of  Article  4(1)(1)  of 
Regulation  (EU)  No.  575/2013  of  the  European  Parliament  and  of  the  Council2,  and  financial 

institutions, within the meaning of Article 4(1)(26) of that Regulation, may also provide microcredit  

the same conditions as licensed microcredit entities. It is noted that Parts 3 and 4 thereof (Articles 

18-31)  are  to  apply  to  credit  institutions  within  the  meaning  of  Union  law.  Accordingly  the  ECB 

understands  that  the  provisions  on  licensing,  acquisition  of  a  qualifying  holding  in  a  microcredit 

institution,  and  withdrawal  of  a  licence  (see  Articles  6-11  of  the  draft  law)  do  not  apply  to  credit 

institutions. 

1.4  Moreover, the draft law confers on the General Secretariat of Commerce and Consumer Protection 

at  the  Ministry  of  Economy  and  Development  the  task  of  ensuring  and  monitoring  effective 

compliance  with  several  provisions  of  the  draft  law  applicable  to  credit  institutions  (relating  to 
consumer protection issues).3 

1.5  Finally,  the draft law  provides that,  with a decision by  the  Minister of Finance  and the  Minister of 

Economy and Development (and any other competent Minister, as applicable), it is possible to set 

up microcredit provision programmes as established in the draft law, co-investing resources from 

microcredit institutions and the national or co-financed leg of the Programme of Public Investments. 

The  same  decision  shall  specify  the  potential  beneficiaries,  the  kinds  and  the  purpose  of  the 

provided microcredit products, the specific programme implementation terms, the procedure for the 

recovery of sums wrongly paid, as well as any other necessary implementation details. 

2. 

General observations  

2.1  By  way  of  introduction,  the  ECB  notes  that  the  great  majority  of  Member  States  do  not  have  a 

dedicated  regime  for  the  regulation  of  the  provision  of  microcredit.  In  these  Member  States,  the 

provision of credit, including credit under terms similar to microcredit within the meaning of the draft 

law, is subject only to the regulatory regime governing the institutions that provide it (either credit 

institutions or  non-bank entities). Unlike in the case  of credit institutions,  which  are subject to the 

harmonised EU banking rules when providing credit for their own account, the regulatory approach 

to the provision of microcredit by non-banks differs across Member States. Absent a harmonised, 

EU-wide  regime  to  govern  the  provision  of  microcredit  by  non-banks,  the  European  Commission 

has  established  a  European  Code  of  Good  Conduct  for  Microcredit  Provision  (the  ‘Code’).  The 

purpose of the Code is to lay down a set of standards in terms of management, governance, risk 

management,  reporting,  consumer  and  investor  relations  that  are  common  to  the  EU  microcredit 

sector, rather than to replace existing regulations applicable to microcredit providers,  where such 
regulations  exist.4  The  Code  is  primarily  designed  to  cover  non-bank  microcredit  providers 

providing  loans  of  up  to  EUR  25,000  to  micro-entrepreneurs.  The  draft  law  contains  several 

references  to  the  Code,  which  appears  to  inform  some  of  its  provisions,  including  the  proposed 

2  

3  
4  

Regulation  (EU)  No  575/2013  of  the  European  Parliament  and  of  the  Council  of  26  June  2013  on  prudential 
requirements  for  credit  institutions  and  investment  firms  and  amending  Regulation  (EU)  No  648/2012  (OJ  L  176, 
27.6.2013, p. 1). 
See Article 27 of the draft law.  
See European Commission, European Code of Good Conduct for Microcredit Provision (2013), p. 10, available at: 
https://ec.europa.eu/regional_policy/sources/thefunds/doc/code_bonne_conduite_en.pdf.  

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statutory ceiling for microcredit loans. 

2.2  The focus of the Code on non-bank microcredit providers is justified by the fundamental differences 

between them and credit institutions, as providers of credit. These differences can be summarised 

as  follows.  First,  the  acceptance  of  deposits  or  other  repayable  funds  from  the  public,  and  the 

granting of loans on the basis of such deposits and funds, is a regulated activity under Union law 

and  is reserved to credit institutions. This particular characteristic accounts for both the particular 

systemic  importance  of  credit  institutions  and  the  application  to  them  of  the  stringent  prudential 

supervisory standards laid down by applicable Union law, including Regulation (EU) No 575/2013 
and Directive 2013/36/EU of the European Parliament and of the Council5. Second, despite the fact 

that in the EU there are other examples of special-purpose lenders which are – in some respects – 

treated  as  credit  institutions,  the  sources  of  their  funding  typically  differ  from  those  of  non-bank 
microcredit  lenders,  and  they  typically  lend  to  different  groups  of  borrowers.6  These  fundamental 

differences  are  also  countenanced  by  the  draft  law.  Indeed,  under  the  draft  law,  microcredit 

institutions do not fund their operations through the collection of deposits or other contributions akin 

to deposits and the terms of credit and categories of beneficiaries provided for in the draft law also 

differ fundamentally from those applicable in the case of credit institutions. Significantly, the Basel 

Committee on Banking Supervision (BCBS) has contemplated the provision of microcredit by legal 

entities  or  individuals  engaged  primarily  in  its  extension,  including  ‘banks  specialised  in  offering 
microcredit’.7 However, the ECB notes that the BCBS’s definition of ‘traditional microlending’ differs 

qualitatively  from  the  draft  law’s  understanding  of  ‘microcredit’,  in  particular  through  the 
requirement for the beneficiaries of microlending to provide collateral. 8  

2.3  The  draft  law  opts  to  include  credit  institutions  in  its  scope  of  application  in  a  manner  that  might 

lead  to  unwelcome  ambiguities  in  terms  of  its fundamental  policy  goals.  If  the  primary  aim  of  the 

draft  law  is  to  promote  the  development  of  the  Greek  microcredit  sector  by  standardising  the 

regulatory  expectations  placed  on  non-bank  microcredit  providers  and  introducing  socially-
motivated terms of credit and categories of beneficiaries aligned with microcredit’s social mission,9 

it  is  difficult  to  see  how  the  licensing  and,  a  fortiori,  the  prudential  supervision  of  such  non-bank 

microcredit providers can be conducted on the basis of rules that could resemble those applicable 

to credit institutions. 

5  

6  

7  

Directive  2013/36/EU  of  the  European  Parliament  and  of  the  Council  of  26  June  2013  on  access  to  the  activity  of 
credit  institutions  and  the  prudential  supervision  of  credit  institutions  and  investment  firms,  amending  Directive 
2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338). 
The  reference  is,  for  example,  to  Irish  and  Lithuanian  credit  unions,  Latvian  cooperative  undertakings,  and  Polish 
cooperative savings and credit unions which, despite falling outside the scope of Directive 2013/36/EU on access to 
the activity of credit institutions and the prudential supervision of credit institutions and investment firms (CRD IV) for 
prudential supervision purposes, are nonetheless deemed to fulfil the functional criteria of credit institutions and are 
to  be  treated  as  credit  institutions,  for  example  for  the  purposes  of  minimum  reserves  requirements  (see,  for 
example,  ECB  Opinion  CON/2009/60,  paragraph.  2.2.).  Significantly,  these  lending  institutions  tend  to  fund  their 
operations  through  the  contributions  of  their  members,  who  are,  typically,  the  recipients  of  the  loans  granted,  and 
their mission differs from that of microcredit providers which are vehicles through which to combat poverty and social 
or financial exclusion (see the Code, p. 22 (Introduction)). All ECB opinions are published on the ECB’s website at 
www.ecb.europa.eu. 

BCBS,  ‘Guidance  on  the  application  of  the  core  principles  for  effective  banking  supervision  to  the  regulation  and 
at: 
supervision 
https://www.bis.org/bcbs/publ/d383.pdf.  

September 

institutions 

inclusion’, 

available 

financial 

relevant 

2016, 

of 

to 

8         Ibid., Annex E. 
9  

The  Code  understands  the  ‘mission’  of  microcredit  providers  as  one  to  ‘combat  poverty  and  social  and  financial 
exclusion’ (see the Code, p. 22 (Introduction)). 

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2.4  The  fundamental  differences  between  the  economic  role  of  credit  institutions  and  microcredit 

providers, as defined in the draft law, the different risks to which each is exposed, and the different 

sources of funding for their activities, all militate in favour of a different regulatory and, in particular, 

supervisory  treatment  to  take  into  account  their  specific  characteristics.  Moreover,  the  equal 

treatment,  on  a  regulatory  and/or  supervisory  footing,  of  non-bank  and  bank  lending  activities  is 

inconsistent with the letter and the spirit of the Code, which was drafted with non-bank microcredit 
providers and their social mission in mind.10 The ECB would, therefore, in the context of the draft 

law,  strongly  advise  against  the  inclusion  of  credit  institutions  within  its  scope  of  application,  in 

order to avoid confusion about the draft law’s policy objectives and legal uncertainty in respect of 

which  set  of  rules  the  fundamentally  different  activities  of  these  entities  would  be  subject  to  in 

Greece under the draft law. 

2.5  On a separate note, paragraph 4 of this opinion assesses the proposed conferral, on the BoG, of 

the  new  tasks  of  licensing  and  supervision  of  microcredit  institutions  against  the  criteria  for 

determining  what  constitutes  a  government  task  from  the  perspective  of  the  monetary  financing 

prohibition laid down in Article 123 of the Treaty.  

3. 

Prudential supervisory and financial stability considerations  

3.1  The  draft  law  defines  a  microcredit  institution  as  a  legal  entity  that  has  obtained  authorisation,  in 

accordance  with  Article  9,  to  provide  microcredit  in  Greece  (Article  2(2)  of  the  draft  law).  Credit 

institutions, therefore, do not appear to fall within the definition of microcredit institution, given that 

Article  9  is  included  in  Part  2  of  the  draft  law,  which  does  not  apply  to  credit  institutions. 

Consequently, it is understood that credit institutions could provide microcredit under their existing 

banking licence. 

3.2  The draft law sets out the definitions of microcredit and business microcredit. Microcredit is defined 

as credits of funds of up to twenty-five thousand euros (EUR 25,000) that do not constitute a bank 

loan and are provided exclusively in accordance with the provisions of the present law (Article 2 of 

the draft law). However, business microcredit is defined to include all forms of credit up to the limit 

of twenty-five thousand euros (EUR 25,000) which are provided either in order to cover investment 
needs  or  as  working  capital.11  On  the  basis  of  this  definition  it  appears  that  a  loan  granted  by  a 

credit institution, within the limits and on the conditions set out in the draft law, would qualify as a 

form of business microcredit and would be subject to the draft law. In this respect, it is also noted 

that  the  definition  of  business  microcredit  contains  an  open-ended  list  of  activities  that  qualify  as 

business  microcredit;  this  creates  legal  uncertainty  as  to  whether  a  loan  granted  by  a  credit 

institution would qualify as business microcredit and fall within the ambit of the draft law.  

3.3  The draft law confers wide-ranging powers on the BoG with regard to microcredit institutions (see 

paragraph 1.2 of this opinion). However, the ECB notes that the draft law is silent on the details of 

the  supervisory  framework  in  which  microcredit  institutions  would  be  expected  to  pursue  their 

activities, as it merely refers to ‘adequate, proportionate, and responsive’ controls that the BoG, as 

10  

11  

Ιt is noted that of the limited number of Member States in which the provision of microcredit constitutes a regulated 
activity, only one has included credit institutions in the scope of the applicable national regime. 

See Article 18(1)(a) of the draft law. 

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the competent authority, would be expected to exercise at a future point in time.12 Moreover, in the 

absence  of  an  express  provision  in  the  draft  law,  it  is  unclear  whether  the  BoG  would  be 

empowered  to  exercise  the  powers  conferred  upon  it  with  regard  to  the  activity  of  business 

microcredit, where this activity is exercised by credit institutions. 

3.4  Furthermore, the ECB notes that Council Regulation (EU) No 1024/2013 13 confers exclusive tasks 

on the ECB concerning the prudential supervision of credit institutions with a view to contributing to 

their safety and soundness and in order to protect the stability of the financial system of the Union 

and each Member State. The ECB is responsible for the effective and consistent functioning of the 

Single Supervisory Mechanism (SSM) and exercises oversight over the SSM’s functioning, based 

on  a  distribution  of  responsibilities  between  the  ECB  and  the  national  competent  authorities, 

including the BoG. In this respect, it is of the utmost importance that the conferral of tasks on the 

BoG  and  the  Ministry  of  Economy  and  Development  with  regard  to  microcredit  institutions  and/or 

the  activity  of  providing  business  microfinance  should  be  without  prejudice  to  the  tasks  that  the 

ECB and the BoG exercise for the purposes of the prudential supervision of credit institutions. By 

removing  credit  institutions  from  the  scope  of  application  of  the  draft  law,  legal  certainty  can  be 

ensured concerning the distribution of competences between the NCAs and the ECB with regard to 
the supervision of credit institutions providing business microcredit.14 

3.5  By explicitly  excluding from supervision other business activities that ‘microcredit institutions’ may 
pursue, in addition to the provision of microcredit,15 the draft law risks undermining the efficiency of 

the  future  supervision  of  microcredit  institutions.  In  particular,  by  precluding  the  supervisor  from 

monitoring  the  full  range  of  the  activities  pursued  by  entities  engaging  in  the  provision  of 

microcredits, and from detecting possible risks to the financial position of those entities arising from 

their other activities, the draft law falls short of creating an environment conducive to the protection 

of financial stability, while at the same time exposing the supervisor to risks of supervisory failure 

and to the attendant reputational risks. 

3.6  The ECB also notes its concern that if credit institutions are included in the scope of application of 
the draft law, Article 3016 could seriously interfere with their lending activity and capital adequacy, 17 

since  it  could  result  in  imposing  pressure  on  credit  institutions  to  extend  microcredit  on  terms 

dictated by the Minister of Economy and Development or by any other minister, rather than on the 

regular terms subject to which supervised credit institutions conduct their lending operations.  

12  
13  

14  

15  
16  

17  

See Article 15(1) of the draft law.  

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). 
The proposed approach would also protect the ECB and SSM from any reputational risks arising from obstruction in 
the exercise of their supervisory mandate over credit institutions that extend credit up to the  statutory limit of EUR 
25,000. 

See Article 5(2) of the draft law. 
Article 30(1) of the draft law states that ‘[W]ith a decision by the Minister of Finance and the Minister of Economy and 
Development  and  any  other  competent  Minister,  as  applicable,  it  is  possible  to  set  up  microfinance  provision 
programmes as established by the present law, co-investing resources from microcredit institutions and the national 
or  co-financed  leg  of  the  Programme  of  Public  Investments.  The  same  decision  shall  specify  the  potential 
beneficiaries,  the  types  and  the  purpose  of  the  microfinance  products  provided,  the  specific  programme 
implementation  terms,  the  procedure  for  the  recovery  of  sums  wrongly  paid,  and  any  other  necessary 
implementation details’. 
This  is  all  the  more  so,  considering  the  absence  of  capital  provisions  corresponding  to  microcredit  as  well  as  the 
possibility of such loans becoming non-performing within a short period of time. 

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4. 

New tasks of the BoG  

4.1  The  draft  law  designates  the  BoG  as  the  authority  responsible  for  both  licensing  and  supervising 
entities that provide microcredit loans in Greece.18 The ECB underlines that a proposed conferral of 

new  tasks  on  a  national  central  bank  (NCB)  of  the  European  System  of  Central  Banks  (ESCB) 

must be assessed against the criteria for determining what constitutes a government task from the 

perspective of the monetary financing prohibition laid down in Article 123 of the Treaty.  

4.2  For  the  purposes  of  that  prohibition,  Article  1(1)(b)(ii)  of  Council  Regulation  (EC)  No  3603/9319 

defines ‘other type of credit facility’, inter alia, as ‘any financing of the public sector’s obligations vis-

à-vis third parties’.  To determine what constitutes ‘financing of the public sector’s obligations vis-à-

vis third parties’ – which can be interpreted as financing provided by an NCB outside the scope of 

its central bank tasks – it is necessary to assess whether a new task to be undertaken by that NCB 

is a government task.  

4.3  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  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 that are not related to tasks that have been conferred upon the ECB and the NCBs are not 

precluded  per  se.  However,  new  tasks  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  would  create  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 

18  
19  

See Article 5(1) of the draft law. 
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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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  be 

interpreted narrowly, so as to avoid leading to the creation of an indefinite chain of ancillary 

tasks.  Such  complementarity  should  also  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 properly perform 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.  

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

conferred  upon  the  BoG  constitute  government  tasks  in  the  context  of  the  monetary  financing 

prohibition. 

4.4.1  New tasks and the tasks conferred upon the ECB and the NCBs by the Treaty and the Statute of 

the ESCB 

The licensing and supervision of ‘microcredit institutions’ is not expressly mentioned among any of 

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

upon  the  NCBs  by  the  Statute  of  the  ESCB.  Under  Article  127(6)  of  the  Treaty,  the  Council  may 

confer  specific  tasks  upon  the  ECB  concerning  policies  relating  to  the  prudential  supervision  of 

credit institutions and other financial institutions. In this respect, the Council has conferred tasks on 

the ECB relating to the prudential supervision of credit institutions, but these tasks do not expressly 

include the authorisation and supervision of microcredit institutions. To the extent that the draft law 

purports  to  regulate  non-bank  lending  activities,  this  new  task  is  not  directly  related  to  tasks 

conferred upon the ECB and the NCBs by the Treaty and the Statute of the ESCB. 

4.4.2  Tasks which are atypical of NCB tasks 

The ECB  notes that the great majority of Member States do not have  a dedicated regime for the 

regulation of the provision of microcredit. However, there are three Member States where there is a 
dedicated  regime  for  the  regulation  of  this  activity20.  In  all  three  Member  States  the  national 

authority responsible for the supervision of credit institutions – in two of these Member States the 

NCB – has been designated as the competent national authority for the licensing and supervision 

20  

France: Article L. 511-6 (5) and Articles R. 518-57 to R. 518-62 of the Monetary and Financial Code and the Decree 
of 18 July 2012 on associations and foundations authorised to grants certain loans and adopted pursuant to Articles 
R. 518-59 and R. 518-62 of the Monetary and Financial Code; Italy: Articles 111 and 113 of Legislative decree no. 
385/1993 (the Italian banking law); Portugal: Decree-Law No. 12/2010 of 19 February 2010 on microcredit financial 
companies; Order 1315/2010, of 28 December 2010 and Order 59/2011, of 31 January 2011. 

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of microcredit institutions 21. In a fourth Member State, while there is no regulatory regime catering 

specifically for the provision of microcredit, financial institutions providing microcredit are regulated 

subject to the licensing and supervision of the national authority responsible for the supervision of 
credit institutions 22. It follows that the new tasks proposed to be conferred on the BoG in relation to 

the  licensing  and  supervision  of  microcredit  institutions  is  not  atypical  for  a  central  bank  in  those 

Member  States  which  have  chosen  to  establish  a  dedicated  regime  for  the  regulation  of  the 

provision of microcredit. 

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

The ECB understands that the licensing and supervision of microcredit institutions is a necessary 

component  of  a  scheme  which  aims  to  facilitate  the  access  of  beneficiaries  to  working  or 

investment capital, or capital for educational/social integration purposes. Despite the fact that this 

particular  financing  scheme  has  a  social  orientation,  these  tasks  need  not  necessarily  be 

discharged on behalf of and in the exclusive interest of the government.  

4.4.4  Extent to which performance of the new tasks creates conflicts of interest with existing central bank 

tasks 

The  new  tasks  of  licensing  and  supervision  of  microcredit  institutions  do  not,  in  general  terms, 

create  conflicts  of  interest  with  existing  central  banking  tasks.  That  said,  the  inherently  social 
purpose  of  microcredit,  namely,  to  help  combat  poverty  and  social  and  financial  exclusion,23 

militates in favour of a more accommodative regulatory and supervisory regime than that applicable 

to credit institutions or other non-bank lenders and could become a source of tension between, on 

the  one  hand,  the  new  tasks  that  the  draft  law  entrusts  to  the  BoG  and  on  the  other,  the  BoG’s 

existing  supervisory  tasks  in  respect  of  credit  institutions  and  other  categories  of  financial 

institutions,  where  the  emphasis  of  the  BoG’s  supervision  is  on  the  financial  soundness  of  those 

institutions and its impact on the overall stability  of the financial system. Therefore,  the possibility 

cannot be excluded that the performance of these new tasks may lead to conflicts of interest with 

the existing tasks of the BoG.  

4.4.5  Extent to which performance of the new tasks is disproportionate to the financial or organisational 

capacity of the BoG 

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.  While  the  draft  law  requires  that 

microcredit  institutions  reimburse  the  BoG  for  the  costs  incurred  in  the  performance  of  its  new 
tasks,24 it does not clearly address the financial impact of these new tasks on the BoG, specifically 

21  

22  

France:  the  Autorité  de  Contrôle  Prudentiel  et  de  Résolution  is  entrusted  with  the  granting  and  withdrawal  of  the 
authorisation  to  exercise  microcredit  activities  by  non-profit  associations  and  foundations  that  are  recognized  as 
being  of  public  utility,  and  allowed,  under  certain  conditions,  to  grant  credits  without  having  been  authorised  as  a 
credit  institution;  Italy:  the  Banca  d’Italia  maintains  the  register  of  microcredit  providers  and  supervises  their 
compliance  with  applicable  requirements;  Portugal:  Banco  de  Portugal  is  the  national  authority  entrusted  with  the 
authorisation and supervision of microcredit financial companies. 

Malta: Financial Institutions Act (Chapter 376 of the Laws of Malta). The Malta Financial Services Authority assumes 
the authorisation and supervision of these microcredit providers. 

23     See the Code, p. 22 (Introduction).  
24  

See Article 15(3) of the draft law. 

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with regard to the envisaged provision  of microcredit by credit institutions. Nor  does the draft law 

consider  the  overall  impact  of  those  tasks  on  the  BoG’s  organisational  capacity;  this  can  be 

significant, given the broad base of small lenders in Greece and the envisaged maximum amount 

of lending per lender, which is not immaterial by Greek standards. The ECB invites the consulting 

authority  to  consider  appropriate  arrangements  so  that  the  reimbursement  of  the  BoG  by  the 

microcredit institutions is commensurate with the financial impact of the new tasks on the BoG.      

4.4.6  Extent to which performance of the new tasks fits into the institutional set-up of the BoG, in the light 

of central bank independence and accountability considerations 

The tasks conferred on the BoG under the draft law do not, on their face, appear to be incompatible 

with  the  BoG’s  overall  institutional  set-up.  However,  it  should  be  noted  that  the  BoG  generally 

performs  its  existing  tasks under  a  clear  legal  framework.  Insofar  as  the  draft  law  contains  many 

legal  uncertainties,  particularly  from  the  prudential  supervisory  and  financial  stability  perspectives 

(see  paragraph  3  above),  it  is  not  guaranteed  that  the  new  tasks  will  fit  smoothly  into  the 

institutional set-up of the BoG. The absence of clarity surrounding the precise scope and nature of 

the  tasks  proposed  to  be  conferred  on  the  BoG  may  raise  accountability  issues  for  the  BoG  if  it 

should come to discharge these tasks. 

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

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

BoG’s  tasks  under  the  draft  law.  The  BoG  could,  thus,  potentially  be  held  liable  for  damages  in 

accordance with the rules of Greek law on liability applicable to the BoG.  

4.4.8   Extent to which performance of the new tasks exposes members of the decision-making bodies of 

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

Taking  into  account  the  social  purpose  of  microcredit  lending  and  the  challenges  to  which  the 

implementation  of  the  draft  law  may  give  rise,  the  possibility  cannot  be  excluded  that  the  BoG’s 

competent decision-making bodies will see their political exposure increase as a result of the BoG’s 

involvement in the licensing and supervision of microcredit providers.  

4.5  Conclusion 

While  the  new  tasks  which  the  draft  law  seeks  to  confer  on  the  BoG  regarding  the  licensing  and 

supervision of microcredit institutions are not among the tasks conferred on the ECB and the NCBs 

by  the  Treaty  and  the  Statute  of  the  ESCB,  they  are  not  atypical  of  the  tasks  of  NCBs  in  those 

Member  States  which  have  chosen  to  regulate  the  activities  of microcredit  institutions.  Moreover, 

as  they  need  not  necessarily  be  discharged  on  behalf  of  and  in  the  exclusive  interest  of  the 

government, the BoG’s new supervisory tasks in relation to microcredit institutions do not constitute 

government tasks. Nonetheless, the ECB notes that the performance of these new tasks may lead 

to conflicts of interest with the existing tasks of the BoG. Moreover, the ECB invites the consulting 

authority  to  consider  appropriate  arrangements  so  that  the  reimbursement  of  the  BoG  by 

microcredit institutions as envisaged in the draft law is commensurate with the financial impact of 

the new tasks on the BoG. Furthermore, the absence of clarity surrounding the precise scope and 

nature of the tasks proposed to be conferred on the BoG may make it challenging for the BoG to 

integrate these tasks into its existing institutional set-up.     

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5. 

Conclusions 

Τhe  ECB  advises  the  consulting  authority  to  take  into  account  the  points  raised  in  this  Opinion  when 

deciding whether to include credit institutions within the scope of application of the draft law, and whether 

to confer on the BoG the proposed new tasks with regard to microcredit providers. 

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

Done at Frankfurt am Main, 15 February 2019. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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