Opinion of the European Central Bank of 31 January 2020 on changes to the governance of De Nederlandsche Bank and the formal establishment of the Financial Stability Committee (CON/2020/6)
Date: 2020-01-31
Institutions: European Central Bank
Subjects: Netherlands, appointment of staff, board of directors, central bank, co-determination, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 31 January 2020  

on changes to the governance of De Nederlandsche Bank and the formal establishment of the 

Financial Stability Committee 

(CON/2020/6) 

Introduction and legal basis 

On 20 December 2019 the European Central Bank (ECB) received a request from the Minister for Finance 
of the Netherlands for an opinion on a draft law on the amendment of The Bank Act 19981 (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/EC2, as 

the  draft  law  relates  to  De  Nederlandsche  Bank  (DNB).  In  accordance  with  the  first  sentence  of 

Article 17.5 of the Rules of Procedure of the ECB, the Governing Council has adopted this opinion.  

1. 

Purpose of the draft law 

1.1  The draft law introduces changes to the internal procedures for the nomination and appointment  of 
the  members  of  the  Executive  Board,  Supervisory  Board3  and  Bank  Council4  of  DNB.  In  addition, 

the draft law strengthens the current legal basis for the existing Financial Stability Committee (FSC).  

1.2  Under  the  existing  provisions  of  The  Bank  Act  1998,  the  President  of  DNB  and  the  other  three  to 

five members of the Executive Board of DNB, which  is the main decision-making body responsible 

for the  management of DNB, are appointed by the  Crown for a term of seven years. The existing 

provisions  provide  that  the  Supervisory  Board,  after  consulting  the  Executive  Board,  draws  up  a 
shortlist of three recommended persons5 with respect to every such appointment of the  Executive 

Board  and  of  the  Supervisory  Board.  The  draft  law  amends  these  provisions  to  clarify  that  the 

shortlist shall comprise ‘in principle’ three persons. 

1.3  As  explained  in  the  Explanatory  Note  to  the  draft  law,  the  inclusion  of  the  phrase  ‘in  principle’  in 

certain provisions encourages a situation in which multiple individuals are considered for a position 

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2  

3  

4  

5  

Bankwet 1998. 
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). 

According to Article 13(6) of The Bank Act 1998, the Supervisory Board: (i) oversees the general course of business 
within  DNB  and  the  policy  pursued  by  the  Governing  Board  in  the  imple mentation  of  DNB’s  tasks  outside  the 
framework  of the  ESCB, (ii) advises  the  Governing  Board, and (iii) adopts  the annual accounts  with  the approval  of 
the Dutch State as DNB’s sole shareholder.  

According  to  Article  15(1),  (2)  and  (5)  of  The  Bank  Act  1998,  the  Bank  Council  is  an  internal  body  of  DNB.  The 
Governor of DNB reports to the Bank Council about general economic and financial developments and discusses the 
policy of DNB. 
Articles 12 to 12b of The Bank Act 1998. 

 
 
 
 
 
                                                 
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and can therefore contribute towards enhancing diversity in the composition of the respective body. 

The idea behind the change is that in exceptional cases it can be difficult to find a sufficient number 

of suitable candidates that are available for the position. This could be the case where the position 

is  demanding  and  requires  a  very  specific  job  profile  in  which  specialist  knowledge  must  be 

combined  with  extensive  managerial  experience.  For  this  reason,  the  draft  law  introduces  the 

phrase ‘in principle’ in order to allow a deviation from the standard, if necessary. In the event that a 

list contains fewer than the  number of candidates that ‘in principle’  is required, the bylaws of DNB 

will require that the statement of reasons accompanying the list explicitly gives the reasons for this. 

1.4  Under the existing provisions of The Bank  Act 1998 and the bylaws of DNB, the four-year term of 
the members of the Supervisory Board may be renewed twice6. Under the draft law it is clarified that 

reappointments  to  the  Supervisory  Board  may  take  place  in  accordance  with  the  bylaws  of  DNB, 

and  that  the  list  for  each  vacancy  drawn  up  by  the  Supervisory  Board  shall  include  ‘in  principle’ 

three nominees (currently this list should include exactly three  nominees),  as outlined in paragraph 

1.3  of  this  opinion.  According  to  the  Explanatory  Note  to  the  draft  law, the  bylaws  of  DNB  will  be 

amended  in  the  light  of  the  draft  law  so  as  to  comply  with  the  amended  Dutch  Corporate 

Governance Code with regard to the period  of office of  Supervisory Board members. Although the 

Code applies to listed companies, DNB voluntarily applies the Code, and, as a result, in the future a 

Supervisory Board member will serve a maximum of two terms of four years and two terms of two 

years.  

1.5  Under  the  existing  provisions  of  The  Bank  Act  1998,  nine  to  eleven  out  of  the  eleven  to  thirteen 

members  of  the  Bank  Council  of  DNB  are  appointed  by  the  Bank  Council  for  renewable  terms  of 

four years, each from a shortlist of two persons for each vacancy drawn up by the Executive Board. 

The  draft  law  clarifies  that  this  shortlist  comprises  ‘in  principle’  two  persons,  as  outlined  in 

paragraph 1.3 of this opinion.   

1.6  The draft law provides for a FSC, in which representatives of DNB, the Authority for the  Financial 

Markets,  the  Netherlands  Bureau  for  Economic  Policy  Analysis  (NBEPA)  and  the  Ministry  of 

Finance shall  hold discussions and exchange information concerning macroeconomic and financial 

developments  with  the  objective  of  identifying  risks  to  the  stability  of  the  financial  system  and 

suggesting possible approaches to solve or mitigate those risks. The FSC shall  have the power to 

make  recommendations  in  that  regard.  The  FSC  shall  publish  its  recommendations  unless 

publication  could  pose  a  risk  to  the  stability  of  the  financial  system.  The  representatives  of  the 

NBEPA and the Ministry of Finance shall not take part in the decision-making process leading to the 

establishment of recommendations.  The FSC shall  meet at least twice a year and shall be chaired 

by the President of DNB. An account of those meetings shall be issued to the Minister for Finance, 

who will in turn send copies of the minutes and the FSC’s recommendations to both Houses of the 

Dutch Parliament.  

1.7  As noted in the Explanatory Note to the draft law, the FSC was established in 2012. At present, the 
FSC  is  established  under  a  Ministerial  Decree  issued  by  the  Minister  for  Finance 7.  The  draft  law 

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7  

Article 11(4) of the bylaws of DNB.  

Decree  by  the  Minister  of  Finance  of  2  November  2012  for  establishment  of  the  Financial  Stability  Committee 
(Netherlands Government Gazette (Stcrt.) 2012, no 22730).  

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intends to provide the FSC with a legal basis in primary legislation (in The Bank Act 1998) in order 

to  do  justice  to  the  importance  of  the  FSC,  further  to  recommendations  by  the  Financial  Stability 

Board (FSB) and the International Monetary Fund (IMF). 

2. 

Observations  

2.1  The  ECB  understands  that  the  Executive  Board  of  DNB  is  responsible  for  the  performance  of  the 

DNB’s ESCB-related tasks. The ECB takes  note of the explanation in the  Explanatory  Note to the 

draft  law  that  the  increased  flexibility  as  to  the  number  of  nominees  for  the  Executive  Board  is 

motivated  by  practical  considerations.  This  does  not  constitute  a  major  change,  and  does  not 

conflict with the principle of central bank independence under Article 130 of the Treaty. 

2.2  The ECB understands that the Supervisory Board and Bank Council of DNB are expressly excluded 
from the performance of the ESCB-related tasks of DNB8. Nevertheless, and as a general remark, 

neither the Supervisory Board  nor the Bank Council may seek to influence the  Executive  Board of 

DNB  in  the  exercise  of  any  of  its  ESCB-related  tasks.  Under  Article  130  of  the  Treaty,  when 

exercising its powers and carrying out the tasks and duties conferred upon  it by the Treaty and the 

ESCB  Statute, neither a  national central bank,  nor any member of its decision-making bodies shall 

seek  or  take  instructions  from,  inter  alia,  any  government  of  a  Member  State  ‘or  from  any  other 
body’, which includes statutory bodies such as the Supervisory Board or the Bank Council of DNB9.  

2.3  Regarding  the  FSC,  the  main  purpose  of  the  draft  law  is  to  establish  its  legal  basis  in  primary 

legislation. The draft law will also make NBEPA a full member of the FSC. The ECB welcomes that 

the Netherlands will strengthen the legal basis of the FSC, and thereby strengthen the FSC’s role in 

identifying risks to the stability of the financial system and  making recommendations in that regard. 

This is also in line with the recommendations of the FSB and the IMF. 

2.4  The draft law does not materially alter the FSC’s mandate or tasks. It does not confer any new tasks 

on DNB. Therefore, the issue of assessing whether the conferral of new tasks on a national central 

bank complies with the prohibition of monetary financing does not arise in the case at hand.  

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

Done at Frankfurt am Main, 31 January 2020. 

[signed] 

The President of the ECB 

Christine LAGARDE 

8  

9  

This  is  evidenced  by  limiting  the  Supervisory  Board’s  role  to  Article  4  of  The  Bank  Act  1998,  whereas  the  ESCB-
related tasks of DNB are laid down in Articles 2, 3 and 7 of  The Bank Act 1998. 
See  paragraph  2.3  of  Opinion  CON/2019/12.  All  ECB  opinions  are  published  on  the  ECB’s  website  at 
www.ecb.europa.eu. 

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