Opinion of the European Central Bank of 26 October 2020 on the provision of short-term liquidity from Banca Naţională a României to the Bank Deposit Guarantee Fund (CON/2020/24)
Date: 2020-10-26
Institutions: European Central Bank
Subjects: financial stability, legal basis

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 26 October 2020  

on the provision of short-term liquidity from Banca Naţională a României to the Bank Deposit 

Guarantee Fund 

(CON/2020/24) 

Introduction and legal basis 

On  9  September  2020  the  European  Central  Bank  (ECB)  received  a  request  from  Banca  Naţională  a 

României (BNR) for an opinion on a draft law amending the Law on deposit guarantee schemes and the 
Bank Deposit Guarantee Fund (hereinafter the ‘draft law’).1 

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/EC,2 as the draft law relates to BNR 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  draft  law  mainly  aims  at  providing  the  Fondul  de  Garantare  a  Depozitelor  Bancare  (Bank 

Deposit  Guarantee  Fund,  hereinafter  the  ‘Fund’),  as  the  statutory  deposit  guarantee  scheme 

officially  recognised  in  Romania,  with  the  necessary  liquidity  for  its  interventions  in  emergency 

situations.  Accordingly,  the  draft  law  introduces  the  possibility  for  the  Fund  to  access  short-term 

repurchase (repo) facilities from the BNR. 

1.2  The draft law stipulates that, for the purpose of ensuring financial stability, BNR may, in emergency 

situations, in order to cover the liquidity needed for the payment of compensations, grant financing 

to  the  Fund  through  repo  transactions  secured  by  financial  instruments  accepted  as  eligible 

collateral for monetary policy operations conducted by  BNR. Such financing  may  be granted only 

exceptionally and on a case-by-case basis, with a maturity that cannot exceed 90 days. 

1  

2  

Legea  nr.  311/2015  privind  schemele  de  garantare  a  depozitelor  şi  Fondul  de  garantare  a  depozitelor  bancare 
(Monitorul  Oficial,  Partea  I  nr.  918  din  11.12.2015).  According  to  the  explanatory  memorandum  attached  to  the 
consultation request, the amending legislative proposal was submitted by BNR to the Ministry of Finance in order to 
initiate  the  legislative  process.  BNR  is  authorised  under  Article  129  of  Law  No  311/2015  to  issue  regulations 
necessary for the application of the legislative provisions regarding the activities of the Fund.  
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  Fund  has  the  status  of  a  legal  person  of  public  interest,  the  main  objective  of  which  is  to 
guarantee deposits in accordance with the relevant statutory provisions. 3 It is managed by a seven-

member Supervisory Board comprising five BNR representatives, of whom one shall be appointed 

Chairperson, and two representatives of the Ministry of Finance, as well as by an Executive Board 

consisting of a minimum three members mandated to ensure the operational management of the 
Fund.4  The  Supervisory  Board  of  the  Fund  supervises  the  activity  of  the  Executive  Board’s 
members and the way in which they fulfil the objectives established in their mandates. 5 

1.4  As  a  deposit  guarantee  scheme,  the  Fund  has  the  following  financial  resources:  (a)  annual  and 

extraordinary  contributions  of  the  participating  credit  institutions;  (b)  loans  from  credit  institutions, 

financial companies, other deposit guarantee schemes and from other institutions; (c) exceptional 
loans  from  the  Government,  as  specified  further;  and  (d)  other  resources.6,7  In  exceptional 

situations,  when  the  available  financial  resources  of  the  Fund  are  insufficient  to  cover 

compensation  payouts,  the  Government,  through  the  Ministry  of  Finance,  shall  make  available  to 

the  Fund  within  five  working  days  the  necessary  amounts  in  the  form  of  a  loan,  under  the  terms 
and  conditions  established  in  an  agreement.8  Amongst  others,  the  Fund’s  Supervisory  Board 

analyses and proposes to BNR for approval (i) the budget for the activities of the statutory deposit 

guarantee  scheme;  (ii)  the  annual  target  level  of  the  Fund’s  financial  resources  as  a  deposit 

guarantee  scheme;  (iii)  the  level  of  the  annual  contribution  of  each  participating  credit  institution; 

(iv) the imposition of extraordinary contributions and their level; and (v) requesting the above loans 
to ensure adequate financial means of the deposit guarantee scheme.9  

2. 

Observations regarding the prohibition of monetary financing 

2.1 

In line with previous opinions, the ECB reiterates its view that national legislation which provides for 

the financing by a national central bank (NCB) of a deposit guarantee scheme would be compatible 

with the monetary financing prohibition laid down in Article 123(1) of the Treaty only if it were short 

term, addressed urgent situations, systemic stability aspects were at stake, and decisions were at 
the NCB’s discretion.10 The ECB welcomes the fact that the wording of the draft law reflects these 

criteria  when  providing  the  possibility  for  the  Fund  to  access  short-term  financing  from  BNR  in 

emergency situations. In addition, the ECB expects that the provision of short-term financing to the 

Fund  will  be  conducted 

in  a  manner  compatible  with  BNR’s 

institutional  and 

financial 

independence, as a safeguard for the proper performance of the BNR’s tasks under the Treaty and 
the Statute of the European System of Central Banks and of the European Central Bank.11 

3  

4  
5  
6  

7  
8  
9  
10  
11  

See Articles 91 and 92 of Law No 311/2015. The Fund shall also operate as the administrator of the bank resolution 
fund in compliance with the legislation on the recovery and resolution of credit institutions.  
See Articles 94 and 100 of Law No 311/2015.  

See Article 98(1) of Law No 311/2015.  
Such  as  donations,  sponsorships,  financial  assistance,  receipts  from  the  recovery  of  receivables  from  deposit 
guarantee schemes, and income from the investment of available financial resources.  
See Article 114 of Law No 311/2015.  

See Article 119 of Law No 311/2015.  
See Article 98(2) of Law No 311/2015.  
See the ECB’s Convergence Report 2020, p. 35, and the ECB Opinions cited therein. 

See paragraph 3.1 of ECB Opinion CON/2015/40 All ECB Opinions are published on EUR-Lex. 

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2.2  As the Treaty prohibits the NCBs from granting overdraft facilities or any other type of credit facility 

to the public sector, this opinion further considers whether the Fund is a ‘body governed by public 

law’  within the meaning  of Article 123(1) of the Treaty. To this end,  it first clarifies the concept  of 

‘body governed by public law’ and then analyses whether the Fund is covered by this concept. 

2.3  Notwithstanding the absence of a specific definition of the concept of ‘body governed by public law’ 
in Council  Regulation (EC) No  3603/93,12 other areas  of Union law13 and the related case-law  of 
the Court of Justice of the European Union14 provide guidance on its interpretation for the purposes 
of the monetary financing  prohibition.15 Accordingly,  a  body is  ‘governed by public law’  within the 

meaning  of  Article  123(1)  of  the  Treaty  if  it  has  all  of  the  following  characteristics:  (a) it  is 

established  for  the  specific  purpose  of  meeting  needs  in  the  general  interest,  not  having  an 

industrial or commercial character; (b) it has legal personality; and (c) it is closely dependent on the 

public sector entities referred to in Article 123(1) of the Treaty. A close dependence on those public 

sector  entities  is  presumed  when  a  body  is  financed,  for  the  most  part,  by  them;  or  is  subject  to 

management supervision by them; or has an administrative, managerial or supervisory board, more 

than half of whose members are appointed by them. 

2.4  As it is apparent from paragraph 1.3 above, the first two conditions are met in respect of the Fund 

since  (a)  it  has  been  established  for  the  purpose  of  meeting  needs  in  the  general  interest  –  the 

Romanian  statutory  deposit  guarantee  scheme;  and  (b)  it  has  legal  personality.  To  guarantee 

deposits  as  a  statutory  deposit  guarantee  scheme  is  in  the  general  interest  insofar  as  the 

establishment and functioning  of deposit  guarantee schemes increase the stability  of the banking 
system and the protection of depositors.16  

2.5  As  further  follows  from  paragraphs  1.3  and  1.4  above,  the  Fund  appears  closely  dependent  on 

BNR  since  the  majority  of  the  members  of  the  Supervisory  Board  of  the  Fund,  including  the 

Chairperson,  are  BNR  representatives.  In  addition,  the  management  of  the  Fund  is  subject  to 

BNR’s  supervision  and,  while  BNR  does  not  finance  the  Fund  for  the  most  part,  it  approves  the 

budget  of  the  Fund  and  its  financial  resources  as  a  deposit  guarantee  scheme.  However,  the 

Fund’s close dependence on BNR does not meet the third condition regarding a close dependence 

12  

13  

14  

15  

16  

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). 
See,  for  instance,  Article  2(2)  of  Directive  2003/98/EC  of  the  European  Parliament  and  of  the  Council  of 
17 November  2003  on  the  re-use  of  public  sector  information  (OJ  L  345,  31.12.2003,  p.  90)  and  Article  2(1)(4)  of 
Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and 
repealing Directive 2004/18/EC (OJ L 94, 28.3.2014, p. 65).  
See, for instance, Judgment of the Court of Justice of 5 October 2017, ‘LitSpecMet’ UAB, C-567/15, EU:C:2017:736, 
paragraphs  28  et  seq.;  Judgment  of  the  Court  of  Justice of  12  September  2013,  IVD  GmbH  &  Co.  KG,  C-526/11, 
EU:C:2013:543,  paragraphs  19  et  seq.;  Judgment  of  the  Court  of  Justice of  11  June  2009,  Hans  &  Christophorus 
Oymanns GbR, Orthopädie Schuhtechnik, C-300/07, EU:C:2009:358, paragraphs 48 et seq.; and the case-law cited 
therein.  
Similarly, the concept of ‘public undertaking’ has been defined for the purposes of the monetary financing prohibition 
by reference to the definition provided for by Article 2 of Commission Directive 80/723/EEC of 25 June 1980 on the 
transparency  of  financial  relations  between  Member  States  and  public  undertakings  (OJ  L  195,  29.7.1980,  p.  35), 
now  replaced  by  Article  2(c)  of  Commission  Directive  2006/111/EC  of  16  November  2006  on  the  transparency  of 
financial  relations  between  Member  States  and  public  undertakings  as  well  as  on  financial  transparency  within 
certain  undertakings  (OJ  L  318,  17.11.2006,  p.  17).  See,  in  this  regard,  Article  8(1)  of  Council  Regulation  (EC) 
No 3603/93 and Recital 15 thereof.  
See  Recital  3  to  Directive  2014/49/EU  of  the  European  Parliament  and  of  the  Council  of  16  April  2014  on  deposit 
guarantee schemes (OJ L 173, 12.6.2014, p. 149). 

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on public sector entities because the NCBs do not form part of the public sector for the purposes of 
the monetary financing prohibition. 17  

2.6 

In light of the foregoing, the ECB is of the view that the Fund does not qualify as a ‘body governed 

by  public  law’  within  the  meaning  of  Article  123(1)  of  the  Treaty  and,  therefore,  BNR  is  not 

generally  precluded  from  providing  short-term  liquidity  to  the  Fund.  Against  this  background,  the 

possibility  for  the  Fund  to  access  short-term  repo  facilities  from  the  BNR  under  the  conditions 

specified under paragraph 2.1 above is in line with the monetary financing prohibition. 

This opinion will be published on EUR-Lex.  

Done at Frankfurt am Main, 26 October 2020. 

[signed] 

The President of the ECB 

Christine LAGARDE 

17  

See Article 8(2) of Council Regulation (EC) No 3603/93. 

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