Opinion of the European Central Bank of 11 December 2020 on Greece’s adherence to the New Arrangements to Borrow with the International Monetary Fund (CON/2020/32)
Date: 2020-12-11
Institutions: European Central Bank
Subjects: legal basis

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 11 December 2020  

on Greece’s adherence to the New Arrangements to Borrow with the International Monetary Fund 

(CON/2020/32) 

Introduction and legal basis 

On 23 November 2020 the European Central Bank (ECB) received a request from the  Greek Ministry of 

Finance  for  an  opinion  on  a  draft  law  on  New  Arrangements  to  Borrow  (NAB)  with  the  International 
Monetary Fund (IMF) (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 indent of Article 2(1) of Council Decision 98/415/EC 2, as 

the  draft  law  relates  to  the  Bank  of  Greece.  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 ratifies Decision No. 16645 – (20/5) of the Executive Board of the IMF on the NAB of 

16 January 2020. As clarified in the explanatory memorandum to the draft law, the NAB was first 

introduced by Decision No. 11428-(97/6) of the Executive Board of the IMF of 27 January 1997 (the 

‘NAB  Decision’),  in  order  to  enable  the  IMF  to  more  effectively  fulfill  its  role  in  the  international 

monetary  system.  Decision  No.  16645  amends  the  NAB  Decision  and  changes  the  credit 

arrangements of NAB participants. The amendments to the NAB Decision and the changes in the 

credit  arrangements  of  NAB  participants  will  become  effective  when  the  following  conditions  are 

met,  but  not  earlier  than  1  January  2021:  (a)  participants  representing  85%  of  total  credit 

arrangements  have  agreed  to  the  amendments  to  the  NAB  Decision;  and  (b)  participants 

representing 85% of total credit arrangements have agreed to the changes in credit arrangements, 

including  each  participant  whose  credit  arrangement  is  being  changed.  If  a  participant  has  not 

agreed to the proposed changes in credit arrangements by 31 December 2020, or at any later date 

as determined by the Executive Board of the IMF, the proposed change to the credit arrangement 

of  such  participant  will  be  deemed  to  have  been  withdrawn,  and  the  credit  arrangement  of  such 

participant  will  remain  unchanged.  Greece  did  not  adhere  to  the  NAB  when  they  were  first 

introduced by the NAB Decision, but it now intends to take the necessary steps in order to adhere 

to that Decision, as amended. The draft law further stipulates that the Greek Minister for Finance 

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Κύρωση  της  υπ’  αριθμ.  16645  -  (20/5)  απόφασης  της  16  Ιανουαρίου  2020  του  Εκτελεστικού  Συμβουλίου  του 
Διεθνούς Νομισματικού Ταμείου σχετικά με τις Νέες Συμφωνίες Δανεισμού (New Arrangements to Borrow). 
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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will declare to the IMF the adherence of Greece to the NAB Decision as amended (as required by 

paragraph 3(c) of the NAB Decision) and will sign any relevant agreement.  

1.2  The draft law authorises the Bank of Greece to provide loans to the Greek State for the provision of 

Greece’s resources to the IMF in accordance with the credit arrangement of Greece and the terms 

of  the  NAB  Decision  as  applicable  at  any  given  moment.  The  draft  law  further  authorises  the 

Governor  of  the  Bank  of  Greece  and  the  Greek  Minister  for  Finance,  as  a  representative  of  the 

Greek State, to sign the relevant loan agreement. The draft law stipulates that the loan is paid by 

the  Bank  of  Greece  directly  to  the  IMF,  in  accordance  with  the  instructions  of  the  Minister  for 

Finance, and that this loan will be repaid to the Bank of Greece by the IMF, at the time and in the 

form and currency set out in the NAB Decision and in accordance with the other terms of the NAB 

Decision as applicable at any given moment.  

2. 

Monetary financing prohibition 

2.1  Article 123(1) of the Treaty prohibits the national central banks from granting overdraft facilities or 

any other type of credit facility to public authorities and bodies of the Member States. The monetary 

financing prohibition is however subject to certain exemptions laid down in Council Regulation (EC) 
No 3603/933. In particular, Article 7 of Regulation (EC) No 3603/93 provides that the financing by 

national central banks of obligations falling upon the public sector vis-à-vis the IMF is not regarded 

as a credit facility within the meaning of Article 123(1) of the Treaty. Recital 14 of Regulation (EC) 

No 3603/93 clarifies the rationale behind this exemption, stating that it is appropriate to authorise 

the  financing  by  the  central  banks  of  obligations  falling  upon  the  public  sector  vis-à-vis  the  IMF 

because  such  financing  ‘results  in  foreign  claims  which  have  all  the  characteristics  of  reserve 

assets’. Therefore, the exemption in Article 7 of Regulation (EC) No 3603/93 must be interpreted in 
line with this rationale4. 

2.2  Reserve assets are defined as those external assets that are readily available to and controlled by 

monetary  authorities  for  meeting  balance  of  payments  financing  needs,  for  interventions  in 

exchange  markets  to  affect  the  currency  exchange  rate,  and  for  other  related  purposes,  such  as 

maintaining  confidence  in  the  currency  and  the  economy,  and  serving  as  a  basis  for  foreign 
borrowing5. Under this definition, reserve assets must be foreign currency assets and, except in the 
case of gold bullion, must be claims on non-residents6.  

2.3 

In the case under consideration, the ECB understands that the Bank of Greece will provide a loan 

to  the  Greek  State  in  order  for  the  latter  to  contribute  to  the  IMF  the  resources  corresponding  to 

Greece’s  participation  in  the  NAB.  For  this  purpose,  the  Bank  of  Greece  will  credit  the  IMF’s 

account with the Bank of Greece on behalf of the Greek State. The ECB understands that Greece’s 

participation in the NAB will result in an SDR-denominated claim of the Bank of Greece against the 

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5  

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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 e.g. Opinions CON/2020/27 and CON/2017/4. All ECB Opinions are available on EUR-Lex.  
See  International  Monetary  Fund,  Balance  of  Payments  and  International  Investment  Position  Manual  (Sixth  ed., 
2009), paragraph 6.64. 

See paragraph 2.2 of Opinion CON/2020/27 and paragraph 3.2 of Opinion CON/2017/4. 

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IMF, using the funds stemming from the loan to the Greek State.  

2.4  The  ECB  has  considered  past  cases  where  national  central  banks  (NCBs)  directly  financed  the 

NAB-related  obligations  of  their  respective  Member  States  vis-à-vis  the  IMF  as  falling  within  the 

exemption  in  Article  7  of  Regulation  (EC)  No 3603/93  given  that  the  financing  arrangements 
resulted  in  foreign  claims  having  all  the  characteristics  of  foreign  reserve  assets7.  However, 

technically, these financing arrangements did not involve any formal loan by the NCB directly to the 

Member  State  which  could  be  seen  as  tantamount  to  a  credit  facility  within  the  meaning  of 
Article 123(1) of the Treaty8.  

2.5 

In this context, the ECB notes that Member States have put in place a variety of arrangements to 

ensure the performance of their respective rights and obligations arising from their membership in 

the IMF. NCBs finance their respective Member States’ obligations and commitments vis-à-vis the 
IMF under different constructions which are governed by their respective national laws9. From this 

perspective, the ECB considers that the provision of loans by the Bank of Greece for the purpose 

of  financing  Greece’s  provision  of  financial  resources  to  the  IMF  in  accordance  with  the  credit 

arrangement  of  Greece  and  the  terms  of  the  NAB  Decision,  as  amended,  as  set  out  in  the  draft 

law, would fall within the exemption under Article 7 of Regulation (EC) No 3603/93, because using 

these funds would result in SDR-denominated claims against the IMF that have the characteristics 

of reserve assets. Therefore, these loans are not regarded as a credit facility within the meaning of 

Article 123 of the Treaty.    

3. 

Miscelanneous issue 

The  draft  law  does  not  stipulate  whether  the  loan  to  be  provided  as  set  out  in  the  draft  law  will  bear 

interest  or not. The ECB invites the consulting  authority to consider related remuneration aspects  when 

promulgating  the  ministerial  decision  authorised  to  be  issued  under  the  draft  law  in  order  to  regulate 

specific matters for the implementation of the NAB Decision as amended. 

This opinion will be published on EUR-Lex.  

Done at Frankfurt am Main, 11 December 2020. 

[signed] 

The President of the ECB 

Christine LAGARDE 

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9  

For  example,  see  Opinions  CON/2020/27,  CON/2017/4,  CON/2011/10,  CON/2010/74,  CON/2010/40,  and 
CON/1997/16.  
Article 1(1)(b)(iii) of Regulation (EC) No 3603/93. 

See paragraph 1.5 of Opinion CON/2016/22. 

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