Letter from Frank Elderson, Member of the Executive Board of the European Central Bank (ECB), to Franz Fayot, Minister for the Economy of Luxembourg, regarding a request for an ECB opinion on a draft law amending certain laws on support in relation to COVID-19 and the law on the financial sector
Date: 2021-05-20
Institutions: European Central Bank
Subjects: financial stability

Frank Elderson 
Member of the Executive Board 

Mr Franz Fayot  

Minister for the Economy 
19-21, boulevard Royal  
L-2449 Luxembourg  
LUXEMBOURG  

ECB-PUBLIC 

[COURTESY TRANSLATION1] 

Frankfurt am Main, 20 May 2021 

Request for an ECB opinion on a draft law amending certain laws on support in relation to COVID-

19 and the law on the financial sector  

Dear Mr Fayot, 

Thank you for your letter of 12 April 2021 requesting an opinion of the European Central Bank (ECB) on a 

draft  law  amending  the  laws  on  support  in  relation  to  COVID-19  and  the  law  on  the  financial  sector 2 

(hereinafter the ‘draft law’). 

After careful consideration, the ECB has decided not to adopt an opinion in the present case as the draft 

law only touches marginally on the ECB’s fields of competence pursuant to Articles 127(4) and 282(5) of 
the Treaty on the Functioning of the European Union, in conjunction with the sixth indent of Article 2(1) of 
Council Decision 98/415/EC3 and Article 127(6) of the Treaty on the Functioning of the European Union.  

In reaching its decision not to adopt an opinion, the ECB took into particular account that, as regards  the 

amendments to the laws on support in relation to COVID-19, their main purpose is to extend the applicable 
support schemes, which expire in the first half of 2021, for an additional period of six months. By way of 
background information, the ECB refers to its Financial Stability Review from November 2020 4, where it 

noted that the importance of policy measures in containing the economic and financial stability impact of 

1  
2  

3  

4  

The official ECB letter is addressed in the official language of the concerned Member State. 

Projet de loi portant modification : 1. de la loi modifiée du 3 avril 2020 relative à la mise en place d'un régime d'aides 
en  faveur  des  entreprises  en  difficulté  financière  temporaire  et  modifiant  la  loi  modifiée  du  19  décembre  2014 
relative 1)  aux  mesures  sociales  au  bénéfice  des  artistes  professionnels  indépendants  et  des  intermittents  du 
spectacle 2) à la promotion de la création artistique ; 2. de la loi modifiée du 18 avril 2020 visant à mettre en place 
un régime de garantie en faveur de l'économie luxembourgeoise dans le cadre de la pandémie Covid-19 ; 3. de la 
loi modifiée du 24 juillet 2020 visant à stimuler les investissements des entreprises dans l'ère du Covid-19 ; 4. de la 
loi modifiée du 5 avril 1993 relative au secteur financier. 
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).  

European  Central  Bank,  Financial  Stability  Review  (November  2020),  available  on  the  ECB’s  website  at 
www.ecb.europa.eu. 

 
 
 
 
 
 
 
 
 
 
ECB-PUBLIC 

the pandemic makes managing the exit from this support equally important. Economic and financial sector 

policy measures have so far limited the materialisation of credit risk and adverse feedback loops between 

the real economy and the financial system. A continued, powerful and targeted policy response is vital to 

protect the economy until the pandemic passes. Even then, risks for households and firms facing a cliff 

edge from the withdrawal of policy support must be balanced against the risks related to prolonged support 

(e.g. possible misallocation of capital, postponed loss recognition, etc.).  

The draft law also amends Article 57 of the law of 5 April 1993 on the financial sector, in order to provide 

for an exemption from the existing prior supervisory approval requirement in the case of acquisition by a 

credit institution or other professionals of the financial sector of a qualifying holding in another entity below 

certain thresholds (EUR 40 million and 5% of the own funds of the acquiring institution). This amendment 

impacts the powers of the ECB pursuant to Article 127(6) of the Treaty on the Functioning of the European 

Union  and  pursuant  to  Council  Regulation  (EU)  No  1024/20135  –  specifically  the  powers  available  to  it 

under national law, although not mentioned explicitly in Union law, in respect of significant credit institutions 

established  in  Luxembourg.  It  also  impacts  the  powers  of  the  Commission  de  Surveillance  du  Secteur 

Financier, as the national competent authority, in respect of less significant credit institutions established 

in Luxembourg. The ECB understands, however, that Article 57 of the law of 5 April 1993 on the financial 

sector only applies to acquisitions of qualifying holdings in entities which are not credit institutions in the 

European  Economic  Area  (EEA),  and  that  it  is  therefore  not  relevant  to  the  ECB’s  powers  to  assess 

notifications  of  the  acquisition  and  disposal  of  qualifying  holdings  in  credit  institutions  under  Council 

Regulation  (EU)  No  1024/2013 6.  Moreover,  the  envisaged  thresholds  do  not  appear  to  be  defined  in  a 
manner that would pre-empt the competent authority from exercising its powers for prudential purposes.  

Based on this, the ECB has decided on this occasion not to adopt an opinion on these provisions of the 

draft law that amend the law of 5 April 1993 on the financial sector, which only touch marginally on the 
ECB’s competences relating to the prudential supervision of credit institutions.  

The ECB appreciates that you have sent the draft law to the ECB for consultation and remains confident 

that the Ministry of the Economy will continue to consult the ECB on future draft legislative provisions that 

fall within the ECB’s fields of competence under the Treaty on the Functioning of the European Union and 

Council Decision 98/415/EC. 

Yours sincerely, 

[signed] 

Cc: 

Mr Gaston Reinesch, Governor, Banque centrale du Luxembourg  

5  

6  

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). 
See Articles (4)(1)(c) and 6 of Council Regulation (EU) No 1024/2013 and Articles 85 to 87 of Regulation (EU) No 
468/2014 of the European Central Bank of 16 April 2014 establishing the framework for cooperation within the Single 
Supervisory Mechanism between the European Central Bank and national competent authorities and with national 
designated authorities (SSM Framework Regulation) (ECB/2014/17) (OJ L 141, 14.5.2014, p. 1).  

2