Opinion of the European Central Bank of 26 November 2021 on the modification of Swiss franc loan agreements (CON/2021/36)
Date: 2021-11-26
Institutions: European Central Bank
Subjects: legal basis

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 26 November 2021  

on the modification of Swiss franc loan agreements 

(CON/2021/36) 

Introduction and legal basis 

On 15 April 2021 the European Central Bank (ECB) received a request from the National Assembly of 

the  Republic  of  Slovenia  for  an  opinion  on  a  draft  law  on  relations  between  lenders  and  borrowers 

concerning credit agreements in Swiss francs (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  and  sixth  indents  of  Article 2(1)  of  Council  Decision 

98/415/EC1, as the draft law relates to Banka Slovenije, rules applicable to financial institutions insofar 

as  they  materially  influence  the  stability  of  financial  institutions  and  markets,  and  the  ECB’s  tasks 

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  purpose  of  the  draft  law  is  to  restructure  consumer  loans  denominated  in  Swiss  francs 

(hereinafter  ‘CHF’)  or  containing  a  currency  clause  in  CHF  that  were  concluded  between 

28 June 2004 and 31 December 2010 (hereinafter ‘Swiss franc loans’).  

1.2 

According to the explanatory memorandum accompanying the  draft law,  the draft  law aims  to 

place borrowers of Swiss franc loans in a position to limit their exchange rate risk and to enable 

them to repay their loans under conditions that, according to the explanatory memorandum, they 

could reasonably expect when acting in good faith when concluding loan agreements 2. The draft 

law further aims to protect consumers, prevent unfair business practices by credit institutions and 

prevent a debt crisis 3. 

1.3 

To achieve these aims, the draft law requires lenders to introduce an exchange-rate cap clause 

in  relation  to  all  agreements  for  Swiss  franc  loans  concluded  between  28  June  2004  and 

31 December 2010.  Such  an  exchange  rate  cap  will  be  activated  when  the  change  in  the 

exchange rate causes: (1)  the  actual credit  balance to differ by more  than 5% from the credit 

1  

2  
3 

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). 
Explanatory memorandum no. 413-01-1/2021/4 of 14 April 2021 (hereinafter the ‘explanatory memorandum’), p. 8. 
Explanatory memorandum, p. 8. 

 
 
 
 
 
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balance calculated based on the exchange rate applicable at the date of drawdown; or (2) the 

actual instalment to differ by more than 5% from the instalment calculated based on the exchange 

rate applicable at the date of drawdown. When the exchange rate cap is activated, the instalments 

and other payments based on the loan agreement are calculated taking into account the currency 

exchange rate at which the exchange rate cap is activated. 

1.4 

The draft law requires lenders – defined as credit institutions that concluded Swiss franc loans 

with borrowers during the period 28 June 2004 to 31 December 2010 – to prepare the following 

documentation  within  60  days  after  the  draft  law  takes  effect:  (1)  a  draft  agreement  on  the 

settlement of mutual claims in the form of an annex to a valid loan agreement or in the form of a 

separate agreement if the loan agreement has already been terminated or has expired; (2) a new 

repayment plan that reflects the exchange rate cap; and (3) a recalculation of the remaining debt 

taking account of the exchange rate cap. In the preparation of the new repayment plan and the 

recalculation of the remaining debt, the cumulative amount of instalments paid in excess of the 

amount  of  the  instalments  as  calculated  under  the  exchange  rate  cap  must  be  used  for  the 

repayment of the remaining unpaid instalments. All the documentation must be prepared without 

any costs for the borrower and submitted to the borrower within 75 days. If the calculations based 

on the exchange rate cap show that all the obligations under a loan agreement have already been 

discharged in full, the lender must return any overpayment to the borrower within 30 days. In case 

of  overpayment  where  any  part  of  the  obligations  under  a  loan  agreement  were  paid  by  a 

guarantor, the guarantor must be reimbursed before the borrower. If, however, the obligations 

under the loan agreement have not yet been discharged in full, the relationship continues under 

the amended conditions and pursuant to the new repayment plan. 

1.5 

The draft law also regulates a number of specific situations that may occur after the conclusion 

of agreements for Swiss franc loans. In particular, if the Swiss franc loan agreement has been 

terminated by the lender, the following applies: (1) the lender must prepare a new repayment plan 

and an agreement on the settlement of mutual claims for the period when the loan agreement 

was  valid  and  effective;  (2)  if  the  amounts  already  paid  are  insufficient  to  discharge  all  the 

obligations under the loan agreement, the parties may agree that the outstanding debt is to be 

repaid under the terms of the credit agreement subject to the exchange rate cap; and (3) if the 

amounts already paid exceed the total amount payable, the excess amount must be repaid to the 

borrower. 

1.6 

If  the  receivables  from  Swiss  franc  loans  have  been  assigned  to  a  third  party,  the  following 

applies:  (1)  the  original  lender  must  prepare  a  new  repayment  plan  for  the  period  until  the 

assignment and an agreement on the settlement of mutual claims; (2) If the borrower still has any 

outstanding debt towards the transferee, the original  creditor and the transferee may agree to 

reduce  the  amount  of  the  borrower’s  outstanding  debt  for  the  amount  of  overpayments.  The 

original lender is obliged to inform the borrower and provide him with evidence of debt reduction; 

(3) If the payments until the transfer exceed the total amount due under the loan agreement taking 

into account the currency cap, the lender must return overpayments to the borrower within 30 

days of receipt of the signed agreement on settlement of mutual claims. In the same deadline, 

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the lender must also return to the borrower the countersigned agreement on settlement of mutual 

claims.  

1.7 

The  draft  law  provides  that  the  general  legal  protection  available  to  any  of  the  parties  is  not 

compromised by the provisions of the draft law. However, the draft law does not entitle the lender 

to  avoid  an  amendment  to  loan  agreements  by  proving  that  the  borrowers  were  appropriately 

informed of the risks. 

1.8 

The draft law provides that Banka Slovenije is responsible for (1) overseeing the implementation 

of  the  law  and  (2)  conducting  misdemeanour  procedures.  If  breaches  are  identified,  Banka 

Slovenije  can  impose  monetary  penalties  or  even  initiate  the  procedure  for  withdrawal  of  the 

banking licence. The draft law specifies that if a lender fails to eliminate in a timely manner the 

identified irregularities in more than 10 cases, Banka Slovenije must initiate the process for the 

withdrawal of the lender’s banking licence. 

2. 

Withdrawal of the banking licence 

2.1 

The Slovenian Law on banking specifies that the authorisation to provide banking services may 

be withdrawn,  among other reasons, if  a credit institution  does not  act in  accordance with the 

order  and  does  not  eliminate  the  violations  or  does  not  implement  the  measures  required  by 

Banka Slovenije and if identified violations cannot be rectified by implementing other supervisory 

measures 4. Under the draft law, however, Banka Slovenije is obliged to initiate the process for 

the withdrawal of the lender’s banking licence if a lender fails to eliminate in a timely manner the 

identified  irregularities  in  more  than  10  cases.  Further,  the  draft  law  does  not  provide  for  a 

requirement that the identified irregularities cannot by rectified by implementing other supervisory 

measures.  The  explanatory  memorandum  does  not  identify  reasons  justifying  the  stricter 

approach taken under the draft law compared to the Law on banking. In those circumstances, the 

ECB invites the consulting authority to ensure that the measures provided for in the draft law are 

proportionate and suitable for their purpose5.  

2.2 

Further, in view of the primacy of Union legislation, the ECB also notes that when Banka Slovenije 

considers that it is necessary to initiate the process for withdrawal of a banking licence, it must 

have full regard to Articles 4(1)(a) and 14(5) of Council Regulation (EU) No 1024/20136, which 

assign to the ECB the exclusive competence, for prudential supervisory purposes, to withdraw 

the authorisation of both significant and less significant credit institutions. Under Regulation (EU) 

No 468/2014 of the European Central Bank (ECB/2014/17) 7, if Banka Slovenije, as the relevant 

national  competent  authority  in  the  Single  Supervisory  Mechanism,  considers  that  a  credit 

institution’s  authorisation  should  be  withdrawn  in  whole  or  in  part  in  accordance  with  relevant 

4  

5  
6  

7   

Article 293 of the Law on banking (Official Gazette of the Republic of Slovenia no. 92/21 as amended). 

See paragraph 3.1 of Opinion CON/2016/40. 
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). 
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). 

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Union or national law, it must submit to the ECB a draft decision proposing the withdrawal of the 

authorisation.  In  that  case,  the  ECB  will  take  a  decision  on  the  proposed  withdrawal  of 

authorisation, taking into account the justification for withdrawal put forward by Banka Slovenije 

and  the  safeguards  under  Union  law,  including  the  principle  of  proportionality 8.  Against  this 

background, Banka Slovenije should be in a position to consider in its draft decision submitted to 

the  ECB  that  the  withdrawal  of  an  authorisation  is  appropriate  for  attaining  the  legitimate 

objectives pursued by the legislation and does not exceed the limits of what is necessary in order 

to achieve those objectives, also considering any reasonable prospect for alternative measures 

to remediate the breaches committed. 

3. 

Restructuring of Swiss franc loans 

3.1 

In 2018 and 2019 the ECB issued two opinions on earlier draft Slovenian laws concerning Swiss 

franc loans, which were, however, not enacted into law 9. 

3.2 

Prior to the global financial crisis, borrowing in foreign currencies by households and non-financial 

corporations  was  popular  in  several  Member  States 10.  As  previously  noted  by  the  ECB11,  the 

lower  interest  rates  applicable  to  foreign  currency  loans  compared  to  loans  in  the  domestic 

currency  increased  the  demand  for  such  loans.  According  to  the  explanatory  memorandum 

accompanying the draft law, most of the Swiss franc loans in Slovenia are long-term mortgage 

loans. 

3.3 

According to the draft law, the restructuring of Swiss franc loans whether still outstanding, already 

terminated or sold will be compulsory for credit institutions. The draft law does not provide for any 

possibility for credit institutions to avoid or challenge the restructuring, even if they can prove that 

the borrower took the Swiss franc loan on the basis of informed consent. 

3.4 

Legal aspects concerning retroactivity 

3.4.1  As previously noted by the ECB 12, introducing measures with retroactive effect undermines legal 

certainty and is not in line with the principle of legitimate expectations and may also interfere with 

acquired rights. 

3.4.2  The existing provisions of the Slovenian Law on consumer credit13, which applies from 2 March 

2017, enable consumers holding mortgage loans denominated in a foreign currency or containing 

a  foreign  currency  clause  to  request  conversion  into  EUR  if  the  change  in  the  exchange  rate 

exceeds 10%. In such a case, the banks are obliged to convert such loans at the exchange rate 

applicable  at  the  date  the  consumer  makes  the  request.  According  to  the  explanatory 

8  

9  
10 

11 
12  
13  

See Article 52(1) of the Charter of Fundamental Rights of the European Union, Article 5 of the Treaty on European 
Union,  and  judgment  of  the  General  Court  of  6  October  2021,  Ukrselhosprom,  T-351/18  and  T-584/18, 
ECLI:EU:T:2021:669, paragraphs 307 to 345. 

See Opinion CON/2018/21 and Opinion CON/2019/27. All ECB opinions are published on EUR-Lex. 
For  further  information  on  lending  in  foreign  currencies  in  the  Union  see  the  Annex  to  Recommendation 
ESRB/2011/1 of the European Systemic Risk Board of 21 September 2011 on lending in foreign currencies (OJ C 
342, 22.11.2011, p. 1). 

See, for example, paragraph 2.1 of Opinion CON/2018/21 and paragraph 2.2. of Opinion CON/2019/27.  
See, for example, paragraph 2.2 of Opinion CON/2018/21 and paragraph 2.3 of Opinion CON/2019/27. 
Article 52 of the Law on consumer credit (Official Gazette of the Republic of Slovenia no. 77/16 as amended). 

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memorandum,  the  draft  law  provides  for  a  similar  mechanism 14  which  is  to  be  applied 

retroactively. However, the draft law introduces a much lower threshold for restructuring, requiring 

a change in the exchange rate in excess of 5%. 

3.4.3  Article  23(1)  of  Directive  2014/17/EU  of  the  European  Parliament  and  of  the  Council15,  which 

applies  to  credit  agreements  that  enter  into  existence  from  21  March  201616,  specifies  that 

Member  States  must  ensure  that  an  appropriate  regulatory  framework  is  in  place  for  credit 

agreements in respect of foreign currency loans to ensure, at a minimum, that (a) the consumer 

has a right to convert the credit agreement into an alternative currency under specified conditions, 

or (b) there are other arrangements in place to limit the exchange rate risk to which the consumer 

is  exposed  under  the  credit  agreement.  Article  23(5)  of  Directive  2014/17/EU  allows  Member 

States to further regulate foreign currency loans provided that such regulation is not applied with 

retroactive effect. The retroactive effect of the draft law is contrary to the general aim of Article 

23(5) of Directive 2014/17/EU 17, reflecting one of the general principles of Union law, namely the 

principle of legal certainty 18 which supports the limitation of retroactive laws 19. 

3.4.4 

It is for the Slovenian authorities to assess whether the retroactive character of the draft law also 

complies with Slovenian legal and constitutional principles 20. 

3.5 

Eligibility criteria 

The draft law does not prescribe specific criteria for borrowers to be eligible to participate in the 

restructuring other than specifying that the Swiss franc loan should have been approved between 

28 June 2004 and 31 December 2010. This raises some concerns with regard to the purpose of 

the draft law. In particular, as the ECB has previously noted21, the application of certain targeted 

eligibility  criteria,  such  as,  for  example,  linking  the  right  to  restructure  to  the  borrower’s  actual 

income position or the loan-to-value (LTV) ratio, may be appropriate. 

3.6 

Effects on the banking sector 

3.6.1  As  previously  noted  by  the  ECB 22,  the  implementation  of  the  draft  law  is  expected  to  entail 

financial costs for the Slovenian banking sector. Credit institutions may be affected to different 

degrees depending on the extent to which they concluded Swiss franc loans between 28 June 

2004  and  31 December  2010.  This,  in  turn,  is  expected  to  have  a  negative  impact  on  the 

profitability, capitalisation and future lending capacity of the banking sector as a whole 23. 

14  
15  

16  
17  
18 
19 
20  
21   
22   
23  

Explanatory memorandum, p. 13.  
Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for 
consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and 
Regulation (EU) No 1093/2010 (OJ L 60, 28.2.2014, p. 34). 
See Article 43(1) of Directive 2014/17/EU. 

See the paragraphs referred to in footnote 12. 
See, for example, judgment of the Court of Justice of 10 March 2009, Heinrich, C-345/06, ECLI:EU:C:2009:140. 

See, for example, judgment of the Court of Justice of 16 May 1979, Tomadini, 84/78, ECLI:EU:C:1979:129. 
See paragraph 2.2.3 of Opinion CON/2018/21 and paragraph 2.3.3 of Opinion CON/2019/27. 

See, for example, paragraph 3.3 of Opinion CON/2015/32. 
See paragraph 3.2.1 of Opinion CON/2019/27. 
See paragraph 3.2.1 of Opinion CON/2018/21 and paragraph 3.2.1 of Opinion CON/2019/27. 

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3.6.2  The  exact  impact  on  the  banking  sector  is  unknown  since  the  draft  law  does  not  include  any 

impact assessment. Further, even if such assessment existed, it would be difficult to predict the 

possible future impact since this is dependent on the CHF exchange rate. In addition, the timing 

and  scale  of  loan  restructuring  envisaged  under  the  draft  law  could  introduce  longer-term 

uncertainty into credit institutions’ business planning. 

3.6.3  As previously noted by the ECB 24, the restructuring will lead to a one-off increase in operational 

costs for affected credit institutions in Slovenia, in particular due to the restructuring of existing 

hedges, refinancing measures, and the costs associated with the obligation to recalculate Swiss 

franc loans and notify each borrower individually thereof25. 

3.6.4  The ECB already emphasised26 its additional concern related to the placing of the main burden 

of the restructuring of Swiss franc loans on the originator credit institutions, envisaged under the 

draft law, even if the originators have already transferred the loans (e.g. as non-performing loans, 

‘NPLs’) to third parties, as is the case with numerous Slovenian credit institutions. Such provisions 

in  the  draft  law  represent  an  important  impediment  to  the  effective  resolution  of  NPLs  as  the 

originator credit institutions would not be able to effectively transfer NPLs off their balance sheet. 

The reasoning behind NPL transfers is, amongst other things, to remove uncertainty with regard 

to potential future losses associated with the transferred assets. In particular, it is unknown what 

the  impact  of  such  restructuring  of  loans  already  transferred  would  mean  for  the  contractual 

agreements  between  the  originator  credit  institutions  and  third-party  purchasers  (e.g.  whether 

such retroactive adjustment would invalidate the contracts and/or the exposures would need to 

be repurchased by the originators). The draft law does not provide certainty with respect to its 

implementation in relation to assets already transferred. 

3.6.5  As previously noted by the ECB 27, the ECB has been a strong proponent of the development of 

secondary markets for credit institution assets, particularly NPLs, as reflected in the action plan 

agreed by the Council of the EU to tackle NPLs in Europe28. As part of a comprehensive solution 

to  NPL  resolution,  the  development  of  secondary  markets  may  contribute  to  reducing  NPLs. 

Looking ahead, well-functioning secondary markets may also prevent stocks of NPLs building up 

in  the  future.  Moreover,  a  well-functioning  secondary  market  may  have  a  positive  effect  on 

financial stability to the extent that it could facilitate  the transfer  of the risks of NPLs off credit 

institutions' balance sheets. The presence of significant volumes of NPLs on credit institutions' 

balance sheets reduces their ability to fulfil their function as providers of credit to the real economy 

and  hampers  the  operational  flexibility  and  overall  profitability  that  are  essential  to  a  well-

functioning  banking  sector.  It  is  essential  that  the  legal  framework  applicable  to  secondary 

markets  enables  the  efficient  transfer  of  NPLs  off  the  balance  sheet  of  credit  institutions,  an 

aspect with regard to which the draft law may introduce uncertainty 29. 

24  
25  
26  
27 
28  

29  

See paragraph 3.2.2 of Opinion CON/2019/27. 
See paragraph 3.2.2 of Opinion CON/2018/21 and paragraph 3.2.2 of Opinion CON/2019/27. 

See paragraph 3.2.3 of Opinion CON/2019/27. 
See paragraph 1.1. of Opinion CON/2018/54 and paragraph 3.2.4 of Opinion CON/2019/27. 

See  the  Council's  press  release  of  11  July  2017  on  the  ‘Council  conclusions  on  Action  plan  to  tackle  non-
performing loans in Europe’, available on the Council's website at: http://www.consilium.europa.eu. 
See, for example, paragraph 2.2.4 of Opinion CON/2019/8 and paragraph 3.2.4 of Opinion CON/2019/27. 

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3.6.6  As a consequence of the draft law, Slovenian credit institutions might incur new losses with regard 

to  NPLs  already  removed  from  their  balance  sheets.  The  ECB  has  already  pointed  out  on 

previous  occasions 30  that  the  ability  of  financial  institutions  to  effectively  manage  credit  risk 

depends  on  a  reliable,  predictable  and  stable  legal  framework  that  adequately  balances  the 

interests of both the creditor and the debtor. In this respect, it is important to carefully consider 

the impact of the draft law in order to ensure legal certainty, and to prevent moral hazard arising 

in the relationship between creditor and debtor. If credit institutions are deprived of efficient tools 

to work out NPLs in an effective and timely manner, this could result in unnecessarily high levels 

of NPLs and private sector debt, which in turn have an adverse impact on financial stability and 

could undermine future credit supply. 

3.6.7  Additionally,  as  the  ECB  has  already  noted31,  the  Slovenian  credit  institutions  that  transferred 

their NPL portfolios to third parties have also handed over all relevant documentation regarding 

the loans transferred to the new creditors, who were fully aware of the nature of the loans prior 

to  that  transaction.  The  draft  law  could  therefore  interfere  with  the  commercial  agreements 

between  the  credit  institutions  and  the  purchasers  of  loans  and  cause  disproportionate 

operational  costs  for  credit  institutions.  Further,  the  fact  that  such  credit  institutions  no  longer 

have access to the documentation on loans transferred could make it impossible to carry out the 

recalculations and prepare the documentation required by the draft law. 

3.6.8  The ECB also notes that in the case of a transfer of receivables relating to Swiss franc loans, the 

draft  law  requires  credit  institutions  to  restructure  Swiss  franc  loans  for  the  period  from  the 

drawdown until the transfer. However, the draft law does not envisage a restructuring of the loans 

for the period following the transfer. 

3.6.9  To  conclude,  the  draft  law  must  carefully  balance  the  benefits  of  creating  well-functioning 

secondary markets for NPLs against the impetus to protect debtors 32. In addition, the draft law 

would  benefit  from  a  thorough  impact  assessment,  including  on  both  significant  and  less 

significant credit institutions.  

3.7 

Effects on financial stability 

3.7.1  The ECB has pointed out on several occasions the risks associated with foreign currency loans 33. 

In particular, foreign currency loans have constituted a major risk to financial stability in several 

Member States 34, where the share of foreign currency loans is relatively high. The ECB points, 

in  this  respect,  to  the  analysis  of  such  risks  made  by  the  European  Systemic  Risk  Board  in 

Recommendation ESRB/2011/1. 

30  
31 
32  
33  

34  

See, for example, paragraph 2.2.4 of Opinion CON/2019/8 and paragraph 3.2.4 of Opinion CON/2019/27. 
See paragraph 3.2.6 of the Opinion CON/2019/27. 

See paragraph 2.2.3 of Opinion CON/2018/31 and paragraph 3.2.7 of Opinion CON/2019/27. 
See, in particular, the ECB Financial Stability Review of June 2010 and, with respect to foreign currency loans in 
Hungary, Opinions CON/2011/87, CON/2012/27, CON/2014/59, CON/2014/72 and CON/2014/76; with respect to 
foreign currency loans in Poland, Opinions CON/2015/26, CON/2017/48, and CON/2017/9; with respect to foreign 
currency loans in Slovenia, Opinions CON/2019/27 and CON/2018/21; and with respect to foreign currency loans 
in Croatia, Opinion CON/2015/32. 
However, this does not seem to be the case in Slovenia. 

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3.7.2  Data provided by Banka Slovenije show that the stock of Swiss franc loans to households reached 

a maximum share in October 2008, when they accounted for 34.7% of housing loans and 8.5% 

of consumer loans. Nevertheless, the overall household portfolios seems to have been of a better 

quality compared to the rest of the banks’ portfolios, as reflected in a relatively low proportion of 

NPLs.  Since  then,  the  share  of  total  loans  denominated  in  Swiss  francs  has  decreased 

significantly 35. At present, loans denominated in Swiss francs do not give rise to any systemic 

risks or pose threats to financial stability. As previously mentioned, however, the implementation 

of the draft law is expected to entail financial costs for the Slovenian banking sector and may, 

therefore,  have  a  negative  impact  on  the  profitability  and  capitalisation  of  Slovenian  credit 

institutions.  In  particular,  the  provision  that  the  lender  must  return  any  overpayment  to  the 

borrower  within  30  days  if  the  total  amount  due  under  a  loan  agreement  as  amended  in 

accordance with the exchange rate cap has been paid in full may imply substantial pressure on 

the income of credit institutions. 

3.7.3  As the ECB has already highlighted in terms of the long-term effects on financial stability 36, when 

introducing measures in relation to the restructuring of foreign currency loans, due consideration 

should  always  be  given  to  fair  burden  sharing  among  all  stakeholders  in  order  to  avoid  moral 

hazard in the future37. The draft law specifies that, regardless of the magnitude of the exchange 

rate fluctuation, the borrower always covers the first 5% of the fluctuation. Therefore, the draft 

law limits the risk exposure for the borrower, but not for the credit institutions, which are otherwise 

required to cover the risk of exchange rate fluctuations without any limitations. 

3.8 

Effects on the Slovenian economy 

As the ECB has previously noted38, the restructuring of Swiss franc loans with retroactive effect, 

as envisaged by the draft law, could have negative effects if it were to lead to a deterioration in 

both foreign and domestic investor sentiment, and trust in the system, due to a perceived increase 

in legal uncertainty and country risk. 

4. 

Conferral of new tasks on Banka Slovenije 

4.1 

New task of Banka Slovenije 

4.1.1  The draft law confers the task of supervising the restructuring procedures performed by credit 

institutions  on  Banka  Slovenije.  Further,  it  designates  Banka  Slovenije  as  the  competent 

misdemeanour authority in the event of breaches of the draft law. The draft law does not specify 

in  detail  the  scope  of  this  new  task.  The  ECB  understands  that  Banka  Slovenije  would  be 

essentially required to supervise the compliance of credit institutions with the requirements of the 

draft law in relation to the  restructuring of their private contractual relationships  with  individual 

customers regarding Swiss franc loans. Banka Slovenije has been designated as the competent 

35  

36   
37  
38  

Currently,  the share  of  total  loans denominated  in  Swiss  francs  is 1.2%  of  total  loans  to  households and  non-
financial corporations. 

See, for example, paragraph 3.3.2 of Opinion CON/2019/27. 
See, for example, paragraph 3.3.2 of Opinion CON/2018/21 and paragraph 3.3.2 of Opinion CON/2019/27. 
See, for example, paragraph 3.4.1 of Opinion CON/2018/21 and paragraph 3.4.1 of Opinion CON/2019/27.  

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misdemeanour  authority  in  relation  to  breaches  of  the  draft  law,  within  the  scope  of  the 

performance of its prudential supervisory tasks over credit institutions 39, and also has, to a certain 

extent,  an  existing  consumer  protection  role40.  However,  Banka  Slovenije  has  no  comparable 

responsibilities with respect to supervision of the compliance by credit institutions with the legal 

requirements  relating  to  the  restructuring  of  privately  negotiated  loan  contracts  with  their 

customers. The draft law therefore confers a new task upon Banka Slovenije. 

4.1.2  As the ECB already underlined in relation to the previous draft laws 41, a proposed conferral of 

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

assessed against the prohibition on monetary financing under Article 123 of the Treaty. For the 

purposes of that prohibition, Article 1(1)(b)(ii) of Council Regulation (EC) No 3603/9342 defines 

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

third parties’. 

4.1.3  Ensuring that Member States implement a sound budgetary policy is one of the key objectives of 

the  monetary  financing  prohibition,  which  may  not  be  circumvented43.  Therefore,  the  task  of 

financing measures, which are normally the responsibility of the Member States, and which are 

financed from their budgetary sources rather than by the NCBs, must not be entrusted to NCBs. 

To decide what constitutes financing of the public sector’s obligations vis-à-vis third parties, which 

can be translated as the provision of central bank financing outside the scope of central bank 

tasks, it is necessary to carry out, on a case-by-case basis, an assessment of whether the task 

to be undertaken by an NCB is a central bank task or a government task, i.e. a task within the 

responsibility of the Member States. In other words,  adequate safeguards must be in place to 

ensure that circumventions of the objective of the monetary financing prohibition of maintaining 

a sound budgetary policy of Member States do not take place. 

4.1.4  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 of that kind in the form of 

criteria for determining what may be seen as falling within the scope of an obligation of the public 

sector 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. 

39   
40  
41  
42  

43  

Article 403 of the Law on banking (Official Gazette of the Republic of Slovenia no. 92/21 in 123/21 – ZBNIP). 
See the Law on consumer credit. 

See, for example, paragraph 4.1.2 of Opinion CON/2018/21 and paragraph 4.1.2 of Opinion CON/2019/27. 
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). 
Article  123  of  the  Treaty  also  serves  the  objective  of  maintaining  price  stability  and  reinforces  central  bank 
independence. 

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Second, as Article 14.4 of the Statute of the ESCB allows NCBs to perform ‘other functions’, new 

tasks, i.e. 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 that are undertaken by an NCB and 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 creates 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 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 not be interpreted broadly, 

so as to lead to the creation of an indefinite chain of ancillary tasks. Such complementarity 

should 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 perform properly 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. 

4.1.5  On the basis of the criteria set out above, the following paragraphs assess whether the new task 

of Banka Slovenije is in line with the prohibition on monetary financing. 

4.2 

Tasks related to the tasks conferred upon the ECB and the NCBs by the Treaty and the Statute 

of the ESCB  

4.2.1  As  previously  noted  by  the  ECB44,  supervising  the  compliance  of  credit  institutions  with  the 

requirements of the draft law in relation to the restructuring of privately negotiated loan contracts 

with their consumers is not among the basic central banking tasks listed in Article 127(2) or (5) 

of the Treaty or otherwise conferred upon the NCBs by the Statute of the ESCB. Nor does the 

task  falls  within  the  scope  of  the  supervisory  tasks  of  Banka  Slovenije.  Thus,  a  careful 

assessment  of  the  conferral  of  this  task  on  Banka  Slovenije  is  required  in  order  to  determine 

44  

See, for example, paragraph 4.2.1 of Opinion CON/2018/21 and paragraph 4.2.1 of Opinion CON/2019/27. 

10 

 
 
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whether it constitutes a government task, and whether the related funding gives rise to monetary 

financing concerns. 

4.3 

Tasks which are atypical of NCB tasks 

4.3.1  As previously noted by the ECB45, the new task conferred on Banka Slovenije by the draft law 

relates  to  supervision  of  the  compliance  by  credit  institutions  with  the  requirements  under  the 

draft law relating to the restructuring of privately negotiated loan agreements with their customers. 

Banka Slovenije’s new task can be seen, to a certain extent, as being related to the protection of 

consumers. 

4.3.2  As previously noted by the ECB 46, it is necessary to analyse whether this new task is atypical of 

NCB tasks. While the majority of NCBs do not appear to have been assigned tasks of this nature, 

the  ECB  has  identified  two  Member  States  where  NCBs  have  been  given  similar  tasks.  In 

Cyprus47  and  Hungary 48,  the  NCBs  have  been  given  tasks  relating  to  the  supervision  of  the 

compliance  by  credit  institutions  with  the  legal  requirements  in  relation  to  the  restructuring  of 

private, contractual loan agreements between credit institutions and their customers. In the case 

of Hungary, these tasks are substantially similar to the tasks conferred on Banka Slovenije under 

the  draft  law.  In  addition,  the  NCBs  in  Croatia49,  the  Czech  Republic50,  Ireland51,  Italy 52  and 

Slovakia53  have  been  given  similar  supervisory  tasks  relating  more  generally  to  consumer 

protection and the transparency of loan arrangements. In this regard, also taking into account the 

consumer protection roles which are currently fulfilled by numerous ESCB NCBs in the field of 

financial  services 54,  the  new  task  does  not  appear  to  be  completely  atypical  of  NCB  tasks. 

However,  the  new  task  would  be  considered  as  atypical  if  Banka  Slovenije’s  supervisory  role 

45  
46  
47  

48  

49   

50  

51  
52  

53  

54  

See paragraph 4.3.1 of Opinion CON/2018/21 and paragraph 4.3.1 of Opinion CON/2019/27. 

See paragraph 4.3.2 of Opinion CON/2018/21 and paragraph 4.3.2 of Opinion CON/2019/27. 
The  Central  Bank  of  Cyprus  was  entrusted  with  sanctioning  powers  in  relation  to  the  compliance  of  credit 
institutions  with  restrictions  regarding  the  variation  of  the  interest  rates  on  credit  facilities  imposed  by  Cypriot 
Law 160(I)/1999  and  supervisory  tasks  relating  also  to  civil  law  aspects  in  the  area  of  payment  services  and 
mortgage credit. In connection with the performance of these tasks, the Central Bank of Cyprus may also request 
and review privately negotiated contracts between credit institutions and their customers. 
Magyar Nemzeti Bank has a supervisory role in connection with the compliance by credit institutions with legal 
requirements  relating  to  the  conversion  of  foreign  currency  denominated  consumer  loans,  including  loans 
denominated in Swiss francs, as defined in applicable laws (e.g. Law XXXVIII of 2014 and Law XL of 2014, both 
as amended by Law LXXVIII of 2014, Law XXVII of 2014, Law LII of 2015 (amending Law XL of 2014) and Law 
CXLV  of  2015).  The  performance  of  these  supervisory  tasks  involves  the  verification  of  compliance  by  credit 
institutions, which includes also the review of privately negotiated contracts between credit institutions and their 
customers. See Opinion CON/2014/72.  

Hrvatska narodna banka carries out oversight over credit institutions’ compliance with the Law on credit institutions, 
which includes compliance with internal bylaws of credit institutions governing the relationship with their clients, 
contracts concluded and consumer protection provisions. 
Česká  národní  banka  has  been  assigned  tasks  related  to  consumer  protection,  including  supervision  of 
compliance by supervised entities of the observance of the prohibition of unfair business practices and supervision 
of rules regarding consumer discrimination or the obligation to inform about prices. 
See, for example, paragraph 3.4.2 of Opinion CON/2017/12. 

The Banca d'Italia has been assigned with tasks in relation to the supervision, from a transparency perspective, 
of the terms of banking and financial agreements between credit institutions and non-credit institution lenders. 

Národná  banka  Slovenska  has  powers  in  the  area  of  the  protection  of  financial  consumers,  which  include  a 
preliminary  assessment  of  unfair  commercial  practices  of  supervised  entities  and  unacceptable  conditions  in 
contracts for the provision of financial services. The scope of this supervision does not include the adjudication of 
disputes between the supervised entities and their customers. 
See, for example, paragraph 3.4.2 of Opinion CON/2017/12. 

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were to extend to the resolution of disputes between contractual parties, which is a matter that is 

usually handled by the courts55. The ECB understands that this is not the case with the draft law. 

4.4 

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

4.4.1  According  to  the  explanatory  memorandum,  the  objective  of  the  draft  law  is  to  implement  the 

constitutional principle of the ‘welfare state’ and to introduce sanctions for breaches of obligations 

arising  under  contractual  relationships,  thereby  providing  legal  protection  to  a  number  of 

consumers who have taken out Swiss franc loans 56. The draft law is therefore intended to provide 

protection to consumers of financial services. 

4.4.2  Due  to  the  retroactive  application  of  the  draft  law,  it  is  not  clear  whether  the  draft  law  would 

effectively guarantee the fulfilment of the objective of protecting consumers of financial services. 

Thus,  the  ECB  cannot  exclude  the  risk  that,  in  carrying  out  its  supervisory  functions,  Banka 

Slovenije would act exclusively in the interest of another public entity. 

4.5 

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

tasks 

4.5.1  As  previously  noted  by  the  ECB57,  it  may  be  considered  that  the  new  task  at  least  partially 

complements  other  similar  existing  supervisory  and  consumer  protection  tasks  of  Banka 

Slovenije. As with other consumer protection tasks, sufficient mitigation measures must be put in 

place to ensure that in the event of a conflict of interest supervisory considerations prevail. 

4.6 

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

capacity of Banka Slovenije 

4.6.1  As previously noted by the ECB 58, the principle of financial independence requires that Member 

States do 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. 

Furthermore,  when  allocating  specific  new  tasks  to  NCBs,  each  NCB  concerned  should  have 

sufficient financial and human resources at its disposal to ensure that the tasks can be carried 

out without impacting on the NCB’s financial or operational capacity to perform its ESCB tasks. 

In  order  to  ensure  that  Banka  Slovenije’s  capacity  to  perform  its  ESCB-related  tasks  is  not 

impaired,  Banka  Slovenije  must,  therefore,  be  in  a  position  to  avail  itself  of  the  necessary 

resources to carry out its duties under the draft law. 

4.6.2  At this early stage, it is difficult to predict what additional resources Banka Slovenije will require 

in order to perform its new supervisory task under the draft law. However, it is likely that Banka 

Slovenije will have to dedicate additional human, technical and financial resources to implement 

this new supervisory task. This may impose an additional burden on existing central banking and 

supervisory tasks performed by Banka Slovenije. Additionally, Banka Slovenije could be exposed 

to reputational risk in carrying out its supervisory assessment of the appropriateness of the legal 

costs of the credit institutions concerned. 

55  
56  
57  
58  

See paragraph 4.3.2 of Opinion CON/2018/21 and paragraph 4.3.2 of Opinion CON/2019/27. 

See the explanatory memorandum, pp. 8, 9 and 11.  
See, for example, paragraph 4.5.1 of Opinion CON/2018/21 and paragraph 4.5.1 of Opinion CON/2019/27. 
See, for example, paragraph 4.6.1 of Opinion CON/2018/21 and paragraph 4.6.1 of Opinion CON/2019/27. 

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4.6.3  While  supervised  entities  are  required  to  pay  fees  to  Banka  Slovenije  in  relation  to  the 

performance of its supervisory tasks under the Law on consumer credit59, the draft law does not 

provide for Banka Slovenije to be reimbursed for the costs of carrying out this new task. The ECB 

invites the consulting authority to consider the impact of the draft law on the resources of Banka 

Slovenije and undertake appropriate measures to ensure that the central banking and supervisory 

tasks performed by Banka Slovenije will in no way be affected. 

4.7 

Extent to which performance of the new task fits into the institutional set-up of Banka Slovenije, 

in the light of central bank independence and accountability considerations 

4.7.1  The potential impact of the new task on the institutional, financial and personal independence of 

Banka Slovenije must be taken into consideration. 

4.8 

Extent to which the performance of tasks harbours substantial financial risks  

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

Banka  Slovenije’s  powers  under  the  draft  law  or  the  failure  to  exercise  such  powers.  Banka 

Slovenije’s potential liability in respect of the performance of the new task will thus be subject to 

the rules on liability for damage caused in the exercise of public authority pursuant to the Law on 

banking and the general liability regime under Slovenian law. As previously noted by the ECB 60, 

the general liability regime would also apply with respect to any potential damage resulting from 

decisions of Banka Slovenije delivered in supervisory proceedings pursuant to the draft law which 

are later declared to be invalid in the courts. 

4.9 

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

of Banka Slovenije to disproportionate political risks and impacts on their personal independence  

4.9.1  As previously noted by the ECB 61, due to the sensitivity of the subject matter and the high degree 

of  public  attention  being  given  to  the  restructuring  of  Swiss  franc  loans  in  Slovenia,  due 

consideration  should  be  given  to  any  disproportionate  political  risk  or  impact  on  the  personal 

independence of the members of the decision-making bodies of Banka Slovenije that may arise 

in the performance of the new task. 

4.9.2 

In this respect, consideration might be given to the possibility of conferring this task on a separate 

government  agency  to  which  Banka  Slovenije  could  provide  technical  support  in  view  of  its 

expertise and experience in dealing with the Slovenian banking sector. 

4.10  Conclusion 

The  new  task  of  Banka  Slovenije  of  supervising  the  compliance  of  credit  institutions  with  the 

requirements  under  the  draft  law  in  relation  to  the  restructuring  of  privately  negotiated  loan 

agreements between credit institutions and their customers can be regarded as a central bank 

task.  However,  as  the  new  task  conferred  upon  Banka  Slovenije  by  the  draft  law  must  not 

adversely affect  its capacity to carry out  its NCB  or ESCB-related tasks, careful  consideration 

should  be  given  to  its  impact  on  Banka  Slovenije’s  operational  capacity.  In  addition,  careful 

59   
60  
61  

See Article 79 of the Law on consumer credit.  
See paragraph 4.8.1 of Opinion CON/2018/21 and 4.8.1 of Opinion CON/2019/27. 
See paragraph 4.9.1 of Opinion CON/2018/21 and 4.9.1 of Opinion CON/2019/27. 

13 

 
 
consideration  should  be  given  to  any  disproportionate  political  risk  or  impact  on  the  personal 

independence of the members of the decision-making bodies of Banka Slovenije that may arise 

in the performance of the new task 62. 

ECB-PUBLIC 

This opinion will be published on EUR-Lex.  

Done at Frankfurt am Main, 26 November 2021. 

[signed] 

The President of the ECB 

Christine LAGARDE 

62  

See paragraph 4.10.1 of Opinion CON/2018/21 and paragraph 4.10.1 of Opinion CON/2019/27. 

14