Opinion of the European Central Bank on the designation of Banco de Portugal as resolution authority for central counterparties (CON/2024/31)
Date: 2024-09-13
Institutions: European Central Bank
Subjects: legal basis

EN  

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 13 September 2024 

on the designation of Banco de Portugal as resolution authority for central counterparties 

(CON/2024/31) 

Introduction and legal basis 

On 5 August 2024, the European Central Bank (ECB) received a request from the Portuguese Ministry of 

Finance  for  an  opinion  on  a  draft  law  designating  the  Banco  de  Portugal  as  resolution  authority  for  the 

purposes of Regulation (EU) 2021/23 of the European Parliament and of the Council on a framework for 

the recovery and resolution of central counterparties (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 Article 2(1), third indent, of Council Decision 98/415/EC1, as the 

draft law relates to the Banco de Portugal (BdP). 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 execute in the national framework several Union regulations related 

to financial services and activities and market infrastructures for financial instruments, by means of 

introducing  some  legislative  adjustments  in  order  to  fully  ensure  the  direct  applicability  of  those 

regulations in the Portuguese legal framework. In particular, the draft law implements in the national 

framework Regulation (EU) 2021/23 of the European Parliament and of the Council2 (hereinafter the 

‘CCP Recovery and Resolution Regulation’).  

1.2  The draft law implements the requirement under the CCP Recovery and Resolution Regulation that 

each Member State must designate one or more resolution authorities for central counterparties 3, 

which are empowered to apply the resolution tools and exercise the resolution powers as set out in 

the CCP Recovery and Resolution Regulation. The draft law appoints the BdP as resolution authority 

for the purposes of the CCP Recovery and Resolution Regulation4. 

1  

2  

3  

4  

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). 
Regulation (EU) 2021/23 of the European Parliament and of the Council of 16 December 2020 on a framework for 
the recovery and resolution of central counterparties and amending Regulations (EU) No 1095/2010, (EU) No 
648/2012, (EU) No 600/2014, (EU) No 806/2014 and (EU) No 2015/2365 and Directives 2002/47/EC, 2004/25/EC, 
2007/36/EC, 2014/59/EU and 2017/1132/EU (OJ L 22, 22.1.2021, p. 1). 
See Article 3 of Regulation (EU) 2021/23. 
See Article 3-A(1) of Decree-Law No. 40/2014 of 18 March, added by the draft law. 

 
 
 
 
 
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1.3  The draft law provides that the Comissão do Mercado de Valores Mobiliários (CMVM, Portuguese 

Securities  Market  Commission)  will  be  the  competent  authority  for  the  supervision  of  central 

counterparties 5. 

1.4  The  explanatory  memorandum  accompanying 

the  draft 

law  (hereinafter 

the 

‘explanatory 

memorandum’) notes that the division of tasks between the BdP and the CMVM takes into account 

the fact that the BdP is already the resolution authority in relation to financial institutions other than 

central counterparties (credit institutions and investment firms) and has the necessary resources and 

operational  capacity  needed  for  the  planning  and  execution  of  resolution  measures  for  central 

counterparties. 

1.5  The explanatory memorandum also notes that the exercise of the tasks as resolution authority for 

central  counterparties  respects  the  BdP’s  financial  independence,  and  that,  in  the  event  that 

resolution measures are applied to central counterparties in Portugal, it is necessary to safeguard 
the financial dimension of the principle of central bank independence, as provided under Article 130 

of the Treaty. Therefore (the explanatory memorandum continues) in the face of the possibility of 

applying resolution measures to a central counterparty, the  BdP’s ability to build up and maintain 
financial resources so as to be able to carry out its tasks effectively and independently in the context 

of the European System of Central Banks (ESCB) should not be prevented. 

2 

Liability as resolution authority for central counterparties 

2.1 

The draft law does not provide for a specific liability regime for the resolution of central counterparties 
by the BdP. In this respect, the ECB understands that the applicable liability regime is the regime 

that already exists in relation to other tasks of the BdP, including the resolution of credit institutions 

and investment firms.  

2.2 

In  accordance  with  Article  22  of  the  Portuguese  Constitution,  the  State  and  all  public  entities  are 

liable for actions or omissions that are committed in or because of the exercise of their functions and 

that  result  in  a  breach  of  rights,  freedoms  and  guarantees  or  create  damages  to  another  party. 

Although formulated as a rule of strict liability where the BdP would be legally responsible for the 

damage caused when exercising the function of resolution authority for central counterparties even 

in the absence of fault, the competent Portuguese administrative courts have interpreted Article 22 

of the Constitution under the same terms as established for civil liability, as laid down in Article 483(1) 

of the Portuguese Civil Code6, as a rule of fault. Under this rule, the BdP is legally responsible for 

the damage caused by the unlawful violation of the right of another person, or any legal provision 

intended to protect the interests of another person only in case of negligence or intent7.  

5  

6  

7  

See Article 3 of Decree-Law No. 40/2014 of 18 March, as amended by the draft law. 

Article 483(1) of the Portuguese Civil Code provides as follows: ‘Whoever, with intent or mere guilt, unlawfully 
violates the right of another person or any legal provision intended to protect the interests of another person shall be 
obliged to compensate the injured party for the damages resulting from the violation.’ 
This is standard case-law in assessing the liability standard of public entities; see Decision of Supremo Tribunal 
Administrativo, of 29 June 2005, proc. No. 05A1064; Decision of Supremo Tribunal Administrativo, of 15 February 
2007, proc. No. 06B4565; Decision of Tribunal da Relação de Évora, of 08 February 2024, proc. No. 
102/22.7T8LGS.E1; Decision of Supremo Tribunal Administrativo, of 4 July 2024, proc. No. 17375/17.5T8LSB.L1-
B.S1; Decision of Supremo Tribunal Administrativo, of 14 September 2023, proc. No. 0533/11.3BEPRT. 

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2.3 

In addition, when assessing whether there has been such unlawful violation on the part of the BdP, 

the ECB understands that the competent Portuguese administrative courts have granted the BdP a 

large margin of discretion when exercising the function of resolution authority for credit institutions 8. 

The relevant case-law highlights that a resolution measure has, inter alia, the purpose of avoiding 

possible negative impacts on financial stability, against the backdrop of an alternative scenario of 

liquidation of a credit institution, and of minimising costs to the public treasury. This implies that the 

BdP  has  the  necessary  powers  to  act  in  this  regard  in  order  to  achieve  the  resolution  purposes 

provided for in the legislation. The complexity and multipolarity of the interests existing in a resolution 

measure were too great for the legislator to anticipate, despite the desire to regulate every aspect of 

such measures. The BdP was therefore designated as the public authority responsible for judiciously 

balancing the theoretical aims of resolution as defined by the legislator against the specificities and 

needs of individual cases. The choices made by the BdP in this process necessarily vary according 

to  the  specific  situation  of  the  entity  under  resolution9.  In  view  of  these  considerations  and  the 

urgency characterising resolution measures, the BdP is afforded a large margin of discretion when 

exercising  the  function  of  resolution  authority.  Consequently,  the  Portuguese  courts  limit  the 

assessment of an unlawful violation of the right of another party or any legal provision intended to 

protect the interests of another party to specific duties of the administrative authority to act (limiting 

the judicial assessment to aspects such as competence, purpose, form, procedure, and constitutional 

principles that condition the exercise of discretion) 10. This means, for instance, that third parties need 

to demonstrate that the BdP acted arbitrarily or breached its basic duties of care when exercising its 

function as resolution authority, for example without motivation or in a way not reasonably adequate 

in order to achieve the resolution objectives.  

3. 

Specific observations 

3.1 

In accordance with Article 14.4 of the Statute of the European System of Central Banks and of the 

European Central Bank, the national central banks (NCBs) may perform functions other than those 

specified in that Statute, unless the Governing Council finds that those functions interfere with the 

objectives and tasks of the ESCB. Where a Member State assigns such a function to its NCB, that 

NCB is responsible and liable for the performance of that function. Nevertheless, when defining the 

responsibility and liability of an NCB in relation to that function, Member States are required to comply 

with their obligations deriving from Union law and, in particular, Article 123(1) and Article 130 of the 

Treaty11. 

3.2    Monetary financing prohibition 

3.2.1  Article 123(1) of the Treaty prohibits the NCBs from granting overdraft facilities or any other type of 

credit facility to public authorities and bodies of the Member States. Article 1(1), point (b), of Council 

8  

9  

10  
11  

See, for instance, Decision of Supremo Tribunal Administrativo, of 9 September 2023, proc. No 2586/14.3, pp. 180 
and 181; Decision of Tribunal Administrativo e Fiscal de Sintra, of 31 October 2022, proc. 1723/16.8BELSB, pp. 100 
and 101. 
See, in particular, Decision of Tribunal Administrativo e Fiscal de Sintra, of 31 October 2022, proc. 1723/16.8BELSB, 
pp. 100 and 101. 
See, for instance, Decision of Supremo Tribunal Administrativo, of 4 April 2024, proc. 1594/08.8, p. 44. 
See judgment of 13 September 2022, Banka Slovenije, C-45/21, EU:C:2022:670, paragraphs 53, 54, 57 and 97; and 
Opinion CON/2023/17, paragraph 2.2.1. All ECB opinions are published on EUR-Lex. 

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Regulation No 3603/9312 defines the term ‘other type of credit facility’ for the purposes of Article 123 

of  the  Treaty  as,  inter  alia,  any  financing  of  the  public  sector’s  obligations  vis-à-vis  third  parties. 

Accordingly,  the  NCB  concerned  must  not  assume  obligations  vis-a-vis  third  parties  that  could 

potentially be incumbent on the public sector. Consequently, the NCB concerned must not finance 

pre-existing obligations vis-à-vis third parties that are incumbent on other public authorities or bodies 

and the effective financing of the obligations vis-à-vis third parties by the NCB concerned must not 

result  directly  from  the  measures  adopted  by,  or  from  the  policy  choices  made  by,  other  public 

authorities or bodies 13. 

3.2.2  While the draft law does not as such impose any financing obligations on the BdP, the designation 

of  the  BdP  as  resolution  authority  for  central  counterparties  according  to  the  CCP  Recovery  and 

Resolution Regulation requires that the conditions under which the BdP is to exercise this function 

are in line with the above limitations deriving from Article 123(1) of the Treaty. In particular, the liability 

of the BdP when exercising the function of resolution authority for central counterparties must  be 

limited to infringements of a serious nature of the rules imposed on the BdP in that context14.  

3.2.3  The  Court  of  Justice  has  not  yet  elaborated  on  what  the  limitations  to  infringements  of  a  serious 

nature of the rules imposed on an NCB exactly consist of. In view of the different traditions for the 

liability  of  NCBs  in  the  Member  States’  national  legal  orders,  such  limitations  may  therefore  take 

different forms provided that they exclude the effective financing of the obligations of the public sector 

vis-à-vis third parties by the NCB concerned when exercising the function of resolution authority for 

central  counterparties.  This  is  the  case  if  national  law  addresses  the  condition  of  fault  and  limits 

liability  of  the  NCB  concerned  to  gross  negligence  in  view  of  the  urgency  and  complexity 

characterised by resolution measures 15. The effective financing of the obligations of the public sector 

vis-à-vis third parties by the NCB concerned when exercising the function of resolution authorities 

for central counterparties is also excluded if national law addresses the condition of unlawful conduct 

instead  of  fault  and  limits  judicial  review  of  resolution  measures  by  granting  a  large  margin  of 

discretion to the NCB concerned in view of the urgency and complexity characterised by the latter 16. 

3.2.4  Against this backdrop, the applicable liability regime addresses the requirement that the liability of 

the BdP when exercising the function of resolution authority for central counterparties should be, in 

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 judgment of 13 September 2022, Banka Slovenije, C-45/21, EU:C:2022:670, paragraphs 67 to 75 and 84, and 
Opinion CON/2023/17, paragraph 2.2.2. 
See judgment of 13 September 2022, Banka Slovenije, C-45/21, EU:C:2022:670, paragraph 75; and Opinion 
CON/2023/17, paragraph 2.2.3. 
Opinion CON/2023/17, paragraph 2.2.3. 
In this regard, the ECB observes that the Court of Justice of the European Union has limited the Union’s non-
contractual liability for discretionary acts of its institutions by requiring a ‘sufficiently flagrant violation of a superior 
rule of law for the protection of an individual’ for such liability to be incurred (see, fundamentally, judgment of 2 
December 1971, Schöppenstedt, Case 5/71, EU:C:1971:116, paragraph 11). In evaluating whether the breach is 
‘sufficiently flagrant’, the Court of Justice analyses whether the institution ‘manifestly and gravely’ disregarded the 
limits on its discretion (see, for instance, judgment of 12 July 2005, CEVA, C-198/03 P, EU:C:2005:445, paragraph 
64), as well as the complexity of the situation to be regulated, the difficulties in the application or interpretation of the 
legislation and the margin of discretion available to the institution (see, for instance, judgment of 10 July 2003, Fresh 
Marine, C-472/00 P, EU:C:2003:399, paragraph 24). In this context, the ECB notes that some authors in legal 
doctrine have highlighted the proximity of the conditions of unlawful conduct and fault by claiming that the 
interpretation of a ‘sufficiently flagrant’ breach by the Court of Justice allows for fault in the form of ‘institutional fault’ 
and ‘gross maladministration’ (see, for instance, G. Brüggemeier, Tort Law in the European Union, 2nd ed. 2018, 
paragraph 141). 

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practice,  limited  to  infringements  of  a  serious  nature.  Although  the  granting  of  a  large  margin  of 

discretion to the BdP and the corresponding limitation of judicial review to specific duties of the BdP 

to act appear to be motivated by the constitutional principle of distribution of power and not by the 

monetary financing prohibition, the effective financing of the obligations of the public sector vis-à-vis 

third parties by the NCB concerned when exercising the function of resolution authority for central 

counterparties  is  de  facto  excluded.  That  said,  the  ECB  understands  that  the  Portuguese  courts 

would, in line with the case-law of the Court of Justice, also make reference to the requirements that 

Article  123(1)  of  the  Treaty  imposes  on  the  interpretation  of  the  liability  regime  of  the  BdP  in  the 

future17. 

3.3  Financial dimension of the principle of independence 

3.3.1  Article 130 of the Treaty prohibits Member States from placing their NCBs in a situation which in any 

way undermines their ability to carry out independently a task falling within the scope of the ESCB18. 

This would be the case if, for example, an NCB were prevented from building up adequate financial 

resources in the form of reserves or buffers to offset losses, particularly those resulting from monetary 

policy operations, and the Member State concerned did not ensure in advance that the NCB had the 

necessary funds to bear the financial burden resulting from exercising a function outside the scope 

of the ESCB (such as the funds necessary to be able to pay the compensation resulting from the 

liability regime for that function), while retaining its ability to carry out its ESCB tasks effectively and 

independently 19. An NCB constrained in its ability to create and/or restore its reserves or buffers may 

need to seek the consent of political authorities to obtain funding or recapitalisation. This places the 

NCB in a situation of dependence on those political authorities of the Member State 20. 

3.3.2  The ECB considers that the BdP’s risk of exposure to liability in the context of  the exercise  of its 

function as resolution authority for central counterparties is remote due to: (1) the fact that only one 

central  counterparty,  solely  dedicated  to  power  derivatives  contracts  and  natural  gas  derivatives 

contracts, is currently established in Portugal; (2) the exceptional nature of a situation leading to the 

resolution of a central counterparty; and (3) the fact that the Portuguese courts grant the BdP a wide 

margin  of  discretion  when  assessing  the  legality  of  resolution  measures.  However,  the  possibility 

cannot be entirely excluded that extreme and exceptional situations might arise at some point in the 

future and result in the exposure of the BdP to such liability. In this respect, a significant amount of 

the  financial  risk  of  the  Union  financial  system  is  processed  by  and  concentrated  in  central 

counterparties on behalf of clearing members and their clients 21. The possibility cannot be entirely 

excluded that the  BdP’s exercise of  its function as  a resolution authority of central counterparties 

might lead to substantial losses and that the magnitude of such losses might constrain the BdP’s 

ability  to  build  up  adequate  financial  resources  to  carry  out  its  ESCB  tasks.  To  address  such 

17  

18  

19  
20  

21  

It is for the national courts to interpret, as far as is possible, the provisions of national law in such a way that they can 
be applied in a manner which contributes to the implementation of Union law. See, for instance, judgment of 18 July 
2007, Lucchini, C-119/05, EU:C:2007:434, paragraph 60; judgment of 11 November 2015, Klausner, C-505/14, 
EU:C:2015:742, paragraphs 31 to 34. 
See judgment of 13 September 2022, Banka Slovenije, C-45/21, EU:C:2022:670, paragraph 97. 
See judgment of 13 September 2022, Banka Slovenije, C-45/21, EU:C:2022:670, paragraph 105. 
See judgment of 13 September 2022, Banka Slovenije, C-45/21, EU:C:2022:670, paragraphs 100 to 102; see also 
paragraph 2.2.4 of Opinion CON/2023/17 and paragraph 3.2.1 of Opinion CON/2023/44. 
See recital 4 of the CCP Recovery and Resolution Regulation; see also paragraph 2.2.4 of Opinion CON/2023/17.  

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situations,  adequate  mechanisms  should  be  considered  in  order  to  ensure  that  the  BdP  is  not 

prevented from building up adequate financial resources in the form of reserves or buffers so as to 

be able to carry out its ESCB tasks effectively and independently 22. 

3.3.3  The ECB therefore welcomes that the Portuguese legislative authorities are willing to comply with 

the financial dimension of the principle of independence in the event that resolution measures are 

applied  to  central  counterparties  in  Portugal,  as  evidenced  by  the  explanatory  memorandum  as 

referred  to  in  paragraph  1.5.  Nevertheless,  it  would  be  important  for  the  abovementioned 

mechanisms to be effectively implemented in the national framework. 

This opinion will be published on EUR-Lex. 

Done at Frankfurt am Main, 13 September 2024. 

[signed] 

The President of the ECB 

Christine LAGARDE 

22  

See paragraph 2.2.4 of Opinion CON/2023/17. 

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