Opinion of the European Central Bank of 16 December 2024 on the provision of emergency liquidity assistance (CON/2024/40)
Date: 2024-12-16
Institutions: European Central Bank
Subjects: financial stability, legal basis

ECB-PUBLIC 

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 16 December 2024  

on the provision of emergency liquidity assistance  

(CON/2024/40) 

Introduction and legal basis 

On 4 November 2024 the European Central Bank (ECB) received a request from Българска народна банк 

(Bulgarian  National  Bank  (BNB))  for  an  opinion  on  an  ordinance  of  the  Bulgarian  National  Bank  on  the 

provision of emergency liquidity assistance (hereinafter the ‘draft ordinance’). 

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 and sixth indents, of Council Decision 98/415/EC 1, 

as the draft ordinance relates to BNB and rules applicable to financial institutions insofar as they materially 

influence the stability of financial institutions and markets. In accordance with Article 17.5, first sentence, 

of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion. 

1. 

Purpose of the draft ordinance 

1.1  The draft ordinance aims to implement Article 48 of the Law on Bulgarian National Bank (hereinafter 

the ‘Law on BNB’) and to regulate the conditions, rules and procedures under which BNB, in its future 

capacity  as  a  Eurosystem  central  bank  and  outside  the  scope  of  Eurosystem  monetary  policy 

operations,  may  provide  emergency  liquidity  assistance  (ELA)  to  a  credit  institution  experiencing 

liquidity stress 2. 

1.2  The draft ordinance provides that BNB may provide ELA in compliance with the Treaty, the Law on 

BNB, the Agreement on emergency liquidity assistance 3 (hereinafter the ‘ELA Agreement’) adopted 

by the Governing Council on 27 September 2024 on the basis of Article 14.4 of the Statute of the 

European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of 

the ESCB’), and other applicable acts of the ECB4. The draft ordinance explicitly clarifies that BNB 

may provide ELA at its discretion 5.  

1.3  The draft ordinance provides that BNB may provide ELA only in euro6.  

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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). 
Article 1(1) and (2) of the draft ordinance. 
Available on the ECB’s website at www.ecb.europa.eu. 
Articles 1(3) of the draft ordinance. 
Article 2(1) of the draft ordinance. 
Article 2(1), point (3), of the draft ordinance. 

 
 
 
 
 
 
 
ECB-PUBLIC 

1.4  The  draft  ordinance  provides  that  BNB  may  grant  ELA  only  to  a  solvent  credit  institution  that 

experiences liquidity stress for which it cannot quickly provide liquidity from other sources7. For this 

purpose, a credit institution is to be considered solvent if its Common Equity Tier 1 capital ratio, Tier 

1  capital  ratio  and  total  capital  ratio,  as  well  as  the  leverage  ratio8  on  an  individual  and  (when 

applicable) consolidated basis, are in line with the minimum capital requirement levels laid down in 

Regulation (EU) No 575/20139. Furthermore, a credit institution is to be considered solvent where 

this requirement is not met but there is a strong likelihood of recapitalisation that would restore the 

regulatory capital to the specified levels within 24 weeks after the end of the quarter for which the 

data shows that the credit institution does not comply with the relevant requirements. In duly justified 

exceptional cases, BNB may request the Governing Council to extend the abovementioned 24-week 

period10.  

1.5  The draft ordinance specifies that ELA will be granted in exchange for collateral and contains detailed 

rules concerning such collateral11. The draft ordinance provides that if ELA is not reimbursed by a 

credit  institution  within  the  agreed  period,  BNB  must  proceed  with  compulsory  collection,  without 

initiating legal proceedings, selling the received collateral or acquiring the ownership rights in respect 

of assets pledged by the recipient bank, up to an amount that satisfies all BNB’s claims arising from 

the ELA granted 12. 

1.6  The draft ordinance provides that ELA may be granted for a term of up to six months and if necessary 

up to 12 months 13, but also provides that under certain conditions this term may be extended beyond 

12 months 14. 

1.7  The draft ordinance provides that BNB is to establish an interest rate for the ELA granted that cannot 

be lower than the Eurosystem’s marginal lending facility rate, increased by 100 basis points. In the 

case of intra-day ELA reverse transactions, BNB is to establish an interest rate that cannot be lower 

than 1 % on an annual basis15. 

1.8  The draft ordinance contains detailed provisions governing the procedure for the granting of ELA to 

a credit institution and the information to be provided by the credit institution to BNB and the ECB 

when ELA is granted16.  

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Article 2(1), point (1), of the draft ordinance. 
Calculated in accordance with the requirements of Regulation (EU) No 575/2013 of the European Parliament and of 
the Council of 26 June 2013 on prudential requirements for credit institutions and amending Regulation (EU) No 
648/2012 (OJ L 176, 27.6.2013, p. 1). 
See Article 92(1), points (a) to (d), of Regulation (EU) No 575/2013.  
Article 3 of the draft ordinance. 
Article 4 of the draft ordinance. 
Article 11(4) of the draft ordinance. 
Article 5(1) of the draft ordinance. 
Article 5(2) of the draft ordinance. 
Article 6(2) and (3) of the draft ordinance. 
Article 1(4) and Articles 9 and 10 of the draft ordinance. 

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ECB-PUBLIC 

2. 

General observations 

2.1  The provision of ELA refers to the provision by a Eurosystem national central bank (NCB) of central 

bank  money  and/or  any  assistance  that  may  lead  to  an  increase  in  the  provision  of  central  bank 

money to a solvent financial institution or a group of solvent financial institutions facing temporary 

liquidity problems, where this operation is not part of the single monetary policy17.  

2.2  The ELA Agreement is based on the understanding that the main responsibility for the provision of 

ELA lies with the NCB concerned. This means that any costs and risks arising from the provision of 

ELA are incurred by the relevant NCB. However, pursuant to Article 14.4 of the Statute of the ESCB, 

the Governing Council may object to the provision of ELA by limiting or prohibiting ELA operations if 

it finds that these interfere with the objectives and tasks of the ESCB. As the Governing Council must 

be  informed  of  such  operations  in  a  timely  manner  in  order  for  it  to  adequately  assess  such 

interference,  the  ELA  Agreement  imposes  corresponding  obligations  on  NCBs.  As  the  ELA 

Agreement was adopted by the Governing Council on the basis of Article 14.4 of the Statute of the 

ESCB, it applies to BNB upon the latter’s accession to the Eurosystem. 

3. 

Specific observations 

3.1  As noted in paragraph 2.1 of this opinion, the ELA Agreement contemplates the possibility that ELA 

may be granted to a financial institution or a group of financial institutions facing liquidity problems 18. 

The  ECB  understands  that  the  limitation  under  the  draft  ordinance  whereby  ELA  may  only  be 

extended  to  credit  institutions  stems  from  Article 48  of  the  Law  on  BNB,  under  which  the  draft 

ordinance is to be adopted. 

3.2  The  ELA  Agreement  also  contemplates  the  possibility  that  an  NCB  might  enter  into  a  liquidity 

arrangement  with  a  non-Eurosystem  central  bank  or  monetary  authority  with  the  purpose  of 

facilitating the provision of emergency foreign currency liquidity 19. However, the ECB notes that the 

draft ordinance does not include a provision covering this possibility. 

3.3  The draft ordinance contains several provisions on the collateralisation of ELA, including a reference 

to  ‘collateral  principles  approved  by  the  ECB’s  GC’.  In  contrast  to  Eurosystem  monetary  policy 

operations, the ECB has not set out any publicly available collateral principles for ELA other than the 
condition that  ELA collateral should sufficiently protect the NCB against risks emerging from ELA 
operations20. 

3.4  The ECB welcomes the provision in the draft ordinance that if ELA is not reimbursed by the institution 

within  the  agreed  period,  BNB  is  to  proceed  with  compulsory  collection,  without  initiating  legal 

proceedings,  selling  the  received  collateral  or  acquiring  the  ownership  rights  in  respect  of  assets 

pledged by the recipient bank, up to an amount that satisfies all BNB’s claims arising from the ELA 

17  

See paragraph 1.2 of the ELA Agreement. See also paragraph 2.1 of Opinion CON/2020/11. All ECB opinions are 
published on EUR-Lex.  

18   With respect to the possibility to extend the provision of ELA to entities that are not credit institutions, see paragraph 

2.3 of Opinion CON/2020/11. 
See Section 3.5 of the ELA Agreement. 
See Section 8.1 of the ELA Agreement. 

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granted21.  This  should  facilitate  BNB’s  enforcement  of  its  collateral  rights  against  defaulting 

counterparties in the event that ELA is provided. 

ECB-PUBLIC 

This opinion will be published on EUR-Lex. 

Done at Frankfurt am Main, 16 December 2024. 

[signed] 

The President of the ECB 

Christine LAGARDE 

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Article 11(4) of the draft ordinance. 

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