· The ECB has been requested to deliver an opinion by 17 December 2010. The ECB notes that, in cases of particular urgency which do not allow for the normal consultation period, the consulting authority may indicate such urgency in its consultation request and ask for a shorter deadline for the adoption of the ECB’s opinion. However, even though the ECB welcomes this consultation request and understands the need for an accelerated legislative procedure, it would have appreciated being consulted by the authority preparing the draft legislation at an earlier stage.
· In line with its previous opinions, the ECB emphasises that, when adopting measures to deal with the financial crisis, Member States should act in a coordinated manner in order to avoid significant differences in national implementation having a counter-productive effect, which may involve distortions in global banking markets. Moreover, it is crucial to ensure consistency with the Eurosystem’s management of liquidity and its operational framework. Against this background, any national measure should ensure a sufficiently level playing field within the Euro Area, which is of key importance to maintain the integrity of the Euro Area banking system.
· Regarding the features and implementation modalities of asset support schemes, the Eurosystem has developed a number of guiding principles to: (i) safeguard financial stability and restore the provision of credit to the private sector while limiting moral hazard; (ii) ensure a level playing field within the single market to the extent possible; and (iii) contain the impact of possible asset support measures on public finances.
· Previous ECB Opinions noted that it is appropriate to maintain a clear distinction between procedures leading to antitrust and banking supervision decisions and that draft national laws should reflect in these circumstances the principle of allocating powers to authorities in accordance with their respective objectives. In the present case, the dual competence of the Minister in banking mergers and the consultative or advisory role conferred on the Governor could conflict with these principles.
· Moreover, previous ECB Opinions pointed out the need to balance the potentially conflicting objectives of market competition and financial stability by introducing safeguards similar to those which apply under EU law. While acknowledging that cases might occur in which a merger in the form of a balance sheet merger would be necessary on stability grounds, although it raises concerns for its effects on competition, the ECB stressed that these cases should remain exceptional and should not unduly restrain competition. The ECB recommends applying the Minister’s prerogatives under the draft law in accordance with the principle of proportionality and with appropriate safeguards.
· The measures intended to safeguard financial stability should involve cooperation with the relevant Member State authorities, in line with EUlegislation and the arrangements in place, such as the Memorandum of Understanding on cooperation between the financial supervisory authorities, central banks and finance ministries of the European Union on cross-border financial stability.
· The ECB recommends referring to the Eurosystem’s ‘operations’ rather than to its ‘functions’, in line with ECB Opinion CON/2008/37. In particular, references to the Eurosystem should include all actions, rights, arrangements and agreements relating to it by all participants.
· The draft law does not contain any general provision protecting the rights of the Central Bank and the ECB under any relevant agreements from the effects of Article 61 and other provisions of the draft law, such as regarding transfer orders, which potentially may impact on the Eurosystem’s operations and the functions and interests of its members. Article 5 of the draft law recognises that the draft law has no effect on the performance of the Central Bank Governor’s or the Central Bank’s ‘functions’ in relation to any credit institution authorised or regulated in Ireland. However, this appears to refer only to the supervisory functions of the Central Bank and its Governor and does not include the potential impact of the draft law provisions on the Central Bank, the ECB or any other central bank within the ESCB when appearing as counterparty in a monetary policy or emergency liquidity operation concluded with a relevant institution. It is essential that such a general provision is contained in the draft law to protect Eurosystem operations and the rights of the Central Bank, the ECB and any other central bank within the ESCB.
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