Legal working papers

In-depth studies for experts

Our Legal Working Paper Series (LWPS) disseminates legal research and doctrine on issues relevant to the tasks and functions of the ECB and the ESCB. Legal Working Papers (LWPs) constitute “work in progress”. They are published to stimulate discussion and contribute to the development of community, monetary and financial law. They are addressed to experts, so readers should be knowledgeable in the legal field.

Availability: ECB Legal Working Papers are available online only.

No. 18
26 June 2019
The European Central Bank and EU procurement law: a comparative outlook

Abstract

JEL Classification

K23 : Law and Economics→Regulation and Business Law→Regulated Industries and Administrative Law

K40 : Law and Economics→Legal Procedure, the Legal System, and Illegal Behavior→General

Abstract

Procurement law is rising in importance year after year. According to the European Commission, public procurement now accounts for over 14% of the EU’s gross domestic product. Also at the ECB, spending through procurement is growing, and the evolution of its procurement law from non-binding internal guidelines to a transparent and comprehensive legal framework is a clear reflection of this development.The purpose of this working paper is to summarise the legal framework for public procurement at the ECB, to compare it to the procurement rules of other EU institutions, and to analyse four key issues in contract award procedures, with due regard to the EU procurement directives and the case law of the Court of Justice of the EU.Due to its specific legal status and organisational autonomy, the ECB can define and adopt its own procurement rules. It is not subject to the EU procurement directives. They are addressed to Member States and not to EU institutions. The ECB is also not bound by the EU Financial Regulation, which applies to most other EU institutions financed from the EU budget.The working paper starts with a look back on the evolution of the ECB’s procurement rules since the establishment of the bank in 1998. We then analyse the current framework, laid down in Decision ECB/2016/2, in more detail.The second chapter summarises public procurement rules of other EU institutions, namely, the Financial Regulation and the procurement guide of the European Investment Bank which, like the ECB, is not subject to the Financial Regulation.The third chapter analyses how the differences in these legal frameworks affect procurement procedures in practice, with a focus on four key aspects of the award process: selection and award criteria, transparency and publication, proportionality and legal remedies

No. 17
6 July 2018
The Eurosystem and the Single Supervisory Mechanism: institutional continuity under constitutional constraints

Abstract

JEL Classification

K10 : Law and Economics→Basic Areas of Law→General

K40 : Law and Economics→Legal Procedure, the Legal System, and Illegal Behavior→General

Abstract

This paper analyses regulatory solutions that have been adopted to address constitutional constraints imposed on the functioning of the Single Supervisory Mechanism (SSM), in which the ECB’s exclusive supervisory competence is carried out. It argues that the operational framework governing the functioning of the SSM has assimilated, to a certain extent, three specific regulatory solutions underpinning the workings of the ESCB/Eurosystem: 1) the (legislative) allocation of certain tasks and responsibilities between ECB internal administrative bodies and structures; 2) the possibility of internal delegation of decision-making powers; and 3) the decentralised exercise of certain of the Union’s tasks. Such a design of the SSM reflects institutional continuity concerning a political choice on how to achieve stage one of a genuine Economic and Monetary Union. It concludes that the Union operates at its best when centralised decision-making on substantial policy issues is combined with a decentralised operational framework allowing for the meaningful involvement of national administrations in the exercise of Union exclusive competences.

No. 16
30 October 2017
Impact of digital innovation on the processing of electronic payments and electronic contracting: an overview of legal risks

Abstract

JEL Classification

K24 : Law and Economics→Regulation and Business Law

Abstract

Digital innovations in finance have in recent years attracted strong interest from public authorities, financial sector stakeholders and academics alike, inter alia on account of their promise to reduce, or to altogether eliminate, the inefficiencies surrounding the execution and settlement of retail payments, including those linked to remote consumer transactions. For all the promises they hold, and their transformative potential, technological innovations also present challenges, some of which are of a legal nature. With technological innovation still at a formative stage, it is essential to identify and evaluate those challenges, so as to better understand which of their payment-specific applications to encourage (and how), and mitigate the risk of technological innovation destabilising the safety and efficiency of payments. This paper seeks to explore the key legal issues that policy makers may wish to take into account in assessing the merits and risks of digital innovation, with an emphasis on its application to retail payments, and to contribute to an understanding of how technological advances are likely to affect both payment transactions and, no less importantly, the legal relationships between the parties to them. The scope of this paper is limited to an examination of the legal implications of technological innovation for payments associated with consumer transactions, including those entered into online, and settled otherwise than by way of cash. Consequently, this paper will not examine the legal implications of technological innovation for the processing of transactions relating to transferable securities, for financial stability, for the conduct, by central banks, of their monetary policy operations, for the micro-prudential supervision of payment service providers, for competition among established payment service providers and new entrants, and for financial inclusion, issues of great legal and practical significance that merit (and, no doubt, will receive, going forward) specialized attention.

No. 15
30 October 2015
The Single Rulebook: legal issues and relevance in the SSM context

Abstract

JEL Classification

K : Law and Economics

Abstract

This working paper discusses the concept of the Single Rulebook as well as its interaction with the Single Supervisory Mechanism (SSM) from a legal perspective. It aims to provide a comprehensive overview of the scope of the Single Rulebook, with a specific focus on banking legislation. It further considers the application of the Single Rulebook, in particular by the European Central Bank (ECB) as part of the SSM, and flags potential challenges and possible solutions. Based on these findings the author considers that the furthering of the Single Rulebook, both in terms of subject areas and granularity of rules, will make the operation of the SSM more efficient, while the establishment of the SSM may also improve the content of the Single Rulebook.

No. 14
11 January 2013
Central Bank involvement in macro-prudential oversight

Abstract

JEL Classification

K : Law and Economics

Abstract

This working paper addresses the institutional arrangements for the performance of macro-prudential oversight of the financial system in the European Union with focus on the functions of the central banks. The first section of the paper outlines the evolution of the EU

No. 13
21 December 2011
Crisis management and bank resolution: Quo vadis, Europe?

Abstract

JEL Classification

K : Law and Economics

Abstract

Crisis management in the financial sector is currently at the top of the reform agenda at national, European and international level. Well-designed bank resolution regimes are essential not only to meet the acute need of a credit institution in crisis but also to ensure that proper incentive structures operate in the market prior to any crisis. Existing regimes are inadequate and incentive structures have proven to be fundamentally destructive. The lack of workable crisis resolution tools has had an adverse effect on crisis prevention and imposed enormous costs on the taxpayer. Effective crisis management demands the ability to manage. In the aftermath of the financial crisis, two leading EU Member States (the United Kingdom and Germany) adopted special resolution regimes, providing for tools and powers to manage the resolution of banks. The paper assesses and compares these two approaches. In addition, the paper analyses the emerging response at European and international level, focusing in particular on bail-ins, the suspension of netting and other rights, treatment of groups and systemically important financial institutions. At the international level, the Financial Stability Board's recently published

No. 12
18 August 2011
Financial sector supervisors' accountability: a european perspective

Abstract

JEL Classification

K : Law and Economics

Abstract

Financial sector supervisors' accountability is widely accepted as a sine qua non condition of good governance and as a guarantor of supervisory independence. An arsenal of accountability inspired control instruments aims to ensure that supervisors are accountable to the legislature, the executive, stakeholders and, last but not least, the judiciary. While the general right to damages for losses arising from civil wrongs is well established, liability for faulty supervisory acts or omissions is, in many respects, limited in scope. This paper examines the conceptual underpinnings of financial sector supervisors' liability and the current legal situation on supervisory liability in the European Union, under both national and Union law. It also inquires into an aspect of the debate that has attracted less attention than it deserves, but which is likely to take on greater importance as the structure of financial supervision undergoes reforms, both at the European Union level and in the Member States: the specificity of the Member States' national central banks as banking supervisors and, in particular, the tension between their independence and their potential third party liability for damages for supervisory faults.

No. 11
30 March 2010
The role of national central banks in banking supervision in selected central and eastern European countries

Abstract

JEL Classification

K : Law and Economics

Abstract

Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Poland and Slovakia have recently undertaken substantial reforms of their supervisory frameworks, aimed at reducing the number of supervisory authorities operating in the domestic financial sector. This working paper examines from a legal perspective national central bank (NCB) involvement in banking supervision in the above-mentioned countries and, in the light of this comparative examination, draws conclusions about the nature and scope of that involvement. The analysis reveals that the trend towards consolidation of supervisory authorities is not always linked to a tendency to diminish or suspend NCB powers in the area of banking supervision: in three of the countries reviewed, the NCBs have sole competence for banking supervision, and in the Czech Republic and Slovakia, integrated supervision has even been placed under the NCB's roof. In the jurisdictions where the NCBs do not perform the supervisory function, the NCBs have nevertheless remained involved in supervision in many different ways, they have a substantial involvement in the preparation of legislation relating to supervision; they may influence the performance of the supervisory function by interaction with the supervisory authorities at the level of their decision-making bodies, through the conclusion of agreements, establishment of common bodies, etc.; and finally NCBs have also demonstrated some capacity to influence the operational side of banking supervision in the areas of licensing, on-going supervision and the imposition of sanctions or remedial measures in the case of breaches of supervisory law requirements. This working paper takes into account the legislation in force in the seven Member States under consideration as at 1 November 2009.

No. 10
18 December 2009
Withdrawal and expulsion from the EU and EMU: some reflections

Abstract

JEL Classification

K : Law and Economics

Abstract

This paper examines the issues of secession and expulsion from the European Union (EU) and Economic and Monetary Union (EMU). It concludes that negotiated withdrawal from the EU would not be legally impossible even prior to the ratification of the Lisbon Treaty, and that unilateral withdrawal would undoubtedly be legally controversial; that, while permissible, a recently enacted exit clause is, prima facie, not in harmony with the rationale of the European unification project and is otherwise problematic, mainly from a legal perspective; that a Member State's exit from EMU, without a parallel withdrawal from the EU, would be legally inconceivable; and that, while perhaps feasible through indirect means, a Member State's expulsion from the EU or EMU, would be legally next to impossible. This paper concludes with a reminder that while, institutionally, a Member State's membership of the euro area would not survive the discontinuation of its membership of the EU the same need not be true of the former Member State's use of the euro.

No. 9
27 November 2009
The legal duty to consult the European Central Bank - National and EU consultations

Abstract

JEL Classification

K : Law and Economics

Abstract

This paper analyses the European Central Bank

No. 8
3 July 2009
National rescue measures in response to the current financial crisis

Abstract

JEL Classification

K : Law and Economics

Abstract

Faced with one of the most severe financial crises in history, the European and national authorities have introduced a number of short-term measures aimed at stabilising the financial system and avoiding spillover to the wider economy. This legal working paper provides a comprehensive overview of the financial crisis measures introduced by the 27 EU Member States from 1 October 2008 through 1 June 2009. A general overview of the individual Member State's rescue schemes as well as details on state guarantee schemes, recapitalisation measures, state loans, the acquisition of impaired assets and nationalisation (where applicable) is set out for each Member State. In addition, individual measures with regard to individual banks are included in the country chapters. Appendix I provides an overview of the deposit-guarantee schemes of the Member States in the form of a chart. Relevant European Central Bank opinions and non-consultation letters can be found in Appendix II and Appendix III contains a table summarising the Member States measures.

No. 7
30 July 2008
Electronic money institutions - current trends, regulatory issues and future prospects

Abstract

JEL Classification

K : Law and Economics

Abstract

Adopted in response to the emergence of new prepaid electronic payment instruments and aspiring to establish a clear legal framework for the strengthening of the Single Market in payment services and the promotion of competition between issuing institutions, the E-money Directives have yet to achieve their objectives. Several years after the legislation's entry into force, relatively few licences have been issued, while the size of the e-money market continues to remain modest. What is more, the likelihood of an immediate increase in the volume of e-money issuance appears small, not only because of the still limited consumer interest in e-payment instruments but, also, on account of the perceived failings of the current regulatory regime. The purpose of this paper is to examine critically the state of play in this segment of the financial services industry and to inquire how the E-money Directives might be amended to bring about enhanced legal and operational certainty, facilitate the delivery of the potential benefits of e-money and contribute to the development of e-commerce within the EU. Our discussion of the regulatory concerns raised by the E-money Directives and our inquiry into the most appropriate means of resolving these will be preceded by an examination of the e-money market's expansion hitherto and its future growth prospects within the EU.

No. 6
26 June 2008
The legal implications of the prudential supervisory assessment of bank mergers and acquisitions under EU law

Abstract

JEL Classification

K : Law and Economics

Abstract

In September 2004, the Scheveningen ECOFIN Council invited the European Commission to identify the various obstacles to cross-border consolidation in the EU financial sector, including obstacles resulting from the application of prudential rules by supervisory authorities. Although this consolidation has increased in recent years, the number of cross-border mergers and acquisitions in the banking sector continues to lag behind other (non-financial) sectors. Moreover, the difficulties experienced by EU banks in attempting to acquire stakes in financial undertakings in other EU Member States (e.g. in Italy in 2005 or in Poland in 2006) have highlighted the need to ensure a high level of transparency and legal certainty in the rules applied by supervisory authorities when assessing proposed increases in and acquisitions of qualifying holdings, and the need for the Commission to closely monitor the application of these rules. This has led to the adoption of Directive 2007/44/EC of the European Parliament and of the Council of 5 September 2007 (

No. 5
23 July 2007
Legal and institutional aspects of the currency changeover following the restoration of the independence of the Baltic states

Abstract

JEL Classification

K : Law and Economics

Abstract

In the monetary reforms that took place in the Baltic States in the 1990s, two approaches were taken for breaking away from the rouble zone: one of them constituted a rapid changeover (Estonia), and the other one was relatively smoother, being made in two stages and involving the use of interim currencies (Latvia and Lithuania). Part 1 of this paper sets out the general considerations common to the currency changeover in the Baltic States, while part 2 examines the two above mentioned approaches in detail, first focusing on the Estonian experience and second on that of Latvia and Lithuania. The paper concludes with a summary.

No. 4
13 June 2007
Privileges and immunities of the European Central Bank

Abstract

JEL Classification

K : Law and Economics

Abstract

The European Central Bank (ECB) is one of the few international/supranational institutions based on German territory. As with other international organisations, the ECB enjoys privileges and immunities in order to ensure its independence and proper functioning. This status is sometimes compared to the extraterritorial status of embassies and consulates. However, a closer analysis shows that this conclusion requires some correction and qualification. A supranational institution is confronted with the issue of its status in the host country in a multitude of circumstances, from the legal basis for its exemption from national law, to the extent of its immunity as regards jurisdiction and enforcement to how all this is applied in practice, in particular as regards labour law and taxation. The purpose of this paper is to explain the scope and content of the privileges and immunities granted to the ECB and to illustrate some of the practical legal problems on the basis of examples. In Part I we examine the extent to which the ECB is exempt from national law, in particular German law. In Part II, we discuss the ECB's immunity from jurisdiction and enforcement. Part III deals with the privileges and immunities granted to the members of the ECB's Executive Board and its staff. Part IV contains an examination of some of the problems that arise in practice when implementing the rules on privileges and immunities.

No. 3
20 October 2006
National central banks and community public sector procurement legislation: a critical overview

Abstract

JEL Classification

K : Law and Economics

Abstract

On 31 March 2004 the Council of Ministers and the European Parliament adopted the Public Sector Procurement Directive, with a national implementation deadline of 31 January 2006. In common with earlier Community public sector procurement legislation, the new Directive seeks to ensure that European public sector entities award contracts in an efficient, transparent and non-discriminatory manner, thereby contributing to the elimination of public procurement as a non-tariff barrier to the development of a genuine Single Market for goods and services throughout the EU. Although some of the Member State national central banks (NCBs) are listed in an Annex to the Public Sector Procurement Directive as

No. 2
10 March 2006
The application of multilingualism in the European Union context

Abstract

JEL Classification

K : Law and Economics

Abstract

On 1 May 2004, 10 more countries acceded to the European Union (EU), bringing the total number of member States to 25, increasing the EU's population to over 450 million and, last but not least, nearly doubling the number of the official languages of the EU. The recent enlargement, a cornerstone in the continuing process of European integration, poses unprecedented challenges, also because of its linguistic implications for the EU and for the language regime applicable to the Community Institutions. In the case of the ECB, this challenge is all the more evident due to the very short deadlines within which some of its operational decisions need to be taken and implemented and the practical implications that their adoption in all the official languages of the EU would entail. This paper is divided in two Parts. Part I provides an overview of the rationale and of the legal basis underlying the EU's current language policy, outlining the language regime applicable to the Community Institutions and bodies and discusses exceptions and limitations to multilingualism associated with the particular situation of Member States with more than one official language or stemming from some recent case-law on the Institutions' language regime. Part II examines the issue of the name of the single currency and some of the reasons underlying the ECB's stance on proposed national variations in its spelling.

No. 1
24 February 2006
The developing EU legal framework for clearing and settlement of financial instruments

Abstract

JEL Classification

K12 : Law and Economics→Basic Areas of Law→Contract Law

Abstract

Traditionally, clearing and settlement of financial instruments has not been the focus of general attention, even though it is at the heart of any financial system. The on-going integration of financial markets, and in particular the process of creating a single market for financial services in the European Union (EU), has put in the spotlight the importance of clearing and settlement. Weaknesses in the clearing and settlement infrastructure can have serious consequences for the financial sector as a whole. In view of this, the European Commission has given high priority to removing the barriers to efficient cross-border clearing and settlement in the single market. Clearing and settlement depends to a large extent on the legal infrastructure on which it is built. Clear and effective legal rules are a prerequisite for building market confidence, fostering investor protection and limiting and managing systemic risk. A modern and efficient legal framework in the EU will not only enhance the safety, soundness and efficiency of the clearing and settlement of financial instruments, it will also promote the further integration and competitiveness of European financial markets. This paper presents and evaluates the existing EU legislative framework. Furthermore, the paper describes current EU initiatives to remove barriers to efficient clearing and settlement, with a specific focus on the legal aspects and, in particular, on the activities of the Legal Certainty Group. Finally, it compares the European initiatives with parallel efforts to harmonise laws on a global scale and gives an outlook as to how the acquis communautaire could evolve in the short to medium term.

Disclaimer: Please keep in mind that the papers are published in the name of the author(s). Their views do not necessarily reflect those of the ECB.