Opinion of the European Central Bank of 17 December 2014 on credit requirements (CON/2014/88)

OPINION OF THE EUROPEAN CENTRAL BANK of 17 December 2014 on credit requirements (CON/2014/88) Introduction and legal basis

On 13 November 2014 the European Central Bank (ECB) received a request from the Estonian Ministry of Finance for an opinion on the Law on credit providers and credit intermediaries (hereinafter ‘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 indent of Article 2(1) of Council Decision 98/415/EC , as the draft law relates to Eesti Pank. 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

The draft law relates to Eesti Pank’s powers to specify loan requirements. The primary aim of the draft law is to harmonise the requirements applicable to undertakings operating in the financial market and to regulate credit provision and credit intermediation to consumers. The draft law applies to financial institutions, other than credit institutions, whose principal economic activity is credit provision. Non-bank credit providers and credit intermediaries include also lessors and deferred payment providers.

2. Macro-prudential objective

The draft law introduces an amendment to the Law on credit institutions in order to enhance legal certainty and states expressly that the purpose of Eesti Pank’s power to specify certain loan requirements is macro-prudential supervision. 2 3 The Law on Eesti Pank implementing Recommendation ESRB/2011/3 designates Eesti Pank as the macro-prudential authority in Estonia . This law authorises Eesti Pank to conduct macro-prudential policy at a national level. Eesti Pank has numerous instruments it can use to achieve this objective including the faculty to establish loan requirements set forth in the draft law.

3. General observations

The ECB observes that the powers to take macro-prudential measures provided for in Regulation (EU) 5 6 No 575/2013 and Directive 2013/36/EU are subject to Article 5 of Regulation (EU) No 1024/2013 (hereinafter the ‘SSM Regulation’), which requires national competent or designated authorities to notify the ECB of their intention to take certain measures. According to Article 5(2) of the SSM Regulation, the ECB may apply more stringent measures aimed at addressing macro-prudential risks. The ECB further notes that, pursuant to Article 9(1) of the SSM Regulation, the ECB may require national competent or designated authorities, by way of instructions, to make use of their macroprudential powers where the SSM Regulation does not confer such powers on the ECB.

This opinion will be published on the ECB’s website.

Done at Frankfurt am Main, 17 December 2014.

[signed]

The President of the ECB

Mario DRAGHI