Opinion of the European Central Bank of 20 February 2023 on the designation of the Central Bank of Cyprus as a competent authority for the implementation of Union legal acts (CON/2023/5)

OPINION OF THE EUROPEAN CENTRAL BANK of 20 February 2023 on the designation of the Central Bank of Cyprus as a competent authority for the implementation of Union legal acts (CON/2023/5) Introduction and legal basis

On 10 January 2023 the European Central Bank (ECB) received a request from the Ministry of Finance of the Republic of Cyprus for an opinion on a Law amending the Central Bank of Cyprus Laws 2002 to 2017 (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 the third indent of Article 2(1) of Council Decision 98/415/EC , as the draft law relates to the Central Bank of Cyprus (CBC). 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 draft law provides that the Minister for Finance may, after obtaining the CBC’s consent, issue a notification to be published in the Official Gazette of the Republic, designating and authorising the CBC as the competent authority for the implementation of any Union legal act. 1.2 The draft law further provides that where the CBC is designated as the competent authority for the implementation of a Union legal act, it will have the power, in case of non-compliance with such legal act, to impose administrative sanctions and take administrative measures provided for in that legal act.

2. General observations

2.1 The ECB understands that, in principle, the effective implementation of directly applicable Union legal acts, such as regulations and decisions, is ensured through: (i) the designation of the authority competent for their implementation; (ii) the penalisation of breaches; and (iii) the conferral on the designated competent authority of the administrative powers necessary for it to meet its obligations in relation to the implementation of such Union legal acts, which may be used, for example, in case of non-compliance.

2.2 The ECB further understands that the power of the Minister for Finance to designate a competent authority for the implementation of Union legal acts derives from the Constitution of the Republic of Cyprus , which provides for the members of the Council of Ministers’ general power to exercise executive powers that are relevant to the respective ministry’s tasks. 2.3 Furthermore, the ECB understands that, under Cypriot law , except where otherwise provided by law, regulatory administrative act or decision of the executive power, each ministry and independent authority is responsible for ensuring the implementation in Cyprus of Union regulations and decisions that fall within the ministry’s or the independent authority’s tasks, in accordance with the Cypriot Constitution, the laws, the regulatory administrative acts and the decisions of the executive power of the Republic of Cyprus. Based on this provision of Cypriot law, the ECB understands that the draft law concerns only Union regulations and decisions that are relevant to the CBC’s existing tasks and responsibilities. 2.4 Finally, based on the foregoing and on the assumption that the designation of the CBC as a competent authority is limited to Union legal acts that fall under the CBC’s tasks and responsibilities, the ECB understands that the draft law does not confer any new task on the CBC. The ECB notes that the CBC has already been designated as the competent authority for the implementation of other relevant Union acts .

3. Specific observations

3.1 The draft law refers to ‘European Union acts’, which is understood to cover Union regulations, directives and decisions. In light of this and considering that not all Union legal acts require the designation of a national competent authority responsible for their implementation in a Member State and the imposition of sanctions in case of non-implementation, the ECB invites the consulting authority to clarify which types of Union legal acts the general term ‘European Union acts’ covers. 3.2 For the sake of legal certainty and transparency, the ECB suggests that the proposed wording of the new provision of the draft law authorising the Minister for Finance to designate the CBC as competent authority for the implementation of Union legal acts should be amended to explicitly clarify that this task will only concern Union legal acts that are relevant to the CBC’s existing tasks and responsibilities .

3.3 The ECB understands that within the Cypriot legal framework the range of administrative sanctions that competent authorities may impose is specified in Union regulations and/or national law. For consistency purposes, the ECB suggests that the draft law’s proposed wording authorising the CBC to impose the administrative sanctions and administrative measures provided for in Union legal acts for the implementation of which the CBC is designated as the competent authority should be amended to explicitly clarify that the CBC may impose such administrative sanctions and administrative measures, within the range specified in Union and/or national law, to the extent relevant to the CBC’s tasks and responsibilities.

This opinion will be published on EUR-Lex.

Done at Frankfurt am Main, 20 February 2023.

[signed]

The President of the ECB

Christine LAGARDE