Opinion of the European Central Bank of 8 September 2023 on requiring credit institutions to provide a universal banking service and guarantee a minimum spread of automated teller machines (ATMs) (CON/2023/25)

OPINION OF THE EUROPEAN CENTRAL BANK of 8 September 2023 on requiring credit institutions to provide a universal banking service and guarantee a minimum spread of automated teller machines (ATMs) (CON/2023/25) Introduction and legal basis

On 30 June 2023 the European Central Bank (ECB) received a request from the Governor of the Banque Nationale de Belgique/Nationale Bank van België (NBB), acting at the request of the Belgian Chamber of Representatives, for an opinion on a draft law amending the Law of 25 April 2014 on the status and supervision of credit institutions relating to the establishment of the universal banking service and the minimum number of cash machines (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 since the draft law contains provisions falling within the ECB’s fields of competence pursuant to Article 127(2) of the Treaty and Article 3.1 of the Statute of the European System of Central Banks and of the European Central Bank, and the first, second, third and sixth indents of Article 2(1) of Council Decision 98/415/EC , as the draft law relates to (1) the basic task of the European System of Central Banks (ESCB) to implement the monetary policy of the Union pursuant to Article 127(2), first indent, of the Treaty, (2) currency matters, (3) means of payment, (4) the NBB and (5) the ECB’s tasks concerning the prudential supervision of credit institutions pursuant to Article 127(6) of the Treaty. 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 key objective of the draft law is to introduce two new obligations for credit institutions: (1) to provide a universal banking service; and (2) to collectively guarantee a minimum spread of automated teller machines (ATMs), self-banking machines and systems for printing bank statements. The scope, terms and conditions, and other modalities applicable to these new obligations, as well as the maximum prices that could be charged, would be set out in a Royal Decree. 1.2 These new obligations would be inserted into the Law of 25 April 2014 on the legal status and supervision of credit institutions (hereinafter the ‘Banking Law’) as operating conditions to be fulfilled by credit institutions on an ongoing basis. On the insertion of these new obligations into the Banking Law, the prudential supervisory authority would have responsibility for monitoring compliance with

1 Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national 1authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). them and for imposing penalties on, and taking binding measures against, credit institutions that fail to meet the new obligations. 1.3 According to the explanatory memorandum of the draft law, the proposal to introduce these two new obligations is based on the following considerations. The first objective of the draft law is to enshrine the principles of the universal banking service in the Banking Law in order to oblige retail banks operating in Belgium to provide this service, which may also be included in an existing service package if the banks meet the relevant conditions. This service would include minimum basic banking services (i.e. the provision of a payment card, the ability to carry out certain transactions and make cash withdrawals, and direct debit facilities) and the provision of paper bank account statements offered at a reasonable price. The second objective of the draft law is to broaden and give legal effect to the preamble of the charter dated 19 July 2021 entered into between the Belgian government and the Belgian financial sector concerning the ‘universal banking service’ . The preamble states that citizens should have effective access to traditional physical banking services. In view of the digital divide, guaranteed access to physical banking services is in the public interest. 1.4 In furtherance of the two new obligations outlined above, the draft law proposes to insert a new section into the Banking Law that would (1) include the imposition of a general obligation on credit institutions to guarantee sufficient physical access to basic non-digital banking and financial payment services throughout the country; (2) provide that such sufficient access is to be guaranteed by providing a universal banking service and collectively guaranteeing a minimum spread of ATMs, selfbanking machines and systems for printing bank statements; and (3) authorise the King to set out in a Royal Decree the terms and conditions and other modalities applicable to these new obligations, as well as the maximum prices that can be charged. 1.5 The draft law would further amend the Banking Law to provide that the two new obligations referred to in paragraphs 1.1 to 1.3 would also have to be complied with by (1) EEA credit institutions acting in Belgium on a cross-border basis or via a branch and (2) Belgian branches of third country credit institutions.

2. Non-digital banking services

2.1 Innovations, regulatory developments, and adapting consumer habits have changed the European retail payments landscape. The COVID-19 pandemic accelerated this trend with an increased shift towards online services and shopping. This led to an increase in consumers paying by electronic or digital means, such as through online payments, payment cards or mobile phones. While the trend towards digitalisation in banking services and retail payments brings about various changes, these changes cannot come at the cost of sidelining cash, which remains a widely used means of payment

2 Charte entre Febelfin et le Gouvernement concernant l'offre d'un "service bancaire universel" (2021)/Charter tussen Febelfin en de Regering inzake het aanbieden van een "universele bankdienst" (2021), available on the website of the Belgian government at www.economie.fgov.be (in French and in Dutch).

3 See Articles 2 and 3 of the draft law, introducing a new section IX of the Banking Law entitled ‘Accessibility of financial services’, which would contain a new Article 75/3 of the Banking Law.

4 See Articles 4 and 5 of the draft law and Articles 315, paragraph 1, and 335, paragraph 1, of the Banking Law. with legal tender status, nor at the cost of excluding segments of the population from physical access to basic non-digital banking and financial payment services. 2.2 The ECB welcomes the objectives of the draft law aimed at ensuring physical access to basic nondigital, banking and financial payment services, and particularly those aimed at ensuring sufficient and effective access to cash throughout the country . Sufficient and effective access to cash is necessary to preserve the effectiveness of the legal tender status of cash. If citizens do not have easy access to cash, they will not be able to use it as a means of payment . In this context, on 28 June 2023 the Commission published a proposal for a Regulation of the European Parliament and of the Council on the legal tender of euro banknotes and coins (hereinafter ‘the proposed regulation on the legal tender of euro cash’), which includes an obligation for Member States to ensure sufficient and effective access to cash throughout their territory . 2.3 Cash payments facilitate the inclusion of the entire population in the economy by allowing citizens to settle a wide range of payment transactions in this way, thus ensuring freedom of choice as to method of payment for all citizens . In addition, cash is a well-established means of payment providing for immediate settlement of debts and direct control over the payer’s spending. It is currently the only payment instrument that allows citizens to settle a transaction in central bank money which is also settled instantly , while, importantly, ensuring privacy. Cash could also play an important role in the event of a disturbance in the payment system . The ability to pay in cash also remains particularly important for certain groups in society that, for various legitimate reasons, prefer to use cash rather than other means of payment, or who are unable to use digital technology. These groups include not only elderly people and minors, but also some disabled citizens, immigrants, socially vulnerable citizens, and others with limited or no access to digital payment services. 2.4 While the ECB holds a positive view of further innovation and development in the field of electronic payment instruments, the ECB also considers that ensuring an adequate level of access to euro cash and the freedom of payment choice is essential. In this context, it is important that all Member States take appropriate measures to ensure that credit institutions and branches operating within their territories provide adequate access to cash services , including facilities to enable cash deposits on payment accounts, in order to facilitate the continued use of cash and acceptance in payments by enterprises.

5 The ECB has consistently welcomed legislative proposals aimed at ensuring access to cash in euro area Member States. See, for example, paragraph 3.3 of Opinion CON/2022/40. All ECB opinions are published on EUR-Lex.

6 See Principle 6 of ELTEG III in the Final report of the Euro Legal Tender Expert Group (ELTEG) of 6 July 2022, available on the Commission’s website at www.ec.europa.eu.

7 COM(2023) 364 final.

8 See paragraphs 2.4 and 3.1 of Opinion CON/2017/8, paragraph 2.7 of Opinion CON/2017/40, paragraph 2.6 of Opinion CON/2019/4, paragraphs 2.1 to 2.3 of Opinion CON/2021/18, paragraph 7.2.1 of Opinion CON/2021/9, paragraph 2.3 of Opinion CON/2021/38 and paragraph 2.1 of Opinion CON/2023/13.

9 See paragraph 2.4 of Opinion CON/2017/8, paragraph 2.1 of Opinion CON/2019/41, paragraph 9.2.1 of Opinion CON/2020/13, paragraph 2.3 of Opinion CON/2020/21, paragraph 7.2.1 of Opinion CON/2021/9 and paragraph 2.1 of Opinion CON/2021/18.

10 See paragraph 2.3 of Opinion CON/2020/21.

11 See paragraph 2.3 of Opinion CON/2019/41 and paragraph 9.2.3 of Opinion CON/2020/13. 2.5 At the same time, the ECB would like to underline the need to clarify the scope of application of the new obligations in view of potential implementation challenges implied by them. The need for clarification may notably apply to the question of which credit institutions will be obliged to offer basic non-digital banking and financial payment services and to collectively guarantee a minimum spread of ATMs, self-banking machines and systems for printing bank statements. The ECB notes that, according to the draft law, a future Royal Decree will define the specific services to be provided, the maximum prices pertaining thereto and the associated terms, conditions and obligations. The ECB understands that it will be consulted before the Royal Decree is adopted. 2.6 The ECB also understands that the basic non-digital banking and financial payment services provided for under the draft law would include direct debits. However, if this relates to setting up a paper-based mandate for a direct debit, it should be emphasised that setting up a mandate does not involve the debtor’s bank, as the mandate is provided directly by the debtor to the creditor. 2.7 From the monetary policy perspective, the ECB also welcomes the measures in the draft law aimed at requiring Belgian credit institutions to offer offline access to a universal banking service and a minimum spread of ATMs. In its pursuance of price stability, the ECB must be able to rely on an appropriate transmission of its monetary policy towards the wider economy. Given the key role of credit institutions in the transmission of monetary policy, they should ideally offer a universal banking service and access to currency in the form of cash throughout the territory so as to be accessible to all economic actors, including those who do not use digital banking services. At the same time, the costs of implementation of the new obligations for credit institutions would need to be adequately accounted for in the Royal Decree.

3. Prudential supervision of credit institutions

3.1 The ECB understands that the Banking Law contains the provisions of Belgian law concerning the prudential supervision of credit institutions and, in accordance with the provisions of Council Regulation (EU) No 1024/2013 (hereinafter the ‘SSM Regulation’) , the competent authorities referred to in the Banking Law are the ECB and the NBB. The ECB further understands that the Belgian Code of Economic Law (CEL) contains the conduct of business and consumer protection 13 14 rules applicable to payment services and the rules on basic banking services . 3.2 Notwithstanding that the draft law would amend the Banking Law, the ECB understands that the new obligations do not relate to the prudential supervision of credit institutions. In accordance with Article 127(6) of the Treaty, the SSM Regulation confers tasks on the ECB concerning the prudential supervision of credit institutions. In this respect, the SSM Regulation clarifies that supervisory tasks not conferred on the ECB, including consumer protection, should remain with the national authorities . Therefore, the ECB understands that the draft law cannot include any role for the ECB in its prudential supervisory function. The ECB also understands that the draft law operates without

12 Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63).

13 See Book VII, Title 3 of the CEL.

14 See Book VII, Title 3, Chapter 8 of the CEL.

15 See recital 28 of the SSM Regulation. prejudice to the specific tasks conferred on the ECB under the SSM Regulation, including in particular the exclusive competence of the ECB to authorise credit institutions and to withdraw authorisations of credit institutions . In the interest of legal certainty regarding the role of the prudential supervisors under the SSM Regulation, the ECB recommends keeping the new obligations under the draft law separate from those on prudential supervision, and hence not to include the new obligations in the Banking Law.

4. Supervision of the new obligations by the NBB

4.1 The ECB understands that the Belgian Federal Public Service Economy is responsible for monitoring compliance with the rules and requirements regarding the conduct of business and consumer protection applicable to payment services under the Belgian Code of Economic Law. In so far as the new obligations under the draft law qualify as consumer protection law, it may be appropriate for the same authority, or other authorities that are currently performing consumer protection tasks, to be given the task of supervising compliance with the new obligations. 4.2 Regarding the obligation for credit institutions to ensure sufficient and effective access to cash throughout the country, the ECB notes that the proposed regulation on the legal tender of euro cash establishes that Member States are to designate one or more national competent authorities ‘with the required powers as regards acceptance of payments in cash and access to cash, and over the cash-related market activities of the cash industry’ . These authorities will, inter alia, be responsible for monitoring and assessing the situation in their Member State regarding access to cash and will notify the results of such monitoring and assessment to the Commission and the ECB in annual reports . The annual reports will also indicate the remedial measures the Member State commits to taking if it considers that sufficient and effective access to cash is not ensured . 4.3 The ECB understands that the designation of the NBB as the competent authority for the supervision of the new obligations that would be inserted into the Banking Law could raise questions regarding the liability regime applicable to the NBB. In this respect, the ECB understands that the existing liability regime in relation to the NBB’s prudential supervision tasks provides that the NBB will not be liable for any act or omission in carrying out its supervisory tasks, except in cases of gross negligence or fraud. In order to ensure legal certainty in this respect, it should be clarified in the draft law whether the new task conferred by the draft law on the NBB would fall within the scope of this limitation of liability, to the extent permitted under the national legal framework.

17 See Book VII, Title 3 of the CEL.

19 Articles 8 and 9 of the proposed regulation on the legal tender of euro cash 4.4 The ECB notes that the draft law does not specify how the new task assigned to the NBB is to be financed. As the task is attributed to the NBB as the ‘supervisory authority’ in the Banking Law, there may be legal uncertainty as to whether this task will be covered by the existing financing arrangements for the NBB’s prudential supervision tasks under which its costs are financed by levying fees on all supervised credit institutions. In the interest of ensuring legal certainty, it should be clarified in the draft law how the new task would be financed. This opinion will be published on EUR-Lex. Done at Frankfurt am Main, 8 September 2023. [signed] The President of the ECB Christine LAGARDE