LJ EUROPEAN CENTRAL BANK ST jean-Claude TRICHET President 2 November 2010 Mr Brian LENIHAN T?naiste and Minister for Finance Govemment Buildings Upper Merrion Street DUBLIN 2 IRELAND ECB Opinion on the extension of the Irish State guarantee of certain liabilities of credit institutions Dear Minister, Following your consultation received by the ECB on 28 October 2010, I have pleasure in enclosing the Opinion of the ECB of 2 November 2010 on the draft Credit Institutions (Eligible Liabilities Guarantee) (Amendment) (No 2) Scheme 2010. I would be grateful if, following completion of the decision-making process, you would kindly send me a copy of the final law. Yours sincerely, Kaiserstrasse 29, D-603l| Frankfurt am Main Tel. +49-69-|344-0 1 Fax: +49-69-|344-7305 Ka|serstr"asse 29, 6031 I Frankfurt am Main, Germany - TelFaxEN te zunornu asm: OPINION OF THE EUROPEAN CENTRAL BANK of 2 November 2010 on the extension of the Irish State guarantee of certain liabilities of credit institutions Introduction and basis On 28 October 2010 the European Central Bank (ECB) received a request fiom the Irish Minister for Finance (hereinafter the 'Minister') for an opinion on a draft Credit Institutions (Eligible Liabilities Guarantee) (Amendment) (No 2) Scheme 2010 (hereinafter the 'draft scheme') amending the Credit Institutions (Eligible Liabilities Guarantee) Scheme 2009 (hereinafter the Scheme'). The ECB's competence to deliver an opinion is based on Articles l27(4) and 282(5) of the Treaty on the Functioning ofthe European Union and the sixth indent of Article 2(l) of Council Decision of 29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft legislative provisionsl, as the draft scheme relates to rules applicable to financial institutions insofar as they materially influence the stability of financial institutions and markets. In accordance with the first sentence of Article 17.5 of the Rules of Procedure ofthe European Central Bank, the Governing Council has adopted this opinion. 1. Purpose ofthe revised draft cheme 1.1 The ELG Scheme was signed into law on 9 December 2009. The ECB was consulted on the ELG Scheme at the draft stage and adopted its Opinion Subsequently the ECB adopted Opinions and on proposed amendments to the ELG e. 1.2 The Irish Govermnent now proposes a further prolongation ofthe validity of the ELG Scheme by 12 months, i.e. that eligible liabilities may be issued until 31 December 2011 together with some minor technical changes. 2. The appropriate time to consult the ECB The ECB notes that the Minister for Finance has requested that the ECB provides its opinion as soon as possible in order to ensure that Union State aid approval for the draft scheme can be obtained quickly and I 01 1. 189, s.7.199s, p. 42. 2 All ECB opinions are published on the ECB's website at the draft scheme presented for parliamentary approval. The ECB reiterates its view as expressed in previous opinions? that the consultation should take place at a point in the legislative process which affords the ECB sufficient time to examine the draft legislative provisions and to adopt its opinion in all required language version and which also enables the relevant national authorities to take the ECB's opinion into consideration before the provisions are adopted. Article 3(4) of Decision also obliges Member States to suspend the adoption process for draft legislative provisions, pending receipt of the ECB's opinion. The ECB would appreciate the Department of Finance giving due consideration to honouring their obligation to consult the ECB in the future, in accordance with Decision 3. The draft scheme 3.1 The purpose of the draft scheme is the extension of the issuance period under the ELG Scheme from 31 December 2010 to 31 December 2011. The Minister in his request for an opinion advises that a positive asses ent by the ECB on financial stability grounds of the requirement for a prolongation ofthe guarantee of short term and interbank liabilities is considered essential by the European Commi sion to the Commi sion's approval process. 3.2 The ECB reiterates the views expressed in previous opinions'. In particular, it recalls that coordination of the duration of national financial support schemes across the Union is of crucial importance in order to ensure a level playing iields. 3.3 Taking into account iinancial stability considerations, an extension of the ELG may be beneficial. - This opinion will be published on the ECB's website. Done at Frankfurt am Main, 2 November 2010. Ure President ofthe ECB Jean-Claude TRICHET 3 See Opinion paragraph 2, paragraph 2 and paragraph 2.1. 4 See Opinions and 5 See Opinions paragraph 3.1, paragraph 2.5.2 and paragraph 3.2. 2