ECB publishes Guide to consultation of ECB by national authorities regarding draft legislative provisions

RegCORE Client Alert | Banking Union

QuickTake

The European Central Bank (ECB) has during April 2025 updated and on 6 May 2025 published an updated Guide to consultation by national authorities regarding draft legislative provisions within its fields of competence (the Guide). This Guide, reflecting developments since the establishment of the Single Supervisory Mechanism (SSM) and drawing on two decades of practical experience, provides comprehensive direction on the legal framework, objectives, scope, and procedures for consulting the ECB on draft national legislation.

As explored in this Client Alert, the update aims to enhance transparency, cooperation, and legislative alignment across the EU, thereby supporting the stability and integrity of the financial system. More specifically the Guide emphasises the importance of timely consultations to ensure that the ECB's expertise is considered before legislative decisions are made, and it highlights the legal consequences of non-compliance, which may include infringement proceedings. Additionally, it provides insights into the types of legislative provisions that require consultation and the circumstances under which the ECB may decline to issue an opinion. The updated Guide aims to enhance transparency and cooperation between national authorities and the ECB, promoting harmonisation of legislation across Member States.

Key principles and takeaways from the Guide

The obligation for Member States to consult the ECB on draft legislative provisions is rooted in the Treaty on the Functioning of the European Union (Articles 127(4) and 282(5)), the Statute of the European System of Central Banks (ESCB), and Council Decision 98/415/EC. The Guide clarifies that this obligation applies to all EU Member States, regardless of euro area participation, and covers a broad range of legislative initiatives that may impact the ECB’s fields of competence.

The principal objective of the consultation process is to ensure that national legislation is compatible with the objectives, legal framework, and policies of the ECB (not just in the SSM context), the Eurosystem, and the ESCB. The process is designed as a preventive mechanism to avoid inconsistencies or incompatibilities between national and EU-level frameworks, and to enable the ECB to provide expert advice at a stage when it can be meaningfully considered by national authorities.  The Guide also highlights the role of ECB opinions in fostering harmonisation, enhancing legislative quality, and supporting transparency and public communication.

In terms of scope of the obligation to consult and the covered provisions, the Guide reiterates that:

• The Guide clarifies that the ECB’s advisory function is preventive in nature, requiring consultation at a stage when the ECB’s opinion can meaningfully influence the (national) legislative process.
• The obligation to consult the ECB applies to all national authorities preparing draft legislative provisions within the ECB’s fields of competence, including government ministries, national parliaments, national central banks (NCBs), supervisory authorities, and other relevant bodies.
• The definition of “draft legislative provisions” encompasses any legally binding rules of general applicability, including primary and certain secondary legislation, decree-laws, and substantive amendments to draft legislation.
• The obligation extends to both euro area and non-euro area Member States, with additional requirements for non-euro area states regarding instruments of monetary policy.

The Guide provides a non-exhaustive list of areas requiring consultation to be addressed to the ECB. These include:

• Currency matters and means of payment (e.g., euro introduction, legal tender, cash limitations, digital payments);
• NCBs (e.g., status, independence, tasks, governance, monetary policy operations);
• Collection, compilation, and distribution of monetary, financial, banking, payment systems, and balance of payments statistics;
• Payment and settlement systems (e.g., oversight, settlement finality, digitalisation, cybersecurity); and
• Rules applicable to financial institutions that materially influence financial stability (e.g., prudential supervision, anti-money laundering, deposit guarantee schemes, financial market infrastructure)

The Guide emphasises that the list of areas is non-exhaustive and that both euro area and non-euro area Member States are subject to the consultation requirement, with specific provisions for non-euro area Member States regarding monetary policy instruments.

The Guide also sets out exemptions and discretion from an obligation to consult the ECB, these include:

• Draft provisions whose exclusive purpose is the transposition of Union directives are generally exempt from the consultation requirement, unless the national legislator exercises discretion that substantially affects the ECB’s fields of competence; and/or
• The ECB may also be consulted on a voluntary basis for guidance on draft provisions, even where no formal obligation exists.

The Guide also clarifies where the ECB may decline to issue an opinion and thus:

• The ECB may issue a “non-adoption letter” where draft provisions only marginally touch on its fields of competence or involve purely formal or administrative changes; and/or
• No opinion is issued for draft provisions that merely transpose Union legislation without substantive national discretion, unless the new tasks or amendments are of non-marginal importance to the ECB’s competence, particularly regarding NCB independence or monetary financing prohibitions.

In terms of timing and process:

• The ECB must be consulted at an “appropriate stage” in the legislative process, allowing sufficient time for review and for its opinion to be considered before adoption.
• Requests for opinions must be addressed in writing to the President of the ECB, accompanied by the draft provisions, an explanatory memorandum, and, where possible, an English translation.
• Member States may set a time limit for the ECB’s response (not less than one month, except in cases of extreme urgency), with the possibility for the ECB to request an extension of up to four weeks.
• The ECB’s opinion is drafted by a panel of experts, reviewed by the Executive Board, and adopted by the Governing Council (and, where relevant, the Supervisory Board).
• All ECB opinions, non-adoption letters, and cases of non-compliance are published on EUR-Lex, supporting transparency and public access.
• Consulting authorities are encouraged to inform the ECB of the final outcome of the legislative process and to provide copies of adopted provisions.

Member States are required to ensure effective compliance with the consultation obligation. The ECB monitors and reports on compliance, and cases of non-compliance may be included in its Annual Report.  Failure to consult the ECB constitutes an infringement of Decision 98/415/EC and may result in infringement proceedings before the Court of Justice of the European Union.  National courts may also be called upon to rule on the validity or enforceability of national provisions adopted without the required consultation. In terms of legal consequences of non-compliance the Guide reiterates that:

A. Infringement proceedings: Failure to consult the ECB as required constitutes an infringement of Decision 98/415/EC and may lead to infringement proceedings before the Court of Justice of the European Union (CJEU), initiated by the Commission or another Member State.

B. Impact on national legislation: National courts may be asked to rule on the validity or enforceability of national provisions adopted without the required ECB consultation. In some cases, such provisions may be deemed unenforceable against individuals, especially where the procedural defect is considered substantial.

C. Remedies for regulated firms an individuals: Regulated firms may have standing to challenge national measures adopted in breach of the consultation obligation, particularly in jurisdictions where procedural defects can be grounds for annulment. Individuals may rely on the obligation to consult the ECB before national courts, and national provisions adopted in breach of this requirement may be subject to annulment or unenforceability.

Key considerations for regulated firms

The Guide to ECB Consultation on Draft Legislation is a critical document for understanding the procedural and substantive safeguards that underpin the relationship between national legislative processes and the ECB’s fields of competence. For regulated firms, the Guide underscores the importance of monitoring legislative developments, understanding the ECB’s advisory role, and being prepared to respond to or leverage the legal consequences of non-compliance with the consultation obligation. In addition to some of the points discussed above, this includes:

1. Early identification of regulatory changes: The publication of ECB opinions provides firms with early insight into the ECB’s views on proposed national measures, allowing for proactive compliance planning and strategic adjustment.
2. Potential for delays in national legislation: The requirement to consult the ECB and suspend the adoption process pending its opinion may introduce delays in the implementation of national legislative changes. Firms should monitor legislative timelines closely, especially for measures with significant operational or compliance impacts.
3. Opportunity for engagement: Firms, particularly those with significant market presence or systemic importance, may wish to engage with national authorities during the legislative drafting process to ensure that their perspectives are considered and that draft provisions are robustly justified in light of ECB competence.
4. Risk of legal challenge: Where national legislation is adopted without proper ECB consultation, firms may have grounds to challenge such measures, either directly or as part of broader litigation strategies, especially if the measures adversely affect their interests.

Given the ECB’s particular focus on the independence of NCBs and the prudential supervision of credit institutions, firms should be attentive to legislative changes in these areas, as ECB scrutiny is likely to be especially rigorous as the new Guide is operationalised.

Outlook

The updated Guide to consultation by national authorities with the ECB marks a significant step forward in fostering a harmonised and transparent legislative environment across the EU’s financial sector. By clarifying the legal framework, procedural requirements, and substantive scope of the consultation obligation, the Guide not only strengthens the preventive function of ECB oversight but also enhances the quality and consistency of national legislation within the ECB’s fields of competence. This is particularly relevant as the EU continues to deepen financial integration and address emerging challenges such as digitalisation, cybersecurity, and the evolving landscape of payment and settlement systems. The Guide’s emphasis on early and meaningful engagement ensures that the ECB’s expertise is leveraged at a formative stage, reducing the risk of legal inconsistencies and supporting the stability and integrity of the financial system.

Looking ahead, the operationalisation of the Guide is expected to drive greater alignment between national and EU-level regulatory frameworks, with a corresponding increase in the scrutiny of legislative initiatives that impact monetary policy, prudential supervision, and the independence of national central banks. Some national authorities may need to adapt their legislative processes to ensure timely and effective consultation, while regulated firms should remain vigilant in monitoring legislative developments and be prepared to engage proactively with both national and EU authorities.

Ultimately, the Guide serves as both a safeguard and an opportunity: it protects the coherence of the EU’s financial architecture while offering firms and authorities a clear pathway to navigate the complexities of legislative change in a rapidly evolving regulatory landscape.

About us

PwC Legal is assisting a number of financial services firms and market participants in forward planning for changes stemming from relevant related developments. We have assembled a multi-disciplinary and multijurisdictional team of sector experts to support clients navigate challenges and seize opportunities as well as to proactively engage with their market stakeholders and regulators.

Moreover, we have developed a number of RegTech and SupTech tools for supervised firms, including PwC Legal’s Rule Scanner tool, backed by a trusted set of managed solutions from PwC Legal Business Solutions, allowing for horizon scanning and risk mapping of all legislative and regulatory developments as well as sanctions and fines from more than 1,500 legislative and regulatory policymakers and other industry voices in over 170 jurisdictions impacting financial services firms and their business.

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If you would like to discuss any of the developments mentioned above, or how they may affect your business more generally, please contact any of our key contacts or PwC Legal’s RegCORE Team via de_regcore@pwc.com or our website.