ACT ON THE BANK OF -AND
Section l
Status
The Bank ofFinland is the central bank of Finland. It is an independent
institution governed.by public law.
The Bank of Fialand shall act as part of thc European System of Central
Banks in the manner laid down in the Treaty establishing the European
Communities, hereinafter referred to as 'the Treaty', and the Statute of the
European System of Central B& and of the European Central Bank,
hereinafter referred to as 'the Statute'.
In perf'ming tasks of the European System of Central Banks, the Bank of
Finland shall act in accordance with the guideline and instnrctions of the
European Central Bank.
Section 2
0 bjective
Tn ac~ordmcewith the Treaty, the primary objective of the Bank of Finland
shall be to maintain price stability. Without prejudice to the objective laid down in paragraph 1, the Bank of
Finland shall also support the achievement of other economic'policy
objectives in accordance with the TW.
Section 3
Tasks
The lask ofthe Bank of Finland shall be to contribute to the exeoution of
monetary policy as dcfined by the Governing Council of the European
Central Bank.
The Bank of Finland shall also:
contribute to maintenance of the currency supply and issuancece
of bank notes;
contribute to holding and management of foreign exchange
reserves;
participate in maintaining the reliability and effidency ofthe
paymcnt system and overall financial system and participate
in their development; and
provide for the compilation and publication of statistics as
& necessary for carrying out its tasks.
Section 4
Independence and cooperation with other authorities In performing tasks of the European System of Central Banks, neither the
Bank of Finland nor members of its governing bodies shall seek or take
instructions concerning such tasks from entities other than the European
Central Bank.
The Bank ofFinland shall cooperate necessary with the Council of State
and other authorities.
Section 5
Powers
Tn order to any out its tasks, the Bank of Finland is empowered to:
gnat and obtain credit;
accept and make deposits;
engage in trade in securities, precious metals and foreign
exchange;
hande payment transactions and dewof payments;
engage in other activities in the securities, money and fbreign
exchange markets; and
issue rules and instructions conc~gthe handling of notes
and coins to banks and other monetary institutions and to C other similar entities.
The Bank of Finland may own shares, other participations and real estate to
the extent necessary for canying out its tasks and organking its activities. . Section 6
Prohibition of public financing
The Bank of Finland is not dowed to grant credit to any institution or body
of the European Union or to any Member State or its region& local or
other authorities, or to any other public entity.
Nor is the Bank of Finland allowed to subscribe to debt instruments issued
by entities referred to in paragraph 1.
,With the exception'of credit institutions, Le provisions laid down in
paragraphs 1 and 2 shall apply also to companies in which a public cntity
rcfmcd to in paragaph 1 exercises control. Publicly owned aedit
institutions shall be given the same treatment as private credit institutions .
in the context of the supply of reserves by central banks.
Section 7
Collateral
The Bank of Finland shall hold adequate collateral in connection with the
granting of credit.
Section 8
Capital
The Bank of Finland shall have primary capital and a reserve W.
The reserve fund can be used for increasing the primary capital or for
covering losses, as prescribed in section 21. Section 9
Governing bodies
Ihc Bank of Finland's governing bodies are the Parliamentary Supmisov
Council and the Board.
Section 10
Parliamentary Sapenisory Coundl
The Parliamentary Supervisory CounciI, which shall consist of nine
members elected by ~arliarn;nt, shall elect a chairman and a deputy
chairman fmamong its members.
A member of the Parliamentary Supervisory Council is obliged to resign if ,
he is appointed as a member of the Council of State or a member of the
Board-
Section l1 Tasks of the Parliamentary Supervisory CoanciI
As a body supenrising the management and activities offte Bar& of
Finland, the Parliamentary Supervisory Co&d shall iedorm the following
tasks:
confirm, upon proposal, ofthe Board, the basic pi=inciples
applied in drawing up the annual accounts of the Bank of
Finland; decide, on the basis of the auditors' report, on the
confirmation of the Bank's balance sheet and profit and Ioss
account and on the discharge of the Board from liability for
matters concerning internal rnanagemcnt of the Bank of Finland;
decide, upon proposal of the Board, on measures concerning
the Bank's profit or loss for the financial yw;
report annually to Parliament on the Bank's activities and
administration and on the main issues dealt with by the
as necessary, submit to Parliament reports on monetary policy
and thc other activities of the Bank of Finland.
In respect of the Bantc's management, the Parliamentary Supetvisory
Council shall:
make proposals to thc Council of State on the filling.of
positions as members of the Board;
decide on the principles for determining salaries, leaves of
absence and annual leaves of members of the Board as well as
on the execution of their duties during leaves of absence
cxcceding one week; decide on the issuance ofwarnings to members of the Board
and settle other issues related to their service;
appoint, upon proposal of the Board, directors of the Bank of
FinIand;
appoint thc Deputy Chhanof the Board;
confirm the Bank of Finland's Pension and Survivors' Pension
Regulations and issue regulations concerning the managcmmt
of the Bank's pension liability, upon proposd of the Board, .
and
issue, upon proposal of the Board, regulations concerning the
language skills required ofofficials of the Bank of Finland.
In addition, the Parliamentary Supavisory Council shall:
decide on motions to be put before Parliamat;
4 decide on proposals to be submitted to the Council of.State in
highIy important matters of principle:
confirm the bases for fw and remunerations to be paid to
auditors elected by Parliament and their secrt!q, 3) other financial transactions that change or may change the claims ofa resident entiiy on nonresident entities or the liabilikies of a
resident entity to nonresident entities.
The Bank of Finland may oblige any entity to supply it with ixzformation as
refacd to in paragraph 1 under penalty of fine. The Bank of Finland shall
decide on the imposition of such a fine.
Decisions referred to above in paragraph 2 may be appealed to the Supreme
Administrative Court as prescribed in the Act on Application of
~&strative Law (5861 1 996). A decision that has been appealed may be
enforced despite the appeal, unless the appeal authority orders otherwise.
Section 29
Right of action and place of jurisdiction
The Board shall exercise the right of adion ofthe Bank of Finland before
court and other authorities and corporate entities. The Board shall represent
the Bank before the Court of Justice of the European Communities.
In civil cases, the Bank of Finland shall act as defendant at the Helsinki
District Court.
Section 30 1 Impeachment Any charges brought against a mwber of the Parliamentary Supervisory
Council or a member of the Board in respect of misconduct in ofice shall
be dealt with hthe first instance by the Helsinki Court of Appeal.
Section 31
EnW hto force
This Act shaU enter into force at the date when Finland enters the single
currency area in accordance with Article 109 1 of the Treaty. The Act shall
repeal &c Act on the Bank of Finland enacted 24 July 1997 (719/1997),
excluding section 18.
Section 16 of this Act shall enter itlto fowon (day) (month) 1998 and
repd section 18 of the Act on the Bank of Finland (719/1997).
Measures necessary for enforcement of this Act can be taken before the Act
. enters into force.
Until 1 January 2002, paragraph 1 and 2 of Section 3 1 of the repealed Act,
as they were h effect at the time of entry into force of this Act, shall apply
instead of section 21, paragraph 2, of this Act. ACT ON COINS
In accordance with a decision of Parliament, the following is enacted:
Section 1
In Finland, pursuant to the legidation of the European Communities, the State has the
exclusive right to mint coins for its own account.
Section 2
Coins shall be. issued by the Bank of Finland. The competent Ministxy shall convey the ,
coins to the Bank of Finland, at face value, for issuance.
The Bank of Finland and the competent Ministry may jointly agree on the procedure by
which coins are issued.
Substantially damaged coins shall not be used as means of payment nor shall it be
obligatory to accept such coins ks payment.
The Bank of Finland shall accept a damaged coin, if it can be established with Gextainty
that it is genuine. - Section 4
The State shall. redeem coins issued by the Bank of Finland and returned to thc Bank:of
Finland at their face value.
Section 5
Pursuant to the legislation of the European Communities, the competent Ministry can
decide which wins shall cease to be Iegal tender.
Notwithstanding the aforementioned provisions, the Bank of Finland shall redam at face
value coins that have ceased to be legal tender for a period of ten years fkom the date of
entry into force ofa decision referred to in paragraph 1.
The State shaU in like manner redeem coins that have been redeemed by the Bank of
Finland in accordance with paragraph 2 witbin one year fiom the expiry of the time
period specified in paragraph 2.
A decision of the Ministry as referred to in paragraph 1 shall be pubfished in the Statutes
of Finland at least six months before the decision enters into forcc, unlcss there is good
cause to act otherwise.
Section 6 4 This Act shall entcr into force when Finland becomes a part of the single currency area in
accordance with Article 109 1of the Treaty establishing the European Community. Coins that are legal tender under provisions enacted prior to the entry into force of this
Act shall continue to be legal tender, until othemisc provided pmuant to paragraph 1 of swtion 5. ACT ON REPEAL OF THE CURRENCY ACT
In accordance with a decision of Parliament, the following is enacted:
This Ad repeals the Currency Act issucd on 16 April 1993 (358/1993) and all
subsequent amendments thereto.
Section 2
This Act shaU &ter into force when Finland becomes a part of the single Curzency area in
accordance with Article 109 1 of the'Trcaty establishing the European Community.
Section 3
Notwithstanding the aforementiond provisions, ceaain provisions of the repealed
Cm~yAct shall apply'asfollows:
1) sections 1,8 and 10, paragraph 1 of section 11, and paragraph 3 of section 17 shall
apply while the cutrency issued pursuant to the repea14 Cuxrency Act is legal tender;
4 2) section 15, excluding the provisions therein concerning decisions on detennindon of
the extend value of the markka and decisions as to which coins shall cease to be legal
tender, shall apply while the curremy issued pursuant to the repealed Currency Act is
legal tender; 3) paragraph 1 of section 18, in respect of what is said therein concerning bmknotes,
shall apply while the banknotes issued pursuant to the repealed Currency Act are legal
tender;
4) paragraph 2 of section 6 and paragraph 2 of section 7 shall apply in accordance with
the legislation of the European Communities until 31 December 2001 :
5) paragraph 1 of section 14, in respect to what is said therein concerning baaknotes,
shall apply until 30 June 2002; and
6) paragraph 2 of section 11 and paragraph 2 of section 14 shall apply for ten years
starting at sucb time when the banknotes issued pursuant to the repealed Currency Act haw ceased to belegal tender. MIMSTRY OF FINANCE FINLAND 23.01.98 MEMORANDUM
GOVERNMENT PROPOSAL TO PARLIAMENT ON THE ACT ON THE BANK OF
FINLAND AND CERTAIN RELATED ACTS
h order to ensure that Finnish legislation on the central bank and thc
cwency is consistent with the Treaty establishing the European
Community (the Treaty), the Finnish Government has drafted a proposal
on an Act on the Bank of Finland, an Act on Repeal of the Currency Act
and -aAct on Coins. The Government proposal will be presented to
Parliament in the latter part of February.
The proposed Act on the Bank of Finland (BOF Act) is a completely
revised version of the cwrent Act. Parliament has required that the
Government submit to it, as soon as possible, a proposal for a separate
act on the anployees (civil servants) of the Bank of Finland. Therefore,
this proposal entails the deletion of the currcnt provisions concerning
the Bank's employees, in addition to the arpendments required by the
Treaty. A separate Govemment proposal containing provisions on the
status of the Bank's employees, based on the state civil Sewants
legislation, will be submitted to Parliament at a laddate. Howwer, thc
BOF Act will. include provisions on the status of the Parliamentary
Supervisory Board, the Governor of the Bank of Finland and the other
members of the Board.
MN[STRY OF FINANCE P.O. BOX 286 FlN-00171 HEL$INKI PHONE +358-9-1601 Proposal on the Act on the Bank of Finland
According to the Government proposal, a statement on the Bank of
Finland's status as part of the European System of Central Banks would
be included in the BOF Act (section 1) in accordance with'Article 14.3
of the Statute of the Buropean System of Central Banks and of the . . European Central Bank (the Statute).
The statutory obj.ective of the Bank of Finland would be amendedso as
to comply, also as regards the wording, with the objective of the
European System of Central Banks Iaid down in Article 105(1) of the
Treaty (section 2).
The main task of thc Bank of Finland would be to contribute to the
execution of monetary policy as defined by the European Central Bank
(section 3, paragraph l). The Bank of Finland's exclusive right to issue
bdmotes, which is mentioned in section 4 of the current Act, would be
amended so as to take into account the competence of the European
Central Bank to issue notes (scction 3, paragraph 2, subparagraph 1).
The provision on the independence ofthe Bank of Finland would be
worded more precisely by including the express statpent that, in
performing tasks of the European System of central Banks, both the
Bank of Finland and the members of its governing bodies Shall be
independent of all entities other than the European Central Bank
(section 4). As regards the Bad of Finland's powers, thc BOF Act would exclude
the Bank's right to determine the base rate and other interest rates that it
applics, which is specified in section 6, paragraph 2, ofthe current act.
The Government will present to Parliament a separate proposal on an act
on the transfi of matters concerning the base rate to the Ministry of
Finance (section 5).
The requirement concerning collateral for credit granted by the Bank of
Finland would be amended by abolishing the Bank's clrxfent right to
temp&ly rescind the ~ollateralrequiremat (section 7).
The provisions on the tasks of the Parliamentary Supervisory Council
would be amended so that the Parliammtary Supervisory Council could
discharge the Board hmliability for tasks other than those of the
Ewpean System of Central Banks (section 11, patagraph 1,
subparagraph 2). Correspondingly, the auditors of the Bank of Finland could submit a repolt to the Parliamentary Supervisory Council on the discharge &m liability for tasks other than those of the European
System of Central Banks (section 23).
The grounds for dismissal of the Governor of the Bank of Finland and the other members of the Board have been brought iqto line with Article
14.2 of the Statute (section 16).
h line with earlier practice, the BOF Act would include an obligation applying to both the Governor and the other members ofthe Board to urovide the Parliamentary Slrpercrisory Council with information on B - * 4 regular basis concerning the execution of monetary poky and other
activities of the Bank of Finland (section 14, paragraph 4). In addition to
the regular annual report, the Parliamentary Supervisory Council would,
as necessary, submit to the Economic Committee of Parliament reports
on monetary policy and other activities of the Bank of Finland (sedion
1.1, paragraph 1, subparagraph 5). This reporting procedure doesn' t
entail any limitations on the independence of the Board of the Bank of
Finland in the execution of monetary policy.
Act on Repeal of the Currenty Act
The current Currency Act would be repealed by a separate ad. All
necessaxy stipulations on the use of the Finnish markka and penni as
legal tender during a transitional period would be laid down in
tmnsitiona1 pmvisiorks. The provision of the current Cmncy Acl; on
decisionmaking concerning the extdvalue of thc Finnish markka
would be repealed.
Act on Coins
In connection with the repeal of the Currency Act, a new Act on Coins
would be adopted. Having due regard to the legislation of the European
Community, this AFt would maintain the ~xcl~ve&ht of tbe State to
mint coins whiIe Finland is included in the euro area. Moreover, the ncw
Act would supplement the European Community legislation on coins.
The essential parts of ihe cutrent provisions on coins would remsin unchanged. Entry intoforce
The proposed amendments would enter into force on l January 1.999,
when FinIand is to become a part of the euto area.
According to an opinion of the European Monetary Institute, the current
provisions on the grounds for dismissal of the aovernor and other
members of the Board of the Bank of Finland ate incompatible with the
Treaty. This has been taken into account in section 16 of the BOF Act,
Seotion 16 would entcr into force immediately when the Aeis passed
and ratified.