The Central Bank of Slovenia made an application for review of the constitutionality of the Slovenian national banking law, arguing that the rules laid down in national provisions in regards to cancelling financial instruments for credit institutions, are incompatible with EU law and it is unclear whether the liability, in cases of insolvency, falls upon the Central Bank or on the credit institutions themselves.
The Court held that EU law precludes liability on the central banks in the European System of Central Banks (ECSB) and cancelling financial instruments of credit institutions is deemed a step that should be taken in cases that the stability of the financial markets is at risk. The liability is such a case is on the credit institutions and not on the central bank. Furthermore, in order to prevent such cases of cancellation of financial instruments, a levy on the general reserves of that central bank and a loan, together with interest, from the Member State should be issued. EU financial law deems cancellation of financial instruments on the Member State level as a significant step that should increase the stability of the economic union as a whole, and also as a step that should only be taken in cases of extreme risk of the insolvency of the credit institution. In regards to the financing of the costs of the liability issue, the a national central bank under the ECSB is liable in cases that it should have predicted an insolvency of a credit institution.