The European Bank for Reconstruction and Development (EBRD) has helped the Slovak Republic adopt a new framework for secured credit transactions to facilitate commercial lending.


The Slovak parliament adopted EBRD-recommended amendments to the country’s civil code, creating one of the most advanced legal frameworks for secured credit of any country in Europe. The new provisions have come into effect on January 1, 2003. Michel Nussbaumer, head of the EBRD’s legal transition team, which works to help countries to reform their commercial laws, described the new law as a giant step forward and said it would greatly strengthen the country’s investment climate.

The absence of an adequate legal framework for pledges and mortgages can seriously impede lending activity. Whether it be a farmer who needs to borrow money to buy a tractor, an enterprise that needs credit from its supplier, or the promoters of a power plant who need to finance a major new project, the inability to obtain valuable security over the debtor’s assets is likely to discourage potential providers of credit.

The new Slovak system will simplify the process of taking and enforcing security over assets, as well as introduce a computerised registry for secured transactions. This will allow lenders to register such a transaction instantly through a computer terminal in a notary’s office, and will enable the public to consult the fully searchable registry via the internet.

The EBRD has advocated the reform of secured transaction legal regimes in its countries of operations since 1992, and acted as adviser to the office of the Deputy Prime Minister for Economy during this process. The project was funded by the UK’s Department for International Development.

The EBRD’s Secured Transactions Project encourages countries to modernise their collateral laws and offers assistance at all stages of the reform process.