EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 19 March 2008 
at the request of the Belgian Ministry of Finance 
on a draft royal decree amending the Royal D ecree of 10 December 2008 on the guarantee for 
certain risks assumed by financial institutions 
(CON/2009/25) 
 Introduction and legal basis
 
On 11 March 2009 the European Central Bank (ECB)  received a request from the Nationale Bank van 
België/Banque Nationale de Belgique  (NBB), acting on behalf of the Belgian Ministry of Finance, for an 
opinion on a draft royal decree amending the Royal Decree of 10 December 2008  on the guarantee for 
certain risks assumed by financial institutions (hereina fter the ‘draft royal decree’). Given the current 
turbulence in the financial markets and the need fo r firm intervention by the authorities involved, the 
consulting authority has requested the ECB to provide  its opinion as a matter of extreme urgency to allow 
the swift adoption of the draft royal decree.  
The ECB’s competence to deliver an  opinion is based on Article 105(4) of the Treaty establishing the 
European Community and on the sixth indent of Article 2(1) of Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Ce ntral Bank by national authorities regarding draft 
legislative provisions
1, as the draft royal decree relates to rules a pplicable 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 of the European Central Bank, the Governing Council 
has adopted this opinion. 
 1.  Purpose of the draft royal decree  
1.1 The draft royal decree extends the scope of the Royal Decree of 10 December 2008, on which the 
ECB previously opined
2. The Royal Decree of 10 December 2008 completes the system for 
granting the guarantee of the Belgian State for lia bilities entered into by financial institutions3 by 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2  See ECB Opinion CON/2008/74 of 21 November 2008 at the requ est of the Belgian Ministry of Finance on a draft royal 
decree on the guarantee for certain risks assumed by fina ncial institutions. All ECB opinions are available on the ECB 
website at www.ecb.europa.eu.  
3  This system was established by  the Royal Decree of 16 October 2008 (see ECB Opinion CON/2008/50 of 
17 October 2008 at the request of the Belgian Ministry of  Finance on a draft royal decree adopted under Article 117 bis of 
the Law of 2 August 2002 on the supervision of the financial se ctor and on financial services ), which is based on Articles 
117bis and 117 ter of the Law of 2 August 2002 on the supervision of th e financial sector and on financial services (see 
2 establishing a State guarantee aimed at avoiding th at the entity whose commitments are guaranteed, 
or a subsidiary thereof, will be exposed to  a serious need for additional liquidity, due inter alia  to a 
downgrading of their rating4.  
1.2 Overall, the draft royal decree does not subs tantially alter the scheme set up under the Royal 
Decree of 10 December 20085. Instead, it is limited to extending the scope of the scheme so that 
not only commitments to cover losses or a risk of losses on financial assets held by a guaranteed entity’s subsidiaries may be guaranteed
6, but also in certain circumstances an undertaking by the 
guaranteed entity to buy financial assets held by its subsidiaries7. The report to the King explains 
that considering that an entity’s liquidity position is, in addition to the risk of default on its portfolio, another element taken into account in de termining its rating, it might be necessary for a 
parent company to undertake to buy its subsidiary’s  assets in certain circumstances (i.e. to grant the 
subsidiary a put option over the assets) in order to  generate sufficient liquidity for the subsidiary 
and therefore uphold the latter’s rating, whic h in turn will avoid liquidity outflows.  
 2.  General observations 
The ECB has already opined on several elements of  the general rescue package put in place by the 
Belgian authorities in response to the curre nt turbulence in the financial markets
8. The ECB underlines 
that all the comments and reco mmendations made in its Opini ons CON/2008/74 and CON/2008/50 apply 
equally to the draft royal decree.  
In particular, the ECB wishes to stress that it is im portant for national authorities to seek to coordinate 
their responses to the current financia l situation with their European Unio n partners. This is in line with 
the Declaration of 12 October 2008 made at the summit of the euro area Member States in Paris, which 
                                                                                                                                                             
on these provisions ECB Opinion CON/2008/46 of 8 October 2008 at  the request of the Belgian Ministry of Finance on a 
preliminary draft law on measures  promoting financial stability  and in particular establishing a State guarantee for the 
provision of credit in the context of financial stability; pa ragraph 2.1 of ECB Opinion C ON/2008/50 and paragraph 1.1 of 
ECB Opinion CON/2008/61 of 28 October 2008 at the request of the Belgian Minister for Finance on a draft royal decree 
implementing the Law of 15 October 2008 on m easures promoting financia l stability and in particular establishing a State 
guarantee for the provision of credit in the context of financia l stability, in relation to the protection of deposits and life  
insurance and amending the Law of 2 August 2002 on the supervis ion of the financial sector and on financial services). 
The draft royal decree is also based on Article 117 bis of the Law of 2 August 2002.  
4 Concerning the reasons behind the adoption of the Royal Decree of 10 December 2008, see ECB Opinion CON/2008/74, 
in particular paragraph 1.2.  
5  The draft royal decree does not modify: (i) the list of entities whose commitments can be guaranteed, i.e. credit 
institutions, financial holding companies ( financiële holdings/compagnies financières ) or mixed financial holding 
companies ( gemengde financiële holdings/c ompagnies financières mixtes) , hereinafter together the ‘guaranteed entities’; 
(ii) the condition that these entities must take measures aimed at supporting their financial situation, solvency and 
liquidity, or commit to taking such measure; (iii) the require ment that the guaranteed commitm ents or the guarantee itself 
can contribute to avoiding the guaranteed entity or its subs idiaries from being exposed to a serious need for additional 
liquidity, due inter alia  to a downgrading of their rating; and (iv) the requirement that the granting of the guarantee is 
justified in the interests of the Belgian economy and by th e need to protect all depositors. The power granted to the 
Belgian Minister for Finance to determine the other detail ed rules and conditions of th e guarantee, including its ceiling 
and its price, also remain unaffected by the draft royal decree. See further ECB Opini on CON/2008/74, paragraph 1.3. 
6 Article 2 of the Royal Decree of 10 December 2008; see ECB Opinion CON/2008/74, paragraph 1.3. 
7  Article 1 of the draft royal decree, amending Article 2 of the Royal Decree of 10 December 2008. 
8  The ECB has been consulted by the Belgian authorities on five  other draft legislative provisions adopted in this context: 
(i) ECB Opinion CON/2008/46; (ii) ECB Opinion CON/2008/ 50; (iii) ECB Opinion CON/2008/61; (iv) ECB Opinion 
CON/2008/74; and (v) ECB Opinion CON/2008/91. 
3 stressed the need for the Member States to ‘act in a united manner and avoid that national measures 
adversely affect the functioning of the single market and the other member States’9. 
The ECB also reminds the consulting authority of the importance of ensuring the harmonisation of the 
price determination of such a guarantee within the euro area and the EU, and that the price of such 
guarantee should be risk-based and market-oriented, i.e.  determined on the basis of the cost of obtaining a 
corresponding guarantee in the market. In this  respect, the ECB recommends to apply, mutatis mutandis , 
the practice set out in its Recommendations on government guarantees for bank debt10. Hence, the 
extension of the scope of the State guarantee under the draft royal decree must be appropriately reflected 
in the price determination of the State guarantee. 
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 19 March 2009. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET 
                                                 
9  See the Declaration of 12 Octobe r 2008, available on the website of the French Presidency, www.ue2008.fr. 
10  See the Recommendations of the Governing Council of th e European Central Bank on government guarantees for bank 
debt, issued on 20 October 2008, available on the ECB’s website at www.ecb.europa.eu.