EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 23 Septem
ber 2009 
on an extension of the State guarantee covering liabilities of credit institutions  
(CON/2009/73) 
 
Introduction and legal basis  
On 14 September 2009 the European Central Bank (E CB) received a request from the Nationale Bank 
van België/Banque Nationale de Belg ique (NBB), acting on behalf of the Belgian Ministry for Finance, 
for an opinion on a draft royal decree amending the Royal Decree of 16 October 2008 implementing 
Article 117bis of the Law of 2 August 2002 on the s upervision of the financial sector and on financial 
services (hereinafter 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 provisions1, 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 is motivated by the need  to preserve confidence in the Belgian financial 
system and by the continuation of financial market turbulence. In this context, it aims to extend the 
scope of the State guarantee scheme laid dow n in the Royal Decree of 16 October 2008 
implementing Article 117bis of the Law of 2 August 2 002 on the supervision of the financial sector 
and on financial services, on which the ECB has already been consulted
2.  
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2  Currently, the Royal Decree of 16 October 2008 empowers the Be lgian Minister for Finance to grant a State guarantee to 
cover liabilities of credit institutions  and/or financial holding companies ( financiële holding/compagnies financières ) as 
well as their issuance vehicles vis-à-vis other credit institu tions and/or professional counterparts belonging to the 
categories identified by the Minister for Finance provided that such liabilities ma ture at the latest on 31 October 2011 and 
that they have been entered into or renewed between  9 October 2008 and 31 October 2009 (Article 2 of the Royal 
Decree). See ECB Opinion CON/2008/50; all ECB opinions are published on the ECB website at www.ecb.europa.eu.  
 The legal basis for the Royal Decree of 16 October 2008 is Article 117bis of the Law of 2 August 2002 (see, concerning 
this provision: ECB Opinion CON/2008/46, in particular paragraphs 1.1, 2.1 and 5; ECB Opinion CON/2008/50, in 
particular paragraph 2.1; and ECB Opinion CON/2009/29). 
 First , the draft roy
al decree would extend the ultimat e maturity date of the liabilities that can be 
covered by the State guarantee under the Royal Decree of 16 October 2008 (i.e. the ultimate 
maturity date would be 31 October 2014,  instead of 31 October 2011 as currently)3. Second, it 
would also extend the period during which such liab ilities must have been entered into or renewed 
(i.e. the “issuing window” would be the peri od between 9 October 2008 and 31 October 2010, 
instead of the period between 9 October 2008 and 31 October 2009 as currently)4. The draft royal 
decree would not amend the other conditions for granting the State guarantee under the Royal 
Decree of 16 October 20085. 
1.2 The Belgian authorities consider that the above extension of the State guarantee scheme is 
necessary given the continuation of  financial market turbulence, and in particular financial 
institutions’ continued refinancing difficulties. They also point out that the extension of the ultimate 
maturity date would allow the beneficiary ins titutions to avoid an excessive concentration of 
maturities for guaranteed obligations with a determined maturity date6.   
 
2.  General observations 
2.1 The ECB understands that, although it was asked to issu e its opinion within one month of receipt of 
the consultation letter on 14 September 2009, the Be lgian Council of Ministers approved the draft 
royal decree already on 18 September 20097 without any prior notification to the ECB of any 
acceleration in the adoption process. The ECB would like to point out that, in cases of particular 
urgency which do not allow for a normal consultation period, the consulting authority may indicate such urgency in the consultation request and ask for a shorter deadline for adoption of the ECB’s 
opinion. This does not affect the national author ities’ duty under Article 105(4) of the Treaty to 
consult the ECB on national draft legislative provisions falling within its fields of competence. It follows from Article 3(4) of Decision 98/415/EC that Member States are obliged to suspend the 
process of adoption of such draft legislative provisions pending receipt of the ECB’s opinion. The adopting national authority should have the opportunity to meaningfully deliberate the ECB’s opinion prior to taking its decision on the substance
8. 
2.2 The ECB has issued a number of opinions at th e request of the competent Member States’ 
authorities on national measures adopted in response to the global financial crisis, and has notably 
already delivered opinions on several elements of  the rescue package put in place by the Belgian 
                                                 
3  Article 1 of the draft royal decree, amending Article 2, first subparagraph of the Royal Decree of 16 October 2008. 
4  Article 2 of the draft royal decree, amending Article 2, second subparagraph of the Royal Decree of 16 October 2008. 
5  For a summary of the other conditions laid down in the Royal Decree of 16 October 2008, see ECB Opinion 
CON/2008/50, especially paragraph 1.2. 
6  Report to the King preceding the draft royal decree, paragraph 3. 
7  See the press release of 18 September 2009 issued by the Communications Office of the Be lgian Council of Ministers. 
8  See the Guide to consultation of the Eu ropean Central Bank by national authoritie s regarding draft legislative provisions, 
Title IV, Section 1. 
2 
authorities in response to the current financial 
market turbulence9. The ECB invites the consulting 
authority to take into account the relevant observa tions made in its previous opinions on similar 
draft legislative provisions in other Member States, some of which are repeated below. In 
particular, all of the comments and recommend ations made by the ECB in its Opinion 
CON/2008/50 apply equally to the draft royal decree. 
2.3 The ECB also draws attention to the guidance provided by the Ecofin Council to the Member States in the Conclusions of its meeting of 7 October 2008
10, and to the Declaration issued by the 
Heads of State of the euro area on 12 Oc tober 2008 (hereinafter the ‘Declaration’)11. The principles 
contained in the Declaration and the Conclusions  of the Ecofin Council were endorsed by the 
European Council of 15 to 16 October 200812. In particular, the ECB stresses that any initiative put 
in place by the competent national authorities to restore confidence in the national segments of the euro area financial markets should be coordi nated and should aim to implement the common 
principles in question, in a spirit of close cooperation with other Member States and the 
Community institutions
13 since, as acknowledged in the Declaration, significant differences in 
national implementation could ha ve a counter-productive effect, creating distortions in global 
banking markets.  
 
3.  Specific observations 
3.1 Interaction of the draft royal decree with the monetary policy of the euro area 
 Since the draft royal decree aims at extending the sc ope of the State guarantee scheme laid down in 
the Royal Decree of 16 October 2008, on which th e ECB has already been  consulted, the ECB 
would like to recall some elements previously  mentioned in its Opinion CON/2008/50 which are 
important from the perspective of monetary policy. 
 In particular, in the context of the adoption of the Royal Decree of 16 October 2008, the Belgian 
authorities publicly announced that the concept of ‘liabilities’ (verbintenissen/engagements ) 
eligible to be covered by the State guarantee scheme provided for in that Royal Decree was to be 
                                                 
9  The related ECB opinions on Belgian draft legislat ive provisions are: (i)  CON/2008/46; (ii) CON/2008/50; 
(iii) CON/2008/61; (iv) CON/2008/74; (v) CON/2008/ 91; (vi) CON/2009/25; and (vii) CON/2009/29. 
10  See ‘Immediate Responses to Financia l Turmoil’, Ecofin Council Conclusions of 7 October 2008, available on the former 
French Presidency’s website at www. ue2008.fr. The Ecofin Council recommended that: (i) interventions should be 
timely and the support should in pr inciple be temporary; (ii) the interests of taxpayers should be protected; (iii) existing 
shareholders should bear the due consequences of the intervention; (iv) the Gove rnment should be in a position to bring 
about a change of management; (v) management should not retain undue be nefits; (vi) governments may have, inter alia , 
the power to intervene in remuneration; (vii) legitimate intere sts of competitors must be protected, in particular through 
State aid rules; and (viii) negative spill-over effects should be avoided.  
11  The text of the Declaration is available on the former Fr ench Presidency’s website at www.ue2008.fr. The Member States 
agreed to: (i) ensure appropriate liquidity conditions for financial institutions: (ii) facilitate the funding of banks; 
(iii) provide financial institutions with additional capital resources to continue to ensure the proper financing of the 
economy; (iv) allow for an efficient recapitalisation of distressed banks; (v) ensure su fficient flexib ility in the 
implementation of accounting rules; and (vi) enhance cooperation procedures am ong European countries. 
12 See Brussels European Council of 15 to 16 October 2008, paragraph 3 of the Presidency Conclusions. 
13 See notably ECB Opinions CON/2009/12, para graph 2.2 and CON/2009/62, paragraph 2.4. 
3 
understood
 broadly and would encompass all of the fi nancing raised by a beneficiary institution in 
order to obtain refinancing from credit institutions and institutional counterparties, including 
notably interbank deposits14. The ECB understands that although the draft royal decree amends the 
Royal Decree of 16 October 2008, it does not further specify what is encompassed by ‘liabilities’ (verbintenissen/engagements ) within the meaning of that Ro yal Decree and, hence, it does not 
exclude interbank deposits.  
In this respect, the ECB wishes to  make the following observations. First , it would like to remind 
the consulting authority that the arrangements for the granting of government guarantees on bank 
debt should, when practically implemented, aim at: (i) addressing the funding problems of liquidity-constrained solvent banks by improving the functioning of the market for bank debt of longer-term maturity; (ii) preserving the level playing field among financial institutions and 
avoiding market distortions; and (iii) ensuring c onsistency with the management of Eurosystem 
liquidity. In line with the Declaration and as stated in its recommendations
15, the ECB restates its 
view that euro area governments should make available a government guarantee of new medium-
term (up to five years) bank senior debt issuance which must be limited in time. In the same vein, 
government guarantees on short-term  bank debt with maturity of three to 12 months may be 
provided in order to revitalise the short-term bank debt market16. Second, as stated in the 
Declaration, it is also stressed that it is of the utmost importance that support operations conducted by national authorities do not in any way affect the conduct and the implementation of monetary policy in the euro area
 17. In this context, the ECB reiterates its  view that the extension of the State 
guarantee to cover interbank deposits should be avoided18, as this could entail a substantial 
distortion in the various national segments of the euro area money market by potentially increasing short-term debt issuance activity across Member States and therefore impairing the implementation of the single monetary policy, which is an exclusive competence of the Eurosystem under Article 105(2) of the Treaty
19. It could also affect the transmission of monetary policy decisions20 
and make it difficult to maintain the necessary leve l playing field between the financial institutions 
benefiting from the State guarantee and those not benefiting from it within the euro area. 
 
                                                 
14  See ECB Opinion CON/2008/50, paragra ph 3.2 and the reference to the press release of 10 October 2008 issued by the 
Secretariat of the Belgian Deputy Prime Minister and Minister of Finance. 
15  Recommendations of the Governing Council of the Europ ean Central Bank on government guarantees for bank debt, 
20 October 2008, available on the ECB’s website. 
16  See notably ECB Opinions CON/2009/12, para graph 3.3.3 and CON/2009/49, paragraph 3.9. 
17 See ECB Opinion CON/2009/12, paragraph 2.3.  
18  See ECB Opinion CON/2008/50, paragraph 3.2, and more recently ECB Opinions CON/2009/12, paragraph 3.3.2 and 
CON/2009/49, paragraph 3.9.  
19  See also ECB Opinion CON/2008/48, in particular para graph 3.7, and more recently ECB Opinions CON/2009/12, 
paragraph 3.3.2 and CON/2009/49, paragraph 3.9. 
20  See notably ECB Opinions CON/2009/12, para graph 3.3.2 and CON/2009/49, paragraph 3.9. 
4 
5                                                 3.2
 Temporary nature of the scheme 
 In line with the Conclusions of the Ecofin C ouncil and the Declaration, it is recalled that 
harmonisation of the measures implemented at the national level is essential to ensure the 
integration of the financial markets within the EU, and within the euro area in particular. In this 
regard, the ECB emphasises that coordination regarding the duration of national financial support schemes across the EU is of crucial importance in order to ensure a level playing field
21. In 
addition, the ECB recalls the need for nationa l support measures to be temporary in nature22. While 
the current elements of fragility in the national financial sector lie at the basis of the proposed 
extension of the ultimate maturity date of the new liabilities that can be covered by the State guarantee under the Royal Decree of 16 October 2008 and of the period during which such 
liabilities must have been entered into or renewed to  be covered by such a State guarantee, it is also 
understood that the temporary nature of this St ate guarantee scheme is maintained in essence, 
hence ensuring that the involvement of the Belgian State will be limited in time.  
 
This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 23 September 2009. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET 
 
21 See notably ECB Opinions CON/2009/24, para graph 3.1 and CON/2009/54, paragraph 2.5.2. 
22 See notably ECB Opinions CON/2009/24, para graph 2.2 and CON/2009/62, paragraph 3.3.