EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 8 October 2008 
at the request of the Belgian Ministry of Finance 
on a preliminary draft law on measures prom oting financial stability and in particular 
establishing a State guarantee for the provision of  credit in the context of financial stability 
(CON/2008/46) 
 Introduction and legal basis
 
On 3 October 2008 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 preliminary draft law on measures pr omoting financial stability and in particular 
establishing a State guarantee for the provision of credit in the context of financial stability (hereinafter 
the ‘draft law’). Given the current turbulence in the international financial markets, the consulting 
authority has requested the ECB to provide its opinion urgently to allow the draft law to be adopted as 
quickly as possible. 
The ECB’s competence to deliver an  opinion is based on Article 105(4) of the Treaty establishing the 
European Community and on the third and sixth indent s of Article 2(1) of Council Decision 98/415/EC 
of 29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft 
legislative provisions1, as the draft law relates to the NBB and to the rules applicable 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 law 
1.1 The draft law is motivated by the current fina ncial market crisis and by the willingness of the 
Belgian authorities to reinforce the means availabl e to them to take measures with a view to 
preserving confidence in the national financial system
2. First , the draft law introduces into Belgian 
law a legal basis empowering the King3 (hereinafter the ‘Belgian ex ecutive’) to take any urgent 
measures with a view to preserving the stability of the financial system4. The Belgian executive 
may, after consulting the Financial Stability Commi ttee, take any measure to preserve the stability 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2  See the explanatory memorandum  to the draft law, p. 1. 
3  The reference to the King is understood as a reference to the Belgian Government. 
4  Article 2 of the draft law, introducing a new Article 117bis into the Law of 2 August 2002 on the supervision of the 
financial sector and on financial services.  
2 of the financial system in the event of a sudden fina ncial market crisis or of a serious threat of a 
systemic crisis, including temporary derogations from certain prudential laws applicable to the 
financial sector5. Second , the draft law establishes a State guarantee covering the NBB for credits 
extended in the context of the NBB’s contributi on to financial stability under its organic law6 and 
provides to this end that ‘the State shall … gua rantee to the [NBB] the repayment of any credit 
granted in the context of its contribution to the stability of the financial system and shall guarantee 
the [NBB] against any loss due to an y transaction necessary in this respect’7. This provision of the 
draft law would enter into force retroactivel y, on 28 September 2008. The Belgian authorities 
consider this retroactivity justified by the circ umstance that it is ‘indispensable to safeguarding 
financial stability that the [NBB] [was] able to grant emergency liquidity with a State guarantee on 
29 September 2008’8.  
1.2 The draft law aims at remedying certain ambi guities in the NBB Law created by the distinction 
made currently in the structure of the NBB Law between tasks that are within the domain of the 
European System of Central Banks (ESCB) and tasks which are not, which the draft law proposes should no longer be made
9. In this context, the draft law clar ifies for instance that the lien granted 
to the NBB under the NBB Law10 is not limited to the NBB’s claims arising from credit 
transactions carried out in the context of its ESCB-re lated tasks but also applies in the context of its 
non ESCB-related tasks11. 
2. General observations 
2.1 The application of the special powers granted to the Belgian executive under the draft law with a 
view to preserving the stability of the financia l system requires the adoption of royal decrees12. 
Although the ECB understands that, under the draft law,  these draft royal decrees are intended to be 
adopted under a ‘fast-track’ procedure and will not for instance require the opinion of the Belgian 
Council of State, this does not prejudice the duty to consult the ECB under Article 105(4) of the Treaty on such draft royal decrees, should they fall within the ECB’s advisory competences.  
2.2 As already mentioned in a recent ECB opinion on another draft national law relating to emergency 
measures arising out of the current financial turmoil
13, the ECB is of the view that it is important 
                                                 
5  The laws concerned, as listed in Article 2 of the draft la w, are as follows: (i) the Law of  22 March 1993 on the status and 
supervision of credit institutions; (ii) the Law of 6 April 1995 on the status and supervisi on of investment firms; and 
(iii) the Law of 2 August 2002 on the supervision of  the financial sector an d on financial services. 
6  See Article 12 of the Law of 22 February 1998 establishing th e organic statute of the Nationale Bank van België/Banque 
Nationale de Belgique (her einafter the ‘NBB Law’). 
7  Article 6 of the draft law ame nding Article 9 of the NBB Law.  
8 See the commentary on Article 12 in the expl anatory memorandum to the draft law, p. 7. 
9  See especially Articles 3 and Articles 8 to 11 of the draft law concerning the structure of the NBB Law, as well as 
Article 7 of the draft law. 
10 Under Article 7, first subparagraph, of  the NBB Law, ‘[the NBB]’s claims aris ing from credit transactions shall entail a 
preferential claim on all securities which the debtor holds in an account with the [NBB] or in its securities clearing 
system as his own assets.’ 
11  Article 2bis of the draft law. 
12  Proposed Article 117bis, second paragr aph of the Law of 2 August 2002. 
13  See ECB Opinion CON/2008/44 of 3 October 2008 at the reques t of the Irish Minister for Finance on a draft Credit 
Institutions (Financial Support) Bill 2008. 
3 for national authorities to seek to coordinate their responses to the current financial situation with 
their EU partners. As a general matter, the E CB wishes to underline the importance it attaches to 
ensuring that the draft law, and any subsequent royal decrees, fully comply with the relevant 
provisions of Community law, including State aid rules.  
3. Provision of emergency liquidity assistance by national central banks 3.1 One of the specific tools available to central banks in a crisis situation is the provision of 
emergency liquidity assistance to individual banks
14. This tool consists of liquidity assistance 
provided by central bank in exceptional circumstances and on a case-by-case basis to temporarily illiquid but solvent institutions.  
3.2 The extension of emergency liquidity assistance fa lls within the NBB’s task of contributing to the 
stability of the financial system, which is set out in Article 12 of the NBB Law.
 Under the draft 
law, the State must guarantee to the NBB the repaym ent of any credit granted in the context of its 
contribution to the stability of the financial system and must guarantee the NBB against any loss due to any transaction necessary in this resp ect. The ECB notes that, in the explanatory 
memorandum to the draft law, the particular respons ibility of the NBB in the event of a crisis is 
highlighted since, as the lender of last resort in th e national financial system, it must evaluate if it is 
going to assist banks in difficulty by providing em ergency liquidity. It is also pointed out that 
providing such emergency liquidity is an autonomous decision that the NBB must be in a position to take in exceptional circumst ances and complete independence
15. 
3.3 As expressed in a recent opinion regarding anothe r draft national law addressing the provision of 
emergency liquidity assistance by a Eurosystem central bank16, the ECB is of the view in this case 
that the draft law should unequivocally ensure th e NBB’s independence to decide on the provision 
of emergency liquidity assistance. To this end, th e draft law should stipulate that the same degree 
of independence is granted to the NBB as regards the provision of emergency liquidity assistance 
as with respect to the performance of its ESCB-related tasks17. 
3.4 The ECB notes that, except as regards tasks and transactions within the domain of the ESCB, 
Article 22(1) and 22(2) of the NB B Law provide for the possibility for the Minister of Finance (or 
their representative) to suspend and/or oppose tr ansactions, measures and/or decisions adopted by 
the NBB which are contrary to the NBB Law, the N BB’s statutes or the interests of the State. In 
this context and in view of the need to ensure  the NBB’s full independence in providing emergency 
liquidity assistance, the ECB would like to take the opportunity of this consultation to draw the 
attention of the Belgian authorities to the need to  clarify these provisions, for instance by expressly 
excluding Article 12 of the NBB law from their scope.  
                                                 
14  See the ECB Financial Stability Review, December 2006, pp.171-172 and the ECB’s Annual Report 1999, p. 98. 
15  See the explanatory memorandum  to the draft law, p. 2. 
16  See ECB Opinion CON/2008/42 of 10 September 2008 at the request of the Banque centrale du Luxembourg on 
amendments to the draft law improving th e legislative framework for Luxembourg as  a financial centre and amending the 
Law of 23 December 1998 on monetary status and on the Ba nque centrale du Luxembourg, paragraphs 4.9 to 4.11. 
17  Alternatively, a reference to the same level of indepe ndence as provided for in Article 108 of the Treaty could be 
considered (see ECB Opinion CON/2008/42, paragraph 4.11, footnote 20). 
4 4. State guarantee and the prohibition on monetary financing 
4.1 The monetary financing prohibition, as defined in Article 101 of the Treaty, is essential to ensure 
that the primary objective of monetary policy, name ly to maintain price stability, is not impeded. 
Therefore, the prohibition must be interpreted extensiv ely in order to ensure its strict application. It 
is noted that, under Article 237(d) of the Treaty, th e ECB is entrusted with the task of monitoring 
the compliance of the NCBs with the prohibition on monetary financing18 and, as pointed out in a 
recent opinion, it is important, in the case of emergency liquidity assistance supported by a State guarantee, to provide for appropriate legal safe guards in terms of centr al bank independence and 
compliance with the monetary financing prohibition
19.  
4.2 The provision of emergency liquidity assistance is  a central bank function, wh ich consists in giving 
support in exceptional circumstances and on a case- by-case basis to temporarily illiquid but solvent 
credit institutions20. However, it is the ECB’s view that ‘national legislation foreseeing the 
financing by NCBs of credit institutions other th an in connection with central banking tasks (such 
as monetary policy, payment systems or temporary liquidity support operations), in particular to 
support insolvent credit and/or other financial in stitutions, is incompatible with the monetary 
financing prohibition’21. In this respect the ECB notes the clarification contained in the explanatory 
memorandum to the draft law, which states that a central bank extension of financial support to an 
insolvent financial institution must be considered  as a form of prohibited monetary financing22. 
The ECB is of the view that this clarification should be contained in the draft law itself. In the same vein, it would be advisable to introduce into the draft law a direct reference to the prohibition 
on monetary financing as defined in Community law or alternatively to Article 101 of the Treaty
23. 
4.3 Under the draft law, the State must guarantee to  the NBB the repayment of any credit granted in 
the context of the NBB’s contribution to the stab ility of the financial system and it must guarantee 
the NBB against any loss due to any transaction ne cessary in this respect. In order for emergency 
liquidity assistance provided with a State guarantee as collateral, as provided for in the draft law, to 
comply with the monetary financing prohibi tion, the following criteria should be met. First , as 
regards the need for the NBB to independently exercise full discretion regarding the decision 
whether to extend emergency liquidity assistance,  the ECB notes that the NBB will take its 
decision fully independently, see however paragraphs  3.3 and 3.4, and that, while the NBB and the 
Commissie voor het Bank-, Financie- en Assurantiewezen/Commission Bancaire, Financière et des Assurances must inform the Minister for Finance in  the event of a crisis endangering the financial 
                                                 
18  See Article 237(d) of the Treaty. 
19  Since 2006, the ECB’s Convergence Report has included an a ssessment of the compatibility of national legislation with 
the monetary financing prohibition. 
20  See ECB Opinion CON/2008/42, footnote 16. 
21  See the ECB’s Convergence Report May 2006, p. 68; the Convergence Report December 2006, p. 30; the Convergence 
Report May 2007, p. 22 and the Convergence Report May 2008, p. 24, all of which are availabl e on the ECB’s website at 
www.ecb.europa.eu. 
22  See the explanatory memora ndum to the draft law, p .3. 
23  ECB Opinion CON/2008/42, paragraph 4.11. 
5 sector, the State guarantee is nevertheless granted ex ante  under the draft law24 and provided 
automatically without the need for any prio r agreement of the Minister for Finance. Second,  it 
should be ensured that  the credit provided by the NBB is as short term as possible. The ECB would 
welcome any clarification in this regard, at leas t in the explanatory memorandum to the draft law . 
Third,  there must be systemic stability aspects at stake. In the present case, the ECB understands 
that the granting of the above credit would be pa rt of the NBB’s statutory contribution to the 
stability of the financial system.  Fourth , there must be no doubts as to the legal validity and 
enforceability of the State guarantee under Belgian law.  In this respect, the ECB welcomes the fact 
that the establishment of the State gua rantee is enshrined in the draft law.  Fifth , there must be no 
doubts as to the economic adequacy of the State guarantee, which should cover both principal and interest on the loans, thus fully preserving the financial independence of the NBB. The State 
guarantee in this case is very broad since it cove rs any losses related to any operations necessary in 
the context of the NBB’s contribution to financial stability. 
5. Financial stability and exceptional derogations from supervisory rules 
Under the draft law, the Belgian executive may take an y measure to preserve the stability of the financial 
system in the event of a sudden financial market crisis or of a serious threat of a systemic crisis, including 
temporary derogations from the supervisory rules applicable to the financial sector
25. The ECB is of the 
view that this broad provision might be further clarif ied with a view to enhanc ing legal certainty and to 
ensuring its compatibility with Community law. Mo reover, and as mentioned above, measures which are 
adopted with the aim of safeguarding financial stab ility should involve cooperation with the relevant 
authorities of the Member States, in line with appli cable Community legislation and the arrangements in 
place, such as the Memorandum of Understanding on cooperation between the financial supervisory 
authorities, central banks and finance ministries of  the European Union on cross-border financial 
stability26. The ECB would also favour the adoption of comm on policy solutions at the European level on 
these issues rather than uncoordinated national legisla tive initiatives. The ECB is of the opinion that 
national law should expressly include this need  for coordination at the European level.  
 This opinion will be published on the ECB’s website.  Done at Frankfurt am Main, 8 October 2008. 
[signed] 
The President of the ECB 
Jean-Claude TRICHET 
                                                 
24  See the explanatory memorandum  to the draft law, p. 4. 
25  See Article 2 of the draft law. The laws concerned ar e the following: (i) the Law of 22 March 1993 on the status and 
supervision of credit institutions; (ii) the Law of 6 April 1995 on the status and supervisi on of investment firms; and 
(iii) the Law of 2 August 2002 on the supervision of  the financial sector an d on financial services. 
26  As published on the ECB website, www.ecb.europa.eu.