EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
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 sector and on financial services 
(CON/2008/50) 
 
Introduction and legal basis  
On 14 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 draft royal decree adopted under Article 117 bis of the Law of 2 August 2002 on the 
supervision of the financial sector  and on financial services (hereinafter the ‘draft royal decree’). 
Considering that the draft royal decree is indispensable to preserving th e stability of the Belgian financial 
system and that any delay in its adoption or publica tion would be detrimental to its effectiveness and its 
objective of strengthening the market’s confidence in the measures announced, the consulting authority 
has requested the ECB to provide its opinion as a matter of extreme urgency.  
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 Central Bank by national authorities regarding draft legislative 
provisions1, as the draft royal decree relates to rules appli cable to financial institutions insofar as they 
materially influence the stability of financial ins titutions 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 curre nt financial market crisis and by the Belgian 
authorities’ wish to preserve the stab ility of the Belgian financial system2. The legal basis for the 
draft royal decree is to be found in Article 117 bis of the Law of 2 August 2002 on the supervision 
of the financial sector and on financial services3.  
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2  See the first recital of the draft royal decree. 
3  See also paragraph 2.1. 
1.2 The draft royal decree would em power the Belgia n Minister of Finance to grant a State guarantee4 
to cover liabi lities entered into by credit ins titutions a nd/or financi al holding com panies ( financiële 
holding/compagnies financières ) (hereinafter the ‘beneficiaries’ ) incorporated under Belgian law 
vis-à-vis other credit inst itutions (and/ or professi onal counterparts belonging to the categories  
identified b y the Minister of Finance5) between 9 October 20 08 an d 31 October 2009 , provided that 
such liabilities mature at th e latest on 31 October 20116.  
 The decision to grant a Sta te guarantee would be su bject to the conditions that:  (i) the beneficiary 
takes measur es aimed at supporti ng its financial situa tion, its solvency  and its l iquidit y (or commit s 
itself to taking such m easures); and (ii) the granting of the guarantee is justif ied in t he inter ests of 
the Belgian econom y and by the protection of all de positors7. The  Minister of Finance would be 
empowered  to lay  down further modalities and conditi ons for a Stat e guarantee, including setti ng its 
ceiling, specify ing the rem uneration to be paid for the granting  of the guarantee, and any  other 
modality  aimed at ensuring com pliance with the two abovementioned conditions8. Moreover, 
beneficiaries would onl y be entitled to invoke a St ate guarantee granted to them  if they  prove: 
(i) that it is not possible for them  to meet th e liab ilities covered by  the State guarantee at their 
maturity ; and (ii) that the enforce ment of th e State guarantee is neces sary to ensure their  
continuit y9. The Minister of Finance would be entitle d to term inate a State guarantee at any time, 
without pri or notice or com pensation, if the cond itions for granti ng the guarantee were no  longer 
met10. The draft ro yal decree would enter i nto force retroactively , on 9 October 20 0811.  
2.  Gene ral observations 
2.1 As mentioned above, the legal basis for the dr aft royal decree is to  be found in Article 117 bis of the 
Law of 2 August 2002 o n the supervision of the fina ncial sector and on financi al services. The ECB 
was recently consulted o n an earl y version of Article 117 bis and stressed in its O pinion 
CON/2008/4 6 that this br oad prov ision needed ‘to  be further clarified with a view to enhancing  
legal certaint y and to ensuring its com patibilit y with Community  law’12. The final version of Article 
117bis, as the ECB understands has been adopted b y the Belgian Parliament on 15 October  2008, 
provides that  the King m ay, after consulting the Fina ncial Stability  Comm ittee13, in the event of a 
sudden crisis on the financial markets or a serious th reat of sy stem ic crisis, and in order to limit the 
                                                 
4  See Arti cle 1 of the dr aft royal decree. 
5  It is no ted that the term ‘professio nal counter parts’ is not def ined in the draf t royal decree. 
6  See Arti cle 2 of the dr aft royal decree. 
7  See Arti cle 3 of the dr aft royal decree. 
8  See Article 4, fir st paragr aph, of the draf t royal decree. 
9  See Article 4, second par agraph , of the draf t royal decr ee. 
10  See Article 4, th ird parag raph, of  the dr aft ro yal decree. 
11  See Arti cle 5 of the dr aft royal decree. 
12  Opinion CON/2008/46 of 8 October 2008 at th e request of the Belgian Ministr y of Finance on a preliminar y draft law on  
measures promo ting fin ancial stability  and in particular establish ing a State guar antee for th e provision of cred it in the  
contex t of f inancial stab ility, see in p articular paragraph  5. All ECB op inions  are available on t he ECB we bsite at 
www.ecb.europ a.eu/ecb/leg al/opinions/html/index .en.html 
13  The Finan cial Stability  Committee comprises th e members of the Mana gemen t Committee of the Commissie voor het 
Bank-, F inancie- en As surantiew ezen/Com mission Banca ire, Financièr e et des Assurances  and of the Board of Dir ectors  
of the NBB, and is chaired  by the Governor of  the NBB (Article 1 17(3) of the Law of 2 August 200 2). 
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scale or eff ects thereof: (i) adopt regulations which may  com plement or derogate fro m certain 
supervisory  laws in the f inancial sect or14; and (ii) establish, by decree deli berated within the  
Council of Ministers, a system to grant a St ate guarantee for liabilities entered into by  the 
supervised institutions as f urther identifi ed by such a decree15. The ECB welco mes the a mendment  
made to Article 117 bis since it clarifie s the scope of the powers given to the King with regard to 
complementa ry or derogatory  measures in the case of financial cris is. In this respect, the ECB notes  
that the reference to the possibilit y for the King to take ‘any  measure’ to preserve the stability of the  
financial sy stem  has been deleted. Without prej udice to the co mments made belo w on the substance 
of the draft ro yal decree, th e ECB welcomes the intr oduction of an explicit legal basis in the law fo r 
the granting of a State guarantee. 
2.2 The ECB notes that there is an ongoin g discussion at both the international and European levels 
with a view to coordi natin g the m any diverse ac tions  of countries ai med at pres erving confidence 
and stabilit y in the interna tional financi al markets. The following common principles to guide th e 
actions of Mem ber States were agreed at the Ecofin  meeting on 7 October 2008: (i) interventions  
should be timely  and t he support  should in  princi ple be tem porary; (ii) the interests of taxpay ers 
should be protected; (iii) existing shareholde rs should bear the due consequences of the 
intervention; (iv) the government should be in a position to bring about a chan ge of management; 
(v) management should not retain  undue  benefits; (vi) governm ents may have, in ter alia, the power 
to intervene with regard to rem unerati on; (vii) legi timate interest  of co mpetitors must be protected,  
in particular through the State aid rules; and (viii) negative spill-over effects should be avoi ded16. 
Moreover, th e ECB notes that on 12 October 2008 th e Heads of State of the euro area issued a 
‘Declaration on a concerted European  action plan of the euro area countries’17, in which they 
confirmed their commit ment to act together in a decisive and com prehensiv e manner to restor e 
confidence in and proper functioni ng of  the financia l system , with the ai m of restoring appropriate 
and efficient financing c onditi ons for  the econom y. The y agre ed on common pri nciples to be 
followed b y governm ents, central bank s and superv isors in the euro area and the EU to  avoid 
national m easures which could adversely  affect th e functioni ng of the single market and the other 
Mem ber Stat es. This coordinated appr oach in clude s initiatives aimed at: ensuring appr opriat e 
liquidit y; facilitating the funding of banks thr ough various means; providing additional capital 
resources to financial instit utions; and re capitalisa tion of distressed banks. Against this background,  
the ECB highlights that all of the ini tiatives put i n place by  national gover nments to restore 
confidence in  financial markets should be aim ed at implementing  such comm on principles, in the 
spirit of close cooperation with other M ember States and EU instit utions.    
                                                 
14  New Article 117 bis (1) of  the Law of 2 August 2 002. 
15 New Article 117 bis (2) of  the Law of 2 August 2 002. 
16  See the press release of the 2894th Council meeting  (13784/08), avai lable on th e Council website at 
www.consilium.europa.eu. 
17  See th e declaration of 12  Octobe r 2008, availab le on the French  Pres idency ’s website at www.ue2008.fr. 
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2.3 On a general note, the EC B would li ke to un derline t hat the draft r oyal decree defines in ver y broad  
terms: (i)  the possible beneficiarie s of a State guara ntee18; (ii) the type of liabilities that can be  
covered19; as well as (iii) the modalities and conditions which can  be im posed on the beneficiaries 
by the Minister of Finance20. The draft ro yal decree th erefore l eaves a wide  margin of discret ion to 
the Minister of Finance in his decision whether to  grant a State guarantee and in specify ing further 
the modalities and conditions for granting the guarant ee. In this respect, th e ECB reco mmen ds that 
the draft ro yal decree (in its recitals) or the repor t to the King  relating to  it should  refer to the 
abovementioned Declaration and specify  that the draft roy al decree, as well as any implem enting  
measure and/or decision, are adopted in the context and should be read in th e light of the said  
Declar ation. 
2.4 The ECB underlines that the reco mmendations m ade in this opi nion in relatio n to the draft  royal 
decree shoul d be read together with the reco mme ndations pre viousl y made b y the ECB in its 
Opinion CON/2008/4 621. In this respec t, the ECB r ecalls  more specifically  the i mportance it 
attaches to co ordinated responses from national auth orities and to the co mpliance of the draf t roy al 
decree, as well as any  implementing measure  and/or decision, with Co mmunity  law, includin g 
State aid rules22. The ECB also wishes t o draw the c onsu lting aut horit y’s attention t o the re cent 
ECB opinion s issued at the request of other Mem ber States,  in w hich the ECB  has co mmen ted on 
legislative pr oposals shari ng some of the features  of the draft royal decree23. It is the E CB’s 
intention to facilitate coordinati on of the various national efforts addressing the current financial  
situation, int er alia through tim ely adoption  and publication of  ECB opinio ns on such national  
legislative proposals.  
3.  Specific co mments 
3.1 Selection of t he beneficiary institutions  
 The ECB reit erates the stance taken in its Op inion C ON/2008/44, according to which arrangem ents 
which may be seen as providin g preferential treat ment to specified cred it institutions shoul d be 
avoided24. In the present case, the Minister of Finan ce may  decide to guarantee the liabilities of any 
credit institution or financ ial holding c ompany incorporated under Belgian law provided t hat it 
complies wit h the conditi ons outlined in the draft r oyal decree25. The ECB would reco mmend 
clarify ing in the draft royal decree or in the re port to the King that the Stat e guarantee will be 
                                                 
18  I.e. credit instit utions a nd/or financial hold ing companies in corporated und er Belgian law which have taken , or have 
committed them selves to tak ing, all measures which are usef ul in order to support their fi nanci al situ ation, thei r 
solvabili ty and t heir liquid ity (see Articles 2 and 3 of th e draft royal d ecree). 
19  I.e. li abilities en tered into vis-à- vis other cr edit institutions and /or professional counterpar ts belo nging to th e cat egorie s 
identif ied b y the Minister of Fin ance, provid ed that th ey have been entered into b etween 9  Octob er 2008 and 31 October  
2009 and mature at th e latest on 3 1 October  2011;  see Article 2  of th e draf t royal decree. 
20  On these m odalities, see paragraph 1.2 , concerning Article 4 of the draf t royal decree. 
21  Opinion CON/2008/46. 
22  Opinion CON/2008/46, in particular p aragraphs 2 and 5 . 
23  See Opinion C ON/2008/48 of 15 October 200 8 at th e requ est of the Ir ish Minister for Fin ance on a draf t Credit 
Institutions (Financi al Support)  Schem e 2008. 
24  See Opinion  CON/2008/44, p aragraph 2.3 . 
25  For these conditions, see par agraph 1.2 . 
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granted to these entities i n accordan ce with the req uirements of EC co mpetition law and S tate aid  
rules. In this context, it should be ensured that the beneficiary  institution(s) will not be u nfairly 
advantaged b y making und ue use of their guaranteed status26.  
3.2 Types of liabi lities covered by the guarantee 
 The ECB u nderstands that the draft roy al decree does not define what is enco mpassed by 
‘liabilities’ ( verbintenissen/engagements ) eligible to be covered by  a State guarantee. In this 
respect, the Belgian authorities public ly announced  before the present consultation that such 
liabilities would encom pass all of the fi nancing raised  by a beneficiary  institut ion in order to obtain 
refinancing f rom credit institutions and institutio nal counterparti es and woul d cover instr uments 
such as bonds and debt securities issu ed by  the be neficiary  to institutional i nvestors, as well as 
interbank de posits, fiduc iary deposits, deposits of central ba nks, deposit s of institut ions, 
commercial paper, certificates of deposits and medium -term  notes, provi ded that the y were 
contracted or renewed by  the beneficiary  instituti on between 9 October 2008 and 31 October 2009  
and that the y mature before 31 October 2 01127.  
 The ECB also notes that, in line with the abovem entioned Declarati on, Mem ber States hav e to act 
in coordinate d manner to avoid sign ificant differe nces in national i mplemen tation which coul d have 
a counter-pro ductive effect, creating dist ortions i n global bankin g markets. The euro area Heads of 
State also ack nowledged the need to work in coope ration with the ECB so as to ensure consistency  
with the m anagem ent of liqui dity by the Eur osystem  and com patibility with the operational  
framework of the Euros ystem . Agai nst this backgrou nd, the  ECB notes that uncoordinated 
decisions among Mem ber States should be avoided as they may involve a fragmentation of  the euro  
area money  market. In this context, the ECB would make a nu mber of observations. First, it  is the  
ECB’s view that the extension of the State guarant ee to cover interbank de posits should be avo ided. 
This could entail a substantial distortion in the various national seg ments of the euro area money  
market by  potentially  increasing short -term debt  issuance  acti vity across Member Stat es and 
therefore impairing the i mplementation of the si ngle m onetary  polic y, whi ch is an exclusive  
competence of the Eur osystem  under Article 105(2 ) of the Treaty28. Second,  it appears crucial t o 
ensure the harm onisation of the price determ ination of such a guara ntee within the euro area  and the  
EU where a level play ing field is of essence. Th e ECB should be involved i n such concertation and  
coordination, and would w elcome this b eing exp licitly foreseen in any  subsequent legislation. 
3.3 Involvement of supervisory authorities 
The ECB notes that the Minister of Finance’ s deci sion to grant the State guarantee is, inter alia, 
subject to the condition t hat the beneficiary  has t aken (or has committed i tself to taking) all  
measures which are useful in order to su pport its fi nancial situation, its solvency  and its liq uidity29. 
                                                 
26  See for  example Opinion CON/2008/48, p aragraph 3.4 . 
27  See the pr ess release of 10 Octo ber 2008 issued by the Secr etariat of the B elgian Deputy  Prime Minister and Minister of  
Finance. 
28  See also Opinio n CON/2008/48, in p articular p aragraph 3 .7. 
29  See Arti cle 3 of the dr aft royal decree. 
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In this respect, the ECB n otes that proper coordi nation with the supervisor y authorit y will have to  
be ensured. 
3.4 Relationship with the preservation of the stability of t he financial  system 
As mentioned above,  the draft roy al decree is in particular motivated by the Belgian authorities’ 
wish to preserve the stab ility of the Belgian financial sy stem30. However, under the draft ro yal 
decree, the Minister of Finance’s decisi on to gran t a State guarantee is subject to the condition that 
the granting of the guarantee is justified ‘in th e interest of the Belgian econom y and by the 
protection of all depositors’31. In additi on, the ECB not es that, in its final version, Article 117 bis of 
the Law of 2  August 2 002 empowers the King to  establish the S tate guarantee ‘in the eve nt of a 
sudden crisis on the financial markets o r of a serious threat of sy stem ic crisis, and in order to  limit 
the sc ale or effects  there of’. Therefore, the EC B recommends t hat this appa rent discrepa ncy is 
clarified in the draft roy al decree. 
 
This opini on will be publis hed on t he ECB’s website. 
 
 
Done at Frankfurt am  Main, 17  October 200 8. 
 
[signed ] 
 
The President of the ECB 
Jean-Claude TRICHET 
                                                 
30  See par agraph  1.1 and the reference to the first recital of the draft royal decree. 
31  See Arti cle 3 of the dr aft royal decree. 
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