EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 13 November 2008  
at the request of the Spanish Minist ry for Economic Affairs and Finance 
on a draft order implementing Royal Decr ee-Law 7/2008 authorising State guarantees  
(CON/2008/67) 
 
Introduction and legal basis  
On 11 November 2008 the European Central Bank (ECB)  received a request from the Spanish Ministry 
for Economic Affairs and Finance for an opinio n on a draft order implementing Royal Decree-
Law 7/2008 of 13 October adopting urge nt financial and economic measur es in relation to the concerted 
European action plan for the euro area countries, in  particular Article 1 authorising State guarantees 
(hereinafter the ‘draft order’).  
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 Ce ntral Bank by national authorities regarding draft 
legislative provisions1, as the draft provisions relate to the Banc o de España and to rules applicable to 
financial institutions that 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 order 
The draft order will implement Article 1 of Royal Decree-Law 7/2008 by la ying down rules on the 
conditions for the guarantees, the eligibility of instit utions and operations, the applicable fees and the 
requesting and granting procedures.   
 2. General observations  The ECB adopted Opinion CON/2008/52 of 17 Octobe r 2008 on Royal Decree-Law 7/2008 and is now 
consulted on its implementing legisla tion. In this context, the ECB not es that the observations made in 
Opinion CON/2008/52 also apply to this draft order. 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2 3. Specific comments 
3.1  Eligibility for support  
The ECB welcomes that Article 2 of the draft orde r is in line with the Commission’s guidance on 
compliance by the financial sector support schemes with State aid rules2, in particular with the 
eligibility criteria that all institutions incorpor ated in the Member State concerned, including 
subsidiaries, with significant activities in that Me mber State, should be covered by the scheme. 
However, the ECB notes that there are no provisions  ensuring that the beneficiary institutions will 
not be unfairly advantaged by making undue use of their guaranteed status to engage in a heightened level of activities which create market  distortions and facilitate abnormal balance sheet 
growth
3. In this regard, the ECB reiterates the importance of establishing appropriate safeguards 
such as limits to marketing of financial products  or to expansion of activities on the basis of the 
State guarantees. 
3.2 Pricing 
The ECB welcomes that Article 4 of the draft order, in line with paragraph 3.4 of ECB Opinion 
CON/2008/52, recognises the need for harmonising pr icing with the ECB’s involvement. The ECB 
appreciates that the draft order’s Annex on pricing of the State guarantee is broadly in line with the 
Eurosystem’s recommendations on government gu arantees on bank debt. In particular, it is 
important to ensure that the price of the State gua rantee is risk-based and market-oriented in that it 
is determined on the basis of the costs of a corresponding guarantee in the market. However, for 
legal certainty reasons, the ECB recommends deleti ng the specific reference to the Eurosystem’s 
recommendations on government guara ntees on bank debt, which is not a legal act and is subject to 
revision. Finally, the ECB reiterates that it is cr ucial to ensure the harm onisation and coordination 
of the price determination of State guarantees within  the European Union, given that a level playing 
field is of essence. 
3.3 Relationship with the single monetary policy  
As stated in previous opinions, the ECB cons iders that extending State guarantees to interbank 
deposits should be avoided, as it could entail a substantial distortion in the various national 
segments of the euro area money market by poten tially increasing short-term debt issuance activity 
across Member States and therefore impairing the implementation of the single monetary policy. Therefore, the ECB welcomes that, according to Article 3(b) of the draft order, no interbank 
deposits may be covered by State guarantees.  
 
                                                 
2  See ‘Communication from the Commission – The application of St ate aid rules to measures ta ken in relation to financial 
institutions in the context of the current global financ ial crisis’ of 13 October 2008, available on the Commission’s 
website at www.ec.europa.eu  (hereinafter the ‘Commission Guidance’). 
3  See point 27 of the Commission Guidance; see, e.g. pa ragraph 3.4 of ECB Opinion CON/2008/48 of 15 October 2008 at 
the request of the Irish Minister for Finance on a draf t Credit Institutions (Fin ancial Support) Scheme 2008. 
3 This opinion will be published on the ECB’s website. 
  Done at Frankfurt am Main, 13 November 2008. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET