EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 27 October 2008  
at the request of the Spanish State Secretary for Economic Affairs 
on a draft Order implementing Royal Decree-Law 6/2008 creating the Fund for the acquisition 
of financial assets and on a draft Basic Agreement of the Fund’s Executive Council  
(CON/2008/60) 
 
Introduction and legal basis  
On 23 October 2008 the European Central Bank (E CB) received a request from the Spanish State 
Secretary for Economic Affairs for an opinion on a draft Order implementing Royal Decree-Law 6/2008 
of 10 October creating the Fund for the acquisition of fi nancial assets (hereinafter  the ‘draft Order’) and 
on a draft Basic Agreement of the Fund’s Executive Council (hereinafter the ‘d raft Basic Agreement) 
(hereinafter collectively the ‘draft provisions’).  
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 provisions 
The draft provisions will implement Royal Decree- Law 6/2008 by determining the composition of the 
Fund’s Executive Committee, creating a technical  committee to assist th e Executive Committee and 
specifying the eligible assets, the auction procedures , the Banco de España’s ro le and the validity period 
of these measures.   
 2. General observations  2.1 The ECB has issued an opinion on the Royal Decree-Law creating the Fund (CON/2008/52 of 
17 October 2008) and is now called upon to comme nt on the implementing legislation to be 
adopted under such Royal Decree-Law. 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2 2.2 In line with its views stated in paragraphs 2. 3 and 2.4 of CON/2008/52, the ECB welcomes that the 
Fund operations will be subject to an expiry date, namely 31 Decem ber 2012, and that auctions will 
be open to all credit institutions registered with the Banco de España and thus also to branches of 
foreign credit institutions in Spain2.  
2.3  Moreover, in line with paragraph 3.2 of CON/2008/52, the ECB welcomes that the Banco de 
España’s role will be limited to acting as governme nt agent and deposit bank  and to providing its 
expertise as part of the Technical Committee assi sting the Executive Commi ttee. The draft Order 
lays down detailed rules in this respect3, whereby nothing in such ru les exceeds the scope defined 
above of the Banco de Es paña’s participation in the Fund. The ECB expects that the practical 
operation of the Fund under the draft Order will not interfere with the Banco de España’s 
institutional and financial independence, as well as its capacity to perform its tasks under the Treaty 
and the Statute of the European System of Central Banks and of the European Central Bank. Further, noting that the public character of the Fund is confirme d by the draft Basic Agreement’s 
provisions related, in particular, to the composition of the Fund’s Executive Committee
4, the ECB 
reiterates its earlier position5 that the Fund may not benefit from overdraft facilities or any type of 
credit facility with the Banco de España, in  accordance with Article 101 of the Treaty and 
Regulation (EC) No 3603/936. 
 
3. Specific comments 
3.1  Collateral  
The ECB notes that, according to Section 2 of th e draft Basic Agreement, for repurchase agreement 
operations conducted by the Fund, the eligibility of  the assets for the operations with the Fund will 
be based on the list of the assets eligible as colla teral for the Eurosystem’s refinancing operations. 
In this respect, the ECB recommends putting in place a mechanism to ex change information in 
order to avoid a risk of double mobilisation of collateral. 
In the same vein, Section 2 also provides that the margins and haircuts applied to the assets 
provided as collateral for the repurchase agreemen t operations will follow the guidelines adopted in 
the context of the Eurosystem’s operational framework. The ECB notes that the Fund should 
follow the standard of daily margin calls to ensure that the market value of collateral after haircut 
remains adequate to collateralise the loan, in line with the Eurosystem. The prices used to value the 
collateral should also be the same as the prices used by the Eurosystem. 
                                                 
2  See Article 5(3) of the draft Order, as  well as its Sole Final Provision.   
3  See Article 7 of the draft Order. 
4  See Section 2 of the draft Basic Agreement. 
5  See paragraph 3.3 of Opinion CON/2008/52. 
6  Council Regulation (EC) No 3603/93 of 13 December 1993 specifyi ng definitions for the application of the prohibitions 
referred to in Articles 104 and 104b(1) of  the Treaty (OJ L 332, 31.12.1993, p. 1). 
3 3.2  Pricing of the operations conducted by the Fund  
The recent ECB Opinion CON/2008/52 notes that, in line with the declaration on a concerted 
European action plan of the euro area countries7, Member States have to act in a coordinated 
manner to avoid significant differences in national implementation from having a counter-
productive effect, creating distortions in global banki ng markets. The euro ar ea Heads of State also 
acknowledged the need to work in cooperation w ith the ECB to ensure consistency with the 
management of liquidity by the Eurosystem a nd compatibility with the Eurosystem’s operational 
framework. As a result, the ECB points out that  uncoordinated decisions among Member States 
should be avoided as they may involve a fra gmentation of the euro area money market. 
Against this background, it is of utmost impor tance that the operations conducted by the Fund do 
not interfere by any means with the signalling of  the single monetary policy and/or with the 
Eurosystem’s refinancing operations. In this context, a number of observations can be made. 
Regarding the repurchase agreement operations c onducted by the Fund, the ECB notes the loans 
granted against collateral will be based on an auc tion procedure where the minimum rate for bids 
should not be below the cost of State funding for the corresponding maturity. First, such operations should not be conducted below the three-month maturi ty in order to ensure consistency with the 
Eurosystem’s management of liquidity. In this respect, the ECB welcomes Section 2 of the draft 
Basic Agreement, which provides that the refina ncing operations conducted by the Fund will be 
above 12-month maturity. Second, the Fund’s ope rations must be based on a genuine market-
oriented auction procedure in order to avoi d collusive agreement between counterparts. 
Regarding the Fund’s acquisition of assets, the EC B recommends further clarification of the price 
determination of the assets that could be acquired by  the Fund. In this respect, the ECB notes that 
the prices at which banks’ assets could be acquired by the Fund should be based on market prices. 
The ECB therefore suggests stating in the draft prov isions that the price of the acquisitions by the 
Fund must not interfere with the transmission of the Eurosystem’s monetary policy and should avoid any distortions in asset prices across euro area countries. 
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 27 October 2008. 
[signed] 
 
The Vice-President of the ECB 
Lucas D. PAPADEMOS 
                                                 
7  Available on the website of the French Presidency at www.eu2008.fr.