EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 28 October 2008 
at the request of the Belgian Minister for Finance 
on a draft royal decree implementing the Law of 15 October 2008 on measures promoting financial 
stability and in particular establishing a State guaran tee for the provision of credit in the context of 
financial stability, in relation to the protection of  deposits and life insurance and amending the Law 
of 2 August 2002 on the supervision of the financial sector and on financial services  
(CON/2008/61) 
 Introduction and legal basis
 
On 24 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 Minister for Finance, for an 
opinion on a draft royal decree implementing the Law of 15 October 2008 on measures promoting financial stability and in particular establishing a St ate guarantee for the provision of credit in the context 
of financial stability, in relation to the protection of  deposits and life insurance and amending the Law of 
2 August 2002 on the supervision of th e financial sector and on financia l services (hereinafter the ‘draft 
royal decree’). Given the current turbulence in the fina ncial markets and the need for firm intervention by 
the authorities involved, the consulting authority has re quested the ECB to provide its opinion urgently to 
allow the swift adoption of 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 provisions
1, 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 curre nt turbulence in the financial markets and by the 
Belgian authorities’ wish to take the necessary me asures to preserve confidence in the financial 
system and, notably, to reinforce the protection of  depositors and to provide for a similar protection 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2 scheme for the holders of certain life insurance products2. In addition, the draft royal decree 
identifies the institutions3 referred to in Article 117bis 2° of the Law of 2 August 20024. The ECB 
understands that the aim of this provision is to ensu re that, were a State guarantee to be granted, its 
scope could be extended to all financial undertakings belonging to a consolidated group. The ECB 
has no further comment on this part of the draft royal decree. 
1.2 Concerning the protection of depositors and the hol ders of certain life insurance products, the draft 
royal decree would:  
(i) raise from EUR 20 000 to EUR 50 000 the protection for deposits5 under the existing 
deposit-guarantee and investor-protection scheme managed by the Fund for the protection of 
deposits and financial instruments (hereinafter the ‘existing Fund’)6; and 
(ii) establish a special Fund for the protection of deposits and life insurance7 (hereinafter the 
‘special Fund’) in order to provide clients th at exercise no banking and/or financial activity8 
with: 
(a) a EUR 50 000 protection for deposits9 in addition to the abovementioned EUR 50 000 
to be reimbursed by the existing Fund, i.e. total protection of EUR 100 000; and  
(b) a maximum EUR 100 000 protection for certain life insurance products, i.e. life 
insurance products with guaranteed return pe rtaining to the ‘branche 21’ as defined in 
Annex 1 to the Royal Decree of 22 Februa ry 1991 (hereinafter the ‘branche 21 
                                                 
2  Report to the King accompanying the draft royal decree. The draft royal decree is part of the general rescue package put 
in place by the Belgian authorities in response to the current turbulence in th e financial markets. The ECB has already 
been consulted by the Belgian authorities on two other draf t legislative provisions adopted in this context: see ECB 
Opinion CON/2008/46 of 8 October 2008 at the request of the Be lgian Ministry of Finance on a preliminary draft law on 
measures promoting financial stability a nd in particular establishing a State guara ntee for the provision of credit in the 
context of financial stability, and ECB Opinion CON/2008/50 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 fina ncial services. All ECB opinions are availa ble on the ECB website, www.ecb.europa.eu. 
3  Article 11 of the draft royal decree. These institutions are:  financial holding companies incorporated under Belgian law, 
credit institutions, investment firms incorporated under Belgia n law, as well as other financ ial undertakings belonging to 
a group over which the Commissie voor het Bank-, Financie- en Assuran tiewezen/Commission bancair e, financière et des 
assurances  exercises consolid ated supervision. 
4 See ECB Opinion CON/2008/50 in relation to this provision, which empowers the King to esta blish a system to grant a 
State guarantee for liabilities entered in to by certain supervised institutions. 
5  As defined in Article 1 of the draft royal decree. The assets  that benefit from this extension are: (i) the deposits and asse ts 
covered by the existing deposit-guarantee scheme  (i.e. deposits and ba nk savings certificates (kasbons/bons de caisse) , 
bonds and other bank debentures cer tificates denominated in euro or in a curre ncy of a Member State that has not adopted 
the euro, as set out in Article 110bis2 §2 of the Law of  22 March 1993 on the legal status and supervision of credit 
institutions); and (ii) cash deposits cove red by the existing investor protection scheme (i.e. deposits held on behalf of 
investors waiting to be refunded to the investor or used for purchasing financial instruments, as set out in Article 113 §2 
second subparagraph of the Law of 6 April 1995 on the legal status and supervision of investment firms), but not 
financial instruments covered by the latter scheme. 
6  See the Law of 22 March 1993 (Article 110 to 110 sexies), the Law of 6 April 1995 (Article 112 to 116), and the Law of 
17 December 1998 establishing a fund for the protection of deposits and financial instruments and reorganising the 
deposit-guarantee and invest or-compensation scheme. 
7  Article 2 of the draft royal decree.  
8  Article 4  in fine  of the draft royal decree.  
9  As defined in Article 4, 1° and 2°, of the draft royal decree.  
3 insurance products’)10, whereby the special Fund’s inte rvention is limited to the value 
of the policy as at the day preceding the insurance company’s failure11.  
1.3 The special Fund would be established w ithin the Deposit and Consignment Office ( Deposito- en 
Consignatiekas/Caisse des dépôts et consignations ), a government department without legal 
personality. Participation in the special Fund would be mandatory for those institutions that already 
participate in the existing Fund (‘mandatory participants’)12, whereas it would be optional for life 
insurance undertakings authorised to  offer branche 21 insurance products13. The special Fund 
would be funded by its participants14 by means of annual contributions to be paid by all 
participants15 and in addition a one-off entry fee to be paid by participating insurance companies16. 
Finally, the ECB understands that if the means ava ilable to the special Fund are insufficient for an 
intervention, the necessary funds will be advanced  by the Deposit and Consignment Office and that 
this advance will be reimbursed either by: (i) a llocating 50 % of the (ordinary) annual contributions 
to be paid by mandatory participants; or (ii) allo cating a special annual contribution to be paid by 
participating insurance companies, depending on whet her the failing institution falls within the first 
or the second category17. 
2.  General observations 
2.1 The ECB welcomes the proposed increase in the to tal amount of protected deposits to EUR 100 000 
in accordance with the conclusions of th e Ecofin Council held on 7 October 200818. In this respect, 
the ECB would repeat that Member States must act in a coordinated manner to avoid significant differences in national implementation from ha ving a counter-productive effect and creating 
distortions in global banking markets. In pa rticular, harmonisation as regards the guaranteed 
amount and the duration of the guarantee are necess ary within the euro area and the EU. Moreover, 
                                                 
10  Article 4, 3° of the draft royal decree. Thes e products are not covered by the existing Fund. 
11  Article 5, first and second subparagraphs of the draft royal decree. 
12  Article 3 §1 of the draft royal decree. The ECB understands th at these mandatory participants are: credit institutions 
established in Belgium, investment firms established in Be lgium and authorised as stock broking firms or as portfolio 
management and investment advice companies, UCITs management companies established in Belgium, as well as 
branches operating in Belgium of such entities governed by the law of another Member State where these entities have 
opted for optional participation in the existing Fund.  
13  Article 3 §2 of the draft royal decree. 
14  Article 6 to 8 of the draft royal decree. 
15  Article 7 §1 of the draft royal decree, laying down a diff erent contribution for mandatory participants (0,31 ‰ of their 
stock of deposits eligible for protection as at 31 December of the preceding year) and for participating life insurance 
companies (0.50 ‰ of the payments capitalised at the guaran tee minimum interest rate, increased by profits attributed 
until 31 December of the preceding year). 
16  Article 7 §2 of the draft royal decree  (025 % of the payments capitalised at the guarantee minimum interest rate, 
increased by profits attributed until 31 December of the preceding year). 
17  Article 8 of the draft royal decree. 
18  The Council (Ecofin) agreed in its 7 October meeting that ‘all Member States would, for an initial period of at least one 
year, provide deposit-guarantee protecti on for individuals for an amount of at  least EUR 50 000, acknowledging that 
many Member States determine to rais e their minimum protected amount to EUR 100 000’. See the press release of the 
2894th Council meeting (13784/08), av ailable on the Council webs ite, www.consilium.europa.eu. 
4 the ECB also emphasises how important it is th at these measures should comply with Community 
law, including EC competition law19.  
2.2 The ECB notes that the draft royal decree is justif ied by the sudden crisis in the financial markets 
and that it is designed to limit the scale or effects of that crisis20; also that once adopted, the draft 
royal decree will cease to apply unless it is confirme d by a law within 12 months of its entry into 
force21. In summary, the ECB understands that the draft royal decree is an emergency measure to be 
adopted without prejudice to further legislative initi atives to be undertaken in Belgium, notably in 
the context of the ongoing work at Community le vel concerning further harmonisation of deposit-
guarantee schemes22.  
3. Specific comments  Funding of deposit-guarantee schemes 3.1 As the ECB has already noted deposit protection is an  important element of the financial safety net 
and contributes to safeguarding financial stability
23. Further, as confirmed also by international 
standards, sound funding arrangements are critical  to the effectiveness of deposit-guarantee 
schemes and to the maintenance of pub lic confidence in the banking system24. At the same time, 
Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit-
guarantee schemes25 does not currently prescribe a method for financing deposit-guarantee 
schemes, provided that: (i) the costs of financing are borne, in principle, by credit institutions 
themselves; (ii) the financing capacity of the scheme is in proportion to credit institutions’ 
liabilities; and (iii) the stability of the banking system of the Member State concerned is not jeopardised
26. The arrangements for the special Fund shoul d therefore be inspired by these broad 
principles. As confirmed by recent experience in some countries, the effectiveness of deposit-
guarantee schemes depends crucially on depositors being confident that they will receive timely 
and sufficient compensation. Therefore, appropria te funding mechanisms should be in place to 
ensure the prompt reimbursement of depositors’ claims. 
                                                 
19  See notably ECB Opinion CON/2008/46, in particular paragraphs 2.1 and 5, a nd ECB Opinion CON/2008/50, 
paragraphs 2.2 and 3.1. 
20  Article 117 bis 1° of the Law of 2 August 2002 on the supervision of the financial sector and on financial services . See 
ECB Opinion CON/2008/46 and ECB Opinion CON/ 2008/50, in particular. paragraph 2.1  
21  Article 117 bis, in fine , of the Law of 2 August 2002. 
22  See the Commission’s proposal for a directive of the Eur opean Parliament and of the Council amending Directive 
94/19/EC on Deposit Guarantee Schemes as regards the c overage level and the payout delay (COM(2008) 0661) 
(hereinafter the ‘proposed  amending Directive’). 
23  Paragraph 8 of ECB Opinion CON/2005/50 of 1 December 2005 at the request of Národná banka Slovenska on a draft 
law amending the Act No 118/1996 Coll. on the protection of ba nk deposits and on amendments to certain laws, as last 
amended; see also paragraph 2.5 of ECB Opinion CON/2007/ 26 of 27 August 2007 at the request of the Polish Minister 
for Finance on a draft law amending the Law on the Bank Guarantee Fund. 
24  Financial Stability Forum, ‘Guidance for Developing Effective Deposit In surance Systems’, Sept ember 2001, point V.4 
(‘Funding arrangements’), p. 26. IADI, Co re Principles for Effect ive Deposit Insurance Systems, 29 February 2008. 
25  OJ L 135, 31.5.1994, p. 5. 
26  See the twenty-third recital to Dir ective 94/19/EC. The proposed amending Dir ective calls for the Commission to submit 
a report on a harmonisation of the funding mechanisms of  deposit-guarantee schemes by 31 December 2009 to the 
European Parliament and the Council (s ee Article 1(6) of the proposed amendi ng Directive, introducing changes to 
Article 12 of Directive 94/19/EC). 
5  Prohibition on monetary financing  
3.2 In line with its previous opinions, the ECB reitera tes that it is important that the draft royal decree 
complies with the prohibition on monetary financing as laid down in the Treaty27. In this respect, 
the ECB notes: (i) that the draft royal decree sp ecifies that if the special Fund’s assets are 
insufficient to allow for an in tervention, the Deposit and Consig nment Office would advance the 
funds necessary to allow for reimbursement of the clients of the failing institution28; and (ii) that 
the NBB is not entrusted with the performance of any activity related to the special Fund. 
 Coordination with the existing scheme 3.3 The ECB notes that the draft royal decree do es not define the conditions, detailed rules and 
limitations of the reimbursement to be made by  the special Fund but delegates them to the King
29. 
In this respect, the ECB welcomes the statemen t in the Report to the King that these conditions, 
detailed rules and limitations will be aligned to the greatest possible extent with those provided for 
in the context of the existing Fund and notes the importance of a clear framework ensuring that 
smooth procedures are in place to allow depositors to obtain prompt reimbursement of all their claims when both the existing and the special Funds are involved.  
Consumer protection 
3.4 The ECB notes that the protection of individual branche 21 insurance products by the special Fund 
is optional and notably depends on whether the issuing insurance company has been admitted as participant in the Fund by the Minister for Fi nance and has paid the requested contributions
30. 
Arrangements should be in place to ensure widesp read consumer awareness of the scope of the 
protection. 
 This opinion will be published on the ECB’s website.  Done at Frankfurt am Main, 28 October 2008. 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET 
                                                 
27  See paragraph 3.1 of ECB Opinion CON/2008/57 of 21 Octobe r 2008 at the request of the German Ministry of Finance 
on a Law on the implementation of a package of measures to stabilise the financial market and an order on its 
implementation; see also pa ragraph 3.2 of ECB Opinion CON/2008/59 of 24 October 2008 at the request of the Swedish 
Ministry of Finance on a draft proposal on stabilising measures for the Swedish fina ncial system. In this context, the ECB 
emphasises that the special Fund should not be allowed to benefit from any type of lending or overdraft facilities from the 
NBB. If the NBB were to perform any activities for the benef it of the special Fund, these activities would also need to 
comply with the above prohibition as far as the remuneration of such activities is  concerned. Similarly, the ECB notes 
that as the special Fund has no legal personality, it will not be in a position to issue debt instruments. 
28  Article 8 of the draft royal decree. The Report to the King further clarifies that if nece ssary, the Deposit and Consignment 
Office may borrow the necessary funds from the Belgian Debt Agency ( Agentschap van de Schuld/Agence de la dette ). 
29  Article 5 , in fine , of the draft royal decree. 
30  Article 3 §2 of the draft royal decree.