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 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 the financial sector and on financial services (CON/2008/61)
Date: 2008-10-28
Institutions: European Central Bank
Subjects: Belgium, bank deposit, credit guarantee, financial institution, financial stability, life assurance

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 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 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 State 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 the financial sector and on financial services (hereinafter the ‘draft 

royal decree’). Given the current turbulence in the financial markets and the need for firm intervention by 

the authorities involved, the consulting authority has requested 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  Central  Bank  by  national  authorities  regarding  draft 
legislative provisions1, as the draft royal decree relates to 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 royal decree 

1.1  The  draft  royal  decree  is  motivated  by  the  current  turbulence  in  the  financial  markets  and  by  the 

Belgian  authorities’  wish  to  take  the  necessary  measures  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.  

 
 
 
 
                                                 
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 ensure 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 holders 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 that 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 pertaining to the ‘branche 21’ as defined in 

Annex  1  to  the  Royal  Decree  of  22 February  1991  (hereinafter  the  ‘branche  21 

2  

3  

4 

5  

6  

7  
8  
9  

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 the financial markets. The ECB has already 
been  consulted  by  the  Belgian  authorities  on  two  other  draft  legislative  provisions  adopted  in  this  context:  see  ECB 
Opinion CON/2008/46 of 8 October 2008 at the request of the Belgian Ministry of Finance on a preliminary draft law on 
measures promoting financial stability and in particular establishing a State guarantee 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 117bis of the Law of 2 August 2002 on the supervision of the 
financial sector and on financial services. All ECB opinions are available on the ECB website, www.ecb.europa.eu. 
Article 11 of the draft royal decree. These institutions are: financial holding companies incorporated under Belgian law, 
credit institutions, investment firms incorporated under Belgian law, as well as other financial undertakings belonging to 
a group over which the Commissie voor het Bank-, Financie- en Assurantiewezen/Commission bancaire, financière et des 
assurances exercises consolidated supervision. 
See ECB Opinion CON/2008/50 in relation to this provision, which empowers the King to establish a system to grant a 
State guarantee for liabilities entered into by certain supervised institutions. 
As defined in Article 1 of the draft royal decree. The assets that benefit from this extension are: (i) the deposits and assets 
covered by the existing deposit-guarantee scheme (i.e. deposits and bank savings certificates (kasbons/bons de caisse), 
bonds and other bank debentures certificates denominated in euro or in a currency 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  covered  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. 
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 investor-compensation scheme. 
Article 2 of the draft royal decree.  
Article 4 in fine of the draft royal decree.  
As defined in Article 4, 1° and 2°, of the draft royal decree.  

2 

                                                 
insurance products’)10, whereby the special Fund’s intervention 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 within 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 available 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) allocating 50 % of the (ordinary) annual contributions 

to be paid by mandatory participants; or (ii) allocating a special annual contribution to be paid by 

participating insurance companies, depending on whether the failing institution falls within the first 
or the second category17. 

2.   General observations 

2.1  The ECB welcomes the proposed increase in the total amount of protected deposits to EUR 100 000 
in accordance with the conclusions of the 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  having  a  counter-productive  effect  and  creating 

distortions  in  global  banking  markets.  In  particular,  harmonisation  as  regards  the  guaranteed 

amount and the duration of the guarantee are necessary within the euro area and the EU. Moreover, 

10  
11  
12  

13  
14  
15  

16  

17  
18  

Article 4, 3° of the draft royal decree. These products are not covered by the existing Fund. 
Article 5, first and second subparagraphs of the draft royal decree. 
Article  3  §1  of  the  draft  royal  decree.  The  ECB  understands  that  these  mandatory  participants  are:  credit  institutions 
established  in  Belgium,  investment  firms  established  in  Belgium  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.  
Article 3 §2 of the draft royal decree. 
Article 6 to 8 of the draft royal decree. 
Article 7 §1 of the draft royal decree, laying down a different 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  guarantee  minimum  interest  rate,  increased  by  profits  attributed 
until 31 December of the preceding year). 
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). 
Article 8 of the draft royal decree. 
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  protection  for  individuals  for  an  amount  of  at  least  EUR  50  000,  acknowledging  that 
many Member States determine to raise their minimum protected amount to EUR 100 000’. See the press release of the 
2894th Council meeting (13784/08), available on the Council website, www.consilium.europa.eu. 

3 

                                                 
the ECB also emphasises how important it is that these measures should comply with Community 
law, including EC competition law19.  

2.2  The ECB notes that the draft royal decree is justified 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 confirmed 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 initiatives to be undertaken in Belgium, notably in 

the context of the ongoing work at Community level 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  stability23.  Further,  as  confirmed  also  by  international 

standards,  sound  funding  arrangements  are  critical  to  the  effectiveness  of  deposit-guarantee 
schemes  and  to the  maintenance of public 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 
jeopardised26.  The  arrangements  for  the  special  Fund  should  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,  appropriate  funding  mechanisms  should  be  in  place  to 

ensure the prompt reimbursement of depositors’ claims. 

19  

20  

21  
22  

23  

24  

25  
26  

See  notably  ECB  Opinion  CON/2008/46,  in  particular  paragraphs  2.1  and  5,  and  ECB  Opinion  CON/2008/50, 
paragraphs 2.2 and 3.1. 
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  
Article 117 bis, in fine, of the Law of 2 August 2002. 
See  the  Commission’s  proposal  for  a  directive  of  the  European  Parliament  and  of  the  Council  amending  Directive 
94/19/EC  on  Deposit  Guarantee  Schemes  as  regards  the  coverage  level  and  the  payout  delay  (COM(2008)  0661) 
(hereinafter the ‘proposed amending Directive’). 
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 bank 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. 
Financial Stability Forum, ‘Guidance for Developing Effective Deposit Insurance Systems’, September 2001, point V.4 
(‘Funding arrangements’), p. 26. IADI, Core Principles for Effective Deposit Insurance Systems, 29 February 2008. 
OJ L 135, 31.5.1994, p. 5. 
See the twenty-third recital to Directive 94/19/EC. The proposed amending Directive 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  (see  Article  1(6)  of  the  proposed  amending  Directive,  introducing  changes  to 
Article 12 of Directive 94/19/EC). 

4 

 
                                                 
Prohibition on monetary financing  

3.2 

In line with its previous opinions, the ECB reiterates 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  specifies  that  if  the  special  Fund’s  assets  are 

insufficient to allow for an intervention, the Deposit and Consignment 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  does  not  define  the  conditions,  detailed  rules  and 
limitations of the reimbursement to be made by the special Fund but delegates them to the King29. 

In  this  respect,  the  ECB  welcomes  the  statement  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  Finance  and  has  paid  the  requested  contributions30. 

Arrangements  should  be  in  place  to  ensure  widespread  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  

28  

29  
30  

See paragraph 3.1 of ECB Opinion CON/2008/57 of 21 October 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 paragraph 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 financial 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 benefit 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. 
Article 8 of the draft royal decree. The Report to the King further clarifies that if necessary, the Deposit and Consignment 
Office may borrow the necessary funds from the Belgian Debt Agency (Agentschap van de Schuld/Agence de la dette). 
Article 5, in fine, of the draft royal decree. 
Article 3 §2 of the draft royal decree. 

5