Opinion of the European Central Bank of 12 November 2008 at the request of the Banca d’Italia on behalf of the Italian Ministry for Economic Affairs and Finance on a draft ministerial decree containing provisions to implement Decree-Law No 157/2008 on further urgent measures to guarantee the stability of the credit system (CON/2008/65)
Date: 2008-11-12
Institutions: European Central Bank
Subjects: Italy, bank, credit institution, financial stability, support mechanism

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 12 November 2008 

at the request of the Banca d’Italia on behalf of the Italian Ministry for Economic Affairs and 

Finance on a draft ministerial decree containing provisions to implement Decree-Law 

No 157/2008 on further urgent measures to guarantee the stability of the credit system 

(CON/2008/65) 

Introduction and legal basis 

On 7 November 2008 the European Central Bank (ECB) received a request from the  Banca d’Italia on 

behalf of the Italian Ministry for Economic Affairs and Finance (hereinafter the ‘MEF’) for an opinion on 

a draft ministerial decree containing provisions to implement Decree-Law No 157 of 13 October 2008 on 

further urgent measures to guarantee the stability of the credit system (hereinafter the ‘draft decree’). 

The  ECB’s  competence  to  deliver  an  opinion  is  based  on  Article  105(4)  of  the  Treaty  establishing  the 

European Community and the third and sixth indents 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 decree relates to the Banca d’Italia and 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 decree 

The draft decree contains provisions implementing Decree-Law No 157/2008 on further urgent measures 
to guarantee the stability of the credit system of 13 October 20082, on which the ECB commented in its 
earlier Opinion CON/2008/583. In particular, the draft decree specifies procedures and conditions for the 

application of the following types of measures in support of Italian banks which were introduced under 
Decree-Law No 157/20084: (i) provision of State guarantees for bank liabilities with maturities of up to 
five  years,  and  issued  after  the  entry  into  force  of  Decree-Law  No  157/20085;  (ii)  swap  arrangements 

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OJ L 189, 3.7.1998, p. 42.  
Decree-Law  No  157/2008  was  presented  to  the  Parliament  on  the  same  day  of  its  adoption,  in  accordance  with  the 
procedure  for  conversion  into  law,  which  is  currently  underway.    Article  2(1)  of  Decree-Law  No  157/2008  contains  a 
delegation for the adoption of the draft decree. 
ECB Opinion CON/2008/58 of 23 October 2008 at the request of the Banca d’Italia on behalf of the Italian Ministry for 
Economic Affairs and Finance on two Decree-Laws containing urgent measures to guarantee the stability of the banking 
system and the continuity of the provision of credit; the opinion is available on the ECB’s website at www.ecb.europa.eu. 
Banks having their  registered office in Italy (see Article 1(2) of the draft decree). 
See Article 1(1) of Decree-Law No 157/2008, as specifically implemented by Articles 1(1)(a) and 2 of the draft decree. 

 
 
 
 
                                                 
involving the provision of Treasury bills in exchange for financial instruments held by banks and bank 

liabilities with maturities of up to five years; and (iii) provision of State guarantees in relation to securities 

lending  transactions  entered  into  by  banks  in  order  to  obtain  securities  eligible  as  collateral  in  the 
Eurosystem  refinancing  operations6  (hereinafter,  the  ‘support  measures’).  The  draft  decree  further 

specifies, in particular:  

(i) 

in  relation  to  the  State  guarantees:  the  bank  liabilities  which  may  be  covered,  the  scope  of  the 

granted State guarantees, as well as procedures for admission of the beneficiary banks and for the 
utilisation and recovery of the granted State guarantees7; 

(ii) 

in  relation  to  swap  transactions:  the  scope  of  financial  instruments  held  by  banks  and  bank 
liabilities, as well as the procedures for admission of the beneficiary banks8. 

Additionally,  the  draft  decree  specifies  the  amount  of  charges  to  be  imposed  on  beneficiary  banks  in 
connection with the provision of the State guarantees or the swap transactions9. 

2.  General observations 

2.1 

In  its  Opinion  CON/2008/58,  the  ECB  made  a  number  of  recommendations  as  regards  the 

implementation of Decree-Law No 157/2008. More specifically, as regards the terms of the State 

guarantees  for  banking  liabilities,  to  ensure  the  effective  implementation  of  the  single  monetary 
policy in the euro area10, the ECB recommended that the extension of the State guarantees to cover 

interbank  deposits  should  be  avoided.  The  ECB  also  highlighted  that  it  is  crucial  to  ensure  the 

coordination  of  the  price  determination  of  the  State  guarantees  within  the  euro  area  and  the  EU, 
given that a level playing field is of  essence11. The ECB appreciates the clarification in the  draft 

decree that the government guarantees may be provided under Article 2 only in relation to specified 

financial  debt  instruments,  hence  excluding  interbank  deposits.    The  ECB  further  notes  that  the 

economic conditions for granting the State guarantee in Article 6 of the draft decree are in line with 

the principles contained in the Commission’s guidelines. 

2.2  The  ECB  also  considers  that  the  draft  decree  complies  with  Article  8  of  the  ‘Declaration  on  a 

concerted European action plan of the euro area countries’ made by the Heads of States of the euro 

area  on  12  October  2008,  which  states,  inter  alia,  that  the  euro  area  governments  ‘would  make 

available  …  a  Government  guarantee  …  of  new  medium  term  (up  to  5  years)  bank  senior  debt 
issuance’12. 

2.3  Furthermore,  the  ECB  appreciates  that  the  draft  decree  is  fully  in  line  with  the  recently  adopted 

Commission’s guidance on compliance of the financial sector support schemes with EU State aid 

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See Article 1(3) of Decree-Law No 157/2008, as specifically implemented by Articles 1(1)(c) and 4 of the draft decree. 
See Articles 2 and 4, 5, 7 and 9 of the draft decree. 
See Articles 3 and 8 of the draft decree. 
See Article 6 of the draft decree. 
See paragraph 3.2 of ECB Opinion CON/2008/58. 
See paragraph 3.3 of ECB Opinion CON/2008/58. 
See the Declaration of 12 October 2008 available on the French Presidency’s website at www.ue2008.fr. 

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rules13 as it provides that: (i) the scope of the support measures will be limited to what is strictly 

indispensable  to  address  the  current  serious  economic  crisis;  (ii)  the  continuation  of  the  support 

measures is subject to biannual monitoring by the Italian authorities, who will duly communicate 
the  outcome  to  the  Commission14;  (iii)  appropriate  mechanisms  are  put  in  place  to  minimise  the 

potential  abuse  by  beneficiary  banks  of  their  preferential  situation,  such  as:  the  prohibition  on 
obtaining undue advantages, e.g. through commercial advertisements targeting the general public15; 

(iv) limitations on the size of the balance sheet of the beneficiary institutions.  

3. 

Banca d’Italia’s involvement in the support measures 

3.1  Under  the  draft  decree,  the  Banca  d’Italia  will  perform  certain  tasks  in  order  to  implement  the 

support measures. First, it will assess the eligibility of the applicant banks’ with particular regard to 
their capital adequacy and ability to discharge the obligations assumed16. Second, it will support the 

Finance Minister in ensuring the beneficiary banks’ compliance with the general safeguards for the 
provision  of  the  support  measures17.  Further,  with  respect  to  securities  lending  transactions  to  be 

guaranteed under the draft decree, the Banca d’Italia will produce the evaluation of such securities, 
which will be based on their market value18. In line with its previous opinions19, the ECB recalls 

that the functions to be performed by the Banca d’Italia with regard to the support measures need to 

comply with the monetary financing prohibition as regards the remuneration of the Banca d’Italia 

for  its  involvement,  which  should  be  conducted  in  a  manner  fully  compatible  with  the  Banca 

d’Italia’s institutional and financial independence under the Treaty and the Statute of the European 

System of Central Banks and of the European Central Bank. 

3.2  Moreover, in the case of payments under the State guarantees, the Banca d’Italia will have the task 
of distributing the amounts from the funds transferred to it by the Government for this purpose20. In 

this respect, the ECB understands that the involvement of the Banca d’Italia will not go beyond the 

traditional task of a fiscal agent and that all the support measures will be financed from the State’s 

budgetary  resources.  It  is  therefore  expected  that  the  involvement  of  Banca  d’Italia  will  comply 

with  the  prohibition  on  monetary  financing  laid  down  in  Article  101  of  the  Treaty  and  the 

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See  the  ‘Communication  from  the  Commission  –  The  application  of  State  aid  rules  to  measures  taken  in  relation  to 
financial  institutions  in  the  context  of  the  current  global  financial  crisis’  of  13  October  2008,  available  on  the 
Commission’s website at www.ec.europa.eu. 
See Article 1(3) of the draft decree. 
See Article 1(4) to (6) of the draft decree. 
See Article 7(3) to(4) and 8(3) to(4). In this respect, the Banca d’Italia will benefit from its role as supervisory authority 
of  the  banking  sector  (see  Title  III  and  in  particular  Article  51  of  the  Legislative  Decree  385  of  1  September  1993, 
published in Gazzetta Ufficiale della Repubblica Italiana of 30.9.1993, n. 230 (Consolidated Banking Law)). 
See Article 1(3)-(5) of the draft decree. 
See Article 4(2) of the draft decree. 
See, e.g., paragraph 3.2 of ECB Opinion CON/2008/52 of 17 October 2008 at the request of the Spanish State Secretary 
for  Economic  Affairs  on  a  Royal  Decree-Law  creating  a  Fund  for  the  acquisition  of  financial  assets  and  on  a  Royal 
Decree-Law adopting urgent financial and economic measures in relation to the concerted European action plan of the 
euro area countries. 
See Article 9(2) of the draft decree. 

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prohibition  on  central  bank  financing  of  public  sector  obligations  vis-à-vis  third  parties21.  In 

particular,  the  ECB  understands  that  any  payouts  of  amounts  by  the  Banca  d’Italia  under 

Article 9(2)  of  the  draft  decree  will  always  be  made  on  the  basis  of  the  prior  transfer  by  the 

Government of all the required funds and that no credit or liability to pay out will exist between the 

Banca d’Italia and the beneficiary banks and, finally, that the payouts will not lead in any case to 

the provision of overdraft credit facilities with the Banca d’Italia. 

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 12 November 2008. 

[signed] 

The Vice-President of the ECB 

Lucas D. PAPADEMOS 

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See  Article  1(1)(b)(ii)  of  Council  Regulation  (EC)  No  3603/93  of  13 December 1993  specifying  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). 

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