Document Type

Case Study

Case Series

Credit Guarantee Programs

JEL Codes

G01, G28


Much like other developed economies during the global financial crisis, Belgium faced substantial systemic stress to its large and heavily concentrated financial system. To combat these mounting pressures, the Belgian government launched a wide-ranging, opt-in state debt guarantee program in a concerted effort to instill confidence and stymie the fear of runs in its financial sector. The debt guarantee scheme, pursuant to which eligible institutions could issue government-guaranteed debt, was originally put into place on October 15, 2008, and retroactively covered liabilities entered into from October 9, 2008, to October 31, 2009, with a maximum maturity of three years. It provided significant discretionary authority to the Minister of Finance, such as the ability to add additional conditions and to decline any bank from participating in the scheme. Eligibility was determined on a case by case basis. Fees and issuance thresholds were determined in the same way prior to two April 14, 2009, Royal Decrees, which homogenized fees and expanded the pool of eligible institutions. Belgium was also a key member in a number of high profile bank rescues, such as that of Dexia in conjunction with France and Luxembourg. Much of the structure of the guarantee scheme was initially based on the ad hoc scheme that the three nations devised for Dexia earlier in October 2008. The state guarantee scheme expired after no banks had made use of it by October 31, 2010, the last day for banks to issue guaranteed debt after amendments to the issuance window and maturity horizon.

Date Revised