Brussels - The European Union's executive on Tuesday approved a Spanish state guarantee for inter-bank lending valued at up to 200 billion euros (280 billion dollars), officials confirmed.

The guarantee scheme, which is aimed at shielding Spain's economy from the worst impacts of the global financial crisis, meets EU rules on competition because it applies to all solvent banks and is limited in time and scope, the European Commission said in a statement.

As such, it is an "adequate means to remedy a serious disturbance in the Spanish economy," the statement said.

The guarantee scheme has an initial ceiling of 100 billion euros, but this can be doubled "if market conditions request it," the statement said.

Under the EU's strict rules on state aid, the Brussels-based commission has to make sure that any help which governments give to struggling industries or businesses does not give the recipient an unfair commercial advantage.

In recent months, the EU executive has dealt with a string of cases as EU member states have scrambled to help their national lenders weather the financial crisis. (dpa)