Laws to nationalise Anglo Irish Bank were almost ready to be used on the night of the guarantee, according to the former governor of the Central Bank John Hurley.
He is giving evidence at the Banking Inquiry where he said the issue was discussed on the night.
The inquiry has heard previous witnesses say there was no legal mechanism available to nationalise and shut down Anglo.
Governor Hurley told the inquiry's chairman Ciaran Lynch that legislation was very nearly ready, and could have been introduced.
Mr Hurley said: "Legislation was in the process of preparation, and I would have thought very close to being ready to be introduced into the Dáil."
The former Central Bank chief was asked if he could confirm whether there was a draft or version in Government Buildings on that night.
He said: "I would imagine it was available either in Government Buildings, the Department of Finance or the Attorney General's office."