"We won't need to worry about (Basque separatist group) ETA in 2016," Rubalcaba said.
Rubalcaba told the International Olympic Committee group that security forces had successfully stopped ETA from affecting sports events in the past. Spain experienced 216 attacks in 1982 when it hosted the soccer World Cup and 51 in 1992 when it staged the Barcelona Games, but neither event was threatened.
ETA has killed more than 825 people in a 40-year campaign for an independent Basque state.
Madrid is the final city to be evaluated by the IOC after Chicago, Tokyo and Rio de Janeiro. Madrid is hoping to persuade the IOC that Spain's security situation and financial stability will ensure a successful games.
The full IOC will vote on the host city Oct. 2 in Copenhagen.
Madrid has already completed 77 percent of its Olympic venues, which it believes will allow it to weather the economic crisis. Spain is one of the worse-hit European countries, with unemployment figures expected to hit 20 percent next year.
Nawal el Moutawakel, chair of the IOC panel, returned to the group on Friday after having missed Thursday's presentations because she flew to Morocco to attend to an urgent matter as sports minister.
El Moutawakel and the other IOC members had lunch with Spain's Royal family, who will lead the delegation in Copenhagen.
Meanwhile, Spanish Sport Minister Jaime Lissavetzky said he doesn't believe that a pending doping law that goes against World Anti-Doping Agency rules would hurt Madrid's bid chances.
The law would prohibit drug-testing of athletes between 11 p.m. and 8 a.m. WADA rules state that athletes must be available for drug testing 24 hours a day.
Lissavetzky will attend WADA meetings in Montreal this weekend, where he is expected to discuss the issue with WADA director general David Howman.