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COUNCIL DIRECTIVE

OF 18 FEBRUARY 1974

ON STABILITY , GROWTH AND FULL EMPLOYMENT IN THE COMMUNITY

( 74/121/EEC )

THE COUNCIL OF THE EUROPEAN COMMUNITIES ,

HAVING REGARD TO THE TREATY ESTABLISHING THE EUROPEAN ECONOMIC COMMUNITY , AND IN PARTICULAR ARTICLE 103 THEREOF ;

HAVING REGARD TO THE PROPOSAL FROM THE COMMISSION ;

HAVING REGARD TO THE OPINION OF THE EUROPEAN PARLIAMENT ;

HAVING REGARD TO THE OPINION OF THE ECONOMIC AND SOCIAL COMMITTEE ;

WHEREAS THE ATTAINMENT BY STAGES OF ECONOMIC AND MONETARY UNION IN THE COMMUNITY REQUIRES THE IMPLEMENTATION OF CONVERGENT ECONOMIC POLICIES OF WHICH THE KEY PRINCIPLE IS THE ACHIEVEMENT OF STABILITY , GROWTH AND FULL EMPLOYMENT IN THE COMMUNITY ;

WHEREAS PROCEDURES FOR COORDINATING ECONOMIC POLICIES HAVE BEEN ORGANIZED , IN THIS CONNECTION , AT COMMUNITY LEVEL , PARTICULARLY IN THE COUNCIL DECISION OF 18 FEBRUARY 1974 ( 1 ) ON THE ATTAINMENT OF A HIGH DEGREE OF CONVERGENCE OF THE ECONOMIC POLICIES OF THE MEMBER STATES OF THE EUROPEAN ECONOMIC COMMUNITY ;

WHEREAS , TO BE IN A POSITION TO MEET THE REQUIREMENT OF SUCH COORDINATION AND IN PARTICULAR TO BE ABLE TO PURSUE COMPATIBLE OBJECTIVES AT COMMUNITY LEVEL WITH REGARD TO STABILITY , GROWTH AND FULL EMPLOYMENT , EACH MEMBER STATE MUST POSSESS AN ADQUATE SET OF ECONOMIC POLICY INSTRUMENTS ;

WHEREAS SUCH INSTRUMENTS MUST BE AVAILABLE AND READY FOR PROMPT USE BY THE COMPETENT AUTHORITIES OF THE MEMBER STATES IF THEY ARE TO CONTROL SHORT-TERM ECONOMIC DEVELOPMENTS AND KEEP THESE IN LINE WITH THE GUIDELINES ESTABLISHED AT COMMUNITY LEVEL ,

HAS ADOPTED THIS DIRECTIVE :

ARTICLE 1

IN ORDER TO ACHIEVE THE OBJECTIVES OF PRICE STABILITY , EXTERNAL BALANCE , GROWTH AND FULL EMPLOYMENT IN THE COMMUNITY , EACH MEMBER STATE SHALL IMPLEMENT ITS SHORT - AND MEDIUM-TERM ECONOMIC POLICIES IN ACCORDANCE WITH THE GUIDELINES ADOPTED BY THE COUNCIL PURSUANT TO THE COUNCIL DECISION OF 18 FEBRUARY 1974 ON THE ATTAINMENT OF A HIGH DEGREE OF CONVERGENCE OF THE ECONOMIC POLICIES OF THE MEMBER STATES OF THE EUROPEAN ECONOMIC COMMUNITY .

ARTICLE 2

WHEN THEY TAKE MAJOR MEASURES OF ECONOMIC POLICY IN ORDER TO ACHIEVE THE OBJECTIVES SET OUT IN ARTICLE 1 , MEMBER STATES SHALL MAKE EXPLICIT REFERENCE TO THE GUIDELINES ADOPTED BY THE COUNCIL .

ARTICLE 3

THE GOVERNMENTS OF THE MEMBER STATES SHALL , ACCORDING TO THEIR OWN ARRANGEMENTS , CONFER WITH THE REPRESENTATIVES OF THE MAIN ECONOMIC AND SOCIAL GROUPS ON THE BROAD LINES OF ECONOMIC POLICY .

ARTICLE 4

IN ORDER TO ESTABLISH MEDIUM-TERM ECONOMIC PROGRAMMES FOR THE COMMUNITY , EACH MEMBER STATE SHALL PREPARE MEDIUM-TERM ECONOMIC FORECASTS ACCOMPANIED BY INFORMATION ON THE APPROPRIATE MEANS TO BE USED TO PROMOTE A PATTERN OF DEVELOPMENT IN CONFORMITY WITH THE GUIDELINES SPECIFIED IN ARTICLE 1 .

ARTICLE 5

EACH MEMBER STATE SHALL ADOPT THE PROVISIONS NECESSARY TO ENABLE THE PUBLIC AUTHORITIES , IF THE NEED ARISES AND FOR A LIMITED PERIOD , TO SLOW DOWN OR ACCELERATE THE RATE OF PUBLIC SPENDING AND TO MODIFY DIRECT OR INDIRECT TAXES WITHIN NOT MORE THAN 90 DAYS .

ARTICLE 6

EACH MEMBER STATE SHALL DRAW UP PUBLIC INVESTMENT PROGRAMMES COVERING A FIVE-YEAR PERIOD . IMPLEMENTATION OF THE PROGRAMMES SHALL BE IN ACCORDANCE WITH THE REQUIREMENTS OF CURRENT ECONOMIC ACTIVITY , WITHIN THE FRAMEWORK OF PUBLIC EXPENDITURE .

ARTICLE 7

EACH MEMBER STATE SHALL TAKE THE MEASURES NECESSARY ( WHERE THEY DO NOT AS YET EXIST ) TO ENABLE THE COMPETENT AUTHORITIES , WITHOUT PRIOR AUTHORIZATION , TEMPORARILY TO FREEZE THE YIELD OF EXCESS TAX REVENUE OR OF LOANS , AND TO RELEASE SUCH FUNDS AT A LATER DATE .

ARTICLE 8

MEMBER STATES SHALL ENSURE THAT THE MANAGEMENT OF THE FINANCES OF LOCAL AUTHORITIES AND , WHERE APPROPRIATE , OF SOCIAL SECURITY AGENCIES CONTRIBUTES TO THE ATTAINMENT OF THE OBJECTIVES AND TO THE IMPLEMENTATION OF THE GUIDELINES REFERRED TO IN ARTICLE 1 . THEY SHALL AS FAR AS NECESSARY PROVIDE THEMSELVES WITH THE MEANS NEEDED TO ENABLE THE INDEBTEDNESS OF SUCH AUTHORITIES AND AGENCIES TO BE CONTROLLED .

ARTICLE 9

MEMBER STATES SHALL TAKE THE MEASURES NECESSARY TO ENABLE THEM TO TAKE PROMPT ACTION ON THE VARIOUS ELEMENTS COVERED BY THE POLICY OF THE MONETARY AUTHORITIES , PARTICULARLY MONEY SUPPLY , BANK LIQUIDITY , CREDIT AND INTEREST RATES .

FOR THIS PURPOSE , MEMBER STATES SHALL CONFER UPON THEIR MONETARY AUTHORITIES , IN SO FAR AS THE LATTER DO NOT ALREADY HAVE THEM , AT LEAST THE INSTRUMENTS AND POWERS TO ENABLE THEM TO APPLY , WHERE NECESSARY , THE FOLLOWING MEASURES :

- IMPOSITION OR MODIFICATION OF RESERVE RATIOS APPLYING TO THE LIABILITIES OF MONETARY INSTITUTIONS ;

- IMPOSITION OR MODIFICATION OF RESERVE RATIOS APPLYING TO THE CREDIT GRANTED BY MONETARY INSTITUTIONS ;

- RECOURSE TO AN OPEN MARKET POLICY WITH WIDE SCOPE FOR ACTION , INCLUDING THE USE , AS NECESSARY , OF SHORT - , MEDIUM - AND LONG-TERM SECURITIES ;

- MODIFICATION OF THE REDISCOUNT CEILINGS WITH THE CENTRAL BANK ;

- MODIFICATION OF THE VARIOUS INTERVENTION RATES PRACTISED BY THE MONETARY AUTHORITIES .

IN ADDITION , THE MONETARY AUTHORITIES SHALL , AS FAR AS POSSIBLE , BE INVESTED WITH THE INSTRUMENTS AND POWERS ENABLING THEM TO IMPLEMENT THE FOLLOWING MEASURES :

- MODIFICATION OF THE BORROWING AND LENDING INTEREST RATES PAID OR CHARGED BY PUBLIC CREDIT AGENCIES ;

- IMPOSITION OR MODIFICATION OF CONDITIONS FOR CONSUMER CREDIT , HIRE-PURCHASE SALES AND MORTGAGE CREDIT ;

- QUANTITATIVE OR QUALITATIVE CREDIT CONTROL .

ARTICLE 10

MEMBER STATES SHALL , TO THE EXTENT THAT THEY DEEM IT EXPEDIENT , TAKE THE MEASURES NECESSARY TO ENABLE THEM TO IMPOSE , WHERE NECESSARY , WITHOUT DELAY AND TEMPORARILY , AN OVERALL OR SELECTIVE RESTRICTION ON THE RISE IN PRICES AND INCOMES .

ARTICLE 11

TO ENABLE THE GUIDELINES WHICH ARE TO ADOPTED BY THE COUNCIL TO BE DRAWN UP AND TO ENABLE THEIR APPLICATION TO BE MONITORED , MEMBER STATES SHALL ENSURE THAT ESSENTIAL INFORMATION IS GATHERED QUICKLY AND SHALL COMMUNICATE IT TO THE COMMISSION AS SOON AS IT IS AVAILABLE .

ARTICLE 12

MEMBER STATES SHALL TAKE THE MEASURES NECESSARY TO COMPLY WITH THIS DIRECTIVE WITHIN 12 MONTHS OF ITS NOTIFICATION . THIS PERIOD SHALL , HOWEVER , BE EXTENDED TO TWO YEARS FOR THE IMPLEMENTATION OF ARTICLES 5 AND 8 .

ARTICLE 13

THIS DIRECTIVE IS ADDRESSED TO THE MEMBER STATES .

DONE AT BRUSSELS , 18 FEBRUARY 1974 .

FOR THE COUNCIL

THE PRESIDENT

H . SCHMIDT

( 1 ) SEE P . 16 OF THIS OFFICIAL JOURNAL .