1. 2. 88 Official Journal of the European Communities No C 26/13 
Article 3 
1. The Member States shall forthwith adopt the 
necessary measures to comply with this Directive. They 
shall forthwith inform the Commission thereof. 
2. Each Member State shall, where necessary, and 
taking account of the interests of the other Member 
States, apply all or some of the instruments mentioned 
in Article 2. 
When these instruments apply to movements of capital 
occuring between residents of the Member States of the 
Community, they may be put into operation only on the 
conditions and according to the procedures laid down in 
the provisions of the Treaty relating to the use of a 
safeguard clause or in the provisions of Article 2 and 3 of 
Directive .../.../EEC for the implementation of Article 
67 of the Treaty. 
Without prejudice to these provisions, the Commission 
may recommend to the Member States that all or some 
of the instruments mentioned in Article 2 be put into 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European 
Economic Community, and in particular Articles 108 and 
235 thereof, 
Having regard to the proposal from the Commission, 
which consulted the Monetary Committee for this purpose, 
Having regard to the opinion of the European Parliament, 
Whereas Article 108 of the Treaty provides for the granting 
of mutual assistance, to be decided by the Council on a 
proposal from the Commission, to a Member State in 
difficulties or seriously threatened with difficulties as 
regards its balance of payments; whereas the resolution of 
the European Council of 5 December 1978 on the 
establishment of the European Monetary System (EMS) 
and related matters confirmed the need for a Community 
facility for medium-term financial assistance of balances of 
payments; 
Whereas it should be possible for the operation of lending 
to a Member State to take place soon enough in order to operation, in the event of short-term capital flows to or 
from third countries leading to serious disturbances in 
the domestic monetary situation and in the stability of 
exchange rate relationships in the European Monetary 
System. 
3. When the instruments mentioned in Article 2 are 
applied, the Commission shall ensure close coordi­
nation between the authorities of the Member States. 
Article 4 
In exercising the powers which are conferred upon it by 
this Directive, the Commission shall act in consultation 
with the Monetary Committee and the Committee of 
Governors of Central Banks. 
Article 5 
This Directive is addressed to the Member States.' 
Article 2 
This Directive is addressed to the Member States. 
encourage that Member State to adopt, in good time, 
measures likely to prevent the occurence of an acute 
balance-of-payments crisis; 
Whereas a financing facility, in the form of a credit line or a 
loan commitment to a Member State undertaking to 
implement a capital liberalization programme despite a 
fragile balance-of-payments situation, should provide 
back-up for such a programme in orderly exchange-rate 
conditions; 
Whereas each loan to a Member State must be linked to the 
adoption by that Member State of economic policy 
measures designed to re-establish or to ensure a sustainable 
balance-of-payments situation and adapted to the gravity 
of the balance-of-payments situation in that State and to 
the way in which it develops; 
Whereas appropriate procedures and instruments should 
be provided for in advance to enable the Community and 
Member States to ensure that, if required, medium-term Proposal for a Council Regulation (EEC) establishing a single facility providing medium-term 
financial support for Member States' balances of payments 
COM(87) 550 final 
(Submitted by the Commission to the Council on 4 November 1987) 
(88/C 26/03) 
No C 26/14 Official Journal of the European Communities 1. 2. 88 
financial support is provided quickly, especially where 
circumstances call for immediate action; 
Whereas, in order to finance the support granted, the 
Community needs to be able to use its creditworthiness to 
borrow resources that will be placed at the disposal of the 
Member States concerned in the form of loans; whereas 
operations of this kind are necessary to the achievement of 
the objectives of the Community as defined in the Treaty, 
especially the harmonious development of economic 
activities in the Community as a whole; whereas the Treaty 
makes no provisions for the specific powers of action 
required for this purpose; 
Whereas by Decision 71/143/EEC (J), as amended by 
Decision 86/656/EEC (2), the Council set up machinery for 
providing medium-term financial assistance that was 
initially valid for a period of four years from 1 January 
1972; whereas this machinery has since been renewed and 
extended, on the last occasion for two years until 31 
December 1988 by Decision 86/656/EEC; whereas this 
machinery provides for the Member States to grant 
medium-term loans, within certain limits, to one or more 
Member States experiencing balance-of-payments dif­
ficulties ; 
Whereas by Regulation (EEC) No 682/81 (3), as amended 
by Regulation (EEC) No 1131/85 (4), the Council set up a 
Community loan mechanism designed to support the 
balances of payments of the Member States; whereas this 
mechanism provides for the Community to contract loans, 
according to needs and within the limits set on outstanding 
borrowing, in order to on-lend the proceeds to one or more 
Member States experiencing balance-of-payments dif­
ficulties ; 
Whereas the Community loan mechanism has dem­
onstrated its effectiveness; whereas its general design and 
the arrangements for implementing it still meet the needs of 
the Community; whereas, in view of the Community's 
borrowing capacity and of the conditions available to it for 
borrowing from financial institutions or on capital 
markets, the mechanism could constitute the main form of 
mutual assistance provided for under Article 108 of the 
Treaty; whereas it could also constitute, under certain 
conditions and in an appropriate form, an instrument to 
provide back-up for a programme of capital liberalization; 
whereas the ceiling on amounts outstanding under the 
mechanism should be adjusted accordingly; 
Whereas, however, it is appropriate that the obligation on 
Member States to finance mutual assistance under the 
machinery for medium-term financial assistance stay in 
force until the final stage of the European Monetary System 
so as to ensure that System's cohesion and stability, 
(!) OJ No L 73, 27. 3. 1971, p. 15. 
(2) OJ No L 382, 31. 12. 1986, p. 28. 
(3) OJNoL73, 19.3. 1981, p. 1. 
(4) OJNoL 118, 1.5. 1985, p. 59. irrespective of the conditions prevailing on international 
capital markets; whereas the present procedures for 
exempting a Member State from contributing or for 
mobilizing Member States' claims should, nevertheless, be 
simplified; 
Whereas it is appropriate to merge medium-term financial 
assistance and the Community loan mechanism into a 
single facility for medium-term financial support, while 
retaining their specific methods of financing; 
HAS ADOPTED THIS REGULATION: 
Article 1 
1. In accordance with the decision adopted by the 
Council pursuant to Article 3 or 4 and after consulting the 
Monetary Committee, the Commission shall be em­
powered to contract loans on the capital markets on behalf 
of the European Economic Community, with the aim of 
lending the proceeds to one or more Member States which 
are experiencing or seriously threatened with balance-of-
payments difficulties or which have undertaken to 
implement a programme of capital liberalization despite a 
fragile balance-of-payments situation. 
2. The outstanding amount of loans to be granted to 
Member States pursuant to paragraph 1 shall be limited 
to ... million ECU in principal. 
Article 2 
Where a Member State proposes to call upon sources of 
conditional financing outside the Community, it shall first 
consult the Commission and the other Member States in 
order to examine, among other things, the possibilities 
available under the Community facility for medium-term 
financial support. Such consultations shall be held within 
the Monetary Committee. 
Article 3 
1. On the initiative of the Commission acting pursuant to 
Article 108 of the Treaty or of the Member State 
experiencing balance-of-payments difficulties and seeking 
a Community loan, the Council, after examining the 
situation in that Member State and the adjustment 
programme that it has undertaken to implement, shall 
decide, as a rule during the same meeting: 
1. 2. 88 Official Journal of the European Communities No C 26/15 
— whether to grant the loan, and the amount of the loan, 
— the average duration of, and the techniques for 
disbursing the loan, which may be paid in one amount 
or in several instalments, 
— the economic policy conditions attaching to the loan, 
with a view to re-establishing a sustainable balance-of-
payments situation. 
2. If the amount available under the ceiling referred to in 
Article 1, paragraph 2 is insufficient, or if the conditions 
available on international capital markets are unsatisfac­
tory, Community loans to Member States experiencing 
balance-of-payments difficulties shall be financed in full or 
in part by the other Member States, whose contributions in 
principal may not exceed the ceilings specified in the 
Annex. 
In such cases, the Council, in addition to taking the 
decisions referred to in paragraph 1, shall decide on the size 
of the Member States' contributions to the financing of the 
loan and on the financial conditions attaching to the credits 
they make available in that connection. The Council may 
exempt from contributing any Member State which 
maintains that difficulties exist or can be foreseen as 
regards its balance of payments. 
Article 4 
1. On the initiative of a Member State undertaking to 
implement a capital liberalization programme despite a 
fragile balance-of-payments situation, the Council, after 
examining the situation in that Member State and the back­
up programme presented in support of its application, shall 
decide, as a rule during the same meeting: 
— whether to grant a financing facility, in the form of a 
credit line or an undertaking to grant a loan, which may 
be activated at the request of the beneficiary Member 
State as and when the need arises and for a period that 
may not normally exceed one year, 
— the overall amount of resources allocated, 
— the back-up measures accompanying the liberalization 
of capital movements with a view to ensuring a 
sustainable balance-of-payments situation. 
2. Loans drawn under the financing facility and granted 
pursuant to paragraph 1 shall, as a rule, have a term of one 
year renewable for a further one-year period. 
3. In cases where restrictions on capital movements are 
introduced or re-introduced during the term of the loan, the 
latter may be consolidated only within the framework of a 
longer-term loan granted as mutual assistance pursuant to 
Article 108 of the Treaty. 
Article 5 
The Commission shall take the necessary measures to 
verify at regular intervals, in collaboration with the 
Monetary Committee, that the economic policy of the Member State in receipt of a Community loan accords with 
the adjustment or back-up programme and with any other 
conditions laid down by the Council pursuant to Article 3 
or 4. To this end, the Member State shall place all the 
necessary information at the disposal of the Commission. 
On the basis of the findings of such verification, the 
Commission and, where appropriate, the Member States 
holding claims under the facility shall release further 
instalments. The Council shall decide on any adjustment to 
be made to the initial economic policy conditions. 
Article 6 
1. Loans granted as medium-term financial support shall 
have a term of one year or more. They may be granted as 
consolidation of short-term monetary support made 
available by the central banks of the Member States. 
2. At the request of the beneficiary Member State, such 
loans may carry the option of early repayment. 
3. Normally, no Member State may draw on this facility 
to the extent of more than 50 % of the ceiling referred to in 
Article 1, paragraph 2. 
Article 7 
1. The borrowing and lending operations referred to in 
Article 1 shall be carried out using the same value date and 
shall not involve the Community in the transformation of 
maturities or in any exchange or interest-rate risk. 
When the borrowings are expressed, payable or repayable 
in the currency of a Member State, they may be concluded 
only after consultation with the competent authorities of 
that Member State. 
Where a Member State receives a loan carrying an early 
repayment clause and decides to invoke this option, the 
Commission shall take the necessary steps after consulting 
the Monetary Committee. 
2. At the request of the debtor Member State and where 
circumstances permit an improvement in the interest rate 
on the loans, the Commission may, after consulting the 
Monetary Committee, refinance all or part of its initial 
borrowings or restructure the corresponding financial 
conditions. 
Refinancing or restructuring shall not have the effect of 
extending the average duration of the borrowings con­
cerned or increasing the amount, expressed at the current 
exchange rate, of capital outstanding at the date of the 
refinancing or restructuring. 
No C 26/16 Official Journal of the European Communities 1. 2. 88 
3. The costs incurred by the Community in concluding 
and carrying out each operation shall be borne by the 
beneficiary Member State. 
Article 8 
1. If one or more Member States that are creditors under 
this facility experience difficulties as regards their balance-
of-payments and/or a sudden decline in their foreign 
currency reserves, they may request mobilization of their 
claims. The Council, having due regard to the circum­
stances, shall decide to mobilize such claims, in particular 
in accordance with one of the following procedures, or a 
combination thereof: 
— by refinancing from Community borrowings from 
financial institutions or on capital markets, 
— by a transfer of the claim to other creditor Member 
States, 
— by early repayment in full or in part by the debtor 
Member State or States. 
2. Where refinancing takes place in accordance with 
paragraph 1, the debtor Member State shall agree that its 
debt, originally denominated in one currency, shall be 
replaced by a debt denominated in the currency used for the 
refinancing. Where applicable, the debtor Member State 
shall bear any additional cost resulting from an alteration 
in the interest rate and the costs incurred by the 
Community in concluding and carrying out the operation. 
3. Any creditor Member State may arrange with one or 
more other Member States for the partial or total transfer 
of its claims. The Member States concerned shall notify the 
Commission and the other Member States of the transfer. 
4. Any Member State that is a creditor in respect of a loan 
carrying an early repayment clause shall take the requisite 
steps where the debtor Member State decides to invoke this 
option. The Member States concerned shall notify the 
Commission and the other Member States of the operation. 
Article 9 
For the application of the ceilings referred to in Article 1, 
paragraph 2 and Article 3, paragraph 2, the loan operations 
shall be recorded at the exchange rate of the day on which 
they are concluded. The repayment operations shall be 
recorded at the exchange rate of the day on which the 
corresponding loan was concluded. 
Article 10 
The Council shall adopt the decisions referred to in Articles 
3, 4, 5 and 8, acting by qualified majority on a proposal 
from the Commission, made after consulting the Monetary 
Committee on the matter. 
Article 11 
The European Monetary Cooperation Fund shall make the 
necessary arrangements for the administration of the loans. The funds shall be paid only to central banks and shall be 
used only for the purposes indicated in Article 1. 
Article 12 
No later than five years after the adoption of this 
Regulation, the Council shall examine, on the basis of a 
report from the Commission, after delivery of an opinion 
by the Monetary Committee and following consultation 
with the European Parliament, whether the facility 
established still meets, in its principle, its arrangements and 
its ceiling, the needs which led to its creation. 
Article 13 
1. Regulation (EEC) No 682/81 and Decision 71/143/ 
EEC are hereby repealed. 
2. Amounts not yet repaid under outstanding Com­
munity loan operations concluded pursuant to Regulation 
(EEC) No 682/81 before the date of entry into force of this 
Regulation shall count against the ceiling referred to in 
Article 1, paragraph 2 at their initial value in ECU. 
3. References to the instruments repealed by virtue of 
paragraph 1 shall be deemed to be references to this 
Regulation. 
This Regulation shall be binding in its entirety and directly 
applicable in all Member States. 
ANNEX 
The ceilings for credits provided for in Article 3, paragraph 2 shall 
be as follows: 
Member State 
Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Portugal 
United Kingdom 
Total Millions 
ECU 
875 
407 
2 715 
235 
1 132 
2 715 
158 
1810 
31 
905 
227 
2 715 
13 925 % of 
total 
6,28 
2,92 
19,50 
1,69 
8,13 
19,50 
1,13 
13,00 
0,22 
6,50 
1,63 
19,50 
100,00