COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 16.10.1996 
COM(96) 499 final 
96/0249 (CNS) 
96/0250 (CNS) 
Communication to the European Parliament, the Council and 
the European Monetary Institute 
Secondary legislation 
for the introduction of the euro and 
some provisions relating to the introduction of the euro 
Proposal for a 
COUNCIL REGULATION (EC) 
on some provisions relating to 
the introduction of the euro 
Proposal for a 
COUNCIL REGULATION fEO 
on the introduction of the euro 
(presented by the Commission) 

Secondary legislation 
for the introduction of the euro and 
some provisions relating to the introduction of the euro 
(Communication to the European Parliament, the Council and 
the European Monetary Institute ) 
The European Council of December 1995 in Madrid adopted a scenario for the 
introduction of the single currency and asked for the technical preparatory work for a 
Council Regulation providing the legal framework for the use of the euro to be 
completed at the latest by the end of 1996. In this perspective the Commission 
herewith transmits two draft proposals for Council Regulations. The annexed draft 
Regulations have been prepared in compliance with the principles for such a 
framework as laid down under point 9 of the reference scenario 
The legal framework has been defined following intensive consultations with 
representatives from the private sector and has benefited from valuable input from the 
European Monetary Institute. 
The consultations held by the Commission services have made it clear that the 
concrete preparations for the changeover to the single currency in the private as well 
as the public sector call for a timely clarification of the legal framework for the euro 
well in advance of the start of stage three of Economic and Monetary Union. For some 
provisions, especially on the continuity of contracts and rounding, the legal certainty 
required for timely preparations can only be achieved if they are adopted and if they 
enter into force long before the start of stage three. 
Article 109 I (4), third sentence, which allows the adoption of "other measures 
necessary for the rapid introduction of ... the single currency", will only be available 
as a legal basis in early 1998, when it has been decided according to Article 
109 j (4), which Member States fulfill the necessary conditions for the adoption of the 
single currency. Therefore, the Commission proposes, in accordance with the under­
standing reached at the informal Ecofin in Dublin in September 1996, to base those 
provisions for which there is an urgent need for legal certainty on Article 235 of the 
Treaty, and to adopt the other provisions of the legal framework on the basis of 
Article 109 1 (4) of the Treaty. 
The Commission suggests seeking political endorsement of the two draft Regulations 
at the meeting of the European Council in Dublin in December 1996. 
The following draft proposals are annexed to this Communication: 
• Council Regulation on the introduction of the euro (Article 109 I (4) of the 
Treaty). The objective is to define monetary law provisions for the Member States 
without a derogation. The Regulation would enter into force on 1 January 1999. It 
provides for the substitution of the euro for the national currencies. During a 
transitional period ending on 31.12.2001 at the latest, the national currencies of 
participating Member States are redefined as sub-divisions of the euro. During this 
period the euro unit and the national currency units are legally equivalent The 
draft Regulation includes rules for the use of the national currency unit and the 
euro in its own unit. It also determines rules for banknotes and coins denominated 
in the euro which will be put into circulation at the latest on 31.12.2001 
The consultation of the European Central Bank is required according to Article 
109 1 (4) of the Treaty, but can be substituted according to Article 109 f (8) of the 
Treaty by the consultation of the European Monetary Institute The consultation of 
the European Parliament is not formally required but highly desirable. 
• Council Regulation on some provisions relating to the introduction of the euro 
(Article 235 of the Treaty). The purpose of this regulation is to lay down those, 
provisions relating to the introduction of the euro where there exists an urgent need 
for legal certainty. The draft Regulation confirms that the introduction of the euro 
does not affect the continuity of contracts or other legal instruments. Moreover it is 
confirmed that from 1.1.1999 one ECU in its composition as a basket of 
component currencies will become one euro. Finally the draft determines the 
degree of accuracy at which conversion rates will be fixed on 1 January 1999 and 
establishes rounding rules for conversions between the euro and the national 
currency units. 
The European Parliament is to be consulted according to Article 235 of the Treaty. 
The European Monetary Institute is to be consulted according to Article 109 f (6) 
of the Treaty. 
2. 
EXPLANATORY MEMORANDUM 
l. INTRODUCTION - GENERAL CONSIDERATIONS 
Principal objectives of the proposals 
Now that preparations for EMU have turned to practical questions, operators 
have increasingly demanded that complete legal certainty on the use of the euro 
be established well in advance of the start of stage three of EMU. 
The European Council of December 1995 in Madrid recognised this need for 
legal certainty, setting forth a scenario for the introduction of the single 
currency, and stipulating notably that a Council Regulation, whose technical 
preparatory work shall be completed at the latest by the end of 1996, will enter 
into force on 1st January 1999 and provide the legal framework for the use of 
the euro. The European Council also confirmed the principle of continuity of 
contracts and the conversion at a rate of one to one of references to the ECU 
basket by references to the euro. 
The Commission is responding to the need for legal certainty by proposing legal 
provisions in this text that should make up the legal framework for the use of the 
euro. 
The provisions are included in two separate draft Regulations for the following 
reason: 
Article 109 1 (4), third sentence, provides for the taking of "other measures 
necessary for the rapid introduction of ... the single currency". However, this 
Article will only be available as a legal basis in early 1998 when it has been 
decided according to Article 109 j (4) which Member States fulfil the necessary 
conditions for the adoption of the single currency. Therefore, those provisions 
for which it is urgent to establish legal certainty by having them adopted in the 
near future are based on Article 235 of the Treaty. The other provisions which 
define the monetary law of the participating Member States are based on Article 
109 1 (4) of the Treaty. By already proposing them at this stage, the Commission 
opens the possibility for a political-agreement on them, such that their formal 
adoption in 1998 will be a mere formality. 
The objectives of the draft Council'Regulation on some provisions relating 
to the introduction of the euro are: 
- to confirm that with effect from 1st January 1999 references to the ECU in 
contracts and other legal instruments are replaced by references to the euro at 
a rate of one euro for one ECU; 
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- to confirm the continuity of contracts which are denominated in national 
currencies and in ECU and which extend beyond 1 st January 1999; 
- to determine the degree of precision at which conversion rates will be 
irrevocably fixed on 1st January 1999; 
- to establish rounding rules. 
Moreover, by this draft Regulation the name "euro" is introduced into EC 
legislation. The reference to the decision by the European Council on the name 
is included in the recitals. 
Among the noteworthy consequences of the draft Regulation are the following: 
- confirmation and assurance for markets that contracts will remain unaffected 
by the introduction of the euro; 
- affirmation of the rights and obligations deriving from contracts which are 
denominated in the basket ECU; 
- facilitation of the technical preparation for the changeover to the euro, in 
particular in the field of information technology. 
The draft Regulation on the introduction of the euro has the following main 
objectives: 
- to determine the time-frame for the completion of the changeover to the euro; 
- to substitute the euro for the national currencies with effect from 
1 st January 1999; 
- to establish legally enforceable equivalence between the euro and the national 
currency units during the period when euro banknotes and coins are not yet in 
circulation; 
- to ensure that during this transitional period private economic agents will be 
free to use the euro; but that at the same time they should not be obliged to do 
so; 
lo establish rules relating to the circulation and protection of banknotes and 
coins. 
This draft Regulation also provides economic agents with increased certainty 
about: 
- the time-frame for the completion of the changeover; 
- the scope for the use of the euro during the transitional period in its own 
denomination and in the form of national currency units; 
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the exchange of banknotes and coins denominated in euro by national notes 
and coins at the end of the changeover process. 
r 
2. COMMENTS ON THE ARTICLES OF COUNCIL REGULATION OK | J ON SOME 
PROVISIONS RELATING TO THE INTRODUCTION OF THE EURO 
Article 1 
This Article provides definitions of various terms used in this draft regulation. 
The term "legal instruments" is meant to cover all instruments which are of legal 
relevance and which refer to currencies, currency units or amounts of currency 
units. It also expressly includes payment instruments, like cheques, other than 
banknotes and coins. 
The term " national currency units" defines the units of the currencies of the 
Member States without a derogation which are still in use in the transitional 
period. 
The conversion rates can only be adopted on 1.1.1999, in accordance with 
Art. 109 1 (4), first sentence of the Treaty (see Article 4). 
Article 2 
This Article has a declaratory value. It confirms the replacement of references to 
the ECU as a basket of component currencies as referred to in Art. 109g of the 
Treaty and as defined in Council Regulation (EC) No. 3.120/94, by references to 
the euro at a rate of one to one. 
This definition is unequivocally used in EC legislation. As for the use of the 
ECU in private law, a presumption is established that contracts which use the 
ECU without clearly defining it shall be assumed to refer to the ECU as defined 
by EC law. It may safely be assumed that in most cases the intention of parties to 
ECU contracts was to make reference to the official ECU even if this was not 
always properly reflected in the wording of the individual contract. The 
establishment of the assumption follows the approach taken in the Commission 
Recommendation 94/284/EC concerning the legal treatment of the ECU and of 
contracts denominated in ECU in view of the introduction of the single 
European currency. Such a presumption fully respects the freedom of contract in 
that it allows the parties to a contract to agree on something different, thus 
"destroying" the presumption. 
(j 
This Article uses the name "euro" for the single currency. A reference to the 
decision of the European Council of Madrid on the name has been included in 
the recitals. 
Paragraph 2 repeals Council Regulation (EC) No. 3320/94. This Regulation 
would in any case, because of the Treaty provisions and in particular Articles 
109 g and 109 1 (4), become ineffective at the start of Stage 3. 
Article 3 
This Article serves to confirm the continuity of legal instruments, notably of 
contracts. It has a declaratory purpose only. As EMU can neither be qualified as 
an unforeseeable event nor as a severe disruption of circumstances, the 
introduction of the euro does not justify invoking the principle of frustration or 
"Wegfall der Geschaftsgrundlage", or the "théorie de l'imprévision" or 
principles with similar effects. The principle of continuity was already 
underlined by the European Council of Madrid in the scenario for the 
changeover. 
The "terms of a legal instrument" include, in particular, interest rates in financial 
contracts but also cover all other terms. 
The provision applies to contracts denominated in currencies of participating 
Member States and in ECU, irrespective of whether they are set up under the law 
of participating or non-participating Member States. 
The Article refers to the "introduction of the euro", a term used in Article 109 I 
(4) of the Treaty; it is broader than "substitution" The term includes the 
replacement of references to the ECU as referred to in Art. 2 of this Regulation 
by'references to the euro. 
The last sentence confirms that the generally accepted principle of freedom of 
contracts is preserved. 
Article 4 
This Article establishes rules on the conversion rates. According to the first 
sentence of Article 109 1 (4) the rates themselves can only be adopted on 
1.1.1999. 
The first paragraph provides certainty about the category of rates to be fixed and 
about the number of significant figures; the latter expression means that a rate, 
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when counted from the left and starting by the first non-zero figure, has six 
figures (not to be confused with the number of decimal points). The Council 
commits itself to fixing the rates with this degree of precision. The choice of six 
significant figures follows the standards of the EMS. 
In order to avoid inaccuracies in conversions, the irrevocable fixing only 
includes the conversion rate between the euro and the national currency units. 
The bilateral rates between the national currency units will be derived from these 
conversion rates. 
Paragraph 2 stipulates that economic agents must not round the conversion rates 
when making conversions. 
Paragraph 3 bans the use of inverse rates because this would imply rounding of 
the rates and could result in significant inaccuracies due to the multiplicative 
effect of the rounding, notably if large currency amounts are involved. 
Paragraph 4 provides a binding algorithm for conversions between national 
currency units, given that those bilateral rates will not, according to the 
definition of "conversion rates" in Article 1, be defined directly. 
Article 5 
This Article defines a number of rounding rules for conversions of monetary 
sums between euro and national currency units as well as between national 
currency units. Monetary sums in euro shall always be rounded to the nearest 
cent. Monetary sums in national currency units shall be rounded to the nearest 
sub-unit or to the nearest unit of the national currency unit. National practices 
are respected. This flexibility allows in particular for the continuation of 
practices in some countries by which monetary sums are rounded to units other 
than those referred to in the Article (for example, where sums are rounded to a 
multiple of the currency unit). 
Article 6 
This Article determines the entry into force. The Regulation will enter into force 
the day after its publication in the Official Journal. Article 2 will have effect 
only as from 1st January 1999. 
F 
3. COMMENTS ON THE ARTICLES OF THE COUNCIL REGULATION ON THE 
INTRODUCTION OF THE EURO 
Article 1 
The first Article defines the terms "participating Member States", "legal instruments", 
"conversion rates", "euro unit", "national currency units", "transitional period" and 
"organised markets". 
The term "participating Member States" is used to describe the Member States 
without a derogation. Though it is understood that in principle all EU Member States 
participate in the third stage of EMU albeit under different rules, the term 
"participating Member States" is used in order to enhance the readability of the draft 
regulation. The enumeration of the participating Member States will facilitate the 
recognition of "lex monetae" in third countries. 
The term "legal instruments" is meant to cover all instruments which are of legal 
relevance and which refer to currencies, currency units or amounts of currency units. 
It is notably meant to include all kinds of contracts, either written or oral, tacitly 
concluded contracts and contracts implied from the conduct of the parties. 
According to Article 109 1 (4) of the Treaty, the conversion rates can only be adopted 
on 1.1.1999. Rules for the adoption of the conversion rates have been adopted in 
Council Regulation [. .] on some provisions relating to the introduction of the euro. 
To avoid problems of rounding, only conversion rates of one euro expressed in terms 
of each of the national currencies of the Member States will be defined. Bilateral rates 
will have to be derived from the euro rates; a binding algorithm for this purpose is 
determined in the said Council Regulation. No inverse rates of one national currency 
unit in terms of euro units will be defined. 
During the transitional period there exist several units of the euro as the currency of 
the participating Member States: the "euro unit" and the "national currency units". 
The term "euro unit" is used to distinguish decimal expressions of the euro in units of 
the euro itself from non-decimal expressions of the euro in the national currency 
units. The "national currency units" refer to the currencies of the participating 
Member States, which were currencies in their own right before being substituted by 
the euro 
The end of the transitional period will have to be determined later. 
The definition of "organised markets" refers to the Directive 93/22 EEC on the 
investment services in the securities field. It includes markets for the regular 
exchange, clearing and settlement of transferable securities, units in collective 
investment undertakings, money market instruments, financial-futures contracts, 
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forward interest rate agreements, swaps, options on financial instruments and 
instruments of payment. 
Article 2 
By the first sentence and in combination with Article 17, as from 1 st January 1999 
the euro is introduced as the currency of the participating Member States. The 
reference to the Member States (and not to the Monetary Union) serves to make clear 
that the euro is the currency of each Member State. This should help to avoid 
ambiguity as to the continuity of contracts, in particular at the international level. 
A distinction is made between the name of the currency (euro) and the unit of account 
(one euro) in which all currency amounts are to be measured. As agreed at the 
informal Ecofin meeting in Verona in April 1996, the euro is divided into one 
hundred "cent". As explained in the recitals, the definition of the name "cent" is not 
meant to prevent the tolerance of the use of variants of this name in common usage, 
without calling into question the principle that the name of the single currency and its 
sub-units can only be determined at Community level. 
Article 3 
By providing for the substitution of the former national currencies by the euro at the 
conversion rates, this Article establishes the "recurrent link" between each of the 
former currencies and the new currency. It therefore ensures the continuity of 
contracts and other legal instruments in accordance with the principle of 
nominalism. The substitution of the former national currencies of the participating 
Member States takes place on 1st January 1999. The transitional provisions defining 
the status and use of the national currency units do not affect this substitution in the 
leual sense. 
Article 4 
This Article determines the unit of account of the ESCB which is neither specified 
in the Treaty nor the ESCB Protocol 
It is to be noted that the present provision, as it only enters into force on 1st January 
1999, does not define the unit of account for the period between the establishment of 
the ECB and the start of stage 3. If the decision were taken to use the basket ECU, 
which is the unit of account of the European Monetary Institute, the present draft 
Regulation would ensure that the unit of account would be the euro as from 1.1.1999. 
the present Article would then be declaratory. 
/o 
Article 5 
Article 5 limits the applicability of Articles 6-9 to the transitional period. 
Article 6 
Article 6 introduces the concept of a national currency unit which is defined in 
Article 1. By way of the first sentence of paragraph 1, further divisions of the 
single currency unit, the euro, (further to that of Article 2, which is permanent) 
are introduced temporarily. By this sentence, the EC legislator makes use of his 
competence to introduce as many divisions of the single currency as he likes, in 
any fraction of the single currency unit and under any name. This operation may 
involve conversion factors which are lower than 1. The national sub-divisions 
remain in force. 
The Article opens the possibility to use the single currency not only under its own 
name, but also under the denominations and in the units of the former national 
currencies which become expressions of the euro. 
The third sentence ensures that those provisions of the national monetary law 
which are compatible with the present Regulation continue to apply during the 
transitional period. This essentially concerns provisions which relate to banknotes 
and coins. 
Paragraph 2 makes clear that it makes no difference to the legal value whether in a 
legal instrument the national currency unit or the euro unit itself is referred to. By 
virtue of this provision contracts denominated in either the euro unit or the national 
currency units are equally valid. 
The same holds for legislative provisions and other legal instruments. 
Article 7 
This Article deals exclusively with legal instruments which were established before 
1.1.1999. Without such a provision it would, for example, be uncertain whether a 
claim in a national currency on 31.12.1998 would have to be considered on 
1.1.1999 as a euro claim expressed in the euro unit itself or a euro claim expressed 
in that national currency unit. 
According to this Article, a contract imposing an obligation to pay, for example, 
100 FF will on 1.1.1999 become an obligation to pay the corresponding amount of 
euros (this follows from Article 3), but denominated in 100 FF, which will be a sub-
// 
unit of the euro. It is only after the transitional period that references in legal 
instruments to national currency units are by virtue of Article 14 to be read as 
references to the euro unit (and thus as obligations to be fulfilled in the euro unit). 
The Article maintains the status quo of denominations, it does not prevent parties to 
a contract from agreeing to change its denomination, or the legislator from changing 
the currency denomination in a law. Neither will it have any standstill effect on 
legislation in general. 
Article 8 
This Article strikes the balance between the principle of "no compulsion" and the 
principle of "no prohibition" as laid down in the reference scenario decided by the 
European Council of Madrid. The first paragraph stipulates that the denomination of 
a legal instrument - either the euro unit or the national currency unit - shall be 
respected. It ensures that the currency unit which is stipulated under the relevant 
legal instrument (e.g. a contract or a law) shall be the one to be used in the 
performance of all acts (statements of accounts, invoices, payments, etc.) to be 
carried out under that legal instrument. Thereby, paragraph 1 ensures that, 
notwithstanding the provisions of the following paragraphs, economic agents will 
only have to use the unit - either euro or national currency - to which they have 
agreed. 
Likewise, paragraph 1 ensures that laws stipulating the use of one unit, e.g. for the 
publishing of accounts, shall be applied according to the denomination stated in 
them. 
Paragraph 1 does not, of course, prevent a debtor, in cases where a cashless 
payment has not been explicitly agreed, from discharging a debt denominated in the 
euro unit by paying with banknotes or coins denominated in the national currency 
unit which is legal tender in the place of performance. 
Paragraph 2 leaves it to the parties to agree on the use of a different denomination 
than that of the legal instrument underlying their contractual relationship. 
The third paragraph serves to enhance the fungibility between the euro and the 
national currency units for payments by crediting an account. It gives the debtor the 
choice of paying his debt in the euro unit or the national currency unit which is 
stipulated in the contract. This provision also makes clear that a bank receiving a 
payment to the euro account is entitled to make the necessary conversion for 
crediting an account in the respective national currency unit, and vice versa, without 
asking for the consent of the beneficiary. The provision is limited to domestic 
payments in the euro or the respective national currency unit. 
The fourth paragraph enables Member States to take measures to enhance the use of 
the euro unit in two specific cases, even if these measures may imply an obligation 
for certain economic agents to use the euro unit. The first indent covers public and 
/Z 
private debt. Excluded from the application of this provision is non-securitized debt 
like bank accounts, loans, etc. The second indent covers organized markets as 
defined in Article 1. 
By virtue of the fifth paragraph, the list of exceptions from the principle of no 
compulsion is closed. The drafting makes use of paragraph 12 of the reference 
scenario adopted by the European Council of Madrid, where it is said that the 
"time-frame (for the generalization of the use of the euro for public sector 
operations) will be laid down in Community legislation and might leave some 
freedom to individual Member States." 
The sixth paragraph confirms for legislative provisions on netting, etc. that the euro 
unit and national currency units are to be considered as the same monetary unit. 
Article 9 
This Article confirms that national banknotes and coins remain legal tender in the 
transitional period. Their legal tender status is confined to the territory where they 
were legal tender before the start of the third stage. It ends at the latest six months 
after the end of the transitional period (see Article 15). 
Article 10 
This Article reflects the provisions of Article 105 a of the Treaty. The formulation 
"put into circulation" does not prejudge the decision of who will be the issuer of 
banknotes (the ECB or national central banks). The euro banknotes are the only 
ones which are legal tender in all participating Member States, in contrast to the 
national banknotes. 
Article 11 
This paragraph addresses the rules for coins. As the Treaty is silent about the legal 
tender status of coins, the Article gives such status to them. The limit to the 
liberatory power of coins is set to be 50 coins irrespective of the face-value of 
individual denominations. The Article does not address the rights of Member States 
with respect to the issuance of coins for numismatic or commemorative purposes. 
13 
Article 12 
This Article provides for protection of banknotes and coins against counterfeiting 
and falsification. The provision refrains from setting standards directly, but obliges 
Member States to ensure adequate sanctions. This does not exclude common steps 
from being taken in the future, be it under the first or the third pillar of the Union. 
Article 13 
This Article enumerates a number of provisions which apply only as from the end 
of the transitional period, either for a limited period of time or for an indefinite 
period. 
Article 14 
After the end of the transitional period, the national currency units cease to exist. 
The Article confirms that from this date onwards, references in legal instruments 
which existed at the end of the transitional period to these currency units have to be 
read as references to the euro unit. This follows from Articles 2 and 3. The Article 
clarifies that a physical "redenomination" in the sense of a redrafting of legal 
instruments which still refer to the former national currency units is not necessary 
for its validity. There may, however, be other reasons which make such a physical 
redenomination desirable or even indispensible in certain cases. References to the 
national currency units in laws etc. will have to be formally adjusted within a 
reasonable time-span by the national legislator. 
After the transitional period, the former national currency units can no longer 
validly be used for setting up contracts, etc. since any reference to a former national 
currency unit in a new contract would be a reference to a term which is no longer 
recognized by monetary law. 
Article 15 
This Article aims at facilitating the exchange of new banknotes and coins for old 
ones at the end of the transitional period. National notes and coins may continue to 
circulate as legal tender for six months at the most after the transitional period. In 
order to provide flexibility, a Member States may shorten this period according to 
the speed at which the changeover can be accomplished on its territory. 
h 
Article 16 
This Article leaves to the Member States the competence to determine for how long 
after the transitional period they will continue to accept banknotes and coins in the 
national currency unit issued by them. Depending on national rules and practices, 
these periods may differ. Member States may choose to accept notes and coins in 
the national currency units for an indefinite period of time. 
/i 
Proposal for a 
Council Regulation on some provisions relating to 
the introduction of the euro 
(PRESENTED BY THE COMMISSION) 
/<* 
Proposal for a 
Council Regulation [ ] 
on some provisions relating to 
the introduction of the euro 96/0249 (CNS) 
The Council of the European Union, 
Having regard to the Treaty establishing the European Community, and in particular 
Article 235 thereof, 
Having regard to the proposal of the Commission, 
Having regard to the opinion of the European Parliament, 
Having regard to the opinion of the European Monetary Institute, 
(1) Whereas the European Council has confirmed at its meeting held in Madrid on 15/16 
December 1995 that the third stage of Economic and Monetary Union will start on 1.1.1999 
as laid down in Article 109 j (4) of the Treaty; whereas in accordance with 
Article 109 k of the Treaty the Member States which will adopt the euro as the single 
currency are the Member States without a derogation; 
(2) Whereas it also decided that the name given to the European currency shall be the 
"euro"; whereas the specific name "euro" will be used instead of the generic term "ECU" 
used by the Treaty to refer to the European currency unit; whereas the euro as the currency 
of the Member States without a derogation will be divided into one hundred sub-units with 
the name "cent"; 
(3) Whereas a Council regulation, defining the legal framework for the use of the euro 
should be adopted on the basis of Article 109 1 (4), third sentence of the Treaty as soon as 
Ihc Member States without a derogation are known; whereas the Council when acting at the 
starting date of the third stage according to Article 109 1 (4), first sentence of the Treaty, 
shall adopt the irrevocably fixed conversion rates; 
(4) Whereas it is necessary for the smooth operation of the common market and the 
changeover to the single currency to provide legal certainty for market participants in all 
Member States on some provisions relating to the introduction of the euro well before the 
entry into the third stage; fr 
(5) Whereas Article 109 1 (4), third sentence, which allows the taking by the Council, acting 
with the unanimity of Member States without a derogation, of "other measures necessary 
for the rapid introduction of... the single currency" is only available as a legal basis when it 
has been decided, according to Article 109 j (4), which Member States fulfil the necessary 
conditions for the adoption of the single currency; whereas it is therefore necessary to use 
Article 235 as a legal basis for those provisions where there is an urgent need for legal 
certainty; 
(6) Whereas the ECU as referred to in Article 109 g of the Treaty and as defined in Council 
Regulation (EC) No. 3320/94' will cease to be defined as a basket of component currencies 
on 1 January 1999 and the euro will become a currency in its own right; whereas the 
decision of the Council regarding the adoption of the conversion rates shall not by itself 
modify the external value of the ECU; whereas this means that one ECU in its composition 
as a basket of component currencies will become one euro; whereas Council Regulation 
(EC) No. 3320/94 therefore becomes obsolete and should be repealed; whereas for 
references in legal instruments to the ECU under private law, parties shall be presumed to 
have agreed to refer to the ECU as referred to in Article 109 g of the Treaty and as defined 
in Council Regulation (EC) No. 3320/94; whereas the provisions on continuity can only 
fulfil their objective to provide legal certainty to the markets if they enter into force as soon 
as possible; 
(7) Whereas it is a generally accepted principle of law that the continuity of legal 
instruments is not affected by the introduction of a new currency; whereas the principle of 
freedom of contract has to be respected; whereas in order to reinforce legal certainty and 
clarity it is appropriate explicitly to confirm that the principle of continuity of legal 
instruments and in particular of contracts shall apply between the former national currencies 
and the euro and between the ECU as referred to in Article 109 g of the Treaty and as 
defined in Council Regulation (EC) No. 3320/94 and the euro; whereas this implies in 
particular that in the case of fixed interest rate instruments the introduction of the euro does 
not alter the nominal interest rate payable by the debtor; 
(8) Whereas the explicit confirmation of the principle of continuity will also contribute to 
the recognition of continuity of contracts in the jurisdiction of third countries; 
1 Council Regulation (EC) No 3320/94 of 22 December 1994 on the consolidation of the existing Community 
legislation on the definition of the ecu following the entry into force of the Treaty on European Union (OJ No 
L350, 31.12.1994, p.27). /Ù 
(9) Whereas the term "contract" used for the definition of legal instruments is meant to 
include inter alia written and oral contracts, tacitly concluded contracts and contracts 
implied from the conduct of the parties; 
(10) Whereas the Council when acting according to Article 109 1 (4), first sentence of the 
Treaty shall define the conversion rates of the euro in terms of each of the national 
currencies of the Member States without a derogation; whereas these conversion rates 
should be used for any conversion between the euro and the national currency units or 
between the national currency units; whereas for any conversion between national currency 
units a fixed algorithm should be used; 
(11) Whereas the introduction of the euro requires the rounding of monetary amounts; 
whereas an early indication of rules for rounding is essential to allow a timely preparation 
and a smooth transition to Economic and Monetary Union; 
(12) Whereas in order to achieve a high degree of accuracy in conversion operations, the 
conversion rates should be defined with six significant figures; whereas a rate with six 
significant figures means a rate which, counted from the left and starting by the first non­
zero figure, has six figures; 
(13) Whereas according to Article 109 f (6) of the Treaty the EMI has to be consulted 
regarding any proposed Community act within its field of competence. 
HAS ADOPTED THIS REGULATION: 
Article 1 
?or the purpose of this regulation: 
"legal instruments" shall mean legislative provisions, acts of administration, judicial 
decisions, contracts, unilateral legal acts, payment instruments other than banknotes 
and coins, and other instruments with legal effect; 
"conversion rates" shall mean the irrevocably fixed conversion rates adopted by the 
Council according to Article 109 1 (4) first sentence of the Treaty; 
^ /i 
"national currency units" shall mean the units of the currencies of Member States 
without a derogation, as those units are defined in their respective monetary law on 
the day before the start of the third stage; 
"euro unit" shall mean the unit of the single currency as adopted by the Member 
States without a derogation on 1.1.1999; 
Article 2 
(1) As from 1.1.1999 every reference in a legal instrument to the ECU, as referred to in 
Article 109 g of the Treaty and as defined in Council Regulation (EC) No. 3320/94, is 
replaced by a reference to the euro at a rate of one euro to one ECU. References in a 
legal instrument to the ECU without such a definition shall be presumed to be references 
to the ECU as referred to in Article 109 g EC and as defined in Council Regulation (EC) 
No. 3320/94. 
(2) As from 1.1.1999 Council Regulation (EC) No. 3320/94 is repealed. 
Article 3 
The introduction of the euro shall not have the effect of altering any term of a legal 
instrument or of discharging or excusing performance under any legal instrument, nor 
give a party the right unilaterally to alter or terminate a legal instrument. This provision 
is subject to anything which parties may have agreed. 
Article 4 
(1) The conversion rates shall be adopted as one euro expressed in terms of each of the 
national currencies of the Member States without a derogation. They shall be adopted 
with six significant figures. 
(2) The conversion rates shall not be rounded or truncated when making conversions. 
/ iO 
(3) The conversion rates shall he used for conversions cither way between the euro unit 
and the national currency units. Inverse rates derived from the conversion rates shall not 
be used. 
(4) Monetary sums to be converted from one national currency unit into another shall 
first be converted into a monetary sum expressed in the euro unit, rounded to at least 
three decimals, and then be converted into the other national currency unit. 
Article 5 
Monetary sums to be paid or accounted for when a rounding takes place after a 
conversion into the euro unit according to Article 4 shall be rounded up or down to the 
nearest cent. Monetary sums converted into a national currency unit shall be rounded up 
or down to the nearest sub-unit or in the absence of a sub-unit to the nearest unit, or 
according to national practices to a multiple or fraction of the sub-unit or unit of the 
national currency unit. If the application of the conversion rate gives a result which is 
exactly half-way, the sum shall be rounded up. 
Article 6 
This Regulation shall enter into force on the day after publication in the Official 
Journal. 
This Regulation shall be binding in its entirety and directly applicable in all Member 
States. 
jf oil 
PROPOSAL FOR A 
COUNCIL REGULATION ON THE 
INTRODUCTION OF THE EURO 
(PRESENTED BY THE COMMISSION) 
R2 
Proposal for a 
Council Regulation f ] 
on the introduction of the euro 96/0250 (CNS) 
The Council of the European Union, 
1 laving regard to the Treaty establishing the European Community, and in particular 
Article 109 1 (4) third sentence thereof, 
Having regard to the proposal from the Commission, 
Having regard to the opinion of the European Central Bank, 
Having regard to the opinion of the European Parliament 
( 1 ) Whereas this regulation defines monetary law provisions of the Member States which 
have adopted the euro; whereas provisions on continuity of contracts, the replacement of 
references to the ECU in legal instruments by references to the euro and rounding have 
already been laid down in Council Regulation |...]; whereas measures pertaining to other 
areas of law will, if necessary, have to be considered such as those concerning double price 
displays, conversion fees; 
(2) Whereas the European Council has decided at its meeting held in Madrid on 15/16 
December 1995 that the name given to the European currency shall be the "euro"; whereas 
the specific name "euro" will be used instead of the generic term "ECU" used by the Treaty 
to refer to the European currency unit; whereas the euro as the currency of the Member 
States without a derogation shall be divided into one hundred sub-units with the name 
"cent"; whereas the definition of the name "cent" does not prevent the use of variants of 
this term in common usage in the Member States; 
(3) Whereas the Council when acting according to Article 109 1 (4), third sentence of the 
Treaty shall take the measures necessary for the rapid introduction of the euro other than the 
adoption of the conversion rates; 
<& 
(4) Whereas whenever under Article 109 k (2) of the Treaty a Member State becomes a 
Member State without a derogation, the Council shall according to Article 109 1 (5) of the 
Treaty take the other measures necessary for the rapid introduction of the euro as the single 
currency of this Member State; 
(5) Whereas according to Article 109 I (4) of the Treaty the Council shall at the starting date 
of the third stage adopt the conversion rates at which the currencies of the participating 
Member States will be irrevocably fixed and at which irrevocably fixed rate the euro will be 
substituted for these currencies; 
(6) Whereas given the absence of exchange rate risk either between the euro unit and the 
national currency units or between these national currency units, legislative provisions shall 
be interpreted accordingly; 
(7) Whereas the term "contract" used for the definition of legal instruments is meant to 
include inter alia written and oral contracts, tacitly concluded contracts and contracts 
implied from the conduct of the parties; 
(8) Whereas in order to prepare a smooth changeover to the euro a transitional period is 
needed between the substitution of the euro for the currencies of the participating Member 
States and the introduction of euro banknotes and coins; whereas during this period the 
national currency units will be defined as sub-divisions of the euro; whereas thereby a legal 
equivalence is established between the euro unit and the national currency units; 
(9) Whereas the euro shall be the unit of account of the European Central Bank (ECB) and 
of the central banks of the participating Member States; whereas this does not prevent 
national central banks from keeping accounts in their national currency unit during the 
transitional period, in particular for their staff and for public administrations; 
(10) Whereas during the transitional period legal instruments can be drawn up validly in the 
euro unit or in the national currency unit; whereas, unless agreed otherwise, economic 
agents have to respect the denomination of a legal instrument in the performance of all acts 
to be carried out under that instrument; whereas in order to ensure the smooth functioning 
of the payments systems exceptions from this general rule are necessary; whereas in order 
to allow, where necessary, the redenomination of outstanding debt in the euro unit and the 
change of the unit of account of the operating procedures of organized markets, Member 
States should be able to take appropriate measures; 
A J v 
(11) Whereas in transactions with the public sector participating Member States may allow 
the use of the euro unit but can only impose it on the basis of Community legislation; 
(12) Whereas according to Article 105a of the Treaty the Council may adopt measures to 
harmonise the denominations and technical specifications of all coins; 
(13) Whereas banknotes and coins need adequate protection against counterfeiting. 
(14) Whereas banknotes and coins denominated in the national currency units lose their 
status of legal tender at the latest six months after the end of the transitional period; whereas 
for practical reasons it might be appropriate to introduce the euro banknotes and coins 
already a short time before the end of the transitional period; 
(15) Whereas as from the end of the transitional period references in legal instruments 
existing at the end of the transitional period will have to be read as references to the euro 
according to the respective conversion rates; whereas a physical redenomination of existing 
legal instruments is therefore not necessary to achieve this result; whereas the rounding 
rules defined in Council Regulation |...| shall also apply to the conversions to be made at 
the end of the transitional period or after the transitional period; whereas for reasons of 
clarity it may be desirable that the physical redenomination will take place as soon as 
appropriate; whereas from the end of the transitional period the former national currency 
units can no longer validly be used for the setting up of new legal instruments; 
HAS ADOPTED THIS REGULATION: 
Parti 
DEFINITIONS 
Article 1 
For the purpose of this regulation: 
- "participating Member States" shall mean (Countries A, B ...) 
- "legal instruments" shall mean legislative provisions, acts of administration, judicial 
decisions, contracts, unilateral legal acts, payment instruments other than banknotes 
and coins, and other instruments with legal effect. 
dS 
- "conversion rates" shall mean the irrevocably fixed conversion rates adopted by the 
Council according to Article 109 1 (4) first sentence of the Treaty. 
- "euro unit" shall mean the currency unit as defined in the second sentence of Article 2. 
- "national currency units" shall mean the units of the currencies of participating 
Member States as those units are defined in their respective monetary law on the day 
before the start of the third stage. 
- "transitional period" shall mean the period beginning on 1.1.1999 and ending on 
31.12.2001 at the latest. 
- "organized markets" shall mean markets for the regular exchange, clearing and 
settlement of any of the instruments listed in section B of the annex to Directive 
93/22/EEC on the investment services in the securities field and shall include 
systems for the regular exchange, clearing and settlement of instruments of payment. 
Part II 
SUBSTITUTION OF THE EURO FOR THE CURRENCIES OF THE 
PARTICIPATING MEMBER STATES 
Article 2 
The currency of the participating Member States shall be the euro. The currency unit 
shall be one euro. One euro shall be divided into one hundred cent. 
Article 3 
The euro shall be substituted for the currencies of the participating Member States at the 
conversion rates. 
I Council Directive 93/22/EEC of 10 May 1993 on investment services in the securities field (OJ No L 141, 
I 1.6.1993, p.27). 
& 
Article 4 
The euro shall be the unit of account of the European Central Bank (ECB) and of the 
central banks of the participating Member States. 
Part III 
TRANSITIONAL PROVISIONS 
Article 5 
Articles 6-9 apply during the transitional period. 
Article 6 
(1) The euro shall also be divided into the national currency units according to the 
conversion rates. Any sub-division thereof shall be maintained. Subject to the 
provisions of this Regulation the monetary law of the participating Member States shall 
continue to apply. 
(2) Where in a legal instrument reference is made to a national currency unit, this 
reference shall be as valid as if reference were made to the euro unit. 
Article 7 
The substitution of the euro for the currencies of the participating Member States shall 
not in itself have the effect of altering the denomination of legal instruments in 
existence on the date of substitution. 
«r ft 
Article 8 
( I ) Acts to be performed under legal instruments stipulating the use of a national 
currency unit shall be performed in that national currency unit. Acts to be performed 
under legal instruments stipulating the use of the euro unit shall be performed in this 
unit. 
(2) The provisions of paragraph 1 are subject to anything which parties may have 
agreed. 
(3) Notwithstanding the provisions of paragraph 1, any amount denominated either in 
the euro unit or in the' national currency unit of a given participating Member State and 
payable within that Member State by crediting an account of the creditor, can be paid 
by the debtor either in the euro unit or in that national currency unit. The amount may 
be credited to the account of the creditor in the denomination of his account, with any 
conversion being effected at the conversion rates. 
(4) Notwithstanding the provisions of paragraph 1, each participating Member State 
may take measures which may be necessary in order to: 
redenominate in the euro unit outstanding debt denominated in national currency 
units; this provision shall apply to bonds and securitized debt. 
allow organized markets to change the unit of account of their operating 
procedures from a national currency unit to the euro unit. 
(5) Other provisions than those of paragraph 4 imposing the use of the euro unit may 
only be adopted by the participating Member States according to any time-frame laid 
down by Community legislation. 
(6) National legal provisions which permit or impose netting, set-off or techniques with 
similar effects shall apply to monetary obligations, irrespective of their currency 
denomination, if that denomination is in euro or in a national currency unit, with any 
conversion being effected at the conversion rates. 
«<r M 
Article 9 
Banknotes and coins denominated in a national currency unit shall retain their status as 
legal tender within the territorial limits as of the last day before the third stage. 
Part JV 
EURO BANKNOTES AND COINS 
Article 10 
As from 1 January 2002 at the latest, the ECB and the central banks of the participating 
Member States shall put into circulation banknotes denominated in euro. 
Notwithstanding Article 15, these banknotes shall be the only banknotes which have the 
status of legal tender in all these Member States. 
Article 11 
As from 1 January 2002 at the latest, the participating Member States shall issue coins 
denominated in euro or in cent and complying with the denominations and technical 
specifications which the Council may lay down in accordance with Article 105 a (2) 
second.sentence of the Treaty. Notwithstanding Article 15, these coins shall be the only 
coins which have the status of legal tender in all these Member States. Except for the 
issuing authority and for those persons specifically designated by the national 
legislation of the issuing Member State, no party shall be obliged to accept more than 
fifty coins in any single payment. 
Article 12 
Participating Member States shall ensure adequate sanctions against counterfeiting and 
falsification of banknotes and coins. 
d°l 
SI 
PartV 
FINAL PROVISIONS 
Article 13 
Articles 14-16 apply as from the end of the transitional period. 
Article 14 
Where in legal instruments existing at the end of the transitional period reference is 
made to the national currency units, these references shall be read as references to the 
euro unit according to the respective conversion rates and calculated according to the 
rounding rules laid down in Council Regulation [...]. 
Article 15 
Banknotes and coins denominated in a national currency unit as referred to in 
Article 6 (1) shall remain legal tender in their respective territorial limits until six 
months after the end of the transitional period at the latest; this period may be shortened 
by national law. 
Article 16 
In accordance with the laws or practices of participating Member States, the respective 
issuers of banknotes and coins shall continue to accept, against euro at the conversion 
rate, the banknotes and coins previously issued by them. 
6b 
V. 
Part VI 
ENTRY INTO FORCE 
Article 17 
This Regulation shall enter into force on 1st January 1999. 
This Regulation shall be binding in its entirety and directly applicable in all Member 
States. 
2./ 
I ! 
Annexe financière 
The present proposals do not have any impact on the budget of the European 
Community. 
3i 
Annexe Petites et Moyennes Entreprises 
The two draft Regulations will have a direct effect on all citizens and all sectors of 
the economy. It will be of particular significance to the banking sector and to 
distributive trades, where citizens will encounter the immediate commercial effects of 
the changes. 
The importance of adjustments to the new situation which will be required of 
enterprises will vary. Small and medium sized enterprises may find adjustment costs 
proportionately higher if the transition is not planned sufficiently in advance. The 
Commission is working closely with these sectors to identify more precisely potential 
problems. 
33 
ISSN 0254-1475 
COM(96) 499 final 
EN 09 10 01 
Catalogue number : CB-CO-96-524-EN-C 
ISBN 92-78-10378-0 
Office for Official Publications of the European Commumties 
L-2985 Luxembourg 
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