OPINION OF THE EUROPEAN CENTRAL BANK
at the request of the Spanish Ministry  of Economy and Fina nce under Article 109f (6) of the
Treaty establishing the Europe an Community (the Treaty) a nd Article 5.3 of the Statute of
the EMI on a draft law on the Introduc tion of the euro (Umbrella law).
CON/98/31
1. On 8 June 1998 the ECB has received a request  from the Spanish Ministry of Economy and
Finance, through the Banco de España, for an  opinion on a draft law on the Introduction of the
euro (Umbrella law) .
2. In accordance with Article 109l (2) of the Treaty, the ECB has taken over the advisory
functions of the EMI which has gone into li quidation upon the establishment of the ECB on 1
June 1998. The ECBs competence to deliver an opinion is based on Article 1.1 of the Council
Decision (93/717/EC) of 22 Nove mber 1993 on the consultation of the EMI by the authorities
of the Member States on draft legislative provis ions, as the Umbrella law contains rules which,
in the context of national change-over legislati on, deal with provisions that concern monetary
law and have an impact on financial markets a nd, thus, fall within the  consultative competence
of the ECB.
3. The aim of the Umbrella law is to supplem ent the EU Council Regulations 1103/97 of 17 June
1997 and 974/98 of 3 May 1998, concerning the intr oduction of the euro, providing with the
adaptations of the national monetary system to  the new situation, setting out general principles
and rules applying to the changeover, during the transitional period, and at the end of the
transitional period. It contains provisions rega rding the relationship be tween the two currency
units in the areas of accounting and reporting, re-denomination of the capital of companies,
adaptations in the domain of administrative cont racts and payments, taxation and social security
rules,  consumer protection and fi xing of exchange rates. It also provides for the maintenance of
the Madrid Interbank Offered Rate (MIBOR). On e of the provisions of the Umbrella law is
given the rank of organic law in order to make  the necessary adaptations to the laws that have
such a qualified rank. The Umbrella law is to be effective as from the 1 January 1999.
The ECB welcomes the initiative of the Span ish Government to prepare for the timely
implementation of the measures necessary or appropriate for the changeover to the single
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currency. The Umbrella law constitutes a comprehensive piece of legislative work which
encompasses a wide range of topics and areas under an overall intention of (i) on the one hand,
being pedagogic for the public, and (ii) on the other hand facilitating the smooth introduction ofthe euro. It moreover incorporates provisions fully in line with the CommissionRecommendations of 1998 on banking charges for conversion to the euro and on dualdisplay of prices and other monetary amounts . The assessment is therefore positive, and no
major inconsistencies or problems are to be mentioned.
4. The Umbrella law follows deliberately a legisl ative technique which includes the reproduction,
where necessary, of provisions of the EU  Council Regulations 1103/97 and 974/98. Whilst it is
clear from the preamble of the draft and from the text  of several provisions that the rules have a
Community origin, the legislative technique  of reproducing in a national act parts of
Community legislation that has all the features of  direct applicability and direct effect  has been
consistently critized by the European Court of Justice. Implementation by insertion into
national legal acts of EU Council Regulations:
- is not necessary, because of the direct applicability and direct effect of such
Community acts (they are to be considered a part of the legal order of each MemberState without any further national step);
- it is inconvenient when the reproduction is  not identical to the wording of the
Community regulations, since it may jeopardise the simultaneous and uniformapplication of those regulations in th e whole of the Community (Case 39/72 [1973]
E.C.R. 101);
- it may cast doubts about the place that the prov ision has in the hierarchy of sources,
appearing to the reader as if it were a nati onal legal source, thus interfering with the
right of the Community to autonomously amend its legislation from time to time.
The technique of incorporating Community pr ovisions in a national act may be acceptable
when:
- the national laws incorporate some elemen ts of Community regulations for the sake
of coherence and in order to make them co mprehensible to the persons to whom they
apply (Case 272/83 [1985] E.C.R.  1057), but only if the Community nature of a legal
rule is clearly shown or disclosed to those subject to it (Case 34/73 [1973] E.C.R.
981);
- the Community provision leaves room for interpretation and demands a national
supplementary act specifying a solution wher e a certain discretion is given to the
national legislator (direct effect require s clarity, precision and unconditionality of the
Community provision).
The above considerations have specific cases of application:
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- Article 2 of the Umbrella law reproduces  parts of Article 1 of the EU Council
Regulation 974/98, but it has added to the scope  of the term legal instruments the
meaning of entries in official registri es; whilst there is no objection in the
substance, the reservations described abov e concerning the legislative technique of
the Umbrella law would recommend that the text reproduces remains identical to the
Community text.
- Article 3(2), last sentence, of the Umbre lla law, reproduces in an imperfect manner
the second paragraph of Article 105a(1) of the Treaty; in particular, the name of thecentimal subdivision of the euro is cent ; whilst the Preamble of the EU Council
Regulation 974/98 permits the use of variants in common usage in the MemberStates, such permission refers to common usage and not to legal designation(however, legal use of the term céntimo might be permitted when employed as theequivalent for the English term hundredth of an euro, but not as legaldenomination of cent; see Arts. 10.1 and 15.3 of the Umbrella Law). The aboveconsiderations are here also applicable.
- The third paragraph of Article 5 of the Umbrella law reproduces imperfectly Article
2 of the EU Council Regulation 1103/97; th e above considerations are here also
applicable.
- Article 7 of the Umbrella law reproduces w ith different wording Article 6 (2) of EU
Council Regulation 974/98. Whilst it may be said  that the draft article improves the
Community text, the above considerati ons would warrant identical wording or
deletion.
- Article 9 of the Umbrella law re-states the principle of contract continuity which is
enshrined in Article 3 of the EU Counc il Regulation 1103/97; whilst it may be said
that the draft article improves the Community text, the above considerations wouldwarrant identical wording or deletion.
- Article 10 of the Umbrella law reproduces w ith slight differences the text of Article
5 of the EU Council Regulation 1103/97. Whilst it may be said that the draft article
improves the Community text, the above considerations would warrant identical
wording or deletion.
- Article 11 of the Umbrella law reproduces partially one of the definitions in Article 1
of the EU Council Regulation 974/98, and states  that the monetary regime during the
transitional period is governed according to the provisions of this chapter, with no
reference whatsoever to the Community regulations; it is recommended that such
reference is clearly made.
- Article 13(1) of the Umbrella law reproduce with different wording Article 8(1) of
the EU Council Regulation 974/98. Whilst it may be said that the draft article
improves the Community text, the above considerations would warrant identical
wording or deletion.
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- Article 13(2) of the Umbrella law reproduce with different wording Article 8(3) of
the EU Council Regulation 974/98. Whilst it may be said that the draft article
improves the Community text, the above considerations would warrant identical
wording or deletion.
5. The ECB welcomes and assesses positively the rules contained in the Umbrella law about re-
denomination of securities. However, Article 15.5 of the Umbrella law, concerning theredenomination of the outstanding public debt in  foreign currency, issu ed according to foreign
law, identifies the currency of issuance ( lex monetae ) and not the governing law ( lex
contractus ) as critère de rattachement for re-denomination purposes. Although the normal
case will be of both lex monetae and the lex contractus coinciding, it is worth mentioning that
other Member States having introduced changeover legislation generally refer to the lex
contractus as the only relevant connecting point.
6. The ECB welcomes the prohibition of banking charges and fees for the final exchange of
banknotes, stated in Article  23 of the Umbrella law.
7. Article 31 refers to the Madrid Interbank Of fered Rate (MIBOR). It distinguishes between
different uses of MIBOR. Paragraph one refers to references to the MIBOR in mortgagecontracts and states that, as long as technical or market  practices do not impede this
publication, the MIBOR will continue to be publishe d to ensure continuity of contracts in the
mortgage area. Should MIBOR not be availa ble any more, the Minister of Economy and
Finance would determine a substitute, with a view to creating the most similar rate in terms of
calculation procedures. Most Member States w ill cease to elaborate local reference interest
rates for money markets, and euro-wide rate s will replace them. The continuation of the
MIBOR in Spain is not in line with the criteri a that other participating Member States will
follow, aimed at ensuring the unity of the m oney market in the euro area. However, this
continuation may be justified by its limited ta rget, namely the continuity of outstanding
contracts in the mortgage industr y, and protection of consumers. 
8. For contracts other than mortgage loans, Article 31 of the Umbrella law states that the Ministry
of Economy and Finance will either fix a new calculation formula or determine a new referencerate which will replace the MIBOR, provided that the MIBOR looses its economic meaning andthe parties in the contract do not replace it by consensual agreement with a new rate. The lawadds that, if these conditions are respected, pa rties will not be entitled to request courts to
unilaterally rescind their obligations because of the substitution of MIBOR. The ECB strongly
recommends that the EURIBOR be named as the interbank rate which best approximates the
functions of the MIBOR in an euro area-wide money market. 
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9. The ECB requests that it be consulted with respect  to any royal decree and/or ministerial order
to be enacted pursuant to the Umbrella law.
10. The ECB authorises the publication of this opinion at the discretion of the consulting
authorities.
In Frankfurt am Main, on 21 July 1998
On behalf of the President of the ECB
[signed]
The Vice-president, Mr. C. Noyer