Proposal for a Council Regulation on the introduction of the euro (96/C 369/06) COM(96) 499 final - 96/0250(CNS)

(Submitted by the Commission on 18 October 1996) THE COUNCIL OF THE EUROPEAN UNION,

Having 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 subunits bearing 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 the third sentence of Article 109 (1) (4) 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 (l) (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 (l) (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 subdivisions 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;

(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 105 (a) of the Treaty the Council may adopt measures to harmonize 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:

PART I Definitions

Article 1

For the purpose of this Regulation:

- 'participating Member States` shall mean (countries A, B, etc.),

- '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 (l) (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 January 1999 and ending on 31 December 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 (1) 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 cents.

Article 3

The euro shall be substituted for the currencies of the participating Member States at the conversion rates.

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 to 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 subdivision 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.

Article 8

1. 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.

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 IV 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 cents and complying with the denominations and technical specifications which the Council may lay down in accordance with the second sentence of Article 105 (a) (2) 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.

PART V Final provisions

Article 13

Articles 14 to 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.

PART VI Entry into force

Article 17

This Regulation shall enter into force on 1 January 1999.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

(1) Council Directive 93/22/EEC of 10 May 1993 on investment services in the securities field (OJ No L 141, 11. 6. 1993, p. 27).