OPINION OF THE EUROPEAN CENTRAL BANK
of 3 September 1999
at the request of the German Federal Ministry of Finance on a bill amending currency-related
provisions with respect to the introduction of the euro ( Drittes Euro-Einführungsgesetz  Drittes
EuroEG  (Third Act on the intr oduction of the euro))
(CON/99/10)
1. On 19 July 1999 the European Central Bank (ECB) received a request from the German Federal
Ministry of Finance for an ECB Opinion concerning a legislative proposal entitled Bill
amending currency-related provisions with respect to the introduction of the euro ( Drittes Euro-
Einführungsgesetz  Drittes EuroEG ).
2. The ECBs competence to deliver an opinion is based on Article 105 (4) of the Treaty and
Article 2 (1), first and second indents, of Council Decision (EC) No. 98/415 of 29 June 1998 onthe consultation of the European Central Bank by national authorities regarding draft legislativeprovisions, as the legislative proposal deals with currency matters and means of payment. Inaccordance with Article 17.5, first sentence, of the Rules of Procedure of the European CentralBank, this opinion has been adopted by the Governing Council of the ECB. The legislative
proposal and an explanatory memorandum were submitted to the ECB in the German language
only. The present opinion is based on an unofficial English translation of the official Germanbill.
The legislative proposal is intended to amend German currency-related provisions in view of thephysical introduction of euro banknotes and coins on 1 January 2002, as stipulated by CouncilRegulation EC/974/98 of 3 May 1998 on the introduction of the euro. The bill complements theFirst Act on the introduction of the euro ( Erstes Euro-Einführungsgesetz ), which dealt with the
necessary adaptations to German legislation with a view to the national implementation of the
regulatory framework for the introduction of the euro on 1 January 1999, on which the EMI
rendered its opinion CON/97/24. The ECB welcomes the submission of this legislative proposal
at a relatively early stage, thus allowing for transparency and legal certainty for the general
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public and other parties with regard to the physical introduction of euro banknotes and coins on
1 January 2002.
3. The draft law consists of eight articles, replacing or amending the existing currency legislation.
Article 1 consists of a draft Act abolishing the legal tender status of banknotes denominated in
Deutsche Mark (DM) and Federal coins denominated in DM or pfennig ( DM-
Beendigungsgesetz ). It deals with the termination of the status of DM banknotes and coins as
legal tender as well as with the obligation of the Bundesbank to exchange DM cash against eurocash without fees in accordance with Article 16 of Council Regulation (EC) No 974/98 of 3May 1998 on the introduction of the euro. In addition, there are some provisions specifying theextent of that obligation. The final provisions of this article deal with the prolongation of penallaw protection against counterfeits and forgeries of DM banknotes and coins after 31 December2001. These provisions are complemented by an agreement dated 22 October 1998 between
associations representing various economic sectors such as credit and finance, trade and similar
services including vending machines, which are the most important catalysts for exchange ofmonetary tokens, on the one hand, and the Federal Ministry of Finance and the DeutscheBundesbank, on the other. By means of this agreement, the aforementioned associationsundertake to use their influence with their member companies to ensure a so-called modifieddeadline for the introduction of euro banknotes and coins. According to this modifieddeadline, the members of the associations are expected, on a voluntary basis, to accept DMbanknotes and coins until 28 February 2002, while at the same time allowing for someflexibility in their dealings beyond that date.
Article 2 contains a new Coinage Act ( Münzgesetz ), replacing the previous law on coins. By
reference to Council Regulation (EC) No. 975/98 of 3 May 1998 on the denomination andtechnical specification of euro coins, it contains provisions on the legal protection of coins, onthe allocation of responsib ilities for the design of the national side of the German euro coins, on
the distribution of the numbers to be minted with respect to the various denominations and onthe production as well as, without prejudice to Article 106 (2), first sentence, of the Treaty, theissuance and withdrawal of the German euro coins. In addition, a number of provisions dealwith the protection of special edition Germ an euro coins and commemorative euro coins.
Article 3 contains an amendment to Article 14 of the Bundesbank Act, by which the Deutsche
Bundesbank is endowed, without prejudice to Article 106 (1) of the Treaty, with the exclusiveright to issue banknotes in Germany. At the same time the Deutsche Bundesbank is obliged to
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publish the denominations and the different characteristics of euro banknotes. It also contains
provisions on the right of the Deutsche Bundesbank to withdraw banknotes.
Article 4 amends the existing regulation on the production and the sale of medals and badges.
Articles 5 to 8 contain a number of provisions which are intended to harmonise and consolidate
other laws which may have a bearing on banknot es and coins (mainly provisions on the German
monetary union as well as special provisions relating to the special status of Berlin and the Saarregion, which have meanwhile been abolished).
4. As regards Article 1, the ECB notes that Section 1 of the bill establishes a legal big
bang, by which the legal tender status of DM banknotes and coins is abolished witheffect from 1 January 2002. Article 15  of Council Regulation (EC) No. 974/98 of 3 May
1998 on the introduction of the euro  stipulates that banknotes and coins denominated in a
national currency unit shall remain legal tender within their territorial limits until six months
after the end of the transitional period (i.e. 31 December 2001), which period may be shortenedby national law, and each participating Member State may, for a period of up to six months afterthe end of the transitional period, lay down rules for the use of the banknotes and coinsdenominated in its currency unit and take any measure to facilitate their withdrawal. In order to
not prejudge the discussion of the informal meeting of the Ecofin to be held in Turku on 10-12
September 1999, inter alia on a possible need to working towards closer intentions amongMember States on the length of the dual circulation period, the ECB abstains from commentingon the approach taken by the German Government in this respect..
Article 1, Section 4, in conjunction with Article 8 (3), stipulates that the penal provisionsapplying to counterfeiting of legal tender banknotes and coins will be extended to apply to DMbanknotes and coins for a period of one year after the termination of their legal tender status on1 January 2002. The ECB notes that this extension of penal protection would not apply to other
national denominations of the euro, which would only benefit from penal protection under
German laws against counterfeiting up to the moment of the termination of their legal tenderstatus. 
5. With regard to Article 2, Section 3 (1) regulates the obligation of the German public to accept
German commemorative euro coins that have been given legal tender status in Germany up toan amount of EUR 100 for a single payment. This reflects Article 11 of Council Regulation(EC) No. 974/98 of 3 May 1998, according to which nobody is under an obligation to acceptmore than 50 euro coins (whereby the maximu m possible amount payable with euro coins is
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EUR 100). Nevertheless, Section 3 (1), second sentence, refers to single payments made both in
euro coins and in German commemorative euro co ins, stipulating that no one is obliged to
accept more than 50 coins amounting to more than EUR 100. This wording might lead touncertainties on whether there would be an obligation to accept a payment of up to 50 coins, forinstance, even if the accumulated value were to amount to more than EUR 100, due to the
inclusion of German commemorative euro coins of a value higher than EUR 2 or to accept
payments of more than 50 coins, if the accumulated value will fall short of EUR 100. The ECBsuggests to consider that this ambiguity be clarified.
The ECB also notes with regard to the possible  holding of coins by the Deutsche Bundesbank
that, through the insertion of the words notwithstanding Article 101 Sub-section 1 inSection 3 (2), it is ensured that the 10% limit of Article 6 of Council Regulation (EC)No. 3603/93 of 13 December 1993 specifying definitions for the application of the prohibitionsreferred to in Articles 104 and 104b (1) of the Treaty is respected.
Section 8 deals with the acceptance of coins which have decreased in weight or have becomeunidentifiable due to extensive circulation or wear. In this context, it might be useful also tospecify the conditions under which the Federal Cash Offices and the Bundesbank will have toaccept bicolour coins, where the inner and outer sections have been separated.
6. Article 3, which will enter into force on 1 January 2002, will amend Section 14 of the
Bundesbank Act. The compliance of this article w ith the Treaty requirement of legal integration
of the NCBs into the ESCB has already been approved in the EMI convergence report dated
March 1998. By replacing the second, third and fourth sentence of section 14 (1) (Its notes are
denominated in Deutsche Mark. They alone are unrestricted legal tender. Notes indenominations smaller than ten Deutsche Mark may be issued only by agreement with theFederal Cabinet) by a new second sentence (Banknotes denominated in euro are the onlyunrestricted legal tender.) and by deleting section 14 (3), the final adaptations which arenecessary to reflect the end of the transitional period are implemented. However, it is remindedthat Article 106 of the Treaty states that the EC B shall have the exclusive right to authorise the
issue of banknotes within the Community and that (both) the ECB and the national centralbanks - in this case the Bundesbank as the national central bank of Germany (in accordance
with the Bundesbank Act)  may issue such notes. It is an exclusive competence of the ECB to
decide on the application and protection of this Treaty based prerogative. Therefore, in order toproperly reflect the wording and meaning of Article 106 of the Treaty, the ECB recommends toredraft the explanatory memorandum on Article 3, especially the passage presently reading asArticle 106 subsection 1 EU Treaty stipulates that the ECB has a sole right to approve the
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issue of banknotes, and that the national central banks are authorised to issue banknotes. ,
accordingly.
In relation to Section 14 (2), which relates to the withdrawal of banknotes for collection by theDeutsche Bundesbank, the ECB acknowledges that the wording has remained unchanged. Yet,
to avoid misinterpretations when comparing Section 14 (1) (containing a reference to
Article 106 (1) of the Treaty) and Section 14 (2) (which does not include that reference), theECB recommends either that both sub-sections of Section 14 of the Bundesbank Act be merged
or that an explicit reference to Article 106 (1) of the Treaty be made in Section 14 (2) so as tomirror the wording of Section 14 (1).
7. In relation to Article 4, regulating the production and the sale of medals and badges, the ECB
notes that the scope of application of the regulation, as amended by this law, will apply to eurocoins and German commemorative euro coins. In view of a harmonised protection, it might be
worthwhile to consider extending the application to elements of non-German commemorative
euro coins which have legal tender status in another Member State of the euro area.
8. The ECB confirms that it has no objections to this ECB Opinion being made public by the
competent national authorities at their discretion.
Done at Frankfurt am Main on 3 September 1999.
The Vice-President of the ECB
[signed]
C. Noyer