EN
OPINION OF THE EUROPEAN CENTRAL BANK
of 26 January 2001
at the request of Portuguese Minister of Fina nce concerning two draft decree-law concerning
(I) the dual circulation of banknotes and coins denominated in euro and in escudos; and
(II) amendments to the organic law of the Banco de Portugal
(CON/2001/01)
1. On 8 January 2001 the European Central Bank (ECB) received a request from the Portuguese
Minister of Finance for an opinion on two draft de cree-law concerning (I) the dual circulation of
banknotes and coins denominated in euro and in escudos; and (II) amendments to the organiclaw of the Banco de Portugal.
2. The ECBs competence to deliver an opinion is based on the first, second and third indents of
Article 2(1) of Council Decision 98/415/EC of 29 June 1998 on the consultation of the
European Central Bank by national authorities regarding draft legislative provisions1, as the
draft legislative proposals contain provisions concerning currency matters, means of paymentand the national central bank statute. In accordance with the first sentence of Article 17.5 of theRules of Procedure of the European Central Bank, this opinion has been adopted by theGoverning Council of the ECB.
3. The first draft decree-law contains the provisions necessary to implement into the Portuguese
legal system Articles 15 and 16 of Council Regulation (EC) 974/98 of 3 May 1998 on theintroduction of the euro
2. It deals with the period during which banknotes and coins
denominated in escudos remain legal tender by lim iting such period to two months after the end
of the transitional period (Articles 1 and 2). This is in line with the common statement on theintroduction of euro banknotes and coins issued by the ECOFIN Council on 8 November 1999and with the solution adopted by a majority of participating Member States. The ECB has noobjections to this solution and especially welcomes the measures adopted in the field ofexchange and withdrawal of banknotes and coins denominated in escudos (Articles 3 and 4).The exchange and withdrawal of banknotes denominated in escudos will take place until
                                                     
1 OJ L 189, 3.7.1998, pp. 42-43.
2 OJ L 139, 11.5.1998, pp. 1-5.
230 June 2002 at the counters of the Banco de Portugal and of credit institutions, and at the local
offices of the tax authorities, thus contributing in a positive manner to a smoother cashchangeover. It should be mentioned that whilst credit institutions are entitled to limit the volumeand frequency of exchange operations, they wi ll have to inform the Banco de Portugal in
advance and will not be allowed to establish such limits if the Banco de Portugal is opposedthereto (Article 3(2)). The same rules are applicable to the exchange and withdrawal of coins,with the particularity that the Banco de Portugal will accept coins for exchange at its countersuntil 31 December 2002 (Article 4).
4. Article 5 of the draft decree-law deals with the automatic redenomination of bank accounts.
Whilst not legally indispensable in the light of Article 14 of Council Regulation (EC) 974/98,this provision introduces an element of additional legal certainty in the large-scale operationinvolving the redenomination of bank accounts, which cannot be underestimated.
5. Article 6 of the same draft legal act establishes a free-of-charge rule for the exchange and
withdrawal of banknotes and coins, and for the redenomination of bank accounts, that also
contributes to additional legal certainty and to a smoother cash changeover.
6. Article 7(1) of the draft decree-law requires that only the conversion rate 1 euro =
200,482 escudos be applied for the exchange and withdrawal of banknotes and coins and for theredenomination of bank accounts. The ECB has doubts about the appropriateness of thisprovision in the light of Articles 14 and 16 of Council Regulation (EC) 974/98, Article 4(3) ofCouncil Regulation (EC) 1103/97 of 17 June 1997 on certain provisions relating to theintroduction of the euro
3 and Article 1 of Council Regulation (EC) 2866/98 of
31 December 1998 on the conversion rates between the euro and the currencies of the MemberStates adopting the euro
4. Indeed, consistent case-law of the Court of Justice has established that
Member States should not pass any measures having the effect of transposing a Communityregulation into national legislation. Community regulations are an integral part of the nationallegal order and Member States are under the obligation not to introduce any measures that mightaffect the uniform interpretation and application of Community law. Converting provisions of aCommunity regulation into national legislation could be deemed to affect the uniforminterpretation and application of Community law in a field where Member States are unable toadopt national legislation. However, the ECB understands that these provisions may be intendedfor reasons of clarity and to reinforce the principle that the exchange and withdrawal ofbanknotes and coins and the redenomination of bank accounts should be made without chargeand without mark-up or commissi on; but would prefer the use of a cross-reference to the
applicable provisions of Community law. The same considerations are applicable to Article 7(2)of the draft decree-law, dealing with rounding on the occasion of the exchange of banknotes and
                                                     
3 OJ L 162, 19.6.1997, pp. 1-3.
4 OJ L 359, 31.12.1998, pp. 1-2.
3coins and the redenomination of bank accounts. Such rounding rules mirror Article 5 of Council
Regulation (EC) 1103/97, and, as such, would not be legally necessary. However, it is admittedthat such rounding rules would contribute to clarity and legal certainty for the cash changeoverin Portugal and again could contribute to avoidi ng the imposition of fees or commission in the
exchange and withdrawal of banknotes and co ins, and the redenomination of bank accounts. 
7. Article 8 grants to the Banco de Portugal regulatory powers to adopt additional provisions that
may prove necessary to implementing the draft decree-law. The ECB has no objections to thissolution and notes that it might prove extremely useful in order to ensure a smooth cashchangeover. Article 9 deals with sanctions and infringements to the provisions of the draftdecree-law and to the regulations adopted for its implementation by the Banco de Portugalunder the aforementioned Article 8. The ECB welcomes this provision as it ensures thatappropriate sanctions will be levied in the case of infringement of the draft decree-law and theBanco de Portugal regulations adopted pursuant thereof (avisos), namely where exchangeobligations or the free-of-charge rules are not adhered to.
8. Finally, with regard to the wording of Article 10 of the draft decree-law, the ECB would prefer
that, for accounting reasons, a solution in line with the wording of Article 9(2) of the organiclaw of the Banco de Portugal, in the wordin g set forth by decree-law 337/90 of 30 October,
would be used, so that a reference to the accounting treatment of national banknotes that are nolonger legal tender would be maintained.
9. The second draft decree-law dealing with amendments to the organic law of the Banco de
Portugal contains two sets of rules. On the one hand, it covers the Banco de Portugalresponsibility to issue its own official bulletin (amendments to Article 59) and clarifies the legalnature of the Banco de Portugal according to the Portuguese legal system (amendments toArticles 39 and 64). On the other hand, it introduces in the organic law of the Banco de Portugalthe necessary adaptations to terminate the legal tender status of banknotes and coinsdenominated in escudos. Indeed, the current wording of Article 65 of the organic law of theBanco de Portugal requires the approval of special legislation in order to repeal Articles 6 to 9of the organic law in the wording set forth by decree-law 337/90, Those Articles were kept inforce by the said Article 65 as they concern the issuance of banknotes denominated in escudoswhich retained their status as legal tender according to Article 9 of Council Regulation(EC) 974/98. The new wording of Article 65 revokes those provisions in conformity with thetermination of the legal tender status of banknotes denominated in escudos
5. Only this last set of
rules relating to the cessation of the legal tender status of banknotes and coins denominated inescudos is relevant for the present opinion, as the other matters are mainly internal in nature.
                                                     
5 The new wording of Article 65 of the organic law of Banco de Portugal reads as follows: Notwithstanding the exclusive
powers of the European Central Bank to authorise the issue, Articles 6 to 9 of the organic law of the Banco de Portugal,
as amended by decree-law No 337/90, shall remain in force up to 28 February 2002, from which date they shall bedeemed revoked.
410. The ECB welcomes the new wording of Article 65  of the organic law of the Banco de Portugal
as it ensures consistency with the provisions of  the first draft decree-law on the dual circulation
of banknotes and coins denominated in euro and in escudos, namely with Article 2 of that legalact; and embodies a necessary legal adaptation to the organic law of the Banco de Portugal inview of the cessation of the legal tender status of banknotes and coins denominated in escudos.As a consequence, Article 6(1) of the organic law of the Banco de Portugal law, in the wordingset forth by Law 5/98 of 31 January, will become the only provision in the organic law of theBanco de Portugal dealing with banknote issuance. In this respect, the opportunity could be usedto update the reference made in Article 6(1) of the organic law of the Banco de Portugal law tothe EC Treaty, as Article 105a was renumbered by the Amsterdam Treaty as Article 106.
11. The ECB confirms that it has no objection to this opinion being made public by the competent
national authorities at their discretion.
Done at Frankfurt am Main on 26 January 2001.
The President of the ECB
[signed]
Willem F. DUISENBERG