A4-0379/96

Resolution embodying the opinion of the European Parliament, pursuant to Article 109j, paragraph 2 of the EC Treaty, on the 1996 convergence decision by the Council, meeting in the composition of the Heads of State or of Government

The European Parliament,

- having been consulted by the Council pursuant to Article 109j(2) of the EC Treaty (11505/96 - C4-0586/96),

- having regard to the report from the Commission on convergence in the European Union in 1996 (COM(96)0560),

- having regard to the Commission recommendation for a Council decision in accordance with Article 109j(2) of the Treaty,

- having regard to the report of the European Monetary Institute on progress towards convergence 1996,

- having regard to the Council recommendation in accordance with Article 109j(2) of the EC Treaty,

- having regard to Rule 139 of its Rules of Procedure,

- having regard to the report of the Committee on Economic and Monetary Affairs and Industrial Policy (A4-0379/96),

A. whereas the convergence criteria themselves contain much room for interpretation, which was intended by the drafters of the Treaty,

B. whereas the convergence reports of the Commission and the EMI very rightly underline the existing flexibility of the convergence criteria according to the Treaty,

C. whereas an interpretation of the criteria as envisaged in the Treaty is likely to enable a sufficient number of Member States to participate in the third stage of EMU from the start,

D. whereas a purely arithmetical application of the criteria is not possible and an attempt to do so would not enable a sufficient number of Member States to participate in the third stage of EMU from the start,

E. whereas Article 3 of the convergence criteria protocol defines participation in the Exchange Rate Mechanism as the fact that a Member State has respected the normal fluctuation margins provided for by the Exchange Rate Mechanism,

F. whereas both the application of the government deficit and of the government debt criterion require extensive assessment and interpretation, with which accordingly the number of qualifying Member States can be extended or restricted,

1. Agrees with the Council recommendation that there is not now a majority of Member States fulfilling the necessary conditions for adopting the single currency;

2. Welcomes the informative nature of the Commission report with regard to the criteria and the possibility of interpretation thereof;

3. Reiterates that Article 104c(2) of the Treaty provides that the fiscal criteria of 3% and 60% are reference values, that can be exceeded if the ratio of public deficit to gross domestic product has declined substantially and continuously and reached a level that comes close to the reference value, or the excess over the reference value is only exceptional and temporary and the ratio remains close to the reference value, or the ratio of public debt to gross domestic product is diminishing sufficiently and approaching the reference value quickly enough;

4. Takes note of the extended sections in the reports of the Commission and the EMI on the legislative requirements with regard to the independence of the national central banks;

5. Takes note that these sections are not yet exhaustive according to these Institutions themselves and at the same time partly open for discussion;

6. Decides to address these problems more extensively including the following themes in separate reports:

- The Institutional Imbalance of the ECB

- Public Acceptability and Third Stage of EMU

- The International Aspects of EMU

- ECB Representation at the IMF and the World Bank;

7. Notes that the EMI report rightly mentions the problem of funding pension commitments in relation to the fiscal convergence criteria and proposes to examine these problems in a separate report;

8. Welcomes the fact that an impressive degree of nominal convergence has already taken place, with a historically low inflation rate, low long-term interest rates and exchange-rate stability, which should enable a majority of Member States to participate in the third stage of EMU on 1 January 1999;

9. Recommends that the imperfect state of harmonization be taken into account when assessing the degree of convergence on inflation; points out that, measured with the existing, still imperfect, tools, inflation has converged impressively, and has fallen to a historically low level;

10. Is convinced that the advantages of Monetary Union for the economic growth of Europe exceed, by a wide margin, the remote risks of any revival of inflation that might be due to a slight temporary exceeding of the 3% deficit criterion;

11. Recommends to the Commission and the Ecofin Council that the excessive deficit decisions should be abrogated as soon as possible, i.e. as soon as the excessive deficits in the Member States concerned have been corrected and no longer exist, in accordance with Art 104c(12) of the Treaty; full account should be taken of the adverse influence of the economic cycle in which Member States find themselves and of that part of the deficit due to government investment spending;

12. Calls on the EMI Council, the Commission, the Ecofin Council and the Council meeting in the composition of the Heads of State or Government to make full use of the assessment margin incorporated in Article 104c(2) of the EC Treaty and to respect the same interpretation for the assessment margins for the stability pact;

13. Is confident that the third stage of EMU will start with a sufficient number of Member States on 1 January 1999;

14. Recommends that the convergence criteria should be applied equitably to all Member States;

15. Recommends considering whether formal ERM membership is necessary for the assessment of the criterion on exchange rate stability. Respecting the present normal fluctuation margins, if necessary around a notional central rate and non-devaluation against other currencies, could be sufficient to pass the test on this criterion;

16. Recommends that those Member States with an opt-out clause, that is to say the United Kingdom and Denmark, just like the other Member States do everything necessary to be among the Member States that can participate in the third stage of EMU from 1 January 1999 onwards;

17. Recommends to the Council, meeting in the composition of the Heads of State or Government, to decide that the procedure laid down in Article 109j(4) will be applied in 1996 and that the third stage of EMU shall start on 1 January 1999;18. Instructs its President to forward this resolution to the Council, meeting in the composition of Heads of State or Government, the Council and the Commission.