COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 05.11.1997 
COM(97) 560 final 
COMMUNICATION FROM THE COMMISSION 
THE IMPACT OF THE CHANGEOVER TO THE EURO 
ON COMMUNITY POLICIES, INSTITUTIONS AND LEGISLATION 

THE IMPACT OF THE CHANGEOVER TO THE EURO ON COMMUNITY 
POLICIES, INSTITUTIONS AND LEGISLATION 
Table of content 
Page 
A. INTRODUCTION, 4 
B. IMPACTS OF THE CHANGEOVER IN CERTAIN 4 
SECTORAL AREAS 
B.1 Community budget 4 
B.2 Agricultural policy 6 
B.3 Administrative expenditure 8 
C. THE CHANGEOVER OF COMMUNITY LEGISLATION 10 
C. 1 The legal framework for the euro 10 
C.2 The main implications of the euro for EU 10 
legislation 
D. OPERATIONAL ASPECTS OF THE CHANGEOVER 15 
D.1 Treasury and financial management 15 
D.2 Statistics 16 
D.3 Informatics 18 
D.4 Other 18 
E. CONCLUSIONS 20 
Annexes: 21 
1. Execution of payments from the 1996 budget 21 
2. Impact of the changeover on policy areas managed 23 
separately from the Community budget 
3. Estimated agri-monetary gaps for 1997 based on the 25 
situation on 01/10/1997 
4. Changeover of remunerations: related issues 26 
5. The introduction of the euro in Community secondary 27 
legislation 
6. Types of euro sensitive threshold and ceiling clauses in 29 
legislation 
7. Guidelines on the legal changeover of monetary references 30 
8. Overview of the impact of the changeover on Community 34 
legislation 
CUSTOMS 
Customs Code 35 
COMMON AGRICULTURAL POLICY 
Agrimonetary regime 38 
FREEDOM OF MOVEMENT FOR WORKERS 
Social security of migrant workers 40 
INTERNAL MARKET 
Cultural objects 41 
Public procurement 42 
Banking 44 
Insurance 46 
Securities 49 
Company Law 51 
Accounting 53 
Defective products 55 
Intellectual property 57 
INDIRECT TAXATION 
VAT legislation 58 
COMMON COMMERCIAL POLICY 
Export Credits 61 
EXTERNAL RELATIONS 
International agreements 63 
CONSUMER PROTECTION 
Consumer credits and certain other contracts 64 
BUDGETS 
Financial Regulation 65 
ADMINISTRATIVE EXPENDITURE 
Remunerations and pensions 66 
THE IMPACT OF THE CHANGEOVER TO THE EURO 
ON COMMUNITY POLICIES, INSTITUTIONS AND LEGISLATION 
A. INTRODUCTION 
1. The present communication intends to provide a comprehensive 
assessment of the impact of the changeover to the euro at Community level 
and the resulting effect on Member States. It reflects the outcome of 
preparatory work within the Commission, involving each of its services, and 
of contacts with representatives of the other Community institutions and 
organs. 
This preparatory work has covered in particular the following areas: 
the practical consequences for Community policies; 
the euro-compatibility of Community legislation; 
the impact in the technical and operational sphere (information 
technology, administrative changes, information and training of staff, 
etc.). 
2. Besides the assessment of the various consequences of the transition to 
the single currency, this communication will also provide an overview of all 
work (legislative and other) which will need to be carried out before and 
after the start of Stage Three. This work programme is presented in detail 
in annex 8. 
Part of these preparations will involve other Community institutions, for 
example whenever specific legislation needs to be enacted. In addition, 
this legislation initiated at Community level will produce a direct or indirect 
impact at Member State level. In this respect, the present communication 
will assist both the Member States and the Community institutions in 
general in the finalisation of their own internal preparations. 
B. IMPACTS OF THE CHANGEOVER IN CERTAIN SECTORAL AREAS 
B.1. COMMUNITY BUDGET 
3. The present legal framework (Art. 11 of the Financial Regulation) enshrines 
a situation in which the Budget is cast in ECUs but both revenue 
(resources) and expenditure are wholly or partly realised on the basis of 
national currency values: 
On the revenue side, the contributions are paid by Member States in 
national currency. The traditional own resources are paid as collected 
(less a 10 % collection charge retained by Member States), whereas 
the provisional VAT and GNP contributions are determined and paid 
according to a formula which involves two ECU exchange rates (1st of 
February, last working day of the year)1. 
On the expenditure side, a significant part of the overall appropriations 
are presently committed and paid in ECUs (e.g. Structural Funds, 
research, other operational sectors, etc.). Generally speaking, all 
expenditure is executed in ECUs, except the payments obligations 
under the Guarantee section of the EAGGF as well as the 
administrative budget (of which staff remunerations and pensions form 
a major part). In relative terms however, CAP expenditure represents 
more than half (almost 52 % of payment appropriation in 1996) of total 
Community budget expenditure, and administrative expenditure a 
further 3.5 % (see table in annex 1A). Both areas are examined in 
greater depth in sections B.2 and B.3. 
4. Operations carried out in national currency, as opposed to ECUs, result in 
the Community budget having to bear the exchange risk associated with 
the movement of national currencies. This is presently the case on the 
revenue side and, to a lesser extent, the expenditure side. 
With the introduction of the euro, the participating Member States will have 
their currency in common with the Community budget. Exchange rate 
effects will vanish as far as these countries are concerned, while remaining 
in place for the other ones. Generally speaking, exchange risks will thus 
be considerably mitigated, both for resources and for expenditure. 
As from 1 January 1999, the Commission intends, as a general rule and as 
far as budget expenditure payable in participating Member States is 
concerned, to make use of the possibility offered to a debtor to settle his 
debt in the euro unit2. 
5. The immediate benefits resulting from monetary union could be 
consolidated and even reinforced through complementary measures. This 
would for instance be the case if, whenever feasible, the use of the euro 
were to be extended in all Member States to those areas of budgetary 
expenditure which are currently still executed in national currency 
(guarantee section of the EAGGF, administrative expenditure, ...). As far 
as the "pre-in" countries are concerned, the underlying payment obligations 
would however continue to be expressed in national currency units i.e. the 
An adjustment mechanism rectifies all provisional contributions in year "n+1", so that the definitive 
contributions correspond to the tax basis in national currencies, as effectively realized in year "n". 
By virtue of article 8.3 of Council Regulation .../98 on the introduction of the euro, based on EC Art. 
109.1(4), which will be adopted in mid-1998, once the list of participating Member States has been 
decided. See also: Resolution of the Council of 7 July 1997 on the legal framework for the 
introduction of the euro (OJ C236 of 2.8.97, pp. 7 - 12). 
exchange risk would thus continue to be borne by the budget3. Further 
information is provided in annex 8 (see fiche on the Financial Regulation). 
6. The changeover to the euro will produce further consequences on the 
operation of the Community budget, in particular as far as treasury 
operations and financial management is concerned. Because of their 
operational character, these impacts are dealt with in section D. 
Revenue and expenditure under the ECSC and EDF budgets are governed 
by distinct rules (see description in annex 2). In both cases, contributions 
and payments are expressed in ECUs, and the changeover is therefore 
expected to occur in a straightforward manner. 
B.2. AGRICULTURAL POLICY 
7. Under present agrimonetary rules, prices and other amounts are 
established in ECUs, although they are paid or collected by Member States 
in national currency. To this effect, the agricultural conversion rates are 
being used, while the date of the operative event4 serves as the reference 
date for the conversion. The agricultural conversion rates follow the 
evolution of the daily exchange rate with certain lags, the latter being more 
important in case the national currency appreciates vis-à-vis the ECU than 
in the opposite case. Whenever a monetary revaluation gives rise to an 
important decrease in the agricultural conversion rate, and hence in the 
level of prices and amounts expressed in national currency, temporary 
financial support can be granted in order to compensate farmers for 
revenue losses. 
8. Each month, the guarantee section of the EAGGF reimburses the Member 
States in their national currency for the expenditure made under the CAP. 
For budgetary accounting purposes, these payments are converted into 
ECUs at the accounting rate5. The system thus gives rise to systematic 
discrepancies between prices and other amounts as fixed in ECUs in the 
CAP, and the amounts which are eventually entered into the budgetary 
accounts. The table in annex 3 shows that the gaps between agrimonetary 
4 Already in the course of 1994, the Commission tabled a similar proposal, which consisted in 
amending Art. 11 of the Financial Regulation so as not only to label the budget in ECUs, but also to 
execute it in ECU, except where sectoral Regulation provide otherwise. At that time, a few Member 
States had raised reservations on this generalized use of the ECU, although on specific grounds 
which are not directly relevant to the present situation. 
The date at which the economic purpose of the operation has been attained, as defined in CAP 
legislation. 
The accounting rate corresponds to the exchange rate of the ECU on the 10th day of the month 
following the month during which the expenditure has been reported. 
conversion rates and market rates are generally below 3 to 4 % in most 
areas of intervention, although peaks in excess of 10 % may be reached for 
certain countries and sorts of amounts. As a rule of thumb, an overall 
difference of 1 % between conversion rates and market rates roughly 
corresponds to ECU 400 million of expenditure. 
9. Following the introduction of the euro on 1.1.1999, the agrimonetary regime 
will be affected in different ways: 
in the case of a participating Member State, the Community budget will 
in principle reimburse earlier expenditure made in euros by the Member 
State concerned, without any need for further adjustment or conversion 
(elimination of exchange risk). 
for the "pre-in" countries, the need for a conversion rate will persist in 
order to use the funds in these Member States. However, this does not 
imply that the existing system should necessarily be carried over in its 
present form. Some or all of the key elements (agricultural conversion 
rates, operative events, accounting rates, etc.) could, for instance, be 
redefined. 
10. The transition to the new agrimonetary regime will require the settling of a 
certain number of technical difficulties' 
for the "ins", the difference between the agrimonetary arrangements 
(between ECUs and national currencies) prevailing at the end of 1998 
and the fixed and irrevocable conversion rates (between the euro and 
the national currencies of the participating countries) will have to be 
dismantled in a way which remains to be defined; 
a similar transition might prove necessary for the "pre-ins" if the 
agricultural conversion rates are defined in a different manner from 
1.1.1999 onwards; 
technical adjustments will prove indispensable in order to manage the 
transition from the old regime into the new one. For example, 
transactions based on operative events dating back to 1998 or before, 
will have to be executed on the basis of old rules. 
11. In any event, Commission proposals should be based on relatively reliable 
estimates of the aggregate gaps to be eliminated and thus notably take 
account of the list of participating Member States, as well as of the 
evolution of markets in the run-up towards monetary union. Specific 
proposals will be tabled towards the end of the first half of 1998, and would 
enter into force on 1.1.1999 (see also annex 8). Adjustments to the 
agrimonetary regime will also apply to the fisheries sector, more specifically 
for all amounts directly or indirectly fixed on the basis of Art. 43 of the 
Treaty. 
B.3. ADMINISTRATIVE EXPENDITURE 
12. For all Community institutions and organs combined, these expenses 
represent about ECU 2.7 billion in absolute terms (1996 figures), and 
correspond to about 3.5 % of the overall budget (1996 payment 
appropriations). The payment of remunerations and pensions constitutes 
by far the largest part of this category of expenditure, and is paid in 
national currency (see annex 1B). This is also the case for office rents and 
corresponding maintenance expenditure. 
13. The calculation and payment of staff remunerations is based on the staff 
regulations (Arts. 63 to 65)6. This method is based upon the following 
principles: 
remunerations are calculated and paid in the national currency of the 
country in which the official is established7 ; 
the monthly remuneration level in national currency remains fixed 
(subject to one or two annual adjustments in order to take account of 
the evolution of prices and of the purchasing power of national 
officials). As a consequence, the budgetary expenditure expressed in 
ECUs varies each month. With the introduction of the euro, this 
exchange risk will obviously disappear for all remunerations or 
pensions paid to officials established in participating Member States, 
purchasing power equivalence is ensured through the adjustment of the 
remunerations of the officials established outside 
Brussels/Luxembourg. To this effect, a correction coefficient is applied 
which, in combination with a fixed exchange rate, takes account of the 
general price level in comparison with B/L. 
14. The majority of Community staff are concentrated in just a few Member 
States. Some national currencies therefore have a more than proportional 
weight in the overall totals. For example, about 90 % of the 29.650 
Community officials working for the different institutions and organs are 
established in Brussels or Luxembourg. A majority of pensioners (55 % of 
the 8.350 pensioners) also lives in Belgium or Luxembourg. The 
significance of the impact of the changeover will thus be primarily 
conditioned by the participation of Belgium and Luxembourg in monetary 
union. Some other categories of expenditure are closely connected to the 
remuneration system (see annex 4) and will thus be affected in a similar 
manner. 
Generally speaking, the same provisions are applicable to pensions, which are calculated in a 
comparable manner. 
Community staff established in countries outside the European Union are, as a general rule, 
remunerated in BEF, with the possibility to exchange part of their salary in local currency. 
15. In the present situation, the salary grid, as well as all other financial 
amounts (thresholds, ceilings, ..) in the staff regulations are expressed in 
BEF. In case Belgium joins the euro area, the changeover of these 
amounts to their euro equivalents at the official conversion rates would, if 
there were no further legislation, only take place at the end of the 
transitional period (31.12.2001) in accordance with the provisions of the 
euro Regulation on the introduction of the euro*. 
Because of the symbolic value and political significance of the 
remuneration of Community staff, it would be appropriate to ensure that all 
staff regulations would be expressed in euro terms as from the start of 
Stage Three (1.1.1999). This immediate transition to the euro would result 
from a horizontal changeover clause (see fiche on remunerations and 
pensions in annex 8) which would reduce the length of the transitional 
period to nil in this particular area, and thus anticipate the transformation in 
euros of all monetary references presently expressed in BEF. This clause 
would ensure the immediate changeover, as from 1.1.1999, of the currency 
unit in which the legal rights in the field of staff remunerations and pensions 
are being fixed and expressed (as distinct from the currency unit in which 
these remunerations and pensions are actually being paid out). It should 
moreover be noted that, although this operation leaves the substance (i.e. 
the final amounts received by the staff) entirely unchanged, all the pay slips 
would be expressed in euro and the remunerations and pensions would be 
paid in euro in the participating countries and in the national currencies in 
non-participating countries. 
16. Finally, an important and well prepared information campaign will be 
launched, in order to fully brief Community staff on the euro in general and 
on the changeover of their remunerations and pensions in particular. This 
campaign should be launched well in advance of 1.1.1999,. and prepared in 
consultation with the unions. Specific information efforts should be 
undertaken towards the Community's pensioners, for whom information 
might otherwise be less readily accessible. The campaign will be prepared 
and launched in parallel in all Community institutions. 
Article 14 of Council Regulation .../98 on the introduction of the euro, based on EC Art. 109.1(4), 
which will be adopted in mid-1998, once the list of participating Member States has been decided. 
See also: Resolution of the Council of 7 July 1997 on the legal framework for the introduction of the 
euro (OJ C236 of 2.8.97, pp. 7-12). 
C. THE CHANGEOVER OF COMMUNITY LEGISLATION 
C.1. THE LEGAL FRAMEWORK FOR THE EURO 
17. The legal framework for the transition to the euro is provided by the two 
euro Regulations9 (see summary description in annex 5). These 
Regulations will ensure a smooth transition, based on the principle of legal 
continuity. Besides settling certain practical questions (e.g. conversion and 
rounding rules) these Regulations also set out the basic monetary law in 
the participating Member States. 
As far as the replacement of monetary references in legal instruments (i.e. 
laws, contracts, etc.) is concerned, the following provisions are foreseen: 
as of 1.1.1999, references to the ECU will become references to the 
euro on a 1 to 1 basis; 
as from 1.1.2002, references to national currency units will read as 
references to the euro unit at the conversion rates. 
18. Community legislation is directly affected by the two euro regulations. A 
guided search through the Celex data base, which includes all Community 
legal acts (including international agreements), has identified the texts 
(about 4000 in total) which are concerned by the changeover, i.e. the ones 
which contain references of a monetary nature (amounts expressed in 
ECUs or national currency, references to interest or exchange rates, 
conversion and rounding clauses, etc.). The Commission services have 
carried out a detailed screening of this legislation with a view to ensuring 
that each of these texts would be fully "euro-compatible" on 1.1.1999. It 
appears that the large majority of these texts only contain simple 
references to ECU amounts. At administrative level, contracts and other 
agreements signed with third parties (suppliers of goods and services, 
experts, etc.) have also been screened. 
C.2. THE MAIN IMPLICATIONS OF THE EURO FOR EU LEGISLATION 
a) References to amounts, ceilings, thresholds, etc. expressed in ECUs 
19. The first and most obvious implication for EU legislation is caused by the 
fact of the ECU being replaced by the euro on 1.1.1999. At a technical 
level this is relatively easy to adapt to, given the fact that, unlike in the case 
1. Council Regulation 1103/97 of 17.6.1997, based on EC Art. 235, on certain provisions relating to 
the introduction of the euro (OJ L162 of 19.6.1997, pp. 1 - 3). 
2. Council Regulation .../98 on the introduction of the euro, based on EC Art. 109.1(4), which will be 
adopted in mid-1998, once the list of participating Member States has been decided. See also: 
Resolution of the Council of 7 July 1997 on the legal framework for the introduction of the euro (OJ 
C236of2.8.97, pp. 7-12). 
10 
of national currencies, the rate of 1:1 is already known and indeed already 
certain. 
In the case of simple references where the agreed Community figure for, 
say the minimum capital of a credit institution, is expressed as 
ECU 5 million, it is clear that with effect from 1.1.1999, the figure in the 
directive will legally speaking, have changed to euro 5 million as a result of 
the euro regulations, without any other action needing to be taken either at 
EU level or at national level, provided that national legislation is in 
compliance with Community law. Simple references are those references to 
current values where the value of the ECU figure has to be respected in 
national currency equivalent at all times (e.g. in the context of a regulation 
or directive which is applicable in all Member States). 
20. The case becomes more complex if the common figure in ECUs in a 
Community legal instrument is accompanied (as a great many are) by a 
clause on the conversion to the respective national currencies. Typically 
such clauses provide a reference date (or formula) for converting ECU 
amounts into national currency, often allowing for some degree of rounding 
by national authorities (e.g. up to 10 % of the size of the amount) in order 
to arrive at suitable amounts expressed in national currency. The 
converted amounts are then frozen until the next review in one, two, three 
or occasionally more years (revision clause). In some cases, the clause 
requires Member States to adjust if its currency has fluctuated beyond a 
certain tolerance margin, hence leading to revisions without a fixed 
periodicity and actually at different times and frequencies for each Member 
State. Still other provisions use a conversion rate applicable on a given 
date without any possibility of revision. The table in annex 6 provides a 
typology of the most common conversion clauses in Community legislation. 
21. Two principles need to be kept in mind when interpreting the relevant 
legislative texts: 
under the principle of legislative continuity the amounts which have 
already been fixed under a directive at national level for a 
predetermined period of time should arguably not be changed 
immediately as a result of the introduction of the euro. Under this 
principle, the various amounts in national currency units could be 
retained for some time during the transitional period, notably because 
of the fact that national currency units will continue to constitute the 
reference in each Member State until the end of 2001, in view of the 
"no compulsion, no prohibition" principle; 
under the principle of legislative coherence (and of equal treatment 
among the "ins") it is arguable that all such harmonised Community 
amounts should be "re-based" with effect from 1.1.1999, in order that 
the participating Member States should apply identical values from then 
onwards, hence ensuring equal treatment amongst them. The rounding 
option would consequently become void for the "ins", as there will no 
H 
longer be a possibility to convert at any different rates than the 
irrevocable conversion rates. 
22. The preferred policy approach will be constrained by the above legal 
principles. The result will depend on the precise wording used in the 
legislation concerned. Because such monetary conversion clauses exist in 
large numbers and varieties, the Commission has worked out certain 
guidelines and decision criteria presented below, which are destined to 
ensure consistency across policy areas and to avoid unnecessary 
legislation. In certain policy areas, this approach has already been 
discussed with Member States in order to verify its practical implications. 
In those cases where amounts in Community legislation give rise to 
payment obligations (e.g. from the part of the Community budget), a strong 
case exists in favour of equal treatment, under the principle of legislative 
coherence, and hence the earliest possible alignment (i.e. on 1.1.1999). 
For amounts which are being used as legal references (e.g. thresholds, 
ceilings, etc.), the situation will notably depend on whether the text contains 
an automatic revision or currency fluctuation clause (which is not 
systematically the case) and whether rounding is allowed: 
in the absence of a revision clause (e.g. the "fixed date" clause), the 
principle of continuity might lead to a situation where the amounts in 
national legislation would never converge in euro terms for the "ins", 
even after 1.1.2002. In those cases, specific legal steps (e.g. 
amendment of the conversion clause, possibly combined with the 
introduction of an automatic revision clause for the pre-ins) might be 
appropriate to ensure identical euro values, at least from 1.1.2002 
onwards; 
in the case of revisions with fixed frequency (e.g. pre-scheduled 
revisions the timing of which is fixed in advance under the instrument), 
the underlying approach should preferably be based on continuity in 
1.1.1999, up to the first revision occurring after this date. At this first 
revision, the revision clause is generally no longer applicable for the 
"ins" to the extent that it has become void of purpose (it aims to 
compensate for currency fluctuations), and the conversion rates 
consequently become directly applicable. The revision process 
however remains unaffected as far as the "pre-ins" are concerned, 
in the case of revisions with variable frequency (e.g. currency 
fluctuation clauses), the purpose of the clause consists in keeping the 
national figures as close as practicable to the figure in Community law. 
These clauses therefore become inapplicable for "ins" with effect from 
1.1.1999 and participating Member States should thus proceed with the 
adjustment of their national figures to the national currency equivalent 
of the amount stated in Community legislation. 
12 
Member States can however continue to apply rounding clauses if they 
so wish, as the underlying rationale for such clauses (i.e. determining 
suitable amounts in national currency units) continues to be applicable 
during the transitional period. For the "ins", such clauses however 
become void at the end of the transitional period and the Member 
States which have decided to make use of them should thus take steps 
to ensure that the euro amount contained in Community legislation also 
becomes applicable at the level of national legislation on 1.1.2002 at 
the latest. For consistency reasons, it would often be desirable for 
participating Member States to refrain from using the rounding faculty. 
23. The consistent application of the guidelines described above will ensure 
overall coherence of Community legislation. In those instances where the 
outcome is not deemed appropriate from a policy point of view, specific 
measures (e.g. tabling of amendments, or even new legislation) will be put 
forward. A more extensive description of the guidelines is provided in 
annex 7. The outcome of the Commission's detailed examination of 
Community legislation, and any complementary measures envisaged, is 
described in a series of technical fiches (see annex 8) which cover different 
areas of Community policy. The fiches moreover illustrate the application 
of the guidelines. 
In most instances, these fiches take the form of "clarification notes", 
providing the legal interpretation of the meaning and effect of the various 
clauses in the light of the introduction of the euro. In other cases, the 
fiches describe why and when the Commission intends to table legislation. 
In a number of cases, the Commission has already discussed certain legal 
interpretations with the Member States, e.g. in the framework of Committee 
meetings. All such texts are currently available"1. 
In addition, much Community texts require implementation by Member 
States (e.g. transposition of a Directive into a national legal text, regular 
update as necessary of "current value" clauses in Directives). Such texts 
should be continuously monitored for conformity by Member States. 
24. Numerous references exist in EU legislation to "national currencies". 
These references do however not become obsolete as far as the "ins" are 
concerned by the mere fact that several Member States will have the same 
currency as from 1 January 1999. They clearly remain in full effect for the 
"pre-ins"; as for the "ins" they clearly refer to the euro as the currency and 
will generally be interpreted as referring to the "national currency unit" of 
the euro until 2002. 
m Insurance Committee (XV/2049/97), Banking Advisory Committee (XV/1057/97), Consultative 
Committee on Public Procurement (CC/97/11 and CC/97/26), Consultative Group on Accounting 
Legislation (XV/7002/97). 
13 
b) Cases requiring a specific solution 
25. In a small minority of the cases which have been screened, the result of 
applying continuity would lead to an unsatisfactory result, either by not 
providing the answer to a technical problem or by leading to a legal or 
economic anomaly. Such cases are relatively small in number and will 
have to be dealt with on a case by case basis. They often require ad hoc 
legislation and are also covered in annex 8. 
An example is the difficulty which can arise when reference is being made 
to specific interest rates (e.g. in the context of penalty clauses). Some of 
these rates will no longer be available once the euro is introduced. In 
some cases, a major revision will prove necessary as will for instance be 
the case for the present system of minimum interest rates (called CIRR 
rates), which applies to the various currencies being referred to in the 
OECD Arrangement on Officially Supported Export Credits. The euro's 
entry on the stage will require a rethinking of existing methods for setting 
these minimum rates, as far as participating Member States are concerned 
(see fiche on export credits in annex 8). 
c) Implications for agreements with third countries 
26. A large number of bilateral agreements exist between the Community and 
third countries covering diverse fields (e.g. insurance, fisheries, etc.). 
Usually these agreements include monetary references and all therefore 
affected by the introduction of the euro. Having until the end of 1998 been 
based on financial obligations and references expressed in ECUs, they will, 
" without any specific action by any party, be automatically converted into 
euro by the euro regulations. As a result of international monetary law 
doctrine, which is widely accepted as covering the ECU, there is formally 
speaking no need to "negotiate" the change to euro with the partners 
involved. Indeed this is fortunate given the long procedural steps that it 
would take to formally amend such agreements. For practical reasons, 
some form of information towards the parties concerned in advance of 
1.1.1999 would be advisable (see fiche on international agreements in 
annex 8). 
14 
D. OPERATIONAL ASPECTS OF THE CHANGEOVER 
D.1. TREASURY AND FINANCIAL MANAGEMENT 
27. As a result of the situation described in section B.1, whereby virtually all 
inflowing revenues are contributed in national currencies, while about half 
of the expenditure is paid out in ECUs, the Commission's treasury 
department is presently confronted with an important and structural shortfall 
of ECUs. Because of this ECU "deficit", the treasury needs to buy between 
ECU 33-35 billion per year on the open market, normally using the 
currencies of the Member States which are net contributors to the Budget. 
The changeover to the euro, and the accompanying inflow of resources 
paid in euros, will tend to close the loop and thus drastically reduce the 
need for these massive currency purchases. As from the start of Stage 
Three, the Commission's foreign exchange transactions will thus represent 
a much smaller proportion of budgetary receipts and payments than is 
presently the case. The significance of this reduction will notably depend 
on the respective sizes of the euro and non-euro areas. 
28. A second factor will contribute to this reduction of foreign exchange 
activities. Member States pay their contributions to the Budget via "own 
resource" accounts, which are either kept at the Treasury of the Member 
State concerned, or otherwise at their central bank. The Commission's 
treasury department subsequently draws on these accounts in order to 
cover the Community's payment obligations. Once or twice a month, the 
Commission issues a series of transfer orders between these accounts, so 
as to ensure that the outstanding amounts on these 15 accounts are 
roughly proportional to the budgetary contribution of each Member State11. 
The foreign exchange operations resulting from this monthly rebalancing 
exercise (which currently represents about ECU 1.5 billion per month on 
average) will be greatly reduced from 1 January 1999 onwards, as many 
transfers will simply be carried out in euros without the need to convert 
currencies. 
29. The overall reduction of the number of currencies which results from the 
introduction of the euro will have further beneficial effects in terms of 
currency and account management. The Commission presently keeps at 
least two commercial bank accounts in each Member State, one of which is 
used for operations in national currency, while the other is used for ECU 
operations. In the participating countries, the two accounts will eventually 
be merged into a single one (by 1.1.2002 at the latest). It is being actively 
considered to proceed with this simplification at an early stage of the 
This rebalancing requirement results from Art. 12.4 of Council Regulation 89/1552 of 29.5.89 on the 
system of the Communities' own resources. 
15 
transitional period. Discussions with financial institutions as regards the 
practical aspects of payment operations during the transitional period and 
beyond are ongoing. 
30. In its role of borrower under the EC, ECSC and Euratom Treaties, the 
Commission will determine its position as regards the redenomination in 
euros of its outstanding debt issues in the light of the decisions of 
participating Member States on the question of redenomination. As it 
stands presently, most of the debt issued by the EC, the ECSC and 
Euratom will have been redeemed prior to 1999. A majority of the 
remaining debt is denominated in ECU and does not require any specific 
action at the time of the changeover. Other remaining debt consists of 
small issues and consequently redenomination is not seen as an essential 
priority. 
On the lending side, the debtors might be willing to accept the 
redenomination of their debt in euros. Debtors will also be reminded of 
their right to switch to the euro for all payments relating to loans expressed 
in the currencies of participating Member States. 
31. The Commission through its treasury department intends to establish 
working relations with the ECB as far as the conduct of its financial 
operations are concerned, notably with a view to further simplifying and 
rationalising existing money flows whenever possible and appropriate. The 
Commission is currently discussing with the EMI how it could participate, 
on a voluntary basis, in the ECB's future system of notification of large 
foreign exchange transactions, which will form part of the Bank's monetary 
policy supervision instruments. 
D.2. STATISTICS 
32. A significant number of Eurostat's statistical time series are expressed in 
monetary units and therefore directly concerned by the changeover. Some 
of these monetary series are expressed in national currencies (primary 
series), while others are expressed in ECUs (common reference series). 
The former are usually the primary series, while the latter are mostly used 
for comparisons and/or aggregations (e.g. computation of Community 
GDP). Other series, such as the ones on price indices, are also 
concerned, although in an indirect manner. 
33. Eurostat's preparatory work on the practical consequences of the 
changeover to the euro has been conducted in the framework of the 
Working Group of Statistics within the EMI (where IMF and BIS also 
participated). Member States have also been associated through the 
Committee on Monetary, Financial and Balance of Payments Statistics. In 
addition, Eurostat has proposed the creation of a specific LEG (Leadership 
16 
Group; a new form of partnership between Commission and Member 
States) on the euro. The LEG will prepare input which will help Member 
States for the changeover of their national statistics to the euro. In the 
present case, INSEE in France will take the lead, while Finland, Germany, 
Italy, Luxembourg, the Netherlands and Spain are also represented in the 
group. 
34. The main operational conclusions reached so far by Eurostat are 
summarised hereunder: 
primary time series (expressed in national currencies) of participating 
Member States will be rescaled, by dividing them by the conversion 
rate, as far as the data prior to 1.1.1999 are concerned (data 
expressed in the currencies of the "pre-in" countries remain 
unaffected): this ensures continuity of statistical figures and also leaves 
all statistical properties of the series intact (e.g. growth rates, etc.). 
Three other solutions are still being discussed (keeping heterogeneous 
series, publishing only the data in ECUs, developing a specific solution 
for each series); 
common reference time series (expressed in ECU at the exchange rate 
published in the O.J. of the EC) remain unaffected as far as the pre-
1999 figures are concerned. Subsequent data will be expressed in 
euros. 
new statistical aggregates will be produced for the euro zone, together 
with corresponding statistics for the pre-in countries which do not yet 
belong to this zone. 
These recommendations apply only for the publication of the data. A 
common conversion policy is to be preferred for the whole European 
Statistical System. 
35. The fixing of exchange rates and their publication have to be ensured for a 
variety of purposes, notably references in legal texts. Following the 
request from market practitioners for the daily publication of reference rates 
for the euro by an official and authoritative body, the EMI has stated its 
intention to propose that the ESCB would be responsible for the publication 
of these rates (cf. EMI policy message issued on 1 July 1997). This will 
also ensure legal continuity in respect of the present daily publication by 
the Commission of ECU exchange rates, which are often referred to in 
Community legislation. 
The need for appropriate interest reference rates for the euro also merits 
attention, notably because of their application in certain areas (export 
credits, ..) and by external users. This would moreover ensure continuity in 
respect of the present ECU Yield Curve model. Different technical and 
methodological questions are currently being examined. 
17 
D.3. INFORMATICS 
36. The introduction of the euro will have an impact on existing information 
systems in the different Community institutions, as will the millennium 
problem which is largely concurrent. The necessary adjustments to 
computer programmes are in general prepared and implemented in a 
decentralised manner. 
As far as the Commission is concerned, a specific working group 
"Euro/Year 2000" has been created in order to support the efforts of the 
different services in preparing their systems for both events. The group is 
establishing an inventory of all major systems and programmes which will 
be concerned be either of these two questions. From a first survey, it 
appears that the efforts in the informatics field relating to the euro will be 
concentrated in the following areas: statistical data bases, treasury 
operations (budgetary receipts and payments), contract follow-up and 
agricultural monetary systems. In each of these areas, it is foreseen that 
work will be completed in time for the transition to Stage Three. 
Finally, the Commission is preparing the integration of the euro symbol into 
the standard Commission informatics configurations. 
D.4. OTHER 
37. With the start of Stage Three approaching, the Commission is becoming 
increasingly involved in information and communication activities relating to 
the practical aspects of the changeover and the preparation of enterprises 
and citizens in this respect. Technical documents covering legal or 
financial subjects, which were originally prepared for internal Commission 
use, are often of interest for outside parties. Such papers are therefore 
increasingly made available for circulation outside the institution, 
particularly when they can assist third parties in their preparation to the 
changeover. Some of these internal reports actually result from specific 
inquiries or requests for clarification addressed to the Commission. 
A special series of euro-related publications, entitled EURO PAPERS12, has 
recently been launched in order to circulate documents of a technical or 
practical nature. The new series aims to assist economic agents and other 
parties in their preparations for the transition to the euro. In addition, 
EUROPA, the Commission's official Internet server, and the EURO site in 
particular (http://euro.eu.int) is increasingly being used to publicise these 
documents and all other material aimed at the general public. 
N°1 "External Aspects of Economic and Monetary Union", N°2 "Accounting for the introduction of the 
euro", N°3 "The impact of the introduction of the euro on capital markets", N°4 "Legal framework for 
the use of the euro", N°5 "Round Table on Practical Aspects of the Changeover to the euro", N°6 
"Checklist on the introduction of the euro for enterprises and auditors". 
38. As all Community institutions and organs are concerned by the changeover 
to the euro, albeit to varying extents, an informal inter-institutional network 
of contact points has been created with a view to foster the exchange and 
dissemination of information. The network will also ensure coordination of 
all actions of common interest (e.g. staff information campaign on the euro). 
Other fora for inter-institutional cooperation are the "Collège des chefs 
d'administration" (notably dealing with remuneration issues) and the 
"Comité Interinstitutionnel de l'Informatique". 
19 
E. CONCLUSIONS 
39. The Commission's overall assessment of the impact and practical 
consequences of the changeover to the euro is largely positive, both in 
relation to the effect on Community policies and to the internal functioning 
of the Commission and the Community institutions in general: 
the impact on the Community budget will be beneficial, both on the 
revenue and expenditure side: the exchange risk borne by the 
Community budget will for instance be substantially reduced, currency 
management will be facilitated, etc.; 
certain policy areas will be considerably simplified; the agrimonetary 
regime probably constitutes the most prominent example; 
while certain specific tasks will have to be undertaken in order to 
prepare a smooth changeover, the transition effort appears to be quite 
reasonable in relation to the benefits. For example, specific 
changeover legislation will be extremely limited, while the operational 
changeover is not expected to cause any disruptions provided ongoing 
preparations continue as scheduled. 
As far as the legislative changeover is concerned, the Member States will 
have a greater part of the task. This will have to be tackled in the context 
of their overall review of national legislation, in some cases with effect from 
1.1.1999, in most cases with effect from 2002 or before. 
40. The Community's changeover effort will largely be concentrated before 
1.1.1999, contrary to the changeover at national/regional/local level, where 
the transition effort will be spread over the entire length of the transitional 
period, and in a few instances be concentrated towards the end of it 
(1.1.2002), when national currency units will start to disappear. As 
Community financial operations are mostly ECU-based, the changeover to 
the euro will almost exclusively take place on 1.1.1999 i.e. without 
transitional period. Despite the fact that most adjustments will thus be 
"front loaded", the introduction of the euro will occur in a smooth and 
orderly fashion as far as Community policies and legislation is concerned. 
This will also apply to the internal organisation and functioning of the 
different Community institutions. 
20 
EXECUTION OF PAYMENTS FROM THE 1996 BUDGET ANNEX 1A 
Description Payments in 
ECUs Payments in 
National Currencies Total 
Sub-
Sections ECU 
million % ECU 
million % ECU 
million % 
Part A 
PartB 
BO 
B1 
B2 
B3 
B4 
B5 
B6 
B7 
B8 Administrative appropriations 639.80 24.03 % 2023.10 75*97% 2662.90 100.00 % 
Operating appropriations 
Guarantees, reserves 
EAGGF Guarantee Section 
Structural operations, structural and cohesion expenditure, 
financial mechanism, other agricultural and regional 
operations, transport and fisheries 
Training, youth, culture, audiovisual media, information and 
other social operations 
Energy, Euratom nuclear safeguards and environment 
Consumer protection, internal market, industry and trans-
European networks 
Research and technological development 
External actions 
Common foreign and security policy 936.40 
40.10 
24142.30 
654.30 
163.80 
538.20 
2615.90 
3642.20 
51.40 100.00% 
0.10 % 
98.00 % 
95,55 % 
94.35 % 
96,68 % 
90.27 % 
97.07 % 
100.00 % 0 
39041.80 
493.60 
30.50 
9.80 
18.50 
281.90 
110.10 
0 0% 
99,90 % 
2,00 % 
-'4,45% 
S.65 % 
3.32 % 
9.73 % 
2.93 % 
0% 936.40 
39081.90 
24635.90 
684.80 
173.60 
556.70 
2897.80 
3752.30 
51.40 1O0.00 % 
100.00% 
100.00% 
100.00% 
100.00% 
100.00% 
100.00% 
100.00% 
100.00% 
Total Part B 
Total Parts A + B 32784.60 
33424.40 45.05 % 
44.31 % 39986.20 
42009.30 54.95 % 
55.69 % 72770.80 
75433.70 100.00 % 
100.00% 
21 
EXECUTION OF PAYMENTS FROM PART A OF THE 1996 BUDGET ANNEX 1B 
Description Payments in 
ECUs Payments in 
National Currencies Total 
Sub-
Sections ECU 
million % ECU 
million iiiiiij ECU 
million % 
A1 
A2 
A3 
A4 
A5 
A6 Expenditure relating to persons working with the institution 
Buildings, equipment and miscellaneous operating 
expenditure 
Expenditure resulting from special functions carried out by 
the institution 
Inter-institutional cooperation, inter-institutional services and 
activities 
Data processing 
Staff and administrative expenditure of European 
Community delegations 
Publications Office 94.20 
165.80 
193.80 
50.40 
95.20 
14.60 
25.80 5.54 % 
47>S0 % 
97.05 % 
64.53 % 
97.64 % 
8.59 % 
38.17 % 1606.90 
183.20 
5.90 
27.70 
2.30 
155.30 
41.80 ililiiliiip 
;|||||||||||lli 
ii:lll!til&9§I%l: 
mmmmmmm 
111I11ÉIIÉ1 
iiii§&ii$i;%i 
mmmmmmm 1701.10 
349.00 
199.70 
78.10 
97.50 
169.90 
67.60 100.00 % 
100.00 % 
k 100,00% 
100.00 % 
100.00% 
1OÛ.00 % 
100.00% 
Total Part A 639.80 24.03 % 2023.10 llltlSMM 2662.90 100.00 % 
22 
ANNEX 2 
Impact of the changeover on policy areas 
managed separately from the Community budget 
A. ECSC 
A.1. Revenues and expenditure 
Budgetary revenues are twofold: 
the levies on the production of coal and steel, which are paid by the 
enterprises in the two sectors; it is however expected that these levies will 
be abolished as from 1998; 
financial revenue resulting from the investment of the ECSC reserves 
(essentially the guarantee fund for borrowings); 
Expenditure covers the following items: 
social measures (readaptation, social housing for coal and steel workers); 
research programmes in the two sectors; 
interest subsidies for job-creating reconversion loans. 
As the ECSC has a commitment budget, all expenditure items are solely 
accounted for in commitment terms. Outstanding commitments are written into 
the passive side of the ECSC balance sheet and subsequently paid (or 
otherwise cancelled in whole or in part). 
A.2. Legal framework 
The legal framework for the ECSC's budgetary activities13 specifies that the 
levies on ECSC products are expressed in European units of account 
(subsequently converted to ECUs by virtue of Decision 3334/80/ECSC), while 
all expenditure should also be expressed in European units of account (now 
ECUs). As a result, all exchange risks are fully borne by the contributors to 
and beneficiaries from the ECSC budget. Even when .payment requests are 
expressed in national currency, they are limited to the ECU countervalue 
originally agreed, irrespective of exchange rate evolutions between the 
currency concerned and the ECU. As the euro Regulations will automatically 
convert references to the ECU into references to the euro, no specific action is 
required in order to ensure a smooth transition to the euro. 
Articles 49 and 50 of the ECSC Treaty, complemented with the decisions 2/52/ECSC and 
3/52/ECSC (ECSC revenues) and decision 3289/75/ECSC (expenditure). 
23 
B. The European Development Fund (EDF) 
B.1. Revenues 
The contributions from Member States are paid in ECUs, except for Germany 
which pays in national currency. All references to amounts in the Lomé 
Convention are also expressed in ECUs. The changeover to the euro will thus 
be automatic and without apparent difficulties. 
B.2. Payments 
All bank accounts, as well as most treasury operations, are ECU-based. A 
certain volume of operations is carried out in Community currencies, and 
occasionally also other ones (USD, YEN, ...). 
Local projects are often paid in the currency of the recipient ACP country. As a 
result of conventions with local banks, the accounts which the EDF keeps in 
these countries are however always expressed in European currencies and the 
switching of these accounts to the euro should occurs without difficulty. 
24 
ESTIMATED AGRIMONETARY GAPS FOR 1997 BASED ON THE SITUATION OF 01/10/1997 ANNEX 3 
mm mmm mm mmm msm mm mmm mm iRtl LIT OS PTA SKR UKL 
A. Agrimonetary gaps between RMR and ACR (% of ACR) 
1) for market prices and amounts 
2) for per ha aid for arable crops 
3) for aid per head of livestock and structural aid 0.82 
0.58 
0.58 0.79 
3.25 
3.25 0.77 
-0.90 
-0.90 0.37 
0.37 
0.37 0.10 
0.10 
0.10 1.19 
1.19 
1.19 2.54 
2.54 
2.54 0.78 
-0.85 
-0.85 0.09 
8.56 
8.56 2.67 
11.23 
5.37 0.75 
-0.91 
-0.91 0.67 
0.67 
0.67 5.25 
8.91 
15.02 1.09 
15.03 
14.38 
B. Annual cost for a 1 % gap14 (ECU million / %) 
1) for market prices and amounts 
2) for per ha aid for arable crops 
3) for aid per head of livestock and structural aid 11.33 
1.56 
1.34 6.83 
6.11 
0.64 22.84 
30.88 
6.61 19.21 
5.44 
1.07 3.00 
1.86 
2.20 32.59 
46.47 
11.53 1.16 
2.12 
2.05 14.98 
1.39 
0.38 10.05 
1.09 
7.25 27.83 
18.28 
5.06 1.74 
3.35 
3.61 19.07 
16.65 
6.45 1.26 
4.31 
1.61 11.41 
16.20 
7.11 
C. Total annual cost15 (ECU million) 
for agrimonetary gaps 
Total EU-15 (ECU million) 10.90 27.32 -16.1 9.57 0.68 108.06 13.50 10.20 72.27 306.67 -5.05 28.34 69.21 358.15 
993.72 
14 Estimated according to the 1997 budget. ( ACR: agricultural conversion rate ; RMR: representative market rate) 
15 Part C is calculated by multiplying the corresponding amounts in parts A and B of the table, and by adding up the three products obtained. 
25 
ANNEX 4 
Changeover of remunerations: 
related issues 
1. Remunerations outside the Union 
These remunerations are paid in BEF at the weighting factor applying to 
Belgium. On request, part of the remuneration can be paid out in local 
currency at the remuneration rate and local weighting factor. 
2. Mission expenses 
Within the EU: all lump sum amounts and ceilings are expressed in BEF 
and are paid out at the monthly exchange rate. 
Outside the EU: all amounts are expressed in ECUs and will automatically 
be converted to euros from 1.1.1999 onwards. 
3. Free lance interpreters 
The current agreement applies until 31.12.98 and will be renegotiated in 
the course of 1998. Increases are currently weighted according to the 
relative weight of the different currencies in the ECU basket. Payments are 
made in ECUs and will thus convert to euros. 
4. Health insurance scheme 
All ceilings are expressed in BEF. Payments are made at the accounting 
rate. 
26 
ANNEX 5 
The introduction of the euro in Community secondary legislation 
Under the Madrid scenario16 for the changeover to the single currency it was 
decided that a Council Regulation entering into force on 1 January 1999 would 
provide the legal framework for the use of the euro. It is against the background 
of the Madrid scenario and the two euro regulations17 which will implement the 
scenario, that the implications for existing EU legislation have to be assessed. 
The euro regulations have three main consequences for EU legislation: 
(1) The principle of continuity of legislation 
Regulation 1103/97 on certain provisions relating to the introduction of the euro 
provides that "legal instruments" are to continue unchanged by the introduction 
of the euro, except of course for the substitution of the euro in place of the 
existing currency unit (national currency or more frequently in EU legislation, 
the ECU). This will be the case unless the legislator decides to introduce some 
change. There are obviously limits to the legislators' discretion here; e.g. a 
change which was in conflict with the very principle of continuity would not be 
acceptable. 
(2) "No compulsion and no prohibition" 
This approach was established by the Heads of State in the Madrid scenario in 
order to offer the maximum possible freedom to economic agents to manage 
the pace of their transition, while at the same time guaranteeing that those who 
wished to make a late transition at the very end of Phase C, should be able to 
continue using their familiar national currency unit until the end of that time. In 
the context of the euro regulation the principle of freedom to use the euro unit 
in contractual relations implies the consent of a counterparty. 
In the legislative setting the euro regulations make it clear that both the 
national currency unit and the euro unit can be used during the transitional 
period to set up new legal instruments. The use of the euro unit can however 
not be imposed during this period other than in the clearly defined and limited 
circumstances described in the euro regulations; public administrations can 
however decide to add the euro unit (or allow for the use of the euro unit) as an 
alternative option for citizens, companies etc. 
17 Approved by the Heads of State and Government at the summit in Madrid of December 1995. 
Council Regulation 1103/97 of 17.6.1997 (OJ L162 of 19.6.1997, pp. 1 - 3) and draft Council 
Regulation ..798 (see Council Resolution of 7.7.1997 on the legal framework for the introduction of 
the euro; OJ C236 of 2.8.1997, pp. 7 - 12). , 
27 
(3) Derogations to "no compulsion" and the standstill for legislative measures 
imposing use of the euro unit 
The draft euro regulation under Article 1091(4) Treaty establishes that Member 
States may not legislate to impose the use of the euro, except by a co­
ordinated procedure involving a common timetable, apart from certain 
exceptions explicitly provided for in the second regulation (e.g. payments by 
crediting an account, redenomination of outstanding debt, changeover of 
organised markets and payment systems). 
28 
ANNEX 6: TYPES OF EURO SENSITIVE. THRESHOLD AMP C£IUN<5 CLAUSES IN LgOISiATtOf* 
Timescale: PRE -EMU 
ECU & national currency equivalents Date: 01.01.99 
ECU = euro 
National currency into euro Timescale: CHANGEOVER PERIOD 
National Currency Unit ("NCU") expression 
of euro, at conversion rate Date 1.1.02 
End of National Currency Units (NCUs) 
1. Current value clauses 
(e.g. Banking) Continuity clearly applies. These clauses are straightforward and continue to apply equally to both "ins" and "outs" 
2. Fixed date clauses18 
(e.g. Insurance 76/580 
Objects) and Cultural Continuity clearly applies. This type of clause will perpetuate differences (very large in cases such as this 1976 insurance 
directive) between the values in national implementing legislation. 
3A. Automatic revision clauses with a 
timetable and complete mechanism for 
converting into national currency 
(e.g. Public Procurement and most 
Insurance directives) E.g. Procurement: revision 
every 2 years based on 
fluctuations in past 2 years. 
E.g. Insurance: annual revision 
on 01.01 as at specific date At the first revision to take effect on or after 01.01.1999 it is considered that conversion 
clauses should not apply to 'ins'. The argument for continuing to apply the clause for "ins" is 
overridden by the main object of the directive i.e. to set a harmonised threshold. For "outs" the 
clause continues to apply. 
3B. Currency fluctuation clauses 
(e.g.; Securities, 2nd. Company Law) These clauses require Member 
States to take action to adjust 
their threshold/ceiling if their 
currency has fluctuated beyond 
a tolerance margin The rationale of fluctuation clauses ceases for "ins" w.e.f. 01.01.1999. The underlying legal 
basis for the amounts in national currency in the "ins" national laws (if different from the 
ECU/euro amount in a directive) also ceases. "Ins" should use the conversion rate of the euro 
regulation w.e.f. 01.01.1999. 
4. "Rounding" clauses to reach a 
convenient national currency amount, 
(e.g. Accounts). These clauses are intended to assist the national legislator to translate a 
round ECU amount into a convenient national currency amount. As such they 
can be applied from 01.01.1999 until 31.12.01. Clauses cease to apply w.e.f. 01.01.2002 
(application of clause could only frustrate object 
of directive). 
Some of these also have a clause providing that the Council may revise the thresholds on a Commission proposal 
29 
ANNEX 7 
Guidelines on the legal changeover of monetary references 
A. INTRODUCTION 
In view of the multiplicity of monetary references (e.g. in the form of thresholds, 
floors and ceilings, payment and reporting obligations, etc.) in Community 
legislation, either expressed in ECUs and/or in national currencies, the 
Commission has developed some guidelines on the interpretation of these 
references in order to ensure a consistent application across policy areas (cf. 
section C.2 of the communication). 
It appears that in many instances the interpretation of monetary references will 
be affected by the introduction of the euro, although in general no specific 
legislation will have to proposed as the meaning of the clause can be 
interpreted in a robust and legally consistent manner. Individual 
interpretations of such clauses are provided in annex 8, while the present 
annex provides a more general presentation of the guidelines. 
B. MONETARY REFERENCES 
Monetary references in Community legislation are, as a general rule, defined in 
ECU terms and will therefore automatically change to euro as from 1.1.1999 
without apparent problems. Legal difficulties can however arise in a second 
stage because of the need to convert some of these amounts into national 
currencies. 
B.1. Simple references 
Simple references to amounts in ECUs are those where there is no clause in 
the legislation to determine the conversion of the ECU amounts into national 
currencies. These simple references can be of two types: 
In its most simple form, reference amounts in ECUs apply directly (e.g. an 
amount both established and paid out in ECUs by the Community budget). 
It is clear that in such cases the introduction of the euro will not require any 
specific steps at Community level; 
In other instances, conversion into national currencies, even if not 
expressly specified in the EU legislation, is implicit in the nature of the 
legislation, for example whenever a Community legal act defines a ceiling 
or threshold which needs to be satisfied at all times, without mentioning any 
conversion arrangements (e.g. all operations exceeding a certain 
threshold labelled in ECUs need to be reported). As noted above, no 
specific steps are necessary at Community level as it is up to Member 
States and parties concerned to ensure at all times that the provision of the 
Community legislation is being applied, and that the amounts expressed in 
30 
national currency correspond to the ECU values. This will continue from 
1.1.1999 with the simple replacement of the ECU amount by a euro 
amount. National authorities are however advised to check national 
implementing rules to ensure that they are indeed up to date on 1.1.1999. 
It should also be noted here that the practical difficulties resulting from 
exchange rate fluctuations will disappear for the "ins", as the euro becomes 
their national currency from 1.1.1999 onwards. For the "pre-ins", the 
situation remains as before. 
B.2. References to ECU amounts, with associated provisions on 
conversion in national currencies 
Unlike simple ECU references discussed in the previous section, many 
references to ECU amounts in Community law are accompanied by Community 
provisions on conversion of the ECU amounts into national currencies. Many 
references in legislation covering the internal market, the customs code, 
indirect taxation, etc. are of this kind. Typically, these provisions have one or a 
combination of the following elements: 
Provisions relating to the exchange rate (and in some cases its method of 
calculation) to be used for the conversion from ECUs to national 
currencies; 
Provisions establishing a periodical revision of the exchange rates to be 
used (and hence of the amounts expressed in national currencies), in order 
to adjust for exchange rate fluctuations. These revisions either occur with a 
pre-established frequency (e.g. every two years) or as soon as a certain 
fluctuation margin has been exceeded; 
Limited rounding options (e.g. maximum 10 % up or down), designed to 
allow for the establishment of convenient amounts in national currencies. 
In the case of participating Member States, it would seem logical to ensure that 
discrepancies between monetary references in Community law and in national 
law, and which simply result from past exchange rate fluctuations or from 
rounding, are eliminated within a reasonable period. 
At least two general policy approaches could be followed to this effect: 
One could for instance seek an early alignment of monetary references in 
Community and national law i.e. with effect from 1.1.1999. This would 
require specific legislation at EU level to amend the relevant provisions. 
This approach would be likely to pose fewer problems in cases where there 
are no provisions on periodical revision. However, even in this case the 
equivalent of the (by then) euro amounts in the national currency units of 
"ins" would not be known until 1.1.1999 as the conversion rates will only be 
determined on this date. 
A second option would be to leave the outcome entirely to the principle of 
continuity as confirmed in the euro Regulations. While this would work well 
31 
for cases where there are provisions on periodical revision due to take 
place within the transitional period, absence of a revision clause in the 
legislation would risk that no alignment of amounts in "in" Member States 
would ever take place. 
It is clear that neither of these policy options produces an entirely satisfactory 
result for all cases. A pragmatic approach is therefore necessary, based upon 
the particular nature of the provisions. In this respect, a policy distinction 
should be introduced between: 
amounts giving rise to payment obligations (e.g. payments made by the 
Community budget under the agrimonetary rules). In such cases, strong 
reasons exist to bring them in line as soon as possible i.e. on 1.1.1999; 
amounts being used as legal references (e.g. thresholds, etc.), where the 
need for early alignment is usually less compelling, particularly if one keeps 
in mind that the amount expressed in national currency will continue to be 
the reference in each Member State during the transitional period, in 
compliance with the "no compulsion, no prohibition" principle. 
In relation to legal references, the following guidelines could be followed: 
for legislation without a revision clause (or with the next revision date after 
the end of the transitional period), a legislative proposal is required in order 
to ensure a revision at the latest by the end of the transitional period 
(1.1.2002). After the transitional period, uniform euro amounts would thus 
apply. In practice, only a few cases of this nature exist. 
for legislation including a revision clause, the introduction of the euro would 
be catered for at the scheduled revision date (unless this revision occurs 
after the end of the transitional period). At the date of the revision, the 
conversion rates would become directly applicable for the participating 
countries, thereby replacing the specific method described in the 
legislation, as this method would be void by then. If this legislation 
includes a rounding option clause, participating Member States would be 
allowed to continue to make use of this clause. At the end of the 
transitional period, this rounding clause would become void for them as 
well and, to the extent they would have made use of it, specific steps 
should thus be taken to revert to the euro value contained in the directive. 
These guidelines ensure that all legal references are eventually equalised in 
the participating Member States, at the latest when the transitional period 
comes to an end. The amount of extra legislation remains limited (because 
most of the legislation has within it the necessary flexibility to deal with the 
changes), which minimises any possible risks of contention in sensitive areas. 
Non-participating Member States in particular have an interest in keeping 
"extra" legislation to a minimum as they will not derive any benefit from it. 
More generally, a sufficient degree of flexibility should be allowed in the 
implementation of the proposed approach, notably in order to take account of 
32 
sectoral specificities, possible difficulties of implementation, overall legislative 
coherence in the policy area concerned, etc. 
C. INTERPRETATIVE NOTES 
Following a detailed screening of Community legislation, it appears that the 
number of cases where specific legislation is necessary are rather limited in 
number. However, it is appropriate to provide the Commission's interpretation 
of certain legal provisions (including details of this approach), notably in order 
to foster consistent applications and interpretations by all parties concerned 
and thereby to increase legal certainty. Annex 8 therefore includes a 
description, in the form of an interpretative or clarification note, of all legal texts 
which do not require a legislative amendment, but need to be interpreted and 
applied consistently beyond 1 January 1999. These interpretations are based 
upon the guidelines described under B above. 
Similarly, the numerous references in EU legislation to "national currencies" do 
not become obsolete by the mere fact that several Member States will have 
their national currency in common. They clearly remain in full effect for the 
"pre-ins"; as for the "ins" they clearly refer to the euro as the currency and will 
be interpreted as referring to the "national currency unit" of the euro until 2002. 
33 
ANNEX 8 
OVERVIEW OF THE IMPACT OF THE CHANGEOVER 
ON COMMUNITY LEGISLATION 
CUSTOMS 
Customs Code 
COMMON AGRICULTURAL POLICY 
Agrimonetary regime 
FREEDOM OF MOVEMENT FOR WORKERS 
Social security of migrant workers 
INTERNAL MARKET 
Cultural objects 
Public procurement 
Banking 
Insurance 
Securities 
Company Law 
Accounting 
Defective products 
Intellectual property 
INDIRECT TAXATION 
VAT legislation 
COMMON COMMERCIAL POLICY 
Export Credits 
EXTERNAL RELATIONS 
International agreements 
CONSUMER PROTECTION 
Consumer credit and certain other contracts 
BUDGETS 
Financial Regulation 
ADMINISTRATIVE EXPENDITURE 
Remunerations and pensions 
34 
CHANGEOVER TO THE EURO 
Community legislation 
POLICY AREA: CUSTOMS 
MEASURES CONCERNED: Customs Code 
A. DESCRIPTION 
1. Council Regulation (EEC) No 2913/92, as amended by Regulation (EC) 
No 82/97, establishes the Community Customs- Code. Implementing 
provisions are contained in Commission Regulation (EEC) No 2454/93, as 
last amended by Regulation (EC) No 1427/97. 
Council Regulation (EEC) No 918/83, as last amended by Regulation (EC) 
No 355/94, sets up the Community system of reliefs from customs duty. 
Council Regulation (EEC) No 3911/92, as last amended by Regulation 
(EC) No 2469/96, lays down rules concerning the export of cultural goods. 
B. COMMENTS 
2. Article 18(1) and (2) of the Community Customs Code stipulates that "the 
value of the ECU in national currencies ... shall be fixed once a month. The 
rates to be used for this conversion shall be those published in the Official 
Journal of the European Communities on the penultimate working day of 
the month" or "... in cases other than those referred to in paragraph 1 ... 
once a year. The rates to be used for this conversion shall be those 
published in the Official Journal of the European Communities on the first 
working day of October ...". These provisions will no longer be relevant 
from 1.1.1999 for Member States participating in EMU and will therefore 
cease to be applicable to them. This is because their purpose is to obtain 
the value of the ECU in national currencies in respect of the various 
amounts expressed in ECUs in the Regulation. Given that this value will be 
precisely known from 1.1.1999, there will no longer be any need to apply 
the provisions to the participating Member States19. Nevertheless, they will 
remain fully applicable to the currencies of non-participating Member 
States. 
The provisions on the rounding of amounts laid down by paragraph 3, 
under which customs authorities may round up or down the sum resulting 
from the conversion into their national currency of an amount expressed in 
i') Provisions which are similar to the ones in Article 18 are applicable for the conversion in national 
currencies of price undertakings (expressed in ECUs) signed between the Commission and certain 
exporters in the framework of anti-dumping procedures. The same reasoning thus applies for the 
conversion of these price undertakings as from 1.1.1999. 
35 
ECUs provided the rounded sum does not differ from the original amount 
by more than 5%, will remain in force since their underlying purpose (i.e. 
the need to obtain round figures in national currency) will still be relevant 
during the transitional period. At the end of that period, the participating 
Member States will directly apply the amounts in euros. 
3. During the transitional period, businesses will be able to use either the 
euro or their national currency in filling out their customs declarations using 
the single administrative document (SAD). The SAD contains' boxes 
designed for amounts which, at the present time, are systematically 
expressed in local currency. The document does not therefore contain any 
reference to the currency used. A legislative measures will be introduced to 
enable the euro to be used for this purpose. 
4. Article 132 of Council Regulation (EEC) No 918/83 also lays down rules on 
conversion and rounding. For the reasons give above, the conversion 
rules will no longer be relevant with regard to participating Member States, 
while the rounding rules will continue to apply in their respect until the end 
of the transitional period. Once the transitional period has ended, the 
various euro amounts contained in the Regulation will be the only amounts 
referred to by participating Member States. 
5. The Annex to Council Regulation (EEC) No 3911/92 contains monetary 
references combined with a rule that conversion is based on the exchange 
rate applicable on a specific date (1 January 1993), with no provision for 
rounding off amounts. However, this Regulation lays down that, every 
three years, the Council, acting on a proposal from the Commission, will 
examine and, where appropriate, update the amounts indicated in the 
Annex, on the basis of economic and monetary indicators in the 
Community. If no measures are taken to update these amounts and amend 
the date of conversion, participating Member States will, after 1.1.2002, 
apply amounts which might be significantly different to those previously 
applied in national currency. For evident reasons of legislative coherence, 
this situation should be remedied by amending Regulation 3911/92 ("Export 
of cultural goods") in the same manner as Directive 93/7 on the return of 
cultural objects unlawfully removed from the territory of a Member State, 
the provisions of which will be re-examined in a report to be produced in 
1999 (the envisaged approach is explained in the fiche "Return of cultural 
objects"). 
C. ACTION AND TIMETABLE 
6. No action is required at Community level concerning the conversion and 
rounding rules laid down by Article 18 of the Customs Code and by 
Regulation (EEC) No 918/83. 
7. As far as introducing the euro into the SAD is concerned, 
Regulation (EEC) No 2454/93 (laying down provisions implementing 
Regulation (EEC) No 2913/92) will have to be amended in order to give 
36 
Member States the legal framework they require to make this change. -An 
initial draft has already been discussed by the Customs Code Committee. 
It is expected to be adopted by the Committee by the end of 1997. 
37 
CHANGEOVER TO THE EURO 
Community legislation 
POLICY AREA: COMMON AGRICULTURAL POLICY 
MEASURES CONCERNED: Agrimonetary regime 
A. DESCRIPTION 
1. Introduction of the euro on 1 January 1999 will have various specific 
repercussions for agriculture. For example, in the case of participating 
Member States, the Community budget will refund expenses previously 
incurred in euros, and no additional adjustment or conversion will be 
necessary. For the other Member States, an exchange rate will in principle 
still be required, although that does not necessarily mean that the existing 
system will have to be kept as it is. 
B. COMMENTS 
2. With regard to payments to recipients, CAP legislation is based on Article 
43 of the Treaty and is in general subject to the agrimonetary regime 
established by Regulation (EEC) No 3813/92. In the light of the two 
Council Regulations which form the legal framework far the use of the euro, 
the main difficulties which might arise'in this area relate to: 
the conversion rate to be applied in respect of non-participating 
Member States (future agrimonetary regime); 
measures for dismantling monetary gaps for the currencies of 
participating Member States; 
All of these problems could be legally resolved by means of a single 
proposal for a Council regulation based on Article 43 of the Treaty. 
3. As for the matter of meeting the Member States' expenses, each month the 
EAGGF Guarantee Section refunds CAP expenditure in national currency. 
For participating Member States, this will be done in euros from 1.1.1999. 
For non-participating Member States, the Commission takes the view that it 
would be appropriate to envisage a generalized use of the euro in this 
area, while the underlying financial commitments would continue to be 
expressed in national currency (the Community budget would therefore 
continue to bear the exchange risk). 
C. ACTION AND TIMING 
4. A Commission proposal on the future agrimonetary regime and transitional 
measures should not be presented until after it is known which 
Member States will participate in EMU and reliable indications have been 
obtained on the likely monetary gaps to be dismantled on 1.1.1999. In 
principle, it should be possible to transmit a proposal of this nature to the 
38 
Council at the end of the first half of 1998 with a view to its entry into-force 
on 1.1.1999. It should deal with all the difficulties linked to the legislation 
based on Article 43 of the Treaty. 
General use of the euro for the purpose of meeting the expenditure of 
non-participating Member States would require amendment of 
Regulation (EEC) No 729/70. Any proposal to this end will be presented at 
the same time as the revision of the agrimonetary regime. 
39 
CHANGEOVER TO THE EURO 
Community legislation 
POLICY AREA FREEDOM OF MOVEMENT OF WORKERS 
MEASURES CONCERNED: Social security of migrant workers 
A. DESCRIPTION 
1. Council Regulation (EEC) No 574/72 of 21 March 1972 fixing the procedure 
for implementing Regulation (EEC) No 1408/71 on the application of social 
security schemes to employed persons, to self-employed persons and to 
members of their families moving within the Community. 
B. COMMENTS 
2. Article 107 of Regulation (EEC) No 574/72 lays down the practical 
arrangements for converting amounts from one national currency to 
another. The conversion rate is based on a monthly average of exchange 
rates for the currencies in question during a reference period of one month. 
The system involves fixing four times a year an average monthly rate 
applicable for three consecutive months. Thus, the average January rate is 
applied for all of the second quarter, the April rate for all of the third 
quarter, and so on. 
3. The method of adjusting exchange rates described in Article 107 of the 
Regulation will cease to be relevant from 1.1.1999 for conversions between 
the currencies of participating countries and will be replaced by the 
provisions of Article 4 of Regulation 1103/97. However, it will continue to 
apply for conversions involving the currency of at least one non-
participating Member State. 
The purpose of the conversion rule is to determine as precise a value as 
possible on the basis of exchange rates recorded over the reference 
period. However, from 1.1.1999 exchange fluctuations between 
participating currencies will no longer occur. Beyond that date, applying 
the conversion clause would run counter to its very purpose. The clause 
will remain fully applicable, however, to conversions involving 
non-participating currencies. 
4. For conversions between a participating and a non-participating 
Member State, the euro will be the central currency from 1.1.1999. For 
payments between non-participating Member States, the existing system 
will remain in force. 
40 
CHANGEOVER TO THE EURO 
Community legislation 
POLICY AREA: INTERNAL MARKET 
MEASURES CONCERNED: Return of Cultural Objects Directive 
A. DESCRIPTION 
1. Directive 93/7 on the return of cultural objects is directly affected, together 
with Regulation 93/ on the exportation of cultural objects. The relevant 
provisions are those specifying the application thresholds (Annex Point B) 
as well as the clause setting out the modalities for the conversion of the 
thresholds into national currency. Every 3 years (starting February 1996) 
the Council is to examine and if .appropriate bring up to date, the 
thresholds. Moreover it is foreseen that the Council may on a proposal from 
the Commission (normally made in its report to be carried out every 3 
years) amend the directive. 
B. IMPACT OF THE CHANGEOVER 
2. Unless action is taken to amend the directive (i.e. the fixed exchange rate 
of 1.1.1993) the "ins" will continue to apply different amounts from each 
other (different because based on 1993 exchange rates, rather than on the 
irrevocably fixed euro conversion rates of 1999). Moreover this situation 
will continue so long as the directive retains the clause in question. 
C. ACTION AND TIMING 
3. It is suggested that the Commission propose amending the directive to the 
effect that from 1.1.2002 the participating Member States will apply uniform 
thresholds in euros directly from the directive. Non-participating Member 
States will continue to convert into their national currencies, with the 
conversion being based on the value of national currencies against the 
euro on a convenient date (to be decided) in advance of the date for entry 
into force of the new thresholds, i.e. 1.2002 (the new date will replace the 
1993 conversion date against the ECU). The Commission is due to make 
its next triennial report on the directive in 1999. This would be the suitable 
occasion to propose such a change and would give ample time for it to be 
implemented nationally by 1.1.2002 (at the latest). 
41 
CHANGEOVER TO THE EURO 
Community legislation 
POLICY AREA: INTERNAL MARKET 
MEASURES: Procurement Directives 
A. DESCRIPTION 
1. The Directives 93/36 (Supplies), 93/37 (Works), 92/50 (Services), all three 
of which have been amended by Directive 97/... adopted on 13.10.97, and 
Directive 93/38 (Utilities) constitute the EC's public procurement legislation 
affected by the changeover to the euro. The relevant provisions are the 
ones specifying the application thresholds20, as well as the clauses setting 
out the modalities for the revision of the thresholds2'. 
B. SUMMARY OF THE EFFECTS OF THE CHANGEOVER 
2. The thresholds will be expressed in euros as from 1.1.1999 in accordance 
with the Regulation 1103/97 on certain provisions relating to the 
introduction of the euro. The national amounts, converted in accordance 
with the directive at the rate of exchange against the ECU under the 
conversion mechanism currently in force, will not be affected until the next 
review date. 
3. All four Procurement Directives provide for a revision of the value of the 
thresholds in national currencies every two years. In addition, they specify 
that the value in national currencies shall be based on the average daily 
values of the currencies expressed in ECUs over the 24 months terminating 
on the last day of August immediately preceding the 1 January revision. 
The method of adapting the values of thresholds in national currencies to 
accommodate changes in exchange rates will have ceased to be relevant 
and therefore cease to be applicable to "ins" by the date of the review 
following the introduction of the euro on 1.1.1999 (next review 1.1.2000) 
but will continue to be relevant and valid for "pre-ins". This is because the 
purpose of the clause is to fix the expression of the value of the thresholds 
in terms of Member States' currencies as accurately as possible, on the 
basis of past performance i.e. average figures over the past two years. 
Given that by the revision date the "ins" will not have separate national 
currencies the possibility of currency fluctuation against the euro amounts 
in the directive will have ceased to exist. Therefore it would clearly be 
contrary to the sense of the clause to apply it to "ins". For "pre-ins" the 
calculation continues as before. The figures for "ins" will be expressed in 
Article 5(1 )(a) of Directive 93/36, Article 6(1) of Directive 93/37. Article 7(1) of Directive 92/50, Article 
14 of Directive 93/38. 
Article 5(1 )(c) of Directive 93/36, Article 6(2)(a) of Directive 93/37, Article 7(8) of Directive 92/50, 
Article 38 of Directive 93/38. 
42 
national currency units at the conversion rate applied to the threshold 
amounts in euros as appearing in the directive. The results of the reference 
value calculations (and, for "ins" of the conversion rates in national 
currency units from the euro amounts) will continue to be published in the 
Official Journal for the use of Member States. 
4. The first revision subsequent to the introduction of the euro will occur on 
1.1.2000. By virtue of the principle of legal continuity, all Member States 
will implement the public procurement Directives during the preceding two-
year period (between 1.1.1998 and 1.1.2000) on the basis of the threshold 
values expressed in national currency units resulting from the previous 
revision dated 1.1.1998. At the 1.1.2000 revision the method prescribed by 
the directives Will not apply to participating Member States but will continue 
to be applied to non participating Member States to calculate the value in 
national currencies of the directive thresholds, as follows: The calculation 
will be based on the average daily values of their currencies against the 
ECU for the 16 months before 1 January 1999 (1 September 1997 -
31 December 1998) together with their average daily values against the 
euro for the remaining 8 months (1 January 1999 -31 August 1999) of the 
24 month review period. For participating Member States the euro amounts 
of the thresholds will apply directly. 
C. ACTION AND TIMING 
5. Member States' representatives discussed the issue on the basis of a 
clarification note on 30 September. Member States could in general agree 
with the interpretation. Legislative action is not required (assuming that the 
interpretation will be accepted by all Member States). 
43 
CHANGEOVER TO THE EURO 
Community legislation 
POLICY AREA: INTERNAL MARKET 
MEASURES: Banking Legislation 
A. DESCRIPTION 
1. The Directives 77/780/EEC & 89/646/EEE; 92/30/EEC; 92/121/EEC; 
94/19/EEC; 91/308/EEC; 93/6/EEC 93/6/EEC, 93/6/EEC, 89/647/EEC & 
96/10/EC, 89/647/EEC; 92/121/EEC; 93/22/EEC; 77/780/EEC; 92/30/EEC; 
95/26/EC; 86/635/EEC constitute the Community's banking legislation 
which is affected by the changeover to the euro. 
B. SUMMARY OF THE EFFECTS OF THE CHANGEOVER 
ECU references 
2. An examination of all references to the ECU in banking supervision 
directives together with other possible implications for those directives of 
the introduction of the single currency has been carried out. The main 
conclusion of this work is that the two euro regulations ^themselves will 
resolve the very large majority of potential ^issues without further action. In 
particular it is clear under article 2 of Council Regulation 1103/97 that all 
references to the ECU automatically become references to the euro. 
3. The fact that all of the banking thresholds are simple thresholds i.e. they 
have to be respected in national currency equivalents at all times means 
that the problems associated with revision periods, rounding provisions, 
currency fluctuation clauses are absent from banking. As a result there is 
no difficulty involved in the transition and both "ins" and "pre-ins" will apply 
the directives in exactly the same way and for the same amounts. 
Accordingly no further clarification is needed with regard to thresholds, 
ceilings and other simple ECU references contained in Community banking 
supervision legislation.22 
For certain other questions some explanation is felt to be helpful as follows: 
Foreign exchange risk 
4. The single currency will be introduced into participating Member States by 
the euro regulations in accordance with the Treaty and will replace their 
national currencies from 1 January 1999. Thus no foreign exchange risk 
will exist between the euro and the participating national currency units and 
between participating national currency units themselves from that date.2' 
77/780/EEC as amended by 89/646/EEC Art. 4(1) & 2(a); 92/30/EEC Art 3(3); 92/121/EEC Art. 6(6); 
94/19/EEC Art. 7(1); 91/308/EEC Art. 3(2) & (3); 93/6/EEC Art. 3(1), (2), (3), (4) & 4(6)(ii) and (iii). 
93/6/EEC (Annex III (3.1) 
44 
Traded debt position risk 
5. The single currency will be introduced into participating Member States by 
the euro regulations in accordance with the Treaty and will replace their 
national currencies from 1 January 1999. Thus traded debt positions in 
euros and participating currency units will be positions in the same 
currency for the calculation of capital requirements for market risk.24 
Derivative contracts 
6. Derivative foreign exchange contracts in ECUs and participating national 
currencies will cease to behave like derivatives after the single currency is 
introduced into participating Member States and replaces their national 
currencies. A similar feature may also occur for certain interest rate 
derivative contracts with reference rates derived from the ECU and 
participating national currencies. In principle such contracts should be 
treated as cash claims or obligations from 1 January 1999. However 
certain transitional problems may arise which it is considered the 
competent authorities should decide how to address according to the 
individual circumstances of the particular case.25 
European Central Bank (ECB) 
7. When the ECB is established in 1998 it should be considered to be a 
'central bank'/'zone A central bank' with respect to all aspects of the EU 
banking and related directives.26 
C. ACTION AND TIMING 
8. Monitor any transitional problems (see paragraph 6). 
16 93/6/EEC (Annex I (3) (9.1) & (13) 
89/647/EEC as amended by 96/10/EEC (Annex II); 93/6/EEC (Annex III, 3.1) 
89/647/EEC( Arts 2.1 and 6.1); 92/121/EEC (Art. 4.7); 93/22/EEC (Art. 2.4); 77/780/EEC (Art. 2.2) 
92/30/EEC; 95/26/EC (Art. 4); 86/635/EEC (Art. 8.2 & 14.1 and 14.2) 
45 
CHANGEOVER TO THE EURO 
Community legislation 
POLICY AREA: INTERNAL MARKET 
MEASURES CONCERNED: Insurance 
A. DESCRIPTION 
1. The Directives 73/239/EEC, 76/580/EEC, 88/357/EEC, 84/5/EEC, 
79/267/EEC, 92/96/EEC, 91/674/EEC and 91/370/EEC (Swiss Agreement) 
constitute the Community's insurance legislation affected by the 
changeover to the euro. The provisions most frequently affected are those 
specifying application thresholds and related provisions converting 
thresholds from ECU/euro into national currency amounts. The remaining 
provisions relate to currency matching, revision of the amounts of the 
thresholds and definition of the ECU and/or unit of account. In addition, 
there is a provision on interest rate guarantee and three provisions on the 
relationship between the ECU and the Swiss franc. 
B. SUMMARY OF THE EFFECTS OF THE CHANGEOVER 
ECU references and conversion clauses 
2. Ail thresholds in the EC legislation will be expressed in euros as from 
1.1.1999 in accordance with the Regulation 1103/97. 
3. The provisions on conversion of ECU (euro) threshold amounts into 
national currencies will continue to apply to non participating Member 
States from 1.1.1999, the applicable rate being that of the last day of the 
preceding month of October. These provisions will no longer apply to 
participating Member States with effect from the revision due to occur as of 
1.1.1999, as the clause will have lost its rationale on that date and 
therefore be inapplicable following the ending of the "in" Member States' 
national currencies. On 1.1.1999 the amounts expressed in ECUs will be 
expressed in euros, their equivalent in the national currency units during 
the transitional period being that resulting from the application of the 
irrevocably fixed conversion rates. Regarding the transitional measure 
provided for in Article 2 of Directive 76/580/EEC, since the amounts of the 
thresholds in Directive 73/239/EEC have not been amended, this provision 
will continue to apply during the transitional period and beyond if not 
amended. Community legislative action will be required if the amounts of 
the thresholds are to be identical throughout the euro area e.g. from 
1.1.2002 onwards. 
46 
Currency matching provisions 
4. As from 1.1.1999 and during the transitional period national currency units 
of participating Member States are one and the same currency as the euro 
and each other, for the purpose of matching rules. 
Interest rate guarantee provisions 
5. Regarding life insurance contracts with an interest rate guarantee Article 
17(1 )B(a)(i) of Directive 79/267/EEC, as amended, shall continue as at 
present for contracts denominated in non participating Member States' 
currencies. Where the contract is denominated in participating Member 
States' currencies or in euros the home member State shall use one of the 
following rates: (i) the rate on bond issues in euros by the home Member 
State when this is a participating Member State or (ii) the rate on bond 
issues in euros by any other participating Member State or (iii) the average 
of the rates on the bond issues in euros by all the participating Member 
States (provided that such information is supplied by an official body) or (iv) 
the rate of the euro denominated issues by Community institutions. All of 
these possibilities will be compatible with the interest rate guarantee clause 
as a consequence of replacing participating Member States' national 
currencies by the euro and replacing the ECU by the euro. The reading of 
this provision in the light of the Council regulations does not allow the 
exclusion of any of the above-mentioned possibilities. However, in order to 
achieve a more harmonised application of this clause, the Commission will 
suggest that Member States may choose to restrict themselves to applying 
option (iii), or option (i) when the information supplied by an official body is 
not available. This does not preclude a later decision on a legislative 
amendment in the light of the experience of the application of this clause 
after the changeover to the euro. 
The Swiss Agreement 
6. From 1.1.1999 the principle of continuity will mean that the conversion rate 
for ECU to Swiss francs will remain as written into the agreement - i.e. a set 
rate subject to the review under the terms of Article 3.1 of Protocol No 3, 
which provides for alteration only if the set rate differs by more than 10% 
against the rate fixed by the Swiss National Bank as on the last day of 
October of each year. This provision will continue to apply after 1.1.1999 
with the only change being the replacement of the ECU with the euro. 
Other affected provisions 
7. The remainder of affected provisions, revision of thresholds and definition 
of the ECU, are affected only by the replacement of the ECU by the euro. 
47 
C. ACTION AND TIMING - -
8. A legislative amendment to Directive 73/239/EEC and Directive 
76/580/EEC will be necessary, to take effect from not later than 1.1.2002. 
(See point 2, above). An amendment might also be desirable to Directive 
79/267/EEC (see point 5 above); this requires further study. 
48 
CHANGEOVER TO THE EURO 
Community legislation 
POLICY AREA: INTERNAL MARKET 
MEASURES CONCERNED: Securities Markets Directives 
A. DESCRIPTION 
1. The Directives 79/279 (Admission to official Stock Exchanges); Directive 
89/298 (Public Offer Prospectus) 93/6 (Capital Adequacy Directive (CAD)); 
94/18 (Eurolist); 97/9 (Investor Compensation) constitute the EC's 
securities legislation directly affected by the changeover to the euro. The 
relevant provisions are those specifying the application thresholds as well 
as the clauses setting out the modalities for the revision of the thresholds 
B. IMPACT OF THE CHANGEOVER 
2. The thresholds will be expressed in euros as from 1.1.1999 in accordance 
with Council Regulation 1103/97. 
3. Directive 79/279 (Admission to official Stock Exchanges) provides in 
Schedule A paragraph 1.2 that the equivalent in national currency of the 
(ECU) threshold "shall initially be that applicable on the date on which the 
directive is adopted." The Directive was adopted on 5 March 1979. 
However, there follows a revision clause the effect of which is to require the 
MS to adjust their national figures (back to the ECU figure) if they diverge 
by more than 10% from the directive. 
4. Given that the purpose of this clause is to keep the national figures as 
close as practicable to the figure of ECU/euro 1 million in the directive (and 
not to simplify the transposition into national law of ECU ceilings by 
allowing rounding of inconvenient figures) the clause becomes redundant 
for "ins" with effect from 01.01.1999. The directive should be interpreted as 
requiring the MS to adjust their national figures on 01.01.1999 to the 
national currency unit equivalent of ECU 1 million, at the conversion rate. 
For "pre-ins" the clause continues to operate, unaffected. 
The same adjustment mechanism is also found in Schedule B paragraph 
III. 1 of Directive 79/279 and the same result should be applied as for 
Schedule A. 
5. Directive 89/298 (Public Offer Prospectus) Directive 96/6 (CAD) and 
Directive 97/9 on Investor Compensation each contains fixed ECU 
references (thresholds and one ceiling) with no fluctuation margins or other 
revision mechanisms. The directives as modified by the euro regulations 
49 
in conformity with the directives at the end of 1998 then no action is-likely 
to be required of them. The national amounts could of course be higher if 
the MS so wishes. The same logic will apply pari passu in the case of the 
ceiling (which could be lower than the euro figure in the directive). 
C. ACTION AND TIMING 
6. No action is required provided under the interpretations set out above. 
50 
CHANGEOVER TO THE EURO 
Community legislation 
POLICY AREA: INTERNAL MARKET 
MEASURES CONCERNED: Company Law 
A. DESCRIPTION 
1. Directive 77/91/EEC is the only piece of Community company law 
legislation which is affected by the changeover to the euro. This directive 
lays down coordinating rules in respect of the formation of public limited 
liability companies and the maintenance and alteration of their capital. The 
only provisions of the directive directly affected by the changeover to the 
euro relate to a minimum threshold of ECU 25 000 for subscribed capital 
necessary for incorporation of a company and the alteration of the 
equivalent of this threshold in national currencies, where necessary. 
Apart from these directly affected provisions, there are some other 
implications following from the Directive, particularly with regard to 
redenomination in euros of company share capital, which should be 
clarified in point 4. 
B. SUMMARY OF THE EFFECTS OF THE CHANGEOVER 
ECU threshold and equivalents in national currencies 
2. The threshold set in ECUs in Article 6(1) of the Directive will automatically 
be expressed in euros as from 1.1.1999 in accordance with Council 
Regulation 1103/97. 
Amendment of the Directive will not be necessary as a result of the 
introduction of the euro. 
3. For non participating Member States the provisions of the Directive shall 
continue to apply, with the threshold set in euros. If the equivalent of this 
threshold in national currency units is more than 10% below the threshold 
now set in euros, which is the margin allowed by Article 6(2) of the 
Directive, the Commission, in accordance with the provisions of this Article, 
shall inform the Member State that it must amend its legislation to comply 
with the minimum amount expressed in euros. 
51 
Redenomination of share capital 
4. Rounding rules may be required to apply to company share capital after the 
automatic conversion to euro. This is to avoid having shares with a nominal 
value with one or more decimal places, which is not practicable for the 
market. Therefore, Member States may need to provide national rules to 
enable companies to adopt cost effective rounding procedures. For 
instance, Member states can provide simplified procedures for the increase 
or decrease of capital if this is necessary for rounding purposes, or 
introduce shares without nominal value. The second company law Directive 
should not be interpreted as preventing the adoption of such simplified 
procedures exclusively for the purpose of the changeover. Shares without 
nominal value are already possible under Article 3 (c) of the Directive. 
C. ACTION AND TIMING 
5. No need for legislative action at Community level. 
CHANGEOVER TO THE EURO 
Community legislation 
POLICY AREA: INTERNAL MARKET 
MEASURES CONCERNED: Accounting 
A. DESCRIPTION 
1. Directives 78/660/EEC, as amended, and 83/349/EEC, as amended, 
constitute the Community's accounting legislation which is affected by the 
changeover to the euro. These directives lay down the accounting 
provisions for the preparation and presentation of annual and consolidated 
accounts, respectively. The provisions of these directives most affected by 
the changeover to the euro relate to thresholds for the preparation and 
presentation of certain accounts, the conversion rates to be applied in 
converting these thresholds into national currencies and the possibility to 
round the result of the conversion into national currencies by up to 10%. 
With the exception of this last provision, which is described in more detail 
in section B paragraph 4 below, amendment to the Directives will not be 
necessary as a result of the changeover to the euro. This amendment can, 
in any event, be dealt with in the context of the normal revision amendment 
which must take place every 5 years. The provisions which allow accounts 
to be presented additionally in ECUs are also affected. 
2. Apart from these most directly affected provisions, there are many 
provisions which, requiring clarification or explanation, are the subject of a 
policy document published by the Commission services - XV/7002/97, 
"Accounting for the introduction of the euro." This document, elaborated 
within the Contact Committee on the Accounting Directives, provides 
explanatory information and guidelines on how the changeover to the euro 
can be treated within the existing framework of European accounting 
legislation. 
B. SUMMARY OF THE EFFECTS OF THE CHANGEOVER 
ECU thresholds, conversion rates and rounding provisions 
3. In any event, the current provisions on conversion of threshold amounts 
into national currencies, which apply from 21 March 1994, are subject to a 
5-yearly review, which is normally achieved through a legislative 
amendment. The next review will take place (at the Commission's initiative) 
in 1999, which will set the new threshold amounts into the national 
currencies of non participating Member States. The new threshold due to 
be set in 1999 would apply directly in euros to participating Member States 
(the euro amount can be transposed into national law expressed in the 
national currency unit at the 1.1.1999 conversion rate). 
53 
4. After the transitional period the national currency units of the participating 
Member States can no longer be used. There will no longer be a need to 
translate the euro thresholds of the Fourth Directive into the national 
currency units of the participating Member States. The non participating 
Member States can continue to use the 10% rounding rule. To ensure 
equal treatment of Member States, it must be ensured that at the 5-yearly 
adjustment of the thresholds in 1999 a system will be introduced into the 
Directive which guarantees an equivalent treatment of SMEs in both 
participating and non participating Member States. 
C. ACTION AND TIMING 
5. A legislative amendment to Directive 78/660/EEC, within the context of the 
normal 5-yearly revision, will be necessary, to take effect from 1999. This 
amendment will be made part of a package of modifications that the 
Commission will announce in the spring of 1998. 
54 
CHANGEOVER TO THE EURO 
Community legislation 
POLICY AREA: INTERNAL MARKET 
MEASURES CONCERNED: Directive on liability for defective products 
A. DESCRIPTION 
1. Directive 85/374 is affected by the changeover to the euro. Due to its 
historic application threshold of ECU 500 (franchise) and ceiling of 
ECU 70 million (overall ceiling), the effect of the introduction of the euro on 
this directive is delayed. The amounts which Member States apply in their 
national laws will continue to be those set under the historic conversion 
rate of 25 July 1985 (i.e. date of adoption of the directive). These national 
amounts will not change until the amounts of the threshold/ceiling in the 
directive change, following a Commission proposal to that effect. 
B. SUMMARY OF THE EFFECTS OF THE CHANGEOVER 
ECU thresholds, conversion rates and rounding provisions 
2. All thresholds in the EC legislation will automatically be expressed in euros 
as from 1.1.1999 in accordance with Council Regulation 1103/97. National 
currency amounts applying the directive in national law will not be affected, 
until a Commission proposal is put forward (and adopted) for the revision of 
the amounts in the directive. 
3. The current provisions on conversion of threshold amounts into national 
currencies, applicable since 25 July 1985 are subject to a 5 yearly review, 
implemented through legislative amendment. The next review will set the 
new threshold amounts in euros and determine the applicable date for 
converting these amounts into the national currencies of non participating 
Member states and into the national currency units of participating Member 
States (at the irrevocable conversion rates fixed on 1.1.1999). 
4. After the transitional period the national currency units of the participating 
Member States can no longer be used. There will no longer be a need to 
translate the euro figures from the directive into the national currency units 
of participating Member States. 
C. ACTION AND TIMING 
5. A legislative amendment to Directive 85/374/EEC, within the context of the 
normal revision, is suggested. This should be timed to take effect at the 
first opportunity after 1.1.1999, following which the participating Member 
States will apply national currency unit equivalents of the new euro 
amounts (at the conversion rate) while the non participating Member States 
55 
will translate the new euro amounts into their national currency,- at the rate 
prevailing on the date of revision, for a new 5 year period. 
56 
CHANGEOVER TO THE EURO 
Community legislation 
POLICY AREA: INTERNAL MARKET 
MEASURES CONCERNED: Intellectual property legislation 
A. DESCRIPTION 
1. Regulation 2869/95 on the fees payable to the Community Trade Mark 
Office is directly affected. 
B. SUMMARY OF THE EFFECTS OF THE CHANGEOVER 
ECU references 
2. Under article 2 of Council Regulation 1103/97, all references to the ECU 
automatically become references to the euro. These references do not give 
rise on any problems of interpretation. 
3. There is a somewhat unusual clause in Article 6(2) of this regulation, which 
refers to the conversion rate between the Peseta and the ECU, as fixed 
daily by the Commission. This clause will of course cease to be applicable 
if Spain adopts the euro, given that there will be nothing to fix on a daily 
basis, as the irrevocable fixing of the conversion rate will take place on 
1.1.1999 for all time. If Spain does not adopt the euro on 1.1.1999 there will 
still be a purpose for this cash conversion clause; which will establish an 
official rate between the euro amounts in the Regulation and the amounts 
required to be paid in Peseta to satisfy the requirements under the 
regulation. 
C. ACTION AND TIMING 
4. No action necessary. 
57 
CHANGEOVER TO THE EURO 
Community legislation 
POLICY AREA: INDIRECT TAXATION 
MEASURES CONCERNED: Legislation on VAT and excise duties 
A. DESCRIPTION 
1. The Sixth Directive 77/388/EEC (as amended by Directives 91/680/EEC, 
92/111/EEC et 95/7/EC) establishes the common system of VAT. 
Directive 69/169/EEC (as last amended by Directive 94/4/EC) lays down 
the rules governing travellers' allowances. 
Directive 78/1035/EEC (as last amended by Directive 85/576/EEC), 
establishes the tax exemptions applicable to small consignments, while 
Directive 83/181/EEC (as last amended by Directive 88/331/EEC) lays 
down the rules governing exemption from VAT on importation. 
Directive 79/1072/EEC establishes arrangements for the refund of VAT to 
taxable persons not established in the territory of the country. 
Directives 92/80/EEC, 92/82/EEC and 92/84EEC lays down the rules 
governing taxes on manufactured tobacco, mineral oils and alcoholic 
beverages. 
B. COMMENTS 
2. Article 31 of Directive 77/388/EEC gives Member States the option, when 
converting the amounts indicated in the Directive into their national 
currency, of rounding the amounts resulting from this conversion either 
upwards or downwards by up to 10%. Given that its underlying logic (i.e. 
the need to obtain round figures in national currency) will still be relevant 
during the transitional period, this rule will continue to apply during that 
time. At the end of the transitional period, participating Member States will 
have to incorporate into their national legislation the amounts in euros 
indicated in the Directive since their national currencies will have ceased to 
exist as monetary units and the rounding-off rule will therefore no longer 
serve any purpose. 
On the other hand, Article 28m of the same Directive stipulates that the 
conversion of some amounts should be based on the rate of exchange 
applicable on a specified date (16 December 1991). The amounts in 
question are minimum amounts (for taxation at destination of 
intra-Community acquisitions, simplified recapitulative statements) or 
Community amounts (taxation of distance selling). Given that Article 28m 
does not provide for any possibility of revision, the amounts in national 
currency will continue to apply during the transitional period. In the 
absence of specific legislative measures, this will also continue to be the 
case for participating Member States after they have completely changed 
over to the euro on 1.1.2002. This would give rise to different amounts (all 
expressed in euros) in the various countries forming part of the euro zone. 
Measures will therefore have to be adopted to remedy this situation and to 
ensure that participating countries adopt the euro amounts laid down by the 
Directives. This opportunity should also be used to revise the conversion 
clause of Article 28m, which will still be applicable to non-participating 
countries, in order to restore a degree of uniformity in applying these 
thresholds within the Community.. 
3. Article 7 of Directive 69/169/EEC and Article 4 of Directive 78/1035/EEC 
lay down conversion and rounding rules. The applicable conversion rate is 
that of the first working day of October, taking effect on 1 January of the 
following year; amounts in national currency may be rounded off by no 
more than ECU 2; the amount of the previous year may continue to apply if 
the conversion leads to a change of less than 5% or to a reduction in the 
tax exemption. These conversion rules will no longer be relevant from 
1.1.1999 for participating countries because fixed parities will have been 
established and they will consequently cease to apply to them. They will, 
however, remain fully applicable to the currencies of non-participating 
countries. Following the same logic as for Article 31 of Directive 
77/388/EEC, the rounding rules will continue to apply during the transitional 
period as far as participating countries are concerned. However, they will 
become obsolete for those countries after that period. 
4. Article 7 of Directive 79/1072/EEC contains a conversion rule (the rate 
being that of 1 January of the year in question) and a rounding-off rule 
identical to that of Article 31 of Directive 77/388/EEC. The action to be 
taken is therefore comparable to that described above. 
5. The same applies to the conversion rules laid down by Directives 
92/80/EEC, 92/82/EEC, et 92/84/EEC, which will therefore be dealt with in 
the same way. 
C. ACTION AND TIMING 
6. It should be examined during the transitional period whether a legislative 
measure will be needed to ensure that, from 1 January 2002, participating 
countries adopt the euro amounts of Directive 77/388/EEC to which 
Article 28m applies. No Community action will be needed in respect of the 
rounding option provided for in Article 31 of Directive 77/388/EEC and in 
the other tax directives. At national level, provisions will have to be 
adopted to ensure that the various euro amounts contained in the 
Directives on VAT and excise-duties are in force from 1.1.2002. 
59 
7. No action is envisaged with regard to the other conversion rules laid-down 
by the tax directives which will remain applicable to non-participating 
countries. 
60 
CHANGEOVER TO THE EURO 
Community legislation 
POLICY AREA: COMMON COMMERCIAL POLICY 
MEASURES CONCERNED: Export Credits 
A. DESCRIPTION 
1. In order to create a level playing field in the area of export credits extended 
with public support, all OECD member countries comply with the provisions 
of the "Arrangement on guidelines for officially supported export credit" 
(also called the "Consensus"). The first version of this arrangement was 
agreed in 1978. Since then, the text has been regularly renegotiated in 
order to strengthen the terms. Following each round of negotiations, the 
newly agreed text becomes part of Community legislation through the 
enactment of a Council Decision (last revision: Decision 97/530/EC; OJ 
L216 of 8.8.97; the full text of the arrangement was annexed to Council 
Decision 93/112/EC; OJ L44 of 22.2.93). 
2. One of the key features of the Consensus is a fairly elaborate system of 
minimum interest rates. These Commercial Interest Reference Rates 
(CIRRs) are supposed to approximate market rates for comparable 
operations. They are calculated per currency and are adjusted once per 
month to prevailing market conditions (twice a month for aircraft financing 
rates), following notification by each country for its own currency. For most 
currencies, CIRRs are calculated on the basis of the yields of government 
bonds issued in the country concerned, supplemented with a 100 basis 
points margin. 
Presently, CIRR rates are notified to the OECD Secretariat for 20 different 
currencies. As far as the Community is concerned, 12 national currencies 
are involved (no CIRR rates exist for the Greek drachma, the Portuguese 
escudo and the Luxembourg franc), while the Commission notifies a CIRR 
rate for the ECU. 
3. Governments are allowed to extend export credits, expressed either in the 
domestic currency or any other currency, provided the terms of the 
Arrangement, notably as regards minimum interest rates, are respected. 
B. COMMENTS 
4. In the absence of any specific action in relation to the start of EMU, 
participating Member States could in theory continue to notify their national 
rates, based on the yields of their domestic government bonds. This 
approach would lead to the creation of a complex system of "national" euro 
rates, which would not only vary in level (depending on the yields of the 
corresponding government bonds) but also in structure (a single-tier 
61 
system applies to most Community currencies, while a few countries- have 
opted for a three-tier one). 
The logic of such a system would be difficult to grasp and it is unclear how 
the Arrangement should then be interpreted and applied as far as the euro 
is concerned. For example, exporters from countries outside the euro zone 
would be confronted with a multitude of euro rates whenever they offer 
export credit finance in euros. In principle, they should be entitled to 
choose the CIRR rate, and would probably opt for the lowest one. The 
same logic would in all likelihood apply to exporters from countries 
belonging to the euro zone, who might expect to get finance at the same 
rates as their competitors outside the euro zone i.e. at a euro rate which 
would differ form the euro rate applying to their national government. 
5. The approach based on different "national" euro CIRRs negates the euro 
as a single currency and lead to numerous difficulties and inconsistencies 
in implementation. It also goes against the basic logic of the CIRR system, 
which is currency-based, as opposed to country-linked. 
At the start of stage 3 (1.1.1999), the CIRR rates for the currencies of the 
participating Member States, as well as the ECU CIRR, should thus be 
replaced by a single euro CIRR. This rate should comply with the 
provisions of Annex VIII of the Arrangement and thus closely correspond to 
a rate for a first-class domestic borrower. 
C. ACTION AND TIMING 
6. The Community's main interest is to ensure a smooth transition to a new 
system, avoiding disturbances and discontinuities which could be harmful 
to Community exporters/importers or adversely affect the image of the euro 
on the international stage. Preparation will have to go through several 
stages (discussions at OECD level, Council Decision, ...) and therefore 
needs to start on a timely basis. 
Informal discussions in the Council Working Group on. Export Credits have 
already started in order to secure a Community position on this question 
with a view to initiate discussions at the OECD. 
62 
CHANGEOVER TO THE EURO 
Community legislation 
POLICY AREA: EXTERNAL RELATIONS 
MEASURES CONCERNED: International agreements 
A. DESCRIPTION 
1. The Community has concluded numerous international agreements which 
include references to national currencies or to the ECU. 
B. COMMENTS 
2. The principle of "/ex monetae", which is applicable to contracts under 
private law also holds for international agreements: jurisdictions of third 
countries will recognise the euro as the successor to the respective 
national currency. That means references in agreements to a currency of a 
participating Member State have to be interpreted with reference to 
European monetary law which has changed and has become an integral 
part of the monetary law of the participating Member States'. 
3. The same holds for references in agreements to the ECU as defined in 
Community law. According to Article 109 I (4) of the Treaty and Article 2 of 
Council Regulation 1103/97, references to the ECU will be replaced by 
references to the euro at a rate of 1:1. 
4. It follows that any renegotiation of the Community's international 
agreements - whether referring to national currencies or to the ECU - is not 
necessary. Neither is it indispensable to change the respective currency 
references physically since such references will have to be read as 
references to the euro. 
C. ACTION AND TIMING 
5. No specific legislative action is envisaged in relation to the Community's 
international agreements. 
6. EC delegations in third countries will be provided with appropriate 
information for external use in relation to the above. Specific demarches 
regarding this specific issue are not called for, but delegations will be 
instructed to raise the issue in the context of regular contacts regarding 
EMU and the changeover to the euro. The issue regarding references in 
international agreements to national currencies or to the ECU should also 
be raised in the context of bilateral discussions with partner countries. 
63 
CHANGEOVER TO THE EURO 
Community legislation 
POLICY AREA: CONSUMER PROTECTION 
MEASURES CONCERNED: Consumer credit and certain other contracts 
A. DESCRIPTION 
1. Council Directive 85/577 deals with consumer protection in respect of 
contracts negotiated away from business premises, for example contracts 
concluded during an excursion organized by the trader away from his 
business premises or during a visit by the trader to the consumer's home. 
Council Directive 87/102 (as last amended by Council Directive 90/88) is 
aiming at the approximation of laws, regulations and administrative 
provisions of the Member States concerning consumer credit. The 
Directive is applied to credit agreements. 
B. COMMENTS 
2. Directive 85/577 specifies that it will only apply to contracts exceeding a 
specified amount (presently 60 ECU; "current value" clause). 
Directive 87/102 does not apply to credit agreements involving amounts 
less than 200 ECU or more than 20.000 ECU (Art. 2.1). The Directive 
contains a clause for conversion into national currencies. The initial 
exchange rate to be used is the one of the date of adoption of the Directive, 
while rounding is allowed up to 10 ECU (Art. 13.1). As this is a fixed date 
clause, it will perpetuate differences between the values in national 
implementing legislation. Article 13.2 foresees 5-yearly revisions from 
1995 onwards. These revisions however only deal with the amounts in the 
directive, as opposed to their translation into national currencies. 
Both directives include a minimum clause which offers the possibility to 
Member States to take more protective measures. For example, in some 
countries, the minimum has been reduced to 0 ECU. 
C. ACTION AND TIMING 
3. The Commission has already announced that both directives will be 
revised. In the case of directive 87/102, this revision will moreover ensure 
that the ceilings and thresholds applying to "ins" will correspond to the 
amounts specified in the Directive as from 1.1.2002 at the latest (except for 
Member States desiring to take more restictive measures). 
64 
CHANGEOVER TO THE EURO 
Community legislation 
POLICY AREA: BUDGETS 
MEASURES CONCERNED Financial Regulation 
A. DESCRIPTION 
1. The Financial Regulation of 21 December 1977 applicable to the general 
budget of the European Communities27 is the basic text governing the 
drawing-up and implementation of the Communities' budget, and as such 
implements Article 209 of the EC Treaty. It is complemented by a 
Commission Regulation containing implementing provisions28. 
B. COMMENTS 
2. Article 11 of the Financial Regulation requires the budget to be drawn up in 
ECUs and refers, for the purposes of defining the ECU, to Council 
Regulation (EC) No 3320/94 of 22 December 1994. It determines the value 
of the ECU and lays down rules for conversion between the ECU and 
national currencies. Other references to the ECU are widespread in the 
Financial Regulation (book-keeping, etc.). 
3. Although Article 11 makes any change in the definition of the ECU decided 
on by the Council automatically applicable to the Financial Regulation, this 
Article should be amended in order to take account of the introduction of 
the euro and, in particular, to establish the principle that not only is the 
budget drawn up in euros, but the Community's rights and obligations are 
also expressed and executed in euros (notwithstanding specific provisions 
concerning revenues or expenditure). The other references to the ECU will 
also have to be replaced by references to the euro. 
C. ACTION AND TIMING 
4. A proposal for an amendment of the Financial Regulation will be presented 
by the Commission, in accordance with Article 209 of the Treaty, towards 
April 1998. Once this has been adopted by the Council, the Commission 
will amend its Regulation 3418/93/EEC laying down detailed rules for the 
implementation of certain provisions of the Financial Regulation. 
OJ L 356 of 31.12.1977, p.1. Regulation last amended by Council Regulation (EC, Euratom, ECSC) 
No 2335 of 18 September 1995 (OJ L 240 of 7.10.1995, p.12). 
Commission Regulation (Euratom, ECSC, EC) NO 3418/93 of 9 December 1993 laying down 
detailed rules for the implementation of certain provisions of the Financial Regulation of 
21 December 1977 (JO L315 du 16.12.1993, p.1). 
65 
CHANGEOVER TO THE EURO 
Community legislation 
POLICY AREA: ADMINISTRATIVE EXPENDITURE 
MEASURES CONCERNED: Remunerations and pensions 
A. DESCRIPTION 
1. The Staff Regulations, the rules applicable to other servants of the 
Communities and the tax regulation are the legislative basis governing the 
laying-down and payment of the remunerations, pensions and other 
pecuniary rights of officials and other servants. 
The amounts making up the remuneration (pay scales, allowances, 
contributions, taxes, etc.) are at present expressed in BEF. The net 
amount is converted into the national currency of the place of employment 
(the country of residence in the case of retired officials) on the basis of a 
fixed exchange rate which, combined with a weighting, takes account of the 
differences in the cost of living compared to Brussels. 
2. From 1.1.1999, Article 8(3) of Council Regulation .../9829 on the 
introduction of the euro will enable payment to be ma"de in euros in those 
countries which will have adopted the euro as their national currency, and 
this will not require any amendment of the Staff Regulations To this end, 
the remuneration currently fixed in national monetary units will merely have 
to be converted into euros at the fixed conversions rate. 
At the end of the transitional period (31.12.2001), in accordance with 
Article 14 of Council Regulation..798 on the introduction of the euro, and 
assuming that Belgium adopts the euro, all the amounts making up the 
remuneration (currently expressed in BEF) and all the associated exchange 
rates and weightings will be replaced by their equivalents in euros at the 
fixed conversion rate. 
B. PROPOSED MODIFICATION 
3. Aware as it is of the political significance and symbolic value of these 
remunerations, the Commission proposes, on the assumption that Belgium 
adopts the euro, that they should be expressed in euros. 
Consequently, from 1.1.1999, all references to BEF and all amounts 
expressed in BEF will be replaced in the Staff Regulations by references to 
the euro and by amounts expressed in euros. Amounts appearing on salary 
statements (basic salary, allowances, contributions, taxes, etc.) will be 
See the Resolution of the Council of 7.7.1997 on the legal framework for the introduction of the euro 
(OJ C 236 of 2.8.1997, p. 7 - 12). 
66 
expressed in euros and the euro will become the central currency -for 
determining remunerations and pensions in all countries. 
4. From 1.1.1999, remunerations and pensions will be paid in euros in all 
countries having adopted the euro as their national currency. In non-
participating countries, remunerations and pensions will continue to be paid 
in national currency. 
5. Given that the rate of conversion between the national monetary unit and 
the euro will be fixed, the level of net remunerations or pensions paid to the 
official will remain unchanged, irrespective of his place of employment. 
The solution will therefore require only a formal amendment of the Staff 
Regulations compatible with the method applied for adapting 
remunerations. In substance, this approach anticipates the full changeover 
to the euro which would otherwise not occur until 1.1.2002. 
C. ACTION AND TIMING 
6. The legislation which the Commission will propose will have the effect of 
replacing the term "Belgian franc" with "euro" and amounts in BEF with 
their equivalent in euros in the Staff regulations and other rules affected at 
the relevant rate of conversion with effect from 1.1.1999. The following will 
be proposed: 
a proposal for a regulation amending the Staff Regulations and the 
rules applicable to other servants with regard to the determination of 
remunerations, pensions and other pecuniary rights in euros; 
a proposal for a Council regulation amending Regulation No 260/68 
laying down the conditions and procedure for applying the tax for the 
benefit of the European Communities; 
a proposal for a Council regulation amending Regulation No 122/66 
(laying down the list of places for which a transport allowance may be 
granted, the maximum amount of that allowance and the rules for 
granting it) and Regulation No 300/76 determining the categories of 
officials entitled to allowances for shiftwork, and the rates and 
conditions thereof. 
7. A qualified majority within the Council will be required in all cases. It 
should take about 14 months for these decisions to be adopted given that 
the opinion of the Staff Regulations Committee and the other institutions is 
required for any amendment to the Staff Regulations. 
Close cooperation at inter-institutional level will enable the regulations and 
"pay" component to be amended in the best possible conditions and the 
staff to be informed in co-operation with their representatives. 
67 
The draft Commission proposals will be ready by the beginning of-1998. 
The Commission is currently carrying out the preliminary consultations. 
They will in principle have to be adopted by 1 January 1999. 


ISSN 0254-1475 
COM(97) 560 final 
DOCUMENTS 
EN 09 01 06 
Catalogue number : CB-CO-97-596-EN-C 
ISBN 92-78-27352-X 
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