OPINION OF THE EUROPEAN CENTRAL BANK
of 17 February 2000
at the request of the French Ministry of Econom ics, Finance and Industry on two draft laws on
the statute and role of the Institut dÉmission des Départements dOutre-Mer (IEDOM)
(CON/99/20)
1. On 24 November 1999 the European Central Bank (ECB) received a request from the French
Ministry of Economics, Finance and Industry for an ECB Opinion on two draft laws entitled theDecree fixing the methods of application of Order No. 99 of 1999 relating to the status andactivities of the Institut dÉmission des Départements dOutre-Mer (IEDOM) and OrderNo. 99 ... of . 1999 relating to the status and activities of the Institut dÉmission desDépartements dOutre-Mer. Following informal comments made by the ECB, the FrenchMinistry of Economics, Finance and Industry submitted two revised draft laws with a request
for an ECB Opinion.
2. The ECBs competence to deliver an opinion is based on Article 105 (4) of the Treaty
establishing the European Community (hereinafter referred to as the Treaty) and onArticle 2 (1), in particular the first and thir d indents, of Council Decision (EC) No. 98/415 of
29 June 1998 on the consultation of the European Central Bank by national authoritiesregarding draft legislative provisions, as the draft laws deal with currency matters and thenational central bank. In accordance with Article 17.5, first sentence, of the Rules of Procedureof the European Central Bank, this ECB Opinion has been adopted by the Governing Council of
the ECB. This ECB Opinion is based on an unofficial English translation of the official French
proposal.
3. The draft laws are intended to revise the regulations regarding the functioning and organisation
of the Institut dÉmission des Départements dOutre-Mer (IEDOM) in order to reflect thetransfer of national monetary powers to the ECB which came into force on 1 January 1999. Theproposed modifications to the Statute of the IE DOM refer in pa rticular to the relationship
between the IEDOM and the Banque de France following the integration of the latter into theEuropean System of Central Banks (ESCB), the composition of the Supervisory Board and the
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management of the IEDOM, the holding of acc ounts and the flow of payments between the
Banque de France and the IEDOM concerning the latters profits and possible losses. Since1 January 1999 the IEDOM has been conducting monetary policy operations of the ESCB in theFrench overseas departments of Guadeloupe, Guyana, Martinique and Réunion and the Frenchterritorial communities of Saint-Pierre-et-Miquelon and Mayotte (hereinafter referred to as the
geographical zone of activity), with the latter two representing an integral part of France, but
not forming part of the European Community and therefore not being subject to Communitylaw. According to the proposed reform, it is fully recognised that the implementation of ESCBtasks in the geographical zone of activity pertains to the Banque de France under Chapter 1 ofLaw No. 93-980 of 4 August 1993, while the IEDOM becomes an agency of the Banque deFrance to carry out those tasks in the name of and on behalf of the Banque de France, with theexclusion of the holding and management of foreign reserve assets. For the purposes of carryingout these tasks, credit institutions established as branches or based in the geographical zone ofactivity have to open accounts at the Banque de France. These accounts are to be held by the
IEDOM as an agent acting in the name of and on behalf of the Banque de France. At the same
time, the IEDOM will also carry out its own tasks in the geographical zone of activity, such asputting coins into circulation and other tasks of general interest entrusted to it by the State.
4. The ECB welcomes the intention of France to reform the IEDOM. The Statute of the European
System of Central Banks and of the European Central Bank does not allow for ESCB tasks to becarried out by bodies other than the ECB and the 15 national central banks forming the ESCB,so in that respect the current situation needed to be amended. The ECB notes that a specialregime may be admitted for the French overseas departments under Article 299.2 of the Treaty,
based on their remoteness, insularity, small size, difficult topography and climate and economic
dependence on few products, as is also reflected in Declaration No. 26 on the outermost regionsof the Community, annexed to the Final Act of the Treaty on European Union (the MaastrichtTreaty). However, it is also noted that the draft laws are not based on any specific decision ofthe Council under that Article. By applying the proposed agency status it can be ensured that itwill be the Banque de France as an integral part of the ESCB and not the IEDOM which willperform ESCB-related monetary policy operations in the geographical zone of activity. The roleof the IEDOM will become purely instrumental and will consist in putting its organisation at thedisposal of the Banque de France in the relevant territories. All corresponding regulatory and
contractual arrangements with counterparties located in the geographical zone of activity will be
entered into exclusively with the Banque de France and will be identical to those applied tocounterparties located in metropolitan France. The counterparties will open accounts in thebooks of the Banque de France and, therefore, all ESCB-related financial transactions will be
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recorded immediately in the accounts and in th e financial statements of the Banque de France.
Consequently, as far as ESCB-related tasks ar e concerned, the ECB has been ensured by the
Banque de France that Articles 6 to 8 of the draft Government Order will not apply as thiswould otherwise be inconsistent with the agency status of the IEDOM. These provisions dealwith the settlement of losses and profits, the legal nature of the operations entered into by the
IEDOM on its own account, the methods for the presentation and settlement of accounts of the
IEDOM and their consolidation with the accounts of the Banque de France, and are linked to theIEDOMs own tasks.
5. The ECB welcomes the fact that the new draft laws provide for a clear allocation of
competences between the Supervisory Board and the Director General, which take into accountthe special status of the IEDOM  as agent of the Banque de France. The Supervisory Board is
only vested with decision-making powers for the IEDOMs own tasks (Article 1-VII of the draft
Decree amending Article 12 of the Decree of 18 October 1986). As far as the IEDOMs
activities as an agent of the Banque de France are concerned, it is the Director General who will
manage the IEDOM and who will represent the IEDOM externally (Article 1-VIII of the draftDecree amending Article 13 of the Decree of 18 October 1986). The ECB understands that thereference in Article 1-VIII of the draft Decree to the Director General acting under the controlof the Supervisory Board only applies to the management of the IEDOMs own tasks and that,as far as the IEDOMs activities as an agent of the Banque de France are concerned, theDirector General will act under the instructions of the Governor of the Banque de France.
6. The ECB understands that the IEDOM will not carry out any tasks related to the collection of
statistics related to Monetary Financial Institutions necessary for the ESCB to undertake it tasks,
as in the geographical zone of activity these activities will be performed within the frameworkfor reporting of statistics to the French Banking Commission.
7. The ECB takes the view that its responsibility for ensuring the integrity of the ESCB requires it
to consider the agency status of the IEDOM as a situation which is acceptable onlyexceptionally, owing to the particular nature of the IEDOM, especially its former status as acentral bank in the geographical zone of activity. A permanent IEDOM-based structure wouldrequire the approval of the Council in accordance with the procedure laid down in Article 299.2
of the Treaty. The ECB stresses that the particular nature of the IEDOM does not warrant
consideration of its status as agent of the Banque de France as a precedent for any future cases.
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8. The ECB understands that, should the Banque de France and the IEDOM prepare a joint
agreement laying down the details of the operational mechanisms for the implementation of thesingle monetary policy in the geographical zone of activity, the ECB will be consultedaccordingly.
9. The ECB finally notes that the two draft laws do not provide for an application of those parts of
Community law including all ECB legal acts which are or will be necessary for the functioningof Economic and Monetary Union in Saint-Pierre-et-Miquelon and Mayotte. The ECB urgesFrance to prepare for the application of such legislation without further delay in order to complywith Article 4 of the Council Decision (EC)  No. 1999/95/EC of 31 December 1998 concerning
the monetary arrangements in the French terr itorial communities of Saint-Pierre-et-Miquelon
and Mayotte (hereinafter referred to as the Council Decision), which requires that such is madein agreement with the Commission of the European Communities and the ECB. 
10. The ECB confirms that it has no objection to this ECB Opinion being made public by the
competent national authorities at their discretion.
Done at Frankfurt am Main on 17 February 2000.
The President of the ECB
[signed]
Willem F. Duisenberg