A4-0447/98

Resolution on the Euro as a parallel currency

The European Parliament,

- having regard to the establishment of the European Central Bank and the start of Stage Three of EMU,

- having regard to its resolution of 30 April 1998 on the Convergence Report of the European Monetary Institute (C4-0201/98) and the Commission document of 25 March 1998 entitled 'EURO 1999 - Report on progress towards convergence and its recommendation with a view to the transition to the third stage of Economic and Monetary Union¨ (COM(98)1999 - C4-0200/98) ((OJ C 152, 18.5.1998, p. 33.)),

- having regard to Rule 148 of its Rules of Procedure,

- having regard to the report of the Committee on Economic and Monetary Affairs and Industrial Policy (A4-0447/98),

A. whereas the start of Stage Three of EMU on 1 January 1999 will not, unfortunately, include Sterling, the Swedish Krona, the Danish Krone and the Greek Drachma,

B. whereas it is to be earnestly hoped that the United Kingdom, Sweden, Denmark and Greece, in their own interests, in the interests of the other Member States participating in the start of EMU and, above all, in the interests of the peoples of the European Union as a whole, will be able to join the Single Currency as soon as possible,

C. whereas, notwithstanding the outstanding political and economic barriers to entry for the United Kingdom, Sweden, Denmark and Greece, substantial majorities of their citizens expect they will be joining EMU within the next seven years (for example in the case of the United Kingdom, 65%),

D. whereas it is widely perceived, by firms in the United Kingdom, Sweden, Denmark and Greece, that there will be competitive advantage to be achieved by an early capacity to operate in Euros,

E. whereas the political uncertainty over the timing of EMU entry by the United Kingdom, Sweden, Denmark and Greece and the economic uncertainty inherent in their retaining the option to manipulate the value of their currencies could easily lead to a significantly greater volatility of Sterling, the Swedish Krona, the Danish Krone and the Greek Drachma against the Euro than has recently been the case against the Deutschmark,

F. whereas this increased volatility could also arise because of the greater weight of the Euro in international markets compared to the Deutschmark and the impact this might have on the volatility of Sterling, the Swedish Krona, the Danish Krone and the Greek Drachma against the Dollar and Yen,

G. whereas this volatility could easily be further exacerbated by the vulnerability of minor currencies to speculative attack revealed in recent global capital market trends,

H. whereas this volatility is likely to ensure that the cost of capital in the United Kingdom, Sweden, Denmark and Greece remains above that prevailing in the Euro zone,

I. whereas from 1 January 1999, the Euro will be used for all EU payments, so sectors dependent on EU payments, notably agriculture, in Member States outside EMU could therefore face increased exchange risk and may seek to pass this on to their domestic suppliers by requesting them to invoice in Euros,

J. whereas use of the Euro by tourists could be especially significant in those regions of the pre-in states where this industry is important, such as London and the Greek islands,

K. whereas a substantial number of major multinational corporations operating in the United Kingdom, Sweden, Denmark and Greece have already announced their intention, after 1 January 1999, to pass the exchange risk on to their domestic suppliers by requesting them to invoice in Euros,

L. whereas a substantial number of national corporations in the United Kingdom, Sweden, Denmark and Greece exporting to the Euro zone will be seeking to pass the exchange risk on to their domestic suppliers by requesting them to invoice in Euros,

M. whereas the desire to compare prices easily across the whole of the EU could well lead British, Swedish, Danish and Greek purchasing managers, even of companies with no Euro income stream, to request their domestic suppliers to quote in Euros,

N. whereas in the United Kingdom, Sweden, Denmark and Greece, in some sectors, notably financial services and information technology, where the employers and employees are international, the Euro will, over the next three years, be the denominating currency of the vast majority of executive remuneration packages,

O. whereas it is also possible that in the United Kingdom, Sweden, Denmark and Greece, wage deals in sectors exposed to the Euro, such as the motor industry, whilst still denominated in national currency, will be explicitly linked to the Euro exchange rate,

P. whereas it is likely that the Euro will, over the next few years, become equal to the Dollar for key commodity import contracts for the Euro zone, notably for North Sea oil and natural gas,

Q. whereas it is possible that the Euro will, over the next few years, become equal to the Dollar in international trade and investment transactions in those countries that are candidate members of the EU,

R. whereas the Euro will therefore not be remotely 'just another foreign currency¨ in the United Kingdom, Sweden, Denmark and Greece after 1 January 1999, but will denominate a rapidly growing share of these countries' money supply (perhaps as much as 15% in the case of Sweden over the next three years),

S. whereas this development is to be welcomed in that it will undoubtedly tend to accelerate British, Swedish, Danish and Greek participation in EMU,

T. whereas this development will, however, pose increasing problems for the Central Banks of the United Kingdom, Sweden, Denmark and Greece in running their national monetary policies,

U. whereas this development could also easily lead small and medium-sized enterprises, which have never before had foreign exchange exposure, to take too lightly risks they do not understand and cannot properly manage,

V. whereas this development might also lead consumers to assume debt and other financial obligations in Euros too lightly, without appreciating the risks involved,

W. whereas the parallel use of the Euro in those countries which are candidate members of the EU is to be welcomed as it will intensify their links with the Union and ease their eventual membership,

X. whereas this development might however, in time, create comparable risks to those now faced by the United Kingdom, Sweden, Denmark and Greece,

Y. whereas the wider international parallel use of the Euro is to be welcomed as it will underpin its role as a global currency equal to the dollar,

1. Considers that:

i) no barriers of any kind should be set by any public authorities in any Member State to the parallel use of the Euro in the United Kingdom, Sweden, Denmark and Greece;

ii) the ECB should establish a special committee to monitor the parallel use of the Euro in the United Kingdom, Sweden, Denmark and Greece and to ensure its development helps rather than hinders the adhesion of these states to EMU;

iii) the Central Banks of the United Kingdom, Sweden, Denmark and Greece should all make official statements, before 1 January 1999, on how they envisage parallel Euro use will develop in their respective economies over the next three years and how they recommend financial institutions, enterprises and consumers should act in these circumstances; these statements to be presented to the European Parliament through the Monetary Affairs Subcommittee;

iv) as the only way the risks inherent in the parallel use of the Euro can be diminished for the United Kingdom, Sweden, Denmark and Greece is by their governments ensuring their policy towards the Euro is as clear as possible to all economic agents, they should take the necessary steps to this end;

v) as the only way the risks inherent in parallel use of the Euro can be removed for the United Kingdom, Sweden, Denmark and Greece is by joining EMU, they should do exactly that, as soon as possible;

2. Instructs its President to forward this resolution to the Commission, the Council, the Governing Council of the ECB and the governments and parliaments of the Member States.