13. 7. 88 Official Journal of the European Communities NoC 183/11 
II 
(Preparatory Acts) 
COMMISSION 
Amended proposal for a Council Regulation establishing a single facility providing medium-term 
financial support for Member States' balances of payments (') 
COM(88) 279 final 
(Submitted by the Commission pursuant to Article 149 (3) of the EEC Treaty on 20 May 1988) 
(88/C 183/06) 
O OJ No C 26, 1. 2. 1988, p. 13. 
ORIGINAL PROPOSAL AMENDED PROPOSAL 
I. CITATIONS 
Having regard to the Treaty establishing the European 
Economic Community, and in particular Articles 108 and 
235 thereof, 
Having regard to the proposal from the Commission, 
which consulted the Monetary Committee for this 
purpose, 
Having regard to the opinion of the European 
Parliament ('), 
First recital 
"Whereas Article 108 of the Treaty provides for the 
granting of mutual assistance, to be decided by the 
Council on a proposal from the Commission, to a 
Member State in difficulties or seriously threatened with 
difficulties as regards its balance of payments; whereas 
the resolution of the European Council of 5 December 
1978 on the establishment of the European Monetary 
System (EMS) and related matters confirmed the need 
for a Community facility for medium-term financial 
assistance of balances of payments; 
Second recital 
Whereas it should be possible for the operation of 
lending to a Member State to take place soon enough in 
order to encourage that Member State to adopt, in good 
time, measures likely to prevent the occurence of an 
acute balance-of-payments crisis; Unchanged 
Unchanged 
Second recital 
Whereas it should be possible for the operation of 
lending to a Member State to take place soon enough in 
order to encourage that Member State to adopt, in good 
time and in a situation where orderly exchange rate 
conditions prevail, economic policy measures likely to 
prevent the occurence of an acute balance-of-payments 
crisis and to support its efforts towards convergence; II. RECITALS 
No C 183/12 Official Journal of the European Communities 13. 7. 88 
ORIGINAL PROPOSAL AMENDED PROPOSAL 
Third recital Deleted 
Whereas a financing facility in the form of a credit line 
or a loan commitment to a Member State undertaking to 
implement a capital liberalization programme despite a 
fragile balance-of-payments situation, should provide 
back-up for such a programme in orderly exchange-rate 
conditions; 
Fourth recital Unchanged 
Whereas each loan to a Member State must be linked to 
the adoption by that Member State of economic policy 
measures designed to re-establish or to ensure a 
sustainable balance-of-payments situation and adapted to 
the gravity of the balance-of-payments situation in that 
State and to the way in which it develops; 
Fifth recital Unchanged 
Whereas appropriate procedures and instruments should 
be provided for in advance to enable the Community and 
Member States to ensure that, if required, medium-term 
financial support is provided quickly, especially where 
circumstances call for immediate action; 
Sixth recital Unchanged 
Whereas, in order to finance the support granted, the 
Community needs to be able to use its credit worthiness 
to borrow resources that will be placed at the disposal of 
the Member States concerned in the form of loans; 
whereas operations of this kind are necessary to the 
achievement of the objectives of the Community as 
defined in the Treaty, especially the harmonious devel­
opment of economic activities in the Community as a 
whole; whereas the Treaty makes no provision for the 
specific powers of action required for this purpose; 
Seventh recital 
Whereas by Decision 71/143/EEC ('), as amended by 
Decision 85/656/EEC (2), the Council set up machinery 
for providing medium-term financial assistance that was 
initially valid for a period of four years from 1 January 
1972; whereas this machinery has since been renewed 
and extended, on the last occasion for two years until 31 
December 1988 by Decision 86/656/EEC; whereas this 
machinery provides for the Member States to grant 
medium-term loans, within certain limits, to one or more 
Member States experiencing balance-of-payments diffi­
culties; Unchanged 
13. 7. 88 Official Journal of the European Communities No C 183/13 
ORIGINAL PROPOSAL AMENDED PROPOSAL 
Eighth recital 
Whereas by Regulation (EEC) No 682/81 ('), as 
amended by Regulation '(EEC) No 1131/85 (2), the 
Council set up a Community loan mechanism designed 
to support the balances of payments of the Member 
States; whereas this mechanism provides for the 
Community to contract loans, according to needs and 
within the limits set on outstanding borrowing, in order 
to onlend the proceeds to one or more Member States 
experiencing balance-of-payments difficulties; 
Ninth recital 
Whereas the Community loan mechanism has demon­
strated its effectiveness; whereas its general design and 
the arrangements for implementing it still meet the needs 
of the Community; whereas, in view of the Community's 
borrowing capacity and of the conditions available to it 
for borrowing from financial institutions or on capital 
markets, the mechanism could constitute the main form 
of mutual assistance provided for under Article 108 of 
the Treaty; whereas it could also constitute, under 
certain conditions and in an appropriate form, an 
instrument to provide back-up for a programme of 
capital liberalization; whereas the ceiling on amounts 
outstanding under the mechanism should be adjusted 
accordingly; 
10th recital 
Whereas, however, it is appropriate that the financing 
obligations on Member States to finance mutual 
assistance under the machinery for medium-term 
financial assistance stay in force until the final stage of 
the European Monetary System so as to ensure that 
system's cohesion and stability, irrespective of the 
conditions prevailing on international capital markets; 
whereas the present procedures for exempting a Member 
State from contributing or for mobilizing Member 
States' claims should, nevertheless, be simplifield; 
11th recital 
Whereas it is appropriate to merge medium-term 
financial assistance and the Community loan mechanism 
into a single facility for medium-term financial support, 
while retaining their specific methods of financing; Unchanged 
Ninth recital 
Whereas the Community loan mechanism has demon­
strated its effectiveness; whereas its general design and 
the arrangements for implementing it still meet the needs 
of the Community; whereas, in view of the Community's 
borrowing capacity and of the conditions available to it 
for borrowing from financial institutions or on capital 
markets, the mechanism could constitute the main form 
of mutual assistance provided for under Article 108 of 
the Treaty; (part of text deleted); whereas the ceiling on 
amounts outstanding under the mechanism should be 
adjusted accordingly; 
10th recital 
Whereas, however, it is appropriate that the financing 
obligations on Member States (part of text deleted) 
under the machinery for medium-term financial 
assistance stay in force until the final stage of the 
European Monetary System so as to ensure that system's 
cohesion and stability, irrespective of the conditions 
prevailing on international capital markets; whereas the 
present procedures for exempting a Member State from 
contributing or for mobilizing Member States' claims 
should, nevertheless, be simplified; 
11th recital 
Whereas it is appropriate to merge medium-term 
financial assistance and the Community loan mechanism 
into a single facility for medium-term financial support; 
(part of text deleted) 
III. ENACTING TERMS 
Article 1 
1. In accordance with the decision adopted by the 
Council pursuant to Articles 3 or 4 and after consulting 
the Monetary Committee, the Commission shall be 
empowered to contract loans on the capital markets on 
behalf of the European Economic Community, with the 
aim of lending the proceeds to one or more Member 
States which are experiencing or seriously threatened 
with balance-of-payments difficulties or which have 
undertaken to implement a programme of capital 
liberalization despite a fragile balance-of-payments 
situation. Article 1 
1. In accordance with the decision adopted by the 
Council pursuant to Article 3 (part of text deleted) and 
after consulting the Monetary Committee, the 
Commission shall be empowered to contract loans on the 
capital markets or with financial institutions on behalf of 
the European Economic Community, with the aim of 
lending the proceeds to one or more Member States 
which are experiencing or threatened with balance-of 
payments difficulties. 
No C 183/14 Official Journal of the European Communities 13. 7. 88 
ORIGINAL PROPOSAL AMENDED PROPOSAL 
2. The outstanding amount of loans to be granted to 
Member States pursuant to paragraph 1 shall be limited 
to ... million ECU in principal. 
Article 2 
Where a Member State proposes to call upon sources of 
conditional financing outside the Community, it shall 
first consult the Commission and the other Member 
States in order to examine, among other things, the 
possibilities available under the Community for medium-
term financial support. Such consultations shall be held 
within the Monetary Committee. 
Article 3 
1. On the initiative of the Commission acting pursuant 
to Article 108 of the Treaty or of the Member State 
experiencing balance-of-payments difficulties and 
seeking a Community loan, the Council, after examining 
the situation in that Member State and the adjustment 
programme that it has undertaken to implement, shall 
decide, as a rule during the same meeting: 
— whether to grant the loan, and the amount of the 
loan; 
— the average duration of, and the techniques for 
disbursing the loan, which may be paid in one 
amount or in several instalments; 
— the economic policy conditions attaching to the loan, 
with a view to re-establishing a sustainable balance-
of-payments situation. The outstanding amount of loans so granted to Member 
States shall be limited to 14 000 million ECU in principal. 
2. If conditions available on capital markets or with 
financial institutions are unsatisfactory or if the amount 
available under the ceiling referred to in paragraph 1 is 
insufficient, Community loans shall be financed in full or 
in part by the other Member States whose contibutions in 
principal may not exceed the ceilings specified in the 
Annex. 
3. The outstanding amount of loans to be granted to 
Member States pursuant to the present regulation, shall 
be limited to 16 000 million ECU in principal. 
Unchanged 
Article 3 
1. The medium-term financial support facility can be 
implemented by the Council on the initiative: 
— of the Commission acting pursuant to Article 108 of 
the Treaty in agreement with the Member State 
seeking Community financing; 
— of a Member State experiencing or threatened with 
difficulties on its current or capital account of the 
balance of payments. 
2. If the amount available under the ceiling referred to 
in Article 1 (2) is insufficient, or if the conditions 
available on international capital markets are unsatis­
factory, Community loans to Member States experi­
encing balance-of-payments difficulties shall be financed 
in full or in part by the other Member States, whose 
contributions in principal may not exceed the ceilings 
specified in the Annex. 
In such cases, the Council, in addition to taking the 
decisions referred to in paragraph 1, shall decide on the 
size of the Member States' contributions to the financing 
of the loan and on the financial conditions attaching to 
the credits they make available in that connection. The 
Council may exempt from contributing any Member 
State which maintains that difficulties exist or can be 
foreseen as regards its balance of payments. 2. The Council, after examining the situation in the 
Member State seeking medium-term financial assistance 
and the recovery or back-up programme presented in 
support of its application, shall decide, as a rule during 
the same meeting: 
— whether to grant a loan or appropriate financing 
facility, its amount and its average duration, 
— the techniques for disbursing the loan or financing 
facility the release or drawings of which shall as a rule 
be by successive instalments, 
— the economic policy conditions attached to the 
medium-term financial assistance with a view to re­
establishing or ensuring a sustainable balance-of-
payments situation. 
13. 7. 88 Official Journal of the European Communities No C 183/15 
ORIGINAL PROPOSAL AMENDED PROPOSAL 
3. Where medium-term financial assistance is financed 
in part or in full by recourse to the Member States, the 
Council, in addition to taking the decisions referred to in 
paragraph 2, shall decide on the size of the contributions 
of these States*and on the financial conditions attaching 
to the credits they make available in that connection. The 
Council may exempt from contributing any Member 
State which maintains that difficulties exist or can be 
foreseen as regards its balance of payments. 
Article 4 
1. On the initiative of a Member State undertaking to 
implement a capital liberalization programme despite a 
fragile balance-of-payments situation, the Council, after 
examining the situation in that Member State and the 
back-up programme presented in support of its appli­
cation, shall decide, as a rule during the same meeting: 
— whether to grant a financing facility, in the form of a 
credit line or an undertaking to grant a loan, which 
may be activated at the request of the benficiary 
Member State as and when the need arises and for a 
period that may not normally exceed one year, 
— the overall amount of resources allocated, 
— the back-up measures accompanying the liberali­
zation of capital movements with a view to ensuring 
a sustainable balance-of-payments situation. Article 4 
(part of text deleted) 
2. Loans drawn under the financing facility and 
granted pursuant to paragraph 1 shall, as a rule, have a 
term of one year renewable for a further one-year 
period. (part of text deleted) 
3. In cases where restrictions on capital movements 
are introduced or re-introduced during the term of the 
loan, the latter may be consolidated only within the 
framework of a longer-term loan granted as mutual 
assistance pursuant to Article 108 of the Treaty. In cases where restrictions on capital movements are 
introduced or re-introduced during the term of the 
medium-term financial assistance, its conditions and 
arrangements shall be reexamined pursuant to Article 108 
of the Treaty. 
Article 5 
The Commission shall take the necessary measures to 
verify at regular intervals, in collaboration with the 
Monetary Committee, that the economic policy of the 
Member State in receipt of a Community loan accords 
with the adjustment or back-up programme and with any 
other conditions laid down by the Council pursuant to 
Articles 3 or 4. To this end, the Member State shall place 
all the necessary information at the disposal of the 
Commission. On the basis of the findings of such verifi­
cation, the Commission and, where appropriate, the 
Member States holding claims under the facility shall 
release further instalments. The Council shall decide on 
any adjustment to be made to the initial economic policy 
conditions. Article 5 
The Commission shall take the necessary measures to 
verify at regular intervals, in collaboration with the 
Monetary Committee, that the economic policy of the 
Member State in receipt of a Community loan accords 
with the adjustment or back-up programme and with any 
other conditions laid down by the Council pursuant to 
Article 3 (part of text deleted). To this end, the Member 
State shall place all the necessary information at the 
disposal of the Commission. On the basis of the findings 
of such verification, the Commission, after delivery of an 
opinion by the Monetary Committee, shall decide on the 
release of further instalments. The Council shall decide 
on any adjustment to be made to the initial economic 
policy conditions. 
No C 183/16 Official Journal of the European Communities 13. 7. 88 
ORIGINAL PROPOSAL AMENDED PROPOSAL 
Article 6 
1. Loans granted as medium-term financial support 
shall have a term of one year or more. They may be 
granted as consolidation of short-term monetary support 
made available by the central banks of the Member 
States. Article 6 
1. Loans granted as medium-term financial support 
(part of text deleted) may be granted as consolidation of 
short-term monetary support made available by the 
central banks of the Member States. 
2. At the request of the beneficiary Member State, 
such loans may carry the option of early repayment. 2. At the request of the beneficiary Member State, 
such loans may carry the option of early repayment. 
3. Normally, no Member State may draw on this 
facility to the extent of more than 50 % of the ceiling 
referred to in Article 1 (2). (part of text deleted) 
Article 7 
1. The borrowing and lending operations referred to 
in Article 1 shall be carried out using the same value date 
and shall not involve the Community in the transfor­
mation of maturities or in any exchange or interest-rate 
risk. Article 7 
1. The borrowing and lending operations referred to 
in Article 1 shall be carried out using the same value date 
and shall not involve the Community in the transfor­
mation of maturities or in any exchange or interest-rate 
risk. 
When the borrowings are expressed, payable or 
repayable in the currency of a Member State, they may 
be concluded only after consultation with the competent 
authorities of that Member State. When the borrowings are expressed, payable or 
repayable in the currency of a Member State, they may 
be concluded only after consultation with the competent 
authorities of that Member State. 
Where a Member State receives a loan carrying an early 
repayment clause and decides to invoke this option, the 
Commission shall take the necessary steps after 
consulting the Monetary Committee. Where a Member State receives a loan carrying an early 
repayment clause and decides to invoke this option, the 
Commission shall take the necessary steps, (part of text 
deleted). 
2. At the request of the debtor Member State and 
where circumstances permit an improvement in the 
interest rate on the loans, the Commission may, after 
consulting the Monetary Committee, refinance all or 
part of its initial borrowings or restructure the corre­
sponding financial conditions. 2. At the request of the debtor Member State and 
where circumstances permit an improvement in the 
interest rate on the loans, the Commission may (part of 
text deleted) refinance all or part of its initial borrowings 
or restructure the corresponding financial conditions. 
Refinancing or restructuring shall not have the effect of 
extending the average duration of the borrowing 
concerned or increasing the amount, expressed at the 
current exchange rate, of capital outstanding at the date 
of the refinancing or restructuring. 
3. The costs incurred by the Community in 
concluding and carrying out each operation shall be 
borne by the beneficiary Member State. Refinancing or restructuring operations shall be carried 
out in accordance with the conditions set out in 
paragraph 1 and shall not have the effect of extending 
the average duration of the borrowing concerned or 
increasing the amount, expressed at the current exchange 
rate, of capital outstanding at the date of the refinancing 
or restructuring. 
Unchanged 
4. The Monetary Committee shall be kept informed of 
developments in operations referred to in the third sub­
paragraph of paragraph 1 and the second sub-paragraph 
of paragraph 2. 
13. 7. 88 Official Journal of the European Communities No C 183/17 
ORIGINAL PROPOSAL AMENDED PROPOSAL 
Article 8 
1. If one or more Member States that are creditors 
under this facility experience difficulties as regards their 
balance-of-payments and/or a sudden decline in their 
foreign currency reserves, they may request mobilization 
of their claims. The Council, having due regard to the 
circumstances, shall decide to mobilize such claims, in 
particular in accordance with one of the following 
procedures, or a combination thereof: 
— by refinancing from Community borrowings from 
financial institutions or on capital markets; 
— by a transfer of the claim to other creditor Member 
States; 
— by early repayment in full or in part by the debtor 
Member State or States. Article 8 
Unchanged 
2. Where refinancing takes place in accordance with 
paragraph i, the debtor Member State shall agree that its 
debt, originally denominated in one currency, shall be 
replaced by a debt denominated in the currency used for 
the refinancing. Where applicable, the debtor Member 
State shall bear any additional cost resulting from an 
alteration in the interest rate and the costs incurred by 
the Community in concluding and carrying out the 
operation. Unchanged 
3. Any creditor Member State may arrange with one 
or more other Member States for the partial or total 
transfer of its claims. The Member States concerned shall 
notify the Commission and the other Member States of 
the transfer. 3. Any creditor Member State may arrange with one 
or more other Member States for the partial or total 
transfer of its claims. The Member States concerned shall 
notify the Commission and the Monetary Committee of 
the transfer. 
4. Any Member State that is a creditor in respect of a 
loan carrying an early repayment clause shall take the 
requisite steps where the debtor Member State decides to 
invoke this option. The Member States concerned shall 
notify the Commission and the other Member States of 
the operation. 4. Any Member State that is a creditor in respect of a 
loan carrying an early repayment clause shall take the 
requisite steps where the debtor Member State decides to 
invoke this option. The Member States concerned shall 
notify the Commission and the Monetary Committee of 
the operation. 
Article 9 
For the application of the ceilings referred to in Articles 
1 (2) and 3 (2), the loan operations shall be recorded at 
the exchange rate of the day on which they are 
concluded. The repayment operations shall be recorded 
at the exchange rate of the day on which the corre­
sponding loan was concluded. Article 9 
For the application of the ceilings referred to in Article 1 
(part of text deleted), the loan operations shall be 
recorded at the exchange rate of the day on which they 
are concluded. The repayment operations shall be 
recorded at the exchange rate of the day on which the 
corresponding loan was concluded. 
Article 10 
The Council shall adopt the decisions referred to in 
Articles 3, 4, 5 and 8, acting by qualified majority on a 
proposal from the Commission, made after consulting 
the Monetary Committee on the matter. Article 10 
The Council shall adopt the decisions referred to in 
Articles 3, 5 and 8, acting by qualified majority on a 
proposal from the Commission, made after consulting 
the Monetary Committee on the matter. 
NoC 183/18 Official Journal of the European Communities 13.7. 88 
ORIGINAL PROPOSAL 
Article 11 
The European Monetary Cooperation Fund shall make 
the necessary arrangements for the administration of the 
loans. 
The funds shall be paid only to central banks and shall 
be used only for the purposes indicated in Article 1. 
Article 12 
No later than five years after the adoption of this Regu­
lation, the Council shall examine, on the basis of a 
report from the Commission, after delivery of an opinion 
by the Monetary Committee and following consultation 
with the European Parliament, whether the facility estab­
lished still meets, in its principle, its arrangements and its 
ceiling, the need which led to its creation. 
Article 13 
1. Regulation (EEC) No 682/81 and Decision 
71/143/EEC are hereby repealed. 
2. Amounts not yet repaid under outstanding 
Community loan operations concluded pursuant to 
Regulation (EEC) No 682/81 before the date of entry 
into force of this Regulation shall count against the 
ceiling referred to in Article 1 (2) at their initial value in 
ECUs. 
3. References to the instruments repealed by virtue of 
paragraph 1 shall be deemed to be references to this 
Regulation. 
The ceilings for credits provided for in Article 3 (2) shall be as 
follows: 
Member State 
Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Portugal 
United Kingdom 
Total Million ECU 
875 
407 
2 715 
235 
1 132 
2 715 
158 
1 810 
31 
905 
227 
2 715 
13 925 °/o total 
6,28 
2,92 
19,50 
1,69 
8,13 
19,50 
1,13 
13,00 
0,22 
6,50 
1,63 
19,50 
100,00 AMENDED PROPOSAL 
Unchanged 
Article 12 
Before 31 December 1992, the Council shall examine, on 
the basis of a report from the Commission after delivery 
of an opinion by the Monetary Committee and following 
consultation with the European Parliament, whether the 
facility established still meets, in its principle, its 
arrangements and its ceiling, the need which led to its 
creation. 
Article 13 
Unchanged 
2. Amounts not yet repaid under outstanding 
Community loan operations concluded pursuant to 
Regulation (EEC) No 682/81 before the date of entry 
into force of this Regulation shall count against the 
ceiling referred to in Article 1 (1) at their initial value in 
ECUs. 
Unchanged 
The ceilings for credits provided for in Article 1 (2) shall be as 
follows: 
Member State 
Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Portugal 
United Kingdom 
Total Million ECU 
875 
407 
2 715 
235 
1 132 
2 715 
158 
1 810 
31 
905 
227 
2 715 
13 925 % total 
6,28 
2,92 
19,50 
1,69 
8,13 
19,50 
1,13 
13,00 
0,22 
6,50 
1,63 
19,50 
100,00