1LS/00/936
Monsieur Jean-Pierre Jouyet
Directeur du Trésor
Ministère de l’Economie,
des Finances et de l’Industrie
139, rue de Bercy
F-75572 Paris Cedex 12
FRANCE
Draft law concerning the introduc tion of the euro in Mayotte and Saint Pierre-et-Miquelon,
draft decree concerning the introduction of th e euro in Mayotte and Saint Pierre-et-Miquelon
and a related draft decision of the Governor of the Banque de France
Dear Mr Jouyet,
On 19 September 2000 the European Central Bank (ECB) received your revised request for agreement
on a draft law concerning the introduction of the euro in Mayotte and Saint-Pierre-et-Miquelon
(hereinafter, the "draft law"), on the draft decree concerning the introduction of the euro in Mayotteand Saint-Pierre-et-Miquelon (hereinafter, the "draft decree") and a related draft decision of theGovernor of the Banque de France (hereinafter, the "draft decision") pursuant to Article 4 of CouncilDecision 1999/95/EC of 31 December 1998 concerning the monetary arrangements in the Frenchterritorial communities of Saint-Pierre-et-Miquelon and Mayotte (hereinafter, "Council Decision1999/95/EC").  As a step towards reaching an agreement on the above-mentioned draft legal acts, mayI therefore make the following observations.
The ECB understands that the three draft legal instruments are intended to ensure that those parts ofCommunity law which are or will be necessary for the functioning of economic and monetary unionare applied in Mayotte and Saint-Pierre-et-Miquelon.  The draft law  will make applicable the
provisions contained in Council Regulation (EC) No 1103/97 of 17 June 1997 on certain provisions
relating to the introduction of the euro and Council Regulation (EC) No 974/98 of 3 May 1998 on theintroduction of the euro.  In addition, Article 8 of th e draft law stipulates that the Governor of Banque
de France shall apply the measures necessary for performing the tasks laid down in Chapter 1 of LawNo 93-980 of 4 August 1993 concerning the Statute of the Banque de France in order to ensure thatthese provisions give rise to the same effects as in metropolitan France. Article 9 of the draft law
stipulates that the Government shall similarly appl y in these two communities the provisions for which
he is competent required for the introduction of the euro so that these provisions have the same effect
2therein as in metropolitan France.  The draft decree  will make applicable Article 1 of Council
Regulation (EC) No 2866/98 of 31 December 1998 on the conversion rates between the euro and thecurrencies of the Member States adopting the euro as amended and the second sentence of Article 11of Council Regulation (EC) No 974/98.  Finally, the draft decision  will make applicable three
Council Regulations, three ECB Regulations and one ECB Decision
1.  This decision ensures that the
minimum reserve system, the ECB's ability to impose sanctions, the statistical reporting requirements
and the rules concerning banknotes are applied in the same way in Mayotte and Saint-Pierre-et-Miquelon as in metropolitan France.
The ECB welcomes the fact that France, in order to comply with Article 4 of Council Decision1999/95/EC in Mayotte and Saint-Pierre-et-Miquelon, is starting to ensure the application of thoseparts of Community law which are or will be necessary for the functioning of economic and monetaryunion. 
In its present form, the draft law and the draft decree provide for the application of the three CouncilRegulations No 2866/98, No 1103/97 and No 974/98  in Mayotte and Saint-Pierre-et-Miquelon by
means of a transposing law which reproduces these provisions, while future amendments to the threeCouncil Regulations will need to be reproduced again by a new transposing French law.  However, theECB considers that the draft law, the draft decree and any other future similar law should (i) merely
state that these Community legal acts are applicable  in these territories, identifying them but without
reproducing or attaching to the law the legislation referred to; and (ii) include a dynamic clauseensuring that any future amendments to these Community legal acts will apply directly in these
territories without any further need for implementati on.  Such an approach would be preferable as it
would ensure legal certainty concerning the pow ers of the Community in these matters, equal
treatment with the euro area Member States and the integrity of single monetary policy. 
In this regard, the ECB has been informed that the French Council of State has adopted an opinion
according to which the introduction of the euro in Mayotte and Saint-Pierre-et-Miquelon could nottake, as the ECB would prefer, the form of a law which merely makes the provisions of the Treatyrelating to economic and monetary union and its secondary legislation applicable to these communitiesbut that instead, the Council of State considers it necessary that the transposition law itself contain theCommunity provisions to be applied in those territories.  The Council of State argues that a Member
                                                     
1 Council Regulation (EC) No 2531/98 of 23 November 1998 concerning the application of minimum reserves by the
European Central Bank, Council Regulation (EC) No 2532/98 of 23 November 1998 concerning the powers of the European
Central Bank to impose sanctions, Council Regulation (EC) No 2533/98 of 23 November 1998 concerning the collection ofstatistical information by the European Central Bank, Regula tion (EC) No 2818/98 of the European Central Bank of 1
December 1998 on the application of minimum reserves, the Regulation (EC) No 2157/99 of the European Central Bank of
23 September 1999 on the powers of the European Central Bank to impose sanctions as being amended,  Regulation (EC) No
2819/98 of the European Central Bank of 1 December 1998 concerning the consolidated balance sheet of the monetaryfinancial institutions sector as being amended as well as the Decision of the European Central Bank of 7 July 1998 on the
denominations, specifications, reproduction, exchange and withdrawal of euro banknotes as amended.
3State cannot proceed unilaterally to an extension, even partial, of a Treaty; in its view, the
modification of the geographical application of a Treaty constitutes a revision of that Agreement,which operates in international law between the cont racting parties and in principle according to the
clauses providing for this in the Treaty itself. 
However, taking into account that on 31 December 1998 the Council of the European Unionunanimously agreed on Article 123 (4) EC (Article 109l (4)) of the EC Treaty) as the proper legalbasis for the introduction of the euro in Mayotte and Saint-Pierre-et-Miquelon, the ECB considers thatit is legally consistent with Community law that  France, as mandated by the European Community,
merely makes the provisions of the Treaty relating to economic and monetary union, and its secondarylegislation, applicable to these communities through the draft law.  Under these circumstances, theinclusion of a dynamic clause ensuring the direct applicability of any future amendments to thisCommunity legislation in the above-mentioned territories seems to be perfectly feasible.
Having said this, the ECB would be prepared to accept the proposed approach as a possibleimplementation of Article 4 of Council Decision 1999/95/EC on the understanding that this is the onlyapproach that is feasible under French law.  In this case however, the following amendments to thedraft texts would need to be made. 
First, in Article 1 of the draft law, the words "or cen times" need to be deleted to bring the text in line
with Council Regulation (EC) No 974/98 of 3 May 1998 th at stipulates that "one euro shall be divided
into one hundred cent".
Second, Articles 8 and 9 of the draft law would need to be amended in order to ensure not only that therelevant Community laws already in force are applied in Mayotte and St. Pierre et Miquelon but alsothat any amendments to these laws and also any future Community laws which are necessary for thefunctioning of economic and monetary union give rise to the same effect and enter into force inMayotte and St. Pierre et Miquelon at the same time as in metropolitan France.  To this end, Articles 8and 9 of the draft law should be amended as follows:
Article 8 of the draft law: "The Governor of the Banque de France shall apply in the territorial
communities of Saint-Pierre-et-Miquelon and Mayotte the measures necessary for performing
the tasks laid down in Chapter 1 of Law No. 93-980 of 4 August 1993 concerning the Statute
of the Banque de France, in particular those which are or will be necessary for the functioningof Economic and Monetary Union, in order to ensure that these provisions give rise to thesame and simultaneous effect as in metropolitan France."
4Article 9 of the draft law: "The Government shall similarly apply in these two communities
the provisions for which he is competent required for the introduction of the euro and which
are or will be necessary for the functioning of economic and monetary union, and which arenot already covered by Article 8, in order to ensure that these give rise to the same andsimultaneous effect  as in metropolitan France".
Finally, the ECB considers that the draft law and the draft decree should indicate the Communityorigin of the legal text. The ECB understands that the implementation of Article 8 of the draft law bythe draft decision of the Governor of the Banque de France, which has been attached for reasons ofexample only, will be subject to a separate consultation by the Banque de France.
If the above suggested changes were to be taken on board, I believe that the ECB would be in a
position to give its agreement as required by Article 4 of Council Decision 1999/95/EC.  I look
forward to hearing from you in due course with a view  to agreeing a revised version of the legislative
framework as soon as possible.
Yours sincerely
[signed]
Willem F. Duisenberg