No C 26/12 Official Journal of the European Communities 1. 2. 88 
Proposal for a Council Directive amending Directive 72/156/EEC on regulating international 
capital flows and neutralizing their undesirable effects on domestic liquidity 
COM(87) 550 final 
(Submitted by the Commission to the Council on 4 November 1987) 
(88/C 26/02) 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, HAS ADOPTED THIS DIRECTIVE: 
Having regard to the Treaty establishing the European 
Community, and in particular Article 70 paragraph 1 
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, 
Whereas by Directive .../.../EEC, for the implementation of 
Article 67 of the Treaty, the Council established the free 
movement of capital between the residents of the Member 
States; 
Whereas the Member States shall endeavour to attain the 
highest possible degree of liberalization in respect of 
movement of capital between the residents of the 
Community and those of third countries; 
Whereas by Directive 72/156/EEC (l) the Council es­
tablished a set of instruments for regulating international 
capital flows and neutralizing their undesirable effects on 
domestic liquidity; whereas in view of the fact that the free 
movement of capital within the Community has been 
established, these instruments may be put into operation in 
order to regulate short-term capital movements between 
residents of the Member States of the Community only on 
the conditions and according to the safeguard procedures 
laid down in the Treaty and in Directive .../.../EEC; 
whereas Directive 72/156/EEC must be amended accord­
ingly ; 
Whereas it must be possible for these instruments to be used 
on a recommendation from the Commission, in order to 
ensure coordinated action by the Member States, in the 
event of short-term capital flows to or from third countries 
leading to serious disturbances in their domestic monetary 
situation and in the stability of exchange rate relationships 
in the European Monetary System; 
Whereas, for the sake of clarity, it is advisable to present in 
a single text all the exacting terms of Directive 72/156/ 
EEC, as amended by this Directive, 
(i) OJNoL91, 18.4. 1972, p. 13. Article 1 
The exacting terms of Directive 72/156/EEC shall be 
replaced by the following: 
'Article 1 
1. In the arrangements which they apply to the 
conclusion or performance of transactions and to 
transfers in respect of capital movements with third 
countries, the Member States shall endeavour to attain 
the same degree of liberalization as in the case of 
operations taking place with residents of the other 
Member States of the Community. 
2. The Member States shall inform the Commission of 
the restrictions which they impose on movements of 
capital to or from third countries at the date of entry 
into force of this Directive, and of any subsequent 
change to these provisions. 
3. The Commission may make recommendations to 
Member States on this subject. 
Article 2 
The Member States shall take all necessary measures to 
ensure that the monetary authorities have available the 
following instruments and are able, where necessary, to 
put them into operation immediately without further 
enabling measures: 
(a) for effective regulation of international capital 
flows: 
— rules governing the constitution of short-term 
assets or liabilities placed with non-residents and 
payment of interest on the short-term holdings of 
non-residents, 
— regulation of short-term financial loans and 
credits granted to or contracted with non­
residents ; 
(b) for the neutralization of those effects produced by 
international capital flows on domestic liquidity 
which are considered undesirable: 
— regulation of the net external position of credit 
institutions, 
— fixing minimum reserve ratios, in particular for 
the holdings of non-residents. 
1. 2. 88 Official Journal of the European Communities No C 26/13 
Article 3 
1. The Member States shall forthwith adopt the 
necessary measures to comply with this Directive. They 
shall forthwith inform the Commission thereof. 
2. Each Member State shall, where necessary, and 
taking account of the interests of the other Member 
States, apply all or some of the instruments mentioned 
in Article 2. 
When these instruments apply to movements of capital 
occuring between residents of the Member States of the 
Community, they may be put into operation only on the 
conditions and according to the procedures laid down in 
the provisions of the Treaty relating to the use of a 
safeguard clause or in the provisions of Article 2 and 3 of 
Directive .../.../EEC for the implementation of Article 
67 of the Treaty. 
Without prejudice to these provisions, the Commission 
may recommend to the Member States that all or some 
of the instruments mentioned in Article 2 be put into 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
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, 
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; 
Whereas it should be possible for the operation of lending 
to a Member State to take place soon enough in order to operation, in the event of short-term capital flows to or 
from third countries leading to serious disturbances in 
the domestic monetary situation and in the stability of 
exchange rate relationships in the European Monetary 
System. 
3. When the instruments mentioned in Article 2 are 
applied, the Commission shall ensure close coordi­
nation between the authorities of the Member States. 
Article 4 
In exercising the powers which are conferred upon it by 
this Directive, the Commission shall act in consultation 
with the Monetary Committee and the Committee of 
Governors of Central Banks. 
Article 5 
This Directive is addressed to the Member States.' 
Article 2 
This Directive is addressed to the Member States. 
encourage that Member State to adopt, in good time, 
measures likely to prevent the occurence of an acute 
balance-of-payments crisis; 
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; 
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; 
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 Proposal for a Council Regulation (EEC) establishing a single facility providing medium-term 
financial support for Member States' balances of payments 
COM(87) 550 final 
(Submitted by the Commission to the Council on 4 November 1987) 
(88/C 26/03)