Proposal for a Council Regulation (EC) on some provisions relating to the introduction of the euro (96/C 369/05) COM(96) 499 final - 96/0249(CNS)

(Submitted by the Commission on 18 October 1996) THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 235 thereof,

Having regard to the proposal of the Commission,

Having regard to the opinion of the European Parliament,

Having regard to the opinion of the European Monetary Institute (EMI),

(1) Whereas the European Council has confirmed at its meeting held in Madrid on 15/16 December 1995 that the third stage of Economic and Monetary Union will start on 1 January 1999 as laid down in Article 109 (j) (4) of the Treaty; whereas in accordance with Article 109 (k) of the Treaty the Member States which will adopt the euro as the single currency are the Member States without a derogation;

(2) Whereas it also decided that the name given to the European currency shall be the 'euro`; whereas the specific name 'euro` will be used instead of the generic term 'ecu` used by the Treaty to refer to the European currency unit; whereas the euro as the currency of the Member States without a derogation will be divided into one hundred subunits bearing the name 'cent`;

(3) Whereas a Council Regulation, defining the legal framework for the use of the euro should be adopted on the basis of the third sentence of Article 109 (1) (4) of the Treaty as soon as the Member States without a derogation are known; whereas the Council when acting at the starting date of the third stage according to the first sentence of Article 109 (1) (4) of the Treaty, shall adopt the irrevocably fixed conversion rates;

(4) Whereas it is necessary for the smooth operation of the common market and the changeover to the single currency to provide legal certainty for market participants in all Member States on some provisions relating to the introduction of the euro well before the entry into the third stage;

(5) Whereas the third sentence of Article 109 (1) (4), which allows the taking by the Council, acting with the unanimity of Member States without a derogation, of 'other measures necessary for the rapid introduction of [. . .] the single currency` is only available as a legal basis when it has been decided, according to Article 109 (j) (4), which Member States fulfil the necessary conditions for the adoption of the single currency; whereas it is therefore necessary to use Article 235 as a legal basis for those provisions where there is an urgent need for legal certainty;

(6) Whereas the ecu as referred to in Article 109 (g) of the Treaty and as defined in Council Regulation (EC) No 3320/94 (1) will cease to be defined as a basket of component currencies on 1 January 1999 and the euro will become a currency in its own right; whereas the decision of the Council regarding the adoption of the conversion rates shall not by itself modify the external value of the ecu; whereas this means that one ecu in its composition as a basket of component currencies will become one euro; whereas Regulation (EC) No 3320/94 therefore becomes obsolete and should be repealed; whereas for references in legal instruments to the ecu under private law, parties shall be presumed to have agreed to refer to the ecu as referred to in Article 109 (g) of the Treaty and as defined in Regulation (EC) No 3320/94; whereas the provisions on continuity can only fulfil their objective to provide legal certainty to the markets if they enter into force as soon as possible;

(7) Whereas it is a generally accepted principle of law that the continuity of legal instruments is not affected by the introduction of a new currency; whereas the principle of freedom of contract has to be respected; whereas in order to reinforce legal certainty and clarity it is appropriate explicitly to confirm that the principle of continuity of legal instruments and in particular of contracts shall apply between the former national currencies and the euro and between the ecu as referred to in Article 109 (g) of the Treaty and as defined in Regulation (EC) No 3320/94 and the euro; whereas this implies in particular that in the case of fixed interest rate instruments the introduction of the euro does not alter the nominal interest rate payable by the debtor;

(8) Whereas the explicit confirmation of the principle of continuity will also contribute to the recognition of continuity of contracts in the jurisdiction of third countries;

(9) Whereas the term 'contract` used for the definition of legal instruments is meant to include inter alia written and oral contracts, tacitly concluded contracts and contracts implied from the conduct of the parties;

(10) Whereas the Council when acting according to the first sentence of Article 109 (1) (4) of the Treaty shall define the conversion rates of the euro in terms of each of the national currencies of the Member States without a derogation; whereas these conversion rates should be used for any conversion between the euro and the national currency units or between the national currency units; whereas for any conversion between national currency units a fixed algorithm should be used;

(11) Whereas the introduction of the euro requires the rounding of monetary amounts; whereas an early indication of rules for rounding is essential to allow a timely preparation and a smooth transition to Economic and Monetary Union;

(12) Whereas in order to achieve a high degree of accuracy in conversion operations, the conversion rates should be defined with six significant figures; whereas a rate with six significant figures means a rate which, counted from the left and starting by the first non-zero figure, has six figures;

(13) Whereas according to Article 109 (f) (6) of the Treaty the EMI has to be consulted regarding any proposed Community act within its field of competence,

HAS ADOPTED THIS REGULATION:

Article 1

For the purpose of this Regulation:

- 'legal instruments` shall mean legislative provisions, acts of administration, judicial decisions, contracts, unilateral legal acts, payment instruments other than banknotes and coins, and other instruments with legal effect,

- 'conversion rates` shall mean the irrevocably fixed conversion rates adopted by the Council according to the first sentence of Article 109 (1) (4) of the Treaty,

- 'national currency units` shall mean the units of the currencies of Member States without a derogation, as those units are defined in their respective monetary law on the day before the start of the third stage,

- 'euro unit` shall mean the unit of the single currency as adopted by the Member States without a derogation on 1 January 1999.

Article 2

1. As from 1 January 1999 every reference in a legal instrument to the ecu, as referred to in Article 109 (g) of the Treaty and as defined in Regulation (EC) No 3320/94, is replaced by a reference to the euro at a rate of one euro to one ecu. References in a legal instrument to the ecu without such a definition shall be presumed to be references to the ecu as referred to in Article 109 (g) of the EC Treaty and as defined in Regulation (EC) No 3320/94.

2. As from 1 January 1999 Regulation (EC) No 3320/94 is repealed.

Article 3

The introduction of the euro shall not have the effect of altering any term of a legal instrument or of discharging or excusing performance under any legal instrument, nor give a party the right unilaterally to alter or terminate a legal instrument. This provision is subject to anything which parties may have agreed.

Article 4

1. The conversion rates shall be adopted as one euro expressed in terms of each of the national currencies of the Member States without a derogation. They shall be adopted with six significant figures.

2. The conversion rates shall not be rounded or truncated when making conversions.

3. The conversion rates shall be used for conversions either way between the euro unit and the national currency units. Inverse rates derived from the conversion rates shall not be used.

4. Monetary sums to be converted from one national currency unit into another shall first be converted into a monetary sum expressed in the euro unit, rounded to at least three decimals, and then be converted into the other national currency unit.

Article 5

Monetary sums to be paid or accounted for when a rounding takes place after a conversion into the euro unit according to Article 4 shall be rounded up or down to the nearest cent. Monetary sums converted into a national currency unit shall be rounded up or down to the nearest subunit or in the absence of a subunit to the nearest unit, or according to national practices to a multiple or fraction of the subunit or unit of the national currency unit. If the application of the conversion rate gives a result which is exactly half-way, the sum shall be rounded up.

Article 6

This Regulation shall enter into force on the day after publication in the Official Journal of the European Communities.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

(1) Council Regulation (EC) No 3320/94 of 22 December 1994 on the consolidation of the existing Community legislation on the definition of the ecu following the entry into force of the Treaty on European Union (OJ No L 350, 31. 12. 1994, p. 27).