WRITTEN QUESTION E-0928/96 by Giorgio Ruffolo (PSE) to the Commission (23 April 1996)

Subject: Article 109 of the EC Treaty

1. How should Article 109k(2) of the Treaty be interpreted? Abrogation of the derogation referred to in Article 109k(1) requires Member States with a derogation to complhy with the convergence criteria laid down in Article 109j(1), one of which (third indent) is 'observance of the normal fluctuation margins provided for by the exchange-rate mechanism of the European Monetary System for at least two years'.

2. What measures will the Commission take to ensure that the above provision does not represent an objective obstacle to entry into the third stage by countries that will require a derogation when the examination in preparation for the third stage is completed in 1998 in accordance with Article 109j(2) and (3)?

3. Does the Commission intend to propose, for the currencies of countries with a derogation, abrogation of the convergence criterion of observance of the fluctuation margins provided for by an exchange-rate mechanism that no longer exists?

4. Is the Commission considering an exchange-rate system for the single currency, or currencies with irrevocably fixed exchange rates at the beginning of the third stage, and the currencies of countries with a derogation, to replace the exchange-rate mechenism of the European Monetary System for the purposes of the above convergence criteria? What form might such a system take?

5. If the letter of the Treaty prevents the conclusion of exchange-rate agreements for the Community currencies of countries with a derogation, will the Commission not consider appropriate supplementary or interpretive provisions to extend the scope of Article 109 to cover such currencies?

Answer given by Mr de Silguy on behalf of the Commission (11 June 1996)

The provision of Article 109k(2) of the Treaty refers to all the convergence criteria listed in Article 109j(1). With regard to the exchange-rate criterion, which prescribes 'the observance of the normal fluctuation margins provided for by the exchange-rate mechanism of the European Monetary System for at least two years without devaluing against the currency of any other Member State', the provision is clear.

The abolition of the exchange-rate convergence criterion as laid down in Article 109j (third indent) is not envisaged. The conditions for entry into the third stage are and will be the same for any Member State, irrespective of the date of entry.

The Commission as well as the EMI are currently engaged in work on the creation of a new monetary relationship between the participants and non-participants in the single currency in accordance with the mandate of the Madrid Council. While this arrangement would need in-built flexibility to cater for difference in convergence among member states not participating in the single currency, it is essential to have an appropriate degree of exchange-rate discipline to ensure the smooth functioning of the single market.

Lastly, the Commission takes the view that the Treaty does not in any way prevent the conclusion of exchange-rate agreements between the euro and Member States with a derogation. On the contrary, Article 109m recalls that, until the beginning of the third stage, 'each Member State shall treat its exchange-rate policy as a matter of common interest'.