European Monetary Institute Consultation under Article 109f(6) of the Treaty on European Union and Article 5(3) of the Statute of the EMI regarding draft legislation relating to the Institut Monétaire Luxembourgeois and the monetary statute of the Grand-Duchy of Luxembourg (CON/94/1)
Date: 1994-04-12
Institutions: European Monetary Institute
Subjects: European System of Central Banks, Luxembourg, central bank, international agreement, money

EUROPEAN MONETARY INSTITUTE

THE PRESIDENT

12th April 1994

Monsieur J. Santer
Prime Minister
and Treasury Minister
of the Grand-Duchy of Luxembourg
L-2910 Luxembourg

Dear Prime Minister,

Re: Consultation under Article 109f(6) of the Treaty on European Union and Article 5(3) of the

Statute  of  the  EMI  regarding  draft  legislation  relating  to  the  Institut  Monétaire

Luxembourgeois and the monetary statute of the Grand-Duchy of Luxembourg (con/94/1)

By letter of 18th February 1994, the Institut Monétaire Luxembourgeois (IML) forwarded

to  us  draft  legislation  amending  the  laws  on  the  IML  and  the  monetary  statute  of  the  Grand-Duchy  of

Luxembourg. Further to our letter of 1st March 1994 to the IML on the EMI's competence to deal with

the  consultation  above,  please  find  below  the  EMI's  opinion  on  the  substance  of  the  subject  matter,

which has been adopted by the Council of the EMI during its meeting of 12th April 1994.

The EMI took note of the fact that the draft intends to bring existing laws into accordance

with the Treaty on European Union, not only for Stage Two of EMU, but also in anticipation of Stage

Three. It does not give rise to any major issues to which the attention of legislative authorities should be

drawn. The legislation is considered to fulfil all requirements stated in the Treaty and the Statute of the

ESCB with respect to the institutional independence of the IML, the independence of the members of its

decision-making bodies as well as its functional and operational independence. The objectives and tasks

of the IML are defined consistently with Articles 2 and 3 of the Statute of the ESCB.

It  can  thus  be  concluded  that  the  legislation  complies  fully  with  the  Member  States'

obligation arising from Article 108 of the Treaty for Stage Two and already to a large extent with a view

to Stage Three. In addition, Article 2(4) of the law establishing the IML explicitly states that the Institute

will perform its duties in the framework, and with due regard to, the international agreements concluded

by  Luxembourg  in  the  monetary  field.  It  is  understood  that  this  includes  the  parts  of  the  Treaty  on

European  Union  which  deal  with  EMU.  Nevertheless,  as  stated  in  the  introduction  of  the  explanatory

note to the draft legislation, further adjustments of the Law establishing the IML might be needed at the

start of Stage Three. In this connection, we would like to point out three issues.

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Firstly, it might be necessary that, before the start of Stage Three, Article 5 of the said law

might have to be supplemented so as to ensure that it would be consistent with Article 14 of the Statute

of  the  ESCB  according  to  which  "the  national  central  banks  are  an  integral  part  of  the  ESCB  and  shall

act in accordance with the guidelines and instructions of the ECB".

Secondly,  it  is  noted  that  Article  18  of  the  law  provides  for  the  direct  transfer  of  net

revenues  arising  from  the  issue  and  circulation  of  banknotes  and  coins  to  the  government.  It  should  be

recalled that in Stage Three, monetary income accruing to the national central banks would be subject to

a redistribution within the ESCB in accordance with the provisions set out in Article 32 of the Statute of

the ESCB. In Stage Three, the wording of Article 18 would require adjustment.

Thirdly,  Article  20  sets  out  provisions  on  remuneration  for  damaged  banknotes.  It  cannot

be  precluded  that  these  provisions  might  have  to  be  harmonised  for  those  central  banks  which  will

participate  in  Stage  Three  of  EMU.  However,  for  the  time  being,  it  is  too  early  to  give  more  precise

indications on the direction of such harmonisation.

A final remark concerns the amendment to the Law of 15th March 1979 on the monetary

statute of the Grand-Duchy of Luxembourg. The amended Article 3 thereof assigns legal tender status to

banknotes denominated in francs or in ECU issued by the ECB and "the national central banks which are

members  of  the  ESCB".  Since  membership  of  the  ESCB  is  not  confined  to  the  central  banks  of  those

Member States which participate in Stage Three of EMU, the draft text may go beyond the intentions of

the legislator. Hence, with a view to avoiding ambiguities, it might be useful to review the wording so as

to  ensure  that  this  provision  only  applies  to  the  ECB  and  the  central  banks  of  those  Member  States

which participate in Stage Three of EMU.

Please  note  that  the  EMI  does  not  have  any  objections  towards  this  letter  being  made

public, in particular to other parties involved in the legislative process.

Yours sincerely,

[signed]

A. Lamfalussy.