Opinion of the European Monetary Institute on a consultation from the Dutch Ministry of Finance under Article 109f (6) of the Treaty establishing the European Community (the “Treaty”) and Article 5.3 of the Statute of the EMI on common exchange rate arrangements for the euro and amendments of various other acts (CON/97/12)
Date: 1997-07-25
Institutions: European Monetary Institute
Subjects: Netherlands, euro, exchange rate, financial stability, financial supervision, monetary integration, money, national law, payment system

OPINION OF THE EUROPEAN MONETARY INSTITUTE

on a consultation from the Dutch Ministry of Finance under Article 109f (6) of the Treaty

establishing the European Community (the “Treaty”) and Article 5.3 of the Statute of the

EMI on common exchange rate arrangements for the euro and amendments of various other

acts

CON/97/12

1.

The  present  opinion  was  requested  by  the  Dutch  Ministry  of  Finance,  which  submitted  a  draft

law (document IMZ nr 97/341) to the EMI for consultation.

2.

The draft law serves three purposes:

-

it  revokes  the  Act  on  the  exchange  rate  of  the  guilder  and  replaces  it  by  a  legislative

provision authorising the Minister of Finance to conclude, on behalf of the Netherlands and

jointly  with  the  Member  States  of  the  future  euro  area,  arrangements  on  the  exchange

rate of the euro in relation to the currencies of those members which are not yet part of

the euro area;

-

it amends the 1994 Act on external financial relations in order to ensure that obligations of

De Nederlandsche Bank to comply with general guidelines from the Minister of Finance

and  to  exchange  information  with  the  Minister  do  not  contravene  the  Bank’s  Treaty

obligations as well in order to ensure that the Bank will be able to exchange information

with the future European Central Bank; and

-

finally,  it  amends  the  Act  on  the  supervision  of  securities  traffic  1995  in  such  a  manner

that  the  ECB,  as  De  Nederlandsche  Bank,  will  not  be  subject  to  the  supervisory  regime

applicable to securities institutions, implying that rules on the issuance of debt certificates

would also not apply to the ECB.

3.

The  EMI  is  competent  to  deal  with  this  request  for  consultation  under  Council  Decision

93/717/EC  of  23  November  1993,  Article  1.1,  first,  second  and  fifth  indents,  as  the  draft  law

concerns  currency  legislation,  the  status  and  powers  of  De  Nederlandsche  Bank  and  rules

applicable to financial institutions.

4.

The EMI welcomes the timely manner in which the above pieces of legislation are being adapted

to  the  requirements  for  Stage  Three.  The  EMI  has  already  on  several  occasions,  and  in

particular  in  its  1995  and  1996  Convergence  Reports,  stressed  the  importance  of  a  timely

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- 2 -

fulfilment of this obligation under Article 108 of the Treaty in order to enable the EMI and other

Community institutions to carry out the Article 109j assessment of (legal) convergence in the EU

Member  States.  The  manner  in  which  the  Dutch  legislative  authorities  are  contemplating  this

(adaptation now, entry into force later through subordinate legislation) accommodates the EMI’s

concern of timely adaptation, whilst it leaves at the same time flexibility to the Dutch authorities

on the moment of effectiveness of the adaptations.

5.

The  EMI  also  welcomes  the  content  of  the  legislation.  It  is  indeed  true,  as  noticed  in  the

explanatory memorandum to the draft law, that Article 109 provides for rules, and a division of

responsibilities, on exchange rate arrangements with third countries but not with Member States

with a derogation. This requires revocation of the Dutch Act on the exchange rate of the guilder

which will become obsolete. However, it may at the same time still be appropriate to adopt rules

at a domestic level for intra-EU arrangements on, for example, the responsible authorities, in the

Dutch  case  the  Minister  of  Finance,  whilst  respecting  the  EU  institutional  framework  in  which

this takes place, something which has now been accomplished in the draft law.

The EMI is also in favour of the clarification in the draft law of De Nederlandsche Bank’s status

in  the  institutional  framework  of  the  ESCB.  Compliance  with  general  guidelines  from  the

Minister  of  Finance  (see  above  paragraph  2,  second  indent)  would  be  incompatible  with

Article 107 of the Treaty - the prohibition of external influence - as far as ESCB-related tasks

are  concerned.  The  addition  to  the  draft  law  that  this  requirement  does  only  apply,  for  areas

covered by the 1994 Act on external financial relations (i.e. payments and capital movements),

to the extent that this is not incompatible with the Treaty improves legal clarity. Also, under the

Statute of the ESCB/ECB De Nederlandsche Bank will on the one hand be obliged to exchange

information  with  the  ECB,  whilst  confidentiality  rules  within  the  ESCB  may  on  the  other  hand

prevent the Bank from exchanging information with political authorities. Again, this situation has

now been accommodated in the draft law (see above paragraph 2, second indent).

Finally,  the  EMI  welcomes  the  situation  that  the  ECB  will  obtain  the  same  status  as  De

Nederlandsche  Bank  in  the  Dutch  financial  market,  i.e.  that  it  will  not  be  subject  to  the

supervisory regime applicable to securities institutions when it issues debt certificates.

6.

The EMI has no objection to this opinion being made public.

25 July 1997

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