Opinion of the European Monetary Institute at the request of the French Ministry of Finance concerning various articles of a draft law on the issuance and putting into circulation of banknotes and coins in the territorial collectivities of Mayotte and Saint-Pierre-et-Miquelon, and on the protection of payment and securities settlement systems (CON/98/09)
Date: 1998-02-19
Institutions: European Monetary Institute
Subjects: European System of Central Banks, France, Mayotte, Saint Pierre and Miquelon, central bank, euro, financial instrument, financial supervision, money, payment system

OPINION OF THE EUROPEAN MONETARY INSTITUTE

at the request of the French Ministry of Finance concerning various articles of a draft law on

the issuance and putting into circulation of banknotes and coins in the territorial

collectivities of Mayotte and Saint-Pierre-et-Miquelon, and on the protection of payment and

securities settlement systems

(CON/98/09)

1.

On 4 February 1998, the EMI received a request for an opinion concerning various articles of a

draft  law  on  the  issuance  and  putting  into  circulation  of  banknotes  and  coins  in  the  overseas

territories  of  Mayotte  and  Saint-Pierre-et-Miquelon,  and  on  the  protection  of  payment  and

securities  settlement  systems  from 

the  French  Ministry  of  Finance.  An  explanatory

memorandum was also submitted for each article to the EMI. This opinion is based on an English

translation of the official draft submitted to the EMI by the consulting authority.

2.

The  EMI’s  competence  to  deliver  an  opinion  is  based  on  Article  1.1,  first,  second  and  fourth

indents,  of  the  Council  Decision  (93/717/EC)  of  22  November  1993  on  the  consultation  of  the

EMI by the authorities of the Member States on draft legislative provisions.

3.

The EMI takes note, without any objections, of the proposed provisions of Article 19 of the draft

law  relating  to  the  changeover  to  the  euro  in  connection  with  the  financial  markets,  payment

systems and securities settlement systems, implementing some provisions of Article 8(4) of the

draft EU Council regulation on the introduction of the euro.

4. With reference to Article 20 of the draft law, the EMI welcomes the proposal to extend to the

securities  settlement  systems  the  provisions  already  applying  under  French  law  to  payment

systems  prohibiting  the  bankruptcy  administrator  or  liquidator  from  challenging  the  payments

made  by  a  participant  on  the  day  of  the  opening  of  such  proceedings  by  a  court  and  on  such

grounds. Although the provisions of the second paragraph of Article 93-1 are already protective,

it  could  be  considered  whether  the  wording  of  the  first  paragraph  of  Article  93-1  is  precise

enough to indicate that in the framework of securities settlement systems, not only the payment

but also the transfer of financial instruments cannot be challenged. The EMI also welcomes the

legislative proposal to apply such provisions to the payment and deliveries orders once they have

become  irrevocable  within  a  payment  system  or  securities  settlement  system.  The  EMI  feels

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that  these  provisions  as  well  as  the  introduction  of  Article  93-2  will  improve  the  smooth  and

efficient functioning of payment systems and securities settlement systems.

5.

The  EMI  welcomes  the  proposed  wording  of  Article  20  of  the  draft  law,  paragraph  III,  of  the

draft  law  granting  supervisory  powers  to  the  Conseil  des  Marchés  Financiers  over  central

securities depositories and over the safekeeping and administration of financial instruments. It is

also welcomes that the competencies vested in the Conseil des Marchés Financiers with regard

to  the  general  organisation  and  operating  rules  of  the  securities  settlement  systems  is  without

prejudice  to  the  powers  of  the  Banque  de  France  concerning  payment  systems.  However,  the

EMI considers convenient that a reference to Article 22 of the Statute of the European System

of Central Banks and of the European Central Bank is included in the new paragraph 16 of the

Financial Activity Modernisation Law no 96-597 of 2 July 1996.

6. 

The  EMI  welcomes  the  provisions  of  Article  21  of  the  draft  law  aiming  at  enabling  intra-day

repurchase  agreements  in  the  system  RGV  (Relit  Grande  Vitesse)  and  defining  in  connection

therewith the moment of transfer of ownership; this will improve and secure the functioning of

such system.

7. With regard to the provisions of Article 34 of the draft law concerning Mayotte and Saint-Pierre

et Miquelon, and taking into consideration the explanatory memorandum relating to this Article,

the EMI draws the attention of the consulting authority to the following points:

(a) As from 1 January 1999, the currency of the Member States participating in EMU will be the

euro  and  the  definition  and  implementation  of  the  monetary  policy  within  the  euro  area  will  be

transferred    to  the  European  System  of  Central  Banks  (ESCB).  The  French  overseas

departments will be part of the euro area and the EU Council regulation on the introduction of

the  euro  will  apply  to  these  territories.  The  IEDOM  is  the  public  institution  of  the  Republic  of

France responsible for putting in circulation banknotes and coins and supplying liquidity to entities

and persons in the French overseas departments. However, the IEDOM is not an NCB nor is it

vested with the requirements that the Treaty requires for NCBs. Therefore, a first issue which

will  need  to  be  clarified  concerns  the  compatibility  of  the  current  institutional  framework  for

monetary matters in the overseas departments with the principle of singleness of the monetary

policy  throughout  the  euro,  should  France  adopt  the  single  currency.  The  EMI  cannot  fail  to

signal  this  issue  when  considering  a  draft  law  that  extends  the  jurisdiction  of  the  IEDOM  to

Mayotte.

(b)  The  territorial  collectivities  of  Mayotte  and  Saint-Pierre  et  Miquelon  are  not  “French

overseas  departments”  and  thus  the  EU  Council  regulation  on  the  introduction  of  the  euro  will

not apply to them. The draft French law modifies the geographic scope of the draft EU Council

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regulation  on  the  introduction  of  the  euro  by  extending  its  effects  outside  the  Community.  It  is

questionable whether this pertains to the competencies of a single Member State or whether this

need to be authorised by the Community, as recipient of the monetary powers of the participating

Member States. It is noted that Article 109(3) of the Treaty would not be suited for the purpose

of  establishing  a  monetary  regime  for  those  territories,  which  are  neither  sovereign  States  nor

have a currency of their own. It is also noted that Protocol (No 13) does not apply to Mayotte

and  Saint-Pierre  et  Miquelon.  There  is,  therefore,  a  normative  lacuna  in  the  Treaty  for  the

specific  situation  of  these  two  territorial  collectivities,  for  the  solution  of  which  the  EMI  is

deprived of appropriate competencies.

The EMI has no objection to this opinion being made public by the consulting authority.

19 February 1998