Opinion of the European Monetary Institute at the request of the Belgian 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 European Monetary Institute (EMI), on a draft Law (the “draft law”) on certain rules concerning the changeover process for the introduction of the euro in Belgium (CON/98/08)
Date: 1998-04-17
Institutions: European Monetary Institute
Subjects: Belgium, Euribor, European Central Bank, European System of Central Banks, central bank, conversion rate, euro, exchange rate, money

OPINION OF THE EUROPEAN MONETARY INSTITUTE

CON/98/08

At the request of the Belgian 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 European Monetary Institute

(EMI),  on  a  draft  Law  (the  “draft  law”)  on  certain  rules  concerning  the  changeover  process  for  the

introduction of the euro in Belgium.

1. On 11 March 1998 the EMI received a request for an opinion on the draft law from the Belgian

Ministry  of  Finance.  An  Explanatory  Memorandum  was  also  submitted  to  the  EMI.  No  English

translation has been provided and the Opinion is based on the French and Flemish text of the draft

law.

2. The  EMI’s  competence  to  deliver  an  opinion  is  based  on  Article  1.1,  first  indent,  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, as the draft law deals, inter alia, with currency

legislation.

3.   The  draft  law  aims  to  make  the  necessary  adaptations  to  Belgian  legislation,  in  particular  with  a

view to the national implementation of the regulatory framework for the introduction of the euro.

The draft law refers to rounding rules, replacement of reference interest rates, taxation, financial

instruments,  redenomination  of  public  and  private  debt,  financial  markets,  monetary  policy,

conversion  of  equity  shares,  dual  pricing,  consumer  protection,  social  welfare  system,  and

sanctions.

4.   The EMI welcomes the initiative of the Belgian Government to prepare for the introduction of the

euro, so as to ensure the timely implementation of the measures necessary or convenient for the

changeover. The draft law is foreseen as a supplement to the draft EU Council regulation on the

introduction of the euro, and provides for its entry into vigour in different dates for the differents

parts of it, some of which is intended to be effective before the start of the third stage.

P o s t f a c h  1 0  2 0  3 1 ,   D - 6 0 0 2 0  F r a n k f u r t ,   T e l :  + 4 9  ( 6 9 )  2 7  2 2 7  -  0 ,   F a x :  + 4 9  ( 6 9 )  2 7  2 2 7  -  2 2 7

 
5.

Specific comments are the following:

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(a) The EMI welcomes the legal provisions  concerning  rounding  rules.  These  are  foreseen  as  a

supplement to the provisions on rounding of EU Council Regulation 1103/97, with which they are

fully  compatible.  It  deprives  of  any  legal  significance  differences  arising  out  of  rounding  rules  in

conversions between francs and euros, in accordance with Article 5 of the draft law, when these

are less than one euro cent in amount. The non-compulsory administrative supervision of converter

machines is welcome as a mechanism introducing certainty to consumers.

(b)  The  references  to  the  rates  of  the  National  Bank  of  Belgium  and  of  the  Guarantee  and

Discount Institute, and the references to the BIBOR, are deemed to be replaced by references to

the  rates  of  the  ECB  and  to  the  EURIBOR,  respectively.  The  transitory  creation  of  an

intermediary stage where a national substitute rate would be organised, as the legislation of other

Member  States  is  currently  foreseeing,  is  avoided.  The  changes  intended  by  the  draft  law  are

therefore welcome, since they contribute to enhance the unity of the euro-wide money market and

avoid the maintenance of national reference rates.

(c)  The  EMI  welcomes  the  regime  envisaged  for  re-denomination  of  public  debt.  The  method

chosen for that re-denomination, based on individual holdings (“comptes des titres”), and rounding

to  the  euro  cent,  is  similar  to  the  method  envisaged  by  many  Member  States  (i.e.  Germany,

Austria, Portugal; France and The Netherlands envisage rounding to the euro unit). The enabling

authority given to the Government for secondary legislation is a useful device to address specific

problems that may arise. The solution given by the draft law to a problem of international private

law, when addressing the re-denomination of debt securities issued under a law which is not the

law  of  the  Member  State  in  whose  currency  unit  the  securities  are  denominated,    which  is  not

different from the governing law of the issue, is correct and consistent with the solution given by

other Member States.

(d)  The  supplementary  rules  for  the  re-denomination  of  both  public  and  private  debt  give  legal

certainty  and  clarity  to  economic  agents.  Freedom  of  contract  is  also  preserved  for  the  re-

denomination  exercises.  A  short  time  limit  and  exhaustive  listing  of  possible  legal    grounds  for  a

judicial challenge of re-denomination measures contributes to legal security. These provisions are

thus welcome. It might be mentioned that other Member States have also foreseen the inclusion in

this kind of legislative acts of the principle of allocation to the issuer/borrower of the costs of re-

denomination.

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(e) The draft law limits  the characterisation as “foreign currency” to only those currencies issued

by  non-participating  Member  States  and  the  currencies  of  non-EU  States;  this  is  fully  consistent

with  the  draft  EU  Council  Regulation  on  the  Introduction  of  the  Euro  and  therefore  a  useful

clarification. Supplementary rules on conversion of foreign currencies into euro, and viceversa, by

reference  to  the  euro  exchange  rates  is  also  consistent  with  the  unity  of  the  foreign  exchange

markets of the euro area.

(f)  The  EMI  welcomes  in  particular  (i)  the  exclusion  of  ESCB  Debt  Certificates  from  the

prospectus  obligation;  should  other  Member  States  adopt  a  similar  measure,  the  use  of  that

monetary policy instrument would be facilitated; (ii) the exclusion of the ECB from the category of

“credit  institution”  subject  to  the  banking  laws  of  Belgium,  whilst  allowing  it  with  certain

prerrogatives  which  are  preserved  for  credit  institutions;  (iii)  the  abrogation  of  the  right  of  the

Treasury to issue legal tender banknotes; (iv) the abrogation of the legal right to mint ECU coins

with legal tender status.

(g) The draft provisions on (i) re-denomination of  corporate equity, (ii) consumer protection, and

(iii) social security contributions and forms, do not raise any concern from the EMI perspective; on

the contrary, these may be considered as helpful provisions facilitating the changeover process.

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

17th April 1998