Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro
Date: 1998-05-03
Institutions: Council of the European Union
Subjects: EU Member State, EU financial instrument, conversion rate, counterfeiting, euro, exchange rate, national currency, paper money, transitional period (EU)

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Official Journal of the European Communities

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I

(Acts whose publication is obligatory)

COUNCIL REGULATION (EC) No 974/98

of 3 May 1998

on the introduction of the euro

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 109l(4),
third
sentence thereof,

Having regard to the proposal from the Commission (1),

Having regard to the opinion of the European Monetary
Institute (2),

Having regard to the opinion of the European Parlia-
ment (3),

(1) Whereas this Regulation defines monetary law
provisions of
the Member States which have
adopted the euro; whereas provisions on continuity
of contracts, the replacement of references to the
ecu in legal instruments by references to the euro
and rounding have already been laid down in
Council Regulation (EC) No 1103/97 of 17 June
1997 on certain provisions relating to the introduc-
tion of the euro (4); whereas the introduction of the
euro concerns day-to-day operations of the whole
population in participating Member States; whereas
measures other than those in this Regulation and
in Regulation (EC) No 1103/97 should be exam-
ined to ensure a balanced changeover, in particular
for consumers;

(2) Whereas, at the meeting of the European Council
in Madrid on 15 and 16 December 1995,
the
decision was taken that the term ‘ecu' used by the
Treaty to refer to the European currency unit is a
generic term; whereas the Governments of the 15
Member States have reached the common agree-
ment that this decision is the agreed and definitive
interpretation of
the relevant Treaty provisions;
whereas the name given to the European currency
shall be the ‘euro'; whereas the euro as the currency
of the participating Member States shall be divided
into one hundred sub-units with the name ‘cent';

(1) OJ C 369, 7. 12. 1996, p. 10.
(2) OJ C 205, 5. 7. 1997, p. 18.
(3) OJ C 380, 16. 12. 1996, p. 50.
(4) OJ L 162, 19. 6. 1997, p. 1.

whereas the definition of the name ‘cent' does not
prevent the use of variants of this term in common
usage in the Member States; whereas the European
Council furthermore considered that the name of
the single currency must be the same in all the
official languages of the European Union, taking
into account the existence of different alphabets;

(3) Whereas the Council when acting in accordance
with the third sentence of Article 109l(4) of the
Treaty shall take the measures necessary for the
rapid introduction of the euro other than the adop-
tion of the conversion rates;

(4) Whereas whenever under Article 109k(2) of the
Treaty a Member State becomes a participating
Member State,
shall according to
Article 109l(5) of the Treaty take the other meas-
ures necessary for the rapid introduction of the
euro as the single currency of this Member State;

the Council

the Treaty the Council shall at

(5) Whereas according to the first sentence of Article
109l(4) of
the
starting date of the third stage adopt the conversion
rates at which the currencies of the participating
Member States shall be irrevocably fixed and at
which irrevocably fixed rate the euro shall be
substituted for these currencies;

(6) Whereas given the absence of exchange rate risk
either between the euro unit and the national
currency units or between these national currency
units, legislative provisions should be interpreted
accordingly;

(7) Whereas the term ‘contract' used for the definition
of legal instruments is meant to include all types of
contracts, irrespective of the way in which they are
concluded;

(8) Whereas in order to prepare a smooth changeover
to the euro a transitional period is needed between
the substitution of the euro for the currencies of

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the participating Member States and the introduc-
tion of euro banknotes and coins; whereas during
this period the national currency units will be
defined as
the euro; whereas
thereby a legal equivalence is established between
the euro unit and the national currency units;

sub-divisions of

(9) Whereas in accordance with Article 109g of the
Treaty and with Regulation (EC) No 1103/97, the
euro will replace the ECU as from 1 January 1999
as the unit of account of the institutions of the
European Communities; whereas the euro should
also be the unit of account of the European Central
Bank (ECB) and of the central banks of the partici-
pating Member States; whereas, in line with the
Madrid conclusions, monetary policy operations
will be carried out in the euro unit by the European
System of Central Banks (ESCB); whereas this does
not prevent national central banks from keeping
accounts in their national currency unit during the
transitional period, in particular for their staff and
for public administrations;

(10) Whereas each participating Member State may
allow the full use of the euro unit in its territory
during the transitional period;

(11) Whereas during the transitional period contracts,
national laws and other legal instruments can be
drawn up validly in the euro unit or in the national
currency unit; whereas during this period, nothing
in this Regulation should affect the validity of any
reference to a national currency unit in any legal
instrument;

(12) Whereas, unless agreed otherwise, economic agents
have to respect the denomination of a legal instru-
ment in the performance of all acts to be carried
out under that instrument;

(13) Whereas the euro unit and the national currency
units are units of the same currency; whereas it
should be ensured that payments inside a partici-
pating Member State by crediting an account can
be made either in the euro unit or the respective
national currency unit; whereas the provisions on
payments by crediting an account should also
apply to those cross-border payments, which are
denominated in the euro unit or the national
currency unit of
the creditor;
whereas it is necessary to ensure the smooth func-
tioning of payment systems by laying down provi-
sions dealing with the crediting of accounts by
credited through those
payment
systems; whereas the provisions on payments by
crediting an account should not imply that finan-
cial intermediaries are obliged to make available

the account of

instruments

either other payment facilities or products denom-
inated in any particular unit of the euro; whereas
the provisions on payments by crediting an
account do not prohibit financial
intermediaries
from coordinating the introduction of payment
facilities denominated in the euro unit which rely
on a common technical infrastructure during the
transitional period;

(14) Whereas

in accordance with the conclusions
reached by the European Council at its meeting
held in Madrid, new tradeable public debt will be
issued in the euro unit by the participating
Member States as from 1 January 1999; whereas it
is desirable to allow issuers of debt to redenominate
outstanding debt
in the euro unit; whereas the
provisions on redenomination should be such that
they can also be applied in the jurisdictions of third
countries; whereas issuers should be enabled to
redenominate outstanding debt
is
denominated in a national currency unit of a
Member State which has redenominated part or all
of the outstanding debt of its general government;
whereas these provisions do not address the intro-
duction of additional measures to amend the terms
of outstanding debt to alter, among other things,
these
the nominal amount of outstanding debt,
being matters subject
law;
to relevant national
whereas it is desirable to allow Member States to
take appropriate measures for changing the unit of
account of the operating procedures of organised
markets;

the debt

if

(15) Whereas further action at the Community level
may also be necessary to clarify the effect of the
introduction of
the euro on the application of
existing provisions of Community law, in particular
concerning netting,
set-off and techniques of
similar effect;

(16) Whereas any obligation to use the euro unit can
only be imposed on the basis of Community legis-
lation; whereas in transactions with the public
sector participating Member States may allow the
use of the euro unit; whereas in accordance with
the reference scenario decided by the European
Council at
the
Community legislation laying down the time frame
for the generalisation of the use of the euro unit
might leave some freedom to individual Member
States;

its meeting held in Madrid,

(17) Whereas in accordance with Article 105a of the
Treaty the Council may adopt measures to har-
monise the denominations and technical speci-
fications of all coins;

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(18) Whereas banknotes

and coins need adequate

HAS ADOPTED THIS REGULATION:

protection against counterfeiting;

(19) Whereas banknotes and coins denominated in the
national currency units lose their status of legal
tender at the latest six months after the end of the
transitional
on
payments
in notes and coins, established by
Member States for public reasons, are not incom-
patible with the status of legal tender of euro bank-
notes and coins, provided that other lawful means
for the settlement of monetary debts are available;

period; whereas

limitations

(20) Whereas as from the end of the transitional period
references in legal instruments existing at the end
of the transitional period will have to be read as
references to the euro unit according to the re-
spective conversion rates; whereas a physical re-
is
denomination of existing legal
therefore not necessary to achieve this
result;
whereas the rounding rules defined in Regulation
(EC) No 1103/97 shall also apply to the conver-
sions to be made at the end of the transitional
period or after the transitional period; whereas for
reasons of clarity it may be desirable that
the
physical redenomination will take place as soon as
appropriate;

instruments

(21) Whereas paragraph 2 of Protocol 11 on certain
provisions relating to the United Kingdom of Great
Britain and Northern Ireland stipulates that, inter
alia, paragraph 5 of that Protocol shall have effect
if the United Kingdom notifies the Council that it
does not intend to move to the third stage; whereas
the United Kingdom gave notice to the Council on
30 October 1997 that it does not intend to move to
the third stage; whereas paragraph 5 stipulates that,
inter alia, Article 109l(4) of the Treaty shall not
apply to the United Kingdom;

(22) Whereas Denmark, referring to paragraph 1 of
Protocol 12 on certain provisions
relating to
Denmark has notified, in the context of the Edin-
burgh decision of 12 December 1992, that it will
not participate in the third stage; whereas, there-
fore, in accordance with paragraph 2 of the said
Protocol, all Articles and provisions of the Treaty
and the Statute of the ESCB referring to a deroga-
tion shall be applicable to Denmark;

PART I

DEFINITIONS

Article 1

For the purpose of this Regulation:

(cid:190) ‘participating Member States' shall mean Belgium,
Germany, Spain, France, Ireland, Italy, Luxembourg,
Netherlands, Austria, Portugal and Finland,

(cid:190) ‘legal instruments' shall mean legislative and statutory
provisions, acts of administration,
judicial decisions,
contracts, unilateral legal acts, payment instruments
other than banknotes and coins, and other instru-
ments with legal effect,

(cid:190) ‘conversion rate' shall mean the irrevocably fixed
conversion rate adopted for the currency of each
participating Member State by the Council according
to the first sentence of Article 109l(4) of the Treaty,
(cid:190) ‘euro unit' shall mean the currency unit as referred to

in the second sentence of Article 2,

(cid:190) ‘national currency units' shall mean the units of the
currencies of participating Member States, as those
units are defined on the day before the start of the
third stage of economic and monetary union,

(cid:190) ‘transitional period' shall mean the period beginning
on 1 January 1999 and ending on 31 December 2001,
(cid:190) ‘redenominate' shall mean changing the unit in which
the amount of outstanding debt
is stated from a
national currency unit to the euro unit, as defined in
Article 2, but which does not have through the act of
redenomination the effect of altering any other term
of the debt, this being a matter subject to relevant
national law.

PART II

SUBSTITUTION OF THE EURO FOR THE CURREN-
CIES OF THE PARTICIPATING MEMBER STATES

Article 2

As from 1 January 1999 the currency of the participating
Member States shall be the euro. The currency unit shall
be one euro. One euro shall be divided into one hundred
cent.

Article 3

(23) Whereas, in accordance with Article 109l(4) of the
Treaty, the single currency will be introduced only
in the Member States without a derogation;

The euro shall be substituted for the currency of each
participating Member State at the conversion rate.

Article 4

(24) Whereas this Regulation, therefore, shall be applic-
able pursuant to Article 189 of the Treaty, subject
to Protocols 11 and 12 and Article 109k(1),

The euro shall be the unit of account of the European
Central Bank (ECB) and of
the
participating Member States.

the central banks of

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PART III

TRANSITIONAL PROVISIONS

Article 5

Articles 6, 7, 8 and 9 shall apply during the transitional
period.

Article 6

1.
The euro shall also be divided into the national
currency units according to the conversion rates. Any
subdivision thereof shall be maintained. Subject to the
provisions of this Regulation the monetary law of the
participating Member States shall continue to apply.

2. Where in a legal instrument reference is made to a
national currency unit, this reference shall be as valid as if
reference were made to the euro unit according to the
conversion rates.

Article 7

The substitution of the euro for the currency of each
participating Member State shall not in itself have the
effect of altering the denomination of legal instruments in
existence on the date of substitution.

Article 8

1. Acts to be performed under legal instruments stipu-
lating the use of or denominated in a national currency
unit shall be performed in that national currency unit.
Acts to be performed under legal instruments stipulating
the use of or denominated in the euro unit shall be
performed in that unit.

The provisions of paragraph 1 are subject to anything

2.
which parties may have agreed.

3. Notwithstanding the provisions of paragraph 1, any
amount denominated either in the euro unit or in the
national currency unit of a given participating Member
State and payable within that Member State by crediting
an account of the creditor, can be paid by the debtor
either in the euro unit or in that national currency unit.
The amount shall be credited to the account of the cred-
itor in the denomination of his account, with any conver-
sion being effected at the conversion rates.

4. Notwithstanding the provisions of paragraph 1, each
participating Member State may take measures which may
be necessary in order to:

(cid:190) redenominate in the euro unit outstanding debt issued
by that Member State’s general government, as
defined in the European system of
integrated
accounts, denominated in its national currency unit
and issued under its own law. If a Member State has
taken such a measure, issuers may redenominate in
the euro unit debt denominated in that Member
State’s national currency unit unless redenomination
is expressly excluded by the terms of the contract; this
provision shall apply to debt issued by the general
government of a Member State as well as to bonds and
other forms of securitised debt negotiable in the

capital markets, and to money market instruments,
issued by other debtors,

(cid:190) enable the change of the unit of account of their
operating procedures from a national currency unit to
the euro unit by:

(a) markets for the regular exchange, clearing and
settlement of any instrument listed in section B of
the Annex to Council Directive 93/22/EEC of 10
May 1993 on investment services in the securities
field (1) and of commodities; and

(b) systems for the regular exchange, clearing and

settlement of payments.

5.
Provisions other than those of paragraph 4 imposing
the use of the euro unit may only be adopted by the
participating Member States in accordance with any time-
frame laid down by Community legislation.

6. National
legal provisions of participating Member
States which permit or impose netting, set-off or tech-
niques with similar effects shall apply to monetary obliga-
tions, irrespective of their currency denomination, if that
denomination is in the euro unit or in a national currency
unit, with any conversion being effected at the conversion
rates.

Article 9

Banknotes and coins denominated in a national currency
unit shall retain their status as legal tender within their
territorial limits as of the day before the entry into force
of this Regulation.

PART IV

EURO BANKNOTES AND COINS

Article 10

As from 1 January 2002, the ECB and the central banks
of the participating Member States shall put into circula-
tion banknotes denominated in euro. Without prejudice
to Article 15, these banknotes denominated in euro shall
be the only banknotes which have the status of legal
tender in all these Member States.

(1) OJ L 141, 11. 6. 1993, p. 27. Directive as amended by Dir-
the

the European Parliament and of

ective 95/26/EC of
Council (OJ L 168, 18. 7. 1995, p. 7).

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Article 11

As from 1 January 2002, the participating Member States
shall issue coins denominated in euro or in cent and
complying with the denominations and technical specifi-
cations which the Council may lay down in accordance
with the second sentence of Article 105a(2) of the Treaty.
Without prejudice to Article 15, these coins shall be the
only coins which have the status of legal tender in all
these Member States. Except for the issuing authority and
for those persons specifically designated by the national
legislation of the issuing Member State, no party shall be
obliged to accept more than 50 coins in any single
payment.

Article 12

Participating Member States shall ensure adequate sanc-
tions against counterfeiting and falsification of euro bank-
notes and coins.

PART V

FINAL PROVISIONS

Article 13

Articles 14, 15 and 16 shall apply as from the end of the
transitional period.

Article 14

Where in legal instruments existing at the end of the
transitional period reference is made to the national
currency units, these references shall be read as references

to the euro unit according to the respective conversion
rates. The rounding rules laid down in Regulation (EC)
No 1103/97 shall apply.

Article 15

1.
Banknotes and coins denominated in a national
currency unit as referred to in Article 6(1) shall remain
legal tender within their territorial limits until six months
after the end of the transitional period at the latest; this
period may be shortened by national law.

2.
Each participating Member State may, for a period of
up to six months after the end of the transitional period,
lay down rules for the use of the banknotes and coins
denominated in its national currency unit as referred to in
Article 6(1) and take any measures necessary to facilitate
their withdrawal.

Article 16

In accordance with the laws or practices of participating
Member States, the respective issuers of banknotes and
coins shall continue to accept, against euro at the conver-
sion rate, the banknotes and coins previously issued by
them.

PART VI

ENTRY INTO FORCE

Article 17

This Regulation shall enter into force on 1 January 1999.

This Regulation shall be binding in its entirety and directly applicable in all Member
States, in accordance with the Treaty, subject to Protocols 11 and 12 and Article 109k(1).

Done at Brussels, 3 May 1998.

For the Council

The President

G. BROWN