98/317/EC: Council Decision of 3 May 1998 in accordance with Article 109j(4) of the Treaty
Date: 1998-05-03
Institutions: Council of the European Union
Subjects: EU Member State, Economic and Monetary Union, budget deficit, euro, inflation, public debt

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COUNCIL DECISION

of 3 May 1998

in accordance with Article 109j(4) of the Treaty

(98/317/EC)

THE COUNCIL OF THE EUROPEAN UNION, meeting in
the composition of Heads of State or Government,

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

Having regard to the report from the Commission,

Having regard to the report from the European Monetary
Institute,

Having regard to the recommendations from the Council
of 1 May 1998,

Having regard to the opinion of the European Parlia-
ment (1),

(1) Whereas, in accordance with Article 109j(4) of the
Treaty, the third stage of economic and monetary
union (EMU) shall start on 1 January 1999;

(2) Whereas, in accordance with Article 109j(2) of the
Treaty, on the basis of reports presented by the
Commission and the European Monetary Institute
on the progress made in the fulfilment by the
Member States of their obligations regarding the
achievement of EMU, the Council has assessed on
1 May 1998, for each Member State, whether it
fulfils the necessary conditions for the adoption of
the single currency and has recommended to the
Council, meeting in the composition of the Heads
of State or Government, the following findings:

Belgium

legislation,

In Belgium, national
including the
statute of the national central bank, is compatible
with Articles 107 and 108 of the Treaty and the
Statute of the European System of Central Banks
(ESCB).

Regarding the
convergence
fulfilment of
criteria mentioned in the four indents of Article
109j(1) of the Treaty:

the

(cid:190) the average inflation rate in Belgium in the year
ending in January 1998 stood at 1,4 %, which
is below the reference value,

(cid:190) Belgium is not

the subject of a Council
decision on the existence of an excessive
government deficit,

(cid:190) Belgium has been a member of the exchange-
rate mechanism (ERM) for the last two years; in
that period, the Belgian franc (BEF) has not
been subject to severe tensions and Belgium
has not devalued, on its own initiative, the BEF
bilateral central rate against any other Member
State’s currency,

(cid:190) in the year ending in January 1998, the long-
term interest rate in Belgium was, on average,
5,7 %, which is below the reference value.

Belgium has achieved a high degree of sustainable
convergence by reference to all four criteria.

Consequently, Belgium fulfils the necessary condi-
tions for the adoption of the single currency.

Germany

In Germany, national
including the
statute of the national central bank, is compatible
with Articles 107 and 108 of the Treaty and the
Statute of the ESCB.

legislation,

Regarding the
convergence
fulfilment of
criteria mentioned in the four indents of Article
109j(1) of the Treaty:

the

(cid:190) the average inflation rate in Germany in the
year ending in January 1998 stood at 1,4 %,
which is below the reference value,

(cid:190) Germany is not

the subject of a Council
decision on the existence of an excessive
government deficit,

(cid:190) Germany has been a member of the ERM for
the last two years; in that period, the German
mark (DEM) has not been subject to severe
tensions and Germany has not devalued, on its
own initiative, the DEM bilateral central rate
against any other Member State’s currency,

(cid:190) in the year ending in January 1998, the long-
term interest rate in Germany was, on average,
5,6 %, which is below the reference value.

(1) Opinion delivered on 2 May 1998 (not yet published in the

Official Journal).

Germany has achieved a high degree of sustainable
convergence by reference to all four criteria.

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Consequently, Germany fulfils the necessary condi-
tions for the adoption of the single currency.

Greece

legislation,

In Greece, national
including the
statute of the national central bank, is compatible
with Articles 107 and 108 of the Treaty and the
Statute of the ESCB.

Regarding the
convergence
fulfilment of
criteria mentioned in the four indents of Article
109j(1) of the Treaty:

the

(cid:190) the average inflation rate in Greece in the year
ending in January 1998 stood at 5,2 %, which
is above the reference value,

(cid:190) the Council decided on 26 September 1994 that
an excessive government deficit
in
Greece and this Decision has not been abro-
gated,

exists

(cid:190) the currency of Greece did not participate in
the ERM in the two years ending in February
1998; during this period, the Greek drachma
(GRD) has been relatively stable against the
ERM currencies but
it has experienced, at
times, tensions which have been counteracted
by temporary increases in domestic interest
rates and by foreign exchange intervention. The
GRD joined the ERM in March 1998,

(cid:190) in the year ending in January 1998, the long-
term interest rate in Greece was, on average,
9,8 %, which is above the reference value.

the convergence
fulfil any of
Greece does not
criteria mentioned in the four indents of Article
109j(1).

Consequently, Greece does not fulfil the necessary
conditions for the adoption of the single currency.

Spain

In Spain, national legislation, including the statute
of the national central bank, is compatible with
Articles 107 and 108 of the Treaty and the Statute
of the ESCB.

Regarding the
convergence
fulfilment of
criteria mentioned in the four indents of Article
109j(1) of the Treaty:

the

(cid:190) the average inflation rate in Spain in the year
ending in January 1998 stood at 1,8 %, which
is below the reference value,

(cid:190) Spain is not the subject of a Council decision
on the existence of an excessive government
deficit,

(cid:190) Spain has been a member of the ERM for the
last two years; in that period, the Spanish peseta
(ESP) has not been subject to severe tensions
and Spain has not devalued, on its own initi-
ative, the ESP bilateral central rate against any
other Member State’s currency,

(cid:190) in the year ending in January 1998, the long-
term interest rate in Spain was, on average,
6,3 %, which is below the reference value.

Spain has achieved a high degree of sustainable
convergence by reference to all four criteria.

Consequently, Spain fulfils the necessary condi-
tions for the adoption of the single currency.

France

France has taken all the necessary steps to make its
including the statute of the
national
national central bank, compatible with Articles 107
and 108 of the Treaty and the Statute of the ESCB.

legislation,

Regarding the
convergence
fulfilment of
criteria mentioned in the four indents of Article
109j(1) of the Treaty:

the

(cid:190) the average inflation rate in France in the year
ending in January 1998 stood at 1,2 %, which
is below the reference value,

(cid:190) France is not the subject of a Council decision
on the existence of an excessive government
deficit,

(cid:190) France has been a member of the ERM for the
last two years; in that period, the French franc
(FRF) has not been subject to severe tensions
and France has not devalued, on its own initi-
ative, the FRF bilateral central rate against any
other Member State’s currency,

(cid:190) in the year ending in January 1998, the long-
term interest rate in France was, on average,
5,5 %, which is below the reference value.

France has achieved a high degree of sustainable
convergence by reference to all four criteria.

Consequently, France fulfils the necessary condi-
tions for the adoption of the single currency.

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Ireland

legislation,

In Ireland, national
including the
statute of the national central bank, is compatible
with Articles 107 and 108 of the Treaty and the
Statute of the ESCB.

convergence
fulfilment of
Regarding the
criteria mentioned in the four indents of Article
109j(1) of the Treaty:

the

(cid:190) the average inflation rate in Ireland in the year
ending in January 1998 stood at 1,2 %, which
is below the reference value,

(cid:190) during the second stage of EMU, Ireland was
not the subject of a Council decision on the
existence of an excessive government deficit,

(cid:190) Ireland has been a member of the ERM for the
last two years; in that period, the Irish pound
(IEP) has not been subject to severe tensions
and the IEP bilateral central rate has not been
devalued against any other Member State’s
currency; on 16 March 1998, at a request of the
Irish authorities, the bilateral central rates of
the IEP against all other ERM currencies were
revalued by 3 %,

(cid:190) in the year ending in January 1998, the long-
term interest rate in Ireland was, on average,
6,2 %, which is below the reference value.

Ireland has achieved a high degree of sustainable
convergence by reference to all four criteria.

Consequently, Ireland fulfils the necessary condi-
tions for the adoption of the single currency.

Italy

In Italy, national legislation, including the statute
of the national central bank, is compatible with
Articles 107 and 108 of the Treaty and the Statute
of the ESCB.

Regarding the
convergence
fulfilment of
criteria mentioned in the four indents of Article
109j(1) of the Treaty:

the

(cid:190) the average inflation rate in Italy in the year
ending in January 1998 stood at 1,8 %, which
is below the reference value,

(cid:190) Italy is not the subject of a Council decision on
an excessive government

the existence of
deficit,

(cid:190) Italy rejoined the ERM in November 1996; in
the period from March 1996 to November
1996, the Italian lira (ITL) appreciated vis-(cid:133)-vis
the ERM currencies; since it re-entered the
ERM, the ITL has not been subject to severe
tensions and Italy has not devalued, on its own
initiative, the ITL bilateral central rate against
any other Member State’s currency,

(cid:190) in the year ending in January 1998, the long-
term interest rate in Italy was, on average,
6,7 %, which is below the reference value.

Italy fulfils the convergence criteria mentioned in
the first, second and fourth indents of Article
109j(1); as regards the criterion mentioned in the
third indent of Article 109j(1), the ITL, although
having rejoined the ERM only in November 1996,
has displayed sufficient stability in the last two
years. For these reasons, Italy has achieved a high
degree of sustainable convergence.

Consequently, Italy fulfils the necessary conditions
for the adoption of the single currency.

Luxembourg

Luxembourg has taken all the necessary steps to
make its national legislation, including the statute
of
the national central bank, compatible with
Articles 107 and 108 of the Treaty and the Statute
of the ESCB.

Regarding the
convergence
fulfilment of
criteria mentioned in the four indents of Article
109j(1) of the Treaty:

the

(cid:190) the average inflation rate in Luxembourg in the
year ending in January 1998 stood at 1,4 %,
which is below the reference value,

(cid:190) during the second stage of EMU, Luxembourg
was not the subject of a Council decision on the
existence of an excessive government deficit,

the last

two years;

in that period,

(cid:190) Luxembourg has been a member of the ERM
for
the
Luxembourg franc (LUF) has not been subject
to severe tensions and Luxembourg has not
devalued, on its own initiative, the LUF bilat-
eral central
rate against any other Member
State’s currency,

(cid:190) in the year ending in January 1998, the long-
term interest
rate in Luxembourg was, on
average, 5,6 %, which is below the reference
value.

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Luxembourg has achieved a high degree of sustain-
able convergence by reference to all four criteria.

Consequently, Luxembourg fulfils the necessary
conditions for the adoption of the single currency.

The Netherlands

In the Netherlands, national legislation, including
the statute of the national central bank, is compat-
ible with Articles 107 and 108 of the Treaty and
the Statute of the ESCB.

convergence
fulfilment of
Regarding the
criteria mentioned in the four indents of Article
109j(1) of the Treaty:

the

(cid:190) the average inflation rate in the Netherlands in
the year ending in January 1998 stood at 1,8 %,
which is below the reference value,

(cid:190) the Netherlands is not the subject of a Council
decision on the existence of an excessive
government deficit,

(cid:190) the Netherlands has been a member of the
ERM for the last two years; in that period, the
Dutch guilder (NLG) has not been subject to
severe tensions and the Netherlands has not
devalued, on its own initiative, the NLG bilat-
eral central
rate against any other Member
State’s currency,

(cid:190) in the year ending in January 1998, the long-
term interest rate in the Netherlands was, on
average, 5,5 %, which is below the reference
value.

The Netherlands has achieved a high degree of
sustainable convergence by reference to all four
criteria.

Consequently, the Netherlands fulfils the necessary
conditions for the adoption of the single currency.

Austria

legislation,

including the
In Austria, national
statute of the national central bank, is compatible
with Articles 107 and 108 of the Treaty and the
Statute of the ESCB.

Regarding the
convergence
fulfilment of
criteria mentioned in the four indents of Article
109j(1) of the Treaty:

the

(cid:190) the average inflation rate in Austria in the year
ending in January 1998 stood at 1,1 %, which
is below the reference value,

(cid:190) Austria is not the subject of a Council decision
on the existence of an excessive government
deficit,

(cid:190) Austria has been a member of the ERM for the
last two years; in that period, the Austrian schil-
to severe
ling (ATS) has not been subject
tensions and Austria has not devalued, on its
own initiative, the ATS bilateral central rate
against any other Member State’s currency,

(cid:190) in the year ending in January 1998, the long-
term interest rate in Austria was, on average,
5,6 %, which is below the reference value.

Austria has achieved a high degree of sustainable
convergence by reference to all four criteria.

Consequently, Austria fulfils the necessary condi-
tions for the adoption of the single currency.

Portugal

In Portugal, national
including the
statute of the national central bank, is compatible
with Articles 107 and 108 of the Treaty and the
Statute of the ESCB.

legislation,

Regarding the
convergence
fulfilment of
criteria mentioned in the four indents of Article
109j(1) of the Treaty:

the

(cid:190) the average inflation rate in Portugal in the year
ending in January 1998 stood at 1,8 %, which
is below the reference value,

(cid:190) Portugal is not the subject of a Council decision
on the existence of an excessive government
deficit,

(cid:190) Portugal has been a member of the ERM for
the last two years; in that period, the Portuguese
escudo (PTE) has not been subject to severe
tensions and Portugal has not devalued, on its
own initiative, the PTE bilateral central rate
against any other Member State’s currency,

(cid:190) in the year ending in January 1998, the long-
term interest rate in Portugal was, on average,
6,2 %, which is below the reference value.

Portugal has achieved a high degree of sustainable
convergence by reference to all four criteria.

Consequently, Portugal fulfils the necessary condi-
tions for the adoption of the single currency.

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Finland

In Finland, national
including the
statute of the national central bank, is compatible
with Articles 107 and 108 of the Treaty and the
Statute of the ESCB.

legislation,

convergence
fulfilment of
Regarding the
criteria mentioned in the four indents of Article
109j(1) of the Treaty:

the

(cid:190) the average inflation rate in Finland in the year
ending in January 1998 stood at 1,3 %, which
is below the reference value,

(cid:190) Finland is not the subject of a Council decision
on the existence of an excessive government
deficit,

(cid:190) Finland has been a member of the ERM since
October 1996; in the period from March 1996
the Finnish markka (FIM)
to October 1996,
appreciated vis-(cid:133)-vis the ERM currencies; since
it entered the ERM, the FIM has not been
subject to severe tensions and Finland has not
devalued, on its own initiative, the FIM bilateral
central rate against any other Member State’s
currency,

(cid:190) in the year ending in January 1998, the long-
term interest rate in Finland was, on average,
5,9 %, which is below the reference value.

as

the

regards

Finland fulfils the convergence criteria mentioned
in the first, second and fourth indents of Article
109j(1);
criterion
mentioned in the third indent of Article 109j(1),
the FIM, although having entered the ERM only in
October 1996, has displayed sufficient stability in
the last two years. For these reasons, Finland has
achieved a high degree of sustainable convergence.

convergence

Consequently, Finland fulfils the necessary condi-
tions for the adoption of the single currency.

Sweden

including the
In Sweden, national
statute of the national central bank, is not compat-
ible with Articles 107 and 108 of the Treaty and
the Statute of the ESCB.

legislation,

Regarding the
convergence
fulfilment of
criteria mentioned in the four indents of Article
109j(1) of the Treaty:

the

(cid:190) the average inflation rate in Sweden in the year
ending in January 1998 stood at 1,9 %, which
is below the reference value,

(cid:190) Sweden is not the subject of a Council decision
on the existence of an excessive government
deficit,

(cid:190) the currency of Sweden has never participated
in the ERM; in the two years under review, the
Swedish crown (SEK)
the
ERM currencies reflecting among others the
absence of an exchange rate target,

fluctuated against

(cid:190) in the year ending in January 1998, the long-
term interest rate in Sweden was, on average,
6,5 %, which is below the reference value.

Sweden fulfils the convergence criteria mentioned
in the first, second and fourth indents of Article
109j(1) but does not fulfil the convergence criterion
mentioned in the third indent thereof.

Consequently, Sweden does not fulfil the necessary
conditions for the adoption of the single currency;

the above reports of

(3) Whereas the Council, meeting in the composition
of Heads of State or Government, after having
made an overall evaluation for each Member State,
the
taking into account
Commission and the European Monetary Institute,
the opinion of the European Parliament and the
Council’s
recommendations of 1 May 1998,
considers that Belgium, Germany, Spain, France,
the Netherlands,
Ireland,
Austria, Portugal and Finland fulfil the necessary
conditions for the adoption of the single currency;

Italy, Luxembourg,

(4) Whereas Greece and Sweden do not at this stage
fulfil the necessary conditions for the adoption of
the single currency; whereas Greece and Sweden
will consequently have a derogation as defined in
Article 109k of the Treaty;

(5) Whereas,

in accordance with paragraph 1 of
Protocol 11 of the Treaty, the United Kingdom has
notified the Council that it does not intend to
move to the third stage of EMU on 1 January 1999;
whereas, by virtue of this notification, paragraphs 4
to 9 of Protocol 11 lay down the provisions applic-
able to the United Kingdom if and so long as the
United Kingdom has not moved to the third stage;

(6) Whereas,

in accordance with paragraph 1 of
Protocol 12 of the Treaty and the Decision taken
in
by

State or Government

the Heads of

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Edinburgh in December 1992, Denmark has noti-
fied the Council that it will not participate in the
third stage of EMU; whereas, by virtue of this noti-
fication, all Articles and provisions of the Treaty
and the Statute of the ESCB referring to a deroga-
tion shall be applicable to Denmark;

(7) Whereas, by virtue of the above notifications it was
not necessary for the Council to make an assess-
ment under Article 109j(2) concerning the United
Kingdom and Denmark,

fulfil the necessary conditions for the adoption of the
single currency on 1 January 1999.

Article 2

This Decision is addressed to the Member States.

Article 3

This Decision shall be published in the Official Journal
of the European Communities.

HAS ADOPTED THIS DECISION:

Done at Brussels, 3 May 1998.

Article 1

Belgium, Germany, Spain, France, Ireland, Italy, Luxem-
bourg, the Netherlands, Austria, Portugal and Finland

For the Council

The President

T. BLAIR