Opinion of the European Central Bank at the request of the Italian Ministry of the Treasury under Article 109f (6) of the Treaty establishing the European Community, Article 5.3 of the Statute of the EMI and Council Decision 93/717/EC of 22 November 1993, concerning a draft legislative Decree containing measures for the introduction of the euro in the Italian legal system pursuant to Law no. 433 of 17 December 1997 (the "draft legislative decree") (CON/98/23)
Date: 1998-06-04
Institutions: European Central Bank
Subjects: Euribor, Italy, central bank, conversion rate, euro, external debt, money

OPINION OF THE EUROPEAN CENTRAL BANK

at the request of the Italian Ministry of the Treasury under Article 109f (6) of the Treaty
establishing the European Community, Article 5.3 of the Statute of the EMI and
Council Decision 93/717/EC of 22 November 1993, concerning a draft legislative Decree

containing measures for the introduction of the euro in the Italian legal system

pursuant to Law no. 433 of 17 December 1997 (the “draft legislative decree”)

(CON/98/23)

1.

On  24  April  1998,  the  EMI  received  a  request  for  an  opinion  on  the  draft  legislative  decree

from the Italian Ministry of the Treasury. This opinion is based on an on the English translation

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

2.

In  accordance  with    Article  109l  (2)  of  the  Treaty,  the  ECB  has  taken  over  the  advisory

functions  of  the  EMI  which  has  gone  into  liquidation  upon  the  establishment  of  the  ECB  on

1 June  1998.  The  ECB’s  competence  to  deliver  an  opinion  is  based  on  Article  1.1,  first  and

second 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

Legislative Decree contains provisions concerning the introduction of the euro.

3.

The purpose of the draft legislative decree is to implement the Law no. 433/1997, delegating to

the  Government  the  authority  to  adopt  rules  in  the  changeover  area,  on  which  the  EMI  has

already given its opinion. The present opinion will therefore concentrate on the technical details

of the implementation of this law. In general, the EMI welcomes the effort made by the Italian

authorities  to  implement  the  changeover  in  full  consistency  with  the  principles  set  by

Community legislation and to promote the introduction of the euro beyond the minimum levels

required. 

4.

The  ECB  takes  note  of  the  introduction  of  the  provision  empowering  the  Governor  of  Banca

d’Italia to indicate a substitute for the Italian reference rate “official discount rate”, which will

disappear at the beginning of Stage Three. This provision, very similar to the ones contained in

the draft legislation of other countries for the substitution of official rates (Belgium, Germany,

Austria, Portugal), has the purpose of improving legal certainty for the markets. However, the

ECB notes that the five-year term indicated in Article 2 is a maximum term. The publication of

such  rate  may  be  expected  to  cease,  within  this  term,  as  soon  as  the  need  to  ensure  legal

certainty  will  allow;  in  any  event,  it  would  be  preferable  that  the  period  of  efficacy  of  the

reference rate does not coincide with the three year’s transition period.

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5.

The  ECB  welcomes  Article  2.2  which  empowers  the  Ministry  of  Treasury  to  certify  with  a

decree which financial parameters have been substituted for in the markets by new parameters

referring  to  the  entire  euro  area.  This  is  a  helpful  contribution  to  clarity;  it  might  even  be

suggested  to  publish  such  decrees  before  1  January  1999,  thereby  reducing  legal  uncertainty,

especially  on  the  question  on  whether  the  Italian  interbank  rate  RIBOR  should  or  not  be

replaced by the euro-area indicator EURIBOR. 

6.

The  ECB  welcomes  the  provision  in  Article  3  introducing  stricter  accuracy  rules  for  the

conversion from lira to euro. The ECB realises that the risk of inaccuracies due to the rounding,

which  can  have  particularly  large  consequences  if  prices  and  tariffs  are  fixed  on  a  very  low

unitary basis (telephone, electricity, etc.) have particularly severe effects in the case of Italian

lira. The solution found by the Italian authorities through this very detailed Article is justified

by the particular arithmetic intricacy of conversions between euro and lira and seems to achieve

the objective of reducing inaccuracies in the conversion. However, the ECB would welcome an

explicit  mention  of  the  inapplicability  of  Article  3  to  conversions  between  national  currency

denominations  during  the  transitional  phase.  In  particular,  the  last  indent  of  paragraph  1  of

Article 3, which defines a minimum standard of two digits for amounts of more than 1.000 lira,

shall not be applicable to any conversion between the lira and other participating currencies, as

the  euro  Regulation  explicitly  foresees  a  minimum  rounding  to  three  decimal  digits  for  the

“triangulation algorithms”. Moreover, the ECB suggests to add a provision stating, similarly to

what  already  done  to  by  the  changeover  legislation  of  other  Member  States,  that  if  the

conversation  rules  of  Article  3  are  respected,  possible  remaining  arithmetical  inaccuracies

would not put at risk the "legal" correspondence between the two amounts.

7.

Concerning  Article  6,  dealing  with  the  redenomination  of  international  debt  instruments

denominated in the currency of a participating Member State, it is the opinion of the ECB that

the  text  should  be  further  clarified.  In  fact,  Article  8,  paragraph  4,  of  Council  Regulation

974/98,  permits  redenomination  of  international  bonds  and  loans  issued  by  a  Member  State

under its national law but in another currency when the Member State issuing that currency has

redenominated in euro its public debt. Clearly, international debt instruments governed by a law

different  from  the  Italian  one  are  not  subject  to  Article  6  and  will  be  redenominated  in

accordance with the law of the contract. However, for the sake of clarity, the ECB suggests to

add in Article 6 a reference to the Italian law. The same reasoning, and the same suggestion, is

applicable with reference to Article 13. Moreover, the wording “issuing Member States”, both

in Article 6 and in Article 13, might give rise to confusion. The ECB suggests to clarify that the

reference is to the Member States issuing that currency.

8.

Concerning the redenomination procedures, although they seem to differ from the method used

in  most  other  countries,  the  ECB  considers  that  this  is  perfectly  compatible  with  the  general

rules of the euro Regulation. The difference between the Italian method and that of  the  other

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countries  can  be  justified  by  the  fact  that  Italy  will  convert  not  only  dematerialised  but  also

currently materialised debt. 

The ECB confirms that it has no objection to this opinion being made public by the competent Italian

authorities at their discretion.

4 June 1998