Opinion of the European Central Bank at the request of the Spanish Ministry of Economy and Finance under Article 109f (6) of the Treaty establishing the European Community (the "Treaty") and Article 5.3 of the Statute of the EMI on a draft law on the Introduction of the euro ("Umbrella law") (CON/98/31)
Date: 1998-07-21
Institutions: European Central Bank
Subjects: Spain, euro, monetary integration, money, national law

OPINION OF THE EUROPEAN CENTRAL BANK

at the request of the Spanish Ministry  of Economy and Finance under Article 109f (6) of the

Treaty establishing the European Community (the “Treaty”) and Article 5.3 of the Statute of

the EMI on a draft law on the Introduction of the euro (“Umbrella law”).

CON/98/31

1.

On  8  June  1998  the  ECB  has  received  a  request  from  the  Spanish  Ministry  of  Economy  and

Finance, through the Banco de España, for an opinion on a draft law on the Introduction of the

euro (“Umbrella law”).

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 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 Umbrella law contains rules which,

in the context of national change-over legislation, deal with provisions that concern monetary

law and have an impact on financial markets and, thus, fall within the  consultative competence

of the ECB.

3. 

The aim of the Umbrella law is to supplement the EU Council Regulations 1103/97 of 17 June

1997 and 974/98 of 3 May 1998, concerning the introduction  of  the  euro,  providing  with  the

adaptations of the national monetary system to the new situation, setting out general principles

and  rules  applying  to  the  changeover,  during  the  transitional  period,  and  at  the  end  of  the

transitional period. It contains provisions regarding the relationship between the two currency

units  in  the  areas  of  accounting  and  reporting,  re-denomination  of  the  capital  of  companies,

adaptations in the domain of administrative contracts and payments, taxation and social security

rules,  consumer protection and fixing of exchange rates. It also provides for the maintenance of

the  Madrid  Interbank  Offered  Rate  (MIBOR).  One  of  the  provisions  of  the  Umbrella  law  is

given the rank of “organic law” in order to make the necessary adaptations to the laws that have

such a qualified rank. The Umbrella law is to be effective as from the 1 January 1999.

The  ECB  welcomes  the  initiative  of  the  Spanish  Government  to  prepare  for  the  timely

implementation  of  the  measures  necessary  or  appropriate  for  the  changeover  to  the  single

- 2 -

currency.  The  Umbrella  law  constitutes  a  comprehensive  piece  of  legislative  work  which

encompasses a wide range of topics and areas under an overall intention of (i) on the one hand,

being pedagogic for the public, and (ii) on the other hand facilitating the smooth introduction of

the  euro.  It  moreover 

incorporates  provisions  fully 

in 

line  with 

the  Commission

Recommendations  of  1998  on  “banking  charges  for  conversion  to  the  euro”  and  on  “dual

display  of  prices  and  other  monetary  amounts”.  The  assessment  is  therefore  positive,  and  no

major inconsistencies or problems are to be mentioned.

4. 

The Umbrella law follows deliberately a legislative technique which includes the reproduction,

where necessary, of provisions of the EU Council Regulations 1103/97 and 974/98. Whilst it is

clear from the preamble of the draft and from the text of several provisions that the rules have a

Community  origin,  the  legislative  technique  of  reproducing  in  a  national  act  parts  of

Community legislation that has all the features of direct applicability and direct effect  has been

consistently  critized  by  the  European  Court  of  Justice.  Implementation  by  insertion  into

national legal acts of EU Council Regulations:

- 

is  not  necessary,  because  of  the  direct  applicability  and  direct  effect  of  such

Community acts (they are to be considered a part of the legal order of each Member

State without any further national step);

- 

it  is  inconvenient  when  the  reproduction  is  not  identical  to  the  wording  of  the

Community  regulations,  since  it  may  jeopardise  the  simultaneous  and  uniform

application of those regulations in the whole of the Community (Case 39/72 [1973]

E.C.R. 101);

- 

it may cast doubts about the place that the provision has in the hierarchy of sources,

appearing to the reader as if it were a national legal source, thus interfering with the

right of the Community to autonomously amend its legislation from time to time.

The  technique  of  incorporating  Community  provisions  in  a  national  act  may  be  acceptable

when:

- 

the national laws incorporate some elements of Community regulations for the sake

of coherence and in order to make them comprehensible to the persons to whom they

apply (Case 272/83 [1985] E.C.R. 1057), but only if the Community nature of a legal

rule  is  clearly  shown  or  disclosed  to  those  subject  to  it  (Case  34/73  [1973]  E.C.R.

981);

- 

the  Community  provision  leaves  room  for  interpretation  and  demands  a  national

supplementary  act  specifying  a  solution  where  a  certain  discretion  is  given  to  the

national legislator (direct effect requires clarity, precision and unconditionality of the

Community provision).

The above considerations have specific cases of application:

- 3 -

-  Article  2  of  the  Umbrella  law  reproduces  parts  of  Article  1  of  the  EU  Council

Regulation 974/98, but it has added to the scope of the term “legal instruments” the

meaning  of  “entries  in  official  registries”;  whilst  there  is  no  objection  in  the

substance,  the  reservations  described  above  concerning  the  legislative  technique  of

the Umbrella law would recommend that the text reproduces remains identical to the

Community text.

-  Article 3(2), last sentence, of the Umbrella law, reproduces in an imperfect manner

the second paragraph of Article 105a(1) of the Treaty; in particular, the name of the

centimal  subdivision  of  the  euro  is  “cent”;  whilst  the  Preamble  of  the  EU  Council

Regulation  974/98  permits  the  “use  of  variants  in  common  usage  in  the  Member

States”,  such  permission  refers  to  common  usage  and  not  to  legal  designation

(however, legal use of the term “céntimo” might be permitted when employed as the

equivalent  for  the  English  term  “hundredth”  of  an  euro,  but  not  as  legal

denomination  of  “cent”;  see  Arts.  10.1  and  15.3  of  the  Umbrella  Law).  The  above

considerations are here also applicable.

-  The third paragraph of Article 5 of the Umbrella law reproduces imperfectly Article

2  of  the  EU  Council  Regulation  1103/97;  the  above  considerations  are  here  also

applicable.

-  Article 7 of the Umbrella law reproduces with different wording Article 6 (2) of EU

Council Regulation 974/98. Whilst it may be said that the draft article improves the

Community  text,  the  above  considerations  would  warrant  identical  wording  or

deletion.

-  Article 9 of the Umbrella law re-states the principle of contract continuity which is

enshrined in Article 3 of the EU Council Regulation 1103/97; whilst it may be said

that the draft article improves the Community text, the above considerations would

warrant identical wording or deletion.

-  Article 10 of the Umbrella law reproduces with slight differences the text of Article

5 of the EU Council Regulation 1103/97. Whilst it may be said that the draft article

improves  the  Community  text,  the  above  considerations  would  warrant  identical

wording or deletion.

-  Article 11 of the Umbrella law reproduces partially one of the definitions in Article 1

of the EU Council Regulation 974/98, and states that the monetary regime during the

transitional period is governed “according to the provisions of this chapter”, with no

reference  whatsoever  to  the  Community  regulations;  it  is  recommended  that  such

reference is clearly made.

-  Article 13(1) of the Umbrella law reproduce with different wording Article 8(1) of

the  EU  Council  Regulation  974/98.  Whilst  it  may  be  said  that  the  draft  article

improves  the  Community  text,  the  above  considerations  would  warrant  identical

wording or deletion.

- 4 -

-  Article 13(2) of the Umbrella law reproduce with different wording Article 8(3) of

the  EU  Council  Regulation  974/98.  Whilst  it  may  be  said  that  the  draft  article

improves  the  Community  text,  the  above  considerations  would  warrant  identical

wording or deletion.

5. 

The ECB welcomes and assesses positively the rules contained in the Umbrella law about re-

denomination  of  securities.  However,  Article  15.5  of  the  Umbrella  law,  concerning  the

redenomination of the outstanding public debt in foreign currency, issued according to foreign

law,  identifies  the  currency  of  issuance  (lex  monetae)  and  not  the  governing  law  (lex

contractus)  as  “critère  de  rattachement”  for  re-denomination  purposes.  Although  the  normal

case will be of both lex monetae and the lex contractus coinciding, it is worth mentioning that

other  Member  States  having  introduced  changeover  legislation  generally  refer  to  the  lex

contractus as the only relevant connecting point.

6. 

The  ECB  welcomes  the  prohibition  of  banking  charges  and  fees  for  the  final  exchange  of

banknotes, stated in Article 23 of the Umbrella law.

7. 

Article  31  refers  to  the  Madrid  Interbank  Offered  Rate  (MIBOR).  It  distinguishes  between

different  uses  of  MIBOR.  Paragraph  one  refers  to  references  to  the  MIBOR  in  mortgage

contracts  and  states  that,  as  long  as  technical  or  market  practices  do  not  impede  this

publication, the MIBOR will continue to be published to ensure continuity of contracts in the

mortgage  area.  Should  MIBOR  not  be  available  any  more,  the  Minister  of  Economy  and

Finance would determine a substitute, with a view to creating the most similar rate in terms of

calculation  procedures.  Most  Member  States  will  cease  to  elaborate  local  reference  interest

rates  for  money  markets,  and  euro-wide  rates  will  replace  them.  The  continuation  of  the

MIBOR  in  Spain  is  not  in  line  with  the  criteria  that  other  participating  Member  States  will

follow,  aimed  at  ensuring  the  unity  of  the  money  market  in  the  euro  area.  However,  this

continuation  may  be  justified  by  its  limited  target,  namely  the  continuity  of  outstanding

contracts in the mortgage industry, and protection of consumers. 

8. 

For contracts other than mortgage loans, Article 31 of the Umbrella law states that the Ministry

of Economy and Finance will either fix a new calculation formula or determine a new reference

rate which will replace the MIBOR, provided that the MIBOR looses its economic meaning and

the parties in the contract do not replace it by consensual agreement with a new rate. The law

adds  that,  if  these  conditions  are  respected,  parties  will  not  be  entitled  to  request  courts  to

unilaterally rescind their obligations because of the substitution of MIBOR. The ECB strongly

recommends  that  the  EURIBOR  be  named  as  the  interbank  rate  which  best  approximates  the

functions of the MIBOR in an euro area-wide money market. 

- 5 -

9. 

The ECB requests that it be consulted with respect to any royal decree and/or ministerial order

to be enacted pursuant to the Umbrella law.

10.  The  ECB  authorises  the  publication  of  this  opinion  at  the  discretion  of  the  consulting

authorities.

In Frankfurt am Main, on 21 July 1998

On behalf of the President of the ECB

[signed]

The Vice-president, Mr. C. Noyer