Recommendation for a Council Decision on the position to be taken by the Community regarding an agreement concerning the monetary relations with the Principality of Monaco
Date: 1998-12-18
Institutions: European Commission
Subjects: European Monetary Agreement, Monaco, monetary cooperation, monetary policy, monetary relations

COMMISSION OF THE EUROPEAN  COMMUNITIES 

Brussels, 
COM(1998) 789 final 

98/0365 (CNB) 
98/0366 (CNB) 
98/0367 (CNB) 

Recommendation for a 
COUNCIL DECISION 

on the position to be taken by the Community regarding an agreement 
concerning the monetary relations with the Principality of Monaco 

Recommendation  for a 
COUNCIL DECISION 

on the position to be taken by the Community regarding an agreement 
concerning the monetary relations with the Republic of San Marino 

Recommendation  for a 
COUNCIL DECISION 

on the position to be taken by the Community regarding an agreement 
concerning the monetary relations with the Vatican City 

(presented by the Commission) 

Recommendation  for a Council  Decision 
on the position to be taken  by the Community  regarding  an  agreement 
concerning  the  monetary  relations with  the Principality  of  Monaco 

EXPLANATORY  MEMORANDUM 

As  from  1  January  1999,  the  Community  will  have  the  exclusive  competence  for 
monetary  and  exchange  rate  matters  in  the  Member  States  adopting  the  euro.  Any 
agreement  with  third  countries  concerning  monetary  or  foreign  exchange  rate  matters 
needs to reflect  this allocation of competence. Therefore, the Community must decide on 
the future  of such agreements which exist between Member  States adopting the euro and 
third countries. 

For  this  purpose,  the  Commission  is  presenting  a  draft  Council  Decision  which  is 
addressed  to  France  and  which  defines  the  position  to  be  taken  in  the  negotiation  of  a 
new agreement between the Community and the Principality of Monaco. 

I.  General  considerations 

France has particular monetary links with the Principality of Monaco, which are based on 
different  legal instruments1  and which ensure that banknotes and coins  issued by  France 
have legal tender status in the Principality of Monaco. Coins issued by the Principality  of 
Monaco  have  legal tender  status in the Principality  of Monaco  only. The Principality  of 
Monaco has neither an own currency nor a central bank. 

Financial institutions located in the Principality of Monaco have access to the  refinancing 
facilities  of  the  Banque  de  France,  which  they  have  not  used  in  the  past  and  to  some 
French payment  systems  under the same conditions  as French banks. On the other  hand 
they  are  subject  to  the  same  minimum  reserve  and  statistical  reporting  requirements  as 
French  banks.  Moreover,  they  are  subject  to  the  same  conditions  with  regard  to  the 
granting of a banking license and are supervised by the competent French authorities. 

As from  1 January  1999, France will  adopt the euro as its currency.  In accordance  with 
the  Treaty,  the  European  System  of  Central  Banks  will  define  and  implement  the 

1  Ordonnance  monégasque  fixant 

le  cours  forcé  des  monnaies  et  billets 
du  2 janvier  1925; Convention  franco-monégasque  relative  au  contrôle  des  changes,  14 avril  1945 ; 
Echange de lettres entre la France et Monaco du  18 mai  1963 relatif à la réglementation  bancaire dans 
la Principauté, as amended by the Echange de lettres du 27 novembre  1987 

le  cours  légal  et 

ls 

monetary  policy  of the  Community.  Therefore  a new  agreement  needs  to  be  concluded 
between the Community and the Principality of Monaco. 

The draft  Council  decision determines the principles on which the negotiations  with the 
Principality  of  Monaco  should  be  based.  The  Commission  recommends  that  the 
Community allows the Principality of Monaco to use the euro as its official  currency and 
to grant  legal tender status to euro banknotes  issued by the European  System  of  Central 
Banks  and  to  euro  coins  issued  by  the  Member  States  which  have  adopted  the  euro. 
Moreover,  financial  institutions  located  in  the  Principality  of  Monaco  may  be  granted 
access to the payment systems offered  by the ESCB under conditions to be determined by 
the ECB. 

On the other hand, the Principality  of Monaco is expected to undertake not to  issue any 
banknotes,  coins  or  monetary  surrogates  of  any  kind  unless  the  conditions  for  such 
issuance  are  agreed  with  the  Community.  Moreover,  the  Principality  of  Monaco  is 
expected  to  make  Community  rules  on  euro  banknotes  and  coins  applicable  in  the 
Principality  of  Monaco  and  to  cooperate  closely  with  the  Community  with  regard  to 
measures against counterfeiting  of euro banknotes and coins. 

The draft  Council decision is based on Article  109 (3) of the Treaty, which stipulates that 
"By  way  of  derogation  from  Article  228,  where  agreements  concerning  monetary  or 
foreign  exchange  regime  matters  need  to  be  negotiated  by  the  Community  with  one  or 
more States or international organizations, the Council, acting by a qualified  majority,  on 
a recommendation  from  the Commission  and after  consulting the ECB, shall decide the 
arrangements for the negotiations and for the conclusion of such agreements." 

Given  the  close  historical  links  between  France  and  the  Principality  of  Monaco,  the 
Commission  recommends  that  France  negotiates  and  concludes  the  new  agreement  on 
behalf  of  the  Community.  In  accordance  with  Article  109  (3)  of  the  Treaty,  the 
Commission  will  be  fully  associated  with 
the  negotiations.  The  Commission 
recommends that the European  Central  Bank is fully  associated  with the negotiations  in 
its fields of competence. The draft  agreement will have to be submitted to the Economic 
and  Financial  Committee  for  opinion.  The draft  agreement  will  have to be  submitted  to 
the  Council  in  the  case  that  the  Commission  or  the  European  Central  Bank  or  the 
Economic and Financial Committee are of the opinion that this is necessary. 

II.  Comments on the articles 

Article 1 

This  article  reflects  the  fact  that  the  agreements  between  France  and the  Principality  of 
Monaco  in their  present  form  are not compatible  with the  allocation  of  competence  for 
monetary  and  exchange  rate  matters  as  laid  down  in  the  Treaty.  The  arrangements 
therefore  need to be amended or replaced at the earliest possible date. France is requested 
to give notice to the Principality  of Monaco with a view to amend the agreements at the 
earliest date which is possible under trie existing agreements. 

3 

Article 2 

Article 2 stipulates that the principles  laid  down in Articles  3 to 6 should  form  the  basis 
for  the  position  to  be  taken  by  France  on  behalf  of  the  Community  in  the  negotiations 
with the Principality of Monaco on an agreement concerning monetary matters. 

Article  3 

Article  3 stipulates that the Community  may allow the Principality  of Monaco to use the 
euro  as  its official  currency  and  to  grant  legal  tender  status to  euro  banknotes  issued  by 
the  European  System  of  Central  Banks  and  to  euro  coins  issued  by  the  Member  States 
which  have  adopted  the  euro.  This  would  ensure  that  the  Principality  of  Monaco  and 
France  could  continue  to  have  the  same  currency,  i.e.  the  euro,  and  that  banknotes  and 
coins  which  have  legal  tender  status  in  France,  would  have  the  same  status  in  the 
Principality of Monaco. 

Article 4 

Article 4  stipulates  that the Principality  of Monaco  is expected  to undertake  not to  issue 
any  banknotes,  coins or monetary  surrogates  unless the  issuance  is expressly  foreseen  in 
the  agreement.  This  applies  not  only  to  banknotes,  coins  or  other  monetary  surrogates 
denominated  in  euro  but  to  all  kind  of  banknotes,  coins  and  monetary  surrogates 
independent of their  denomination. 

Article 5 

The  purpose  of  the first paragraph  is to  ensure  that  Community  rules  on euro  banknotes 
and  coins  such  as  those  on  the  enforcement  of  copyright,  the  exchange  of  damaged 
banknotes  z?A the reproduction  of banknotes  and coins, are respected  in the  Principality 
of Monaco. 

The second  paragraph  stipulates that the Principality  of Monaco  is expected to  undertake 
to  co-operate  closely  with  the  Community  in  the  protection  euro  banknotes  and  coins 
against  counterfeiting.  This  concerns, inter  alia, the  exchange  of  technical  and  statistical 
data  concerning  counterfeited  banknotes  and  coins  and  the  exchange  of  operational  and 
strategic  information  between  the  competent  authorities.- The  Principality  of  Monaco  is 
expected  to  ensure  adequate  sanctions  against  counterfeiting  and  falsification  of  euro 
banknotes and coins. 

Article 6 

Article  6  stipulates  that, the  Community  may  allow  financial  institutions  located  in  the 
Principality  of  Monaco  to  have  access  to  some  or  all  French  national  payment  systems 
under  conditions  to  be  determined  with  the  agreement  of  the  European  Central  Bank. 
This  provisions  is  not  meant  to  allow  the  imposition  of  an  obligation  on  the  ESCB  to 
grant access ?.o the ESCB payment  systems. Such access can only be  granted  if the  ECB 
agrees. 

Article 7 and 8 

Article  7 and  8 stipulate  that  France  shall  conduct  the  negotiations  with the  Principality 
of Monaco and conclude the agreement on behalf of the Community. The Council  makes 
thereby  use of  it competence  to define  the arrangements  for  the negotiations  and  for  the 
conclusion  of  agreements  concerning  monetary  or  foreign  exchange  regime  matters.  In 
accordance with Article  109 (3) of the Treaty, it is recalled that the Commission  shall be 
fully  associated with the negotiations. 

Given  the  relevance  of  most  of  the  aspects  of  this  agreement  for  the  European  Central 
Bank,  the  European  Central  Bank  shall  be  fully  associated  with  the  negotiations  in  its 
fields of competence. 

Before  the  conclusion  of  the  agreement,  France  shall  submit  the  draft  agreement  to  the 
Economic  and  Financial  Committee  for  opinion.  If  the  Commission  or  the  European 
Central  Bank,  which  have been fully  associated  to the negotiations  or the Economic  and 
Financial  Committee  are  of  the  opinion  that  the  agreement  should  be  submitted  to  the 
Council, the conclusion of the agreement has to wait for the Council to take a decision  in 
accordance with Article  109 (3) of the Treaty. 

Article 9 

Article 9 reflects  the requirement that any persisting bilateral agreements between  France 
and  the  Principality  of  Monaco  have  to  be  compatible  not  only  with  the  allocation  of 
competence  for  monetary  and  exchange rate matters  as laid down  in the Treaty, but  also 
with  the  new  agreement  between  the  Community  and  the  Principality  of  Monaco 
concerning their monetary relations. 

Article 10 

This article clarifies  that the decision  is addressed  to France. It will  be effective  as  soon 
as it is notified  to France. 

f 

Recommendation  for  a Council  Decision  [  ]  of... 
on  the  position  to be taken  by the  Community  regarding  an  agreement 
concerning  the  monetary  relations with  the Principality  of  Monaco 

93/  0365(CNB) 

The Council of the European Union, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article  109 (3) thereof, 

Having regard to the recommendation from the Commission, 

Having regard to the opinion of the European Central  Bank, 

(1)  Whereas  according  to  Council  regulation  (EC) No  974/98  of  3 May  19981  the  euro 
will  be  substituted  as  from  1 January  1999  for  the  currency  of  each  participating 
Member  State at the conversion rate; 

(2)  Whereas  the  Community  will  have the  competence  for  monetary  and  exchange  rate 

matters in the Member  States adopting the euro as from the same date; 

(3)  Whereas  the  Council  is  to  determine  the  arrangements  for  the  negotiation  and 

conclusion of agreements concerning monetary or foreign  exchange regime matters; 

(4)  Whereas France has particular monetary  links with the Principality  of Monaco which 
are based on different  legal instruments2; whereas financial  institutions  located  in the 
Principality  of  Monaco  have the potential  right to access the refinancing  facilities  of 

1  OJL  139,  11.5.1993, p.l 

2  Ordonnance  monégasque  fixant 

le  cours  forcé  des  monnaies  et  billets 
légal  et 
du  2 janvier  1925; Convention  franco-monégasque  relative  au  contrôle  des  changes,  14 avril  1945 ; 
Echange de lettres entre  la France et Monaco du  18 mai  1963 relatif à la réglementation  bancaire  dans 
la Principauté, as amended by the Echange de lettres du 27 novembre  1987 

le  cours 

G 

the Banque de France and whereas they participate in some French payment  systems 
under the same conditions as French banks; 

(5)  Whereas the euro will be substituted for the French Franc on  1  January  1999; 

(6)  Whereas  according  to  declaration  No  6  annexed  to  the  final  act  of  the  Treaty  on 
European  Union,  the  Community  undertakes  to  facilitate  the  renegotiations  of 
existing arrangements with the Principality of Monaco as might become necessary  as 
a result of the introduction of the single currency; 

(7)  Whereas  the  arrangements  between  France  and  the  Principality  of  Monaco  in  their 
present  form  need  to  be  amended  or,  as  the  case  may  be,  replaced  at  the  earliest 
possible date, taking into account the allocation of competence to the Community  for 
monetary and exchange rate matters as laid down in the Treaty; 

(8)  Whereas given the close economic relations between the Principality  of Monaco  and 
the Community,  it is appropriate that an agreement  concerning  banknotes  and  coins, 
the access to payment  systems  and the  legal  status of the euro  in the  Principality  of 
Monaco  is  concluded  between  the  Community  and  the  Principality  of  Monaco; 
whereas given the historical  links between France and the Principality  of Monaco, it 
is appropriate that France negotiates and may conclude the new agreement  on  behalf 
of the Community; 

(9)  Whereas  in  order  to  allow  the  Principality  of  Monaco  to  have  the  same  currency  as 
France, it is appropriate to agree that the Principality  of Monaco  uses the euro  as its 
official  currency  and grants legal tender status to euro banknotes and coins issued by 
the  European  System  of  Central  Banks  and  the  Member  States which  have  adopted 
the euro; 

(10)  Whereas  it  is  important  that  the  Principality  of  Monaco  ensures  that  Community 
rules  on banknotes  and coins denominated  in euro  are  applicable  in the  Principality 
of  Monaco;  whereas  euro  banknotes  and  coins  need  appropriate  protection  against 
counterfeiting;  whereas  it  is important  that  the  Principality  of  Monaco  takes  all  the 
necessary  measures  to  combat  counterfeiting  and  to  cooperate  with  the  Community 
in this area; 

(11)  Whereas  the  European  Central  Bank  and the  national  central  banks  may  engage  in 
all  types  of banking  transactions  in relation  to  financial  institutions  located  in  third 
countries;  whereas  the  European  Central  Bank  and  the  national  central  banks  may 
under  appropriate  conditions  allow  financial  institutions  in third  countries  access  to 
their  payment  systems;  whereas  the  agreement  between  the  Community  and  the 

Ir 

Principality  of  Monaco  shall  not  impose  any  obligations  on  the  European  Central 
Bank or on any national central bank; 

(12) Whereas the Commission and the European Central Bank in its fields  of competence 
will have to be fully  associated with these negotiations; whereas it is appropriate that 
France submits the draft  agreement to the Economic and Financial  Committee for  its 
opinion;  whereas the draft  agreement will have to be submitted  to the Council  in the 
case  that  the  Commission  or  the  European  Central  Bank  or  the  Economic  and 
Financial  Committee are of the opinion that this is necessary; 

(13)  Whereas existing agreements between France and the Principality of Monaco  should 
be  amended  or,  as  the  case  may  be,  replaced  so  as  to  avoid  any  inconsistencies 
between  such  agreements  and  the  agreement  between  the  Community  and  the 
Principality of Monaco concerning their monetary relations; 

HAS ADOPTED THIS DECISION: 

Article 1 

France  shall  notify'  the  Principality  of  Monaco  of  the  need  to  amend  the  existing 
arrangements  between France and the Principality  of Monaco at the earliest possible  date 
as far  as monetary' matters are concerned and offer  negotiations for a new agreement. 

Article 2 

The  position  to  be  taken  by  the  Community  in the  negotiations  with  the  Principality  of 
Monaco  for  an  agreement  concerning  matters  referred  to  below  shall  be  based  on  the 
principles laid down in Articles 3 to 6. 

Article 3 

(1) The Principality  of Monaco shall be entitled to use the euro as its official  currency. 

(2)  The  Principality  of  Monaco  shall  be  entitled  to  grant  legal  tender  status  to  euro 
banknotes and coins. 

Article 4 

The Principality of Monaco.shall undertake not to issue any banknotes, coins or monetary 
surrogates of any kind unless the conditions for  such issuance have been agreed  with the 
European  Community. 

Article 5 

(1)  The  Principality  of  Monaco  shall  undertake  to  make  Community  rules  on  euro 
banknotes and coins applicable in the Principality of Monaco. 

(2) The Principality of Monaco shall undertake to cooperate closely with the  Community 
with regard to measures against counterfeiting  of euro banknotes and coins. 

Article 6 

Financial  institutions  located  in the Principality  of Monaco  may  have  access  to  some  or 
all  French  payment  systems  under  appropriate  conditions  to  be  determined  with  the 
agreement of the European Central Bank. 

Article 7 

France  shall  conduct  the  negotiations  with  the  Principality  of  Monaco  on  the  above-
mentioned  matters  on  behalf  of  the  Community.  The  Commission  shall  be  fully 
associated  with  the  negotiations.  The  European  Central  Bank  shall  be  fully  associated 
with the negotiations  in its fields of competence. France shall submit the draft  agreement 
to the Economic and Financial Committee for opinion. 

Article 8 

France shall be entitled to conclude the agreement on behalf of the Community  unless the 
Commission  or  the  European  Central  Bank  or  the  Economic  and  Financial  Committee 
are of the opinion that the agreement should be submitted to the Council. 

3 

Article 9 

France  and the  Principality  of  Monaco  shall  review  their  existing  arrangements  in  order 
to  make  them  compatible  with  the  agreement  between  the  Community  and  the 
Principality of Monaco concerning their monetary relations. 

This decision is addressed to France. 

Article 10 

Done at Brussels, 

For the Council 

The President 

A o 

Recommendation  for a Council  Decision 
on the  position  to  be taken  by the Community  regarding  an  agreement 
concerning  the  monetary  relations with  the Republic  of San  Marino 

EXPLANATORY  MEMORANDUM 

As  from  1  January  1999,  the  Community  will  have  the  exclusive  competence  for 
monetary  and  exchange  rate  matters  in  the  Member  States  adopting  the  euro.  Any 
agreement  with  third  countries  concerning  monetary  or  foreign  exchange  rate  matters 
needs to reflect  this allocation of competence. Therefore,  the Community  must decide on 
the future  of such agreements  which exist between  Member  States adopting the euro and 
third countries. 

For  this  purpose,  the  Commission  is  presenting  a  draft  Council  Decision  which  is 
addressed  to Italy  and which  defines  the position to be taken  in the negotiation  of a new 
agreement between the Community  and the Republic of San Marino. 

I. General  considerations 

Italy  has  concluded  several  agreements  with  the  Republic  of  San  Marino  which  include 
provisions  on  monetary  matters'  and  which  ensure  that  banknotes  and  coins  issued  by 
Italy  have  legal  tender  status  in  the  Republic  of  San, Marino.  Coins  issued  by  the 
Republic  of  San Marino, in a material  other than gold,  are identical  in  shape,  dimension 
and  composition  to those  circulating  in Italy.  The  issuing  volume  of  these  coins,  which 
have  legal  tender  status  in  the  Republic  of  San  Marino  and  in  Italy  is  limited  by  the 
agreements.  The  Republic  of  San  Marino  has  undertaken  not  to  issue  any  other  coins, 
banknotes  or  monetary  surrogates.  The  Republic  of  San  Marino  has  neither  an  own 
currency  nor  a central  bank,  even  though  the  Istituto  di  Credito  Sammarinese  performs 
some functions  similar to those of a central bank. 

Financial  institutions  located  in  the  Republic  of  San  Marino  do  not  have  access  to  the 
refinancing  facilities  of  the  Banca  d'Italia.  On  the  other  hand,  one  financial  institution 
located in the Republic of San Marino has access to the Italian RTGS system. There is no 
formal  relationship between the Banca d'Italia and the Istituto di Credito  Sammarinese. 

1  Convenzione di amicizia e di buon vicinato fra  San Marino e L'ltalia del 31 marzo  1939, as amended, 
Convenzione  monetaria  tra  la  Repubblica  Italiana  e  la  Repubblica  di  San  Marino,  21-X1I-1991; 
Convenzione  in  materia  di  rapporti  finanziari  e valutari  tra  la  Repubblica  Italiana  e  la Repubblica  di 
San  Marino con atto aggiuntivo corredato da Processo Verbale fïrmato  a Roma il 4 marzo  1994. 

M 

As from  1 January  1999, Italy will adopt the euro as its currency. In accordance with the 
Treaty,  the  European  System  of  Central  Banks  will  define  and  implement  the  monetary 
policy  of the Community. Therefore  a new agreement needs to be concluded between the 
Community  and the Republic of San Marino. 

The  draft  Council  decision  determines  the principles  on  which  the  negotiations  with  the 
Republic  of  San  Marino  should  be  based.  The  Commission  recommends  that  the 
Community  allows  the  Republic  of  San  Marino  to  use  the  euro  as  its  official  currency 
and  to  grant  legal  tender  status  to  euro  banknotes  issued  by  the  European  System  of 
Central  Banks  and  to  euro  coins  issued  by  the  Member  States  which  have  adopted  the 
euro.  Moreover,  financial  institutions  located  in  the  Republic  of  San  Marino  may  be 
granted  access  to  the  payment  systems  offered  by  the  ESCB  under  conditions  to  be 
determined by the ECB. 

On the other hand, the Republic  of San Marino  is expected to undertake  not to issue  any 
banknotes,  coins  or  monetary  surrogates  of  any  kind  unless  the  conditions  for  such 
issuance  are  agreed  with  the  Community.  Moreover,  the  Republic  of  San  Marino  is 
expected  to  make  Community  rules  on  euro  banknotes  and  coins  applicable  in  the 
Republic  of  San  Marino  and  to  cooperate  closely  with  the  Community  with  regard  to 
measures  against  counterfeiting  of  euro  banknotes  and  coins.  It  is  confirmed  that  Italy 
may choose to issue coins with a specific  symbol relating to the Republic of San Marino. 

The draft  Council  decision is based on Article  109 (3) of the Treaty, which  stipulates that 
"By  way  of  derogation  from  Article  228,  where  agreements  concerning  monetary  or 
foreign  exchange  regime  matters  need  to  be  negotiated  by  the  Community  with  one  or 
more  States or international  organizations, the Council, acting by a qualified  majority,  on 
a  recommendation  from  the  Commission  and  after  consulting  the  ECB,  shall  decide  the 
arrangements  for the negotiations and for the conclusion of such agreements." 

Given  the  close  historical  links  between  Italy  and  the  Republic  of  San  Marino,  the 
Commission  recommends  that  Italy  negotiates  and  concludes  the  new  agreement  on 
behalf  of  the  Community.  In  accordance  with  Article  109  (3)  of  the  Treaty,  the 
the  negotiations.  The  Commission 
Commission  will  be  fully  associated  with 
recommends  that the  European  Central  Bank  is fully  associated  with  the  negotiations  in 
its  fields  of competence. The draft  agreement  will have to be submitted  to the  Economic 
and  Financial  Committee  for  opinion.  The  draft  agreement  will  have  to  be  submitted  to 
the  Economic  and  Financial  Committee  for  opinion. The draft  agreement  will have to be 
submitted  to  the  Council  in the  case that the Commission  or the  European  Central  Bank 
or the Economic and Financial  Committee are of the opinion that this is necessary. 

II. Comments  on the articles 

Article 1 

This  article  reflects  the  fact  that  the  agreements  between  Italy  and  the  Republic  of  San 
Marino  in  their  present  form  are  not  compatible  with  the  allocation  of  competence  for 
monetary  and  exchange  rate  matters  as  laid  down  in  the  Treaty.  The  arrangements 
therefore  need to be amended or replaced at the earliest possible date. Italy is requested to 

/Il 

give  notice  to  the  Republic  of  San  Marino  with  a view  to  amend  the  agreements  at  the 
earliest date which is possible under the existing agreements. 

Article 2 

Article 2 stipulates that the principles  laid down  in Articles  3 to 6 should  form  the  basis 
for the position to be taken by Italy on behalf of the Community  in the negotiations  with 
the Republic of San Marino on an agreement concerning monetary matters. 

Article 3 

Article 3 stipulates that the Community may allow the Republic of San Marino to use the 
euro  as  its official  currency  and  to grant  legal  tender  status to  euro banknotes  issued  by 
the  European  System  of  Central  Banks  and  to  euro  coins  issued  by  the  Member  States 
which  have  adopted  the  euro.  This  would  ensure  that  the  Republic  of  San  Marino  and 
Italy could continue tc have the same currency, i.e. the euro, and that banknotes and coins 
which have legal tender status in Italy, would have the same status in the Republic of San 
Marino. 

Article 4 

Article 4 stipulates that the Republic of San Marino is expected  to undertake not to  issue 
any  banknotes, coins or monetary  surrogates unless the  issuance  is expressly  foreseen  in 
the  agreement.  This  applies  not  only  to  banknotes,  coins  or  other  monetary  surrogates 
denominated  in  euro  but  to  all  kind  of  banknotes,  coins  and  monetary  surrogates 
independent of their denomination. 

Article 5 

The purpose  of the first paragraph  is to ensure that  Community  rules  on euro  banknotes 
and  coins  such  as  those  on  the  enforcement  of  copyright,  the  exchange  of  damaged 
banknotes and the reproduction  of banknotes and coins, are respected  in the Republic  of 
San Marino. 

The second paragraph stipulates that the Republic of San Marino is expected to undertake 
to  co-operate  closely  with  the  Community  in  the  protection  euro  banknotes  and  coins 
against  counterfeiting.  This concerns, inter alia, the exchange  of technical  and  statistical 
data  concerning  counterfeited  banknotes  and  coins  and the  exchange  of  operational  and 
strategic  information  between the competent  authorities. The Republic  of  San  Marino  is 
expected  to  ensure  adequate  sanctions  against  counterfeiting  and  falsification  of  euro 
banknotes and coins. 

Article 6 

^ 

Article  6  stipulates  that  the  Community  may  allow  financial  institutions  located  in  the 
Republic  of  San  Marino  to  have  access  to  the  Italian  national  RTGS  system2  under 
conditions to be determined  by the European  Central  Bank. This provisions  is not  meant 
to  allow  the  imposition  of  an  obligation  on  the  ESCB  to  grant  access  to  the  ESCB 
payment  systems.  Such access to the Italian national  RTGS  system  can  only  be  granted 
if the ECB agrees and under the conditions specified  by the ECB. 

Article 7  and 8 

Article 7 and 8 stipulate that Italy shall conduct the negotiations with the Republic of San 
Marino  and  conclude  the  agreement  on  behalf  of  the  Community.  The  Council  makes 
thereby  use  of  it competence to  define  the  arrangements  for  the negotiations  and  for  the 
conclusion  of  agreements  concerning  monetary  or  foreign  exchange  regime  matters.  In 
accordance with Article  109 (3) of the Treaty, it is recalled that the Commission  shall be 
fully  associated with the negotiations. 

Given  the  relevance  of  most  of  the  aspects  of  this  agreement  for  the  European  Central 
Bank,  the  European  Central  Bank  shall  be  fully  associated  with  the  negotiations  in  its 
fields of competence. 

Before  the  conclusion  of  the  agreement,  Italy  shall  submit  the  draft  agreement  to  the 
Economic  and  Financial  Committee  for  opinion.  If  the  Commission  or  the  European 
Central  Bank,  which  have been  fully  associated  to the negotiations  or the Economic  and 
Financial  Committee  are  of  the  opinion  that  the  agreement  should  be  submitted  to  the 
Council, the conclusion of the agreement has to wait for the Council  to take a decision  in 
accordance with Article  109 (3) of the Treaty. 

Article 9 

Article  9 reflects  the  requirement  that  any persisting  bilateral  agreements  between  Italy 
and  the  Republic  of  San  Marino  have  to  be  compatible  not  only  with  the  allocation  of 
competence  for  monetary  and exchange rate matters  as laid down  in the  Treaty,  but  also 
with  the  new  agreement  between  the  Community  and  the  Republic  of  San  Marino 
concerning their monetary relations. 

Article 10 

This article clarifies  that the decision  is addressed  to Italy. It will be effective  as soon  as 
it is notified  to Italy. 

2  Real-Time Gross Settlement  System 

/?y 

Recommendation  for  a Council  Decision  [  ]  of... 
on the  position  to be taken by the Community  regarding  an  agreement 
concerning  the  monetary  relations with  the Republic  of  San  Marino 

9 8/  0366(CNB) 

The Council of the European Union, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 

Article  109 (3) thereof, 

Having regard to the recommendation from the Commission, 

Having regard to the opinion of the European Central Bank, 

(1)  Whereas  according  to  Council  regulation  (EC) No  974/98  of  3 May  19981  the  euro 
will  be  substituted  as  from  1 January  1999  for  the  currency  of  each  participating 
Member State at the conversion rate; 

(2)  Whereas  the  Community  will  have  the  competence  for  monetary  and  exchange  rate 

matters in the Member States adopting the euro as from the same date; 

(3)  Whereas  the  Council  is  to  determine  the  arrangements  for  the  negotiation  and 
conclusion of agreements concerning monetary or foreign  exchange regime matters; 

(4)  Whereas  Italy  has  concluded  several  agreements  with  the  Republic  of  San  Marino 

which include provisions on monetary matters2; 

(5)  Whereas the euro will be substituted for the Italian Lira on  1  January  1999; 

1  OJ L  139,  11.5.1998, p.l 

Convenzione di amicizia e di buon  vicinato  fra  San  Marino e  PItalia  del  31  marzo  1939, as  amended, 
Convenzîcne  monetaria  tra  la  Repubblica  Italians  e  la  Repubblica  ai  San  Marino,  21-XH-Î99Î; 
Convenzione  in  materia  di  rapport! ftnanziari  e  valutari  tra  la  Repubblica  Itaiiana  e  la  Repubblica  di 
San  Marino con atto aggiuntivo corredato da Processo Verbale ilrmato a Roma  ïl 4 marzo  1994. 

/i 

(6)  Whereas  according  to  declaration  No  6  annexed  to  the  final  act  of  the  Treaty  on 
European  Union,  the  Community  undertakes  to  facilitate  the  renegotiations  of 
existing  arrangements with  the Republic of  San Marino as might become  necessary 
as a result of the introduction of the single currency; 

(7)  Whereas  the  agreements  between  Italy  and 

the  Republic  of  San  Marino  in  their 
present  form  need  to  be  amended  or,  as  the  case  may  be,  replaced  at  the  earliest 
possible date, taking into account the allocation of competence to the Community  for 
monetary and exchange rate matters as laid down in the Treaty; 

(8)  Whereas  given  the  close  economic  relations  between  the  Republic  of  San  Marino 
and  the  Community,  it  is  appropriate  that  an  agreement  concerning  banknotes  and 
coins, the access to payment  systems and the legal  status of the euro in the  Republic 
of  San  Marino  is  concluded  between  the  Community  and 
the  Republic  of  San 
Marino;  whereas  given  the  historical  links  between  Italy  and  the  Republic  of  San 
Marino, it is appropriate that Italy negotiates and  may conclude the new  agreement 
on behalf of the Community; 

(9)  Whereas  in order to  allow the  Republic of  San  Marino  to have  the  same currency  as 
Italy,  it  is appropriate  to  agree that the  Republic  of  San  Marino  uses  the  euro  as  its 
official  currency and grants legal tender status to euro banknotes and coins issued by 
the  European  System  of  Central  Banks and  the Member  States  which  have  adopted 
the euro; 

(10)  Whereas  it  is  important  that  the  Republic  of  San  Marino  ensures  that  Community 
rules  on banknotes  and  coins denominated  in euro  are applicable  in the Republic  of 
San  Marino;  whereas  euro  banknotes  and  coins  need  appropriate  protection  against 
counterfeiting;  whereas  it is important  that the Republic of  San Marino takes all  the 
necessary  measures  to  combat  counterfeiting  and  to  cooperate  with  the  Community 
in this area; 

(11) Whereas the European Central Bank and the national central  banks may engage in all 
types  of  banking  transactions  in  relation  to  financial  institutions  located  in  third 
countries;  whereas  the  European  Central  Bank  and  the  national  central  banks  may 
under  appropriate  conditions  allow  financial  institutions  in third  countries  access  to 
their  payment  systems;  whereas  the  agreement  between  the  Community  and  the 
Republic  of  San  Marino  shall  not  impose  any  obligations  on  the  European  Central 
Bank or on any national central bank; 

(12) Whereas the Commission and the European Central Bank in its fields  of competence 
will have to be fully  associated with these negotiations; whereas it is appropriate that 
Italy  submits  the  draft  agreement  to  the  Economie  and  Financial  Committee  for  its 

AG 

opinion; whereas the draft  agreement will have to be submitted to the Council  in the 
case  that  the  Commission  or  the  European  Central  Bank  or  the  Economic  and 
Financial Committee are of the opinion that this is necessary; 

(13) Whereas  existing  agreements  between  Italy  and the  Republic  of  San  Marino  should 
be  amended  or,  as  the  case  may  be,  replaced  so  as  to  avoid  any  inconsistencies 
between  such  agreements  and  the  agreement  between  the  Community  and  the 
Republic of San Marino concerning their monetary relations; 

I 

il 

HAS ADOPTED THIS DECISION: 

Article 1 

Italy  shall  notify  the  Republic  of  San  Marino  of  the  need  to  amend  the  existing 
agreements  between  Italy and  the Republic of San Marino at the earliest possible date as 
far as monetary matters are concerned and offer  negotiations for a new agreement. 

Article 2 

The position  to be taken by the Community  in the negotiations with the Republic  of  San 
Marino  for  an  agreement  concerning  matters  referred  to  below  shall  be  based  on  the 
principles laid down in Articles 3 to 6. 

Article 3 

(1) The Republic of San Marino shall be entitled to use the euro as its official  currency. 

(2)  The  Republic  of  San  Marino  shall  be  entitled  to  grant  legal  tender  status  to  euro 
banknotes and coins. 

/ 

Article 4 

The  Republic  of  San  Marino  shall  undertake  not  to  issue  any  banknotes,  coins  or 
monetary  surrogates of any kind unless the conditions for such issuance have been agreed 
with the European  Community. 

Article 5 

(1)  The  Republic  of  San  Marino  shall  undertake  to  make  Community  rules  on  euro 
banknotes and coins applicable in the Republic of San Marino. 

(2)  The  Republic  of  San  Marino  shall  undertake  to  cooperate  closely  with  the 
Community with regard to measures against counterfeiting  of euro banknotes and coins. 

Article 6 

Financial  institutions  located  in  the  Republic  of  San  Marino  may  have  access  to  the 
Italian  national  RTGS  under  appropriate  conditions  to  be  determined  by  the  European 
Central  Bank. 

Article 7 

Italy  shall  conduct  the  negotiations  with  the  Republic  of  San  Marino  on  the  above-
mentioned  matters  on  behalf  of  the  Community.  The  Commission  shall  be  fully 
associated  with  the  negotiations.  The  European  Central  Bank  shall  be  fully  associated 
with the negotiations in its fields of competence. Italy shall submit the draft  agreement to 
the Economic and Financial Committee for opinion. 

Article 8 

Italy  shall be entitled  to conclude the agreement  on behalf  of the  Community  unless  the 
Commission  or  the  European  Central  Bank  or  the  Economic  and  Financial  Committee 
are of the opinion that the agreement should be submitted to the Council. 

t 

Article 9 

Italy  and  the  Republic  of  San  Marino  shall  ensure  that  existing  agreements  are 
compatible  with the agreement between the Community  and the Republic of San Marino 
concerning their monetary relations. 

This decision is addressed to Italy. 

Article 10 

Done at Brussels, 

For the Council 

The President 

G 

/ 

Recommendation  for  a Council  Decision 
on  the  position  to be taken  by the  Community  regarding  an  agreement 
concerning  the  monetary  relations with  Vatican  City 

EXPLANATORY  MEMORANDUM 

As  from  1  January  1999,  the  Community  will  have  the  exclusive  competence  for 
monetary  and  exchange  rate  matters  in  the  Member  States  adopting  the  euro.  Any 
agreement  with  third  countries  concerning  monetary  or  foreign  exchange  rate  matters 
needs to reflect  this allocation  of competence. Therefore,  the Community  must decide on 
the  future  of  such  agreements  which  exist  between  Member  States adopting the euro and 
third countries. 

For  this  purpose,  the  Commission  is  presenting  a  draft  Council  Decision  which  is 
addressed  to Italy  and which  defines  the position to be taken in the negotiation  of a new 
agreement between the Community and Vatican City. 

I. General  considerations 

Italy  has particular  monetary  links with the Vatican  City, which are based  on a monetary 
convention1  which  ensures  that  coins  issued  by  Italy  have  legal  tender  status  in  Vatican 
City.  Banknotes  issued  by  the  Banca  dTtalia  do  not  have  the  status  of  legal  tender  but 
circulate  de facto  within the territory  of Vatican  City. Coins issued  by Vatican  City,  in a 
material  other  than  gold,  are  identical  in  shape,  dimension  and  composition  to  those 
circulating  in  Italy.  The  issuing  volume of these  coins, which have  legal  tender  status in 
Vatican City and in Italy, is limited by the monetary convention. Vatican City has neither 
an own currency  nor a central bank, 

Financial  institutions  located  in  Vatican  City  have  neither  access  to  the  refinancing 
facilities  of  the  Banca  d'ltalia  nor  to  the  Italian  RTGS  system.  They  are  not  subject  to 
any prudential supervision by Italian authorities. 

As from  1 January  1999, Italy will adopt the euro as its currency. In accordance with the 
Treaty,  the  European  System  of  Central  Banks  will  define  and  implement  the  monetary 
policy of the Community. Therefore  a new agreement needs to be concluded between the 
Community  and Vatican City. 

1  Convenzione  monetaria  tra 

la  Repubblica  Italiana  e 

lo  Stato  délia  Città  del  Vaticano 

il 

3 dicembre  1991 

& 

The  draft  Council  decision  determines  the  principles  on  which  the  negotiations  with 
Vatican  City  should be based. The Commission  recommends that the Community  allows 
Vatican City to use the euro as its official  currency and to grant legal tender status to euro 
banknotes  issued  by the European  System of Central  Banks and to euro coins  issued  by 
the Member  States which have adopted the euro. Moreover,  financial  institutions  located 
in  Vatican  City  may  be  granted  access  to  the  payment  systems  offered  by  the  ESCB 
under conditions to be determined by the ECB. 

On  the  other  hand,  Vatican  City  is  expected  to  undertake  not  to  issue  any  banknotes, 
coins  or  monetary  surrogates  of  any  kind  unless  the  conditions  for  such  issuance  are 
agreed  with  the  Community.  Moreover,  Vatican  City  is  expected  to  make  Community 
rules  on  euro  banknotes  and  coins  applicable  in  Vatican  City  and  to  cooperate  closely 
with  the  Community  with  regard  to  measures  against  counterfeiting  of  euro  banknotes 
and  coins.  It  is  confirmed  that  Italy  may  choose  to  issue  coins  with  a  specific  symbol 
relating to Vatican City. 

The draft  Council  decision is based on Article  109 (3) of the Treaty, which stipulates that 
"By  way  of  derogation  from  Article  228,  where  agreements  concerning  monetary  or 
foreign  exchange  regime  matters  need  to  be  negotiated  by  the  Community  with  one  or 
more States or international organizations, the Council, acting by a qualified  majority,  on 
a recommendation  from  the  Commission  and  after  consulting  the  ECB, shall  decide  the 
arrangements  for the negotiations and for the conclusion of such agreements." 

Given  the  close  historical  links  between  Italy  and  Vatican  City,  the  Commission 
recommends  that  Italy  negotiates  and  concludes  the  new  agreement  on  behalf  of  the 
Community.  In  accordance  with  Article  109  (3)  of  the  Treaty,  the  Commission  will  be 
fully  associated  with  the  negotiations.  The  Commission  recommends  that  the  European 
Central  Bank  is  associated  with  the  negotiations  in  its  fields  of  competence.  The  draft 
agreement  will  have  to  be  submitted  to  the  Economic  and  Financial  Committee  for 
opinion.  The  draft  agreement  will  have  to  be  submitted  to  the  Economic  and  Financial 
Committee  for  opinion. The draft  agreement  will have to be submitted  to the  Council  in 
the  case  that  the  Commission  or  the  European  Central  Bank  or  the  Economic  and 
Financial Committee are of the opinion that this is necessary. 

II. Comments on the articles 

Article 1 

This  article reflects  the  fact  that the  agreements between  Italy  and Vatican  City  in  their 
present  form  are  not  compatible  with  the  allocation  of  competence  for  monetary  and 
exchange  rate matters as laid down in the Treaty. The arrangements therefore  need to be 
amended  or  replaced  at  the  earliest  possible  date.  Italy  is  requested  to  give  notice  to 
Vatican  City with  a view to amend the agreements  at the earliest  date which  is  possible 
under the existing agreements. 

u 

Article 2 

Article 2 stipulates that the principles  laid down  in Articles  3 to  6 should  form  the  basis 
for the position to be taken by Italy  on behalf of the Community  in the negotiations  with 
Vatican City on an agreement concerning monetary matters. 

Article 3 

Article  3  stipulates  that  the  Community  may  allow  Vatican  City  to  use  the  euro  as  its 
official  currency  and  to  grant  legal  tender  status  to  euro  banknotes  issued  by  the 
European  System of Central Banks and to euro coins issued by the Member  States which 
have  adopted  the  euro. This  would  ensure  that  Vatican  City  and  Italy  could  continue  to 
have  the  same  currency,  i.e.  the  euro,  and  that  banknotes  and  coins  which  have  legal 
tender status in Italy, would have the same status in Vatican City. 

Article 4 

Article 4 stipulates  that Vatican City is expected to undertake not to issue any banknotes, 
coins  or monetary  surrogates  unless the  issuance  is expressly  foreseen  in the  agreement. 
This  applies  not  only  to  banknotes,  coins  or  other  monetary  surrogates  denominated  in 
euro  but  to  all  kind  of  banknotes,  coins  and  monetary  surrogates  independent  of  their 
denomination. 

Article 5 

The  purpose  of the  first  paragraph  is to  ensure  that  Community  rules  on euro  banknotes 
and  coins  such  as  those  on  the  enforcement  of  copyright,  the  exchange  of  damaged 
banknotes and the reproduction of banknotes and coins, are respected in Vatican City. 

The second  paragraph  stipulates  that Vatican  City  is expected  to undertake to  co-operate 
closely  with  the  Community  in  the  protection  euro  banknotes  and  coins  against 
counterfeiting.  This  concerns,  inter  alia,  the  exchange  of  technical  and  statistical  data 
concerning  counterfeited  banknotes  and  coins  and  the  exchange  of  operational  and 
strategic  information  between  the  competent  authorities.  Vatican  City  is  expected  to 
ensure  adequate  sanctions  against  counterfeiting  and  falsification  of  euro  banknotes  and 
coins. 

Article 6 

Article  6  stipulates  that  the  Community  may  allow  financial  institutions  located  in 
Vatican  City  to have  access to the Italian national  RTGS  system2  under conditions  to be 
determined  by  the  European  Central  Bank.  This  provisions  is  not  meant  to  allow  the 
imposition  of an obligation  on the  ESCB to grant access to the  ESCB  payment  systems. 

2  Real-Time Gross Settlement  System 

It 

Such  access to the Italian national  RTGS system can  only be granted  if the ECB  agrees 
and under the conditions specified  by the ECB. 

I* 

Article  7  and 8 

Article  7  and  8 stipulate  that  Italy  shall  conduct  the  negotiations  with  Vatican  City  and 
conclude the  agreement  on behalf of the  Community.  The Council  makes thereby  use of 
it competence  to  define  the  arrangements  for  the  negotiations  and  for  the  conclusion  of 
agreements concerning monetary or foreign  exchange regime matters. In accordance with 
Article  109 (3) of the Treaty,  it is recalled that the  Commission  shall be  fully  associated 
with the negotiations. 

Given  the  relevance  of  most  of  the  aspects  of  this  agreement  for  the  European  Central 
Bank,  the  European  Central  Bank  shall  be  fully  associated  with  the  negotiations  in  its 
fields of competence. 

Before  the  conclusion  of  the  agreement,  Italy  shall  submit  the  draft  agreement  to  the 
Economic  and  Financial  Committee  for  opinion.  If  the  Commission  or  the  European 
Central  Bank,  which  have been  fully  associated  to the negotiations  or the  Economic  and 
Financial  Committee  are  of  the  opinion  that  the  agreement  should  be  submitted  to  the 
Council, the conclusion  of the agreement has to wait for the Council to take a decision  in 
accordance with Article  109 (3) of the Treaty. 

Article 9 

Article  9  reflects  the  requirement  that  any  persisting  bilateral  agreements  between  Italy 
and  Vatican  City  have  to  be  compatible  not  only  with  the  allocation  of  competence  for 
monetary  and  exchange  rate  matters  as  laid  down  in  the  Treaty,  but  also  with  the  new 
agreement  between  the  Community  and  Vatican  City  concerning  their  monetary 
relations. 

Article 10 

This article clarifies  that the decision is addressed to Italy. It will be effective  as soon  as 
it is notified  to Italy. 

1\ 

Recommendation  for a Council  Decision  [  ]  of... 
on  the position  to  be taken  by the Community  regarding  an  agreement 
concerning  the  monetary  relations with  Vatican  City 

9 8/  0367(CNB) 

The Council of the European Union, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article  109 (3) thereof, 

Having regard to the recommendation from the Commission, 

Having regard to the opinion of the European Central Bank, 

(1)  Whereas  according  to  Council  regulation  (EC) No  974/98  of  3 May  19981  the  euro 
will  be  substituted  as  from  1 January  1999  for  the  currency  of  each  participating 
Member State at the conversion rate; 

(2)  Whereas the  Community  will  have the  competence  for  monetary  and  exchange  rate 

matters in the Member States adopting the euro as from the same date; 

(3)  Whereas  the  Council  is  to  determine  the  arrangements  for  the  negotiation  and 

conclusion of agreements concerning monetary or foreign exchange regime matters; 

(4)  Whereas  Italy  has  concluded  an  agreement  with  Vatican  City  which  includes 

provisions on monetary matters2; 

(5)  Whereas the euro will be substituted for the Italian Lira on  1  January  1999; 

(6)  Whereas  according  to  declaration  No  6  annexed  to  the  final  act  of  the  Treaty  on 
European  Union,  the  Community  undertakes  to  facilitate  the  renegotiations  of 
existing arrangements with Vatican City as might become necessary  as a result of the 
introduction of the single currency; 

1  OJ L  139, 11.5.1998, p.l 

2  Convenzione  monetaria  tra 

la  Repubblica  Italiana  e  lo  Stato  délia  Città  del  Vaticano 

il 

3dicembre 1991. 

*V 

(7)  Whereas  the agreement  between  Italy  and Vatican City  in its present  form  need  to 
be amended  or, as the case may be, replaced at the earliest possible date, taking into 
account the allocation of competence to the Community  for monetary matters as laid 
down in the Treaty; 

(8)  Whereas  given  the  close  economic  relations  between  Vatican  City  and  the 
Community,  it is appropriate that an agreement concerning banknotes and coins, the 
access  to  payment  systems  and  the  legal  status  of  the  euro  in  Vatican  City  is 
concluded  between  the  Community  and  Vatican  City;  whereas  given  the  historical 
links between  Italy  and Vatican  City, it is appropriate that  Italy  negotiates  and  may 
conclude the new agreement on behalf of the Community; 

(9)  Whereas  in  order  to  allow  Vatican  City  to  have  the  same  currency  as  Italy,  it  is 
appropriate to agree that Vatican City uses the euro as its official  currency and grants 
legal  tender  status  to  euro  banknotes  and  coins  issued  by  the  European  System  of 
Central Banks and the Member States which have adopted the euro; 

(10)  Whereas  it  is  important  that  Vatican  City  ensures  that  Community  rules  on 
banknotes  and  coins  denominated  in  euro  are  applicable  in  Vatican  City;  whereas 
euro banknotes and coins need appropriate protection against counterfeiting;  whereas 
it  is  important  that  Vatican  City  takes  all  the  necessary  measures  to  combat 
counterfeiting  and to cooperate with the Community in this area; 

(11)  Whereas  the  European  Central  Bank  and the  national  central  banks  may  engage  in 
all  types  of  banking  transactions  in relation to financial institutions  located  in third 
countries;  whereas  the  European  Central  Bank  and  the  national  central  banks  may 
under  appropriate  conditions  allow financial institutions  in third  countries  access to 
their payment systems; whereas the agreement between the Community  and Vatican 
City  shall  not  impose  any  obligations  on  the  European  Central  Bank  or  on  any 
national central bank; 

(12) Whereas the Commission and the European Central Bank in its fields of competence 
will have to be fully  associated with these negotiations; whereas it is appropriate that 
Italy  submits the draft  agreement  to the Economic  and  Financial  Committee  for  its 
opinion; whereas the draft  agreement will have to be submitted to the Council in the 
case  that  the  Commission  or  the  European  Central  Bank  or  the  Economic  and 
Financial Committee are of the opinion that this is necessary; 

(13) Whereas the existing  agreement between  Italy  and Vatican  City  should be  amended 
or,  as  the  case  may  be,  replaced  so  as  to  avoid  any  inconsistencies  between  this 
agreement  and the agreement between the Community  and Vatican  City  concerning 
their monetary relations; 

K 

HAS ADOPTED THIS DECISION: 

Article 1 

Italy shall notify  Vatican City of the need to amend the existing agreement between Italy 
and  Vatican  City  at  the  earliest  possible  date  as  far  as  monetary  matters  are  concerned 
and offer  negotiations for a new agreement. 

Article 2 

The position to be taken by the Community  in the negotiations  with Vatican  City  for  an 
agreement  concerning  matters  referred  to  below  shall  be  based  on  the  principles  laid 
down in Articles 3 to 6. 

Article 3 

(1) Vatican City shall be entitled to use the euro as its official  currency. 

(2) Vatican City shall be entitled to grant legal tender status to euro banknotes and coins. 

Article 4 

Vatican City shall undertake not to issue any banknotes, coins or monetary  surrogates of 
any  kind  unless  the  conditions  for  such  issuance  have  been  agreed  with  the  European 
Community. 

Article 5 

(1) Vatican City  shall undertake to make Community  rules on euro banknotes  and coins 

applicable in Vatican City. 

(2) Vatican City shall undertake to cooperate closely with the Community with regard to 
measures against counterfeiting  of euro banknotes and coins. 

ft 

Article 6 

Financial  institutions  located  in  Vatican  City  may  have  access  to  the  Italian  national 
RTGS under appropriate conditions to be determined by the European Central Bank. 

Article 7 

Italy shall conduct the negotiations with Vatican City on the above-mentioned  matters on 
behalf  of  the. Community.  The  Commission  shall  be  fully  associated  with  the 
negotiations.  The European  Central  Bank  shall be fully  associated  with  the  negotiations 
in  its fields of  competence.  Italy  shall  submit the  draft  agreement  to  the  Economic  and 
Financial Committee for opinion. 

Article 8 

Italy  shall be entitled  to conclude the agreement  on behalf of the Community  unless the 
Commission  or  the  European  Central  Bank  or  the  Economic  and  Financial  Committee 
are of the opinion that the agreement should be submitted to the Council. 

Article 9 

Italy  and  Vatican  City  shall  ensure  that  any  existing  agreement  is  compatible  with  the 
agreement  between  the  Community  and  Vatican  City  concerning  their  monetary 
relations. 

This decision is addressed to Italy. * 

Article 10 

Done at Brussels, 

For the Council 

The President 

11 

ISSN 0254-1475 

COM(98) 789 final 

DOCUMENTS 

EN 

09  10  11  06 

Catalogue number  :  CB-CO-98-789-EN-C 

Office  for Official  Publications of the European  Communities 

L-2985 Luxembourg 

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