Proposal for a Council Decision concerning the monetary arrangements in the French territorial communities of Saint-Pierre-et-Miquelon and Mayotte
Date: 1998-12-22
Institutions: European Commission
Subjects: Economic and Monetary Union, European Monetary System, Mayotte, Saint Pierre and Miquelon, single monetary policy

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 22.12.1998 
COM(1998) 801 final 
98/ 0364(CNB) 

Proposal for a 

COUNCIL DECISION 

concerning the monetary arrangements in the French  territorial 
communities of Saint-Pierre-et-Miquelon and  Mayotte 

(presented by the Commission) 

Proposal  for  a Council  Decision 

concerning  the  monetary  arrangements  in the  French  territorial 

communities  of Saint-Pierre-et-Miquelon  and  Mayotte 

EXPLANATORY  MEMORANDUM 

As  from  1 January  1999  the  euro  will  be  substituted  for  the  currencies  of  the  Member 
States  adopting  the euro. The  Council,  meeting  in  the  composition  of  Heads  of  State  or 
Government,  has  confirmed  on  3 May  1998  that  France  fulfils  the  necessary  conditions 
for  the  adoption  of  the  single  currency  on  1 January  1999;  therefore  the  euro  will  be 
substituted for the French franc  as from  that date. 

The Commission  is presenting a draft  Council Decision  which is addressed to France and 
which ensures that the euro will  also become the currency of those parts of France which 
do not form part of the Community. 

I.  General  considerations 

Saint-Pierre-et-Miquelon  and  Mayotte  are 
("collectivités 
territoriales")  of  France. The  two  communities  are  not  part  of  the  Community.  Without 
further  action,  the  monetary  law  of  the  euro  area  and  other  Community  rules  relating  to 
Economic  and Monetary Union would not be applicable in these territories. 

territorial  communities 

At present  the French  franc  is the currency of  Saint-Pierre-et-Miquelon  and Mayotte  and 
French  banknotes  and  coins  have  legal  tender  status  in  these  territories.  Banknotes  and 
coins  are  put  into  circulation  by  the  IEDOM  (Institut  d'Emission  des  Départements 
d'Outre-Mer) in both  communities  (in Mayotte  as from  1.1.1999).  IEDOM  also  provides 
refinancing  facilities  and  imposes  minimum  reserve  requirements  (reserve  requirements 
so far in Saint-Pierre-et-Miquelon  only). 

The Treaty  does  not  specify  the  monetary  regime  applicable  in  Saint-Pierre-et-Miquelon 
and  Mayotte.  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.  It  is  necessary  that  the  Council  specifies,  in  a  decision  addressed  to  France,  the 
monetary regime which should apply in these French  communities. 

Article  109 1  (4) is the appropriate legal basis for taking this decision. It stipulates that the 
Council  shall  also  take  the  other  measures  (apart  from  fixing  the  conversion  rates) 
necessary for the rapid introduction  of the euro as the single currency of Member States. 

A 

The  proposal  for  a decision  intends  to ensure  that  Saint-Pierre-et-Miquelon  and  Mayotte 
will continue to have the same currency as metropolitan  France. Therefore,  it is suggested 
that  the  euro  becomes  the  currency  of  Saint-Pierre-et-Miquelon  and  Mayotte  and  that 
France  grants  legal  tender status  in  these territories  to banknotes  and coins  issued  by the 
European  System of Central  Banks  and the Member  States  adopting the euro. Moreover, 
the European  Central Bank  and the Banque de France  shall  carry out the functions  of the 
European  System  of  Central  Banks  in  these  territories  as  specified  in  the  statutes  of  the 
ECB and the ESCB. 

In  order  to  guarantee  the  singleness  of  the  monetary  policy  of  the  euro  area  and  a  level 
playing  field  for  financial  institutions  located  in  this  area,  France  is  required  to  ensure 
that  those  parts  of  Community  law  which  are  or  will  be  necessary  for  a  smooth 
functioning  of EMU are applicable in Saint-Pierre-et-Miquelon  and Mayotte. 

II.  Comments on the articles 

Article 1 

This  article  provides  for  the  introduction  of  the  euro  in  the  two  communities  by France. 
The  euro  introduced  in  Saint-Pierre-et-Miquelon  and  Mayotte  will  have  all  the 
characteristics  of  the  euro;  it  will  in  particular  be  divided  into  100 cent  and,  during  the 
transitional  period,  into  the  national  currency  units  according  to  the  provisions  of 
Regulation  (EC) No 974/98. 

Article 2 

This  article  addresses  the  question  of  legal  tender.  The  article  obliges  France  to  ensure 
that the same means of payment  are legal tender in Saint-Pierre-et-Miquelon  and Mayotte 
as in metropolitan  France. The first  and second paragraph  reflect  the different  schemes of 
legal tender in the participating Member States before  and after  the end of the year 2001. 

Article 3 

This article makes it clear that the European  Central  Bank  and the national  central  banks, 
when  providing  refinancing  to  financial  institutions  located  in  the  two  communities,  do 
so  according  to  the  rules  which  apply  to  the  monetary  functions  and  operations  of  the 
ESCB  as  well  as  to  the  issuence  of  banknotes  as  laid  down  in  its  Statute.  The  national 
central  bank  which  carries  out  operations  in  the  two  communities  will  normally  be  the 
Banque de France. 

It  is  understood  that  France  will  reform  in  time  the  status  and  role  of  the  Institut 
d'Emission  des Départements  d'Outre Mer (IEDOM) in order achieve compatibility  with 
the  tasks  assigned  to  the  European  System  of  Central  Banks  by  the  Treaty.  It  is  also 

understood  that  the  Institut  d'Emission  d'Outre  Mer  (IEOM)  will  no  longer  fulfil  any 
tasks in Mayotte as from  1  January  1999. 

Article 4 

Article  4  obliges  France  to  ensure  that  any  present  or  future  Community  law  which  is 
necessary  for  the  functioning  of  Economic  and  Monetary  Union  does  apply  in  the  two 
communities. In doing so, France  will have to consult  the Commission  and the European 
Central  Bank.  Areas  of  law  in  question  are  in  particular  the  two  euro  regulations  Nos 
1103/97  and  974/98,  the  law  set  by  the  European  Central  Bank  and  any  further  law 
necessary for the functioning  of EMU. 

Article 5 

This  article  makes  clear  that  the  decision  will  be  effective  as  from  1  January  1999,  the 
date on which  the competence  for  monetary  matters  is transferred  to the Community  and 
the euro is substituted for the French  franc. 

Article 6 

This article clarifies  that the decision  is addressed to France. 

-3 

Proposal for a Council Decision  [  ] of... 

concerning the monetary arrangements in the French  territorial 

communities  of Saint-Pierre-et-Miquelon and Mayotte 

The Council  of the European  Union, 

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

Article  109 1  (4), third sentence thereof, 

Having regard to the proposal  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 euro will be substituted for the French  franc  on  1  January  1999; 

(4)  Whereas  the  French  territorial  communities  ("collectivités  territoriales")  Saint-
Pierre-et-Miquelon  and  Mayotte  are  an  integral  part  of  France;  whereas  they  do  not 
form  part  of  the  Community;  whereas  the  monetary  regime  of  Saint-Pierre-et-
Miquelon  and  Mayotte  is  not  specified  in  the  Treaty;  whereas  it  is  necessary  to 
clarify  their monetary  regime; whereas  these territorial  communities  should  have the 
same currency as metropolitan  France; 

1  OJL  139,  11.5.1998, p. 1 

. 4-

(5)  Whereas  banknotes  and  coins  denominated  in  French  francs  are put  into  circulation 
by  the  "Institut  d'Emission  des  Départements  d'Outre  Mer  (IEDOM)"  in  Saint-
Pierre-et-Miquelon  and,  from  1  January  1999,  in  Mayotte;  whereas  financial 
institutions  located  in  these  communities  have  access  to  refinancing  facilities  in 
French  francs  with IEDOM; whereas France  intends  to reform  in time the  status  and 
role  of  the  IEDOM  in  order  to  achieve  compatibility  with  the  tasks  assigned  to  the 
European  System of Central Banks by the Treaty and Protocol No 3; 

(6)  ,Whereas  the  euro  should  be  the  currency  of  these  communities;  whereas  France 

should  grant  legal  tender  status  to  French  franc  banknotes  and  coins  and  to  euro 

banknotes and coins issued by the ESCB and the Member States which  have  adopted 

the euro; 

(7)  Whereas  as from  1  January  1999 the European  System  of Central  Banks defines  and 
implements  the  monetary  policy  of  the  Community;  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  they  may  also 
engage in these transactions in territories of a Member State which  are not part of the 
Community;  whereas  they should  make  use of this competence  with  respect  to these 
communities; whereas in order to ensure the singleness of the monetary policy of the 
ESCB  and a level playing field  for financial  institutions  located  in the euro area, it is 
appropriate  that  those  parts  of  present,  and  future  Community  law  which  are 
necessary  for  the functioning  of  Economic  and Monetary  Union  be  made  applicable 
in Saint-Pierre-et-Miquelon and Mayotte; 

(8)  Whereas  the  monetary  arrangements  in  Saint-Pierre-et-Miquelon  and  Mayotte  need 

to be defined  by France by way of national  legislation; 

HAS ADOPTED THIS DECISION: 

- 5-

Article 1 

t he  euro shall be the currency of Saint-Pierre-et-Miquelon and Mayotte. 

Article 2 

1.  France  shall  continue  to  assign  the  status  of  legal  tender  to  banknotes  and  coins 

denominated  in French  francs  in  Saint-Pierre-et-Miquelon  and Mayotte  until  30 June 

2002 at the latest. 

2.  From  1 January  2002  France  shall  assign  the  status  of  legal  tender  to  banknotes  and 

coins denominated  in euro in Saint-Pierre-et-Miquelon  and Mayotte. 

Article 3 

The  European  Central  Bank  and  the  national  central  banks  shall  carry  out  the  functions 
and operations  of the European  System of Central  Banks in Saint-Pierre-et-Miquelon  and 
Mayotte  as  laid  down  in  chapter  IV  and  Article  16 of  the  Statute  of  the  ESCB  and  the 
ECB. 

Article 4 

France in consultation  with  the Commission  and the European  Central  Bank  shall  ensure 
that  those parts  of  Community  law  which  are or will  be  necessary  for  the  functioning  of 
Economic and Monetary Union are applied in Saint-Pierre-et-Miquelon  and Mayotte. 

- 6-

Article 5 

This Decision  shall apply as from  1  January  1999. 

Article 6 

This Decision is addressed to France. 

Done at 

For the Council 

The President 

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ISSN 0254-1475 

COM(98) 801 final 

DOCUMENTS 

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