Proposal for a Council Regulation (EC) on the conversion rates between the euro and the currencies of the Member States adopting the euro
Date: 1998-12-31
Institutions: European Commission
Subjects: EU Member State, European Monetary System, euro, exchange rate, third stage of EMU

COMMISSION OF THE EUROPEAN  COMMUNITIES 

Brussels, 31.12.1998 
COM(1998) 732 final 

98/0353 (CNB) 

Proposal for a 

COUNCIL REGULATION  (EC) 

on the conversion  rates between the euro 
and the currencies of the Member States adopting the euro 

(presented by the Commission) 

Proposal for a 
Council Regulation (EC) 
on the conversion rates between the euro 
and the currencies of the Member States adopting the euro 

EXPLANATORY MEMORANDUM 

As  from  1  January  1999  the  euro  will  be  substituted  for  the  present  currencies  of 
Belgium, Germany, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, 
Portugal and Finland. 

This  substitution  requires the adoption of the conversion rates at which the euro will  be 
substituted  for  the national  currencies  and at which rates the euro, during  a  transitional 
period, will be divided into national currency units. 

I. General  considerations 

Article  109 1  (4) of the Treaty  foresees  that the  Council  shall  at the  starting  date  of the 
third  stage  acting  with  the  unanimity  of the  Member  States  without  a  derogation,  on  a 
proposal from the Commission and after consulting the ECB, adopt the conversion rates. 

In two Communiqués issued on 3 May 1998 and on 26 September  1998, the Ministers of 
the  Member  States  adopting  the  euro  as  their  single  currency,  the  Governors  of  the 
Central  Banks  of  these  Member  States,  the  Commission  and  the  European  Monetary 
institute/the  European  Central  Bank  have  announced  how  the  conversion  rates  will  be 
determined and adopted on 31 December  1998. They have notably announced that: 

"On 31 December  1998, following  the regular central bank concertation  procedure 
...  and  in  line  with the  existing procedures  ...  the  Commission  will  calculate  the 
final  official  ECU exchange rates for the participating currencies. The Commission 
will propose these rates for  adoption by the Council as the irrevocable  conversion 
rates for the euro." 

This procedure will ensure that the adoption of the conversion rates for the euro will by 
itself, as required by  Article  109 1 (4) of the Treaty, not modify  the external value of the 
ECU. 

In  order  to  increase  legal  certainty  and  clarity  for  market  operators  and  to  speed  up 
procedures  in the afternoon  of 31 December  1998, the Commission adopted  its proposal 
for a Council Regulation without the conversion rates already on 9 December  1998. 

The  official  ECU  rates  of the  currencies  of the  Member  States  adopting  the  euro  have 
been  calculated  by the Commission  on  31 December  1998  according  to  the  established 
procedure. The Commission communicates these rates as the proposed  irrevocably fixed 
conversion rates to the Council, the European Parliament and the European Central Bank. 

II. Comments on the articles 

Article 1 

This article specifies  the conversion rates as referred to in the third indent of Article  1 of 
Council regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro1. 

The  conversion  rates  establish,  together  with  the  provisions  of  Articles  2  and  3  of 
Council regulation (EC) No 974/98, the recurrent link between the euro and the national 
currencies of the Member States adopting the euro. 

Moreover,  in  accordance  with  Article  6  (1) of  Council  regulation  (EC) No  974/98, the 
conversion rates determine during the transitional period, starting on  1 January  1999 and 
ending on 31 December 2001, how the euro will be divided into national currency units. 

In  accordance  with  Council  regulation  (EC)  No  1103/97  of  17  June  1997  on  certain 
provisions  relating  to the introduction  of the euro2, the conversion  rates  are  determined 
with  six  significant  figures;  the rates  are expressed  as one euro  in terms  of  each  of  the 
national currencies of the Member States adopting the euro. 

Article 2 

This  article  ensures that the regulation will  be applicable  as from the beginning  of  the 
third  stage  of Economic  and Monetary Union, i.e.  as from 1 January  1999, 0.00.  a.m., 
local time. Council regulation (EC) No 974/98 will be applicable as from the same time. 

1  OJ No L 139,11.5.1998, p.  1 

2  OJNoL 162,19.6.1997, p. 1 

2-

Proposal for a Council Regulation (EC) 
on the conversion rates between the euro 
and the currencies of the Member States adopting the euro 

The Council of the European Union, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and in  particular 
Article 109 1 (4) first sentence thereof, 

Having regard to the proposal from the Commission, 

Having regard to the opinion of the European Central Bank, 

(1)  Whereas according to Article 109 j (4) of the Treaty, the third stage of Economic and 
Monetary Union shall start on  1 January  1999; whereas the Council, meeting in the 
composition  of  Heads  of  State or Government, has confirmed  on 3 May  1998 that 
Belgium,  Germany,  Spain,  France,  Ireland,  Italy,  Luxembourg,  the  Netherlands, 
Austria, Portugal  and Finland  fulfil  the necessary  conditions  for the  adoption  of  a 
single currency on 1 January 19991; 

(2)  Whereas according to Council regulation (EC) No 974/98  of 3 May  19982, the euro 
shall be the currency of the Member States which adopt the single currency as from 
1 January  1999; whereas  the  introduction  of  the euro requires  the  adoption  of  the 
conversion rates at which the euro will be substituted for the national currencies and 
at  which  rates  the  euro  will  be  divided  into  national  currency  units;  whereas  the 
conversion rates in Article  1  are the conversion rates referred to in the third indent of 
Article 1  of Council regulation (EC) No 974/98; 

1  OJNoL139,  11.5.1998, p. 30 

2  OJ No L 139, 11.5.1998, p. 1 

(3)  Whereas  according  to  Council  regulation  (EC)  No  1103/97  of  17  June  1997  on 
certain  provisions  relating  to  the  introduction  of  the  euro3,  every  reference  to the 
ECU in a legal instrument shall be replaced by a reference to the euro at a rate of one 
euro to one ECU; whereas Article  109 1  (4), second sentence of the Treaty, provides 
that the adoption of the conversion rates shall by itself not modify the external value 
of  the  ECU;  whereas  this  is  ensured  by  adopting  as  the  conversion  rates,  the 
exchange rates against the ECU of the currencies of the Member States adopting the 
euro,  as  calculated  by  the  Commission  on  31  December  1998  according  to  the 
established procedure for the calculation of the daily official ECU rates; 

(4)  Whereas  the  Ministers  of  the  Member  States  adopting  the  euro  as  their  single 
currency,  the  Governors  of  the  Central  Banks  of  these  Member  States,  the 
Commission  and the European Monetary Institute/the European Central Bank, have 
issued  two  Communiqués  on  the  determination  and  on  the  adoption  of  the 
irrevocable conversion rates for the euro dated 3 May 19984 and 26 September 1998, 
respectively; 

(5)  Whereas  Council  regulation  (EC) No  1103/97  stipulates  that  the  conversion  rates 
shall be adopted as one euro expressed in terms of each of the national currencies of 
the Member States  adopting the euro; whereas in order to ensure  a high  degree  of 
accuracy, these rates will be adopted with six significant figures and no inverse rates 
nor bilateral  rates between  the currencies  of  the Member  States  adopting  the euro 
will be defined; 

1  OJ No L 162,19.6.1997, p.l 

4  OJ No C 160,27.05.1998, p.l 

HAS ADOPTED THIS REGULATION: 

Article I 

The  irrevocably  fixed  conversion  rates  between  the  euro  and  the  currencies  of  the 
Member States adopting the euro are: 

leuro  = 

40.3399  Belgian franc 

= 

= 

= 

= 

= 

= 

= 

= 

= 

= 

1.95583  German mark 

166.386  Spanish peseta 

6.55957  French franc 

0.787564  Irish pound 

1936.27  Italian lira 

40.3399  Luxembourg franc 

2.20371  Dutch guilder 

13.7603  Austrian schilling 

200.482  Portuguese escudo 

5.94573  Finnish markka 

Article 2 

This Regulation shall enter into force on 1 January 1999. 

This  Regulation  shall  be  binding  in  its  entirety  and  directly  applicable  in  all  Member 

States. 

Done at Brussels, 

For the Council 

The President 

ISSN 0254-1475 

COM(98) 732  final 

ENTS 

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