Opinion of the European Central Bank of 3 September 1999 at the request of the German Federal Ministry of Finance on a bill amending currency-related provisions with respect to the introduction of the euro (Drittes Euro-Einführungsgesetz - Drittes EuroEG (Third Act on the introduction of the euro)) (CON/99/10)
Date: 1999-09-03
Institutions: European Central Bank
Subjects: Germany, euro, monetary integration, money, national law

OPINION OF THE EUROPEAN CENTRAL BANK

of 3 September 1999

at the request of the German Federal Ministry of Finance on a bill amending currency-related

provisions with respect to the introduction of the euro (Drittes Euro-Einführungsgesetz – Drittes

EuroEG (Third Act on the introduction of the euro))

(CON/99/10)

1. 

On 19 July 1999 the European Central Bank (ECB) received a request from the German Federal

Ministry  of  Finance  for  an  ECB  Opinion  concerning  a  legislative  proposal  entitled  “Bill

amending currency-related provisions with respect to the introduction of the euro (Drittes Euro-

Einführungsgesetz – Drittes EuroEG)”.

2. 

The  ECB’s  competence  to  deliver  an  opinion  is  based  on  Article 105 (4)  of  the  Treaty  and

Article 2 (1), first and second indents, of Council Decision (EC) No. 98/415 of 29 June 1998 on

the consultation of the European Central Bank by national authorities regarding draft legislative

provisions,  as  the  legislative  proposal  deals  with  currency  matters  and  means  of  payment.  In

accordance with Article 17.5, first sentence, of the Rules of Procedure of the European Central

Bank,  this  opinion  has  been  adopted  by  the  Governing  Council  of  the  ECB.  The  legislative

proposal and an explanatory memorandum were submitted to the ECB in the German language

only. The present opinion is based on an unofficial English translation of the  official  German

bill.

The legislative proposal is intended to amend German currency-related provisions in view of the

physical introduction of euro banknotes and coins on 1 January 2002, as stipulated by Council

Regulation EC/974/98 of 3 May 1998 on the introduction of the euro. The bill complements the

First Act on the introduction of the euro (Erstes Euro-Einführungsgesetz), which dealt with the

necessary adaptations to German legislation with a view to the national implementation of the

regulatory  framework  for  the  introduction  of  the  euro  on  1 January  1999,  on  which  the  EMI

rendered its opinion CON/97/24. The ECB welcomes the submission of this legislative proposal

at  a  relatively  early  stage,  thus  allowing  for  transparency  and  legal  certainty  for  the  general

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public and other parties with regard to the physical introduction of euro banknotes and coins on

1 January 2002.

3. 

The draft law consists of eight articles, replacing or amending the existing currency legislation.

Article 1 consists of a draft “Act abolishing the legal tender status of banknotes denominated in

Deutsche  Mark  (DM)  and  Federal  coins  denominated 

in  DM  or  pfennig”  (DM-

Beendigungsgesetz). It deals with the termination of the  status  of  DM  banknotes  and  coins as

legal tender as well as with the obligation of the Bundesbank to exchange DM cash against euro

cash  without  fees  in  accordance  with  Article  16  of  Council  Regulation  (EC)  No  974/98  of  3

May 1998 on the introduction of the euro. In addition, there are some provisions specifying the

extent of that obligation. The final provisions of this article deal with the prolongation of penal

law protection against counterfeits and forgeries of DM banknotes and coins after 31 December

2001.  These  provisions  are  complemented  by  an  agreement  dated  22  October  1998  between

associations representing various economic sectors such as credit and finance, trade and similar

services  including  vending  machines,  which  are  the  most  important  catalysts  for  exchange  of

monetary  tokens,  on  the  one  hand,  and  the  Federal  Ministry  of  Finance  and  the  Deutsche

Bundesbank,  on  the  other.  By  means  of  this  agreement,  the  aforementioned  associations

undertake to use their influence with their member companies to ensure a so-called “modified

deadline  for  the  introduction  of  euro  banknotes  and  coins”.  According  to  this  “modified

deadline”,  the  members  of  the  associations  are  expected,  on  a  voluntary  basis,  to  accept  DM

banknotes  and  coins  until  28  February  2002,  while  at  the  same  time  allowing  for  some

flexibility in their dealings beyond that date.

Article 2  contains  a  new  Coinage  Act  (Münzgesetz),  replacing  the  previous  law  on  coins.  By

reference  to  Council  Regulation  (EC)  No. 975/98  of  3 May  1998  on  the  denomination  and

technical specification of euro coins, it contains provisions on the legal protection of coins, on

the allocation of responsibilities for the design of the national side of the German euro coins, on

the distribution of the numbers to be minted with respect to the various denominations and on

the production as well as, without prejudice to Article 106 (2), first sentence, of the Treaty, the

issuance  and  withdrawal  of  the  German  euro  coins.  In  addition,  a  number  of  provisions  deal

with the protection of special edition German euro coins and commemorative euro coins.

Article 3 contains an amendment to Article 14 of the Bundesbank Act, by which the Deutsche

Bundesbank is endowed, without prejudice to Article 106 (1) of the Treaty, with the exclusive

right to issue banknotes in Germany. At the same time the Deutsche Bundesbank is obliged to

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publish the denominations  and the  different  characteristics  of euro  banknotes.  It  also contains

provisions on the right of the Deutsche Bundesbank to withdraw banknotes.

Article 4 amends the existing regulation on the production and the sale of medals and badges.

Articles 5 to 8 contain a number of provisions which are intended to harmonise and consolidate

other laws which may have a bearing on banknotes and coins (mainly provisions on the German

monetary union as well as special provisions relating to the special status of Berlin and the Saar

region, which have meanwhile been abolished).

4.

As  regards  Article 1,  the  ECB  notes  that  Section 1  of  the  bill  establishes  a  “legal  big

bang”,  by  which  the  legal  tender  status  of  DM  banknotes  and  coins  is  abolished  with

effect from 1 January 2002. Article 15  of Council Regulation (EC) No. 974/98 of 3 May

1998  on  the  introduction  of  the  euro  stipulates  that  banknotes  and  coins  denominated  in  a

national  currency  unit  shall  remain  legal  tender  within  their  territorial  limits  until  six  months

after the end of the transitional period (i.e. 31 December 2001), which period may be shortened

by national law, and each participating Member State may, for a period of up to six months after

the  end  of  the  transitional  period,  lay  down  rules  for  the  use  of  the  banknotes  and  coins

denominated in its currency unit and take any measure to facilitate their withdrawal. In order to

not prejudge the discussion of the informal meeting of the Ecofin to be held in Turku on 10-12

September  1999,  inter  alia  on  a  possible  need  to  “working  towards  closer  intentions  among

Member States on the length of the dual circulation period”, the ECB abstains from commenting

on the approach taken by the German Government in this respect..

Article 1,  Section 4,  in  conjunction  with  Article  8 (3),  stipulates  that  the  penal  provisions

applying to counterfeiting of legal tender banknotes and coins will be extended to apply to DM

banknotes and coins for a period of one year after the termination of their legal tender status on

1 January 2002. The ECB notes that this extension of penal protection would not apply to other

national  denominations  of  the  euro,  which  would  only  benefit  from  penal  protection  under

German  laws  against counterfeiting  up  to the  moment  of  the  termination  of  their  legal  tender

status. 

5.  With regard to Article 2, Section 3 (1) regulates the obligation of the German public to accept

German commemorative euro coins that have been given legal tender status in Germany up to

an  amount  of  EUR  100  for  a  single  payment.  This  reflects  Article 11  of  Council  Regulation

(EC)  No. 974/98 of  3 May  1998,  according  to  which  nobody  is  under  an  obligation  to  accept

more  than  50  euro  coins  (whereby  the  maximum  possible  amount  payable  with  euro  coins  is

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EUR 100). Nevertheless, Section 3 (1), second sentence, refers to single payments made both in

euro  coins  and  in  German  commemorative  euro  coins,  stipulating  that  “no  one  is  obliged  to

accept  more  than  50  coins  amounting  to  more  than  EUR  100”.  This  wording  might  lead  to

uncertainties on whether there would be an obligation to accept a payment of up to 50 coins, for

instance,  even  if  the  accumulated  value  were  to  amount  to  more  than  EUR  100,  due  to  the

inclusion  of  German  commemorative  euro  coins  of  a  value  higher  than  EUR  2  or  to  accept

payments of more than 50 coins, if the accumulated value will fall short of EUR 100. The ECB

suggests to consider that this ambiguity be clarified.

The ECB also notes with regard to the possible holding of coins by the Deutsche Bundesbank

that,  through  the  insertion  of  the  words  “notwithstanding  Article 101  Sub-section 1”  in

Section 3 (2),  it  is  ensured  that  the  10%  limit  of  Article 6  of  Council  Regulation  (EC)

No. 3603/93 of 13 December 1993 specifying definitions for the application of the prohibitions

referred to in Articles 104 and 104b (1) of the Treaty is respected.

Section 8 deals with the acceptance of coins which have decreased in  weight  or have  become

unidentifiable  due  to  extensive  circulation  or  wear.  In  this  context,  it  might  be  useful  also  to

specify the conditions under which the Federal Cash Offices and the Bundesbank will have to

accept bicolour coins, where the inner and outer sections have been separated.

6. 

Article 3,  which  will  enter  into  force  on  1  January  2002,  will  amend  Section 14  of  the

Bundesbank Act. The compliance of this article with the Treaty requirement of legal integration

of  the  NCBs  into  the  ESCB  has  already  been  approved  in  the  EMI  convergence  report  dated

March 1998. By replacing the second, third and fourth sentence of section 14 (1) (“Its notes are

denominated  in  Deutsche  Mark.  They  alone  are  unrestricted  legal  tender.  Notes  in

denominations  smaller  than  ten  Deutsche  Mark  may  be  issued  only  by  agreement  with  the

Federal  Cabinet”)  by  a  new  second  sentence  (“Banknotes  denominated  in  euro  are  the  only

unrestricted  legal  tender.”)  and  by  deleting  section  14  (3),  the  final  adaptations  which  are

necessary to reflect the end of the transitional period are implemented. However, it is reminded

that Article 106 of the Treaty states that the ECB shall have the exclusive right to authorise the

issue  of  banknotes  within  the  Community  and  that  (both)  the  ECB  and  the  national  central

banks  -  in  this  case  the  Bundesbank  as  the  national  central  bank  of  Germany  (in  accordance

with the Bundesbank Act) – may issue such notes. It is an exclusive competence of the ECB to

decide on the application and protection of this Treaty based prerogative. Therefore, in order to

properly reflect the wording and meaning of Article 106 of the Treaty, the ECB recommends to

redraft the explanatory memorandum on Article 3, especially the passage presently reading as

“Article  106  subsection  1  EU  Treaty  stipulates  that  the  ECB  has  a  sole  right  to  approve  the

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issue  of  banknotes,  and  that  the  national  central  banks  are  authorised  to  issue  banknotes.”,

accordingly.

In relation to Section 14 (2), which relates to the withdrawal of banknotes for collection by the

Deutsche Bundesbank, the ECB acknowledges that the wording has remained unchanged. Yet,

to  avoid  misinterpretations  when  comparing  Section 14 (1)  (containing  a  reference  to

Article 106 (1)  of  the  Treaty)  and  Section 14 (2)  (which  does  not  include  that  reference),  the

ECB recommends either that both sub-sections of Section 14 of the Bundesbank Act be merged

or that an explicit reference to Article 106 (1) of the Treaty be made in Section 14 (2) so as to

mirror the wording of Section 14 (1).

7. 

In relation to Article 4, regulating the production and the sale of medals and badges, the ECB

notes that the scope of application of the regulation, as amended by this law, will apply to euro

coins and German commemorative euro coins. In view of a harmonised protection, it might be

worthwhile  to consider  extending  the application to  elements  of  non-German  commemorative

euro coins which have legal tender status in another Member State of the euro area.

8. 

The  ECB  confirms  that  it  has  no  objections  to  this  ECB  Opinion  being  made  public  by  the

competent national authorities at their discretion.

Done at Frankfurt am Main on 3 September 1999.

The Vice-President of the ECB

[signed]

C. Noyer