2000/427/EC: Council Decision of 19 June 2000 in accordance with Article 122(2) of the Treaty on the adoption by Greece of the single currency on 1 January 2001
Date: 2000-06-19
Institutions: Council of the European Union
Subjects: Economic and Monetary Union, Greece, budget deficit, euro, inflation, public debt

7.7.2000

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Official Journal of the European Communities

L 167/19

II

(Acts whose publication is not obligatory)

COUNCIL

COUNCIL DECISION

of 19 June 2000

in accordance with Article 122(2) of the Treaty on the adoption by Greece of the single currency
on 1 January 2001

(2000/427/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 122(2), thereof,

Having regard to the proposal from the Commission (1),

Having regard to the report from the Commission (2),

and the Decision taken by the Heads of State or Govern-
ment in Edinburgh in December 1992, Denmark has
notified the Council that it will not participate in the
third stage of EMU. Denmark has not requested that the
procedure referred to in Article 122(2) of the Treaty be
initiated.

Having regard to the report
Bank (3),

from the European Central

(3)

Having regard to the opinion of the European Parliament,

By virtue of Decision 1998/317/EC Greece and Sweden
have a derogation as defined in Article 122 of
the
Treaty.

Having regard to the discussion of the Council, meeting in the
composition of Heads of State or Government,

(4)

Whereas:

(1)

(2)

The third stage of economic and monetary union (EMU)
started on 1 January 1999. The Council, meeting in
Brussels on 3 May 1998 in the composition of Heads of
State or Government, decided that Belgium, Germany,
Spain, France, Ireland, Italy, Luxembourg, the Nether-
lands, Austria, Portugal and Finland fulfilled the neces-
sary conditions for adopting the single currency on 1
January 1999 (4).

In accordance with paragraph 1 of the Protocol on
certain provisions relating to the United Kingdom of
Great Britain and Northern Ireland annexed to the
Treaty, the United Kingdom notified the Council that it
did not intend to move to the third stage of EMU on 1
January 1999. This notification has not been changed. In
accordance with paragraph 1 of the Protocol on certain
provisions relating to Denmark annexed to the Treaty

(1) Opinion delivered on 8 May 2000 (not yet published in the Official

Journal).

(2) Opinion delivered on 5 May 2000 (not yet published in the Official

Journal).

(3) Opinion delivered on 28 April 2000 (not yet published in the Offi-

cial Journal).

The European Central Bank (ECB) was established on 1
July 1998. The European Monetary System has been
replaced by an exchange rate mechanism, the setting-up
of which was agreed by a resolution of the European
Council on the establishment of an exchange-rate mech-
anism in the third stage of economic and monetary
union of 16 June 1997 (5). The procedures for an
exchange-rate mechanism in stage three of economic
and monetary union (ERM II) were laid down in the
Agreement of 1 September 1998 between the ECB and
the national central banks of the Member States outside
the euro area laying down the operating procedures for
an exchange rate mechanism in stage three of economic
and monetary union (6).

(5)

Article 122(2) of the Treaty lays down the procedures
for abrogation of the derogation of the Member States
concerned. According to that Article at least once every
two years, or at the request of a Member State with a
derogation, the Commission and the ECB shall report to
the Council in accordance with the procedure laid down
in Article 121(1) of the Treaty. Such reports have to be
prepared in 2000. On 9 March 2000 Greece made such
a request.

(4) Council Decision 1998/317/EC of 3 May 1998 in accordance with

Article 121(4) of the Treaty (Oj L 139, 11.5.1998, p. 30).

(5) OJ C 236, 2.8.1997, p. 5.
(6) OJ C 345, 13.11.1998, p. 6.

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Official Journal of the European Communities

7.7.2000

(6)

(7)

(8)

(9)

National legislation in the Member States including the
statutes of national central banks shall as necessary be
adapted with a view to ensuring compatibility with
Articles 108 and 109 of the Treaty and the Statute of
the ESCB. The reports of the Commission and the ECB
provide a detailed assessment of the compatibility of the
legislation of Greece and Sweden with Articles 108 and
109 of the Treaty and the Statute of the ESCB.

ination. In particular, the Member State must not have
devalued its currency's bilateral central rate against any
other Member State's currency on its own initiative for
the same period. Since 1 January 1999 the ERM II
provides the framework for assessing the fulfilment of
the exchange rate criterion. In assessing the fulfilment of
this criterion in their reports, the Commission and the
ECB have examined the two-year period ending in
March 2000.

According to Article 1 of the Protocol on the conver-
gence criteria referred to in Article 121 of the Treaty
establishing the European Community, the criterion on
price stability referred to in the first indent of Article
121 (1) of the Treaty means that a Member State has a
price performance that is sustainable and an average rate
of inflation, observed over a period of one year before
the examination, that does not exceed by more than one
and a half percentage points that of, at most, the three
best performing Member States
in terms of price
stability. For the purpose of
the criterion on price
stability inflation will be measured by the harmonised
indices of consumer prices (HICPs) defined in Council
Regulation (EC) No 2494/95 (1). In order to assess the
price stability criterion a Member State's inflation has
been measured by the percentage change in the arith-
metic average of 12 monthly indices relative to the
arithmetic average of 12 monthly indices of the previous
period. In the one year period ending in March 2000 the
three best performing Member States in terms of price
stability were France, Austria and Sweden, with inflation
rates of, respectively 0,9 %, 0,9 % and 0,8 %. A reference
value calculated as the simple arithmetic average of the
inflation rates of
the three best performing Member
States in terms of price stability plus 1,5 percentage
points was considered in the reports of the Commission
and the ECB. On this basis, the reference value in the
one year period ending in March 2000 was 2,4 %.

According to Article 2 of the Protocol on the conver-
gence criteria referred to in Article 121 of the Treaty
establishing the European Community, the criterion on
the government budgetary position referred to in the
second indent of Article 121(1) of the Treaty shall mean
that at the time of the examination the Member State is
not
the subject of a Council decision under Article
104(6) of the Treaty that an excessive deficit exists.

According to Article 3 of the Protocol on the conver-
gence criteria referred to in Article 121 of the Treaty
establishing the European Community, the criterion on
the
participation in the exchange-rate mechanism of
European Monetary System referred to in the third
indent of Article 121(1) of the Treaty means that a
Member State has respected the normal
fluctuation
margins provided for by the exchange-rate mechanism
(ERM) of the European Monetary System without severe
tensions for at least the last two years before the exam-

(10) According to Article 4 of the Protocol on the conver-
gence criteria referred to in Article 121 of the Treaty
establishing the European Community, the criterion on
the convergence of interest rates referred to in the fourth
indent of Article 121(1) of
the Treaty means that,
observed over a period of one year before the exam-
ination, a Member State has had an average nominal
long-term interest rate that does not exceed by more
than two percentage points that of, at most, the three
best performing Member States
in terms of price
stability. For the purpose of the criteria on the conver-
gence of interest rates, comparable interest rates on 10-
year benchmark government bonds were used. In order
to assess the fulfilment of the interest-rate criterion a
reference value calculated as
the simple arithmetic
average of the nominal long-term interest rates of the
three best performing Member States in terms of price
stability plus two percentage points was considered in
the reports of the Commission and the ECB. On this
basis, the reference value in the one year period ending
in March 2000 was 7,2 %.

(11)

In accordance with Article 5 of the Protocol on the
convergence criteria referred to in Article 121 of the
Treaty establishing the European Community, the data
used in the current assessment of the fulfilment of the
convergence criteria will be provided by the Commis-
sion. For the preparation of this proposal the Commis-
sion provided data. Budgetary data were provided by the
Commission after reporting by the Member States by 1
March 2000 in accordance with Council Regulation (EC)
No 3605/93 of 22 November 1993 on the application
of
the Protocol on the excessive deficit procedure
annexed to the Treaty establishing the European
Community (2).

(12)

The Greek domestic legislation, including the Statute of
the national central bank,
is compatible with Articles
108 and 109 of the Treaty and the Statute of the ESCB.

Regarding the fulfilment by Greece of the convergence
criteria mentioned in the four indents of Article 121(1)
of the Treaty:

— the average inflation rate in Greece in the year
ending March 2000 stood at 2,0 % which is below
the reference value,

(1) Council Regulation (EC) No 2494/95 of 23 October 1995 concer-
ning harmonised indices of consumer prices (OJ L 257, 27.10.1995,
p. 1).

(2) OJ L 332, 31.12.1993, p. 7. Regulation as amended by Council

Regulation (EC) No 475/2000 (OJ L 58, 3.3.2000, p. 1).

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— by virtue of Council Decision 2000/33/EC of 17
December 1999 abrogating the Decision on the exis-
tence of an excessive deficit in Greece (1), Greece is
not the subject of a Council Decision on the exis-
tence of an excessive government deficit,

— Greece has been a member of the ERM and subse-
quently of ERM II during the last two years. In that
period the Greek drachma (GRD) has not been
subject
to severe tensions and Greece has not
devalued, on its own initiative, the GRD bilateral
central
rate against any other Member State's
currency up to 1 January 1999 nor against the euro
since then,

— in the year ending March 2000 the long-term
interest rate in Greece was, on average, 6,4 % which
is below the reference value.

Greece has achieved a high degree of sustainable conver-
gence by reference to all four criteria.

Consequently, Greece fulfils the necessary conditions for
the adoption of a single currency.

(13)

The Council, acting by qualified majority on a proposal
by the Commission, shall decide which Member States
with a derogation fulfil the necessary conditions for the

adoption of the single currency and abrogate the deroga-
tions of the Member States concerned,

HAS ADOPTED THIS DECISION:

Article 1

Greece fulfils the necessary conditions for the adoption of the
single currency. The derogation in favour of Greece laid down
in recital 4 of Decision 98/317/EC shall be abrogated with
effect from 1 January 2001.

Article 2

This Decision is addressed to the Member States.

Done at Santa Maria da Feira, 19 June 2000.

For the Council

The President

J. PINA MOURA

(1) OJ L 12, 18.1.2000, p. 24.