Opinion of the European Central Bank of 19 September 2003 at the request of the Council of the European Union on the draft Treaty establishing a Constitution for Europe (CON/2003/20)
Date: 2003-09-19
Institutions: European Central Bank
Subjects: European Central Bank, European Constitution, European System of Central Banks, European treaties, opinion

25.9.2003

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Official Journal of the European Union

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EUROPEAN CENTRAL BANK

OPINION OF THE EUROPEAN CENTRAL BANK

of 19 September 2003

at the request of the Council of the European Union on the draft Treaty establishing a Consti-
tution for Europe

(CON/2003/20)

(2003/C 229/04)

A. Introduction

from the Council of

1. On 21 July 2003 the European Central Bank (ECB)
received a request
the European
Union for an opinion on the draft Treaty establishing a
Constitution for Europe (hereinafter
the ‘draft Consti-
tution’). The European Convention on the Future of
Europe (hereinafter the ‘European Convention’) adopted
the draft Constitution in two steps on 13 June and 10
July 2003 and submitted it
to the European Council
meeting in Thessaloniki on 20 June and to the Italian
Presidency on 18 July 2003. The European Council
welcomed the draft Constitution as a good basis for
starting
the
of
the Member States (Intergovernmental
governments of
Conference or
Italian Presidency has
IGC)
convened for 4 October 2003.

representatives

conference

that

the

the

of

ECB

Furthermore, on 8 May and 5 June 2003, the President of
the
drafting
suggestions to the Chairman of the European Convention
on issues that concern the ECB and the ESCB.

communicated

comments

and

B. General considerations

the

and clarifies

legal
the European Union.

4. The ECB welcomes the draft Constitution, which simplifies,
and institutional
streamlines
framework of
the
It enhances
Union's ability to act at both the European and the inter-
national
is an important step in
preparing the Union for the future, as requested by the
Laeken Declaration.

level and,

therefore,

2. The ECB's competence to deliver an opinion is based on
Article 48 of
the Treaty on European Union, which
requires the consultation of the ECB in the event of insti-
tutional changes in the monetary area. The draft Consti-
tution amends and integrates into a single Treaty the
existing Treaties on which the European Union is
founded and will, upon its ratification and entry into
force, be the Union's basic primary law. Thus, the draft
Constitution, by incorporating Title VII
(‘Economic and
monetary policy’) of the EC Treaty, addresses the legal
basis of the ECB and of the European System of Central
Banks (ESCB), and therefore comes within the scope of
Article 48 of the Treaty on European Union. In accordance
with the first sentence of Article 17.5 of the Rules of
Procedure of the ECB, the Governing Council of the ECB
has adopted this opinion (1).

3. The ECB was neither a formal member nor an official
observer of the European Convention. Nevertheless, the
President of the ECB was invited to an expert hearing of
the Working Group on Economic Governance on 13
September 2002, during which he conveyed the ECB's
preliminary views on monetary and financial matters.

(1) The text of the draft Constitution on which this opinion is based is
document CONV 850/03 of 18 July 2003 as released by the Secre-
tariat of the European Convention.

5. The ECB understands that the transfer of the provisions on
the ECB and the ESCB from the EC Treaty to the Consti-
tution will not entail any changes to the substance, and
that the tasks, mandate, status and legal regime of the ECB
and of the ESCB remain substantially unchanged. Whilst
the ECB attaches great value to institutional and oper-
ational stability in the monetary domain, it is also aware
of the fact that a new constitution has necessary impli-
cations to the institutional framework. The ECB considers
that the adjustments and updates that the current consti-
tutional process envisages do not affect that stability.

6. The ECB has been consulted on a text that refers to, but
does not have annexed to it, the Statute of the European
System of Central Banks and of the European Central Bank
(‘the Statute’) and the other protocols which are relevant
for economic and monetary union (EMU). This opinion is
based on two crucial and related premises. The first is that
the substance of
the Statute and the other protocols
relevant to EMU will not be subject to changes and that
these documents will be annexed to the Constitution of
form an integral part, as foreseen in
which they will
Article IV-6 thereof. The second premise is that all parts
including the Statute and the
of the draft Constitution,
to EMU, will maintain their
other protocols relevant
value as primary law,
level as
other parts of the Treaty.

i.e. the same hierarchical

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This opinion is based on the premise that the substance of
the Statute will not be changed. Nevertheless, the ECB
understands that non-substantive amendments will need
to be made to the Statute, in particular to introduce termi-
nological adaptations and cross-references to the new
numbering of the Constitution provisions, and to update
provisions that have become obsolete. The ECB would
wish to be associated with the preparatory activity for
any such revision of the Statute.

its functions and tasks, which would benefit

7. In this opinion, the ECB identifies some Articles in the
draft Constitution that are of relevance for the exercise
of
from
further clarifications, technical adjustments, and editorial
changes. For ease of reference, drafting suggestions are
compiled in the annex to this opinion.

C. The objectives and competences of the Union

and therefore considers that it encompasses all exclusive
competences related to the euro as described in the
relevant provisions of the draft Constitution, in particular
Articles III-77 and III-78.

D. The institutional status of the ECB and of the ESCB

The Union's institutional framework

10. The status of

features,

in particular

the ECB within the Union's institutional
framework is governed by Article I-29 of the draft Consti-
tution under which the ECB would be one of the ‘Other
institutions’ of the Union. Article I-29 preserves the ECB's
independence,
substantive
including financial
legal personality and
regulatory capacity, specifically the power to issue legally
binding acts. The ECB therefore understands that
the
framework created by the draft Constitution does not
imply, and is not meant to imply, any change to the
substance of the current institutional status of either the
ECB or the ESCB.

independence,

its

8. Article I-3(3) of the draft Constitution states that

Price

yields

stability

confidence

‘The
Union shall work for the sustainable development of
Europe based on balanced economic growth . . .’. Article
2 of the EC Treaty confers on the Community the task of
promoting ‘non-inflationary growth’, and Article 4(3)
for the
mentions ‘stable prices’ as a ‘guiding principle’
activities of both the Community and the Member States.
The ECB regrets that such an explicit reference to price
stability is not contained in Article I-3 on the Union's
objectives.
in the
long-term value of the euro and translates into low and
stable long-term interest rates, which in turn foster a high
level
and
employment. Price stability also avoids an ad hoc redistri-
bution of wealth as a result of price increases. Therefore,
the draft Constitution
the ECB would welcome that
retained the
the
forefront of the EC Treaty of the guiding principle of
stable prices, and would like to suggest that a reference
to ‘non-inflationary growth’ be introduced in Article I-3(3)
‘The Union shall work for the
of the draft Constitution:
sustainable development of Europe based on balanced and
non-inflationary economic growth . . .’. Alternatively, a
reference to price stability could be considered.

current prominent positioning

investment

ultimately,

growth

and,

of

at

the Union ‘monetary policy,

9. Article I-12 of the draft Constitution lists as an exclusive
the
for
competence of
Member States which have adopted the euro’.
In the
context of Article I-12 the term ‘monetary policy’ is not
to be read in a narrow and technical sense as referring
the ESCB to which Article
only to the basic task of
III-77(2)(a) of
the draft Constitution refers. Such a
narrow view is neither warranted nor intended. Contrary
to this restrictive interpretation, the ECB understands the
term ‘monetary policy’ as reflecting the title of Section 2 of
Chapter II of Title III of Part III of the draft Constitution,

11. The ECB notes that Article I-29 is placed under Title IV of
the draft Constitution, entitled ‘The Union's Institutions’.
This same heading appears in Article I-18, where the
ECB is not included. Thus, the draft Constitution on the
one hand places the ECB under the Title of ‘Union's Insti-
tutions’ but on the other hand the provision that lists the
Union's institutions does not include the ECB. Because of
the ECB needs to be
its specific institutional
features,
differentiated from the ‘Union's
institutions’ and this
justifies the fact that Article I-18 does not list the ECB.
To increase the clarity, consistency and soundness of its
institutional status, if not for purely editorial reasons, the
ECB would like to recommend that the heading of Title IV
be changed to ‘The Institutional Framework of the Union’;
this expression (derived from the current heading of
Chapter I of Title IV), would therefore encompass the
constellation of
the
Union's institutions (Chapter I), and (ii) the ECB, Court
of Auditors and the advisory bodies (Chapter II). As a
result of
should be
the heading of Chapter
changed to ‘The Union's Institutions’, consistently with
the heading of Article I-18 in this Chapter. By swapping
the headings in this way, the ECB would be part of the
‘institutional
the Union’, without being
within the list of the ‘Union's institutions’. The Union's
institutions would of course also be part of the ‘institu-
tional framework of the Union’. In addition, Article I-29
on the ECB also deals extensively with the ESCB and may
also refer to the Eurosystem if the suggestion in paragraph
14 below were to be followed. The Article defines the
concept of the ESCB/Eurosystem, mentions their decision-
making bodies, and refers to their objectives and tasks.
Therefore, the ECB suggests that the ESCB and the Euro-
system should be included in the heading of Article I-29,
together with the ECB.

institutional bodies, namely:

framework of

this

(i)

I

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The independence of the ESCB

12. Paragraph 3 of Article I-29 addresses the independence of
independence. However,
the ECB,
including its financial
the Member
the national central banks (NCBs) of all
States, i.e. all the ESCB members, shall also be independent
according to Article III-80 of the draft Constitution. Thus,
the ECB would welcome the introduction of a reference to
the independence of the NCBs in paragraph 3 of Article
I-29. This may be achieved by replacing the third sentence
by the following sentence: ‘When exercising their powers
and carrying out
the
national central banks, and any member of their decision-
making bodies shall be completely independent’. As a
consequence, the first sentence of paragraph 3 of Article
I-29 would need to be replaced by the following wording:
‘The European Central Bank is an Institution which has
legal personality and which shall be independent for its
finances’.

their tasks and duties,

the ECB,

the

13. The ECB notes that the ECB is defined by Article I-29(3) as
expression ‘completely inde-
‘independent’ while
is applied in relation to both the Commission
pendent’
(Article
(Article
I-25(4)) and the Court of Auditors
I-30(3)). The ECB understands this difference in termi-
nology as being merely linguistic and reflecting no quali-
tative difference between the independence of these insti-
tutions and that granted to the ECB, but would suggest for
reasons of consistency that the terms be aligned.

The Eurosystem

from the first one,
competence

14. Under the acronym ‘ESCB’ two realities coexist. On the
one hand, ESCB refers to the ECB and the NCBs of all
the EU Member States. On the other hand, and by the
effect of other provisions,
‘ESCB’ also refers to the ECB
and the central banks of only those EU Member States
is
which have adopted the euro. This second concept
different
the
exclusive
conducting
monetary policy,
including the issue and the overall
management of the euro, the management of the official
foreign reserves of the Member States that have adopted
the euro, and promoting the smooth operation of payment
systems. The
this
competence require a high degree of harmonisation of
instruments and infrastructure, and a single
procedures,
decision-making body with regulatory capacity.

since it embodies
and

actions necessary

to carry out

defining

for

The EU Treaty has created these two realities by intro-
ducing in the EC Treaty and in the Statute Articles that
distinguish between which provisions
apply to one
composition or to the other. This legislative technique
does not serve the aim of clarity and comprehension of
the EC Treaty. In order to distinguish the second concept
of ‘ESCB’, the Governing Council adopted and has been
using since 1998 the term ‘Eurosystem’ in its communi-
cations with the public. With a view to simplify and make
the Constitution more accessible for European citizens and

in so doing to bring the Union's institutional framework
closer to the general public, the ECB would suggest that
the historic reform that the draft Constitution represents
would be a suitable opportunity to introduce the term
‘Eurosystem’ into the Constitution. This could be done in
Article I-29(1), where the second sentence could be
replaced by the following:
‘The European Central Bank,
together with the national central banks of the Member
States which have adopted the Union currency, the euro,
shall constitute the Eurosystem. The Eurosystem shall
conduct the monetary policy of the Union’. This termino-
logical change will require a general provision indicating
that ‘ESCB’ is to be read as ‘Eurosystem’ in those provisions
of the Constitution that refer to tasks or functions related
to the euro or to the Member States that have adopted the
euro.

E. International representation of the euro

15. The international representation of the euro is addressed in
Articles III-90 and III-228 of the draft Constitution. The
ECB understands that the draft Constitution does not, even
implicitly, deprive the ECB of
its current competences
based on the monetary tasks explicitly entrusted to the
ESCB by the EC Treaty. However, as the responsibilities
of the ESCB are not referred to in the body of Article
it is advisable for reasons of legal clarity to add
III-90,
such an explicit reference. For that purpose,
the ECB
suggests the insertion of a fourth paragraph in Article
III-90 stating that ‘The measures adopted on the basis of
this Article shall be in compliance with the allocation of
powers laid down in Articles III-71 and III-77.’ Thus
mirroring the language of Article 111(4) of the EC Treaty.

16. A significant number of the issues that are of particular
interest
for EMU are discussed not only within inter-
national organisations but also in informal multinational
groupings, many of which are standard-setters for financial
markets (e.g. G-10, etc.). In order to clearly express that
the scope of Article III-90 extends to those groups, the
ECB would like to suggest that the word ‘fora’ be used in
addition to the word ‘conferences’ in paragraphs 1 and 3
of Article III-90 of the draft Constitution.

17. In order to enhance the precision of Article III-90 of the
draft Constitution, the ECB would like to recommend the
addition of the word ‘monetary’ to ‘international financial
institutions’, so as to clearly restrict this provision to ‘inter-
national monetary and financial institutions’. Moreover, in
order to address the inconsistency between paragraphs 1
and 3 of Article III-90, the ECB would like to recommend
either the insertion in paragraph 3 of the expression ‘after
consultation of the European Central Bank’ or the deletion
of the expression ‘on a proposal from the Commission’
(paragraph) 1 . . .
since the ‘procedural provisions of
apply’
that
and the only procedural provisions of
paragraph are a proposal from the Commission and the
consultation of the ECB.

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F. Other provisions that affect the institutional status of

the ECB

requires an exit agreement

‘setting out
the withdrawal’ and organises

18. Article I-59 of the draft Constitution contains a new set of
rules for voluntary withdrawal from the Union, and in
the
particular,
arrangements
the
Union's allocation of competences and procedures. To
the extent that such arrangements enter into the fields of
competence of the ECB, the ECB understands that it will
be fully associated with the Council of Ministers in the
procedure.

for

19. The ECB acknowledges the choice made by the draft
Constitution to make the ‘ordinary legislative procedure’
(currently the ‘co-decision procedure’) the basic rule for
the adoption of legislation, fully involving the Parliament
and requiring qualified majority voting in the Council. The
ECB notes that the draft Constitution moves to the legis-
lative procedure the adoption of certain legislation that
concerns
the
transfer to the ECB of specific tasks concerning policies
relating to prudential supervision of credit
institutions
(Article III-77(6)) and the simplified amendment of the
Statute (Article III-79(5)), whereas in other areas such as
the appointment of the members of the Executive Board it
retains the ‘common accord’.

the EMU institutional

such as

set-up,

in line with

20. Articles III-88 and III-89 of the draft Constitution refer to
the Eurogroup, for which a new Protocol has been created
and will be annexed to the Constitution. The ECB
welcomes the fact that the Constitution incorporates the
Eurogroup,
the
Luxembourg European Council of 12-13 December
1997. In view of the draft Constitution's recognition of
the Eurogroup,
it
understands the wording of Article 1 of the Eurogroup
Protocol as being without prejudice to the tasks and
responsibilities of
the ESCB, as described in the draft
Constitution.

the ECB would like to state that

conclusions

the

of

G. Exchange-rate convergence criterion

fluctuation margins

21. Article III-92(1)(c) of the draft Constitution refers to the
exchange-rate criterion as follows: ‘the observance of the
normal
the
exchange-rate mechanism for at least two years, without
devaluing against the euro’. This text reiterates the wording
of Article 121 of the EC Treaty but deletes the reference to
the European Monetary System (EMS) which no longer
the
exists. However,
expression ‘observance of the normal fluctuation margins

this deletion may imply that

provided

for

by

standard ± 15 % fluctuation band of

provided for by the exchange-rate mechanism’ could
henceforth only reasonably be understood as referring to
the
the new
exchange-rate mechanism (ERM II). This interpretation
would not be in line with the way in which the
exchange-rate criterion has been applied in the past,
that when
where due account was taken of
the
Article 121 was drafted (originally Article 109j)
normal
exchange-rate
mechanism (ERM) were ± 2,25 %.

fluctuation margins

the fact

the

of

the ERM II,

For reasons of legal clarity, and equal treatment among
past, current and future members of
the
ECB would like to suggest the following amendment to
fluc-
‘the observance of
Article III-92(1)(c):
tuation margins provided for by participation in the
exchange-rate mechanism for at least two years without
severe tensions, in particular without devaluing against the
euro.’

the normal

A reference to the need to avoid ‘severe tensions’ is already
included in the Protocol on the convergence criteria. It has
served as a basis for applying — in the ECB convergence
reports and Commission assessments — the exchange-rate
criterion in accordance with its intended scope.

This opinion is drafted under the premise that the Protocol
on the convergence criteria referred to in Article 121 of
the EC Treaty will be annexed to the Constitution and
without any changes to the substance.

H. Editorial suggestions

22. In paragraph 3 of Article III-91 the ECB would propose
that the text be improved by replacing ‘Under Chapter IX’
with ‘Under the conditions laid down in Chapter IX’.

23. In the second sentence of Article III-278(d) of the draft
Constitution the word ‘Council’ should be replaced by
‘Governing Council’,
in order to avoid confusion with
the General Council of the ECB.

This opinion will be published in the Official
European Union and on the website of the ECB.

Journal of

the

Done at Frankfurt am Main, 19 September 2003.

The President of the ECB

Willem F. DUISENBERG

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ANNEX

ECB drafting suggestions

Article I-3: ‘The Union shall work for the sustainable development of Europe based on balanced and non-inflationary
economic growth . . .’

Part I, Title IV, heading: ‘The Union's Institutions’

‘The Institutional Framework of the Union’

Part I, Title IV, Chapter I, heading: ‘The Institutional Framework’

‘The Union's Institutions’,

Article I-29, heading: ‘The European Central Bank, the European System of Central Banks and the Eurosystem’

Article I-29(1): ‘The European Central Bank, together with the national central banks, shall constitute the European
System of Central Banks. The European Central Bank, together with the national central banks of the Member States
which have adopted the Union currency, the euro, shall constitute the Eurosystem. The Eurosystem shall conduct the
monetary policy of the Union.’

Article I-29(3), first sentence: ‘The European Central Bank is an Institution which has legal personality and which shall
be independent for its finances’.

Article I-29(3), third sentence: ‘In the exercise of its When exercising their powers and for its finances carrying out
their tasks and duties, it the European Central Bank, the national central banks, and any member of their decision-
making bodies shall be completely independent’.

Article III-90(1): ‘In order to secure the euro's place in the international monetary system, the Council of Ministers, on
a proposal from the Commission and after consulting the European Central Bank, shall adopt a European decision
establishing common positions on matters of particular interest for the economic and monetary union within the
competent international monetary and financial institutions, and conferences and fora’.

Article III-90(3): ‘The Council of Ministers, on a proposal from the Commission and after consultation of the European
Central Bank, may adopt appropriate measures to ensure unified representation within the international monetary and
financial institutions, and conferences and fora. The procedural provisions of paragraphs 1 and 2 shall apply.’

Article III-90, new (fourth) paragraph: ‘The measures adopted on the basis of this Article shall be in compliance with
the allocation of powers laid down in Articles III-71 and III-77.’

Article III-91(3): ‘Under the conditions laid down in Chapter IX . . .’.

Article III-92(1)(c):
fluctuation margins provided for by participation in the
exchange-rate mechanism for at least two years without severe tensions, in particular without devaluing against the
euro.’

‘the observance of

the normal

Article III-278(d): ‘the fulfilment by national central banks of obligations under the Constitution and the Statute of the
European System of Central Banks and the European Central Bank. In this connection, the powers of the Governing
Council of the European Central Bank . . .’.