Opinion of the European Central Bank of 1 April 2004 at the request of the Council of the European Union on a recommendation by the Commission of the European Communities for a Council decision on the position to be taken by the Community regarding an agreement concerning the monetary relations with the Principality of Andorra (SEC(2004) 204 final) (CON/2004/12)
Date: 2004-04-01
Institutions: European Central Bank
Subjects: Andorra, European Central Bank, euro, monetary agreement, monetary relations, monetary union

C 88/18

EN

Official Journal of the European Union

8.4.2004

EUROPEAN CENTRAL BANK

OPINION OF THE EUROPEAN CENTRAL BANK

of 1 April 2004

at the request of the Council of the European Union on a recommendation by the Commission of
the European Communities for a Council decision on the position to be taken by the Community
regarding an agreement concerning the monetary relations with the Principality of Andorra
(SEC(2004) 204 final)

(CON/2004/12)

(2004/C 88/09)

from the Council of

1. On 27 February 2004 the European Central Bank (ECB)
received a request
the European
Union for an opinion on a recommendation by the
Commission of the European Communities for a Council
decision on the position to be taken by the Community
regarding an agreement concerning the monetary relations
with the Principality of Andorra (SEC(2004) 204 final)
(hereinafter the ‘recommendation’).

2. The ECB's competence to deliver an opinion on the
the
recommendation is based on Article 111(3) of
Treaty
In
European Community.
accordance with the first sentence of Article 17.5 of the
Rules of Procedure of the European Central Bank, the
Governing Council has adopted this opinion.

establishing

the

3. The recommendation proposes a draft Council decision
(hereinafter the ‘draft decision’) defining the Community's
position in the negotiation of a monetary agreement (here-
inafter the ‘Agreement’) between the Community and the
Principality of Andorra (hereinafter ‘Andorra’) concerning
the following:

(a) the use of the euro as Andorra's official currency; and

(b) a prohibition on Andorra issuing any banknotes, coins
the Community's

or monetary surrogates without
agreement to the conditions of such issuance; and

supervision of the institutions concerned, and also of
all relevant Community legislation on the prevention
of money laundering, on the prevention of fraud and
counterfeiting of non-cash means of payment and on
statistical reporting requirements; and

(e) examining the possibility of granting financial

insti-
tutions located in Andorra access to payment and
settlement systems within the euro area subject
to
appropriate conditions determined in agreement with
the ECB and laid down in the Agreement.

is not

intended, however,

It
provide
located
monetary policy operations.

for
in Andorra having

the possibility of

that

the Agreement will
institutions
financial
to Eurosystem

access

4. The ECB acknowledges

to

that

such an agreement,

it would be
open negotiations

in the
on a
interest
Community's
In determining the
monetary agreement with Andorra.
the historical bonds
scope of
between Andorra, Spain and France deserve
special
attention. The ECB considers that an agreement between
the Community and Andorra will clarify the legal status of
the euro in Andorra. Prior to the introduction of the
single currency, Andorra used the French franc and the
Spanish peseta. Andorra on 11 October 2000 unilaterally
adopted the Law on measures guaranteeing the transition
to the euro in the Principality of Andorra (1) to which
certain Council Regulations on the introduction of the
euro (2) were annexed. The ECB considers that a third
country
euro following
agreement with the Community.

should only introduce

the

(c) the

for Andorra
regarding euro banknotes

to conform with
requirement
Community rules
and
coins, including cooperating with the Community on
measures to protect euro banknotes and coins against
fraud
rules
implementing Community legal acts
in the latter
domain; and

counterfeiting

adopting

and

and

(d) the adoption by Andorra of all appropriate measures
ensuring the application in Andorra of all relevant
Community banking and financial
in
legislation relating to the activities and
particular

legislation,

(1) Llei reguladora de les mesures per garantir la transició cap a l'euro

al Principat d'Andorra, Butlletí Oficial, 8 November 2000.

(2) Council Regulation (EC) No 1103/97 of 17 June 1997 on certain
provisions relating to the introduction of the euro (OJ L 162,
19.6.1997, p. 1. Regulation as amended by Regulation (EC) No
2595/2000 (OJ L 300, 29.11.2000, p. 1)), Council Regulation
(EC) No 974/98 of 3 May 1998 on the introduction of the euro
(OJ L 139, 11.5.1998, p. 1. Regulation as amended by Regulation
(EC) No 2596/2000 (OJ L 300, 29.11.2000, p. 2)) and Council
Regulation (EC) No 2866/98 of 31 December 1998 on the
conversion rates between the euro and the currencies of
the
Member States adopting the euro (OJ L 359, 31.12.1998, p. 1.
Regulation as amended by Regulation (EC) No 1478/2000 (OJ L
167, 7.7.2000, p. 1)).

8.4.2004

EN

Official Journal of the European Union

C 88/19

5. The ECB notes that Article 3 of the draft decision provides
the basis for Andorra to be authorised to use the euro as
its official currency and to grant legal tender status to euro
banknotes and coins. A logical consequence of this is that
Andorra should undertake to conform with Community
rules on euro banknotes and coins, as provided for in
Article 5(1) of the draft decision.

to cooperate

an obligation to adopt

6. The ECB concurs with the proposal to impose an obli-
closely with the
gation on Andorra
Community in the fight against counterfeiting and fraud
involving euro banknotes and coins as laid down in
Article 5(2) of the draft decision. As to placing Andorra
under
implementing
Community legal acts in this domain, this should not be
limited to Community legal acts adopted under the first
pillar but also cover legal acts adopted under the third
pillar, such as Council Framework Decision of 29 May
2000 on increasing protection by criminal penalties and
other sanctions against counterfeiting in connection with
the introduction of the euro (1).

rules

located

7. The ECB welcomes Article 6(1) of the draft decision, the
objective of which is also to apply the legal framework
institutions
applying
the
financial
to
Community to financial
institutions located in Andorra,
thereby both protecting the single currency and ensuring
a level playing field. In view of the importance of legis-
lation regarding the prevention of
in
payment and securities clearing and settlement systems,
the ECB recommends explicitly mentioning this area in
the list of relevant Community legislation to be applied
by Andorra.

systemic risks

in

8. The ECB equally welcomes the fact that under Article 6(1)
of the draft decision, Andorra will undertake to adopt all
appropriate measures to apply all relevant Community
legislation on statistical
reporting requirements. The
ECB's statistical framework is sufficiently flexible to be
information
applied by third countries, and statistical

provide
provided
information for the conduct of the ESCB's tasks.

countries may

these

by

useful

9. Article 6(2) of

that

financial

the draft decision provides

to payment and settlement

the
institutions located in
Agreement may grant
Andorra access
systems
within the euro area subject to the ECB's consent. In the
ECB's opinion, this would only be possible on condition
that the Andorran financial system develops significantly.
The appropriate conditions for granting such access will
need to be laid down in the Agreement itself.

10. The ECB welcomes the fact that negotiations on behalf of
the Community will be conducted by the Commission
with full association of Spain and France and association
of the ECB in all aspects of the negotiations falling within
its fields of competence.

11. Finally, the ECB would like to emphasise that the opening
of negotiations with Andorra on a monetary agreement
should in no way be seen as setting a precedent
for
opening negotiations on monetary agreements between
the Community and other third countries in the future.
In this context the ECB notes that the absence to date of
formal monetary arrangements between Andorra and any
Member State reflects the fact that, unlike the Republic of
San Marino,
the Vatican City and the Principality of
Monaco, Andorra did not become a sovereign State until
1993. This could also explain why Andorra was not
included in Declaration No 6 on monetary relations
with the Republic of San Marino, the Vatican City and
the Principality of Monaco annexed to the Treaty on
European Union (2).

Done at Frankfurt am Main, 1 April 2004.

The President of the ECB

Jean-Claude TRICHET

(1) OJ L 140, 14.6.2000, p. 1.

(2) OJ C 191, 29.7.1992, p. 99.