2006/495/EC: Council Decision of  11 July 2006  in accordance with Article 122(2) of the Treaty on the adoption by Slovenia of the single currency on  1 January 2007
Date: 2006-07-11
Institutions: Council of the European Union
Subjects: Economic and Monetary Union, Slovenia, budget deficit, euro, inflation, public debt

15.7.2006

EN

Official Journal of the European Union

L 195/25

COUNCIL DECISION

of 11 July 2006

in accordance with Article 122(2) of the Treaty on the adoption by Slovenia of the single currency
on 1 January 2007

(2006/495/EC)

THE COUNCIL OF THE EUROPEAN UNION,

(3)

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

Having regard to the proposal from the Commission,

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

Having regard to the report from the European Central Bank (2),

Having regard to the Opinion of the European Parliament (3),

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

Whereas:

(1)

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,
the Neth-
erlands, Austria, Portugal
and Finland fulfilled the
necessary conditions for adopting the single currency
on 1 January 1999 (4).

Italy, Luxembourg,

Ireland,

(2)

The Council decided on 19 June 2000 that Greece
fulfilled the necessary conditions for adopting the single
currency on 1 January 2001 (5).

(1) Report adopted on 16 May 2006.
(2) Report adopted on 15 May 2006.
(3) Opinion delivered on 15 June 2006 (not yet published in the

Official Journal).

(4) Council Decision 98/317/EC of 3 May 1998 in accordance with
Article 121(4) (*) of the Treaty (OJ L 139, 11.5.1998, p. 30).
(*) NOTE: The title of Decision 98/317/EC has been adjusted to take
account of the renumbering of the Articles of the Treaty estab-
lishing the European Community, in accordance with Article 12
of the Treaty of Amsterdam; the original reference was to Article
109j(4) of the Treaty.

(5) Council Decision 2000/427/EC 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 (OJ L 167, 7.7.2000, p. 19).

the Protocol on
In accordance with paragraph 1 of
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
and the Decision taken by the Heads of State or
Government
1992,
Denmark has notified the Council that it will not parti-
cipate in the third stage of EMU. Denmark has not
requested that
the procedure referred to in Article
122(2) of the Treaty be initiated.

in December

Edinburgh

in

By virtue of Decision 98/317/EC Sweden has a dero-
the Treaty.
gation as defined in Article 122 of
In
the 2003 Act of
accordance with Article 4 of
Accession (6),
the Czech Republic, Estonia, Cyprus,
Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and
Slovakia have a derogation as defined in Article 122 of
the Treaty.

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 of 16 June 1997 on the establishment of an
exchange-rate mechanism in
of
economic and monetary union (7). The procedures for
an
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 (8).

exchange-rate mechanism in

three

stage

stage

third

the

the derogation of

Article 122(2) of the Treaty lays down the procedures for
abrogation 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. On 2 March 2006,
Slovenia submitted a formal request for a convergence
assessment.

(4)

(5)

(6)

(6) OJ L 236, 23.9.2003, p. 33.
(7) OJ C 236, 2.8.1997, p. 5.
(8) OJ C 345, 13.11.1998, p. 6. Agreement as amended by the
Agreement of 14 September 2000 (OJ C 362, 16.12.2000, p. 11).

(7)

(8)

L 195/26

EN

Official Journal of the European Union

15.7.2006

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
the European System of Central Banks and of
European Central Bank, hereinafter referred to as “the
Statute of ESCB”. The reports of the Commission and
the ECB provide a detailed assessment of the compat-
ibility of the legislation of Slovenia with Articles 108
and 109 of the Treaty and the Statute of the ESCB.

the European Monetary System without severe tensions
for at least the last two years before the examination. 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 April 2006.

stability

inflation will be measured by

According to Article 1 of
the Protocol on the
convergence criteria referred to in Article 121 of the
Treaty, 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
the
price
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 arithmetic 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
2006, the three best-performing Member States in terms
of price stability were Sweden, Finland and Poland, with
inflation rates of, respectively 0,9 percent, 1,0 percent
and 1,5 percent. 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 2006 was 2,6 percent.

(9)

the Protocol on the
According to Article 2 of
convergence criteria,
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.

(10) According to Article 3 of

exchange-rate mechanism of

the Protocol on the
the criterion on participation in
convergence criteria,
European
the
Monetary System referred to in the third indent of
the Treaty means that a Member
Article 121(1) of
State has
fluctuation margins
provided for by the exchange-rate mechanism (ERM) of

respected the normal

the

(1) Council Regulation (EC) No 2494/95 of 23 October 1995
concerning harmonised indices of consumer prices (OJ L 257,
27.10.1995, p. 1). Regulation as amended by Regulation (EC) No
1882/2003 of the European Parliament and the Council (OJ L 284,
31.10.2003, p. 1).

(11) According to Article 4 of

the Protocol on the
convergence criteria, 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 examination, 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 convergence 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 2006 was 5,9 percent.

(12)

In accordance with Article 5 of the Protocol on the
the statistical data used in the
convergence criteria,
current assessment of the fulfilment of the convergence
criteria shall be provided by the Commission. The
Commission has provided the necessary data for the
preparation of
this Decision. Budgetary data were
provided by it on the basis of reports by the Member
States submitted by 1 April 2006 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).

(13) On the basis of reports presented by the Commission
and the ECB on the progress made in the fulfilment by
Slovenia of its obligations regarding the achievement of
economic
the Commission
concludes that:

and monetary

union,

In Slovenia, national 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.

(2) OJ L 332, 31.12.1993, p. 7. Regulation as last amended by Regu-

lation (EC) No 2103/2005 (OJ L 337, 22.12.2005, p. 1).

15.7.2006

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Official Journal of the European Union

L 195/27

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

— the average inflation rate in Slovenia in the year
ending March 2006 stood at 2,3 percent, which is
below the reference value and is likely to continue to
do so in the months ahead,

— Slovenia is not the subject of a Council Decision on
the existence of an excessive government deficit,

— Slovenia has been a member of ERM II since 28 June
2004; in the two-year period ending April 2006 the
Slovenian tolar (SIT) has not been subject to severe
tensions and Slovenia has not devalued, on its own
initiative,
the
euro,

the SIT bilateral central rate against

(14) According to Article 122(2) of the Treaty the Council,
acting by qualified majority on a proposal by the
is to decide which Member States with a
Commission,
derogation fulfil
the
adoption of the single currency and abrogate the dero-
gations of the Member States concerned,

the necessary

conditions

for

HAS ADOPTED THIS DECISION:

Article 1

Slovenia fulfils the necessary conditions for the adoption of the
single currency. The derogation in favour of Slovenia referred to
in Article 4 of the 2003 Act of Accession is abrogated with
effect from 1 January 2007.

Article 2

This Decision is addressed to the Member States.

— in the year ending March 2006 the long-term interest
rate in Slovenia was, on average, 3,8 percent which is
below the reference value.

Article 3

This Decision shall be published in the Official Journal of the
European Union.

Slovenia has achieved a high degree of
convergence by reference to these criteria.

sustainable

Done at Brussels, 11 July 2006.

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

For the Council
The President

E. HEINÄLUOMA