Proposal for a Council Regulation amending Regulation (EC) No 974/98 as regards the introduction of the euro in Cyprus
Date: 2007-05-16
Institutions: European Commission
Subjects: Cyprus, Economic and Monetary Union, European Monetary System, euro

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 16.5.2007 
COM(2007) 257 final 

2007/0091 (CNB) 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 974/98 as regards the introduction of the euro in Cyprus 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

On  16  May  2007,  the  Commission  adopted  a  proposal  for  a  Council  Decision  in 
accordance  with  Article  122(2)  EC,  indicating  that  Cyprus  fulfils  the  necessary 
conditions for the adoption of the single currency and that the derogation of Cyprus 
is abrogated with effect from 1 January 2008. 

In case of  a  positive decision, the Council will subsequently have to take  the other 
measures necessary for the introduction of the euro in Cyprus. 

Council  Regulation  (EC)  No  974/98  on  the  introduction  of  the  euro1  governs  the 
initial  introduction  of  the  euro  in  the  first  wave  euro-area  Member  States  and 
Greece2. This Regulation was amended by Regulation (EC) No 2169/2005 in order to 
prepare  for  future  enlargements  of  the  euro  area  and  by  Regulation  (EC)  No 
1647/2006  in  order  to  cover  Slovenia  which  adopted  the  euro  on  1  January  2007. 
Yet, in order for Cyprus to be covered by Regulation (EC) No 974/98, a reference to 
this  Member  State  needs  to  be  added  to  this  Regulation.  The  present  proposal 
contains the necessary amendments to this Regulation. 

Cyprus'  changeover  plan  specifies  that  the  so-called  "big  bang"  scenario  should  be 
applicable,  i.e.  that  the  adoption  of  the  euro  as  the  currency  of  Cyprus  and  the 
introduction of euro banknotes and coins in this Member State should coincide. 

2. 

LEGAL ASPECTS 

2.1. 

Legal basis 

Legal  basis  for  the  present  proposal  is  Article  123(5)  EC,  which  allows  for  the 
adoption  of  the  other  measures  necessary  for  the  introduction  of  the  euro  in  the 
Member State the derogation of which has been abrogated under Article 122(2) EC. 

The Council shall act with the unanimity of the Member States without a derogation 
and  the  Member  State  concerned  on  a  proposal  from  the  Commission  and  after 
consulting the ECB. 

2.2. 

Subsidiarity and proportionality 

The  proposal  falls  under  the  exclusive  competence  of  the  Community.  The 
subsidiarity principle therefore does not apply. 

The present initiative does not go beyond what is necessary to achieve its objective 
and, therefore, complies with the proportionality principle. 

1 

2 

OJ L 139, 11.5.1998, p. 1. Regulation as last amended by Council Regulation (EC) No 1647/2006 of 
7 November 2006 (OJ L 309, 9.11.2006, p. 2). 
Cf. Council Regulation (EC) No 2596/2000 of 27 November 2000 amending Council Regulation (EC) 
No 974/98 on the introduction of the euro (OJ L 300, 29.11.2000, p. 2). 

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2.3. 

Choice of the legal instrument 

The Regulation instrument is the only appropriate legal instrument to amend Council 
Regulation (EC) No 974/98 on the introduction of the euro. 

3. 

BUDGETARY IMPLICATIONS 

The proposal has no implications for the Community budget. 

4. 

COMMENTARY ON INDIVIDUAL ARTICLES 

4.1. 

Article 1 

In  accordance  with  Article  1  lit.  (a)  and  with  Article  1a  of  Regulation  (EC)  No 
974/98,  the  table  in  the  Annex  to  that  Regulation  lists  the  participating  Member 
States  and  defines  the  euro  adoption  date,  the  cash  changeover  date,  and  the 
"phasing-out" period, if applicable, for all these Member States. According to Article 
1  lit.  (i)  of  Regulation  (EC)  No  974/98,  a  "phasing-out"  period  can  only  apply  to 
Member States where the euro adoption date and the cash changeover date fall on the 
same  day.  This  was  not  the  case  for  the  eleven  Member  States  which  adopted  the 
euro on 1 January 1999 and for Greece which adopted the euro on 1 January 2001. 
Slovenia's euro adoption date and cash changeover date coincided (1 January 2007), 
but  the  country  has  chosen  not  to  have  a  "phasing-out"  period.  Also  Cyprus'  and 
Malta's changeover plans specify the same date for the euro adoption date and for the 
cash changeover date (1 January 2008), while both Member States have chosen not 
to have a "phasing-out" period. 

This Article adds Cyprus and the following relevant data for this Member State to the 
table in the Annex to Regulation (EC) No 974/98 in protocol order. 

Member State 

Euro adoption date 

Cash changeover date 

Member State with a 
"phasing-out" period 

"Cyprus 

1 January 2008 

1 January 2008 

No" 

4.2. 

Article 2 

This  Article  sets  the  date  of  entry  into  force  of  the  Regulation  at  1 January  2008, 
ensuring that it will be applicable in conformity with the timing of the other Council 
acts relating to the adoption of the euro by Cyprus, i.e. the date of the abrogation of 
the  derogation  and  the  date  of  the  entry  into  force  of  the  conversion  rate  of  the 
Cyprus pound. 

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2007/0091 (CNB) 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 974/98 as regards the introduction of the euro in Cyprus 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular Article 
123(5) thereof, 

Having regard to the proposal from the Commission3, 

Having regard to the opinion of the European Central Bank4, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

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8 

Council Regulation (EC) No  974/98 of 3 May 1998 on the introduction  of the euro5 
provides for the substitution of the euro for the currencies of the Member States which 
fulfilled  the  necessary  conditions  for  the  adoption  of  the  single  currency  at  the  time 
when the Community entered the third stage of economic and monetary union. 

Council  Regulation  (EC)  No  2596/20006  amended  Regulation  (EC)  No  974/98  to 
provide for the substitution of the euro for the currency of Greece. 

Council  Regulation  (EC)  No  2169/20057  amended  Regulation  (EC)  No  974/98  in 
order to prepare for subsequent introductions of the euro in Member States which have 
not yet adopted the euro as the single currency. 

Council  Regulation  (EC)  No  1647/20068  amended  Regulation  (EC)  No  974/98  to 
provide for the substitution of the euro for the currency of Slovenia.  

According to Article 4 of the 2003 Act of Accession, Cyprus is a Member State with a 
derogation as defined in Article 122 of the Treaty. 

Pursuant  to  Council  Decision  2007/…/EC  of  …  …  2007  in  accordance  with  Article 
122(2)  of  the  Treaty  on  the  adoption  by  Cyprus  of  the  single  currency  on  1 January 

OJ C 
OJ C 
OJ L 139, 11.5.1998, p. 1. Regulation as last amended by Council Regulation (EC) No 1647/2006 (OJ L 
309, 9.11.2006, p. 2). 
OJ L 300, 29.11.2000, p. 2. 
OJ L 346, 29.12.2005, p. 1. 
OJ L 309, 9.11.2006, p. 2. 

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20089, Cyprus fulfils the necessary conditions for the adoption of the single currency 
and the derogation in favour of Cyprus is to be abrogated with effect from 1 January 
2008. 

(7) 

(8) 

The introduction of the euro in Cyprus requires the extension to Cyprus of the existing 
provisions on the introduction of the euro set out in Regulation (EC) No 974/98. 

Cyprus' changeover plan specifies that euro banknotes and coins should become legal 
tender in that Member State on the day of the introduction of the euro as its currency. 
Consequently, the euro adoption date and the cash changeover date shall be 1 January 
2008. No “phasing-out” period applies. 

(9) 

Regulation (EC) No 974/98 should therefore be amended accordingly, 

HAS ADOPTED THIS REGULATION: 

The Annex to Regulation (EC) No 974/98 shall be amended in accordance with the Annex to 
this Regulation. 

Article 1 

This Regulation shall enter into force on 1 January 2008. 

Article 2 

This Regulation shall be binding in its entirety and directly applicable in the Member States in 
accordance with the Treaty establishing the European Community. 

Done at Brussels,  

For the Council 
The President 

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Annex 

In the Annex to Regulation (EC) No 974/98, the following line is inserted between the entries 
for Italy and Luxembourg.  

Member State 

Euro adoption date 

Cash changeover date 

Member  State  with  a 
"phasing-out" period 

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 

"Cyprus 

1 January 2008 

1 January 2008 

No" 

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