Recommendation for a Council Decision on the position to be taken by the European Community regarding the renegotiation of the Monetary Agreement with the Vatican City State
Date: 2009-10-16
Institutions: European Commission
Subjects: Economic and Monetary Union, Holy See, Italy, international negotiations, monetary policy

EN 

EN 

   EN 

 
 
COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 16.10.2009 
COM(2009) 570 final 

2009/0158 (CNB) 

Recommendation for a 

COUNCIL DECISION 

on the position to be taken by the European Community regarding the renegotiation of 
the Monetary Agreement with the Vatican City State 

EN 

   EN 

 
 
 
  
EXPLANATORY MEMORANDUM 

The Monetary Agreements were concluded between the European Community and Monaco, 
San Marino and Vatican in order to give legal continuity to the arrangements which existed 
between  these  countries  on  the  one  hand  and  France  and  Italy  on  the  other  before  the 
introduction of the euro.  

Ten years after the euro replaced the legacy currencies of Italy and France used by Monaco, 
San Marino and Vatican, the Council invited the Commission to review the functioning of the 
Monetary  Agreements1.  The  results  of  the  assessment  were  adopted  in  the  'Commission 
Communication  on  the  functioning  of  the  Monetary  Agreements  with  Monaco,  San  Marino 
and  Vatican'2.  The  Commission  concluded  that  the  Monetary  Agreements  in  their  present 
form need to be amended with a view to ensuring a more consistent approach in the relations 
between the Community and the countries having signed the Agreements. The present draft 
Recommendation for a Council Decision defines the position to be taken by the Community 
in the renegotiation of the Agreement with the Vatican City State. 

The Commission proposes to renegotiate and amend the following provisions:  

•  Transposition of relevant EC legislation 

The  obligations  of  Monaco,  San  Marino  and  Vatican  stemming  from  their  respective 
Monetary Agreements with the Community are very unequal. The Monetary Agreement with 
the  Principality  of  Monaco  comprises  the  biggest  number  of  obligations.  Contrary  to  the 
Agreement  with  Monaco,  the  Agreements  with  Vatican  and  San  Marino  do  not  entail  any 
specific  obligation  to  transpose  EU  legislation  in  the  domain  of  protection  of  euro  cash 
against counterfeiting and the ways of cooperation with the Community in this area. In order 
to  create  a  level  playing  field  and  ensure  appropriate  protection  of  euro  banknotes  and 
coins  against  counterfeiting  Vatican,  together  with  San  Marino,  shall  apply  the  relevant 
Community legislation.  

Since  there  is  no  proper  banking  sector  in  Vatican,  there  is  no  need  to  transpose  the 
Community banking and financial legislation. 

•  Follow-up mechanisms 

In contrast with the procedure envisaged for the Agreement with Monaco, no provision was 
made for a follow-up procedure in the Agreements signed with Vatican and San Marino. In 
the absence of regular formal follow-up, Vatican and San Marino do not regularly report on 
the  implementation  of  the  Agreements  and  they  are  not  properly  informed  of  legislative 
developments in the fields covered by the Agreements. The Commission therefore proposes 
creating  two  new  joint  committees  -  similar  to  the  one  existing  with  the  Principality  of 
Monaco - with the Vatican City State and the Republic of San Marino. 

The Joint Committee with  the Vatican  City  State would be composed of representatives of 
the Vatican City State, Italy, the European Commission and the European Central Bank. The 

1 

2 

Council  Conclusions  on  'Common  guidelines  for  the  national  sides  and  the  issuance  of  euro  coins 
intended for circulation', 2922nd ECOFIN Council meeting of 10 February 2009. 
COM (2009)359 of 14 July 2009 

EN 

2 

   EN 

 
                                                 
Committee  would  be  in  charge  of  facilitating  the  implementation  of  the  Agreement  and 
discussing  possible  amendments  to  the  list  of  the  Community  legislation  to  be  applied  by 
Vatican.  It  would  also  have  a  decision  making  power  with  regard  to  a  limited  number  of 
issues  conferred  to  it  by  the  Monetary  Agreement  (e.g.  approving  the  change  of  a  Mint 
producing Vatican euro coins). 

•  Ceiling for the issuance of euro coins 

For historical reasons, the ceilings for maximum yearly issuance of Monaco, San Marino and 
Vatican were fixed in two different ways (Monaco is currently authorised to issue a maximum 
of 1/500th of the quantity of coins minted in France while Vatican and San Marino have fixed 
quotas) leading to very different results. 

With  a  view  to  ensuring  fair  treatment  to  all  countries  with  the  Monetary  Agreements,  the 
Commission  proposes  to  introduce  a  new  uniform  method  for  calculating  the  ceilings  of 
euro  coins  issuance  (i.e.  to  be  also  used  in  all  future  Agreements).  The  Commission  also 
proposes  to  increase  the  ceilings  of  issuance  of  the  countries  having  signed  the  Monetary 
Agreements  with  a  view  to  allowing  some  circulation  of  their  coins.  Coins  minted  in  low 
quantities are very demanded by coin collectors. As a consequence, the coins are not serving 
their original purpose of a payment instrument but are solely kept as collectors' items. 

The new ceilings would be composed of a fixed and a variable part: 

(1) 

(2) 

The  fixed  part  should  aim  at  covering  the  demand  of  coin  collectors.  According  to 
common estimates, a total value of around €2 100 000 should be sufficient to cover the 
demand of the collectors' market.3  

The variable part would be based, in the case of Vatican, on the average per capita 
issuance of Italy. The average number of coins per capita issued in Italy in (n-1) would 
be multiplied by the number of inhabitants of the Vatican City State.  

Using the new method, the ceiling of issuance of the Vatican City State would approximately 
double if compared with the current quota. 

•  Rules for minting euro coins 

The current Monetary Agreements reserve the right to produce the euro coins of Vatican and 
San Marino to the national Mint of Italy. This rule was introduced for historical reasons, at a 
time  when  euro  cash  was  not  yet  in  circulation  and  nearly  all  the  euro-area  countries  were 
minting euro coins only for their own needs. The situation has now evolved, with a number of 
euro-area  countries  today  having  their  coins  minted  in  another  euro-area  country.  The 
Commission therefore proposes to open the possibility for Vatican and San Marino to order 
their euro coins in another EU Mint experienced in producing euro coins. The change of 
the Mint would however have to be approved by the Joint Committee. 

•  Election of jurisdiction 

3 

San  Marino  has  for  instance  concentrated  on  striking  selected  euro  denomination  coins  with  some 
success: these coins are now used at face value for transactions.  

EN 

3 

   EN 

 
                                                 
The present Monetary Agreements have not given the Community any leverage in the event 
that the countries having signed the Monetary Agreements do not fulfil their obligations (e.g. 
do not transpose the relevant Community legislation in due time), apart from the ultimate – 
and  therefore  unlikely  -  possibility  to  withdraw  unilaterally  from  the  Agreement.  The 
Commission  therefore  proposes  to  elect  the  European  Court  of  Justice  as  the  jurisdiction 
responsible  for  settling  disputes  which  may  arise  from  the  application  of  the  Monetary 
Agreements. 

EN 

4 

   EN 

 
2009/0158 (CNB) 

Recommendation for a 

COUNCIL DECISION 

on the position to be taken by the European Community regarding the renegotiation of 
the Monetary Agreement with the Vatican City State 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular Article 
111.3 thereof, 

Having regard to the recommendation from the Commission4, 

Having regard to the opinion of the European Central Bank5, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

The Community has the competence for monetary and exchange rate matters as of the 
date of the introduction of the euro; 

The  Council  is  to  determine  the  arrangements  for  the  negotiation  and  conclusion  of 
agreements concerning monetary or foreign exchange regime matter; 

The Italian Republic, on behalf of the Community, concluded on 29 December 2000 a 
Monetary Agreement with the Vatican City State ; 

The Council concluded on 10 February 2009 that the Commission should review the 
functioning of the existing agreements and consider possible increases in the ceilings 
for coin issuance; 

The  Commission  concluded  in  the  'Communication  on  the  functioning  of  the 
Monetary  Agreements  with  Monaco,  San  Marino  and  Vatican'6  that  the  Monetary 
Agreement with the Vatican City State in its present form needs to be amended with a 
view to ensuring a more consistent approach in the relations between the Community 
and the Countries having signed a monetary agreement; 

The  Monetary  Agreement  with  Vatican  should  therefore  be  renegotiated  as  soon  as 
possible  so  that  the  new  regime  enters  into  force  on  1st  January  2010,  together  with 
the new rules on the modalities of introduction of euro coins set by the Commission 
Recommendation  of  19  December  2008  on  common  guidelines  for  the  national  side 

4 
5 
6 

OJ C , , p. . 
OJ C , , p. . 
COM(2009)359 

EN 

5 

   EN 

 
                                                 
and the issuance of euro coins intended for circulation, endorsed by the Council in its 
conclusions of 10 February 2009. 

HAS ADOPTED THIS DECISION:  

Article 1 

The  Italian  Republic  shall  notify  the  Vatican  City  State  of  the  need  to  amend  the  existing 
Monetary  Agreement  between  the  Italian  Republic,  on  behalf  of  the  European  Community, 
and the Vatican City State at the earliest possible date and offer renegotiation on the relevant 
provisions of the Agreement.  

The Community shall seek the following changes in the renegotiation of the Agreement with 
the Vatican City State: 

Article 2 

(a) 

(b) 

(c) 

(d) 

(e) 

The  Agreement  shall  be  concluded  between  the  Community  and  the  Vatican 
City  State.  The  text  of  the  agreement  shall  be  a  codified  text  of  the  current 
agreement with the amendments.  

The  Vatican  City  State  shall  undertake  to  adopt  all  appropriate  measures, 
through direct transpositions or possibly equivalent actions, for the application 
of all relevant Community legislation on the prevention of money laundering, 
on  the  prevention  of  fraud  and  counterfeiting  of  cash  and  non-cash  means  of 
payment.  

The method for determining the ceiling of issuance of Vatican euro coins shall 
be  revised.  The  new  ceiling  shall  be  calculated  using  a  method  which  will 
combine  a  fixed  part  aimed  at  avoiding  excessive  numismatic  speculation  on 
Vatican  coins  by  satisfying  the  demand  of  the  collector  coin  market  and  a 
variable part, calculated as the average per capita coin issuance of Italy in the 
year n-1 multiplied by the number of inhabitants of Vatican. Without prejudice 
to  the  issuance  of  collector  coins,  the  Agreement  shall  set  the  minimum 
proportion of Vatican euro coins to be introduced at face value at 51%.  

A Joint Committee shall be established in order to monitor the progress in the 
implementation  of  the  Agreement.  It  shall  be  composed  of  representatives  of 
the Vatican City State, the Republic of Italy, the Commission and the ECB. It 
shall  have  the  possibility  to  revise  each  year  the  fixed  part  with  a  view  to 
taking into account inflation and the evolution of the collector market. It shall 
adopt decisions unanimously. The Joint Committee shall adopt its own rules of 
procedure. 

The  euro  coins  of  the  Vatican  City  State  shall  be  minted  by  the  Instituto 
Poligrafico e Zecca dello Stato. The Vatican City State shall however have the 
possibility to take another contractor among the EU Mints striking euro coins, 
with the agreement of the Joint Committee. The volume of coins issued by the 
Vatican  City  State  shall  be  added  to  the  volume  of  coins  issued  by  the  home 

EN 

6 

   EN 

 
country of the producing mint for the purpose of the ECB approval of the total 
volume of the issuance.  

(f) 

The Court of Justice of the European Communities shall be elected as the body 
in  charge  of  settling  disputes  which  may  arise  from  the  application  of  the 
Agreement. 

If the Community or the Vatican consider that the other Party has not fulfilled an obligation 
under  the  Monetary  Agreement,  it  may  bring  the  matter  before  the  Court  of  Justice.  The 
judgment of the Court shall be binding on the Parties, which will take the necessary measures 
to comply with the judgment within a period to be decided by the Court in its judgment. In 
case  the  Community  or  the  Vatican  fail  to  take  the  necessary  measures  to  comply  with  the 
judgment within the period, the other Party can terminate immediately the Agreement. 

Article 3 

The negotiations with the Vatican City State shall be conducted by the Italian Republic and 
the  Commission  on  behalf  of  the  Community.  The  European  Central  Bank  shall  be  fully 
associated  with  the  negotiations  in  its  field  of  competence.  The  Italian  Republic  and  the 
Commission shall submit the draft agreement to the Economic and Financial Committee for 
opinion. 

The Council shall conclude the agreement. 

This Decision is addressed to the Italian Republic and the Commission. 

Article 4 

Done at Brussels,  

For the Council 
The President 

EN 

7 

   EN