Proposal for a COUNCIL DECISION laying down measures in view of progressively establishing unified representation of the euro area in the International Monetary Fund
Date: 2015-10-21
Institutions: European Commission, Secretariat-General
Subjects: Euro Group (euro area), International Monetary Fund, external competence (EU), monetary cooperation, non-participating country (euro area), participating country (euro area), the EU's international role

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   EUROPEAN COMMISSION  Brussels, 21.10.2015  COM(2015) 603 final 2015/0250 (NLE)   Proposal for a COUNCIL DECISION laying down measures in view of progressively establishing unified representation of the euro area in the International Monetary Fund  
 
 
EXPLANATORY MEMORANDUM 

The  euro  area  is  a  large  open  economy  with  international  policy  responsibilities.  The 
economic and  financial weight of the euro area, and the existence  of a single monetary and 
exchange  rate  policy  have  made  euro  area  policy  decisions  and  economic  developments 
increasingly relevant for the world economy.  

The  political  relevance  of  the  euro  area  has  been  greatly  enhanced  in  recent  years.  The 
European Semester, along with adoption of the so-called six-pack and two-pack legislation1 as 
well  as  the  Treaty  on  the  Stability,  Coordination  and  Governance  in  the  Economic  and 
Monetary  Union2  have  integrated,  strengthened  and  broadened  EU-level  surveillance  of 
Member  State  policies  in  essential  areas  of  macroeconomic  and  budgetary  relevance.  The 
European Stability Mechanism was established as the permanent crisis resolution mechanism 
for  the  countries  of  the  euro  area.  The  Union  has  also  put  in  place  a  Banking  Union  with 
centralized supervision and resolution for banks in the euro area and open to all other Member 
States. 

At  the  same  time,  the  external  representation  of  the  euro  area  has  not  kept  up  with  those 
developments. The progress that has been achieved on further internal integration of the euro 
area  needs  to  be  projected  externally,  notably  through  progress  towards  united  external 
representation  in  the  International  Monetary  Fund  (IMF).  The  EU  (euro  area)  has  exclusive 
competence  or  competence  shared  with  its  Members  States  in  many  areas  covered  by  the 
Articles of Agreement of the IMF. 

The  IMF,  through  its  lending  instruments  and  surveillance,  is  an  essential  actor  in  global 
economic and financial governance. It has played a key role, together with the Commission 
and  the  European  Central  Bank  (ECB),  in  shaping  and  implementing  programmes  aimed  at 
rescuing  Member  States  hit  by  the  financial  and  sovereign  debt  crises.  In  addition,  the 
strengthened  governance  framework  for  economic  policy  coordination  and  strong 
convergence  of  financial  sector  regulation  and  supervision  in  the  context  of  the  Banking 
Union mean that, in the future, the IMF will need to go beyond a purely national perspective 
in its assessment of supervision and crisis management in the euro area.  

An effective euro area representation would allow delivering a single euro area message at the 
IMF  on  issues  such  as  on  programmes  and  reviews,  economic  and  fiscal  policy, 
macroeconomic surveillance, exchange rate policies, and financial stability. A more coherent 
representation would also be to the benefit of third countries, in particular through a stronger 
and more consistent euro area contribution to global economic and financial stability. 
In October 2014 the Commission announced in its 2015 work programme3 that it intends to 
address  the  external  representation  of  the  euro  area  in  the  framework  of  deepening  the 
Economic and Monetary Union.  

In line with the Five President's report of June 2015 on Completing Europe's Economic and 
Monetary Union4, a strengthened international voice is an integral part of the ongoing efforts 
to  improve  the  economic  governance  of  the  euro  area.  The  report  particularly  emphasizes 
shortcomings  related  to  the  euro  area  representation  in  the  IMF  where,  despite  important 

1 
http://europa.eu/rapid/press-release_MEMO-13-318_nl.htm.  
2 
Treaty  on  the  Stability,  Coordination  and  Governance  in  the  Economic  and  Monetary  Union,  1 
February  2012:  http://www.consilium.europa.eu/european-council/pdf/Treaty-on-Stability-Coordination-and-
Governance-TSCG/. 
3 

COM(2014)  910:  Annex  1 
http://ec.europa.eu/atwork/pdf/cwp_2015_new_initiatives_en.pdf. 
Five  Presidents'  Report  "Completing  Europe's  Economic  and  Monetary  Union",  22  June  2015, 
http://ec.europa.eu/priorities/economic-monetary-union/docs/5-presidents-report_en.pdf. 

to  Commission  Work  Programme  2015,  16  December  2014, 

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progress made to further coordinate European positions, the euro area does not yet speak with 
one voice.  
The  Commission’s  Blueprint  for  a  Deep  and  Genuine  Economic  and  Monetary  Union5 
already set out a number of priority actions for strengthening and consolidating the external 
economic representation of the euro area. It suggested putting the focus on the IMF because 
of  its  key  role  in  the  framework  of  international  economic  governance.  External 
representation  was  listed  among  the  priority  actions  suggested  for  the  short  term.  The 
European Parliament has also called for a unified external representation of the euro area6.  

In  2006,  the  ECOFIN  Council  agreed  that  the  move  to  a  single  euro  area  chair  in  the  IMF 
would  be  a  longer-term  goal.  In  this  context,  Member  States  considered  that  several  ways 
could  be  envisaged  in  order  to  move  to  a  possible  single  euro  area  chair  in  the  future, 
including an approach involving temporary steps. 

Against  this  background,  this  proposal  suggests  moving  to  a  unified  representation  for  the 
euro  area  in  the  IMF  with  the  President  of  the  Eurogroup  as  the  representative  for  the  euro 
area. It proposes a gradual approach for achieving this goal involving intermediate transitional 
steps for representation in the International Monetary and Financial Committee (IMFC) and 
the  IMF  Executive  Board.  Such  transitional  steps  would  involve  granting  observer  rights  to 
the euro area represented by a representative of a euro area Member State already member of 
the  Board,  in  association  with  the  Commission  and  the  European  Central  Bank  (which  has 
currently  observership  status  in  the  IMF  Executive  Board).  Furthermore,  the  coordination 
process for establishing common positions should be strengthened in order to have systematic 
common statements on all IMF policy, country and surveillance issues that are of relevance to 
the euro area.. Finally, these steps should also aim to strengthen cooperation of the euro area 
with non-euro area Member States regarding IMF issues. It should be noted that the external 
representation  of  the  euro  area  will  also  depend  on  the  future  status  of  the  euro  area  in  the 
IMF that member countries of the IMF would be willing to grant. 

 

Legal basis 

Article  138  (2)  TFEU  foresees  the  adoption  of  appropriate  measures  to  ensure  unified 
representation  within  international  financial  institutions  and  conferences.  The  objective 
underlying  this  provision  was  to  achieve  a  stronger  and  unified  representation  of  the  euro 
area,  given  that  the  effectiveness  of  the  current  informal  arrangements  for  representing  the 
euro  area  was  deemed  insufficient.  As  a  first  step,  this  provision  may  be  used  for  the 
representation  of  the  euro  area  within  the  IMF  only.  Provisions  allowing  the  euro  area  to 
better coordinate the establishment of its positions within the IMF should also be included in 
the  proposal  as  they  are  necessary  and  ancillary  to  the  objective  of  unified  representation. 
Reference is also made to the first paragraph of Article 138 TFEU which enables the Council 
to  establish common positions  on matters of particular  interests  for economic and  monetary 
union within international financial institutions and conferences.  

Article  138(3)  TFEU  provides  that,  for  the  adoption  of  this  proposal,  only  members  of  the 
Council  representing  euro  area  Member  States  take  part  in  the  vote.  The  Council  acts  after 
consulting the ECB. 

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6 

A  Blueprint  for  a  deep  and  genuine  Economic  and  Monetary  Union  -  COM(2012)  777,  30.11.2012, 
http://ec.europa.eu/archives/commission_2010-
2014/president/news/archives/2012/11/pdf/blueprint_en.pdf. 
European Parliament resolution of 25 October 2011 on Global Economic Governance (2011/2011(INI), 
http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+TA+P7-TA-2011-
0457+0+DOC+PDF+V0//EN. 

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At  the  same  time,  the  Commission  decides  to  withdraw  the  Commission  proposal  for  a 
Council  decision  on  the  Representation  and  Position  Taking  of  the  Community  at 
International Level in the context of Economic and Monetary Union COM (1998) 637 final 
which was not adopted and became obsolete since the launch of the euro and the entry into 
force of the Lisbon Treaty.7 

7 

Proposal  for  a  Council  decision  on  the  Representation  and  Position  Taking  of  the  Community  at 
International  Level  in  the  context  of  Economic  and  Monetary  Union  –  COM(1998)  637  final,  
http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:51998PC0637&from=FR. 

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2015/0250 (NLE) 

Proposal for a 

COUNCIL DECISION 

laying down measures in view of progressively establishing unified representation of the 
euro area in the International Monetary Fund 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 138 thereof,  

Having regard to the proposal of the Commission8, 

Having regard to the opinion of the European Central Bank9, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

Appropriate  measures  may  be  adopted  to  ensure  unified  representation  and  common 
positions  of  the  Union  when  exercising  its  competences  specific  to  the  euro  area 
Member States (the "euro area") within the international financial institutions. 

The euro area is a large open economy with international policy responsibilities. 

The  Union  has  exclusive  competence  as  regards  monetary  policy  for  the  euro  area 
Member  States.  Moreover,  strengthened  Union  coordination  and  surveillance 
mechanisms  apply  as  regards  economic,  fiscal,  and  financial  policies  of  euro  area 
Member States. 

As  noted  by  the  Report  "Completing  Europe's  Economic  and  Monetary  Union" 
published  on  22  June  2015  ("Five  Presidents'  Report"),  the  large  economic  and 
financial size of the Union and the existence of a single monetary and exchange rate 
policy  for  most  of  its  members,  make  the  Union  policy  decisions  and  economic 
developments increasingly relevant for the world economy. The report also called for 
consolidation of the external representation of the euro area. 

It  is,  therefore,  imperative  that  the  euro  area  plays  its  full  role  in  international 
monetary,  economic  and  financial  policy  cooperation,  in  particular  within  the 
International Monetary Fund (IMF), which is a core organisation in the international 
monetary and financial system. 

However,  IMF  members  are  single  countries.  As  a  result,  the  euro  area  is  not 
represented as a single member in the Fund and its organs. Currently, two of the euro 
area Member States can each appoint an Executive Director, while the other euro area 
Member States are spread over six multi-country constituencies. This hinders the euro 
area  from  expressing  its  position  effectively  and  in  a  unified  way  within  the IMF. It 
also undermines the effectiveness of the collaboration between the IMF and the euro 
area. 

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(7) 

The recently strengthened euro area framework for economic policy coordination and 
strong convergence of financial sector regulation and supervision in the context of the 
Banking  Union  mean  that  in  the  future  the  IMF  will  need  to  go  beyond  a  national 
perspective  in  its  assessment  of  supervision  and  crisis  management  in  the  euro  area. 
An  effective  euro  area  representation  will  also  allow  delivering  a  single  euro  area 
message  at  the  IMF  on  issues  such  as  financial  assistance  programmes  and  reviews, 
economic and fiscal policy, macroeconomic surveillance, exchange rate policies, and 
financial stability policy. 

(8)  Without  prejudice  to  the  possibility  of  full  membership  of  the  euro  area,  at  a  later 
stage,  measures  should be adopted in order to allow the euro area to speak  with one 
voice within the IMF, taking into account the current IMF membership structure. 

(9) 

The objective to be pursued should be a unified representation with a single seat for 
the euro area within all organs of the IMF, while allowing euro area Member States to 
maintain  their  current  shareholder  status  in  the  Fund.  The  Commission  should 
undertake work to achieve this objective.  

(10)  The deadline for attaining such a unified representation in the IMF should correspond 
to the timeline for the final stage of the process set out in the "Five Presidents' Report" 
for the completion of Economic and Monetary Union. 

(11)  This  unified representation should be accompanied by a stronger coordination of the 
positions  to  be  taken  within  the  IMF,  while  at  the  same  time  aiming  for  greater 
cooperation of the euro area with non-euro area Member States in the IMF. 

(12)  As long as a unified representation of the euro area within all organs of the IMF is not 
fully attained, transitional arrangements should be made in order for the euro area to 
present a more coherent position within the IMF, in particular in the Executive Board 
of the IMF, and the International Monetary and Financial Committee (IMFC).  

(13)  As  regards  the  Executive  Board,  the  current  practice  of  having  one  of  the  current 
Executive Directors of the euro area Member States also representing the interests of 
the  euro  area  should  be  formalized.  Moreover,  since  the  European  Central  Bank 
(ECB), in accordance with Decision No 12925-(03/1) of the IMF under Article X of 
its  Articles  of  Agreement,  already  sends  a  representative  as  an  observer  to  certain 
meetings  of  the  Executive  Board  in  view  of  its  tasks  in  the  European  System  of 
Central Banks (ESCB), this status of observer of the ECB should benefit the euro area 
as a whole. Such a single status of observer in the Executive Board for the euro area as 
a  whole  would  allow  covering  the  full  range  of  euro  area  matters.  This  would  also 
allow the euro area to better organize its representation as observer. 

(14)  The  President  of  the  Eurogroup,  the  Commission  and  the  ECB  should  negotiate  this 

observer status of the euro area with the IMF.  

(15)  The  Commission  and  ECB  are  already  observers  in  the  IMFC.  Current  statements 
addressed to its Spring and Annual Meetings should be replaced by a statement from 
the President of the Eurogroup for the euro area. 

(16)  All efforts should be made for a gradual rearrangement of the euro area Member States 
in  the  IMF  in  order  to  achieve  greater  consistency.  The  Council  should  agree  on 
principles for a path for the regrouping of the euro area Member States in the IMF. 

(17)  At the moment, the coordination of the position of the Member States in view of IMF 
meetings  takes  place  both  in  the  Economic  and  Financial  Committee  (EFC)  and  its 
sub-committee on IMF related issues (SCIMF), in Brussels, and in informal meetings 

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between  Member  State  representatives  at  the  IMF  in  Washington  (EURIMF). 
Dedicated  euro  area  sub-committees  in  the  EFC  should  be  set  up  in  order  to  better 
coordinate the position of the euro area as regards IMF issues. 

(18)  Euro area Member States agreed in 2007 to prepare common euro area statements on 
issues  directly  and  exclusively  related  to  euro  area  common  policy.  This  agreement 
should be strengthened and extended in order to set out the requirement for common 
statements on all IMF policy, country and surveillance issues of relevance to the euro 
area. 

(19)  When  a  Member  State  adopts  the  euro,  all  efforts  should  be  pursued  in  order  to 

achieve the necessary adaptations within the IMF. 

(20)  All issues that do not have particular relevance to the euro area but to the Union as a 
whole  should  be  closely  coordinated  with  non-euro  area  Member  States  within  the 
EFC or the Council.  

(21) 

In  order  to  increase  transparency  and  accountability  to  the  European  Parliament  and 
the  Council,  the  Commission,  in  consultation  with  the  Eurogroup  and  the  European 
Central Bank, should prepare regular reports on coordination on euro area matters in 
the IMF and other international financial institutions to the European Parliament and 
the Council, 

HAS ADOPTED THIS DECISION:  

SECTION 1 
DEFINITIONS AND PURPOSE  

Article 1 
Definitions 

For the purposes of this Decision, the following definitions apply: 

(1) 

(2) 

'euro area Member States' means the Member States whose currency is the euro; 

'euro  area'  means  the  Union  when  exercising  its  competences  specific  to  the  euro 
area Member States. 

Article 2 
Purpose 

This  Decision  lays  down  provisions  for  the  progressive  establishment  of  a  unified 
representation as well as common positions of the euro area within the International Monetary 
Fund (IMF) until the euro area will have obtained full membership of the IMF.   

SECTION 2 
UNIFIED REPRESENTATION OF THE EURO AREA IN THE IMF AND 
COORDINATED ESTABLISHMENT OF ITS POSITIONS 

Article 3 
Unified representation of the euro area in the IMF  

Euro  area  Member  States,  supported  by  the  Commission  and  the  European  Central  Bank 
(ECB), shall take all necessary actions for the establishment, by 2025 at the latest, of a unified 

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representation  of  the  euro  area  within  the  IMF,  which  shall  be  based  on  the  following 
principles: 

– 

– 

– 

– 

in the Board of Governors, presentation of the views of the euro area by the President 
of the Eurogroup;  

in the International Monetary and Financial Committee (IMFC), representation of the 
euro area by the President of the Eurogroup; 

in the IMF Executive Board, direct representation of the euro area by the Executive 
Director  of  a  euro  area  constituency,  following  the  establishment  of  one  or  several 
constituencies composed only of euro area Member States; 

election  of  the  Executive  Director,  as  referred  to  above,  upon  proposal  of  the 
President  of    the  Eurogroup  and  in  accordance  with  the  procedure  provided  for  in 
Article 2 of Protocol No 14 on the Eurogroup, annexed to the Treaties; 

Article 4 
Coordinated establishment of the positions to be taken by the euro area 

When  the  unified  representation  envisaged  at  Article  3  is  attained,  the  following  provisions 
shall apply: 

(a) 

(b) 

Without  prejudice  to  any  common  position  adopted  by  the  Council  pursuant  to 
Article 138(1) TFEU, all positions to be taken, orally or through written statements, 
within  IMF  organs  shall  be  fully  coordinated  in  advance  within  the  Council,  the 
Eurogroup, the EFC and/or the Euro Working Group (EWG), as appropriate.  

A dedicated support structure shall be established within the IMF in order to support 
all actors engaged in the unified representation of the euro area in accordance with 
Article 3 

SECTION 3 
TRANSITIONAL ARRANGEMENTS 

Article 5 
Transitional arrangements  

Until  unified  representation  based  on  the  principles  listed  under  Article  3  is  fully  attained, 
Articles 6 to 9 shall apply.   

Article 6 
Representation of the euro area in the IMF Executive Board 

1. 

2. 

The euro area Member States and the Eurogroup, the Commission, and the ECB shall 
jointly seek to secure with the IMF the status of observer for the euro area within the 
IMF Executive Board according to the modalities as set out in paragraph 2. 

The euro area shall be represented in the Executive Board by the representative of a 
euro  area  Member  State  already  member  of  the  Board.  He/She  shall  be  designated 
for two and a half years in accordance with the procedure provided for in Article 2 of 
Protocol No 14 on the Eurogroup annexed to the Treaties. The Commission and the 
ECB shall also be able to attend meetings and intervene, as appropriate. 

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 3. 

An  observer  office  shall  be  established  within  the  IMF  in  order  to  support  the 
exercise of the euro area's observer rights.  

Article 7 
Representation of the euro area in the IMFC 

The euro area Member States and the Eurogroup, the Commission, and the ECB shall 
jointly  seek  to  secure  with  the  IMF  a  right  for  the  euro  area  to  address  the  IMFC. 
This right shall be without prejudice to the arrangements which the Union as a whole 
enjoys in the IMF at the moment. 

In  the IMFC, the euro area shall be represented by the President of the Eurogroup, 
the Commission and the ECB, which shall be able to intervene in IMFC meetings, as 
appropriate.    

Article 8 
Euro Area internal coordination as regards constituency arrangements of the IMF 

All  questions  related  to  constituency  arrangements  of  the  IMF  involving  euro  area 
Member States shall be fully coordinated and agreed in advance within the Council, 
the Eurogroup, the EFC and/or the EWG, as appropriate.  

The  positions  taken  in  relation  to  constituency  arrangements,  as  referred  to  in 
paragraph 1, or changes thereto, shall be consistent with the objectives of increasing 
coherence  of  the  representation  of  the  euro  area  and    achieving  its  unified 
representation within the IMF. 

In the transitional phase, euro area Member States shall regroup to establish one or 
several constituencies composed of only euro area Member States. 

1. 

2. 

1. 

2. 

3. 

Article 9 
Euro area internal coordination as regards matters of euro area relevance 

Without prejudice to any common position adopted by the Council pursuant to Article 138(1) 
TFEU, euro area Member States shall, within the Council, the Eurogroup, the EFC and/or the 
EWG,  as  appropriate,  closely  coordinate  and  agree  on  common  positions  on  all  matters  of 
euro area relevance for the IMF Executive Board and Board of Governors meetings and shall 
use common statements on those issues. 

SECTION 4 
COMMON PROVISIONS 

Article 10 
Euro area Enlargement 

When  the  Council  decides  that  a  Member  State  fulfils  the  necessary  conditions  for  the 
adoption of the euro, the euro area Member States and the Eurogroup, the Commission, and 
the ECB shall jointly seek to secure the necessary changes within the IMF. 

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Article 11 
Coordination with non-euro area Member States 

Close  cooperation  with  non-euro  area  Member  States  shall  be  organised  within  the  Council 
and  the  EFC,  on  matters  related  to  the  IMF.  Common  positions  shall  be  coordinated  on 
matters relevant for the European Union as a whole. 

Article 12 
Reporting 

The Commission shall, in consultation with the Eurogroup and the ECB, regularly report on 
coordination on euro area matters in the IMF and other international financial institutions to 
the European Parliament and the Council. 

This Decision is addressed to the euro area Member States. 

Article 13  
Addressees 

Article 14 
Entry into force 

This Decision shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union.  

Done at Brussels, 

For the Council 
The President 

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