Recommendation for a COUNCIL DECISION on the amendment to the Monetary Agreement with the Principality of Andorra and to the Monetary Agreement with the Republic of San Marino
Date: 2024-03-22
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Andorra, European Monetary Agreement, San Marino, application of EU law, association agreement (EU), euro, financial legislation, money laundering, revision of an agreement, terrorism financing

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   EUROPEAN COMMISSION  Brussels, 22.3.2024  COM(2024) 134 final  Recommendation for a COUNCIL DECISION on the amendment to the Monetary Agreement with the Principality of Andorra and to the Monetary Agreement with the Republic of San Marino  
 
EXPLANATORY MEMORANDUM 

The European Union has signed a Monetary Agreement with the Principality of Andorra1 
and another Monetary Agreement with the Republic of San Marino2. 

In  accordance  with  the  Monetary  Agreements,  the  euro  is  the  official  currency  of  the 
Principality of Andorra and the Republic of San Marino. Under the Monetary Agreements, 
and in order to ensure the smooth use and protection of the euro, the two countries have to 
transpose  EU  legal  acts  of  a  monetary  law  nature.  Given  that  the  Principality  of  Andorra 
and the Republic of San Marino each have a significant banking sector operating in close 
connection with those of the euro area, the Principality of Andorra and the Republic of San 
Marino  must  also  implement  EU  banking  and  financial  legislation  relevant  for  the 
protection  of  the  euro.  In  particular,  this  is  in  relation  to  the  activity  and  supervision  of 
financial  institutions  concerned,  pursuant  to  the  terms  and  conditions  set  out  in  each 
Monetary Agreement. Moreover, both countries must implement all EU legal acts on anti-
money laundering and countering the financing of terrorism (AML/CFT). The EU legal acts 
to be implemented under the Monetary Agreements are listed in the annexes thereto. 

The  negotiations  on  an  Association  Agreement  with  the  Principality  of  Andorra  and  the 
Republic  of  San  Marino  were  finalised  in  December  2023.  In  accordance  with  the 
Association  Agreement,  the  two  countries  are  to  implement  and  apply  completely,  and 
effectively  all  applicable  EU  provisions  covering  banking,  insurance,  asset  management, 
and  securities  markets.  The  Association  Agreement  will  also  provide  for  the  full 
implementation and application of all EU legal acts on AML/CFT. 

The  EU  banking  and  financial  services  acts  that  are  relevant  for  the  euro  and  which  the 
Principality  of  Andorra  and  the  Republic  of  San  Marino  must  implement  under  the 
Monetary Agreements are only a subset of the EU financial services acts that they will have 
to  enact  further  to  the  Association  Agreement.  The  set  of  EU  legal  acts  on  AML/CFT  is 
identical in the Monetary Agreements and in the Association Agreement. 

There  is  a  partial  overlap  of  EU  legal  acts  to  be  implemented  pursuant  to  the  different 
agreements. This means that, in the absence of action, the overlapping acts would have to 
be listed in the annexes to both agreements. Given this, a solution should be found to clarify 
the  duties  and  avoid  duplication  of  efforts  while  guaranteeing  legal  certainty  and  swift 
application of the agreements. 

An integration of the Monetary Agreements into the Association Agreement is not possible 
as  they  have  different  purposes  and  legal  bases.  The  legal  basis  of  the  Monetary 
Agreements  is  Article 219(3)  of  the  Treaty  on  the  Functioning  of  the  European  Union 
(TFEU). In accordance with this, the Council - representing only those Member States that 
have  changed  over  to  the  euro  -  acts  by  the  default  rule  of  qualified  majority  on  a 
recommendation  from  the  Commission  and  after  consulting  the  European  Central  Bank. 
The Association Agreement is based on Article 218 TFEU, whereby, further to the consent 
of  the  European  Parliament,  the  Council  -  representing  all  Member  States  -  will  adopt  a 
decision concluding the agreement. 

A viable and simple solution consists in amending the Monetary Agreements. By means of 

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OJ C 369, 17.12.2011, p. 1. 
OJ C 121, 26.4.2012, p. 5. 

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the  proposed  amendment,  the  legislative  acts  of  a  monetary  law  nature  (such  as  those 
concerning  banknotes  and  coins,  fraud  and  counterfeiting,  statistical  reporting  to  the 
European Central  Bank,  and acts  under Article 133 TFEU) would continue to  be listed in 
the  Annexes  to  the  Monetary  Agreements.  However,  a  clause  would  be  inserted  into  the 
Monetary Agreements to provide for the inclusion in the Association Agreement of all new 
EU legal acts on AML/CFT and all new EU legal acts on banking and finance relevant for 
the  euro,  once  these  EU  legal  acts  become  applicable  under  the  Association  Agreement. 
Until the segments of the protocol on financial services of the Association Agreement come 
into  effect  for  an  associated  State  and  the  EU  legal  acts  pertaining  to  those  segments 
become  applicable  to  that  associated  State,  the  relevant  EU  acquis  would  continue  to  be 
incorporated  and  considered  in  the  annex  of  the  Monetary  Agreements  of  that  associated 
State. This procedure would be applied for each segment in case their coming into effect is 
progressive. 

The  acts  concerning  AML/CFT  and  banking  and  finance  listed  in  the  Association 
Agreement but  relevant  for the euro would be clearly marked  as such, so that when their 
implementation  is  assessed,  this  can  be  done  at  the  same  time  for  the  purposes  of  the 
Monetary  Agreements.  This  will  ensure  streamlining  of  agendas  and  avoid  duplication  of 
efforts  in  the  Joint  Committee  meetings  for  the  Association  Agreement  and  those  for  the 
Monetary  Agreements.  It  is  the  intention  of  the  Commission  services  to  invite  their 
European  Central  Bank  counterparts  to  join  the  European  Commission  delegation  to  the 
Sub-committee on financial services established under the Association Agreement when it 
discusses  the  implementation  of  the  acts  on  AML/CFT,  banking  and  finance  relevant  for 
the euro. 

To  ensure  legal  certainty,  another  clause  would  be  added  to  the  Monetary  Agreements  to 
guarantee  the  independence  of  the  Association  Agreement  and  of  the  Monetary 
Agreements. It would also provide for the transfer to the Monetary Agreements of the acts 
on  banking  and  finance  relevant  for  the  euro  and  on  AML/CFT  in  the  event  that  the 
Association Agreement were to be partially or fully suspended or terminated. 

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Recommendation for a 

COUNCIL DECISION 

on the amendment to the Monetary Agreement with the Principality of Andorra and to 
the Monetary Agreement with the Republic of San Marino 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 219(3) thereof, 

Having regard to the recommendation from the Commission1, 

Having regard to the opinion of the European Central Bank2, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

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The Union has the exclusive competence for monetary and exchange rate matters as 
of the date of the introduction of the euro. 
The Union has signed a Monetary Agreement with the Principality of Andorra3 and 
another Monetary Agreement with the Republic of San Marino4. 

Following  the  finalisation  of  the  negotiations  in  December  2023,  the  Union  is 
expected to sign an Association Agreement with the Principality of Andorra and the 
Republic  of  San  Marino.  Under  the  Association  Agreement  and  its  protocol  on 
financial services, Andorra and San Marino will progressively join the single market 
for financial services, which means Andorra and San Marino should transpose all the 
Union  acquis  and  new  legislation  on  combating  money  laundering  or  terrorist 
financing and on financial services.  

Both  the  Monetary  Agreements  and  the  Association  Agreement  provide  for  the 
implementation of Union legal acts by Andorra and San Marino. Those acts are listed 
in the Annexes to the respective Agreements. 

The  Union  legal  acts  on  combating  money  laundering  or  terrorist  financing,  to  be 
implemented pursuant to both types of agreement, are identical. In contrast, the acts 
on  financial  services  overlap  only  partially.  The  acts  applying  under  the  Monetary 
Agreements mainly concern banking and financial law related to the supervision of 
financial institutions which are relevant for the euro, whereas all Union legal acts on 
financial services fall within the scope of the Association Agreement. 

OJ C , , p. . 
OJ C , , p. . 
Monetary  Agreement  between  the  European  Union  and  the  Principality  of  Andorra  (OJ  C  369, 
17.12.2011, p. 1). 
Monetary  Agreement  between  the  European  Union  and  the  Republic  of  San  Marino  (OJ  C 121, 
26.4.2012, p. 5). 

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(6) 

(7) 

(8) 

(9) 

(10) 

(11) 

The Monetary Agreements, on the one hand, and the Association Agreement, on the 
other, are independent of each other and have different purposes and legal bases. The 
legal  basis  of  the  Monetary  Agreements  is  Article 219(3)  TFEU,  whereby,  the 
Council - representing only those Member States that have changed over to the euro - 
acts  by  the  default  rule  of  qualified  majority  on  a  recommendation  from  the 
Commission  and  after  consulting  the  European  Central  Bank.  The  Association 
Agreement  is  based  on  Article 218  TFEU,  whereby,  further  to  the  consent  of  the 
European  Parliament,  the  Council  -  representing  all  Member  States  -  will  adopt  a 
decision  concluding  the  agreement.  Therefore,  the  Agreements  are  independent  of 
each other, and the Monetary Agreements cannot be integrated into the Association 
Agreement.  

A mechanism should be found to address the partial overlapping of identical duties 
under  the  different  agreements  and  ensure  the  smooth  interaction  between  them.  A 
viable and simple solution consists in amending the Monetary Agreements. 

A  clause  should  be  inserted  into  the  Monetary  Agreements  that  provides  for  the 
incorporation  in  the  Association  Agreement  of  all  new  Union  legal  acts  on 
combating money laundering or terrorist financing and all new relevant Union legal 
acts on banking and finance relevant for the euro once those Union legal acts become 
applicable under the Association Agreement. The assessment of the implementation 
of all those  acts,  whether past  or future, should  be undertaken in  the framework of 
the Association Agreement, and may be relevant for the application of the Monetary 
Agreements. 

Union legal acts of a monetary law nature should remain governed exclusively by the 
Monetary Agreements. 

A  clause  should  be  inserted  into  the  Monetary  Agreements  to  guarantee  the 
independence of the agreements.  

The Union legal acts on banking and finance relevant for the euro and on combating 
money  laundering  or  terrorist  financing  that  have  become  part  of  the  Association 
Agreement should be incorporated in the Monetary Agreements automatically if the 
Association Agreement is partially or fully suspended or if it is terminated. 

(12) 

The  Council  is  to  determine  the  arrangements  for  the  amendment  to  agreements 
concerning monetary or foreign exchange regime matters, 

HAS ADOPTED THIS DECISION: 

Article 1 

The  Commission  shall  seek  the  following  changes  in  the  Monetary  Agreements  in  the 
negotiation  of  an  amendment  to  the  Monetary  Agreement  with  the  Principality  of  Andorra 
and an amendment to the Monetary Agreement with the Republic of San Marino: 

(a) 

Insertion of a clause in the Monetary Agreements by which all new acts pertaining to 
the subset of Union legal acts on banking and financial law relevant for the euro and 
all  new  Union  legal  acts  on  combating  money  laundering  or  terrorist  financing 
become  part  of  the  relevant  Annex  to  the  Association  Agreement  exclusively  once 
these Union legal acts become applicable under the Association Agreement; 

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(b) 

(c) 

(d) 

(e) 

Insertion of a clause in the Monetary Agreements which ensures that the assessment 
of the implementation of all Union legal acts on banking and financial law relevant 
for  the  euro  and  all  Union  legal  acts  on  combating  money  laundering  or  terrorist 
financing,  whether  past  or  future,  should  be  undertaken  in  the  framework  of  the 
Association  Agreement,  and  may  be  relevant  for  the  application  of  the  Monetary 
Agreements.  The  clause  should  also  clearly  state  that  Union  legal  acts  on  banking 
and financial law relevant for the euro be clearly marked as such, so that when their 
implementation is assessed, this can be done at the same time for the purpose of the 
Monetary Agreement, as it is also done at the same time for all Union legal acts on 
combating money laundering or terrorist financing; 

Insertion of  a clause in  the Monetary Agreement  by which the Union legal acts  on 
banking  and  financial  law  necessary  for  the  euro  and  all  Union  legal  acts  on 
combating money laundering or terrorist financing that are listed in the Association 
Agreement but are relevant for the smooth use and protection of the euro are clearly 
marked, so that the assessment of the implementation of these acts in the Principality 
of Andorra and the Republic of San Marino under the Association Agreement can be 
done at the same time for the purposes of the Monetary Agreements; 

Insertion  of  a  clause  in  the  Monetary  Agreements  by  which  the  subset  of  all  new 
Union  legal  acts  on  banking  and  financial  law  relevant  for  the  euro  and  all  new 
Union  legal  acts  on  combating  money  laundering  or  terrorist  financing,  having 
become  part  of  the  Association  Agreement,  are  automatically  incorporated  in  the 
Annexes  to  the  Monetary  Agreements  if  the  Association  Agreement  is  partially  or 
fully suspended or if it is terminated; 

Insertion of a clause in the Monetary Agreements which ensures that Union legal acts 
of  a  monetary  law  nature  shall  remain  governed  exclusively  by  the  Monetary 
Agreements. 

The Commission shall inform the Principality of Andorra and the Republic of San Marino of 
the need and of the Union’s readiness to amend the Monetary Agreements. 

Article 2 

The  Commission  is  empowered  to  negotiate,  conclude,  and  sign  the  amendment  to  the 
Monetary  Agreement  with  the  Principality  of  Andorra  in  four  languages:  Catalan,  French, 
English and Spanish. The text in each of these languages shall be considered equally authentic. 

The  Commission  is  empowered  to  negotiate,  conclude,  and  sign  the  amendment  to  the 
Monetary Agreement with the Republic of San Marino in English. 

This Decision is addressed to the Commission. 

Done at Brussels, 

For the Council 
The President 

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