CELEX: 51979PC0352
Language: en
Date: 1979-07-05
Title: Proposal for a COUNCIL REGULATION (EEC) amending Regulation (EEC) No 574/72 fixing the procedure for implementing Regulation (EEC) No 1408/71 on the application of social security schemes to employed persons and their families moving within the Community (submitted to the Council by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (79) 352
Vol. 1979/0130
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In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983
concerning the opening to the public of the historical archives of the European Economic
Community and the European Atomic Energy Community (OJ L 43, 15.2.1983, p. 1), as
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In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom 1.
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 ---pagebreak---  COMMISSION OF THE EUROPEAN COMMUNITIES
                                                         COM(79 ) 352 final .
                                                         Brussels , 5 July 1979
                                    Proposal for a
                              COUNCIL REGULATION ( EEC )
   amending Regulation ( EEC ) No 574/ 72 fixing the procedure for
   implementing Regulation ( EEC ) No 1408/ 71 on the application
   of social security schemes to employed persons and their
   families moving within the Community
            f;
                              >\
                   ( submitted to the Council by the Commission )
              o
         c
            -   On..
C0M(79 ) 352 final .
 ---pagebreak---                                 EXPL'irATORY MEKORJflTOUM
Specific conversion rates axe used by the social security institutions of the
Member States to investigate and administer the files of employed persons and
their families moving within the Community .
The implementation of the European Monetary System (MS) involves a review of
the method currently being used for determining rates for converting currencies ,
            fiied in accordance with Article 107 of EEC Council Regulation No
574/7 21 . This proposal aims at adopting a new method with more stringent rules
to determine the rates and closely defined exchange relation     between the various
currencies .
1 . The present method of calculating rates of conversion
1.1 In accordance with the provisions of Article 107 ( l) of EEC Regulation No
                                                                       2
574/72 as amended by Article 1 of EEC Council Regulation No 2639/74 s different
methods are used at present for calculating rates of conversion depending on
whether or not the currencies in question are bound by a 2.25      fluctuation
margin , as detailed below .
- For exchange dealings between currencies staying within a 2.25 % fluctuation
    margin , the central rates are applicable .
    It should be noted that until the entry into force of the MS this provision,
    affected only the currencies in the " snake" but that with the introduction of
    the MS it applies also to the French franc and the Irish pound ,
1 . Regulation (EEC) No 574/72 of the Council of 21 March 1972 fixing the procedure
     for implementing Regulation (EEC) No 1408/71 on the application of social
     security schemes to employed persons and their families moving within the
     Community (0J No L 74 of 27 March 1972).
 2 . Regulation (EEC) No 2639/74 of the Council of 15 October 1974 published in
     0J No L 283 of 19 October 1974-
 ---pagebreak--- - For exchange dealings between currencies not adhering to the 2.25 1° margin
   a rate is used that is based on the arithmetic mean of the bilateral exchange
   rates of these currencies quoted on each "business day     th ^ exchanges (" fixing""
   procedure) of the two markets^. It should be noted that since the introduction
   of the MS this provision affects only the relations between the Italian lira ,
   the British pound and all the other currencies .
1.2 The present calculation method has several drawbacks , including the following :
- The existence of two calculation methods , one applicable to currencies staying .
   within a 2.25    margin and the other where this is not the case , tends to give
   rise to distortion . The supremacy given to central rates was justified as long
   as all Community relations , including those between Central Banks taking part
   in the'^nakd1, were based on central rates but this is no longer the case . Indeed ,
   with the exception of the common agricultural policy, where the dual criteria
   ( central rates - market rates) has been retained so as not to upset the present
   system of monetary compensatory amounts , all intra-Community financial relations ,
   including settlements between Central Banks within the MS framework , are
   effected on the basis of daily exchange rates .
- The reference to the " fixing" procedure leads to discrepancies iui the rates
   taken into account , as a result mainly of the fact that the yessions at which
   rates are fixed are not held simultaneously in the various national exchanges .
- The domain of social security for migrant workers would be the sole Community
   sector still relaying on the daily " fixing" procedure , as with the adoption of
   the EKS the Central Banks and the Commission decided to relinquish this procedure
   for calculating the ECTJ and instead use the representative rate of each currency
   in relation to the dollar . This situation requires the maintenance of a special ,
   rather cumbersome infrastructure for analysing telexes from the Central Banks .
3 . At the London market : rates recorded at noon .
 ---pagebreak---                                      - 'i-
   It is also a source of difficulties as mistakes can be detected only at
   the end of the month when monthly averages are "being worked out .
2 . Proposal for a new method
2.1 The Commission proposes that in the sector of social security for
migrant workers the concept of central rates he abandoned and instead to
calculate conversion rates on the basis of the daily exchange rates for
all currencies , it being understood- that at the same time the rates
resulting from daily " fixing" would be replaced by the rates that are
notified by all the Central Banks at the same hour .    These rates are
already being used in all other Community sectors for calculating the ECO
under the European Monetary System ,
2.2 In addition to obvious administrative simplification , the new calculation
method will yield the following advantages ?
– exact cross-rates obtained by simple derivation , obviating the need for
   calculating averages between two markets ;
– results immediately available ! the rates may be determined as often as
   necessary and communicated without delay;
– standard, treatment for all currencies on the basis of market rates .
2.3 A comparison of the two methods shows that there will be virtually no
difference for separately floating currencies , as their rates are already
based on exchange markets ? " fixing" at present and rates recorded at the
same hour in the new method proposed .
However, for the currencies between which a maximum margin of 2.25$ is
being maintained , the reference to market rather than central rates will
entail a difference due to the movements of these currencies within the
system which may rise to the permissible fluctuation ceiling of 2® 25i°»
                                           Λ
 ---pagebreak--- 3 . Procédure
The new revision of Article 107 of Regi.Tla.tion Ho 574/ 72 provides that
henceforth the rates of conversion -used for th& purposes of the Regulations
on social security for migrant workers will , as in all the other Community
sectors , "be based on the exchange rates notified by the Central Banks at
the same hour and no longer on the central rates for certain currencies
and the " fixing" rates for other currencies .
It is the wish of the Commission that the new method be applied as soon as
possible , in any case before August 197 9 »
 ---pagebreak---                                       - 6 -
                                 Proposal for a
                          COUNCIL REGULATION ( EEC )
amending Regulation ( EEC ) No 574/ 72 fixing the procedure for implementing
Regulation ( EEC ) No 1408/ 71 on the application of social security schemes
to employed persons and their families moving within the Community
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,
Having regard to the Treaty establishing the European Economic Community ;
Having regard to Council Regulation ( EEC ) No 1408/ 71 of 14 June 1971 on
the application of social security schemes to employed persons and their
                                         1
families moving within the Community , as last amended by Regulation ( EEC )
No 2595/ 77^, and in particular Article 97 thereof;
Having regard to the proposal from the Commission ;
Whereas Council Regulation ( EEC ) No 3181 / 78^ set up the European Monetary
System ; -
                                                4
Whereas Council Regulation ( EEC ) No 574/ 72     fixed the procedure for
implementing Regulation ( EEC ) No 1408/ 71 , and whereas in particular
Article 107 thereof lays down the procedure for the conversion of
currencies ;
Whereas this procedure should be amended so as to adapt it to the
mechanisms laid down for calculating the ECU under the European Monetary
System ;
HAS ADOPTED THIS REGULATION :
                                                                           ./.
  OJ No L 149 , 5.7.1971 , p . 2
20J No L 302, 26.11.1977, p . 1
30J No L 379, 30.12.1978, p. 2
40J No L 74, 27.3.1972, p . 1
 ---pagebreak---                                    Article 1
Regulation ( EEC ) No 574/ 72 is hereby amended as follows :
1.  Article 107(1)(a ) and ( b ) shall be replaced by the following :
    " The rate calculated by the Commission shall be based on the
    monthly average of the exchange rates of those currencies during
    the reference period specified in paragraph 2, which shall be
    notified to the Commission for the purposes of the European
    Monetary System ."
2.  The first subparagraph of Article 107(2 ) shall be deleted .
3.  Article 107(3 ) shall be replaced by the following :
    " The exchange rates to be used for the purposes of paragraph 1
    shall be the rates notified to the Commission at the same hour by
    the central banks for the calculation of the ECU within the framework
    of the European Monetary System ."
                                   Article 2
This Regulation shall enter into force on the day of its publication in
the Official Journal of the European Communities .
This Regulation shall be binding in its entirety and directly applicable
                                               »
in all Member States .
Done at Brussels .                         For the Council