CELEX: 51992PC0545
Language: en
Date: 1992-12-10
Title: Proposal for a COUNCIL DIRECTIVE authorizing The Hellenic Republic to defer liberalization of certain capital movements under Article 6(2) of Council Directive 88/361/EEC of 24 June 1988

COMMISSION OF THE EUROPEAN COMMUNITIES
                                             C0M(92) 545 final
                                             Brussels, 10 December 1992
                              Proposal for a
                            COUNCIL DIRECTIVE
                   authorizing The Hellenic Republic
          to defer liberalization of certain capital movements
   under Article 6(2) of Council Directive 88/361/EEC of 24 June 1988
                     (presented by the Commission)
 ---pagebreak---                                                                             z
                            EXPLANATORY MEMORANDUM
1. The Council Directive 88/361/EEC of 24 June 1988 which entered into
   force on 1 July 1990, authorized four Member States - Greece, Ireland,
   Spain and Portugal - to defer the liberalization of certain capital
   transactions until 31.12.1992.
   Moreover, under Article 6 paragraph 2 of the Directive, Greece and
   Portugal may request an extension of the above time limit if they
   consider    that they are unable, because of balance of payments
   difficulties or of Insufficient adaptation of the national financial
   system to proceed with full liberalization before 31.12.1992. The
   possibility for such an extension, which cannot exceed three years, is
   also covered by Article 73e of the EMU Treaty.
2. The Greek authorities requested on 12.11.92 an extension of the
   transitional period for short-term capital operations until 1.1.1995.
   They also propose to liberalize some of the currently applied
   restrictions from 1.1.1993.
   According to the authorities the maintenance of the restrictions on
   short-term capital movements, for a specified period, is necessary while
   efforts to stabilize the economy are still underway and in order to
   support the monetary and exchange rate policies.
3. The Commission, after having reviewed, in collaboration with the
   Monetary Committee, the economic and financial situation of Greece,
   considers that there are grounds for granting an extension of the
   transitional period :
      although the balance of payments has improved following progress made
      towards stabilizing the economy, trHs improvement remains fragile
      taking account of the stil! sizeable fiscal imbalances and the high
      InfI at Ion;
      although liberalization measures and reforms have been introduced in
      4
        he area of financial markets, key markets and Instruments are still
      Insufficiently developed.
   In view of the above, the Commission proposes to the Council to adopt
   the attached Directive authorizing Greece to defer the liberalization of
   certain capital movements until 30 June 1994.
 ---pagebreak---                                                                                     *- J
                                  Proposal for a
                                COUNCIL DIRECTIVE
                               of .. December 1992
                      authorizing The Hellenic Republic
           to defer liberalization of certain capital movements
   under Article 6(2) of Council Directive 88/361/EEC of 24 June 1988
THE COUNCIL OF THE EUROPEAN COMMUNITIES
Having   regard    to    the  Treaty    establishing     the   European    Economic
Community, and in particular Article 69 thereof,
Having  regard   to the Council      Directive 88/361/EEC^1>       issued   for the
 implementation of the provisions of Article 67 of the Treaty and in
particular Article 6(2) thereof,
Having regard to the proposal from the Commission submitted following
consultation with the Monetary Committee^2^.
Whereas under Article 6(2) of the Directive the Hellenic Republic was
authorized to continue to apply, until 31 December 1992, restrictions
on the movement of capital       laid down in Annex IV, Lists III and IV, of
the Directive; whereas the Article provides for the possibility for an
extension of this time limit, not exceeding three years.
Whereas   the  Hellenic    Republic    has  applied  a programme      of  economic
stabilisation and reform; whereas         It has claimed that the process of
budgetary   consolidation has accelerated        and   it will    be strengthened
with the 1993 budget; whereas despite the adjustment effort which is
underway   solid expectations of monetary         and exchange     rate stability
have   not,    yet,    been   established;     whereas     the    maintenance    of
restrictions    on   short-term     capital,   for   a    specified    period,   is
necessary   in order to ensure a smooth macroeconomic adjustment and to
support  monetary    and exchange     rate policies after      the entry of     the
Drachma to the exchange rate mechanism of the EMS-, whereas the Hellenic
Republic has requested an extension of the time limit set for complete
liberalization    of    short-term    capital   until     1.1.1995-,  whereas    it
intends, however, to proceed to the liberalization, from 1.1.1993, of
some of the currently applied restrictions.
(1) O.J. No L 178, 8.7.1988, p.5
(2)
 ---pagebreak---                                                                                 f
Whereas the Commission has reviewed, in collaboration with the Monetary
Committee,    the   economic    and   financial    developments    in   the   Greek
economy;   whereas     it   follows   from   this   examination    that   although
progress has been made        in the stabilisation of      the economy     and the
situation    of  the    balance   of   payments   has   improved,   the   existing
sizeable budgetary imbalances and the still high inflation render this
 improvement   fragile. Whereas      a gradual    liberalization of     short-term
capital movements      is appropriate before a durable       improvement     in the
stabilization of the economy has been achieved.
Whereas reforms have been introduced and liberalization measures have
been taken by the Greek authorities in the area of financial markets;
whereas,    however,     the  financial    system    is  not   yet   sufficiently
developed to face a situation of complete mobility of capital.
Whereas   there are grounds, In view of          the above, for extending       the
authorization    to   apply   restrictions    on   the  movement   of   short-term
capi tal.
Whereas however such a derogation can in no way justify a control of
capital   movements     under  conditions    contrary   to  Article    8A   of  the
Treaty.
HAS ADOPTED THIS DIRECTIVE
                                     Article 1
The Hellenic Republic may temporarily continue to apply restrictions to
the capital movements listed in the Annex to this directive, subject to
the conditions and time limits laid down in that Annex.
                                     Article 2
This Directive is addressed to the Member States
Done at Brussels, .. December 1992
                                                  For the CounciI
 ---pagebreak---                                    ANNEX
              The Hellenic Republic may, until 30 June 1994,
   continue to apply restrictions on the following capital movements
Operations in current and deposit accounts with financial institutions:
    operations of a duration of less than one year       carried out by
    residents with foreign financial institutions.
Financial loans and credits of a duration of less than one year
Personal capital movements :
     loans of a duration of less than one year.
Physical  import and export of financial assets :
    means of payments.
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                                                                     ISSN 0254-1475
                                                              COM (92) 545 final
                                                      DOCUMENTS
EN                                                                              09
                                 Catalogue number : CB-CO-92-567-EN-C
                                                             ISBN 92-77-50636-9
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