The Treaty lays out the procedures and timing for deciding on a conversion rate from a national currency to the euro. How the conversion rate is applied is also of great importance to make sure people have trust in the new, single currency, and to ensure the continuity of contracts and other legal instruments.
The Commission and the European Central Bank issue regular convergence reports for those Member States which have not yet adopted the euro – except Denmark and the United Kingdom. Reports are produced at least once every two years, or at the request of a Member State seeking entry to the euro area.
Based on a proposal from the Commission, the Council, after consulting the European Parliament and discussions at the level of heads of state and government, approves the Member State’s entry to the euro area. The conversion rate is then adopted by the Council, on the basis of a Commission proposal and after consulting the European Central Bank, and thereby becomes irrevocably fixed.
The irrevocable conversion rate is usually set at the central rate observed by the national currency within the Exchange Rate Mechanism (ERM II). Participation in ERM II for at least two years without severe tensions is one of the preconditions a Member State must meet for adopting the euro. It therefore provides the best reference for the fixing of the conversion rate.
The way the conversion rates must be expressed and applied is laid down in a Council Regulation (1103/97), the aim of which is to ensure fairness and continuity of contracts and other legal instruments ('legal certainty') during the changeover. It sets out the specific conversion and rounding rules to be respected:
|Euro-area Member State||Old national currency||Conversion rate to €1|
|Belgium||Belgian franc (BEF)||40.3399|
|Germany||German mark (DEM)||1.95583|
|Estonia||Estonian kroon (EEK)||15.6466|
|Ireland||Irish pound (punt) (IEP)||0.787564|
|Greece||Greek drachma (GRD)||340.750|
|Spain||Spanish peseta (ESP)||166.386|
|Cyprus||Cyprus pound (CYP)||0.585274|
|France||French franc (FRF)||6.55957|
|Italy||Italian lira (ITL)||1936.27|
|Latvia||Latvian lat (LTL)||0.702804|
|Luxembourg||Luxembourg franc (LUF)||40.3399|
|Malta||Maltese lira (MTL)||0.429300|
|The Netherlands||Dutch guilder (NLG)||2.20371|
|Austria||Austrian schilling (ATS)||13.7603|
|Portugal||Portugese escudo (PTE)||200.482|
|Slovenia||Slovenian tolar (SIT)||239.640|
|Slovakia||Slovak koruna (SKK)||30.1260|
|Finland||Finnish markka (FIM)||5.94573|