For the Council regulations on the legal framework for the use of the euro, please refer to Euro Papers n° 4Introduction
As from 1 January 1999, the competence for monetary policy, exchange rate policy and currency law for the Member States which adopt the single currency will be transferred to the Community level.
The monetary policy of the euro area will be defined and implemented by the European System of Central Banks (Article 105 of the Treaty). The exchange rate policy will be determined by the Council, with the ESCB and the Commission being involved according to the provisions of Article 109 of the Treaty.
The legal framework for the introduction and the use of the euro is essentially laid down in two Council regulations:
- draft Council Regulation on the introduction of the euro and
- Council Regulation (EC) No 1103/97 of 17 June 1997 on certain provisions relating to the introduction of the euro.
Council Regulation 1103/97, which is based on Article 235 of the Treaty, entered into force on 20 June 1997. The Council Regulation on the introduction of the euro will, given the voting rules foreseen in Article 109 l (4) of the Treaty, only be adopted in 1998 once the participating Member States are known.
The draft Council Regulation on the introduction of the euro provides that the euro will be the currency of the participating Member States as from 1 January 1999. On that date, the national currencies of the participating Member States will be replaced by the euro.
One euro will be divided into one hundred cent. During a transitional period running from 1.1.1999 to the end of 2001, the euro will also be divided into national currency units according to the conversion rates. During this period, economic agents are free to use the euro unit, but will not be obliged to do so: this is the "no compulsion / no prohibition" principle.
On 31 December 2001, the national currency units, as sub-divisions of the euro, cease to exist. References to the national currency units in legal instruments still existing at the end of the transitional period have to be read as references to the euro unit, according to the conversion rates. However, banknotes and coins denominated in the national currency units may still keep, for a period of up to six months, their status of legal tender. Member States may shorten this period.
Council Regulation (EC) No 1103/97 includes provisions on the replacement of references to the ECU by references to the euro, the continuity of legal instruments and the specification and the use of the conversion rates, including rounding.
Questions and answers on the euro regulations
In a limited number of articles, the two Council regulations lay down rules for a great variety of currency uses. Since the legal framework for the euro has been laid down, a number of questions on their applicability to specific cases have been put forward to the Commission services by citizens, companies and business associations. To most of these questions, answers can be found in the euro regulations themselves. In some cases, answers depend on national law, e.g. tax and accounting laws or law of obligation.
The answers provided in this document are preliminary considerations by members of the staff of the European Commission. They should be read under the twin provisos that the interpretation of legislation is in the final instance for the courts to decide and that the interpretations given do not represent an official opinion of the Commission as such. It should be recalled that the two regulations which form the legal framework for the use of the euro are not the product of the Commission, but the legislator, i.e. the Council.
The Commission services will continue to study the legal questions raised in the course of the introduction of the euro and will, if appropriate, publish a further version of this document.