Monetary law of the participating Member States (transitional period)

This Regulation lays down the monetary law provisions of the Member States which have adopted the euro.

ACT

Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro [See amending acts].

SUMMARY

This Regulation provides for the substitution of the euro for the national currencies of the Member States * participating in the euro zone at the conversion rate * laid down. It clarifies the provisions applying to the Member States that will introduce the euro in the future and lists the Member States participating in the euro. This list may be extended when further Member States adopt the single currency.

The currency unit will be one euro, divided into one hundred cents. The euro will be the unit of account of the European Central Bank (ECB) and of the central banks of the participating Member States.

Transitional period

During the transitional period * the euro will be divided into national currency units * according to the conversion rates. Any subdivisions of the national currency units will be maintained. It will therefore be possible to use the single currency under its own name, but also in the denominations and units of the legacy national currencies, which will have become expressions of the euro.

During the transitional period, the monetary law of the participating Member States will continue to apply in so far as it is compatible with this Regulation (this essentially concerns the provisions on banknotes and coins).

During this period, where in a legal instrument * reference is made to a national currency unit, this reference will be as valid as if reference were made to the euro unit according to the conversion rates.

During the transitional period the substitution of the euro for the currency of each participating Member State will not in itself have the effect of altering the denomination of legal instruments in existence before the introduction of the euro.

During the transitional period the currency unit in which a legal instrument is denominated - irrespective of whether it is the euro unit or a national currency unit - must be respected: all acts to be performed under this instrument must be performed in the currency unit stipulated in the instrument.

However, the parties may agree to use another currency unit.

This provision does not prevent debtors, in cases where specific provision has not been made for non-cash payments, from settling debts denominated in the euro unit by paying with banknotes and coins denominated in the national currency unit which is legal tender at the place of the transaction.

During the transitional period any amount denominated either in the euro unit or in the national currency unit of a given participating Member State and payable within that Member State by crediting an account of the creditor can be paid by the debtor either in euros or in the national currency unit of the Member State concerned.

A bank which receives a payment in euros must make the necessary conversion (according to the conversion rate) in order to credit an account denominated in the national currency unit (and vice versa).

During the transitional period the Member States may, under certain conditions, extend the use of the euro:

• to public or private outstanding debt;
• to markets for the regular exchange, clearing and settlement of payments.

During the transitional period the participating Member States may adopt other provisions imposing the use of the euro (e.g. for public-sector transactions) only in accordance with any time-frame laid down by Community legislation.

During the transitional period banknotes and coins denominated in a national currency unit will, within their territorial limits, retain the status as legal tender as of the day before the adoption of the euro * in that Member State.

The transitional period can be reduced to zero, in which case the euro adoption date and the cash changeover date fall on the same day ("big bang" scenario).

Phasing-out period

A phasing-out period can only apply to Member States in which the euro adoption date and the cash changeover date fall on the same day. If there is a phasing-out period in a Member State, legal instruments created during that period may refer to the national currency unit. These instruments must be performed in the Member State in which the phasing-out period applies. The references to the national currency unit must be read as references to the euro unit according to the respective conversion rates. The transitional period and the phasing-out period are mutually exclusive.

Introduction of euro notes and coins

With effect from the respective cash changeover date *, the ECB and the national central banks will put into circulation banknotes denominated in euros. These banknotes will be the only banknotes that will have the status of legal tender in all the participating Member States, unlike the national banknotes.

With effect from the respective cash changeover date, the participating Member States will issue coins denominated in euros or in cents and complying with the denominations and technical specifications that the Council may lay down in accordance with Article 106 of the Treaty. These coins will be the only coins which have the status of legal tender in all the Member States. No party will be obliged to accept more than fifty coins in any single payment, irrespective of the face value of the coins used.

Participating Member States will ensure adequate sanctions against counterfeiting and falsification of euro banknotes and coins.

With effect from the respective cash changeover date, the national currency units will cease to exist:

• References to national currency units in existing legal instruments should be read as references to the euro unit (according to the respective conversion rates).
• It will no longer be possible to use the legacy national currencies in drawing up contracts because such references would no longer be recognised by monetary law.

Banknotes and coins denominated in a national currency unit remain legal tender within their territorial limits until six months after the respective cash changeover date ("dual circulation period"); this period may be shortened by the Member States.

During the dual circulation period, credit institutions in the participating Member States which have adopted the euro after 1 January 2002 will exchange banknotes and coins denominated in the national currency unit of the Member State concerned for euro banknotes and coins free of charge. National legislation may impose certain ceilings in this connection.

Adapting the Regulation to the eurozone enlargements

The current Regulation has been amended on several occasions, in view of the enlargement of the euro area, notably by Regulation (EC) No 2596/2000 on the introduction of the euro in Greece as from 1 January 2001, Regulation (EC) No 1647/2006 on the introduction of the euro in Slovenia as from 1 January 2007 and Regulation (EC) No 835/2007 and No 836/2007 on the introduction of the euro in Cyprus and Malta respectively as from 1 January 2008.

Regulation (EC) No 2169/2005 was adopted to ensure clarity and safeguards in relation to the rules regarding the introduction of the euro in other Member States, for example, with a list of the participating Member States, which is susceptible of amendment upon other Member States adopting the euro.

See also

For further information please consult:

• Enlargement of the euro area;
• European Commission: Directorate-General (DG) for Economic and Financial Affairs.

Last updated: 18.07.2007