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Euro area monetary law - the switch-over to the euro in practice

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Euro area monetary law - the switch-over to the euro in practice

A European Union (EU) country which has met the strict criteria to adopt the euro must follow clear rules when making the changeover from its national currency. Once it has done so, it must apply the budgetary discipline required in a recently adopted treaty designed to ensure proper governance of the euro area.

ACT

Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro

SUMMARY

A European Union (EU) country which has met the strict criteria to adopt the euro must follow clear rules when making the changeover from its national currency. Once it has done so, it must apply the budgetary discipline required in a recently adopted treaty designed to ensure proper governance of the euro area.

WHAT DOES THE REGULATION DO?

It defines the monetary law of EU countries which have adopted the euro as the single currency and sets out the different stages which lead to its introduction.

KEY POINTS

A transition period of up to 3 years is allowed between the date a country adopts the euro and the time euro notes and coins enter circulation. In practice, these dates are now the same as Lithuania, which adopted the euro on 1 January 2015, demonstrated.

A phasing-out period of up to 1 year is provided for those countries which do not implement the transitional arrangements. During this period, both the euro and the national currency may be used before the latter is phased out.

National central banks of countries which have adopted the euro, and the European Central Bank, are the only institutions authorised to put the single currency notes and coins into circulation.

Euro-using countries are responsible for tackling any attempts to counterfeit the notes and coins.

To strengthen the euro zone’s economic framework, EU countries adopted the Treaty on Stability, Coordination and Governance. This came into force on 1 January 2013. Its rules aim to:

foster budgetary discipline through a fiscal compact (such as keeping national budgets either balanced or in surplus);

strengthen coordination of national economic policies;

improve governance of the euro area.

The European Union has also established a yearly cycle of economic policy coordination. This is known as the ‘European Semester’. Under this, the Commission carries out a detailed analysis of national budgetary, macro-economic and structural reform plans. It then issues detailed recommendations to each EU country for the forthcoming 12 to 18 months.

For more information, see the European Commission's website on the euro.

REFERENCES

Act

Entry into force

Deadline for transposition in the Member States

Official Journal

Regulation (EC) No 974/98

1.1.1999

-

OJ L139, 11.5.1998, pp. 1-5.

Amending acts

Entry into force

Deadline for transposition in the Member States

Official Journal

Regulation (EC) No 2596/2000

1.1.2001

-

OJ L 300, 29.11.2000, pp. 2-3.

Regulation (EC) No 2169/2005

18.1.2006

-

OJ L 346, 29.12.2005, pp. 1-5.

Regulation (EC) No 1647/2006

1.1.2007

-

OJ L 309, 9.11.2006, pp. 2-3.

Regulation (EC) No 835/2007

1.1.2008

-

OJ L 186,18.7.2007, pp. 1-2.

Regulation (EC) No 836/2007

1.1.2008

-

OJ L 186, 18.7.2007, pp. 3-4.

Regulation (EC) No 693/2008

1.1.2009

-

OJ L 195, 24.7.2008, pp. 1-2.

Regulation (EU) No 670/2010

1.1.2011

-

OJ L 196, 27.8.2010, pp. 1-3.

Regulation (EU) No 827/2014

1.1.2015

-

OJ L 228, 31.7.2014, pp. 3-4.

last update 14.09.2015

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