The euro - Europe’s common currency

Legal certainty, especially for individuals and companies, is absolutely essential when an EU country replaces its national currency with the euro. These two pieces of legislation ensure that certainty to provide a smooth changeover.

ACT

Council Regulation (EC) No 1103/97 of 17 June 1997 on certain provisions relating to the introduction of the euro.

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

SUMMARY

WHAT DO THE REGULATIONS DO?

The two regulations - No 1103/97 and No 974/98 (amended by Regulation (EC) No 2169/2005) - provide the legal foundation for the introduction of the euro (economic and monetary union - EMU). The first covers issues such as conversion rates and procedures, status of contracts and payment instructions. The second sets out a timetable for the transition to the euro. Their provisions must be complied with by all EU countries adopting the euro.

KEY POINTS (REGULATION (EC) NO 1103/97)

• The euro replaced the ECU (European currency unit), a basket of national currencies which had previously been used for EU accounting purposes, on 1 January 1999. The euro to ECU conversion rate was 1:1.
• The euro is divided into 100 sub-units. These may be known as cents or any other terms commonly used in the country concerned.
• The continuity of contracts and all legal agreements and obligations which contain reference to a national currency remain unaffected by the introduction of the euro.
• The conversion rates for national currencies into euro extend to six figures. They may not be rounded up or down.
• Any conversion from one national currency to another must be made via the euro.

KEY POINTS (REGULATIONS (EC) NOS 974/98 AND 2169/2005)

• As from the euro adoption date, the currency of the participating EU countries is the euro.
• A transitional period may take place between the date the euro is adopted and the actual changeover date when euro banknotes and coins are put into circulation by the European Central Bank and the national central bank(s) to replace the country’s currency.
• This should last 3 years at most, but may be as short as possible and even zero if the two dates fall on the same day. In fact, countries which have recently adopted the euro have not used a transition period.
• In the phasing-out period, new legal documents may refer to the national currency for up to 1 year to ease the transition.
• Any references to national currencies in legal documents after the cash changeover date are automatically considered to be in euro.
• When both national and euro banknotes and coins are used in parallel, the public may exchange the former for the latter at no cost up to certain ceilings.
• National bank notes and coins remain legal tender in the country concerned until 6 months, at the latest, after the cash changeover date, although the government may reduce this period.
• Thereafter, they may be exchanged against euro according to the procedures stipulated in national law and practice.

Council Regulation (EC) No 974/98 governed the initial introduction of the euro and was adapted by Regulation (EC) No 2169/2005 to prepare for the enlargement of the euro area. (A related summary describes how the switchover to the euro works in practice).

EURO USERS

Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal and Spain (since 1999), Greece (2001), Slovenia (2007), Cyprus and Malta (2008), Slovakia (2009), Estonia (2011), Latvia (2014) and Lithuania (2015).

Further information is available from the European Commission’s Directorate-General for Economic and Financial Affairs’ website and publication.

last update 10.09.2015