Regulation (EC) No 974/98 — on the introduction of the euro
Article 140 of the Treaty on the Functioning of the European Union (TFEU)
WHAT IS THE AIM OF THE REGULATION AND OF ARTICLE 140 TFEU?
The regulation defines the legal monetary requirements that European Union countries having adopted the euro must apply. It sets out the different stages leading to the introduction of the euro.
Article 140 TFEU sets out the criteria for economic and monetary union membership and adoption of the euro. It provides for regular monitoring of the progress that non-euro countries make towards meeting those requirements.
The regulation on adopting the euro:
- contains details of the dates for the single currency in each country of euro adoption, for the cash changeover and for the phasing out of the national currency;
- confirms that the single currency is the euro, which is divided into 100 cents and replaces participating countries’ national currency at the agreed conversion rate;
- gives the European Central Bank and the national central banks of euro-participating countries exclusive power to put euro banknotes into circulation;
- allows national banknotes and coins to remain legal tender as from the day before the euro adoption date;
- sets out the terms of any phasing-out period for national currencies, an option no euro member took advantage of;
- states that national banknotes and coins remain legal tender in their respective countries until 6 months after the respective cash changeover dates;
- notes that euro banknotes and coins are the only legal tender in euro area countries after the respective changeover dates;
- authorises euro countries to apply adequate sanctions against any counterfeiting or falsification of banknotes and coins.
To adopt the euro, countries must meet the following 4 economic and financial conditions, known as the convergence criteria, set out in Article 140 TFEU and in Protocol No 13 of the TFEU:
- price stability: have an inflation rate for 1 year no higher than 1.5% of the 3 lowest national euro area rates;
- government finances: ensure these are sound and sustainable by limiting national deficit and debt to no more than 3% and 60%, respectively, of national gross domestic product;
- exchange rate stability: avoid excessive currency fluctuations for at least 2 years by participating in the Exchange Rate Mechanism, which regulates rates between euro and non-euro members;
- interest rate convergence: have a long-term interest rate that does not exceed by 2 percentage points the rate of the 3 best-performing euro countries.
The European Commission helped prepare for the arrival of the euro with a wide-ranging information campaign. This targeted:
- businesses that would be using the euro for transactions from 1 January 2002;
- the general public, which would need to adapt to the new coins and notes and the prices and values they express;
- special needs groups such as those socially or economically isolated, with physical disabilities or unable to read or write;
- school children who would grow up with the new currency and could help make their parents and elders familiar with it.
FROM WHEN DOES THE REGULATION APPLY?
It has applied since 1 January 1999.
2019 marks the 20th anniversary of the introduction of the euro. On 1 January 1999, 11 EU countries fixed their exchange rates, adopted a shared monetary policy, and launched the euro as a new common currency on world financial markets. Today, the euro is the currency of 19 EU countries.
For more information, see:
Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro (OJ L 139, 11.5.1998, pp. 1-5)
Successive amendments to Regulation (EC) No 974/98 have been incorporated into the original document. This consolidated version is of documentary value only.
Consolidated version of the Treaty on the Functioning of the European Union — Part Three — Union policies and internal actions — Title VIII — Economic and monetary policy — Chapter 5 — Transitional provisions — Article 140 (ex Articles 121(1), 122(2), second sentence, and 123(5) TEC) (OJ C 202, 7.6.2016, pp. 108-110)
Consolidated version of the Treaty on the Functioning of the European Union — Protocol (No 13) on the convergence criteria (OJ C 202, 7.6.2016, pp. 281-282)
last update 14.02.2019