Proposal for COUNCIL REGULATION amending Regulation (EC) No 2866/98 on the conversion rates between the euro and the currencies of the Member States adopting the euro

(presented by the Commission)

EXPLANATORY MEMORANDUM

On 31 December 1998, the Council adopted the conversion rates between the euro and the eleven currencies of the Member States which fulfilled the necessary conditions and which adopted the euro with effect from 1 January 1999. The Council had decided on 2 May 1998 that Greece was one of the Member States which at that time did not fulfil the necessary conditions for the adoption of the single currency.

On 3 May 2000, the Commission adopted a proposal for a Council Decision in accordance with Article 122 (2) of the Treaty, proposing that Greece fulfils the necessary conditions for the adoption of the single currency and that the derogation of Greece is abrogated with effect from 1 January 2001.

In case of a positive decision, the Council will subsequently have to adopt the conversion rate between the euro and the drachma which will take effect from 1 January 2001 and will have to take the other measures necessary for the introduction of the euro in Greece.

I. General considerations

The conversion rates of the currencies which were replaced by the euro at the beginning of Stage Three were adopted on the basis of the first sentence of Article 123 (4) of the Treaty (ex 109 l (4)). The rates of currencies of Member States joining the euro area at a later date are adopted according to Article 123 (5). In 1998, the rates had to be fixed under the constraint that this measure would by itself not modify the external value of the euro, i.e. that the rate of conversion between the ECU basket and the euro would be 1 : 1. Therefore it was not possible to determine and to adopt the conversion rates between the euro and the national currencies before the last day of the year, after the final exchange rates of the ECU basket had been calculated by the Commission according to the established rules. This constraint is no longer existent.

Fixing the conversion rate of the drachma and substituting the euro for the drachma are complementary decisions which must take effect on the same date, as was the case for the initial eleven currencies. By contrast, the date at which the decisions are taken must not necessarily be the same; it would not, however, seem logical to adopt the conversion rate before taking a decision on the substitution of the currency.

II. Comments on the articles

Article 1

The proposed rate is the present central rate of the drachma in the exchange rate mechanism (ERM II). This is the rate following revaluation of the drachma by 3½ percent on 15 January 2000.

As for the other currencies and in accordance with Council regulation (EC) N° 1103/97 on certain provisions relating to the introduction of the euro, the rate is determined with six significant figures.

Article 2

This article ensures that the regulation will be applicable in conformity with the timing of the other Council acts relating to the abrogation of the derogation of Greece and the date of the substitution of the euro for the drachma.

2000/0138 (CNB)

Proposal for

COUNCIL REGULATION

amending Regulation (EC) No 2866/98 on the conversion rates between the euro and the currencies of the Member States adopting the euro

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 123 (4), first sentence, and (5) thereof,

Having regard to the proposal from the Commission, [13]

[13] ...

Having regard to the opinion of the European Central Bank, [14]

[14] ...

Whereas:

(1) Regulation (EC) No 2866/98 of 31 December 1998 on the conversion rates between the euro and the currencies of the Member States adopting the euro [15] determines the conversion rates as from 1 January 1999 pursuant to Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro; [16]

[15] OJ L 359, 31.12.1998, pp. 1-2

[16] OJ L 139, 11.5.1998, pp. 1-5

(2) Decision of 3 May 1998 in accordance with Article 121 (4) (98/317/EC) stipulated that Greece did not fulfil the necessary conditions for the adoption of the single currency;

(3) Pursuant to Decision of 20 June 2000 in accordance with Article 122 (2) of the Treaty (00/../EC) Greece now fulfils the necessary conditions, and the derogation of Greece is abrogated with effect from 1 January 2001;

(4) Pursuant to Regulation (EC) No 974/98, as amended by Regulation (EC) No ../00, the currency of Greece will be the euro as from 1 January 2001;

(5) The introduction of the euro in Greece requires the adoption of the conversion rate between the euro and the drachma,

HAS ADOPTED THIS REGULATION:

Article 1

In the list of conversion rates in Article 1 of Regulation (EC) No 2866/98, the following shall be inserted between the rates of the German mark and the Spanish peseta:

" = 340.750 Greek drachma".

Article 2

This Regulation shall enter into force on 1 January 2001.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

For the Council

The President