Agreements on exchange-rate matters (Cape Verde, the CFA area and the Comores)

The euro having now replaced the French franc and Portuguese escudo, the Council authorises Portugal and France to maintain in force their existing agreements with Cape Verde, the CFA area and the Comores and define their future implementation and amendments.

ACTS

Council Decision 98/683/EC of 23 November 1998 concerning exchange-rate matters relating to the CFA franc and the Comorian.

Council Decision 98/744/EC of 21 December 1998 concerning exchange-rate matters relating to the Cape Verde escudo [Official Journal L 358 of 31.12.1998].

SUMMARY

On 1 January 1999 the euro replaced the escudo and the French franc. France is authorised to continue its present agreements with the UEMOA (Union économique et monétaire ouest-africaine), the CEMAC (Communauté économique et monétaire de l'Afrique centrale) and the Comores. Portugal is authorised to continue its present agreement with Cape Verde. These agreements became the responsibility of the Community on the date of introduction of the euro.

Portugal has concluded with Cape Verde an exchange-rate cooperation agreement which reflects the historical ties of friendship and cooperation between the two countries. The agreement is intended to ensure exchange-rate stability between the two countries' currencies, the Cape Verde escudo being linked to the Portuguese escudo at a fixed parity. It provides for the provision of financial and technical assistance by Portugal.

France has concluded with the UEMOA, the CEMAC and the Comores several agreements intended to guarantee the convertibility of the CFA franc and the Comorian franc into the French franc at a fixed parity.

These agreements are unlikely to have any material effect on the monetary and exchange-rate policy of the euro area. The convertibility of the Cape Verde escudo is guaranteed by a budgetary commitment on the part of the Portuguese Government.

Similarly, France's agreements with the UEMOA, the CEMAC and the Comores are unlikely to have any effect on the monetary and exchange-rate policy of the euro area. In their present form and state of implementation, they are, therefore, unlikely to impede the smooth functioning of economic and monetary union (EMU). They do not imply any obligation for the European Central Bank (ECB) and the national central banks to support the convertibility of the CFA franc or the Comorian franc.

Implementation of the agreements is a matter for the signatories.

Portugal and France must keep the Commission, the European Central Bank and the Economic and Financial Committee informed of how the agreements are being implemented. Any development likely to affect the smooth functioning of monetary and exchange-rate policy must be notified in good time. Any change in the parity between the linked currencies must be notified in advance to the Economic and Financial Committee.

Any plans to change the nature or scope of the agreements must be submitted to the Commission, the European Central Bank or the Economic and Financial Committee.

Such plans require the approval of the Council on the basis of a recommendation from the Commission and after consulting the European Central Bank.

Last updated: 16.08.2006