EU: Overdraft facilities prohibited II

We turn to the European Convention, the closest thing to a constituent assembly EU citizens have had since the 1950s and 1980s. The proposed Article corresponding to Article 101 TEC is located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter II ‘Economic and monetary policy’, Section 1 ‘Economic policy’.

Article III-73 of the draft Treaty establishing a Constitution for Europe, OJ 18.7.2003 C 169/40:

Article III-73 Draft Constitution

1. Overdraft facilities or any other type of credit facility with the European Central Bank or with the central banks of the Member States (hereinafter referred to as ‘national central banks’) in favour of Union institutions, bodies or agencies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the European Central Bank or national central banks of debt instruments.

2. Paragraph 1 shall not apply to publicly owned credit institutions which, in the context of the supply of reserves by central banks, shall be given the same treatment by national central banks and the European Central Bank as private credit institutions.

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The draft Constitution followed the current TEC text closely, with the customary terminological differences, such as the ‘European Central Bank’ replacing the ‘ECB’.

The government of Sweden presented its views on the draft Constitution in ‘Europeiska konventet om EU:s framtid’ (Utrikesdepartementet, Departementsserien (Ds) 2003:58, 2003), but I found no comment regarding the essentially unchanged Article III-73.

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Ahead of the intergovernmental conference (IGC 2003─2004), the government of Sweden stated its positions on economic policy provisions, in ‘Europeiska konventet om EU:s framtid’ (Regeringens skrivelse 2003/04:13, den 2 oktober 2003), on pages 49─50, but there was no comment on Article III-73.

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Likewise, ‘A Constitutional Treaty for the EU ─ The British Approach to the European Union Intergovernmental Conference 2003’ (FCO, Cm5934, September 2003) was silent on Article III-73 of the draft Constitution.

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Étienne de Poncins presented the proposed text of Article III-73 of the draft Constitution in ‘Vers une Constitution européenne’ (Éditions 10/18, 2003), page 295, without comment.

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In the following instalment we look at the prohibition against government borrowing from central banks ─ monetary financing ─ in the Constitutional Treaty.


Ralf Grahn