Friday, 7 November 2008

Euro currency legislation

Despite its shortcomings, the EU Treaty of Lisbon has certain advantages. There are a number of so called institutional innovations aimed at improving the way the European Union works. At the same time, the Lisbon Treaty would clear out some deadwood from the existing treaties.

Legislation on the euro currency is a case in point on both aspects.


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Current treaty

Article 123(4) (of ex Article 109l) of the Treaty establishing the European Community (TEC) sets out the powers of the Council to take the measures necessary to introduce the ecu (now euro) as the single currency.

Here is the text of Article 123(4) TEC, from the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/89:

Article 123(4) TEC

4. At the starting date of the third stage, the Council shall, acting with the unanimity of the Member States without a derogation, on a proposal from the Commission and after consulting the ECB, adopt the conversion rates at which their currencies shall be irrevocably fixed and at which irrevocably fixed rate the ecu shall be substituted for these currencies, and the ecu will become a currency in its own right. This measure shall by itself not modify the external value of the ecu. The Council, acting by a qualified majority of the said Member States, on a proposal from the Commission and after consulting the ECB, shall take the other measures necessary for the rapid introduction of the ecu as the single currency of those Member States. The second sentence of Article 122(5) shall apply.


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Draft Constitution

After the introduction of the single currency and especially after the euro banknotes and coins started circulating, Article 123(4) TEC became dated.

The European Convention proposed a new Article III-83, which shifted the focus from the introduction to the use of the single currency, updated the name of the currency and introduced the ordinary legislative procedure (OJ 18.7.2003 C 169/43):

Article III-83 Draft Constitution

Without prejudice to the powers of the European Central Bank, a European law or framework law shall lay down the measures necessary for use of the euro as the single currency of the Member States. Such law or framework law shall be adopted after consultation of the European Central Bank.

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Constitution

The intergovernmental conference (IGC 2004) changed from singular to plural, when it adopted the proposal of the European Convention. In the Constitutional Treaty, the provision became Article III-191 (OJ 16.12.2004 C 310/84):

Article III-191 Constitution

Without prejudice to the powers of the European Central Bank, European laws or framework laws shall lay down the measures necessary for use of the euro as the single currency. Such laws or framework laws shall be adopted after consultation of the European Central Bank.

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Original Lisbon Treaty

In Article 2, point 97, of the original Treaty of Lisbon (ToL) the intergovernmental conference (IGC 2007) added a new Article 111a (OJ 17.12.2007 C 306/74):

97) The following Article 111a shall be inserted:

‘Article 111a

Without prejudice to the powers of the European Central Bank, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall lay down the measures necessary for the use of the euro as the single currency. Such measures shall be adopted after consultation of the European Central Bank.’.

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Renumbering

The TFEU table of equivalences confirms that Article 111a TFEU (ToL) in the original Treaty of Lisbon was to be renumbered Article 133 TFEU in the consolidated version, under the title ‘Economic and monetary policy’, renumbered Title VIII (OJ 17.12.2007 C 306/214).

(In the consolidated version of the Lisbon Treaty, OJ 9.5.2008 C 115, the Tables of equivalences start on page 361, but the ToL numbers have been omitted.)

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Consolidated Lisbon Treaty: TFEU

Article 133 of the Treaty on the Functioning of the European Union (TFEU) is found in the consolidated versions of the Treaty on European Union and the Treaty on the Functioning of the European Union, published in the Official Journal of the European Union, OJ 9.5.2008 C 115/105:

Part Three Union policies and internal actions

Title VIII Economic and monetary policy

Chapter 2 Monetary policy

Article 133 TFEU

Without prejudice to the powers of the European Central Bank, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall lay down the measures necessary for the use of the euro as the single currency. Such measures shall be adopted after consultation of the European Central Bank.

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Instead of temporary Council measures to introduce the single currency, the Lisbon Treaty, in effect, adopts the proposal of the European Convention. The use of the euro currency can be regulated permanently, and although the legal instruments are not named, the ordinary legislative procedure is introduced (co-decision), adding a thin slice of power to the elected European Parliament.

Technically, the treaty is tidied up and it becomes more readable.


Ralf Grahn