Wednesday, 5 November 2008

National central banks: EMU compatible legislation

The Treaty on European Union (Treaty of Maastricht) entered into force fifteen years ago, on 1 November 1993. Among the main novelties were the provisions on economic and monetary union (EMU).

Preparations for the third stage of EMU, including the European System of Central Banks (ESCB) and the European Central Bank (ECB) as well as the single currency, later given the name ‘euro’, required adaptation of national legislation in the member states.

The third stage of EMU began on 1 January 1999.



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Current treaty

Article 109 (ex Article 108) of the Treaty establishing the European Community (TEC) sets out the obligation of the member states to adapt their legislation to the treaty provisions on economic and monetary union, including the ESCB Statute (as in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/89):

Article 109 TEC

Each Member State shall ensure, at the latest at the date of the establishment of the ESCB, that its national legislation including the statutes of its national central bank is compatible with this Treaty and the Statute of the ESCB.

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Original Lisbon Treaty

In Article 2, point 94, of the original Treaty of Lisbon (ToL) the IGC 2007 amended Article 109 (OJ 17.12.2007 C 306/74):

94) In Article 109, the words ‘, at the latest at the date of the establishment of the ESCB,’ shall be deleted.

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Renumbering

The TFEU table of equivalences confirms that Article 109 TFEU (ToL) in the original Treaty of Lisbon was to be renumbered Article 131 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 131 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 115/104:

Part Three Union policies and internal actions

Title VIII Economic and monetary policy

Chapter 2 Monetary policy

Article 131 TFEU
(ex Article 109 TEC)

Each Member State shall ensure that its national legislation including the statutes of its national central bank is compatible with the Treaties and the Statute of the ESCB and of the ECB.

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The European System of Central Banks (ESCB) is up and running. The words referring to its establishment have become redundant, but the obligation to ensure the compatibility of national legislation with the treaties (third stage of EMU) is ongoing, with the national central bank participating in the ESCB and independent from political interference.

Old or new EU member states are required to adapt their national legislation before being admitted to the Eurosystem. (See the latest Convergence Report of the ECB, May 2008, with regard to the non-euro area member states.)


Ralf Grahn