Is it impossible for small companies to win public contracts? Public procurement is generally seen at least as a daunting task for smaller enterprises.
The Small Business Act for Europe was launched by the European Commission 25 June 2008 to lower the hurdles faced by small and medium sized enterprises (SMEs). The aim was neatly put by Commission president José Manuel Barroso: Less red tape and more red carpet.
As the Commission points out, during the last years 80 per cent of the new jobs in the European Union have been created in the 23 milion SMEs (each with less than 250 employees and a turnover of less than 50 million euro).
For a quick presentation of the Small Business Act (SBA), go to the press release “Think Small First”: A Small Business Act for Europe:
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/08/1003&format=HTML&aged=0&language=EN&guiLanguage=en
***
Small Business Act
Officially, the document is the Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions, “Think Small First” A “Small Business Act” for Europe , Brussels, 25.6.2008 COM(2008) 394 final:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2008:0394:FIN:EN:PDF
***
The aim was to focus the Commission’s own activities and to infuse some small business thinking into the refounded Lisbon Growth and Jobs Strategy, before the member states conclude their next round of national Lisbon strategies.
The Commission calls the term Act symbolic. It could just as well be called misleading, since the SBA is primarily a political programme, with a modicum of related legislative proposals.
This is the wider context for the proposals concerning public contracts.
***
Public procurement proposals
Section V (page 10) encourages the European Union and the member states to make use of the Code of Best Practice providing guidance to contracting authorities on how they may apply the EC public procurement framework in a way which facilitates SMEs’ participation in public procurement procedures.
The Communication acknowledged the obstacles SMEs face when participating in public procurement markets, which account for16% of the EU gross domestic product (GDP). According to the Commission, further significant efforts are needed to reduce the remaining obstacles to SMEs accessing procurement markets, especially by alleviating requirements imposed by contracting authorities in award procedures.
***
Commission actions
The Commission promised to present a voluntary Code of Best Practice for contracting authorities, to trigger further change in the purchasing culture. It would provide guidance on how to reduce bureaucracy, improve transparency and information and ensure a level playing field for SMEs.
The Commission promised to further facilitate access to information on procurement opportunities by complementing the existing EU websites dedicated to public procurement with a series of initiatives such as optional publication of contract notices for below-threshold procurement, an online tool to find business partners, and increased transparency of public procurement requirements
***
Member states’ actions
Electronic procurement portals: The member states were ‘invited to’ set up electronic portals to widen access to information on public procurement opportunities below the EU thresholds.
Smaller lots: The member states could encourage their contracting authorities to subdivide contracts into lots where it is appropriate and to make sub-contracting opportunities more visible.
Reasonable demands: The Commission wanted the member states to remind their contracting authorities of their obligation to avoid disproportionate qualification and financial requirements.
Dialogue and training: The Commission also wanted to encourage constructive dialogue and mutual understanding between SMEs and large buyers through activities such as information, training, monitoring and exchange of good practice.
***
It is important for small businesses and their organisations to keep on the lookout for good practices in Europe, and to keep a watch on the laggards among the member states.
If you have good or deplorable examples of procurement practices in Europe, your comments are most welcome.
Ralf Grahn
Friday, 31 October 2008
European Central Bank IIb: Legal materials on Article III-79 draft Constitution
Having made a textual comparison of the main institutional framework of the European System of Central Banks (ESCB) and the European Central Bank (ECB) in the current Treaty establishing the European Community (TEC) and in the draft Constitution, we turn to some legal materials and descriptions of the proposal of the European Convention in the draft Constitution.
***
de Poncins
Étienne de Poncins presented the proposed text of Article III-78 of the draft Constitution in ‘Vers une Constitution européenne’ (Éditions 10/18, 2003), on page 303─304. His comment leads us to believe that the European Convention really intended the European Parliament to participate fully in the simplified revision procedures mentioned in paragraph 5:
« Commentaire : le paragraphe 5 autorise la modification du statut de la Banque centrale européenne. Actuellement cette législation requiert l’unanimité du Conseil et l’avis conforme du Parlement européen. La procédure législative sera d’application, le Conseil se prononçant à la majorité qualifié. »
***
Sweden
Sweden remains outside the third phase of economic and monetary union (EMU), without an opt-out, but following the 14 September 2003 referendum. Still, the normal EU/EC institutions operate, in case of simplified revisions of the ESCB Statute or complementary legislation according to Article 42 of the Statute, which means that the member states with a derogation participate in the Council. In principle, these member states are seen as future participants in the Eurosystem.
I found no mention of Article III-79 in the Swedish government’s memorandum on the draft Constitution, ‘Europeiska konventet om EU:s framtid’ (Utrikesdepartementet, Departementsserien (Ds) 2003:58, 2003).
***
Sweden
Ahead of the intergovernmental conference (IGC 2003─2004), but after the euro referendum, the government of Sweden made a reference to technical the participation of the European Parliament in certain matters pertaining to the ESCB Statute, in ‘Europeiska konventet om EU:s framtid’ (Regeringens skrivelse 2003/04:13, den 2 oktober 2003), on page 49 (in the last quoted sentence):
”Europeiska centralbankens tillsynsbefogenheter och stadgar
Konventet föreslår att beslutsregeln för överföring av tillsynsbefogenheter för den finansiella sektorn till Europeiska centralbanken (ECB) skall ändras. I dag krävs enhällighet i rådet och samtycke av Europaparlamentet. Förslaget innebär att rådet skall besluta med kvalificerad majoritet och att Europaparlamentet skall ges medbeslutande för en sådan överföring. Vidare föreslås att Europaparlamentet ges medbeslutande beträffande vissa frågor i stadgan för Europeiska centralbankssystemet.”
The Swedish government admitted the reasons for functioning decision-making within the eurozone and the interest of euro area members to effective representation in international financial institutions, but in between the government expressed its will to be included in the coordination processes generally (on page 50):
”Det kan finnas skäl för euroländerna att på olika sätt säkerställa ett väl fungerande beslutsfattande i euroområdet. Det är dock viktigt att samordningsprocesserna behåller sin gemensamma karaktär. Det är också förståeligt att euroländerna vill uppnå en effektiv representation av euroområdet i internationella finansiella institutioner.”
***
United Kingdom
The United Kingdom has opted out of the third stage of economic and monetary union (EMU). (In the latest consolidated version of the treaties, Protocol (No 25) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland, OJ 29.12.2006 C 321 E/299).
Between the European Convention and the intergovernmental conference, the UK government presented its general approach ─ most British ─ in ‘A Constitutional Treaty for the EU; The British Approach to the European Union Intergovernmental Conference 2003’ (Cm5934, September 2003), under Economic Governance on pages 34─35:
“74. Many of the issues discussed in the European Convention and raised in the draft Constitutional Treaty could have significant consequences for the future performance of EU economies. The draft Constitutional Treaty proposed by the Convention has proposed changes to the EU’s existing system of economic governance and other aspects of the EU fiscal framework; the institutional balance between the Union and Member States in economic policy coordination; and the role of the Eurogroup, the informal grouping of euro area finance ministers. The Government will oppose any such proposals which might lead to unnecessary rigidities or undermine the central role of Member States in determining their economic policies. It will work to ensure outcomes that will bolster stability, promote flexibility and enhance the ability of European countries to raise productivity and employment levels.
75. The draft Treaty does not alter the terms of the UK’s Economic and Monetary Union protocol (allowing the UK to decide whether or not to join the euro). This will need formally to be re-adopted on the conclusion of the IGC.”
***
Finland
Finland is part of Euroland.
The Finnish government, in ‘Valtioneuvoston selonteko Eduskunnalle konventin tuloksista ja valmistautumisesta hallitusten väliseen konferenssiin’ (VNS 2/2003 vp), mentioned the adoption of the (normal) legislative procedure concerning amendments to certain Articles of the ESCB Statute in draft Constitution Article III-79. The Finnish government remarked on the proposal to extend qualified majority voting in the Council of Ministers to amendments proposed by the Commission, not only the ECB. This had raised fears of weakening the position of the central bank, and the Finnish Convention delegates had resisted this amendment (page 66):
”Perustuslaillisella sopimuksella muutetaan myös joitakin päätöksentekomenettelyjä talous- ja rahapolitiikan alalla. Lainsäädäntömenettely ulotetaan kattamaan myös rahoituslaitosten valvontaa koskevien erityistehtävien siirtäminen EKP:lle (III-77 artikla) sekä EKP-järjestelmän perussäännön tiettyjen artiklojen muuttaminen (III-79 artikla). EKP:lle voidaan normaalia lainsäädäntömenettelyä noudattaen antaa erityistehtäviä jotka koskevat luottolaitosten sekä muiden rahoituslaitosten kuin vakuutusyritysten toiminnan vakauden valvontaa. Nykysopimuksessa tämä edellyttää neuvostossa yksimielisyyttä. Suomen taholta ei yhdistetyn valvontavastuun tavoittelua unionissa ole pidetty tarkoituksenmukaisena, koska kyse on erittäin herkkäluonteisista kysymyksistä joilla on myös taloudellisia vaikutuksia. EKP:n keskuspankin perussääntöä voidaan puolestaan jatkossa muuttaa ministerineuvostossa määräenemmistöllä myös komission, ei vain EKP:n aloitteesta. Tämän on pelätty heikentävän keskuspankin asemaa. Suomen edustajat konventissa vastustivatkin näitä muutoksia.”
***
The attentive reader, with an eye for detail, may have noticed that my initial text comparison did not bring all the aspects to the fore. Neither did the researched documents individually, but using several sources gives us a fuller picture of the Article studied.
We will follow the Article III-79 proposed by the European Convention as it reappears after the intergovernmental conferences leading to the signing of the Constitutional Treaty and the Treaty of Lisbon.
.
Ralf Grahn
***
de Poncins
Étienne de Poncins presented the proposed text of Article III-78 of the draft Constitution in ‘Vers une Constitution européenne’ (Éditions 10/18, 2003), on page 303─304. His comment leads us to believe that the European Convention really intended the European Parliament to participate fully in the simplified revision procedures mentioned in paragraph 5:
« Commentaire : le paragraphe 5 autorise la modification du statut de la Banque centrale européenne. Actuellement cette législation requiert l’unanimité du Conseil et l’avis conforme du Parlement européen. La procédure législative sera d’application, le Conseil se prononçant à la majorité qualifié. »
***
Sweden
Sweden remains outside the third phase of economic and monetary union (EMU), without an opt-out, but following the 14 September 2003 referendum. Still, the normal EU/EC institutions operate, in case of simplified revisions of the ESCB Statute or complementary legislation according to Article 42 of the Statute, which means that the member states with a derogation participate in the Council. In principle, these member states are seen as future participants in the Eurosystem.
I found no mention of Article III-79 in the Swedish government’s memorandum on the draft Constitution, ‘Europeiska konventet om EU:s framtid’ (Utrikesdepartementet, Departementsserien (Ds) 2003:58, 2003).
***
Sweden
Ahead of the intergovernmental conference (IGC 2003─2004), but after the euro referendum, the government of Sweden made a reference to technical the participation of the European Parliament in certain matters pertaining to the ESCB Statute, in ‘Europeiska konventet om EU:s framtid’ (Regeringens skrivelse 2003/04:13, den 2 oktober 2003), on page 49 (in the last quoted sentence):
”Europeiska centralbankens tillsynsbefogenheter och stadgar
Konventet föreslår att beslutsregeln för överföring av tillsynsbefogenheter för den finansiella sektorn till Europeiska centralbanken (ECB) skall ändras. I dag krävs enhällighet i rådet och samtycke av Europaparlamentet. Förslaget innebär att rådet skall besluta med kvalificerad majoritet och att Europaparlamentet skall ges medbeslutande för en sådan överföring. Vidare föreslås att Europaparlamentet ges medbeslutande beträffande vissa frågor i stadgan för Europeiska centralbankssystemet.”
The Swedish government admitted the reasons for functioning decision-making within the eurozone and the interest of euro area members to effective representation in international financial institutions, but in between the government expressed its will to be included in the coordination processes generally (on page 50):
”Det kan finnas skäl för euroländerna att på olika sätt säkerställa ett väl fungerande beslutsfattande i euroområdet. Det är dock viktigt att samordningsprocesserna behåller sin gemensamma karaktär. Det är också förståeligt att euroländerna vill uppnå en effektiv representation av euroområdet i internationella finansiella institutioner.”
***
United Kingdom
The United Kingdom has opted out of the third stage of economic and monetary union (EMU). (In the latest consolidated version of the treaties, Protocol (No 25) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland, OJ 29.12.2006 C 321 E/299).
Between the European Convention and the intergovernmental conference, the UK government presented its general approach ─ most British ─ in ‘A Constitutional Treaty for the EU; The British Approach to the European Union Intergovernmental Conference 2003’ (Cm5934, September 2003), under Economic Governance on pages 34─35:
“74. Many of the issues discussed in the European Convention and raised in the draft Constitutional Treaty could have significant consequences for the future performance of EU economies. The draft Constitutional Treaty proposed by the Convention has proposed changes to the EU’s existing system of economic governance and other aspects of the EU fiscal framework; the institutional balance between the Union and Member States in economic policy coordination; and the role of the Eurogroup, the informal grouping of euro area finance ministers. The Government will oppose any such proposals which might lead to unnecessary rigidities or undermine the central role of Member States in determining their economic policies. It will work to ensure outcomes that will bolster stability, promote flexibility and enhance the ability of European countries to raise productivity and employment levels.
75. The draft Treaty does not alter the terms of the UK’s Economic and Monetary Union protocol (allowing the UK to decide whether or not to join the euro). This will need formally to be re-adopted on the conclusion of the IGC.”
***
Finland
Finland is part of Euroland.
The Finnish government, in ‘Valtioneuvoston selonteko Eduskunnalle konventin tuloksista ja valmistautumisesta hallitusten väliseen konferenssiin’ (VNS 2/2003 vp), mentioned the adoption of the (normal) legislative procedure concerning amendments to certain Articles of the ESCB Statute in draft Constitution Article III-79. The Finnish government remarked on the proposal to extend qualified majority voting in the Council of Ministers to amendments proposed by the Commission, not only the ECB. This had raised fears of weakening the position of the central bank, and the Finnish Convention delegates had resisted this amendment (page 66):
”Perustuslaillisella sopimuksella muutetaan myös joitakin päätöksentekomenettelyjä talous- ja rahapolitiikan alalla. Lainsäädäntömenettely ulotetaan kattamaan myös rahoituslaitosten valvontaa koskevien erityistehtävien siirtäminen EKP:lle (III-77 artikla) sekä EKP-järjestelmän perussäännön tiettyjen artiklojen muuttaminen (III-79 artikla). EKP:lle voidaan normaalia lainsäädäntömenettelyä noudattaen antaa erityistehtäviä jotka koskevat luottolaitosten sekä muiden rahoituslaitosten kuin vakuutusyritysten toiminnan vakauden valvontaa. Nykysopimuksessa tämä edellyttää neuvostossa yksimielisyyttä. Suomen taholta ei yhdistetyn valvontavastuun tavoittelua unionissa ole pidetty tarkoituksenmukaisena, koska kyse on erittäin herkkäluonteisista kysymyksistä joilla on myös taloudellisia vaikutuksia. EKP:n keskuspankin perussääntöä voidaan puolestaan jatkossa muuttaa ministerineuvostossa määräenemmistöllä myös komission, ei vain EKP:n aloitteesta. Tämän on pelätty heikentävän keskuspankin asemaa. Suomen edustajat konventissa vastustivatkin näitä muutoksia.”
***
The attentive reader, with an eye for detail, may have noticed that my initial text comparison did not bring all the aspects to the fore. Neither did the researched documents individually, but using several sources gives us a fuller picture of the Article studied.
We will follow the Article III-79 proposed by the European Convention as it reappears after the intergovernmental conferences leading to the signing of the Constitutional Treaty and the Treaty of Lisbon.
.
Ralf Grahn
European Central Bank IIa: Article III-79 draft Constitution
The European System of Central Banks (ESCB) and the European Central Bank (ECB) were part of the all-encompassing draft Treaty establishing a Constitution for Europe.
But did the European Convention propose any material or stylistic change to the existing provisions?
We look at the contents of the institutional basics in draft Constitution Article III-79.
***
Article III-79 of the draft Constitution, proposed by the European Convention, corresponds with Article 107 of the Treaty establishing the European Community (TEC), and it 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 2 ‘Monetary policy’.
Article III-79 draft Treaty establishing a Constitution for Europe is found in OJ 18.7.2003 C 169/42─43:
Article III-79 Draft Constitution
1. The European System of Central Banks shall be composed of the European Central Bank and of the national central banks.
2. The European Central Bank shall have legal personality.
3. The European System of Central Banks shall be governed by the decision-making bodies of the European Central Bank, which shall be the Governing Council and the Executive Board.
4. The Statute of the European System of Central Banks is laid down in the Protocol on the Statute of the European System of Central Banks and the European Central Bank.
5. Articles 5.1, 5.2, 5.3, 17, 18, 19.1, 22, 23, 24, 26, 32.2, 32.3, 32.4, 32.6, 33.1(a) and 36 of the Statute of the European System of Central Banks and the European Central Bank may be amended by European laws:
(a) either on a proposal from the Commission after consultation of the European Central Bank;
(b) or on a recommendation from the European Central Bank after consultation of the Commission.
6. The Council of Ministers shall adopt the European regulations and decisions laying down the measures referred to in Articles 4, 5.4, 19.2, 20, 28.1, 29.2, 30.4 and 34.3 of the Statute of the System of European Central Banks and the European Central Bank. It shall act after consulting the European Parliament:
(a) either on a proposal from the Commission after consulting the European Central Bank;
(b) or on a recommendation from the European Central Bank after consulting the Commission.
***
Texts compared
The following differences can be noted between the current Article 107 TEC and Article III-79 draft Constitution:
The draft Constitution spells out the acronyms ESCB and ECB in full, for ease of reading.
In paragraph 4, the draft Constitution defined more exactly in which Protocol the ESCB Statute lay hidden; namely ‘the Protocol on the Statute of the European System of Central Banks and the European Central Bank’.
In paragraph 5, the simplified revision of certain provisions of the ESCB Statute referred to the existing Articles. This left the detailed work to the coming intergovernmental conference, if changes to the Statute were to be made. The Convention, preoccupied by the main institutional building-blocks of the European Union, left only a rudimentary collection of eight draft protocols and declarations in all.
The legal instruments to be used were defined as European laws. The two-pronged approach, either a recommendation from the ECB or a proposal from the Commission, was maintained, although they were mentioned in reverse order. No mention was made of the European Parliament, whereas the assent of the EP is required currently. On the other hand, paragraph 5 did not say that the Statute amendments were to be adopted by the Council (alone).
Was it a slip to drop the words ‘by the Council’, or did the Convention really mean to introduce the ordinary legislative procedure (European laws, with no qualification) for these enumerated simplified changes to the ESCB Statute?
On the other hand, although the potential scope for changes looked insignificant, when we studied Article 107(5) TEC, the ESCB Statute is, in principle, a treaty level document, so any exemption to normal treaty amending procedures (IGC and ratifications) might be seen as a serious matter.
The more important complementary legislation in paragraph 6 was re-written in the same manner as the preceding paragraph, but here the European regulations and decisions were to be adopted by the Council of Ministers, after consulting the European Parliament (as currently).
***
The next post is going to look at some legal materials concerning the European Convention proposal. With luck, we might even find an answer to the baffling legislative ‘minutiae’ mentioned above.
Ralf Grahn
But did the European Convention propose any material or stylistic change to the existing provisions?
We look at the contents of the institutional basics in draft Constitution Article III-79.
***
Article III-79 of the draft Constitution, proposed by the European Convention, corresponds with Article 107 of the Treaty establishing the European Community (TEC), and it 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 2 ‘Monetary policy’.
Article III-79 draft Treaty establishing a Constitution for Europe is found in OJ 18.7.2003 C 169/42─43:
Article III-79 Draft Constitution
1. The European System of Central Banks shall be composed of the European Central Bank and of the national central banks.
2. The European Central Bank shall have legal personality.
3. The European System of Central Banks shall be governed by the decision-making bodies of the European Central Bank, which shall be the Governing Council and the Executive Board.
4. The Statute of the European System of Central Banks is laid down in the Protocol on the Statute of the European System of Central Banks and the European Central Bank.
5. Articles 5.1, 5.2, 5.3, 17, 18, 19.1, 22, 23, 24, 26, 32.2, 32.3, 32.4, 32.6, 33.1(a) and 36 of the Statute of the European System of Central Banks and the European Central Bank may be amended by European laws:
(a) either on a proposal from the Commission after consultation of the European Central Bank;
(b) or on a recommendation from the European Central Bank after consultation of the Commission.
6. The Council of Ministers shall adopt the European regulations and decisions laying down the measures referred to in Articles 4, 5.4, 19.2, 20, 28.1, 29.2, 30.4 and 34.3 of the Statute of the System of European Central Banks and the European Central Bank. It shall act after consulting the European Parliament:
(a) either on a proposal from the Commission after consulting the European Central Bank;
(b) or on a recommendation from the European Central Bank after consulting the Commission.
***
Texts compared
The following differences can be noted between the current Article 107 TEC and Article III-79 draft Constitution:
The draft Constitution spells out the acronyms ESCB and ECB in full, for ease of reading.
In paragraph 4, the draft Constitution defined more exactly in which Protocol the ESCB Statute lay hidden; namely ‘the Protocol on the Statute of the European System of Central Banks and the European Central Bank’.
In paragraph 5, the simplified revision of certain provisions of the ESCB Statute referred to the existing Articles. This left the detailed work to the coming intergovernmental conference, if changes to the Statute were to be made. The Convention, preoccupied by the main institutional building-blocks of the European Union, left only a rudimentary collection of eight draft protocols and declarations in all.
The legal instruments to be used were defined as European laws. The two-pronged approach, either a recommendation from the ECB or a proposal from the Commission, was maintained, although they were mentioned in reverse order. No mention was made of the European Parliament, whereas the assent of the EP is required currently. On the other hand, paragraph 5 did not say that the Statute amendments were to be adopted by the Council (alone).
Was it a slip to drop the words ‘by the Council’, or did the Convention really mean to introduce the ordinary legislative procedure (European laws, with no qualification) for these enumerated simplified changes to the ESCB Statute?
On the other hand, although the potential scope for changes looked insignificant, when we studied Article 107(5) TEC, the ESCB Statute is, in principle, a treaty level document, so any exemption to normal treaty amending procedures (IGC and ratifications) might be seen as a serious matter.
The more important complementary legislation in paragraph 6 was re-written in the same manner as the preceding paragraph, but here the European regulations and decisions were to be adopted by the Council of Ministers, after consulting the European Parliament (as currently).
***
The next post is going to look at some legal materials concerning the European Convention proposal. With luck, we might even find an answer to the baffling legislative ‘minutiae’ mentioned above.
Ralf Grahn
Thursday, 30 October 2008
European Central Bank Ih: Complementary ECB legislation
The European Central Bank (ECB) is operationally independent, within the limits of the treaty and the statute, but especially in matters concerning the member states, the national central banks or outside operators, certain additional parameters are subject to outside political control, with the Council as decision-maker.
We look at the system for complementary ECB legislation.
***
Article 107(6) of the Treaty establishing the European Community (TEC), in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/88, provides the legal base for certain provisions referred to in the ESCB Statute:
Article 107(6) TEC
6. The Council, acting by a qualified majority either on a proposal from the Commission and after consulting the European Parliament and the ECB or on a recommendation from the ECB and after consulting the European Parliament and the Commission, shall adopt the provisions referred to in Articles 4, 5.4, 19.2, 20, 28.1, 29.2, 30.4 and 34.3 of the Statute of the ESCB.
***
Protocol (No 18) on the Statute of the European System of Central Banks and of the European Central Bank (annexed to the latest consolidated version of the current treaties, OJ 29.12.2006 C 321 E/256─280) contains the Articles referred to.
Article 4 ESCB Statute concerns the mandatory consultation of the European Central Bank on any proposed Community act in its fields of competence and by national authorities regarding any draft legislative provision in its fields of competence.
Article 42 ESCB Statute gave the Council an obligation to act:
Article 42 ESCB Statute
Complementary legislation
In accordance with Article 107(6) of this Treaty, immediately after the decision on the date for the beginning of the third stage, the Council, acting by a qualified majority either on a proposal from the Commission and after consulting the European Parliament and the ECB or on a recommendation from the ECB and after consulting the European Parliament and the Commission, shall adopt the provisions referred to in Articles 4, 5.4, 19.2, 20, 28.1, 29.2, 30.4 and 34.3 of this Statute.
Pursuant to ESCB Statute Article 5.4, the Council, in accordance with the procedure laid down in Article 42, shall define the natural and legal persons subject to reporting requirements, the confidentiality regime and the appropriate provisions for enforcement.
According to ESCB Statute Article 19.2 the Council shall, in accordance with the procedure laid down in Article 42, define the basis for minimum reserves and the maximum permissible ratios between those reserves and their basis, as well as the appropriate sanctions in cases of noncompliance.
Article 20 ESCB Statute gives the ECB Governing Council the right to decide, by a majority of two thirds of the votes cast, upon the use of such other operational methods of monetary control as it sees fit, but within the scope of such methods defined by the Council, if they impose obligations on third parties.
Article 28.1 ESCB Statute concerns the capital of the ECB. Initially it was set at ECU (later euro) 5 000 million, but subject to later increases by such amounts as may be decided by the
Governing Council acting by the qualified majority provided for in Article 10.3, within the limits
and under the conditions set by the Council under the procedure laid down in Article 42.
ESCB Statute Article 29.2 regards the statistical data used to determine the ECB capital key subscription. The data shall be provided by the Commission in accordance with the rules adopted by the Council under the procedure provided for in Article 42.
Article 30.4 ESCB Statute provides for the possible transfer of additional foreign reserve assets from national central banks to the European Central Bank, within the limits and under the conditions set by the Council in accordance with the procedure laid down in Article 42.
Article 34.3 ESCB Statute provides for the Council to set the limits and the conditions of the fines and periodic penalty payments the ECB is entitled to impose on undertakings for failure to comply with obligations under its regulations and decisions.
***
At this stage, I leave it to the interested reader to look for the concrete Council Decisions and Regulations implementing ESCB Statute Article 42.
Ralf Grahn
We look at the system for complementary ECB legislation.
***
Article 107(6) of the Treaty establishing the European Community (TEC), in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/88, provides the legal base for certain provisions referred to in the ESCB Statute:
Article 107(6) TEC
6. The Council, acting by a qualified majority either on a proposal from the Commission and after consulting the European Parliament and the ECB or on a recommendation from the ECB and after consulting the European Parliament and the Commission, shall adopt the provisions referred to in Articles 4, 5.4, 19.2, 20, 28.1, 29.2, 30.4 and 34.3 of the Statute of the ESCB.
***
Protocol (No 18) on the Statute of the European System of Central Banks and of the European Central Bank (annexed to the latest consolidated version of the current treaties, OJ 29.12.2006 C 321 E/256─280) contains the Articles referred to.
Article 4 ESCB Statute concerns the mandatory consultation of the European Central Bank on any proposed Community act in its fields of competence and by national authorities regarding any draft legislative provision in its fields of competence.
Article 42 ESCB Statute gave the Council an obligation to act:
Article 42 ESCB Statute
Complementary legislation
In accordance with Article 107(6) of this Treaty, immediately after the decision on the date for the beginning of the third stage, the Council, acting by a qualified majority either on a proposal from the Commission and after consulting the European Parliament and the ECB or on a recommendation from the ECB and after consulting the European Parliament and the Commission, shall adopt the provisions referred to in Articles 4, 5.4, 19.2, 20, 28.1, 29.2, 30.4 and 34.3 of this Statute.
Pursuant to ESCB Statute Article 5.4, the Council, in accordance with the procedure laid down in Article 42, shall define the natural and legal persons subject to reporting requirements, the confidentiality regime and the appropriate provisions for enforcement.
According to ESCB Statute Article 19.2 the Council shall, in accordance with the procedure laid down in Article 42, define the basis for minimum reserves and the maximum permissible ratios between those reserves and their basis, as well as the appropriate sanctions in cases of noncompliance.
Article 20 ESCB Statute gives the ECB Governing Council the right to decide, by a majority of two thirds of the votes cast, upon the use of such other operational methods of monetary control as it sees fit, but within the scope of such methods defined by the Council, if they impose obligations on third parties.
Article 28.1 ESCB Statute concerns the capital of the ECB. Initially it was set at ECU (later euro) 5 000 million, but subject to later increases by such amounts as may be decided by the
Governing Council acting by the qualified majority provided for in Article 10.3, within the limits
and under the conditions set by the Council under the procedure laid down in Article 42.
ESCB Statute Article 29.2 regards the statistical data used to determine the ECB capital key subscription. The data shall be provided by the Commission in accordance with the rules adopted by the Council under the procedure provided for in Article 42.
Article 30.4 ESCB Statute provides for the possible transfer of additional foreign reserve assets from national central banks to the European Central Bank, within the limits and under the conditions set by the Council in accordance with the procedure laid down in Article 42.
Article 34.3 ESCB Statute provides for the Council to set the limits and the conditions of the fines and periodic penalty payments the ECB is entitled to impose on undertakings for failure to comply with obligations under its regulations and decisions.
***
At this stage, I leave it to the interested reader to look for the concrete Council Decisions and Regulations implementing ESCB Statute Article 42.
Ralf Grahn
Public procurement in Sweden
Internal market rules are applied to public procurement in the EU member states through European Community directives, transposed into national law.
But how single is the Single Market, if you are a European or international firm and you want to do business in one of the member states of the European Union?
You may even want to supply goods or services to central, regional or local government.
We look at the procurement legislation in Sweden, with a view to the information available to foreign suppliers in English.
***
The European Community directives are the foundation, and naturally they are available in English.
The so called Classic Directive:
Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts (OJ 30.4.2004 L 134/114), since amended. This is a link to the consolidated version:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:2004L0018:20080101:EN:PDF
The so called Utilities Directive:
Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors (OJ 30.4.2004 L 134/1) has been amended a few times, so this is a link to the consolidated version:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:2004L0017:20080101:EN:PDF
***
Preparing transposition in Sweden
When the Swedish Government got around to transposing the EC Directives, it presented a massive Bill to the Parliament. The main proposal runs to 570 pages:
Regeringens proposition 2006/07:128 Ny lagstiftning om offentlig upphandling och upphandling inom områdena vatten, energi, transporter och posttjänster:
http://www.regeringen.se/content/1/c6/08/43/76/9cb61697.pdf
The Government Bill was accompanied by two sets of Annexes.
Annexes 1 – 6 (373 pages):
http://www.regeringen.se/content/1/c6/08/43/76/c6856bc3.pdf
Annexes 7 – 15 (280 pages):
http://www.regeringen.se/content/1/c6/08/43/76/1aa64eec.pdf
***
Two statutes
The new Swedish procurement legislation consists of two main Acts, in force from 1 January 2008.
Lag om offentlig upphandling (Swedish Public Procurements Act)
The Act transposing the Classic Directive 2004/18/EC is called Lag (2007:1091) om offentlig upphandling (abbreviated LOU)
***
Försörjningslagen
Lag (2007:1092) om områdena vatten, energi, transporter och posttjänster (colloquially Försörjningslagen) transposes the Utilities Directive 2004/17/EC.
Current Swedish legislation can be accessed through (in Swedish):
www.lagrummet.se
***
Translations?
The Swedish Government offers some unofficial translations of legal acts on a web page called Swedish statutes in translation, with links to a dozen legal areas, but I was unable to find any translation of the procurement acts there:
http://www.sweden.gov.se/sb/d/3288
***
Swedish Competition Authority
The Swedish Competition Authority (Konkurrensverket) is responsible for improving competition and, since 1 September 2007, for supervising public procurement. It offers some basic information, news and publications in English:
http://www.kkv.se/default____218.aspx
Last year, the Competition Authority published The Strategy of the Swedish Competition Authority and its Direction for Procurement Issues (30 pages), where it set out its main goals to enhance competition in public procurement:
http://www.kkv.se/upload/Filer/ENG/Publications/strategidok_eng.pdf
The main public procurement aims of the Swedish Competition Authority are the following:
procuring entities being aware of their options regarding procurement and that they avoid violating the Swedish Public Procurements Act,
the competitive sector of the Swedish economy grows and the competitive solutions are applied to an increased extent in the public sector,
suppliers have the opportunity and want to take part in procurements,
Swedish consumers, procuring entities and suppliers know about the significance of competition for a varied selection goods and services of good quality at reasonable prices.
By the way, there is an unofficial Swedish translation of the Swedish Competition Act (but I found no translation of the procurement acts):
http://www.kkv.se/upload/Filer/ENG/Publications/compact_eng.pdf
***
State procurement
The Swedish state coordinates its purchasing activities. For some information in English, go to Statlig inköpssammordning, Coordination of government procurement:
http://www.avropa.nu/templates/Page____9.aspx
There is a short presentation of the coordinating body, the Swedish Financial Management Aurhority (Ekonomistyrningsverket) on:
http://www.avropa.nu/upload/Dokument/Yttranden,%20rapporter,%20pm/In%20English.pdf
***
Sveriges offentliga inköpare SOI
Sveriges Offentliga Inköpare SOI is an association for about 1,100 purchasing professionals, but the information is available only in Swedish:
http://www.soi.se/
***
Swedish National Board of Trade
Kommerskollegium (the Swedish National Board of Trade) is the Swedish governmental agency dealing with foreign trade and trade policy. Its main areas of activity are related to the European Community:
The Internal Market
The Customs Union
External Trade policy
The web pages offer a fair amount of basic information in English. For more, go to:
http://www.kommers.se/templates/Standard____3127.aspx
The National Board of Trade is a partner in the SOLVIT network.
***
Green public procurement
Three public procurement themes are the darlings of politicians. One is the participation of small and medium sized enterprises (SMEs), the second is e-procurement and the third one is green public procurement.
Sweden would not be Sweden without green procurement cropping up. Naturvårdsverket (the Swedish Environmental Protection Agency) offers a point of departure on its page More and more public bodies in Sweden have guidelines on green procurement:
http://www.naturvardsverket.se/en/In-English/Menu/Climate-change/Swedish-News-on-Climate-Change/More-and-more-public-bodies-in-Sweden-have-guidelines-on-green-procurement/
***
Upphandling24
Upphandling24 is a commercial website in Swedish, dedicated to public procurement news and information:
http://upphandling24.idg.se/
***
Confederation of Swedish Enterprise
Svenskt Näringsliv (the Confederation of Swedish Enterprise) lobbies for more open public markets. The information is in Swedish:
http://www.svensktnaringsliv.se/fragor/offentlig_upphandling/article15121.ece
***
Local Authorities and Regions
For the members of Sveriges Kommuner och Landsting (the Swedish Association of Local Authorities and Regions, SALAR) the complicated procurement legislation is a constant headache, which results in demands for simplification and continuous monitoring of new proposals and decisions (in Swedish):
http://www.skl.se
***
Freedom of choice
The Swedish Competition Authority has a page in English ‘New rules pave the way for freedom of choice’ on a new government proposal. The law, due to come into force on 1 January 2009, regulates how municipalities and county councils are to proceed if they decide to introduce a freedom-of-choice system in their care services:
http://www.konkurrensverket.se/t/NewsPage____3987.aspx
The Government Bill, Regeringens proposition 2008/09:29 Lag om valfrihetssystem, is available in Swedish:
http://www.regeringen.se/content/1/c6/11/25/56/e7303623.pdf
***
It is hard to penetrate new markets, especially outside one’s own home country, and public procurement adds its own twist.
The language barriers within the internal market are formidable, and in Sweden the available official information in English can be described as basic. But generally Swedish officials are helpful and English is almost a second language to them, so once you get the ball rolling, you have every chance of success.
Ralf Grahn
But how single is the Single Market, if you are a European or international firm and you want to do business in one of the member states of the European Union?
You may even want to supply goods or services to central, regional or local government.
We look at the procurement legislation in Sweden, with a view to the information available to foreign suppliers in English.
***
The European Community directives are the foundation, and naturally they are available in English.
The so called Classic Directive:
Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts (OJ 30.4.2004 L 134/114), since amended. This is a link to the consolidated version:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:2004L0018:20080101:EN:PDF
The so called Utilities Directive:
Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors (OJ 30.4.2004 L 134/1) has been amended a few times, so this is a link to the consolidated version:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:2004L0017:20080101:EN:PDF
***
Preparing transposition in Sweden
When the Swedish Government got around to transposing the EC Directives, it presented a massive Bill to the Parliament. The main proposal runs to 570 pages:
Regeringens proposition 2006/07:128 Ny lagstiftning om offentlig upphandling och upphandling inom områdena vatten, energi, transporter och posttjänster:
http://www.regeringen.se/content/1/c6/08/43/76/9cb61697.pdf
The Government Bill was accompanied by two sets of Annexes.
Annexes 1 – 6 (373 pages):
http://www.regeringen.se/content/1/c6/08/43/76/c6856bc3.pdf
Annexes 7 – 15 (280 pages):
http://www.regeringen.se/content/1/c6/08/43/76/1aa64eec.pdf
***
Two statutes
The new Swedish procurement legislation consists of two main Acts, in force from 1 January 2008.
Lag om offentlig upphandling (Swedish Public Procurements Act)
The Act transposing the Classic Directive 2004/18/EC is called Lag (2007:1091) om offentlig upphandling (abbreviated LOU)
***
Försörjningslagen
Lag (2007:1092) om områdena vatten, energi, transporter och posttjänster (colloquially Försörjningslagen) transposes the Utilities Directive 2004/17/EC.
Current Swedish legislation can be accessed through (in Swedish):
www.lagrummet.se
***
Translations?
The Swedish Government offers some unofficial translations of legal acts on a web page called Swedish statutes in translation, with links to a dozen legal areas, but I was unable to find any translation of the procurement acts there:
http://www.sweden.gov.se/sb/d/3288
***
Swedish Competition Authority
The Swedish Competition Authority (Konkurrensverket) is responsible for improving competition and, since 1 September 2007, for supervising public procurement. It offers some basic information, news and publications in English:
http://www.kkv.se/default____218.aspx
Last year, the Competition Authority published The Strategy of the Swedish Competition Authority and its Direction for Procurement Issues (30 pages), where it set out its main goals to enhance competition in public procurement:
http://www.kkv.se/upload/Filer/ENG/Publications/strategidok_eng.pdf
The main public procurement aims of the Swedish Competition Authority are the following:
procuring entities being aware of their options regarding procurement and that they avoid violating the Swedish Public Procurements Act,
the competitive sector of the Swedish economy grows and the competitive solutions are applied to an increased extent in the public sector,
suppliers have the opportunity and want to take part in procurements,
Swedish consumers, procuring entities and suppliers know about the significance of competition for a varied selection goods and services of good quality at reasonable prices.
By the way, there is an unofficial Swedish translation of the Swedish Competition Act (but I found no translation of the procurement acts):
http://www.kkv.se/upload/Filer/ENG/Publications/compact_eng.pdf
***
State procurement
The Swedish state coordinates its purchasing activities. For some information in English, go to Statlig inköpssammordning, Coordination of government procurement:
http://www.avropa.nu/templates/Page____9.aspx
There is a short presentation of the coordinating body, the Swedish Financial Management Aurhority (Ekonomistyrningsverket) on:
http://www.avropa.nu/upload/Dokument/Yttranden,%20rapporter,%20pm/In%20English.pdf
***
Sveriges offentliga inköpare SOI
Sveriges Offentliga Inköpare SOI is an association for about 1,100 purchasing professionals, but the information is available only in Swedish:
http://www.soi.se/
***
Swedish National Board of Trade
Kommerskollegium (the Swedish National Board of Trade) is the Swedish governmental agency dealing with foreign trade and trade policy. Its main areas of activity are related to the European Community:
The Internal Market
The Customs Union
External Trade policy
The web pages offer a fair amount of basic information in English. For more, go to:
http://www.kommers.se/templates/Standard____3127.aspx
The National Board of Trade is a partner in the SOLVIT network.
***
Green public procurement
Three public procurement themes are the darlings of politicians. One is the participation of small and medium sized enterprises (SMEs), the second is e-procurement and the third one is green public procurement.
Sweden would not be Sweden without green procurement cropping up. Naturvårdsverket (the Swedish Environmental Protection Agency) offers a point of departure on its page More and more public bodies in Sweden have guidelines on green procurement:
http://www.naturvardsverket.se/en/In-English/Menu/Climate-change/Swedish-News-on-Climate-Change/More-and-more-public-bodies-in-Sweden-have-guidelines-on-green-procurement/
***
Upphandling24
Upphandling24 is a commercial website in Swedish, dedicated to public procurement news and information:
http://upphandling24.idg.se/
***
Confederation of Swedish Enterprise
Svenskt Näringsliv (the Confederation of Swedish Enterprise) lobbies for more open public markets. The information is in Swedish:
http://www.svensktnaringsliv.se/fragor/offentlig_upphandling/article15121.ece
***
Local Authorities and Regions
For the members of Sveriges Kommuner och Landsting (the Swedish Association of Local Authorities and Regions, SALAR) the complicated procurement legislation is a constant headache, which results in demands for simplification and continuous monitoring of new proposals and decisions (in Swedish):
http://www.skl.se
***
Freedom of choice
The Swedish Competition Authority has a page in English ‘New rules pave the way for freedom of choice’ on a new government proposal. The law, due to come into force on 1 January 2009, regulates how municipalities and county councils are to proceed if they decide to introduce a freedom-of-choice system in their care services:
http://www.konkurrensverket.se/t/NewsPage____3987.aspx
The Government Bill, Regeringens proposition 2008/09:29 Lag om valfrihetssystem, is available in Swedish:
http://www.regeringen.se/content/1/c6/11/25/56/e7303623.pdf
***
It is hard to penetrate new markets, especially outside one’s own home country, and public procurement adds its own twist.
The language barriers within the internal market are formidable, and in Sweden the available official information in English can be described as basic. But generally Swedish officials are helpful and English is almost a second language to them, so once you get the ball rolling, you have every chance of success.
Ralf Grahn
Wednesday, 29 October 2008
Public procurement in Finland
Public information in Finland is available by law in Finnish and (to a lesser degree) in Swedish. But increasingly government information can be found in English for practical reasons.
For international companies and their advisors there is an unofficial English translation of the Finnish Act on Public Contracts (348/2007), based on Directive 2004/18/EC, available at:
http://www.finlex.fi/en/laki/kaannokset/2007/en20070348.pdf
***
The official versions are in Finnish and Swedish.
Finnish: Laki julkisista hankinnoista (348/2007):
http://www.finlex.fi/fi/laki/ajantasa/2007/20070348
Swedish: Lag om offentlig upphandling (348/2007):
http://www.finlex.fi/sv/laki/ajantasa/2007/20070348
***
The Government Bill, leading to the Act on Public Contracts, in Finnish ‘Hallituksen esitys Eduskunnalle laeiksi julkisista hankinnoista sekä vesi- ja energiahuollon, liikenteen ja postipalvelujen alalla toimivien yksiköiden hankinnoista (HE 50/2006 vp) and in Swedish ‘Regeringens proposition till Riksdagen med förslag till lag om offentlig upphandling och lag om upphandling inom sektorerna vatten, energi, transporter och posttjänster (RP 50/2006 rd), is accessible at:
http://www.finlex.fi/fi/esitykset/he/2006/?_offset=220
***
The Act, based upon the Utilities Directive 2004/17/EC, ‘Laki vesi- ja energiahuollon, liikenteen ja postipalvelujen alalla toimivien yksiköiden hankinnoista’ (349/2007) is available only in the official Finnish and Swedish versions.
Here in Finnish:
http://www.finlex.fi/fi/laki/ajantasa/2007/20070349
’Lag om upphandling inom sektorerna vatten, energi, transporter och posttjänster’ (349/2007) in Swedish:
http://www.finlex.fi/sv/laki/ajantasa/2007/20070349
***
The advisory website Hankinnat.fi offers brief information in English at:
http://www.kunnat.net/k_etusivu.asp?path=1;161;122591
***
Tenders are announced in Finnish and Swedish on HILMA:
http://www.hankintailmoitukset.fi/
***
The Ministry of Employment and the Economy offers additional information about tender procedures in English at:
http://www.tem.fi/?l=en&s=102
The Ministry pages contain: Latest updates on Public procurement, Legislation (public procurement), Government institutions (Public procurement), Advice on public contracts, Publication on contracts, Thresholds, Case law (Public procurement), Special sectors (Public procurement) and Further information and links (Public procurement).
Ralf Grahn
For international companies and their advisors there is an unofficial English translation of the Finnish Act on Public Contracts (348/2007), based on Directive 2004/18/EC, available at:
http://www.finlex.fi/en/laki/kaannokset/2007/en20070348.pdf
***
The official versions are in Finnish and Swedish.
Finnish: Laki julkisista hankinnoista (348/2007):
http://www.finlex.fi/fi/laki/ajantasa/2007/20070348
Swedish: Lag om offentlig upphandling (348/2007):
http://www.finlex.fi/sv/laki/ajantasa/2007/20070348
***
The Government Bill, leading to the Act on Public Contracts, in Finnish ‘Hallituksen esitys Eduskunnalle laeiksi julkisista hankinnoista sekä vesi- ja energiahuollon, liikenteen ja postipalvelujen alalla toimivien yksiköiden hankinnoista (HE 50/2006 vp) and in Swedish ‘Regeringens proposition till Riksdagen med förslag till lag om offentlig upphandling och lag om upphandling inom sektorerna vatten, energi, transporter och posttjänster (RP 50/2006 rd), is accessible at:
http://www.finlex.fi/fi/esitykset/he/2006/?_offset=220
***
The Act, based upon the Utilities Directive 2004/17/EC, ‘Laki vesi- ja energiahuollon, liikenteen ja postipalvelujen alalla toimivien yksiköiden hankinnoista’ (349/2007) is available only in the official Finnish and Swedish versions.
Here in Finnish:
http://www.finlex.fi/fi/laki/ajantasa/2007/20070349
’Lag om upphandling inom sektorerna vatten, energi, transporter och posttjänster’ (349/2007) in Swedish:
http://www.finlex.fi/sv/laki/ajantasa/2007/20070349
***
The advisory website Hankinnat.fi offers brief information in English at:
http://www.kunnat.net/k_etusivu.asp?path=1;161;122591
***
Tenders are announced in Finnish and Swedish on HILMA:
http://www.hankintailmoitukset.fi/
***
The Ministry of Employment and the Economy offers additional information about tender procedures in English at:
http://www.tem.fi/?l=en&s=102
The Ministry pages contain: Latest updates on Public procurement, Legislation (public procurement), Government institutions (Public procurement), Advice on public contracts, Publication on contracts, Thresholds, Case law (Public procurement), Special sectors (Public procurement) and Further information and links (Public procurement).
Ralf Grahn
European Central Bank Ig: Amending ESCB Statute
Amending the treaties of the European Union is a laborious (some would say impossible) process in a union of 27. All the same, the member states have negotiated voluminous treaties and protocols in fine detail. This leads to recurring needs for amendments when policies evolve and circumstances change.
The member states have generally put themselves in the place of Tantalus: Constant hunger and thirst, but no satisfaction.
Well, not totally. The enabling clause (passerelle) has been introduced to make simplified amendments possible, in details here and there.
***
Protocol (No 18) on the Statute of the European System of Central Banks and of the European Central Bank (annexed to the latest consolidated version of the current treaties, OJ 29.12.2006 C 321 E/256─280) is a treaty level document, in principle requiring the application of the rules for treaty amendment if something has to be changed.
Mercifully, the member states’ governments have agreed that some household rules can be tweaked without a full-scale intergovernmental conference and ratification in every EU member state.
***
Article 107(5) of the Treaty establishing the European Community (TEC) offers an ‘amendment light’ procedure for changing parts of the ESCB Statute. This ‘passerelle’ type provision is limited to certain Articles, and four EU bodies are involved in each change, with the representatives of the member states (the Council) making the decision.
Here is paragraph 5 on the scope of simplified amendments (as in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/88):
Article 107(5) TEC
5. Articles 5.1, 5.2, 5.3, 17, 18, 19.1, 22, 23, 24, 26, 32.2, 32.3, 32.4, 32.6, 33.1(a) and 36 of the Statute of the ESCB may be amended by the Council, acting either by a qualified majority on a recommendation from the ECB and after consulting the Commission or unanimously on a proposal from the Commission and after consulting the ECB. In either case, the assent of the European Parliament shall be required.
***
For some people, enabling clauses are one more devious example of power-creep by ‘Brussels’ (although the European Central Bank is located in Frankfurt am Main), so we have to take a closer look at how the TEC places our distinct heritages and age-old freedoms at risk. In other words, we have to turn to the ESCB Statute to see what the Articles cover.
Article 5.1: Collecting statistical information.
Article 5.2: National central banks gathering statistical information.
Article 5.3: ECB rules for the collection, compilation and distribution of statistics.
Article 17: The ECB and the national central banks have the authority to open accounts
for credit institutions, public entities and other market participants and accept assets, including
book entry securities, as collateral.
Article 18: The ECB and the national central banks carry out open market and credit operations according to general principles established by the ECB.
Article 19.1: The ECB can determine the minimum reserve accounts credit institutions and national central banks have to hold, and the ECB can levy penalty interest and impose sanctions in case of non-compliance.
Article 22: the ECB may make regulations to ensure efficient and sound clearing and payment systems.
Article 23: The ECB and the national central banks can establish international relations with central banks and financial institutions in other countries and, where appropriate, with international organisations, and they can conduct international banking operations.
Article 24: the ECB and national central banks may enter into operations for their administrative purposes or for their staff.
Article 26: On annual financial accounts of the ECB and a consolidated ESCB balance sheet.
Article 32.2: Guidelines for determining each national central bank’s annual monetary income from its assets.
Article 32.3: An alternative method for determining the national central bank’s monetary income.
Article 32.4: Deductions from the monetary income.
Article 32.6: Clearing and settlement of monetary income.
Article 33.1(a): Allocation of the net profit of the ECB.
Article 36: The Governing Council lays down the conditions of employment of the staff of the ECB, and the Court of Justice has jurisdiction in disputes.
***
Most of the tasks listed above look necessary, if the ECB is to function as a central bank, so it is difficult to imagine the abolishment of (m)any powers. On the other hand, only a few of the Articles seem to leave any room for positive amendments, because the ECB appears to have the (necessary) power.
This leaves us puzzled.
Has the enabling clause for simplified amendments been written for (educational) reasons of principle or for fun?
Or are there concrete and practical reasons to anticipate amendments of the ESCB Statute?
I would be most pleased, if knowledgeable readers would care to comment.
Ralf Grahn
The member states have generally put themselves in the place of Tantalus: Constant hunger and thirst, but no satisfaction.
Well, not totally. The enabling clause (passerelle) has been introduced to make simplified amendments possible, in details here and there.
***
Protocol (No 18) on the Statute of the European System of Central Banks and of the European Central Bank (annexed to the latest consolidated version of the current treaties, OJ 29.12.2006 C 321 E/256─280) is a treaty level document, in principle requiring the application of the rules for treaty amendment if something has to be changed.
Mercifully, the member states’ governments have agreed that some household rules can be tweaked without a full-scale intergovernmental conference and ratification in every EU member state.
***
Article 107(5) of the Treaty establishing the European Community (TEC) offers an ‘amendment light’ procedure for changing parts of the ESCB Statute. This ‘passerelle’ type provision is limited to certain Articles, and four EU bodies are involved in each change, with the representatives of the member states (the Council) making the decision.
Here is paragraph 5 on the scope of simplified amendments (as in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/88):
Article 107(5) TEC
5. Articles 5.1, 5.2, 5.3, 17, 18, 19.1, 22, 23, 24, 26, 32.2, 32.3, 32.4, 32.6, 33.1(a) and 36 of the Statute of the ESCB may be amended by the Council, acting either by a qualified majority on a recommendation from the ECB and after consulting the Commission or unanimously on a proposal from the Commission and after consulting the ECB. In either case, the assent of the European Parliament shall be required.
***
For some people, enabling clauses are one more devious example of power-creep by ‘Brussels’ (although the European Central Bank is located in Frankfurt am Main), so we have to take a closer look at how the TEC places our distinct heritages and age-old freedoms at risk. In other words, we have to turn to the ESCB Statute to see what the Articles cover.
Article 5.1: Collecting statistical information.
Article 5.2: National central banks gathering statistical information.
Article 5.3: ECB rules for the collection, compilation and distribution of statistics.
Article 17: The ECB and the national central banks have the authority to open accounts
for credit institutions, public entities and other market participants and accept assets, including
book entry securities, as collateral.
Article 18: The ECB and the national central banks carry out open market and credit operations according to general principles established by the ECB.
Article 19.1: The ECB can determine the minimum reserve accounts credit institutions and national central banks have to hold, and the ECB can levy penalty interest and impose sanctions in case of non-compliance.
Article 22: the ECB may make regulations to ensure efficient and sound clearing and payment systems.
Article 23: The ECB and the national central banks can establish international relations with central banks and financial institutions in other countries and, where appropriate, with international organisations, and they can conduct international banking operations.
Article 24: the ECB and national central banks may enter into operations for their administrative purposes or for their staff.
Article 26: On annual financial accounts of the ECB and a consolidated ESCB balance sheet.
Article 32.2: Guidelines for determining each national central bank’s annual monetary income from its assets.
Article 32.3: An alternative method for determining the national central bank’s monetary income.
Article 32.4: Deductions from the monetary income.
Article 32.6: Clearing and settlement of monetary income.
Article 33.1(a): Allocation of the net profit of the ECB.
Article 36: The Governing Council lays down the conditions of employment of the staff of the ECB, and the Court of Justice has jurisdiction in disputes.
***
Most of the tasks listed above look necessary, if the ECB is to function as a central bank, so it is difficult to imagine the abolishment of (m)any powers. On the other hand, only a few of the Articles seem to leave any room for positive amendments, because the ECB appears to have the (necessary) power.
This leaves us puzzled.
Has the enabling clause for simplified amendments been written for (educational) reasons of principle or for fun?
Or are there concrete and practical reasons to anticipate amendments of the ESCB Statute?
I would be most pleased, if knowledgeable readers would care to comment.
Ralf Grahn
Tuesday, 28 October 2008
European Central Bank: Procurement rules
The ECB declares its commitment to the principle of cost-efficiency and to seeking the best value for money from the procurement of goods, services and works.
Still, the EC Procurement Directive (2004/18/EC) and the Financial Regulation (No 1605/2002) do not apply to the European Central Bank (ECB), but the ECB states that it respects the general principles of procurement law as reflected in the Procurement Directive and the Financial Regulation.
***
ESCB Statute
Protocol (No 18) on the Statute of the European System of Central Banks and of the European Central Bank (ESCB Statute; annexed to the latest consolidated version of the current treaties, OJ 29.12.2006 C 321 E/256─280) includes Article 11.6, which gives the Executive Board the authority to run the current business of the ECB:
11.6. The Executive Board shall be responsible for the current business of the ECB.
***
ECB Rules of Procedure
More detailed rules are found in the Decision of the European Central Bank of 19 February 2004 adopting the Rules of Procedure of the European Central Bank (ECB/2004/2); OJ 18.3.2004 C 80/33.
Article 19 of the ECB Rules of Procedures sets out the main principles concerning procurement of goods and services for the ECB:
Article 19 ECB Rules of Procedure
Procurement
19.1. Procurement of goods and services for the ECB shall give due regard to the principles of publicity, transparency, equal access, non-discrimination and efficient administration.
19.2. Except for the principle of efficient administration, derogations may be made from the above principles in cases of urgency; for reasons of security or secrecy; where there is a sole supplier; for supplies from the national central banks to the ECB; to ensure the continuity of a supplier.
***
ECB Rules of Procurement
On these bases, the Decision of the European Central Bank of 3 July 2007 laying down the Rules on Procurement (ECB/2007/5), OJ 14.7.2007 L 184/34, created new procurement rules for the ECB, largely built on general EC legislation, but with details particular to the ECB and the ESCB.
***
EBC General Terms & Conditions
The ECB, like other contracting parties in a strong position, has set out its own standard terms for suppliers. These are presented separately (in English and German) for:
Services and Works (Dienst & Werk)
Purchase (Kauf)
There is a third set of standard terms, concerning construction work, available on the ECB web site in German (Vertragsbedingungen für Bauleistungen), perhaps an indication of the planned Headquarters Building in Frankfurt am Main.
For an overview of ECB procurement, go to:
http://www.ecb.europa.eu/ecb/jobsproc/proc/tenders/html/index.en.html
Ralf Grahn
Still, the EC Procurement Directive (2004/18/EC) and the Financial Regulation (No 1605/2002) do not apply to the European Central Bank (ECB), but the ECB states that it respects the general principles of procurement law as reflected in the Procurement Directive and the Financial Regulation.
***
ESCB Statute
Protocol (No 18) on the Statute of the European System of Central Banks and of the European Central Bank (ESCB Statute; annexed to the latest consolidated version of the current treaties, OJ 29.12.2006 C 321 E/256─280) includes Article 11.6, which gives the Executive Board the authority to run the current business of the ECB:
11.6. The Executive Board shall be responsible for the current business of the ECB.
***
ECB Rules of Procedure
More detailed rules are found in the Decision of the European Central Bank of 19 February 2004 adopting the Rules of Procedure of the European Central Bank (ECB/2004/2); OJ 18.3.2004 C 80/33.
Article 19 of the ECB Rules of Procedures sets out the main principles concerning procurement of goods and services for the ECB:
Article 19 ECB Rules of Procedure
Procurement
19.1. Procurement of goods and services for the ECB shall give due regard to the principles of publicity, transparency, equal access, non-discrimination and efficient administration.
19.2. Except for the principle of efficient administration, derogations may be made from the above principles in cases of urgency; for reasons of security or secrecy; where there is a sole supplier; for supplies from the national central banks to the ECB; to ensure the continuity of a supplier.
***
ECB Rules of Procurement
On these bases, the Decision of the European Central Bank of 3 July 2007 laying down the Rules on Procurement (ECB/2007/5), OJ 14.7.2007 L 184/34, created new procurement rules for the ECB, largely built on general EC legislation, but with details particular to the ECB and the ESCB.
***
EBC General Terms & Conditions
The ECB, like other contracting parties in a strong position, has set out its own standard terms for suppliers. These are presented separately (in English and German) for:
Services and Works (Dienst & Werk)
Purchase (Kauf)
There is a third set of standard terms, concerning construction work, available on the ECB web site in German (Vertragsbedingungen für Bauleistungen), perhaps an indication of the planned Headquarters Building in Frankfurt am Main.
For an overview of ECB procurement, go to:
http://www.ecb.europa.eu/ecb/jobsproc/proc/tenders/html/index.en.html
Ralf Grahn
European Central Bank If: ESCB and ECB Statute
The legal framework of the European System of Central Banks (ESCB) and the European Central Bank (ECB) is set out at treaty level in the Treaty establishing the European Community (TEC) and in the Statute of the European System of Central Banks and of the European Central Bank (ESCB Statute).
***
Article 107(4) TEC is the bridge between the treaty proper and the ESCB Statute:
4. The Statute of the ESCB is laid down in a Protocol annexed to this Treaty.
***
ESCB Statute
We have referred to individual Articles of the ESCB Statute in a number of posts (and will do so again), because Protocol (No 18) on the Statute of the European System of Central Banks and of the European Central Bank (annexed to the latest consolidated version of the current treaties, OJ 29.12.2006 C 321 E/256─280) not only repeats, but elaborates on the treaty provisions.
This blog post is content to give you an overview of the ESCB Statute, by presenting a table of contents, which makes it easier to find what you want.
CHAPTER I
CONSTITUTION OF THE ESCB
Article 1 The European System of Central Banks
CHAPTER II
OBJECTIVES AND TASKS OF THE ESCB
Article 2 Objectives
Article 3 Tasks
Article 4 Advisory functions
Article 5 Collection of statistical information
Article 6 International cooperation
CHAPTER III
ORGANISATION OF THE ESCB
Article 7 Independence
Article 8 General principle
Article 9 The European Central Bank
Article 10 The Governing Council
Article 11 The Executive Board
Article 12 Responsibilities of the decision-making bodies
Article 13 The President
Article 14 National central banks
Article 15 Reporting commitments
Article 16 Banknotes
CHAPTER IV
MONETARY FUNCTIONS AND OPERATIONS OF THE ESCB
Article 17 Accounts with the ECB and the national central banks
Article 18 Open market and credit operations
Article 19 Minimum reserves
Article 20 Other instruments of monetary control
Article 21 Operations with public entities
Article 22 Clearing and payment systems
Article 23 External operations
Article 24 Other operations
CHAPTER V
PRUDENTIAL SUPERVISION
Article 25 Prudential supervision
CHAPTER VI
FINANCIAL PROVISIONS OF THE ESCB
Article 26 Financial accounts
Article 27 Auditing
Article 28 Capital of the ECB
Article 29 Key for capital subscription
Article 30 Transfer of foreign reserve assets to the ECB
Article 31 Foreign reserve assets held by national central banks
Article 32 Allocation of monetary income of national central banks
Article 33 Allocation of net profits and losses of the ECB
CHAPTER VII
GENERAL PROVISIONS
Article 34 Legal acts
Article 35 Judicial control and related matters
Article 36 Staff
Article 37 Seat
Article 38 Professional secrecy
Article 39 Signatories
Article 40 Privileges and immunities
CHAPTER VIII
AMENDMENT OF THE STATUTE AND COMPLEMENTARY LEGISLATION
Article 41 Simplified amendment procedure
Article 42 Complementary legislation
CHAPTER IX
TRANSITIONAL AND OTHER PROVISIONS FOR THE ESCB
Article 43 General provisions
Article 44 Transitional tasks of the ECB
Article 45 The General Council of the ECB
Article 46 Rules of Procedure of the General Council
Article 47 Responsibilities of the General Council
Article 48 Transitional provisions for the capital of the ECB
Article 49 Deferred payment of capital, reserves and provisions of the ECB
Article 50 Initial appointment of the members of the Executive Board
Article 51 Derogation from Article 32
Article 52 Exchange of banknotes in Community currencies
Article 53 Applicability of the transitional provisions
***
ECB Rules of Procedure
The ECB Rules of Procedure supplement the Treaty establishing the European Community and the Statute of the European System of Central Banks and of the European Central Bank, and they define the term ‘Eurosystem’ to mean the European Central Bank (ECB) and the national central banks of those Member States whose currency is the euro.
In other words, for added detail on the operating rules of the ECB, you can go to the Decision of the European Central Bank of 19 February 2004 adopting the Rules of Procedure of the European Central Bank (ECB/2004/2); OJ 18.3.2004 C 080/33.
***
ECB General Council Rules of Procedure
Since the European Union is doomed to have non-euro area national central banks for the forseeadle future, the European Central Bank has adopted Rules of Procedure of the ‘transitional’ General Council:
Decision of the European Central Bank of 17 June 2004 adopting the Rules of Procedure of the General Council of the European Central Bank (ECB/2004/12); OJ 30.6.2004 L 230/61.
Ralf Grahn
***
Article 107(4) TEC is the bridge between the treaty proper and the ESCB Statute:
4. The Statute of the ESCB is laid down in a Protocol annexed to this Treaty.
***
ESCB Statute
We have referred to individual Articles of the ESCB Statute in a number of posts (and will do so again), because Protocol (No 18) on the Statute of the European System of Central Banks and of the European Central Bank (annexed to the latest consolidated version of the current treaties, OJ 29.12.2006 C 321 E/256─280) not only repeats, but elaborates on the treaty provisions.
This blog post is content to give you an overview of the ESCB Statute, by presenting a table of contents, which makes it easier to find what you want.
CHAPTER I
CONSTITUTION OF THE ESCB
Article 1 The European System of Central Banks
CHAPTER II
OBJECTIVES AND TASKS OF THE ESCB
Article 2 Objectives
Article 3 Tasks
Article 4 Advisory functions
Article 5 Collection of statistical information
Article 6 International cooperation
CHAPTER III
ORGANISATION OF THE ESCB
Article 7 Independence
Article 8 General principle
Article 9 The European Central Bank
Article 10 The Governing Council
Article 11 The Executive Board
Article 12 Responsibilities of the decision-making bodies
Article 13 The President
Article 14 National central banks
Article 15 Reporting commitments
Article 16 Banknotes
CHAPTER IV
MONETARY FUNCTIONS AND OPERATIONS OF THE ESCB
Article 17 Accounts with the ECB and the national central banks
Article 18 Open market and credit operations
Article 19 Minimum reserves
Article 20 Other instruments of monetary control
Article 21 Operations with public entities
Article 22 Clearing and payment systems
Article 23 External operations
Article 24 Other operations
CHAPTER V
PRUDENTIAL SUPERVISION
Article 25 Prudential supervision
CHAPTER VI
FINANCIAL PROVISIONS OF THE ESCB
Article 26 Financial accounts
Article 27 Auditing
Article 28 Capital of the ECB
Article 29 Key for capital subscription
Article 30 Transfer of foreign reserve assets to the ECB
Article 31 Foreign reserve assets held by national central banks
Article 32 Allocation of monetary income of national central banks
Article 33 Allocation of net profits and losses of the ECB
CHAPTER VII
GENERAL PROVISIONS
Article 34 Legal acts
Article 35 Judicial control and related matters
Article 36 Staff
Article 37 Seat
Article 38 Professional secrecy
Article 39 Signatories
Article 40 Privileges and immunities
CHAPTER VIII
AMENDMENT OF THE STATUTE AND COMPLEMENTARY LEGISLATION
Article 41 Simplified amendment procedure
Article 42 Complementary legislation
CHAPTER IX
TRANSITIONAL AND OTHER PROVISIONS FOR THE ESCB
Article 43 General provisions
Article 44 Transitional tasks of the ECB
Article 45 The General Council of the ECB
Article 46 Rules of Procedure of the General Council
Article 47 Responsibilities of the General Council
Article 48 Transitional provisions for the capital of the ECB
Article 49 Deferred payment of capital, reserves and provisions of the ECB
Article 50 Initial appointment of the members of the Executive Board
Article 51 Derogation from Article 32
Article 52 Exchange of banknotes in Community currencies
Article 53 Applicability of the transitional provisions
***
ECB Rules of Procedure
The ECB Rules of Procedure supplement the Treaty establishing the European Community and the Statute of the European System of Central Banks and of the European Central Bank, and they define the term ‘Eurosystem’ to mean the European Central Bank (ECB) and the national central banks of those Member States whose currency is the euro.
In other words, for added detail on the operating rules of the ECB, you can go to the Decision of the European Central Bank of 19 February 2004 adopting the Rules of Procedure of the European Central Bank (ECB/2004/2); OJ 18.3.2004 C 080/33.
***
ECB General Council Rules of Procedure
Since the European Union is doomed to have non-euro area national central banks for the forseeadle future, the European Central Bank has adopted Rules of Procedure of the ‘transitional’ General Council:
Decision of the European Central Bank of 17 June 2004 adopting the Rules of Procedure of the General Council of the European Central Bank (ECB/2004/12); OJ 30.6.2004 L 230/61.
Ralf Grahn
Re: Europa and Julien Frisch: EU transparency now!
Is there no European public sphere? If that is your belief, you don’t believe in the existence of Steve Peers, RZ or Julien Frisch (and a growing number of engaged EU citizens, researchers and NGOs).
***
I was happy to see that Euroblogger RZ on Re: Europa wrote a post on the Statewatch proposals for improved openness, transparency and democracy in the European Union, prepared by Professor Steve Peers of the University of Essex.
The article ‘Towards a more perfect Union’ indicated the main thrust of the proposals, and called the document brilliant:
http://reeuropa.blogspot.com/2008/10/towards-more-perfect-union.html
***
Julien Frisch, another Euroblogger with an EU citizens’ perspective, also wrote a post on the same theme ‘More transparency in the Council of the European Union!’, calling for immediate reforms:
http://julienfrisch.blogspot.com/2008/10/more-transparency-in-council-of.html
***
Steve Peers and Statewatch make proposals for EU openness, transparency and democracy in two draft documents:
1) Declaration of the European Council on enhancing the openness, transparency and democracy of the activities of the European Union (Annex I)
2) Inter-Institutional Agreement On enhancing public access to documents and citizens’ participation in decision-making as regards the co-decision procedure (Annex II)
Together with the introductory explanations, they form the ‘Statewatch analysis: Proposals for greater openness, transparency and democracy in the EU’, by Professor Steve Peers, University of Essex (October 2008).
The brilliance of the proposals lies in that they can be implemented now, regardless of the Lisbon Treaty. They represent small, but concrete steps towards a better union.
This important document is available at:
http://www.statewatch.org/analyses/proposals-for-greater-openness-peers-08.pdf
***
Even before a democratic European Union is established, a number of improvements are possible, if the political will is there.
Essential reading for heads of state or government ─ and for other EU citizens.
“Magnanimity in politics is not seldom the truest wisdom; and a great empire and little minds go ill together.” (Edmund Burke)
***
No number of inter-institutional agreements on better communications or communications campaigns is going to legitimise the European project without real reform ─ big and small ─ of structures and content. As long as our leaders fail to embrace democratic reform, their project plays into the hands of populist and anti-reformist movements everywhere.
The European Union needs two things: Real power, where it matters. Real democracy, where the matters belong.
It is time for the European Council to re-found the European Union.
Ralf Grahn
***
I was happy to see that Euroblogger RZ on Re: Europa wrote a post on the Statewatch proposals for improved openness, transparency and democracy in the European Union, prepared by Professor Steve Peers of the University of Essex.
The article ‘Towards a more perfect Union’ indicated the main thrust of the proposals, and called the document brilliant:
http://reeuropa.blogspot.com/2008/10/towards-more-perfect-union.html
***
Julien Frisch, another Euroblogger with an EU citizens’ perspective, also wrote a post on the same theme ‘More transparency in the Council of the European Union!’, calling for immediate reforms:
http://julienfrisch.blogspot.com/2008/10/more-transparency-in-council-of.html
***
Steve Peers and Statewatch make proposals for EU openness, transparency and democracy in two draft documents:
1) Declaration of the European Council on enhancing the openness, transparency and democracy of the activities of the European Union (Annex I)
2) Inter-Institutional Agreement On enhancing public access to documents and citizens’ participation in decision-making as regards the co-decision procedure (Annex II)
Together with the introductory explanations, they form the ‘Statewatch analysis: Proposals for greater openness, transparency and democracy in the EU’, by Professor Steve Peers, University of Essex (October 2008).
The brilliance of the proposals lies in that they can be implemented now, regardless of the Lisbon Treaty. They represent small, but concrete steps towards a better union.
This important document is available at:
http://www.statewatch.org/analyses/proposals-for-greater-openness-peers-08.pdf
***
Even before a democratic European Union is established, a number of improvements are possible, if the political will is there.
Essential reading for heads of state or government ─ and for other EU citizens.
“Magnanimity in politics is not seldom the truest wisdom; and a great empire and little minds go ill together.” (Edmund Burke)
***
No number of inter-institutional agreements on better communications or communications campaigns is going to legitimise the European project without real reform ─ big and small ─ of structures and content. As long as our leaders fail to embrace democratic reform, their project plays into the hands of populist and anti-reformist movements everywhere.
The European Union needs two things: Real power, where it matters. Real democracy, where the matters belong.
It is time for the European Council to re-found the European Union.
Ralf Grahn
Monday, 27 October 2008
Statewatch: EU openness, transparency and democracy
Even before true democratic reform of the European Union, and more or less regardless of the ratification of the Treaty of Lisbon, the European Council could improve openness, transparency and democracy by providing impetus for a number of limited, but important reforms.
Professor Steve Peers has written a number of proposals for Statewatch, setting out possible improvements, which primarily require political will. The concrete proposals are given in two draft documents:
Declaration of the European Council on enhancing the openness, transparency and democracy of the activities of the European Union (Annex I)
Inter-Institutional Agreement On enhancing public access to documents and citizens’ participation in decision-making as regards the co-decision procedure (Annex II)
Together with the introductory explanations, they form the ‘Statewatch analysis: Proposals for greater openness, transparency and democracy in the EU’, by Professor Steve Peers, University of Essex (October 2008).
This important document is available at:
http://www.statewatch.org/analyses/proposals-for-greater-openness-peers-08.pdf
***
Before a democratic European Union is established, a number of improvements are possible, if the political will is there. Even the Lisbon Treaty might become less odious for some EU citizens, if these reform steps were taken.
Ralf Grahn
Professor Steve Peers has written a number of proposals for Statewatch, setting out possible improvements, which primarily require political will. The concrete proposals are given in two draft documents:
Declaration of the European Council on enhancing the openness, transparency and democracy of the activities of the European Union (Annex I)
Inter-Institutional Agreement On enhancing public access to documents and citizens’ participation in decision-making as regards the co-decision procedure (Annex II)
Together with the introductory explanations, they form the ‘Statewatch analysis: Proposals for greater openness, transparency and democracy in the EU’, by Professor Steve Peers, University of Essex (October 2008).
This important document is available at:
http://www.statewatch.org/analyses/proposals-for-greater-openness-peers-08.pdf
***
Before a democratic European Union is established, a number of improvements are possible, if the political will is there. Even the Lisbon Treaty might become less odious for some EU citizens, if these reform steps were taken.
Ralf Grahn
Europe: Populism or democracy?
Ahead of the European elections in June 2009, we have seen two political trends. One the one hand, after the historic EU enlargement in 2004 and 2007 and since the beginning of the current Commission, the communitarian spirit seems to have ceded to increasing intergovernmentalism and national self-interest. The financial turmoil has accelerated both nationalistic responses and intergovernmental summiteering, with various ‘ad hoc’ initiatives thrown in for good measure. The Treaty of Lisbon would have brought some belated efficiency gains after the expansion to 27 members, but the Lisbon Treaty fails miserably in creating a European level democracy.
On the other hand, popular estrangement has increasingly favoured nationalistic and populist parties in national and sub-national elections. Referendums, purportedly on pan-European issues like the Constitutional Treaty and the Lisbon Treaty, have boosted anti-reformist and self-absorbed movements, left or right, in France, the Netherlands and Ireland.
Municipal elections in Finland are hardly hot stuff for international media generally, but the spectacular gains by the populist True Finns are the latest indication of anti-European sentiments on the rise. Although the True Finns captured less than six per cent of the vote, their swayed almost six times as many voters as four years ago.
The International Edition of Helsingin Sanomat has more:
http://www.hs.fi/english/article/MUNICIPAL+ELECTIONS+SUNDAY+2345+National+Coalition+Party+largest+party+True+Finns+big+winners+gains+for+Greens+/1135240557573
***
More than ever, pan-European solutions and actions are needed to enhance our security and to regain our prosperity, but populations are increasingly rejecting the European leaders’ intergovernmentalist and functionalist project.
The group of wise persons has been expressly forbidden to even think about so called institutional issues, but today’s challenges do not call for institutional tinkering in the customary manner.
The wise persons ─ and the European leaders ─ have to look at the foundations of the European project. Without democratic legitimacy and accountability the European Union is running aground. Only a European Union based on its citizens can give us the foundations we need to weather the storms.
Ralf Grahn
On the other hand, popular estrangement has increasingly favoured nationalistic and populist parties in national and sub-national elections. Referendums, purportedly on pan-European issues like the Constitutional Treaty and the Lisbon Treaty, have boosted anti-reformist and self-absorbed movements, left or right, in France, the Netherlands and Ireland.
Municipal elections in Finland are hardly hot stuff for international media generally, but the spectacular gains by the populist True Finns are the latest indication of anti-European sentiments on the rise. Although the True Finns captured less than six per cent of the vote, their swayed almost six times as many voters as four years ago.
The International Edition of Helsingin Sanomat has more:
http://www.hs.fi/english/article/MUNICIPAL+ELECTIONS+SUNDAY+2345+National+Coalition+Party+largest+party+True+Finns+big+winners+gains+for+Greens+/1135240557573
***
More than ever, pan-European solutions and actions are needed to enhance our security and to regain our prosperity, but populations are increasingly rejecting the European leaders’ intergovernmentalist and functionalist project.
The group of wise persons has been expressly forbidden to even think about so called institutional issues, but today’s challenges do not call for institutional tinkering in the customary manner.
The wise persons ─ and the European leaders ─ have to look at the foundations of the European project. Without democratic legitimacy and accountability the European Union is running aground. Only a European Union based on its citizens can give us the foundations we need to weather the storms.
Ralf Grahn
European Central Bank Ie: Governing Council and Executive Board
The governing bodies of the European System of Central Banks (ESCB) are written into the Treaty establishing the European Community (TEC) as if all EU member states had adopted the euro currency. In practice, the European Central Bank (ECB) is at the core of the Eurosystem, including the national central banks of the eurozone countries, but additional decision-making structures will have to accommodate three groups of “outsider” countries for a long time, possibly even permanently:
First, there are the old member states the United Kingdom and Denmark with, in principle, permanent opt-outs from the single currency, and Sweden technically not fit for the third stage of economic and monetary union (EMU).
The second group consists of the new member states with a derogation, not yet able (or willing) to adopt the euro currency.
Third, future EU member states will mean new recruits to the non-euro group, if the enlargement process continues, before they fulfil the convergence criteria.
***
Eurosystem
Article 107(3) TEC reflects the “official position”, which is a reality for the 15 (soon 16) eurozone countries (in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/88):
Article 107(3) TEC
3. The ESCB shall be governed by the decision-making bodies of the ECB which shall be the Governing Council and the Executive Board.
***
Protocol (No 18) on the Statute of the European System of Central Banks and of the European Central Bank (OJ 29.12.2006 C 321 E/256─280) repeats and elaborates on the treaty provisions in Chapter III Organisation of the ESCB.
The single currency evidently needs centralised decision-making structures, reflected in the ESCB Statute, which reiterates that the decision-making bodies of the ESCB are those of the ECB:
Article 8 ESCB Statute
General principle
The ESCB shall be governed by the decision-making bodies of the ECB.
***
The rest of Article 107(3) TEC is repeated in Article 9.3 of the ESCB Statute, which names the Governing Council and the Executive Board of the ECB as the decision-making bodies:
Article 9 ESCB Statute
The European Central Bank
9.1. The ECB which, in accordance with Article 107(2) of this Treaty, shall have legal personality, shall enjoy in each of the Member States the most extensive legal capacity accorded to legal persons under its law; it may, in particular, acquire or dispose of movable and immovable property and may be a party to legal proceedings.
9.2. The ECB shall ensure that the tasks conferred upon the ESCB under Article 105(2), (3) and (5) of this Treaty are implemented either by its own activities pursuant to this Statute or through the national central banks pursuant to Articles 12.1 and 14.
9.3. In accordance with Article 107(3) of this Treaty, the decision making bodies of the ECB shall be the Governing Council and the Executive Board.
***
The basic treaty provisions on the composition of the decision-making bodies are set out in Article 112 TEC (ex Article 109a). The core group is the ECB Executive Board, with six members, the President, the Vice-President and four other members. They are also members of the larger Governing Council, where the Governors of the national central banks sit:
CHAPTER 3
INSTITUTIONAL PROVISIONS
Article 112 TEC
1. The Governing Council of the ECB shall comprise the members of the Executive Board of the ECB and the Governors of the national central banks.
2. (a) The Executive Board shall comprise the President, the Vice-President and four other members.
(b) The President, the Vice-President and the other members of the Executive Board shall be appointed from among persons of recognised standing and professional experience in monetary or banking matters by common accord of the governments of the Member States at the level of Heads of State or Government, on a recommendation from the Council, after it has consulted the European Parliament and the Governing Council of the ECB.
Their term of office shall be eight years and shall not be renewable.
Only nationals of Member States may be members of the Executive Board.
***
ESCB Statute
Article 10 of the ESCB Statute modifies the voting rights in the ECB Governing Council, when the number of Eurosystem national central banks increases, for the first time when the number exceeds 15 (as it will on 1 January 2009), if the Governing Council does not decide to postpone the rotation system until the number of governors exceeds 18.
For certain decisions the votes are weighted according to the national central banks' shares in the subscribed capital of the ECB.
***
ESCB Statute Article 11 reiterates and expands upon the provisions on the ECB Executive Board in Article 112 TEC.
***
The main responsibilities of the ECB Governing Council and the Executive Board are set out in Article 12 of the ESCB Statute.
***
ECB Executive Board members
The first President of the Executive Board was Wim Duisenberg (from 1998 to 2003). The appointment of the current President Jean-Claude Trichet runs from 2003 to 2011.
Lucas Papademos is Vice-President and the four other members of the Executive Board are: Gertrude Trumpel-Guderell, José Manuel González-Páramo, Lorenzo Bini Smaghi and Jürgen Stark.
The European Central Bank offers additional information on the Executive Board, including current and past members, at:
http://www.ecb.europa.eu/ecb/orga/decisions/eb/html/index.en.html
***
ECB Governing Council members
In addition to the six members of the Executive Board, the ECB Governing Council consists of the governors of the fifteen Eurosystem national central banks:
Guy Quaden (Nationale Bank van België / Banque Nationale de Belgique)
Axel A. Weber (Deutsche Bundesbank)
John Hurley (Central Bank and Financial Services Authority of Ireland)
Georgios Provopoulos (Bank of Greece)
Miguel Fernández Ordóñez (Banco de España)
Christian Noyer (Banque de France)
Mario Draghi (Banca d’Italia)
Athanasios Orphanides (Central Bank of Cyprus)
Yves Mersch (Banque centrale du Luxembourg)
Michael C. Bonello (Central Bank of Malta)
Nout Wellink (De Nederlandsche Bank)
Ewald Nowotny (Oesterreichische Nationalbank)
Vítor Manuel Ribeiro Constáncio (Banco de Portugal)
Marko Kranjec (Banka Slovenije)
Erkki Liikanen (Suomen Pankki – Finlands Bank)
The ECB’s web page on the Governing Council is available at:
http://www.ecb.europa.eu/ecb/orga/decisions/govc/html/index.en.html
***
Member States with a derogation
ECB General Council
The General Council of the European Central Bank is, in principle, a transitional body, where the President and the Vice-President of the ECB Executive Board and the governors of the Eurosystem national central banks are joined by the 12 governors of the non-eurozone national central banks.
Article 44 of the ESCB Statute on transitional tasks provides that the ECB shall take over those tasks of the EMI which, because of the derogations of one or more member states, still have to be performed in the third stage, and that the ECB shall give advice in the preparations for the abrogation of the derogations specified in Article 122 TEC.
ESCB Statute Article 45 is the main provision on the composition of the General Council:
Article 45 ESCB Statute
The General Council of the ECB
45.1. Without prejudice to Article 107(3) of this Treaty, the General Council shall be constituted as a third decision-making body of the ECB.
45.2. The General Council shall comprise the President and Vice-President of the ECB and the Governors of the national central banks. The other members of the Executive Board may participate, without having the right to vote, in meetings of the General Council.
45.3. The responsibilities of the General Council are listed in full in Article 47 of this Statute.
***
The Rules of Procedure of the General Council are dealt with in Article 46 and the Responsibilities of the General Council are laid down in Article 47 of the ESCB Statute.
***
ECB General Council members
In addition to the President and the Vice-President of the ECB Executive Board and the governors of the Eurosystem national central banks the ECB General Council joins the 12 governors of the non-eurozone national central banks (member states with a derogation):
Ivan Iskrov (Bulgarian National Bank)
Zdeněk Tůma (Česká národní banka)
Nils Bernstein (Danmarks Nationalbank)
Andres Lipstok (Eesti Pank)
Ilmārs Rimšēvičs (Latvijas Banka)
Reinoldius Šarkinas (Lietuvos bankas)
András Simor (Magyar Nemzeti Bank)
Slawomir Skrzypek (Narodowy Bank Polski)
Mugur Isǎresku (Banca Natională a Romăniei)
Ivan Šramko (Národná banka slovenska)
Stefan Ingves (Sveriges Riksbank)
Mervyn King (Bank of England)
The ECB’s web page on the General Council is accessible at:
http://www.ecb.europa.eu/ecb/orga/decisions/genc/html/index.en.html
Ralf Grahn
First, there are the old member states the United Kingdom and Denmark with, in principle, permanent opt-outs from the single currency, and Sweden technically not fit for the third stage of economic and monetary union (EMU).
The second group consists of the new member states with a derogation, not yet able (or willing) to adopt the euro currency.
Third, future EU member states will mean new recruits to the non-euro group, if the enlargement process continues, before they fulfil the convergence criteria.
***
Eurosystem
Article 107(3) TEC reflects the “official position”, which is a reality for the 15 (soon 16) eurozone countries (in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/88):
Article 107(3) TEC
3. The ESCB shall be governed by the decision-making bodies of the ECB which shall be the Governing Council and the Executive Board.
***
Protocol (No 18) on the Statute of the European System of Central Banks and of the European Central Bank (OJ 29.12.2006 C 321 E/256─280) repeats and elaborates on the treaty provisions in Chapter III Organisation of the ESCB.
The single currency evidently needs centralised decision-making structures, reflected in the ESCB Statute, which reiterates that the decision-making bodies of the ESCB are those of the ECB:
Article 8 ESCB Statute
General principle
The ESCB shall be governed by the decision-making bodies of the ECB.
***
The rest of Article 107(3) TEC is repeated in Article 9.3 of the ESCB Statute, which names the Governing Council and the Executive Board of the ECB as the decision-making bodies:
Article 9 ESCB Statute
The European Central Bank
9.1. The ECB which, in accordance with Article 107(2) of this Treaty, shall have legal personality, shall enjoy in each of the Member States the most extensive legal capacity accorded to legal persons under its law; it may, in particular, acquire or dispose of movable and immovable property and may be a party to legal proceedings.
9.2. The ECB shall ensure that the tasks conferred upon the ESCB under Article 105(2), (3) and (5) of this Treaty are implemented either by its own activities pursuant to this Statute or through the national central banks pursuant to Articles 12.1 and 14.
9.3. In accordance with Article 107(3) of this Treaty, the decision making bodies of the ECB shall be the Governing Council and the Executive Board.
***
The basic treaty provisions on the composition of the decision-making bodies are set out in Article 112 TEC (ex Article 109a). The core group is the ECB Executive Board, with six members, the President, the Vice-President and four other members. They are also members of the larger Governing Council, where the Governors of the national central banks sit:
CHAPTER 3
INSTITUTIONAL PROVISIONS
Article 112 TEC
1. The Governing Council of the ECB shall comprise the members of the Executive Board of the ECB and the Governors of the national central banks.
2. (a) The Executive Board shall comprise the President, the Vice-President and four other members.
(b) The President, the Vice-President and the other members of the Executive Board shall be appointed from among persons of recognised standing and professional experience in monetary or banking matters by common accord of the governments of the Member States at the level of Heads of State or Government, on a recommendation from the Council, after it has consulted the European Parliament and the Governing Council of the ECB.
Their term of office shall be eight years and shall not be renewable.
Only nationals of Member States may be members of the Executive Board.
***
ESCB Statute
Article 10 of the ESCB Statute modifies the voting rights in the ECB Governing Council, when the number of Eurosystem national central banks increases, for the first time when the number exceeds 15 (as it will on 1 January 2009), if the Governing Council does not decide to postpone the rotation system until the number of governors exceeds 18.
For certain decisions the votes are weighted according to the national central banks' shares in the subscribed capital of the ECB.
***
ESCB Statute Article 11 reiterates and expands upon the provisions on the ECB Executive Board in Article 112 TEC.
***
The main responsibilities of the ECB Governing Council and the Executive Board are set out in Article 12 of the ESCB Statute.
***
ECB Executive Board members
The first President of the Executive Board was Wim Duisenberg (from 1998 to 2003). The appointment of the current President Jean-Claude Trichet runs from 2003 to 2011.
Lucas Papademos is Vice-President and the four other members of the Executive Board are: Gertrude Trumpel-Guderell, José Manuel González-Páramo, Lorenzo Bini Smaghi and Jürgen Stark.
The European Central Bank offers additional information on the Executive Board, including current and past members, at:
http://www.ecb.europa.eu/ecb/orga/decisions/eb/html/index.en.html
***
ECB Governing Council members
In addition to the six members of the Executive Board, the ECB Governing Council consists of the governors of the fifteen Eurosystem national central banks:
Guy Quaden (Nationale Bank van België / Banque Nationale de Belgique)
Axel A. Weber (Deutsche Bundesbank)
John Hurley (Central Bank and Financial Services Authority of Ireland)
Georgios Provopoulos (Bank of Greece)
Miguel Fernández Ordóñez (Banco de España)
Christian Noyer (Banque de France)
Mario Draghi (Banca d’Italia)
Athanasios Orphanides (Central Bank of Cyprus)
Yves Mersch (Banque centrale du Luxembourg)
Michael C. Bonello (Central Bank of Malta)
Nout Wellink (De Nederlandsche Bank)
Ewald Nowotny (Oesterreichische Nationalbank)
Vítor Manuel Ribeiro Constáncio (Banco de Portugal)
Marko Kranjec (Banka Slovenije)
Erkki Liikanen (Suomen Pankki – Finlands Bank)
The ECB’s web page on the Governing Council is available at:
http://www.ecb.europa.eu/ecb/orga/decisions/govc/html/index.en.html
***
Member States with a derogation
ECB General Council
The General Council of the European Central Bank is, in principle, a transitional body, where the President and the Vice-President of the ECB Executive Board and the governors of the Eurosystem national central banks are joined by the 12 governors of the non-eurozone national central banks.
Article 44 of the ESCB Statute on transitional tasks provides that the ECB shall take over those tasks of the EMI which, because of the derogations of one or more member states, still have to be performed in the third stage, and that the ECB shall give advice in the preparations for the abrogation of the derogations specified in Article 122 TEC.
ESCB Statute Article 45 is the main provision on the composition of the General Council:
Article 45 ESCB Statute
The General Council of the ECB
45.1. Without prejudice to Article 107(3) of this Treaty, the General Council shall be constituted as a third decision-making body of the ECB.
45.2. The General Council shall comprise the President and Vice-President of the ECB and the Governors of the national central banks. The other members of the Executive Board may participate, without having the right to vote, in meetings of the General Council.
45.3. The responsibilities of the General Council are listed in full in Article 47 of this Statute.
***
The Rules of Procedure of the General Council are dealt with in Article 46 and the Responsibilities of the General Council are laid down in Article 47 of the ESCB Statute.
***
ECB General Council members
In addition to the President and the Vice-President of the ECB Executive Board and the governors of the Eurosystem national central banks the ECB General Council joins the 12 governors of the non-eurozone national central banks (member states with a derogation):
Ivan Iskrov (Bulgarian National Bank)
Zdeněk Tůma (Česká národní banka)
Nils Bernstein (Danmarks Nationalbank)
Andres Lipstok (Eesti Pank)
Ilmārs Rimšēvičs (Latvijas Banka)
Reinoldius Šarkinas (Lietuvos bankas)
András Simor (Magyar Nemzeti Bank)
Slawomir Skrzypek (Narodowy Bank Polski)
Mugur Isǎresku (Banca Natională a Romăniei)
Ivan Šramko (Národná banka slovenska)
Stefan Ingves (Sveriges Riksbank)
Mervyn King (Bank of England)
The ECB’s web page on the General Council is accessible at:
http://www.ecb.europa.eu/ecb/orga/decisions/genc/html/index.en.html
Ralf Grahn
Sunday, 26 October 2008
European Central Bank Id: Legal personality
With legal personality the European Central Bank the capacity to act, subject to the EC Treaty and the ESCB Statute. We look at both authority and limits, within the member states and internationally.
We take a peek at the ECB’s privileges and immunities.
***
Legal personality
We remember that the European Central Bank is not mentioned among the European Community institutions in Article 7 of the Treaty establishing the European Community (TEC), but according to Article 8 TEC a European System of Central Banks (ESCB) and a European Central Bank (ECB) are established. They shall act within the limits of the powers conferred upon them by the TEC and by the treaty level Statute of the ESCB and the ECB.
Legal personality is one crucial aspect of these powers. Pursuant to Article 107(2) TEC, in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/88:
2. The ECB shall have legal personality.
***
Internally
We notice that legal personality is accorded to the European Central Bank, not the European System of Central Banks.
Protocol (No 18) on the Statute of the European System of Central Banks and of the European Central Bank (1992) repeats, but also elaborates on the treaty provisions. Article 9.1 of the Statute adds the following, OJ 29.12.2006 C 321 E/259:
Article 9 ESCB Statute
The European Central Bank
9.1. The ECB which, in accordance with Article 107(2) of this Treaty, shall have legal personality, shall enjoy in each of the Member States the most extensive legal capacity accorded to legal persons under its law; it may, in particular, acquire or dispose of movable and immovable property and may be a party to legal proceedings.
9.2. The ECB shall ensure that the tasks conferred upon the ESCB under Article 105(2), (3) and (5) of this Treaty are implemented either by its own activities pursuant to this Statute or through the national central banks pursuant to Articles 12.1 and 14.
9.3. In accordance with Article 107(3) of this Treaty, the decision making bodies of the ECB shall be the Governing Council and the Executive Board.
***
Within the European Community (EC), or more exactly “in each of the Member States” the ECB shall have “the most extensive legal capacity accorded to legal persons under its law”. In other words, the exact scope is determined by and it varies according to the law of the member state.
The Satute mentions two examples, which means that the powers of the ECB to act are not necessarily restricted to them. Internally, the ECB’s legal capacity (to act) includes the following in every member state:
The ECB has the right to acquire and to dispose of property, both movable and immovable.
The other important example is that the ECB may be a party to legal proceedings.
Naturally, the European Central Bank exercises its powers within the limits conferred by the TEC and by the Statute of the ESCB and the ECB (objectives, tasks, substantial and procedural limitations).
***
Internationally
The International Court of Justice has given the following definition of the legal personality of an international organisation “That it is a subject of international law and capable of possessing international rights and duties, and that it has capacity to maintain its rights by bringing international claims” (as quoted in Ian Brownlie: Public International Law; Oxford University Press, 6th Edition, 2003; page 649).
Undoubtedly, the European Central Bank has capacity to act internationally, but subject to limitations. Naturally, the scope of the ECB’s activities is defined by its tasks (functionally). In addition, the ECB’s powers are limited by the competences accorded to the European Community, and in particular the EU Council.
***
International agreements
According to Article 111(1) TEC, formal agreements on an exchange-rate system for the euro in relation to non-Community currencies are concluded by the Council. The Council adopts, adjusts or abandons the central rates of the euro within the exchange-rate system.
The Council may formulate general orientations for exchange-rate policy in relation to non-Community currencies; Article 111(2) TEC.
Pursuant to Article 111(3) TEC, agreements concerning monetary or foreign exchange regime matters are negotiated and concluded by the Council on behalf of the Community. These agreements are binding on the EC, the ECB and the member states. (Both the first and the third paragraph are exceptions to Article 300 on the normal procedures for international agreements.)
The Council decides the international position of the European Community on issues of particular relevance to economic and monetary union (EMU), as well as on EC representation. (Article 111(4) TEC, with references to Articles 99 and 105).
But, in matters directly pertaining to its powers, the European Central Bank has concluded agreements with international organisations. The anti-counterfeiting agreements with Europol and Interpol can be mentioned as examples.
Another example is the Headquarters Agreement between the Government of the Federal Republic of Germany and the ECB concerning the seat of the ECB (29.12.1998):
http://www.ecb.europa.eu/ecb/legal/pdf/en_headquarters_agreement_final.pdf
The Headquarters Agreement in German (original):
http://www.ecb.europa.eu/ecb/legal/pdf/de_headquarters_agreement_f_published.pdf
***
Article 6.2 of the ESCB Statute foresees an international role for the ECB, in the form of participation in international monetary institutions, but subject to the EC positions defined by the Council, as indicated by Article 6.3 (OJ 29.12.2006 C 321 E/258):
Article 6 ESCB Statute
International cooperation
6.1. In the field of international cooperation involving the tasks entrusted to the ESCB, the ECB shall decide how the ESCB shall be represented.
6.2. The ECB and, subject to its approval, the national central banks may participate in international monetary institutions.
6.3. Articles 6.1 and 6.2 shall be without prejudice to Article 111(4) of this Treaty.
***
Clearing and payment systems
ESCB Statute Article 22 confers powers with an international dimension on the European Central Bank:
Article 22 ESCB Statute
Clearing and payment systems
The ECB and national central banks may provide facilities, and the ECB may make regulations, to ensure efficient and sound clearing and payment systems within the Community and with other countries.
***
International relations and transactions
Article 23 of the ESCB Statute authorises the ECB to establish relations with central banks and international (monetary) organisations (first indent) and conduct all types of banking transactions with third countries and international organisations (fourth indent).
Article 23 ESCB Statute
External operations
The ECB and national central banks may:
— establish relations with central banks and financial institutions in other countries and, where
appropriate, with international organisations;
— acquire and sell spot and forward all types of foreign exchange assets and precious metals; the
term ‘foreign exchange asset’ shall include securities and all other assets in the currency of any
country or units of account and in whatever form held;
— hold and manage the assets referred to in this Article;
— conduct all types of banking transactions in relations with third countries and international
organisations, including borrowing and lending operations.
***
Privileges and immunities
Article 40 of the ESCB Statute refers to the Privileges and immunities of the ECB, a reminder of the intergovernmental (international law) roots of the European Central Bank (as part of the framework of the European Union and the European Communities).
Article 40 ESCB Statute
Privileges and immunities
The ECB shall enjoy in the territories of the Member States such privileges and immunities as are necessary for the performance of its tasks, under the conditions laid down in the Protocol on the privileges and immunities of the European Communities.
Annexed to the Treaties establishing the European Community and the European Atomic Energy Community, Protocol (No 36) on the privileges and immunities of the European Communities (1965), accords to the Communities and to the European Investment Bank in the territories of the Member States such privileges and immunities as are necessary for the performance of their tasks;
OJ 29.12.2006 C 321 E/318
Article 23 of Protocol No 36 extends the application to the European Central Bank:
Article 23 Protocol on privileges and immunities
This Protocol shall also apply to the European Central Bank, to the members of its organs and to its staff, without prejudice to the provisions of the Protocol on the Statute of the European System of Central Banks and the European Central Bank.
The European Central Bank shall, in addition, be exempt from any form of taxation or imposition of a like nature on the occasion of any increase in its capital and from the various formalities which may be connected therewith in the State where the bank has its seat. The activities of the Bank and of its organs carried on in accordance with the Statute of the European System of Central Banks and of the European Central Bank shall not be subject to any turnover tax.
-----
The privileges and immunities granted to the European Communities and the European Central Bank are largely comparable with privileges and immunities customary in diplomatic relations, as codified under the aegis of the United Nations in the Vienna Convention on Diplomatic Relations (1961; in force since 1964).
The Vienna Convention can be accessed at:
http://untreaty.un.org/ilc/texts/instruments/english/conventions/9_1_1961.pdf
***
Liability
The principles regarding the European Community’s non-contractual liability apply to damage caused by the European Central Bank or its servants in the performance of their duties; Article 288 TEC. Pursuant to Article 235 TEC, the Court of Justice has jurisdiction.
Ralf Grahn
We take a peek at the ECB’s privileges and immunities.
***
Legal personality
We remember that the European Central Bank is not mentioned among the European Community institutions in Article 7 of the Treaty establishing the European Community (TEC), but according to Article 8 TEC a European System of Central Banks (ESCB) and a European Central Bank (ECB) are established. They shall act within the limits of the powers conferred upon them by the TEC and by the treaty level Statute of the ESCB and the ECB.
Legal personality is one crucial aspect of these powers. Pursuant to Article 107(2) TEC, in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/88:
2. The ECB shall have legal personality.
***
Internally
We notice that legal personality is accorded to the European Central Bank, not the European System of Central Banks.
Protocol (No 18) on the Statute of the European System of Central Banks and of the European Central Bank (1992) repeats, but also elaborates on the treaty provisions. Article 9.1 of the Statute adds the following, OJ 29.12.2006 C 321 E/259:
Article 9 ESCB Statute
The European Central Bank
9.1. The ECB which, in accordance with Article 107(2) of this Treaty, shall have legal personality, shall enjoy in each of the Member States the most extensive legal capacity accorded to legal persons under its law; it may, in particular, acquire or dispose of movable and immovable property and may be a party to legal proceedings.
9.2. The ECB shall ensure that the tasks conferred upon the ESCB under Article 105(2), (3) and (5) of this Treaty are implemented either by its own activities pursuant to this Statute or through the national central banks pursuant to Articles 12.1 and 14.
9.3. In accordance with Article 107(3) of this Treaty, the decision making bodies of the ECB shall be the Governing Council and the Executive Board.
***
Within the European Community (EC), or more exactly “in each of the Member States” the ECB shall have “the most extensive legal capacity accorded to legal persons under its law”. In other words, the exact scope is determined by and it varies according to the law of the member state.
The Satute mentions two examples, which means that the powers of the ECB to act are not necessarily restricted to them. Internally, the ECB’s legal capacity (to act) includes the following in every member state:
The ECB has the right to acquire and to dispose of property, both movable and immovable.
The other important example is that the ECB may be a party to legal proceedings.
Naturally, the European Central Bank exercises its powers within the limits conferred by the TEC and by the Statute of the ESCB and the ECB (objectives, tasks, substantial and procedural limitations).
***
Internationally
The International Court of Justice has given the following definition of the legal personality of an international organisation “That it is a subject of international law and capable of possessing international rights and duties, and that it has capacity to maintain its rights by bringing international claims” (as quoted in Ian Brownlie: Public International Law; Oxford University Press, 6th Edition, 2003; page 649).
Undoubtedly, the European Central Bank has capacity to act internationally, but subject to limitations. Naturally, the scope of the ECB’s activities is defined by its tasks (functionally). In addition, the ECB’s powers are limited by the competences accorded to the European Community, and in particular the EU Council.
***
International agreements
According to Article 111(1) TEC, formal agreements on an exchange-rate system for the euro in relation to non-Community currencies are concluded by the Council. The Council adopts, adjusts or abandons the central rates of the euro within the exchange-rate system.
The Council may formulate general orientations for exchange-rate policy in relation to non-Community currencies; Article 111(2) TEC.
Pursuant to Article 111(3) TEC, agreements concerning monetary or foreign exchange regime matters are negotiated and concluded by the Council on behalf of the Community. These agreements are binding on the EC, the ECB and the member states. (Both the first and the third paragraph are exceptions to Article 300 on the normal procedures for international agreements.)
The Council decides the international position of the European Community on issues of particular relevance to economic and monetary union (EMU), as well as on EC representation. (Article 111(4) TEC, with references to Articles 99 and 105).
But, in matters directly pertaining to its powers, the European Central Bank has concluded agreements with international organisations. The anti-counterfeiting agreements with Europol and Interpol can be mentioned as examples.
Another example is the Headquarters Agreement between the Government of the Federal Republic of Germany and the ECB concerning the seat of the ECB (29.12.1998):
http://www.ecb.europa.eu/ecb/legal/pdf/en_headquarters_agreement_final.pdf
The Headquarters Agreement in German (original):
http://www.ecb.europa.eu/ecb/legal/pdf/de_headquarters_agreement_f_published.pdf
***
Article 6.2 of the ESCB Statute foresees an international role for the ECB, in the form of participation in international monetary institutions, but subject to the EC positions defined by the Council, as indicated by Article 6.3 (OJ 29.12.2006 C 321 E/258):
Article 6 ESCB Statute
International cooperation
6.1. In the field of international cooperation involving the tasks entrusted to the ESCB, the ECB shall decide how the ESCB shall be represented.
6.2. The ECB and, subject to its approval, the national central banks may participate in international monetary institutions.
6.3. Articles 6.1 and 6.2 shall be without prejudice to Article 111(4) of this Treaty.
***
Clearing and payment systems
ESCB Statute Article 22 confers powers with an international dimension on the European Central Bank:
Article 22 ESCB Statute
Clearing and payment systems
The ECB and national central banks may provide facilities, and the ECB may make regulations, to ensure efficient and sound clearing and payment systems within the Community and with other countries.
***
International relations and transactions
Article 23 of the ESCB Statute authorises the ECB to establish relations with central banks and international (monetary) organisations (first indent) and conduct all types of banking transactions with third countries and international organisations (fourth indent).
Article 23 ESCB Statute
External operations
The ECB and national central banks may:
— establish relations with central banks and financial institutions in other countries and, where
appropriate, with international organisations;
— acquire and sell spot and forward all types of foreign exchange assets and precious metals; the
term ‘foreign exchange asset’ shall include securities and all other assets in the currency of any
country or units of account and in whatever form held;
— hold and manage the assets referred to in this Article;
— conduct all types of banking transactions in relations with third countries and international
organisations, including borrowing and lending operations.
***
Privileges and immunities
Article 40 of the ESCB Statute refers to the Privileges and immunities of the ECB, a reminder of the intergovernmental (international law) roots of the European Central Bank (as part of the framework of the European Union and the European Communities).
Article 40 ESCB Statute
Privileges and immunities
The ECB shall enjoy in the territories of the Member States such privileges and immunities as are necessary for the performance of its tasks, under the conditions laid down in the Protocol on the privileges and immunities of the European Communities.
Annexed to the Treaties establishing the European Community and the European Atomic Energy Community, Protocol (No 36) on the privileges and immunities of the European Communities (1965), accords to the Communities and to the European Investment Bank in the territories of the Member States such privileges and immunities as are necessary for the performance of their tasks;
OJ 29.12.2006 C 321 E/318
Article 23 of Protocol No 36 extends the application to the European Central Bank:
Article 23 Protocol on privileges and immunities
This Protocol shall also apply to the European Central Bank, to the members of its organs and to its staff, without prejudice to the provisions of the Protocol on the Statute of the European System of Central Banks and the European Central Bank.
The European Central Bank shall, in addition, be exempt from any form of taxation or imposition of a like nature on the occasion of any increase in its capital and from the various formalities which may be connected therewith in the State where the bank has its seat. The activities of the Bank and of its organs carried on in accordance with the Statute of the European System of Central Banks and of the European Central Bank shall not be subject to any turnover tax.
-----
The privileges and immunities granted to the European Communities and the European Central Bank are largely comparable with privileges and immunities customary in diplomatic relations, as codified under the aegis of the United Nations in the Vienna Convention on Diplomatic Relations (1961; in force since 1964).
The Vienna Convention can be accessed at:
http://untreaty.un.org/ilc/texts/instruments/english/conventions/9_1_1961.pdf
***
Liability
The principles regarding the European Community’s non-contractual liability apply to damage caused by the European Central Bank or its servants in the performance of their duties; Article 288 TEC. Pursuant to Article 235 TEC, the Court of Justice has jurisdiction.
Ralf Grahn
Saturday, 25 October 2008
European Central Bank Ic: ESCB books and publications
One of the objectives of this blawg is to suggest reading materials for students of history, politics, economics and law on EU law and related subjects, here the European System of Central Banks (ESCB) and the European Central Bank (ECB), as well as European economic policy and the euro currency more widely.
***
An introductory brochure of a general nature, available in 23 EU languages, is ‘The European Central Bank, the Eurosystem, the European System of Central Banks’ (2nd edition, April 2008). It presents the history of economic and monetary union, the structure and tasks of the European System of Central Banks, monetary policy, the Target2 System, the euro banknotes and coins and banking supervision, and it offers a handy glossary for the general reader. The English version is available at the website of the European Central Bank:
http://www.ecb.int/pub/pdf/other/escb_en.pdf
***
Hanspeter K. Scheller: The European Central Bank ─ History, role and functions (2nd revised edition, 2006). The book is available in 13 languages; for the English version, go to:
http://www.ecb.int/pub/pdf/other/ecbhistoryrolefunctions2006en.pdf
***
The ‘Legal framework of the Eurosystem and the ESCB. ECB legal acts and instruments’ (July 2008), which “contains summaries of the legal acts and instruments constituting the legal framework of the Eurosystem and the ESCB. The publication presents the main legal acts and instruments in a readable form, with references to the official acts, which have been adopted by the ECB and published since the ECB’s establishment in June 1998 up to the end of 2007.”
In other words, this publication contains legal material at a deeper level than the treaty provisions, in the form of readable summaries. Go to:
http://www.ecb.int/pub/pdf/other/legalframeworkeurosystemescb2008en.pdf
***
If you need the (internal) institutional provisions, you might profit from having a handy publication. The ECB’s booklet ‘Institutional provisions’ contains the Statute of the ESCB and the ECB, the Rules of procedure of the Executive Board of the ECB and the Rules of procedure of the General Council of the ECB:
http://www.ecb.europa.eu/pub/pdf/other/ecbinstitutionalprovisions2004en.pdf
***
‘Legal aspects of the European System of Central Banks ─ Liber amicorum Paolo Zamboni Garavelli’ (2005) is a hefty compilation of articles about various legal aspects of European monetary policy:
http://www.ecb.int/pub/pdf/other/legalaspectsescben.pdf
***
European Central Bank: How the euro became our money. A short history of the euro banknotes and coins (unknown date ; 94 pages).
This illustrated history of the euro banknotes and coins is available at:
http://www.ecb.europa.eu/pub/pdf/other/euro_became_our_moneyen.pdf
***
Werner Becker: Der Euro wird zehn (EU Monitor 57, Deutsche Bank Research, 17. Juni 2008; 44 pages), is a detailed analysis, in German, of the successes and disappointments of nearly a decade of the single currency, since 1 January 1999 The strengths and weaknesses of the euro, the potential second world currency, are detailed in the face of approaching financial turmoil, which is going to be the first hard test of the Eurozone.
Available at:
http://www.dbresearch.com/PROD/CIB_INTERNET_EN-PROD/PROD0000000000226658.pdf
***
‘10th Anniversary of the ECB’ is the theme of the Special edition of the Monthly Bulletin (29 May 2008; 158 pages), with a comprehensive overview of monetary policy within the euro area. The English version is available at:
http://www.ecb.int/pub/pdf/other/10thanniversaryoftheecbmb200806en.pdf
***
The European Central Bank: The monetary policy of the ECB (2004; 128 pages), available at:
http://www.ecb.europa.eu/pub/pdf/other/monetarypolicy2004en.pdf
***
There are a number of useful publications on the ECB’s web pages, from the Monthly Bulletin and the handy Monthly Statistics Pocket Book to various specialist books and research papers. Look for Publications at:
http://www.ecb.europa.eu
The latest ECB Monthly Bulletin with economic and monetary developments, articles and euro area statistics (October 2008) is available at:
http://www.ecb.europa.eu/pub/pdf/mobu/mb200810en.pdf
The latest Statistics Pocket Book with macroeconomic data (October 2008):
http://www.ecb.europa.eu/pub/pdf/stapobo/spb200810en.pdf
***
Both long term decisions and the current financial turmoil are reflected in the European Central Bank’s press releases, available at:
http://www.ecb.europa.eu/press/pr/date/2008/html/index.en.html
***
The legal framework of the European Central Bank in its entirety can be accessed through:
http://www.ecb.int/ecb/legal/html/index.en.html
There is a helpful User Guide and links for detailed search.
***
For a quick recap of history, la Banque de France offers a convenient calender of events on the road to monetary union ‘Principales dates de l’Europe monétaire ─ et calendrier prévisionnel’:
http://www.banque-france.fr/fr/eurosys/telechar/europe/calendrier.pdf
***
The Banque de France article ‘Le statut juridique de la monnaie unique’ (an extract from Bulletin de la Banque de France No 108, December 2002) presents an overview of the legal framework of the euro currency:
http://www.banque-france.fr/fr/publications/telechar/bulletin/etu108_2.pdf
***
Deutsche Bundesbank, the national central bank of Germany, has published a fairly detailed overview of economic and monetary union, especially monetary policy. The 83 page publication ‘Die Europäische Wirtschafts- und Währungsunion’ (April 2008) is available at:
http://www.bundesbank.de/download/presse/publikationen/ewwu.pdf
***
The new Eurosystem entrant Malta presents ‘The law of the euro: Constitutive, institutional and external aspect’, by Ken Mifsud Bonnici (published by the Central Bank of Malta, 2008; 34 pages):
http://www.centralbankmalta.org/updates/downloads/pdfs/the_law_of_the_euro_2008.pdf
***
Michael Palmer offers a historical perspective in ‘The Banque central du Luxembourg in the European system of central banks’ (2001), with both national and European ingredients. The book, which contains a portrait of Pierre Werner (of the Werner Plan), is available at:
http://www.bcl.lu/fr/publications/autres_publications/bcl_european_system.pdf
***
The legal framework of the national central bank of Luxembourg is presented in Étienne de Lhoneux at al. ‘La Banque central du Lxembourg’:
http://www.bcl.lu/fr/publications/autres_publications/bcl_presentation_juridique.pdf
***
One example of interlocking national and European legislation is the Bank of Finland publication ‘Legal Provisions’ (2006):
http://www.bof.fi/NR/rdonlyres/0F437D54-9B58-4DA8-B5C4-CDCB3402CC51/0/saados_en.pdf
***
Some readers may be interested in the introduction of the euro currency in new entrants to the Eurosystem. Slovakia is going to be in the news during the last days of this year and at the beginning of 2009. You could start with the Slovakian government’s press release ‘Government approved the National Euro Changeover Plan’ (7 July 2005), with links to Part I and Part II of the Changeover Plan:
http://www.nbs.sk/INDEXA.HTM
You can then monitor further developments and updated plans by looking at the web page on the introduction of the euro at the National Bank of Slovakia.
You can also look for (official legal) opinions of the European Central Bank on various aspects concerning the euro changeover in Slovakia, or more generally at the web pages dedicated to the euro changeover.
Documents on the recent euro changeover (1 January 2007) in Slovenia are found on:
http://www.bsi.si/en/publications.asp?MapaId=717
***
Banco de España presents future perspectives in its conference report S. Fernández & F. Restoy (eds.) ‘Central Banks in the 21st Century’ (2006):
http://www.bde.es/informes/be/bcentral/bcentral_indice.htm
***
Next, this legal blog is going to return to the treaty and other provisions on the European System of Central Banks and the European Central Bank.
Ralf Grahn
***
An introductory brochure of a general nature, available in 23 EU languages, is ‘The European Central Bank, the Eurosystem, the European System of Central Banks’ (2nd edition, April 2008). It presents the history of economic and monetary union, the structure and tasks of the European System of Central Banks, monetary policy, the Target2 System, the euro banknotes and coins and banking supervision, and it offers a handy glossary for the general reader. The English version is available at the website of the European Central Bank:
http://www.ecb.int/pub/pdf/other/escb_en.pdf
***
Hanspeter K. Scheller: The European Central Bank ─ History, role and functions (2nd revised edition, 2006). The book is available in 13 languages; for the English version, go to:
http://www.ecb.int/pub/pdf/other/ecbhistoryrolefunctions2006en.pdf
***
The ‘Legal framework of the Eurosystem and the ESCB. ECB legal acts and instruments’ (July 2008), which “contains summaries of the legal acts and instruments constituting the legal framework of the Eurosystem and the ESCB. The publication presents the main legal acts and instruments in a readable form, with references to the official acts, which have been adopted by the ECB and published since the ECB’s establishment in June 1998 up to the end of 2007.”
In other words, this publication contains legal material at a deeper level than the treaty provisions, in the form of readable summaries. Go to:
http://www.ecb.int/pub/pdf/other/legalframeworkeurosystemescb2008en.pdf
***
If you need the (internal) institutional provisions, you might profit from having a handy publication. The ECB’s booklet ‘Institutional provisions’ contains the Statute of the ESCB and the ECB, the Rules of procedure of the Executive Board of the ECB and the Rules of procedure of the General Council of the ECB:
http://www.ecb.europa.eu/pub/pdf/other/ecbinstitutionalprovisions2004en.pdf
***
‘Legal aspects of the European System of Central Banks ─ Liber amicorum Paolo Zamboni Garavelli’ (2005) is a hefty compilation of articles about various legal aspects of European monetary policy:
http://www.ecb.int/pub/pdf/other/legalaspectsescben.pdf
***
European Central Bank: How the euro became our money. A short history of the euro banknotes and coins (unknown date ; 94 pages).
This illustrated history of the euro banknotes and coins is available at:
http://www.ecb.europa.eu/pub/pdf/other/euro_became_our_moneyen.pdf
***
Werner Becker: Der Euro wird zehn (EU Monitor 57, Deutsche Bank Research, 17. Juni 2008; 44 pages), is a detailed analysis, in German, of the successes and disappointments of nearly a decade of the single currency, since 1 January 1999 The strengths and weaknesses of the euro, the potential second world currency, are detailed in the face of approaching financial turmoil, which is going to be the first hard test of the Eurozone.
Available at:
http://www.dbresearch.com/PROD/CIB_INTERNET_EN-PROD/PROD0000000000226658.pdf
***
‘10th Anniversary of the ECB’ is the theme of the Special edition of the Monthly Bulletin (29 May 2008; 158 pages), with a comprehensive overview of monetary policy within the euro area. The English version is available at:
http://www.ecb.int/pub/pdf/other/10thanniversaryoftheecbmb200806en.pdf
***
The European Central Bank: The monetary policy of the ECB (2004; 128 pages), available at:
http://www.ecb.europa.eu/pub/pdf/other/monetarypolicy2004en.pdf
***
There are a number of useful publications on the ECB’s web pages, from the Monthly Bulletin and the handy Monthly Statistics Pocket Book to various specialist books and research papers. Look for Publications at:
http://www.ecb.europa.eu
The latest ECB Monthly Bulletin with economic and monetary developments, articles and euro area statistics (October 2008) is available at:
http://www.ecb.europa.eu/pub/pdf/mobu/mb200810en.pdf
The latest Statistics Pocket Book with macroeconomic data (October 2008):
http://www.ecb.europa.eu/pub/pdf/stapobo/spb200810en.pdf
***
Both long term decisions and the current financial turmoil are reflected in the European Central Bank’s press releases, available at:
http://www.ecb.europa.eu/press/pr/date/2008/html/index.en.html
***
The legal framework of the European Central Bank in its entirety can be accessed through:
http://www.ecb.int/ecb/legal/html/index.en.html
There is a helpful User Guide and links for detailed search.
***
For a quick recap of history, la Banque de France offers a convenient calender of events on the road to monetary union ‘Principales dates de l’Europe monétaire ─ et calendrier prévisionnel’:
http://www.banque-france.fr/fr/eurosys/telechar/europe/calendrier.pdf
***
The Banque de France article ‘Le statut juridique de la monnaie unique’ (an extract from Bulletin de la Banque de France No 108, December 2002) presents an overview of the legal framework of the euro currency:
http://www.banque-france.fr/fr/publications/telechar/bulletin/etu108_2.pdf
***
Deutsche Bundesbank, the national central bank of Germany, has published a fairly detailed overview of economic and monetary union, especially monetary policy. The 83 page publication ‘Die Europäische Wirtschafts- und Währungsunion’ (April 2008) is available at:
http://www.bundesbank.de/download/presse/publikationen/ewwu.pdf
***
The new Eurosystem entrant Malta presents ‘The law of the euro: Constitutive, institutional and external aspect’, by Ken Mifsud Bonnici (published by the Central Bank of Malta, 2008; 34 pages):
http://www.centralbankmalta.org/updates/downloads/pdfs/the_law_of_the_euro_2008.pdf
***
Michael Palmer offers a historical perspective in ‘The Banque central du Luxembourg in the European system of central banks’ (2001), with both national and European ingredients. The book, which contains a portrait of Pierre Werner (of the Werner Plan), is available at:
http://www.bcl.lu/fr/publications/autres_publications/bcl_european_system.pdf
***
The legal framework of the national central bank of Luxembourg is presented in Étienne de Lhoneux at al. ‘La Banque central du Lxembourg’:
http://www.bcl.lu/fr/publications/autres_publications/bcl_presentation_juridique.pdf
***
One example of interlocking national and European legislation is the Bank of Finland publication ‘Legal Provisions’ (2006):
http://www.bof.fi/NR/rdonlyres/0F437D54-9B58-4DA8-B5C4-CDCB3402CC51/0/saados_en.pdf
***
Some readers may be interested in the introduction of the euro currency in new entrants to the Eurosystem. Slovakia is going to be in the news during the last days of this year and at the beginning of 2009. You could start with the Slovakian government’s press release ‘Government approved the National Euro Changeover Plan’ (7 July 2005), with links to Part I and Part II of the Changeover Plan:
http://www.nbs.sk/INDEXA.HTM
You can then monitor further developments and updated plans by looking at the web page on the introduction of the euro at the National Bank of Slovakia.
You can also look for (official legal) opinions of the European Central Bank on various aspects concerning the euro changeover in Slovakia, or more generally at the web pages dedicated to the euro changeover.
Documents on the recent euro changeover (1 January 2007) in Slovenia are found on:
http://www.bsi.si/en/publications.asp?MapaId=717
***
Banco de España presents future perspectives in its conference report S. Fernández & F. Restoy (eds.) ‘Central Banks in the 21st Century’ (2006):
http://www.bde.es/informes/be/bcentral/bcentral_indice.htm
***
Next, this legal blog is going to return to the treaty and other provisions on the European System of Central Banks and the European Central Bank.
Ralf Grahn
European Central Bank Ib: European System of Central Banks
The European System of Central Banks (ESCB) is composed of the European Central Bank (ECB) and of the national central banks.
***
In addition to the provisions in the Treaty establishing the European Community (TEC), treaty level rules have been set out in a Protocol annexed to the treaty.
Protocol (No 18) on the Statute of the European System of Central Banks and of the European Central Bank (1992) defines the Constitution of the ESCB in Chapter 1, Article 1 (as in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/256):
Article 1 ESCB Statute
The European System of Central Banks
1.1. The European System of Central Banks (ESCB) and the European Central Bank (ECB) shall
be established in accordance with Article 8 of this Treaty; they shall perform their tasks and carry
on their activities in accordance with the provisions of this Treaty and of this Statute.
1.2. In accordance with Article 107(1) of this Treaty, the ESCB shall be composed of the ECB
and of the central banks of the Member States (‘national central banks’). The Institut monétaire
luxembourgeois will be the central bank of Luxembourg.
***
Article 107(1) TEC applies to all member states. Consequently the national central banks of all EU member states form part of the ESCB, together with the ECB.
The term Eurosystem is narrower, in that it is applied to the ECB and the national central banks of the countries that have adopted the euro.
***
The 27 EU national central banks are the following:
Austria: Oesterreichische Nationalbank
Belgium: Nationale Bank van België/Banque Nationale de Belgique
Bulgaria: Bulgarian National Bank
Cyprus: Central Bank of Cyprus
Czech Republic: Česká národní banka
Denmark: Danmarks Nationalbank
Estonia: Eesti Pank
Finland: Suomen Pankki - Finlands Bank
France: Banque de France
Germany: Deutsche Bundesbank
Greece: Bank of Greece
Hungary: Magyar Nemzeti Bank
Ireland: Central Bank and Financial Services Authority of Ireland
Italy: Banca d´Italia
Latvia: Latvijas Banka
Lithuania : Lietuvos bankas
Luxembourg : Banque centrale du Luxembourg
Malta: Central Bank of Malta
Netherlands: De Nederlandsche Bank
Poland: Narodowy Bank Polski
Portugal: Banco de Portugal
Romania: Banca Naţională a României
Slovakia: Národná banka Slovenska
Slovenia: Banka Slovenije
Spain: Banco de España
Sweden: Sveriges Riksbank
United Kingdom: Bank of England
Source: European Central Bank (a web page with links to the central banks)
http://www.ecb.europa.eu/home/html/links.en.html
***
On 1 January 2009 Slovakia will join the Eurosystem, but until the end of the year 15 of the national central banks belong to the euro area and 12 countries are outside the eurozone.
Euroland: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, Spain (15).
Outside the eurozone: Bulgaria, the Czech Republic, Denmark, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Sweden, United Kingdom (12).
***
Later, we are going to see that the different groups of national central banks have repercussions for the tasks and the decision-making of the ESCB.
The next posts are going to present some reading suggestions for students of history, politics, economics and law, as well as for other interested EU citizens, and to look more closely at the legal framework of the ESCB.
Ralf Grahn
***
In addition to the provisions in the Treaty establishing the European Community (TEC), treaty level rules have been set out in a Protocol annexed to the treaty.
Protocol (No 18) on the Statute of the European System of Central Banks and of the European Central Bank (1992) defines the Constitution of the ESCB in Chapter 1, Article 1 (as in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/256):
Article 1 ESCB Statute
The European System of Central Banks
1.1. The European System of Central Banks (ESCB) and the European Central Bank (ECB) shall
be established in accordance with Article 8 of this Treaty; they shall perform their tasks and carry
on their activities in accordance with the provisions of this Treaty and of this Statute.
1.2. In accordance with Article 107(1) of this Treaty, the ESCB shall be composed of the ECB
and of the central banks of the Member States (‘national central banks’). The Institut monétaire
luxembourgeois will be the central bank of Luxembourg.
***
Article 107(1) TEC applies to all member states. Consequently the national central banks of all EU member states form part of the ESCB, together with the ECB.
The term Eurosystem is narrower, in that it is applied to the ECB and the national central banks of the countries that have adopted the euro.
***
The 27 EU national central banks are the following:
Austria: Oesterreichische Nationalbank
Belgium: Nationale Bank van België/Banque Nationale de Belgique
Bulgaria: Bulgarian National Bank
Cyprus: Central Bank of Cyprus
Czech Republic: Česká národní banka
Denmark: Danmarks Nationalbank
Estonia: Eesti Pank
Finland: Suomen Pankki - Finlands Bank
France: Banque de France
Germany: Deutsche Bundesbank
Greece: Bank of Greece
Hungary: Magyar Nemzeti Bank
Ireland: Central Bank and Financial Services Authority of Ireland
Italy: Banca d´Italia
Latvia: Latvijas Banka
Lithuania : Lietuvos bankas
Luxembourg : Banque centrale du Luxembourg
Malta: Central Bank of Malta
Netherlands: De Nederlandsche Bank
Poland: Narodowy Bank Polski
Portugal: Banco de Portugal
Romania: Banca Naţională a României
Slovakia: Národná banka Slovenska
Slovenia: Banka Slovenije
Spain: Banco de España
Sweden: Sveriges Riksbank
United Kingdom: Bank of England
Source: European Central Bank (a web page with links to the central banks)
http://www.ecb.europa.eu/home/html/links.en.html
***
On 1 January 2009 Slovakia will join the Eurosystem, but until the end of the year 15 of the national central banks belong to the euro area and 12 countries are outside the eurozone.
Euroland: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, Spain (15).
Outside the eurozone: Bulgaria, the Czech Republic, Denmark, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Sweden, United Kingdom (12).
***
Later, we are going to see that the different groups of national central banks have repercussions for the tasks and the decision-making of the ESCB.
The next posts are going to present some reading suggestions for students of history, politics, economics and law, as well as for other interested EU citizens, and to look more closely at the legal framework of the ESCB.
Ralf Grahn
European Central Bank Ia: Article 107 TEC
A single currency is all very well, but someone has to care for it.
***
Article 7 of the Treaty establishing the European Community (TEC) mentions the institutions of the Community: the European Parliament, the Council, the Commission, the Court of Justice and the Court of Auditors.
The European Central Bank is not mentioned among the Community institutions.
Article 8 TEC (ex Article 4a) sets out the main institutional rules for monetary policy, with the establishment of the European system of central banks and the European Central Bank (in the latest consolidated version of the treaties, OJ 29.12.2006 C 321/47):
Article 8 TEC
A European system of central banks (hereinafter referred to as ‘ESCB’) and a European Central Bank (hereinafter referred to as ‘ECB’) shall be established in accordance with the procedures laid down in this Treaty; they shall act within the limits of the powers conferred upon them by this Treaty and by the Statute of the ESCB and of the ECB (hereinafter referred to as ‘Statute of the ESCB’) annexed thereto.
***
Article 107 TEC (ex Article 106) lays out the basic structure of the European System of Central Banks (ESCB) and the European Central Bank (ECB), OJ 29.12.2006 C 321/88:
Article 107 TEC
1. The ESCB shall be composed of the ECB and of the national central banks.
2. The ECB shall have legal personality.
3. The ESCB shall be governed by the decision-making bodies of the ECB which shall be the Governing Council and the Executive Board.
4. The Statute of the ESCB is laid down in a Protocol annexed to this Treaty.
5. Articles 5.1, 5.2, 5.3, 17, 18, 19.1, 22, 23, 24, 26, 32.2, 32.3, 32.4, 32.6, 33.1(a) and 36 of the Statute of the ESCB may be amended by the Council, acting either by a qualified majority on a recommendation from the ECB and after consulting the Commission or unanimously on a proposal from the Commission and after consulting the ECB. In either case, the assent of the European Parliament shall be required.
6. The Council, acting by a qualified majority either on a proposal from the Commission and after consulting the European Parliament and the ECB or on a recommendation from the ECB and after consulting the European Parliament and the Commission, shall adopt the provisions referred to in Articles 4, 5.4, 19.2, 20, 28.1, 29.2, 30.4 and 34.3 of the Statute of the ESCB.
***
Next, this blawg, founded on the rules of law, is going to take a closer look at the current Article 107 TEC.
Ralf Grahn
***
Article 7 of the Treaty establishing the European Community (TEC) mentions the institutions of the Community: the European Parliament, the Council, the Commission, the Court of Justice and the Court of Auditors.
The European Central Bank is not mentioned among the Community institutions.
Article 8 TEC (ex Article 4a) sets out the main institutional rules for monetary policy, with the establishment of the European system of central banks and the European Central Bank (in the latest consolidated version of the treaties, OJ 29.12.2006 C 321/47):
Article 8 TEC
A European system of central banks (hereinafter referred to as ‘ESCB’) and a European Central Bank (hereinafter referred to as ‘ECB’) shall be established in accordance with the procedures laid down in this Treaty; they shall act within the limits of the powers conferred upon them by this Treaty and by the Statute of the ESCB and of the ECB (hereinafter referred to as ‘Statute of the ESCB’) annexed thereto.
***
Article 107 TEC (ex Article 106) lays out the basic structure of the European System of Central Banks (ESCB) and the European Central Bank (ECB), OJ 29.12.2006 C 321/88:
Article 107 TEC
1. The ESCB shall be composed of the ECB and of the national central banks.
2. The ECB shall have legal personality.
3. The ESCB shall be governed by the decision-making bodies of the ECB which shall be the Governing Council and the Executive Board.
4. The Statute of the ESCB is laid down in a Protocol annexed to this Treaty.
5. Articles 5.1, 5.2, 5.3, 17, 18, 19.1, 22, 23, 24, 26, 32.2, 32.3, 32.4, 32.6, 33.1(a) and 36 of the Statute of the ESCB may be amended by the Council, acting either by a qualified majority on a recommendation from the ECB and after consulting the Commission or unanimously on a proposal from the Commission and after consulting the ECB. In either case, the assent of the European Parliament shall be required.
6. The Council, acting by a qualified majority either on a proposal from the Commission and after consulting the European Parliament and the ECB or on a recommendation from the ECB and after consulting the European Parliament and the Commission, shall adopt the provisions referred to in Articles 4, 5.4, 19.2, 20, 28.1, 29.2, 30.4 and 34.3 of the Statute of the ESCB.
***
Next, this blawg, founded on the rules of law, is going to take a closer look at the current Article 107 TEC.
Ralf Grahn
Friday, 24 October 2008
Euro banknotes and coins VII: More comments on Article 128 TFEU
The previous post mentioned a few brief UK references to Article 128 of the Treaty on the Functioning of the European Union (TFEU). We now turn to legal materials: from Sweden outside the Eurozone, and from inside Euroland Finland, as well as some EU commentaries in book form, to see if the issue of euro banknotes and euro coins has elicited enlightening comments.
***
Lissabonfördraget (Sweden)
Sweden remains outside the Eurozone, despite the lack of an opt-out based on the treaties.
The consultation paper ’Lissabonfördraget’ was the first official Swedish description of the Lisbon Treaty amendments, and it is available at:
http://www.regeringen.se/content/1/c6/09/49/81/107aa077.pdf
It was followed by the Swedish government’s draft ratification bill ‘Lagrådsremiss – Lissabonfördraget’, published 29 May 2008:
http://www.regeringen.se/sb/d/5676/a/106277
The draft bill was given a green light by the Council on Legislation (Lagrådet):
http://www.lagradet.se/yttranden/Lissabonfordraget.pdf
The latest official government view, and now my standard reference for Sweden, is the ratification bill, with the Swedish parliament (Riksdagen) expected to decide on approval in late autumn, on 20 November. The ratification bill, Regeringens proposition 2007/08:168 Lissabonfördraget; 3 July 2008, is available at:
http://www.regeringen.se/content/1/c6/10/84/02/8c96cf3e.pdf
The Swedish government gives a general presentation of the objectives and the tasks of the European Central Bank, including the sole power to authorise the issue of euro banknotes, on page 131:
”Europeiska centralbanken
I artiklarna 112 och 113 i nu gällande EG-fördrag finns institutionella bestämmelser om Europeiska centralbanken (ECB). ECB utgör tillsammans med de nationella centralbankerna det Europeiska centralbankssystemet (ECBS) (artikel 107.1 i EG-fördraget). ECBS:s huvudmål är att upprätthålla prisstabilitet (artikel 105.1 i EG-fördraget). Utan att åsidosätta detta mål ska ECBS stödja den allmänna ekonomiska politiken inom gemenskapen i syfte att bidra till att förverkliga gemenskapens mål.
ECBS leds av ECB:s beslutande organ, dvs. dess råd och direktionen (artikel 107.3 i EG-fördraget). ECB:s direktion består av ordförande, vice ordförande och fyra andra ledamöter (artikel 112.2 i EG-fördraget).
ECB utformar självständigt unionens monetära politik och har ensamrätt på att tillåta sedelutgivning inom gemenskapen (artiklarna 105 och 106 i EG-fördraget). Den ska årligen till Europaparlamentet, rådet, kommissionen och Europeiska rådet överlämna en årsrapport om verksamheten inom ECBS och om den monetära politiken under det föregående och innevarande året (artikel 113.3).
ECB ska inom sitt behörighetsområde höras om varje utkast till unionsrättsakt samt om varje utkast till rättsregler på nationell nivå (artikel 105.4).
Närmare bestämmelser om ECBS och ECB finns i ett protokoll om stadgan för Europeiska centralbankssystemet och Europeiska centralbanken.”
The changing decision-making procedures are discussed on page 184. The Treaty of Lisbon abolishes the so called cooperation procedure. Pursuant to the Lisbon Treaty, the Council adopts measures to harmonise the denominations and technical specifications of euro coins, after consulting the European Parliament and the European Central Bank:
”Proceduren för samarbetsförfarandet finns i artikel 252 i EG-fördraget. Amsterdamfördraget minskade avsevärt tillämpningsområdet för samarbetsförfarandet, vilket för närvarande endast tillämpas på den ekonomiska och monetära politiken (artiklarna 99.5, 102.2, 103.2 och 106.2 i EG-fördraget). Genom Lissabonfördraget upphävs det s.k. samarbetsförfarandet i nuvarande artikel 252 i EG-fördraget (jfr avsnitt 16.2 om förfaranden för antagande av akter och andra bestämmelser). Beslutsförfarandena i de artiklar där samarbetsförfarandet idag tillämpas ändras därför enligt följande.
-----
Rådet kan enligt artikel 106.2 i EG-fördraget vidta åtgärder för att harmonisera valörerna och de tekniska specifikationerna för alla mynt som ska sättas i omlopp. Genom Lissabonfördraget anges att sådana åtgärder ska antas av rådet efter att ha hört Europaparlamentet och Europeiska centralbanken (artikel 106.2 i EUF-fördraget).”
***
Lissabonin sopimus (Finland)
Finland is one of 15 member states currently forming Euroland, or more officially the Eurosystem, the term used by the European Central Bank.
The Finnish ratification bill, ‘Hallituksen esitys Eduskunnalle Euroopan unionista tehdyn sopimuksen ja Euroopan yhteisön perustamissopimuksen muuttamisesta tehdyn Lissabonin sopimuksen hyväksymisestä ja laiksi sen lainsäädännön alaan kuuluvien määräysten voimaansaattamisesta’ (HE 23/2008 vp), presents an overview of economic and monetary policy (Talous- ja rahapolitiikka) on pages 91 to 92.
Article 106 TFEU (ToL), renumbered Article 128 TFEU, is described on page 211. Inserting the word ‘euro’ before banknotes is noted. Consultation of the European Parliament is mentioned, and the provision is said to correspond with Article III-186 of the Constitutional Treaty:
”106 artikla (uusi 128 artikla) sisältää määräykset setelien ja metallirahojen liikkeelle laskemisesta. Artiklan 1 kohtaa täsmennetään siten, että Euroopan keskuspankilla on yksinoikeus nimenomaan eurosetelien liikkeelle laskemiseen yhteisössä. Artiklan 2 kohtaan tehdään lisäys, jonka mukaan neuvoston tulee kuulla myös Euroopan parlamenttia ennen kuin se päättää metallirahojen yksikköarvojen ja teknisten määritelmien yhdenmukaistamisesta. Määräys vastaa perustuslakisopimuksen III-186 artiklaa.”
http://www.finlex.fi/fi/esitykset/he/2008/20080023.pdf
The Swedish language version of the ratification bill ‘Regeringens proposition till Riksdagen med förslag om godkännande av Lissabonfördraget om ändring av fördraget om Europeiska unionen och fördraget om upprättandet av Europeiska gemenskapen och till lag om sättande i kraft av de bestämmelser i fördraget som hör till området för lagstiftningen’ (RP 23/2008 rd), offers the same general remarks on economic and monetary policy on pages 93 to 94. The detailed remarks, Article by Article, under ’Ekonomisk och monetär politik’ contain the same description of Article 106 TFEU (ToL), the future Article 128 TFEU as in Finnish, on page 214:
”Artikel 106 (blivande artikel 128) innehåller bestämmelser om utgivning av eurosedlar och euromynt. Punkt 1 i artikeln precisera så att Europeiska centralbanken har ensamrätt att ge ut just eurosedlar i gemenskapen. Till artikel 106.2 fogas ett tillägg, enligt vilket rådet även ska höra Europaparlamentet innan det beslutar om harmonisering av valörerna och de tekniska specifikationerna för mynt. Bestämmelsen motsvarar artikel III-186 i det konstitutionella fördraget.”
The ratification bill in Swedish can be accessed at:
http://www.finlex.fi/sv/esitykset/he/2008/20080023.pdf
***
de Poncins
Étienne de Poncins offers a few general comments on EU economic governance and budget matters, ‘La gouvernance économique et les questions budgétaires’ in his ‘Le traité de Lisbonne en 27 clés’ (Éditions Lignes de Repères, 2008), pages 245─251, but nothing specific on Article 128 TFEU.
***
Fischer
‚Der Vertrag von Lissabon‘, by Klemens H. Fischer (Nomos, Stämpfli Verlag & Verlag Österreich, 2008), traces the amendments Article by Article; here on page 271. He refers to the amendments according to Article 2, point 92, of the original Treaty of Lisbon, but he mistakenly remarks:
„Das Anhörungsverfahren de lege lata wird (cf. Absatz 2) durch das Zustimmungsverfahren ersetzt.“
The other amendments are editorial (horizontal).
***
Priollaud and Siritzky
François-Xavier Priollaud and David Siritzky offer a short introductory explanation on economic and monetary policy (pages 246 and 247). They succinctly present the main features of the chapet on monetary policy (La politique monétaire) on pages 254 an 255 in their book ‘Le traité de Lisbonne – Commentaire, article par article, des nouveaux traités européens (TUE et TFUE)’ (La Documentation française, Paris, 2008). They offer the following description of the powers of the European Parliament, but they do not find it necessary to mention the move to the consultation procedure concerning Article 128(2) TFUE (although the amendments are indicated correctly in the text of the Article):
« La modification des pouvoirs du Parlement européen
La généralisation de la procédure legislative renforce le rôle du Parlement européen en ce qui concerne la modification de certaines dispositions des statuts du SEBC et de la BCE (art. 129 TFUE) et pour l’adoption des mesures nécessaires à l’usage de l’euro (art. 133 TFUE). Les pouvoirs du Parlement sont en revanche diminués par rapport à la situation actuelle en matière de contrôle prudentiel des établisseents et marchés financiers (art. 127 § 6 TFUE). Il ne sera que consulté (comme la BCE), alors que son avis conforme était jusq’à présent requis par l’art. 105 TCE. L’unanimité est en outre maintenue sur ce point. »
***
Consultation procedure
Measures to harmonise the denominations and technical specifications of euro coins is a detail, but the intergovernmental character of economic policy and the foundations of monetary policy is striking.
In Article 128 TFEU, the European Parliament is downgraded, consulted (as the ECB).
In case someone wants to reflect on the consultation procedure (and other decision-making procedures), Martin Gellermann offers a description in Rudolf Streinz (Hrsgb.): EUV/EGV Vertrag über die Europäische Union und Vertrag zur Gründung der Europäischen Gemeinschaft (C.H.Beck, 2003). I quote the beginning of Konsultations- oder Anhörungsverfahren (page 2204):
„Als Ursprungsmodell für eine Beteiligung des Europäischen Parlaments am Prozess der gemeinschaftlichen Rechtsetzung erscheint das Konsultations- oder Anhörungsverfahren in dem der Kommission das Initiativrecht, dem Parlament eine Beratungsbefugnis und dem Rat das alleinige Entscheidungsrecht gebührt.“
Ralf Grahn
***
Lissabonfördraget (Sweden)
Sweden remains outside the Eurozone, despite the lack of an opt-out based on the treaties.
The consultation paper ’Lissabonfördraget’ was the first official Swedish description of the Lisbon Treaty amendments, and it is available at:
http://www.regeringen.se/content/1/c6/09/49/81/107aa077.pdf
It was followed by the Swedish government’s draft ratification bill ‘Lagrådsremiss – Lissabonfördraget’, published 29 May 2008:
http://www.regeringen.se/sb/d/5676/a/106277
The draft bill was given a green light by the Council on Legislation (Lagrådet):
http://www.lagradet.se/yttranden/Lissabonfordraget.pdf
The latest official government view, and now my standard reference for Sweden, is the ratification bill, with the Swedish parliament (Riksdagen) expected to decide on approval in late autumn, on 20 November. The ratification bill, Regeringens proposition 2007/08:168 Lissabonfördraget; 3 July 2008, is available at:
http://www.regeringen.se/content/1/c6/10/84/02/8c96cf3e.pdf
The Swedish government gives a general presentation of the objectives and the tasks of the European Central Bank, including the sole power to authorise the issue of euro banknotes, on page 131:
”Europeiska centralbanken
I artiklarna 112 och 113 i nu gällande EG-fördrag finns institutionella bestämmelser om Europeiska centralbanken (ECB). ECB utgör tillsammans med de nationella centralbankerna det Europeiska centralbankssystemet (ECBS) (artikel 107.1 i EG-fördraget). ECBS:s huvudmål är att upprätthålla prisstabilitet (artikel 105.1 i EG-fördraget). Utan att åsidosätta detta mål ska ECBS stödja den allmänna ekonomiska politiken inom gemenskapen i syfte att bidra till att förverkliga gemenskapens mål.
ECBS leds av ECB:s beslutande organ, dvs. dess råd och direktionen (artikel 107.3 i EG-fördraget). ECB:s direktion består av ordförande, vice ordförande och fyra andra ledamöter (artikel 112.2 i EG-fördraget).
ECB utformar självständigt unionens monetära politik och har ensamrätt på att tillåta sedelutgivning inom gemenskapen (artiklarna 105 och 106 i EG-fördraget). Den ska årligen till Europaparlamentet, rådet, kommissionen och Europeiska rådet överlämna en årsrapport om verksamheten inom ECBS och om den monetära politiken under det föregående och innevarande året (artikel 113.3).
ECB ska inom sitt behörighetsområde höras om varje utkast till unionsrättsakt samt om varje utkast till rättsregler på nationell nivå (artikel 105.4).
Närmare bestämmelser om ECBS och ECB finns i ett protokoll om stadgan för Europeiska centralbankssystemet och Europeiska centralbanken.”
The changing decision-making procedures are discussed on page 184. The Treaty of Lisbon abolishes the so called cooperation procedure. Pursuant to the Lisbon Treaty, the Council adopts measures to harmonise the denominations and technical specifications of euro coins, after consulting the European Parliament and the European Central Bank:
”Proceduren för samarbetsförfarandet finns i artikel 252 i EG-fördraget. Amsterdamfördraget minskade avsevärt tillämpningsområdet för samarbetsförfarandet, vilket för närvarande endast tillämpas på den ekonomiska och monetära politiken (artiklarna 99.5, 102.2, 103.2 och 106.2 i EG-fördraget). Genom Lissabonfördraget upphävs det s.k. samarbetsförfarandet i nuvarande artikel 252 i EG-fördraget (jfr avsnitt 16.2 om förfaranden för antagande av akter och andra bestämmelser). Beslutsförfarandena i de artiklar där samarbetsförfarandet idag tillämpas ändras därför enligt följande.
-----
Rådet kan enligt artikel 106.2 i EG-fördraget vidta åtgärder för att harmonisera valörerna och de tekniska specifikationerna för alla mynt som ska sättas i omlopp. Genom Lissabonfördraget anges att sådana åtgärder ska antas av rådet efter att ha hört Europaparlamentet och Europeiska centralbanken (artikel 106.2 i EUF-fördraget).”
***
Lissabonin sopimus (Finland)
Finland is one of 15 member states currently forming Euroland, or more officially the Eurosystem, the term used by the European Central Bank.
The Finnish ratification bill, ‘Hallituksen esitys Eduskunnalle Euroopan unionista tehdyn sopimuksen ja Euroopan yhteisön perustamissopimuksen muuttamisesta tehdyn Lissabonin sopimuksen hyväksymisestä ja laiksi sen lainsäädännön alaan kuuluvien määräysten voimaansaattamisesta’ (HE 23/2008 vp), presents an overview of economic and monetary policy (Talous- ja rahapolitiikka) on pages 91 to 92.
Article 106 TFEU (ToL), renumbered Article 128 TFEU, is described on page 211. Inserting the word ‘euro’ before banknotes is noted. Consultation of the European Parliament is mentioned, and the provision is said to correspond with Article III-186 of the Constitutional Treaty:
”106 artikla (uusi 128 artikla) sisältää määräykset setelien ja metallirahojen liikkeelle laskemisesta. Artiklan 1 kohtaa täsmennetään siten, että Euroopan keskuspankilla on yksinoikeus nimenomaan eurosetelien liikkeelle laskemiseen yhteisössä. Artiklan 2 kohtaan tehdään lisäys, jonka mukaan neuvoston tulee kuulla myös Euroopan parlamenttia ennen kuin se päättää metallirahojen yksikköarvojen ja teknisten määritelmien yhdenmukaistamisesta. Määräys vastaa perustuslakisopimuksen III-186 artiklaa.”
http://www.finlex.fi/fi/esitykset/he/2008/20080023.pdf
The Swedish language version of the ratification bill ‘Regeringens proposition till Riksdagen med förslag om godkännande av Lissabonfördraget om ändring av fördraget om Europeiska unionen och fördraget om upprättandet av Europeiska gemenskapen och till lag om sättande i kraft av de bestämmelser i fördraget som hör till området för lagstiftningen’ (RP 23/2008 rd), offers the same general remarks on economic and monetary policy on pages 93 to 94. The detailed remarks, Article by Article, under ’Ekonomisk och monetär politik’ contain the same description of Article 106 TFEU (ToL), the future Article 128 TFEU as in Finnish, on page 214:
”Artikel 106 (blivande artikel 128) innehåller bestämmelser om utgivning av eurosedlar och euromynt. Punkt 1 i artikeln precisera så att Europeiska centralbanken har ensamrätt att ge ut just eurosedlar i gemenskapen. Till artikel 106.2 fogas ett tillägg, enligt vilket rådet även ska höra Europaparlamentet innan det beslutar om harmonisering av valörerna och de tekniska specifikationerna för mynt. Bestämmelsen motsvarar artikel III-186 i det konstitutionella fördraget.”
The ratification bill in Swedish can be accessed at:
http://www.finlex.fi/sv/esitykset/he/2008/20080023.pdf
***
de Poncins
Étienne de Poncins offers a few general comments on EU economic governance and budget matters, ‘La gouvernance économique et les questions budgétaires’ in his ‘Le traité de Lisbonne en 27 clés’ (Éditions Lignes de Repères, 2008), pages 245─251, but nothing specific on Article 128 TFEU.
***
Fischer
‚Der Vertrag von Lissabon‘, by Klemens H. Fischer (Nomos, Stämpfli Verlag & Verlag Österreich, 2008), traces the amendments Article by Article; here on page 271. He refers to the amendments according to Article 2, point 92, of the original Treaty of Lisbon, but he mistakenly remarks:
„Das Anhörungsverfahren de lege lata wird (cf. Absatz 2) durch das Zustimmungsverfahren ersetzt.“
The other amendments are editorial (horizontal).
***
Priollaud and Siritzky
François-Xavier Priollaud and David Siritzky offer a short introductory explanation on economic and monetary policy (pages 246 and 247). They succinctly present the main features of the chapet on monetary policy (La politique monétaire) on pages 254 an 255 in their book ‘Le traité de Lisbonne – Commentaire, article par article, des nouveaux traités européens (TUE et TFUE)’ (La Documentation française, Paris, 2008). They offer the following description of the powers of the European Parliament, but they do not find it necessary to mention the move to the consultation procedure concerning Article 128(2) TFUE (although the amendments are indicated correctly in the text of the Article):
« La modification des pouvoirs du Parlement européen
La généralisation de la procédure legislative renforce le rôle du Parlement européen en ce qui concerne la modification de certaines dispositions des statuts du SEBC et de la BCE (art. 129 TFUE) et pour l’adoption des mesures nécessaires à l’usage de l’euro (art. 133 TFUE). Les pouvoirs du Parlement sont en revanche diminués par rapport à la situation actuelle en matière de contrôle prudentiel des établisseents et marchés financiers (art. 127 § 6 TFUE). Il ne sera que consulté (comme la BCE), alors que son avis conforme était jusq’à présent requis par l’art. 105 TCE. L’unanimité est en outre maintenue sur ce point. »
***
Consultation procedure
Measures to harmonise the denominations and technical specifications of euro coins is a detail, but the intergovernmental character of economic policy and the foundations of monetary policy is striking.
In Article 128 TFEU, the European Parliament is downgraded, consulted (as the ECB).
In case someone wants to reflect on the consultation procedure (and other decision-making procedures), Martin Gellermann offers a description in Rudolf Streinz (Hrsgb.): EUV/EGV Vertrag über die Europäische Union und Vertrag zur Gründung der Europäischen Gemeinschaft (C.H.Beck, 2003). I quote the beginning of Konsultations- oder Anhörungsverfahren (page 2204):
„Als Ursprungsmodell für eine Beteiligung des Europäischen Parlaments am Prozess der gemeinschaftlichen Rechtsetzung erscheint das Konsultations- oder Anhörungsverfahren in dem der Kommission das Initiativrecht, dem Parlament eine Beratungsbefugnis und dem Rat das alleinige Entscheidungsrecht gebührt.“
Ralf Grahn
Euro banknotes and coins VI: Article 128 TFEU comments
We look at UK comments on Article 128 of the Treaty on the Functioning of the European Union (TFEU) concerning the issue of euro banknotes and euro coins.
***
European Central Bank
The Opinion of the European Central Bank of 5 July 2007 at the request of the Council of the European Union on the opening of an Intergovernmental Conference to draw up a Treaty amending the existing Treaties (CON/2007/20), OJ 13.7.2007 C 160/2, was issued on the understanding that, as regards the status, mandate, tasks and legal regime of the ECB, the Eurosystem and the European System of Central Banks, the changes to the current Treaties to be introduced by the IGC were to be limited to and were to comprise all the innovations agreed at the 2004 IGC.
***
Statewatch
Professor Steve Peers covered the Treaty of Lisbon in a number of Statewatch Analyses. ‘EU Reform Treaty Analysis no. 3.4: Revised text of Part Three, Titles VII to XVII of the Treaty establishing the European Community (TEC): Other internal EC policies’ (Version 2, 24 October 2007) includes the current Title VII Economic and monetary policy.
Peers presented the text of Article 106 TFEU (ToL), to be renumbered Article 128 TFEU in the consolidated version, and highlighted the changes. He offered the following succinct comment (page 12):
“The consultation procedure shall apply to this Article, in place of the ‘cooperation’ procedure. These measures shall not constitute legislative acts. This entails a downgrade of the EP’s role here.”
The analysis 3.4 and other useful Statewatch analyses are available through:
http://www.statewatch.org/euconstitution.htm
***
FCO
The Foreign and Commonwealth Office (FCO) offers a convenient source of brief annotations on Lisbon Treaty amendments in ‘A comparative table of the current EC and EU treaties as amended by the Treaty of Lisbon’ (Command Paper 7311, published 21 January 2008). It offers the following comment on Article 128 TFEU, Article 106 TFEU (ToL) in the original Lisbon Treaty (page 12):
“Draws on Article 106 TEC. Paragraph 2 replaces the cooperation procedure with consultation with the EP.”
The FCO comparative table is available at:
http://www.official-documents.gov.uk/document/cm73/7311/7311.asp
***
House of Commons Library
The UK House of Commons Library Research Paper 07/86 ‘The Treaty of Lisbon: amendments to the Treaty establishing the European Community’ (published 6 December 2007) discussed ‘H. Economic and Monetary Policy’ on pages 61 to 64. Article 106 TFEU (ToL) is included in a brief description on page 62:
“Articles 105 ─ 110 (Constitution Articles III-185 ─ 190) on monetary policy are largely the same as the present Treaty Articles.”
The Library Research Paper 07/86 is available at:
http://www.parliament.uk/commons/lib/research/rp2007/rp07-086.pdf
***
House of Lords
At this juncture, economic and monetary union (EMU) did not interest the House of Lords, so I found nothing on Article 106 TFEU (ToL) or 128 TFEU in the House of Lords European Union Committee report ‘The Treaty of Lisbon: an impact assessment, Volume I: Report’ (HL Paper 62-I, published 13 March 2008).
The report is available at:
http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf
***
The following post is going to look at legislative materials and comments on Article 128 TFEU from other corners of Europe.
Ralf Grahn
***
European Central Bank
The Opinion of the European Central Bank of 5 July 2007 at the request of the Council of the European Union on the opening of an Intergovernmental Conference to draw up a Treaty amending the existing Treaties (CON/2007/20), OJ 13.7.2007 C 160/2, was issued on the understanding that, as regards the status, mandate, tasks and legal regime of the ECB, the Eurosystem and the European System of Central Banks, the changes to the current Treaties to be introduced by the IGC were to be limited to and were to comprise all the innovations agreed at the 2004 IGC.
***
Statewatch
Professor Steve Peers covered the Treaty of Lisbon in a number of Statewatch Analyses. ‘EU Reform Treaty Analysis no. 3.4: Revised text of Part Three, Titles VII to XVII of the Treaty establishing the European Community (TEC): Other internal EC policies’ (Version 2, 24 October 2007) includes the current Title VII Economic and monetary policy.
Peers presented the text of Article 106 TFEU (ToL), to be renumbered Article 128 TFEU in the consolidated version, and highlighted the changes. He offered the following succinct comment (page 12):
“The consultation procedure shall apply to this Article, in place of the ‘cooperation’ procedure. These measures shall not constitute legislative acts. This entails a downgrade of the EP’s role here.”
The analysis 3.4 and other useful Statewatch analyses are available through:
http://www.statewatch.org/euconstitution.htm
***
FCO
The Foreign and Commonwealth Office (FCO) offers a convenient source of brief annotations on Lisbon Treaty amendments in ‘A comparative table of the current EC and EU treaties as amended by the Treaty of Lisbon’ (Command Paper 7311, published 21 January 2008). It offers the following comment on Article 128 TFEU, Article 106 TFEU (ToL) in the original Lisbon Treaty (page 12):
“Draws on Article 106 TEC. Paragraph 2 replaces the cooperation procedure with consultation with the EP.”
The FCO comparative table is available at:
http://www.official-documents.gov.uk/document/cm73/7311/7311.asp
***
House of Commons Library
The UK House of Commons Library Research Paper 07/86 ‘The Treaty of Lisbon: amendments to the Treaty establishing the European Community’ (published 6 December 2007) discussed ‘H. Economic and Monetary Policy’ on pages 61 to 64. Article 106 TFEU (ToL) is included in a brief description on page 62:
“Articles 105 ─ 110 (Constitution Articles III-185 ─ 190) on monetary policy are largely the same as the present Treaty Articles.”
The Library Research Paper 07/86 is available at:
http://www.parliament.uk/commons/lib/research/rp2007/rp07-086.pdf
***
House of Lords
At this juncture, economic and monetary union (EMU) did not interest the House of Lords, so I found nothing on Article 106 TFEU (ToL) or 128 TFEU in the House of Lords European Union Committee report ‘The Treaty of Lisbon: an impact assessment, Volume I: Report’ (HL Paper 62-I, published 13 March 2008).
The report is available at:
http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf
***
The following post is going to look at legislative materials and comments on Article 128 TFEU from other corners of Europe.
Ralf Grahn
Euro banknotes and coins V: Comparison Article 128 TFEU
Formally, the Treaty of Lisbon amends the Treaty on European Union (TEU) and the Treaty establishing the European Community (TEC), but historically the Lisbon Treaty is the (interim) end result of a treaty reform process launched when the Treaty of Nice was signed in 2001.
Therefore, we compare Article 128 of the Treaty on the Functioning of the European Union (TFEU), not only with the current treaty (TEC), but with the previous stages of the treaty reform process, the draft Constitution (2003) and the Constitutional Treaty (2004).
***
Lisbon Treaty comparison
Substantially, not much has happened.
Article III-78(1) of the draft Constitution wrote the European Central Bank in full, and it added the word ‘euro’ before banknotes. The third sentence was slightly rephrased, and ‘Union’ replaced ‘Community’. Similar editorial changes were made to the second paragraph, but the European Parliament was downgraded by the move from the cooperation procedure to the consultation procedure.
The IGC 2004 left the provision almost untouched. The Council of Ministers became the Council in the Constitutional Treaty, but this was a general choice of terminology. The second paragraph was divided into two subparagraphs, making it somewhat easier to read, but the substance remained the same.
The IGC 2007 made the minimum changes to Article 106 TEC needed to achieve the same result in substance as the Constitutional Treaty, so the second paragraph of Article 128 TFEU remains undivided and there are minimal differences in wording between the TFEU and the Constitution.
Ralf Grahn
Therefore, we compare Article 128 of the Treaty on the Functioning of the European Union (TFEU), not only with the current treaty (TEC), but with the previous stages of the treaty reform process, the draft Constitution (2003) and the Constitutional Treaty (2004).
***
Lisbon Treaty comparison
Substantially, not much has happened.
Article III-78(1) of the draft Constitution wrote the European Central Bank in full, and it added the word ‘euro’ before banknotes. The third sentence was slightly rephrased, and ‘Union’ replaced ‘Community’. Similar editorial changes were made to the second paragraph, but the European Parliament was downgraded by the move from the cooperation procedure to the consultation procedure.
The IGC 2004 left the provision almost untouched. The Council of Ministers became the Council in the Constitutional Treaty, but this was a general choice of terminology. The second paragraph was divided into two subparagraphs, making it somewhat easier to read, but the substance remained the same.
The IGC 2007 made the minimum changes to Article 106 TEC needed to achieve the same result in substance as the Constitutional Treaty, so the second paragraph of Article 128 TFEU remains undivided and there are minimal differences in wording between the TFEU and the Constitution.
Ralf Grahn
Thursday, 23 October 2008
Euro banknotes and coins IV: Article 128 TFEU
What does the EU Lisbon Treaty say about issuing euro banknotes and euro coins?
We start by looking at the contents of the Treaty of Lisbon.
***
The current Treaty establishing the European Community (TEC) was ─ perhaps still is destined ─ to become the Treaty on the Functioning of the European Union (TFEU), and generally the so called innovations as agreed in the 2004 IGC were to be inserted into the Treaty by way of specific modifications ‘in the usual manner’ (points 17 and 18, pages 6 and 7).
I found nothing specific in the mandate of the intergovernmental conference (IGC 2007 Mandate, Council document 11218/07, 26 June 2007) about Article 106 TEC.
***
Original Lisbon Treaty
In Article 2, point 92 of the original Treaty of Lisbon (ToL) the IGC 2007 agreed on the following concerning Article 106 TEC (OJ 17.12.2007 C 306/72─73):
92) Article 106 shall be amended as follows:
(a) in paragraph 1, first sentence, the word ‘euro’ shall be inserted before ‘banknotes’;
(b) in paragraph 2, first sentence, the word ‘euro’ shall be inserted before ‘coins’; at the beginning of the second sentence, the words ‘The Council may, acting in accordance with the procedure referred to in Article 252 and after consulting the ECB’ shall be replaced by: ‘The Council, on a proposal from the Commission and after consulting the European Parliament and the European Central Bank, may’.
***
Renumbering
The TFEU table of equivalences confirms that Article 106 TFEU (ToL) in the original Treaty of Lisbon was to be renumbered Article 128 TFEU in the consolidated version, under the title ‘Economic and monetary policy’, renumbered Title VIII (OJ 17.12.2007 C 306/211─212).
(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.)
***
Consolidated Lisbon Treaty
Article 128 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 115/102─103:
Part Three Union policies and internal actions
Title VIII Economic and monetary policy
Chapter 2 Monetary policy
Article 128 TFEU
(ex Article 106 TEC)
1. The European Central Bank shall have the exclusive right to authorise the issue of euro banknotes within the Union. The European Central Bank and the national central banks may issue such notes. The banknotes issued by the European Central Bank and the national central banks shall be the only such notes to have the status of legal tender within the Union.
2. Member States may issue euro coins subject to approval by the European Central Bank of the volume of the issue. The Council, on a proposal from the Commission and after consulting the European Parliament and the European Central Bank, may adopt measures to harmonise the denominations and technical specifications of all coins intended for circulation to the extent necessary to permit their smooth circulation within the Union.
***
Having already seen the small amendments Article 106 TEC is undergoing, the following post is going to compare Article 128 TFEU with the current TEC, the draft Constitution and the Constitution.
Later we will take a look at some legislative materials and comments.
Ralf Grahn
We start by looking at the contents of the Treaty of Lisbon.
***
The current Treaty establishing the European Community (TEC) was ─ perhaps still is destined ─ to become the Treaty on the Functioning of the European Union (TFEU), and generally the so called innovations as agreed in the 2004 IGC were to be inserted into the Treaty by way of specific modifications ‘in the usual manner’ (points 17 and 18, pages 6 and 7).
I found nothing specific in the mandate of the intergovernmental conference (IGC 2007 Mandate, Council document 11218/07, 26 June 2007) about Article 106 TEC.
***
Original Lisbon Treaty
In Article 2, point 92 of the original Treaty of Lisbon (ToL) the IGC 2007 agreed on the following concerning Article 106 TEC (OJ 17.12.2007 C 306/72─73):
92) Article 106 shall be amended as follows:
(a) in paragraph 1, first sentence, the word ‘euro’ shall be inserted before ‘banknotes’;
(b) in paragraph 2, first sentence, the word ‘euro’ shall be inserted before ‘coins’; at the beginning of the second sentence, the words ‘The Council may, acting in accordance with the procedure referred to in Article 252 and after consulting the ECB’ shall be replaced by: ‘The Council, on a proposal from the Commission and after consulting the European Parliament and the European Central Bank, may’.
***
Renumbering
The TFEU table of equivalences confirms that Article 106 TFEU (ToL) in the original Treaty of Lisbon was to be renumbered Article 128 TFEU in the consolidated version, under the title ‘Economic and monetary policy’, renumbered Title VIII (OJ 17.12.2007 C 306/211─212).
(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.)
***
Consolidated Lisbon Treaty
Article 128 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 115/102─103:
Part Three Union policies and internal actions
Title VIII Economic and monetary policy
Chapter 2 Monetary policy
Article 128 TFEU
(ex Article 106 TEC)
1. The European Central Bank shall have the exclusive right to authorise the issue of euro banknotes within the Union. The European Central Bank and the national central banks may issue such notes. The banknotes issued by the European Central Bank and the national central banks shall be the only such notes to have the status of legal tender within the Union.
2. Member States may issue euro coins subject to approval by the European Central Bank of the volume of the issue. The Council, on a proposal from the Commission and after consulting the European Parliament and the European Central Bank, may adopt measures to harmonise the denominations and technical specifications of all coins intended for circulation to the extent necessary to permit their smooth circulation within the Union.
***
Having already seen the small amendments Article 106 TEC is undergoing, the following post is going to compare Article 128 TFEU with the current TEC, the draft Constitution and the Constitution.
Later we will take a look at some legislative materials and comments.
Ralf Grahn
Euro banknotes and coins IIIb: UK and Constitution Article III-186
Does Article III-186 of the Constitutional Treaty differ from Article III-78 of the draft Constitution with regard to the authorisation and issue of legal tender in the euro area (eurozone)?
First, we compare the texts.
Then, we look at what our legal materials have to say, with a special focus on the United Kingdom. Has the UK succeeded in creating valuable options, or did the government prepare for future storms by throwing the steering wheel into the sea?
***
Draft Constitution Article III-78 and Constitution Article III-186 texts compared
The IGC 2004 left the provision almost untouched. The Council of Ministers became the Council in the Constitutional Treaty, but this was a general choice of terminology.
The second paragraph was divided into two subparagraphs, making it somewhat easier to read, but the substance remained the same.
***
Although the results of the IGC 2004 were far from dramatic, we check if Article III-186 Constitution elicited any comments in our sample of legal materials.
Sweden
Outside the euro area, the Swedish government memorandum ‘Fördraget om upprättande av en konstitution för Europa’ (Utrikesdepartemetet, Departementsserien (Ds) 2004:52; December 2004) described the signed Constitutional Treaty.
Before turning to the proposed new powers for the euro area, the Swedish government mentioned the technical questions regarding euro coins in passing, as one of the areas where the eurogroup already decides on its own (page 239):
”Euroområdet
Genom det konstitutionella fördraget kommer beslutsfattandet i euroområdet att stärkas. Redan i dag finns ett antal frågor där euroländerna själva fattar beslut, bl.a. sanktioner i stabilitets- och tillväxtpakten, växelkurspolitik och tekniska frågor som rör euromynten. Genom det nya konstitutionella fördraget kommer euroländerna att kunna samordna sin ekonomiska politik på ett mer formellt sätt. Artikel III-194 i det konstitutionella fördraget fastställer att euroländerna ska utarbeta riktlinjerna för den ekonomiska politiken och se till att dessa överensstämmer med de riktlinjer som har antagits för hela unionen.”
***
On the whole, here on page 172, the Swedish draft ratification bill ‘Lagrådsremiss ─ Fördraget om upprättande av en konstitution för Europa’ (2 June 2005) reiterated the remarks made in the memorandum mentioned above.
***
Finland
The government of eurozone Finland laid out the Constitutional Treaty in its ratification bill ‘Hallituksen esitys Eduskunnalle Euroopan perustuslaista tehdyn sopimuksen hyväksymisestä ja laiksi sen lainsäädännön alaan kuuluvien määräysten voimaansaattamisesta’ (HE 67/2006 vp). Even if the measures concern a detail ─ the denominations and the technical specifications of euro coins ─ this extract from the government’s text gives the impression that consulting the European Parliament is an addition to the EP’s powers (page 183):
”III-186 artikla, jossa määrätään setelien ja metallirahojen liikkeelle laskemisesta, vastaa SEY 106 artiklaa sillä lisäyksellä, että neuvoston tulee kuulla myös Euroopan parlamenttia ennen kuin se päättää metallirahojen yksikköarvojen ja teknisten määritelmien yhdenmukaistamisesta.”
The weakening of the EP’s position has been noted elsewhere, as we have indicated earlier.
***
The same remarks appear in Swedish in ’Regeringens proposition till Riksdagen med förslag om godkännande av Fördraget om upprättande av en konstitution för Europa och till lag om sättande i kraft av de bestämmelser i fördraget som hör till området för lagstiftningen (RP 67/2006 rd), with the Finnish government’s comments on page 187:
”Artikel III-186, där det bestäms om utgivningen av sedlar och mynt, motsvarar artikel 106 i EG-fördraget med det tillägget att rådet skall höra även Europaparlamentet innan det beslutar om harmonisering av valörerna och de tekniska specifikationerna för mynt.”
Elsewhere, the description oft he EP’s role is explained more clearly.
***
Fischer
Klemens H. Fischer, in ‘Der Europäische Verfassungsvertrag‘ (Nomos, Stämpfli & Manz, 2005), only made the observations that „Artikel III-186 EUVV korrespondiert mit Artikel 106 EGV“ and „Artikel III-186 EUVV korrespondiert mit Artikel III-78 VVE“ (page 317).
***
United Kingdom
According to Article 4 of the Protocol (No 13, in the Constitutional Treaty) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland as regards economic and monetary union, the Constitution’s Article III-186 did not apply to the UK.
The UK Foreign and Commonwealth Office (FCO) ‘White Paper on the Treaty establishing a Constitution for Europe’ (Cm 6309, September 2004) mentioned economic and monetary union (EMU) stating the existence of the protocol. The government then proceeded to say that it was, in principle, in favour of a successful single currency. If other member states proved the success and the British ‘economic tests’ were met, the government might propose joining. The promise of a referendum was the real clincher (page 28):
”Economic and Monetary Union
The UK’s Protocol makes clear that the UK is under no obligation to join the single currency.The Constitution does not change the terms of this Protocol. In principle the Government is in favour of UK membership of a successful single currency; in practice the economic tests must be met. If the five tests were passed, and the Government recommended joining EMU, it would be put to a vote in Parliament and then to a referendum of the British people.”
***
Five economic tests
The five economic tests, to precede any political decision, can be found on the web page ’Single Currency ─ Economic & Monetary Union (EMU)’ of BERR (Department for Business Enterprise and Regulatory Reform):
“1. Are business cycles and economic structures compatible so that we and others could live comfortably with euro interest rates on a permanent basis?
2. If problems emerge is there sufficient flexibility to deal with them?
3. Would joining EMU create better conditions for firms making long-term decisions to invest in Britain?
4. What impact would entry into EMU have on the competitive position of the UK's financial services industry, particularly the City's wholesale markets?
5. Will joining the EMU promote higher growth, stability and a lasting increase in jobs?”
The referendum promise is repeated by BERR even today, the proponents of direct democracy having dealt parliamentary sovereignty and government operability a fatal blow.
Given the toxic atmosphere, it is hard to imagine a financial and economic meltdown of such proportions that the United Kingdom could adopt the single currency on the existing premises, irrespective of the internal economic tests (largely met already).
But self-incapacitation has an external side, too. If Britain suffered and economic catastrophe, it would most likely flunk the (external) convergence criteria.
***
Convergence criteria
As a reminder, here are the four EMU convergence criteria at headline level:
Price stability
No excessive deficit
Interest rate convergence
Exchange-rate participation without devaluation
Since we are dealing with the Constitutional Treaty, we look at the corresponding version of the Protocol (No 11) on the convergence criteria (OJ 16.12.2004 C 310/339):
11. PROTOCOL ON THE CONVERGENCE CRITERIA
THE HIGH CONTRACTING PARTIES,
DESIRING to lay down the details of the convergence criteria which shall guide the Union in taking decisions referred to in Article III-198 of the Constitution to end the derogations of those Member States with a derogation,
HAVE AGREED upon the following provisions, which shall be annexed to the Treaty establishing a Constitution for Europe:
Article 1
The criterion on price stability referred to in Article III-198(1)(a) of the Constitution shall mean that the Member State concerned has a price performance that is sustainable and an average rate of inflation, observed over a period of one year before the examination, that does not exceed by more than 1,5 percentage points that of, at most, the three best performing Member States in terms of price stability. Inflation shall be measured by means of the consumer price index on a comparable basis, taking into account differences in national definitions.
Article 2
The criterion on the government budgetary position referred to in Article III-198(1)(b) of the Constitution shall mean that at the time of the examination the Member State concerned is not the subject of a European decision of the Council under Article III-184(6) of the Constitution that an excessive deficit exists.
Article 3
The criterion on participation in the exchange-rate mechanism of the European Monetary System referred to in Article III-198(1)(c) of the Constitution shall mean that the Member State concerned has respected the normal fluctuation margins provided for by the exchange-rate mechanism of the European Monetary System without severe tensions for at least the last two years before the examination. In particular, the Member State shall not have devalued its currency's bilateral central rate against the euro on its own initiative for the same period.
Article 4
The criterion on the convergence of interest rates referred to in Article III-198(1)(d) of the Constitution shall mean that, observed over a period of one year before the examination, the Member State concerned has had an average nominal long-term interest rate that does not exceed by more than 2 percentage points that of, at most, the three best performing Member States in terms of price stability. Interest rates shall be measured on the basis of long-term government bonds or comparable securities, taking into account differences in national definitions. The statistical data to be used for the application of this Protocol shall be provided by the Commission.
Article 6
The Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament, the European Central Bank, and the Economic and Financial Committee referred to in Article III-192 of the Constitution, adopt appropriate provisions to lay down the details of the convergence criteria referred to in Article III-198 of the Constitution, which shall then replace this Protocol.
***
In short, when the United Kingdom signed the Constitutional Treaty, the UK government not only rejected entering the third stage of economic and monetary union (EMU) and adopting the euro currency immediately, but practically eliminated its chances of ever doing so, however pressing the need.
What difference does an additional referendum promise make, then chancellor Gordon Brown might have argued.
***
The next instalment turns to the IGC 2007 and the Lisbon Treaty.
Ralf Grahn
First, we compare the texts.
Then, we look at what our legal materials have to say, with a special focus on the United Kingdom. Has the UK succeeded in creating valuable options, or did the government prepare for future storms by throwing the steering wheel into the sea?
***
Draft Constitution Article III-78 and Constitution Article III-186 texts compared
The IGC 2004 left the provision almost untouched. The Council of Ministers became the Council in the Constitutional Treaty, but this was a general choice of terminology.
The second paragraph was divided into two subparagraphs, making it somewhat easier to read, but the substance remained the same.
***
Although the results of the IGC 2004 were far from dramatic, we check if Article III-186 Constitution elicited any comments in our sample of legal materials.
Sweden
Outside the euro area, the Swedish government memorandum ‘Fördraget om upprättande av en konstitution för Europa’ (Utrikesdepartemetet, Departementsserien (Ds) 2004:52; December 2004) described the signed Constitutional Treaty.
Before turning to the proposed new powers for the euro area, the Swedish government mentioned the technical questions regarding euro coins in passing, as one of the areas where the eurogroup already decides on its own (page 239):
”Euroområdet
Genom det konstitutionella fördraget kommer beslutsfattandet i euroområdet att stärkas. Redan i dag finns ett antal frågor där euroländerna själva fattar beslut, bl.a. sanktioner i stabilitets- och tillväxtpakten, växelkurspolitik och tekniska frågor som rör euromynten. Genom det nya konstitutionella fördraget kommer euroländerna att kunna samordna sin ekonomiska politik på ett mer formellt sätt. Artikel III-194 i det konstitutionella fördraget fastställer att euroländerna ska utarbeta riktlinjerna för den ekonomiska politiken och se till att dessa överensstämmer med de riktlinjer som har antagits för hela unionen.”
***
On the whole, here on page 172, the Swedish draft ratification bill ‘Lagrådsremiss ─ Fördraget om upprättande av en konstitution för Europa’ (2 June 2005) reiterated the remarks made in the memorandum mentioned above.
***
Finland
The government of eurozone Finland laid out the Constitutional Treaty in its ratification bill ‘Hallituksen esitys Eduskunnalle Euroopan perustuslaista tehdyn sopimuksen hyväksymisestä ja laiksi sen lainsäädännön alaan kuuluvien määräysten voimaansaattamisesta’ (HE 67/2006 vp). Even if the measures concern a detail ─ the denominations and the technical specifications of euro coins ─ this extract from the government’s text gives the impression that consulting the European Parliament is an addition to the EP’s powers (page 183):
”III-186 artikla, jossa määrätään setelien ja metallirahojen liikkeelle laskemisesta, vastaa SEY 106 artiklaa sillä lisäyksellä, että neuvoston tulee kuulla myös Euroopan parlamenttia ennen kuin se päättää metallirahojen yksikköarvojen ja teknisten määritelmien yhdenmukaistamisesta.”
The weakening of the EP’s position has been noted elsewhere, as we have indicated earlier.
***
The same remarks appear in Swedish in ’Regeringens proposition till Riksdagen med förslag om godkännande av Fördraget om upprättande av en konstitution för Europa och till lag om sättande i kraft av de bestämmelser i fördraget som hör till området för lagstiftningen (RP 67/2006 rd), with the Finnish government’s comments on page 187:
”Artikel III-186, där det bestäms om utgivningen av sedlar och mynt, motsvarar artikel 106 i EG-fördraget med det tillägget att rådet skall höra även Europaparlamentet innan det beslutar om harmonisering av valörerna och de tekniska specifikationerna för mynt.”
Elsewhere, the description oft he EP’s role is explained more clearly.
***
Fischer
Klemens H. Fischer, in ‘Der Europäische Verfassungsvertrag‘ (Nomos, Stämpfli & Manz, 2005), only made the observations that „Artikel III-186 EUVV korrespondiert mit Artikel 106 EGV“ and „Artikel III-186 EUVV korrespondiert mit Artikel III-78 VVE“ (page 317).
***
United Kingdom
According to Article 4 of the Protocol (No 13, in the Constitutional Treaty) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland as regards economic and monetary union, the Constitution’s Article III-186 did not apply to the UK.
The UK Foreign and Commonwealth Office (FCO) ‘White Paper on the Treaty establishing a Constitution for Europe’ (Cm 6309, September 2004) mentioned economic and monetary union (EMU) stating the existence of the protocol. The government then proceeded to say that it was, in principle, in favour of a successful single currency. If other member states proved the success and the British ‘economic tests’ were met, the government might propose joining. The promise of a referendum was the real clincher (page 28):
”Economic and Monetary Union
The UK’s Protocol makes clear that the UK is under no obligation to join the single currency.The Constitution does not change the terms of this Protocol. In principle the Government is in favour of UK membership of a successful single currency; in practice the economic tests must be met. If the five tests were passed, and the Government recommended joining EMU, it would be put to a vote in Parliament and then to a referendum of the British people.”
***
Five economic tests
The five economic tests, to precede any political decision, can be found on the web page ’Single Currency ─ Economic & Monetary Union (EMU)’ of BERR (Department for Business Enterprise and Regulatory Reform):
“1. Are business cycles and economic structures compatible so that we and others could live comfortably with euro interest rates on a permanent basis?
2. If problems emerge is there sufficient flexibility to deal with them?
3. Would joining EMU create better conditions for firms making long-term decisions to invest in Britain?
4. What impact would entry into EMU have on the competitive position of the UK's financial services industry, particularly the City's wholesale markets?
5. Will joining the EMU promote higher growth, stability and a lasting increase in jobs?”
The referendum promise is repeated by BERR even today, the proponents of direct democracy having dealt parliamentary sovereignty and government operability a fatal blow.
Given the toxic atmosphere, it is hard to imagine a financial and economic meltdown of such proportions that the United Kingdom could adopt the single currency on the existing premises, irrespective of the internal economic tests (largely met already).
But self-incapacitation has an external side, too. If Britain suffered and economic catastrophe, it would most likely flunk the (external) convergence criteria.
***
Convergence criteria
As a reminder, here are the four EMU convergence criteria at headline level:
Price stability
No excessive deficit
Interest rate convergence
Exchange-rate participation without devaluation
Since we are dealing with the Constitutional Treaty, we look at the corresponding version of the Protocol (No 11) on the convergence criteria (OJ 16.12.2004 C 310/339):
11. PROTOCOL ON THE CONVERGENCE CRITERIA
THE HIGH CONTRACTING PARTIES,
DESIRING to lay down the details of the convergence criteria which shall guide the Union in taking decisions referred to in Article III-198 of the Constitution to end the derogations of those Member States with a derogation,
HAVE AGREED upon the following provisions, which shall be annexed to the Treaty establishing a Constitution for Europe:
Article 1
The criterion on price stability referred to in Article III-198(1)(a) of the Constitution shall mean that the Member State concerned has a price performance that is sustainable and an average rate of inflation, observed over a period of one year before the examination, that does not exceed by more than 1,5 percentage points that of, at most, the three best performing Member States in terms of price stability. Inflation shall be measured by means of the consumer price index on a comparable basis, taking into account differences in national definitions.
Article 2
The criterion on the government budgetary position referred to in Article III-198(1)(b) of the Constitution shall mean that at the time of the examination the Member State concerned is not the subject of a European decision of the Council under Article III-184(6) of the Constitution that an excessive deficit exists.
Article 3
The criterion on participation in the exchange-rate mechanism of the European Monetary System referred to in Article III-198(1)(c) of the Constitution shall mean that the Member State concerned has respected the normal fluctuation margins provided for by the exchange-rate mechanism of the European Monetary System without severe tensions for at least the last two years before the examination. In particular, the Member State shall not have devalued its currency's bilateral central rate against the euro on its own initiative for the same period.
Article 4
The criterion on the convergence of interest rates referred to in Article III-198(1)(d) of the Constitution shall mean that, observed over a period of one year before the examination, the Member State concerned has had an average nominal long-term interest rate that does not exceed by more than 2 percentage points that of, at most, the three best performing Member States in terms of price stability. Interest rates shall be measured on the basis of long-term government bonds or comparable securities, taking into account differences in national definitions. The statistical data to be used for the application of this Protocol shall be provided by the Commission.
Article 6
The Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament, the European Central Bank, and the Economic and Financial Committee referred to in Article III-192 of the Constitution, adopt appropriate provisions to lay down the details of the convergence criteria referred to in Article III-198 of the Constitution, which shall then replace this Protocol.
***
In short, when the United Kingdom signed the Constitutional Treaty, the UK government not only rejected entering the third stage of economic and monetary union (EMU) and adopting the euro currency immediately, but practically eliminated its chances of ever doing so, however pressing the need.
What difference does an additional referendum promise make, then chancellor Gordon Brown might have argued.
***
The next instalment turns to the IGC 2007 and the Lisbon Treaty.
Ralf Grahn
Euro banknotes and coins IIIa: Article III-186 Constitution
Did the intergovernmental conference (IGC 2004) improve on or ─ as more often ─ subtract from the proposal by the European Convention regarding the issue of euro banknotes and coins?
First, a reminder of the contents.
***
In the Treaty establishing a Constitution for Europe, the provisions on monetary policy are located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter II ‘Economic and monetary policy’, Section 2 ‘Monetary policy’.
Article III-186 sets out a more centralised system for euro banknotes and a more decentralised arrangement for the issue of euro coins, OJ 16.12.2004 C 310/82:
Article III-186 Constitution
1. The European Central Bank shall have the exclusive right to authorise the issue of euro bank notes in the Union. The European Central Bank and the national central banks may issue such notes. Only the bank notes issued by the European Central Bank and the national central banks shall have the status of legal tender within the Union.
2. Member States may issue euro coins subject to approval by the European Central Bank of the volume of the issue.
The Council, on a proposal from the Commission, may adopt European regulations laying down measures to harmonise the denominations and technical specifications of coins intended for circulation to the extent necessary to permit their smooth circulation within the Union. The Council shall act after consulting the European Parliament and the European Central Bank.
***
The next post is going to compare the Constitutional Treaty III-186 with the draft Constitution Article III-78 and look at some legislative materials on the Constitution.
Ralf Grahn
First, a reminder of the contents.
***
In the Treaty establishing a Constitution for Europe, the provisions on monetary policy are located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter II ‘Economic and monetary policy’, Section 2 ‘Monetary policy’.
Article III-186 sets out a more centralised system for euro banknotes and a more decentralised arrangement for the issue of euro coins, OJ 16.12.2004 C 310/82:
Article III-186 Constitution
1. The European Central Bank shall have the exclusive right to authorise the issue of euro bank notes in the Union. The European Central Bank and the national central banks may issue such notes. Only the bank notes issued by the European Central Bank and the national central banks shall have the status of legal tender within the Union.
2. Member States may issue euro coins subject to approval by the European Central Bank of the volume of the issue.
The Council, on a proposal from the Commission, may adopt European regulations laying down measures to harmonise the denominations and technical specifications of coins intended for circulation to the extent necessary to permit their smooth circulation within the Union. The Council shall act after consulting the European Parliament and the European Central Bank.
***
The next post is going to compare the Constitutional Treaty III-186 with the draft Constitution Article III-78 and look at some legislative materials on the Constitution.
Ralf Grahn
Wednesday, 22 October 2008
Euro banknotes and coins IIb: Comparison Article III-78 draft Constitution
We compare the proposal of the European Convention (Article III-78) with the current Article 106 of the Treaty establishing the European Community (TEC) concerning the issue of euro banknotes and euro coins.
After that we look at some legal materials and descriptions of the proposal of the European Convention in the draft Constitution.
***
Texts compared
Article III-78(1) of the draft Constitution wrote the European Central Bank in full, and it added the word ‘euro’ before banknotes. The third sentence was slightly rephrased, and ‘Union’ replaced ‘Community’. Similar editorial changes were made to the second paragraph, but the European Parliament was downgraded by the move from the cooperation procedure to the consultation procedure.
***
de Poncins
Étienne de Poncins presented the proposed text of Article III-78 of the draft Constitution in ‘Vers une Constitution européenne’ (Éditions 10/18, 2003), without comment, on page 302─303.
***
Sweden
Sweden remains outside the third phase of economic and monetary union (EMU), without a derogation, but following the 14 September 2003 referendum.
I found no mention of Article III-78 in the Swedish government’s memorandum on the draft Constitution, ‘Europeiska konventet om EU:s framtid’ (Utrikesdepartementet, Departementsserien (Ds) 2003:58, 2003).
***
Sweden
Ahead of the intergovernmental conference (IGC 2003─2004), but after the euro referendum, the government of Sweden made a passing reference to technical specifications regarding euro coins, which are decided by the Eurogroup, in ‘Europeiska konventet om EU:s framtid’ (Regeringens skrivelse 2003/04:13, den 2 oktober 2003), on page 48:
”Redan idag finns ett antal frågor där euroländerna själva fattar beslut, bl.a. sanktioner i stabilitets- och tillväxtpakten, växelkurspolitik och tekniska frågor som rör euromynten. Konventet föreslår att euroländerna, inom det ordinarie rådet, skall kunna samordna sin politik ytterligare genom att de ges möjlighet att själva besluta om särskilda bestämmelser för euroländerna när det gäller riktlinjer för den ekonomiska politiken samt förfarandet vid alltför stort underskott.”
***
United Kingdom
The United Kingdom has opted out of the third stage of economic and monetary union (EMU). (In the latest consolidated version of the treaties, Protocol (No 25) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland, OJ 29.12.2006 C 321 E/299).
Between the European Convention and the intergovernmental conference, the UK government presented its general approach ─ most British ─ in ‘A Constitutional Treaty for the EU; The British Approach to the European Union Intergovernmental Conference 2003’ (Cm5934, September 2003), under Economic Governance on pages 34─35:
“74. Many of the issues discussed in the European Convention and raised in the draft Constitutional Treaty could have significant consequences for the future performance of EU economies. The draft Constitutional Treaty proposed by the Convention has proposed changes to the EU’s existing system of economic governance and other aspects of the EU fiscal framework; the institutional balance between the Union and Member States in economic policy coordination; and the role of the Eurogroup, the informal grouping of euro area finance ministers. The Government will oppose any such proposals which might lead to unnecessary rigidities or undermine the central role of Member States in determining their economic policies. It will work to ensure outcomes that will bolster stability, promote flexibility and enhance the ability of European countries to raise productivity and employment levels.
75. The draft Treaty does not alter the terms of the UK’s Economic and Monetary Union protocol (allowing the UK to decide whether or not to join the euro). This will need formally to be re-adopted on the conclusion of the IGC.”
***
Finland
Finland is part of Euroland.
The Finnish government, in ‘Valtioneuvoston selonteko Eduskunnalle konventin tuloksista ja valmistautumisesta hallitusten väliseen konferenssiin’ (VNS 2/2003 vp), listed the procedure in Article III-78 among the non-legislative acts to be adopted by the Council after consulting the European Parliament (Muut kuin lainsäätämisjärjestyksessä hyväksyttävät säädökset; 3.21Määrenemmistö neuvostossa ja Euroopan parlamentin kuuleminen; page 88).
***
We will see that the European Convention initiated some of the changes of terminology, later to appear in the Constitutional Treaty and the Treaty of Lisbon.
Downgrading the role of the European Parliament to mere consultation concerning the detail of denominations and technical specifications of euro coins did not elicit much comment, but it underlined the intergovernmental character of EU economic and monetary union (EMU) in combination with the particular autonomy of the European Central Bank with regard to monetary policy.
Ralf Grahn
After that we look at some legal materials and descriptions of the proposal of the European Convention in the draft Constitution.
***
Texts compared
Article III-78(1) of the draft Constitution wrote the European Central Bank in full, and it added the word ‘euro’ before banknotes. The third sentence was slightly rephrased, and ‘Union’ replaced ‘Community’. Similar editorial changes were made to the second paragraph, but the European Parliament was downgraded by the move from the cooperation procedure to the consultation procedure.
***
de Poncins
Étienne de Poncins presented the proposed text of Article III-78 of the draft Constitution in ‘Vers une Constitution européenne’ (Éditions 10/18, 2003), without comment, on page 302─303.
***
Sweden
Sweden remains outside the third phase of economic and monetary union (EMU), without a derogation, but following the 14 September 2003 referendum.
I found no mention of Article III-78 in the Swedish government’s memorandum on the draft Constitution, ‘Europeiska konventet om EU:s framtid’ (Utrikesdepartementet, Departementsserien (Ds) 2003:58, 2003).
***
Sweden
Ahead of the intergovernmental conference (IGC 2003─2004), but after the euro referendum, the government of Sweden made a passing reference to technical specifications regarding euro coins, which are decided by the Eurogroup, in ‘Europeiska konventet om EU:s framtid’ (Regeringens skrivelse 2003/04:13, den 2 oktober 2003), on page 48:
”Redan idag finns ett antal frågor där euroländerna själva fattar beslut, bl.a. sanktioner i stabilitets- och tillväxtpakten, växelkurspolitik och tekniska frågor som rör euromynten. Konventet föreslår att euroländerna, inom det ordinarie rådet, skall kunna samordna sin politik ytterligare genom att de ges möjlighet att själva besluta om särskilda bestämmelser för euroländerna när det gäller riktlinjer för den ekonomiska politiken samt förfarandet vid alltför stort underskott.”
***
United Kingdom
The United Kingdom has opted out of the third stage of economic and monetary union (EMU). (In the latest consolidated version of the treaties, Protocol (No 25) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland, OJ 29.12.2006 C 321 E/299).
Between the European Convention and the intergovernmental conference, the UK government presented its general approach ─ most British ─ in ‘A Constitutional Treaty for the EU; The British Approach to the European Union Intergovernmental Conference 2003’ (Cm5934, September 2003), under Economic Governance on pages 34─35:
“74. Many of the issues discussed in the European Convention and raised in the draft Constitutional Treaty could have significant consequences for the future performance of EU economies. The draft Constitutional Treaty proposed by the Convention has proposed changes to the EU’s existing system of economic governance and other aspects of the EU fiscal framework; the institutional balance between the Union and Member States in economic policy coordination; and the role of the Eurogroup, the informal grouping of euro area finance ministers. The Government will oppose any such proposals which might lead to unnecessary rigidities or undermine the central role of Member States in determining their economic policies. It will work to ensure outcomes that will bolster stability, promote flexibility and enhance the ability of European countries to raise productivity and employment levels.
75. The draft Treaty does not alter the terms of the UK’s Economic and Monetary Union protocol (allowing the UK to decide whether or not to join the euro). This will need formally to be re-adopted on the conclusion of the IGC.”
***
Finland
Finland is part of Euroland.
The Finnish government, in ‘Valtioneuvoston selonteko Eduskunnalle konventin tuloksista ja valmistautumisesta hallitusten väliseen konferenssiin’ (VNS 2/2003 vp), listed the procedure in Article III-78 among the non-legislative acts to be adopted by the Council after consulting the European Parliament (Muut kuin lainsäätämisjärjestyksessä hyväksyttävät säädökset; 3.21Määrenemmistö neuvostossa ja Euroopan parlamentin kuuleminen; page 88).
***
We will see that the European Convention initiated some of the changes of terminology, later to appear in the Constitutional Treaty and the Treaty of Lisbon.
Downgrading the role of the European Parliament to mere consultation concerning the detail of denominations and technical specifications of euro coins did not elicit much comment, but it underlined the intergovernmental character of EU economic and monetary union (EMU) in combination with the particular autonomy of the European Central Bank with regard to monetary policy.
Ralf Grahn
Euro banknotes and coins IIa: Article III-78 draft Constitution
Did the European Convention have anything to say about issuing euro banknotes and coins, the only legal tender within the euro area?
***
Article III-78 of the draft Constitution, proposed by the European Convention, corresponds with Article 106 TEC, and it 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 2 ‘Monetary policy’.
First, we present the proposed contents. In the draft Treaty establishing a Constitution for Europe, Article III-78 on the issue of euro banknotes and euro coins is found in OJ 18.7.2003 C 169/42:
Article III-78 Draft Constitution
1. The European Central Bank shall have the exclusive right to authorise the issue of euro bank notes in the Union. The European Central Bank and the national central banks may issue such notes. Only the bank notes issued by the European Central Bank and the national central banks shall have the status of legal tender within the Union.
2. Member States may issue euro coins subject to approval by the European Central Bank of the volume of the issue. The Council of Ministers, on a proposal from the Commission, may adopt European regulations laying down measures to harmonise the denominations and technical specifications of all coins intended for circulation to the extent necessary to permit their smooth circulation within the Union. The Council of Ministers shall act after consulting the European Parliament and the European Central Bank.
***
The next post is going to look at some legal materials concerning the European Convention proposal.
Ralf Grahn
***
Article III-78 of the draft Constitution, proposed by the European Convention, corresponds with Article 106 TEC, and it 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 2 ‘Monetary policy’.
First, we present the proposed contents. In the draft Treaty establishing a Constitution for Europe, Article III-78 on the issue of euro banknotes and euro coins is found in OJ 18.7.2003 C 169/42:
Article III-78 Draft Constitution
1. The European Central Bank shall have the exclusive right to authorise the issue of euro bank notes in the Union. The European Central Bank and the national central banks may issue such notes. Only the bank notes issued by the European Central Bank and the national central banks shall have the status of legal tender within the Union.
2. Member States may issue euro coins subject to approval by the European Central Bank of the volume of the issue. The Council of Ministers, on a proposal from the Commission, may adopt European regulations laying down measures to harmonise the denominations and technical specifications of all coins intended for circulation to the extent necessary to permit their smooth circulation within the Union. The Council of Ministers shall act after consulting the European Parliament and the European Central Bank.
***
The next post is going to look at some legal materials concerning the European Convention proposal.
Ralf Grahn
Euro banknotes and coins If: Protecting the euro
Protecting the euro banknotes and coins against counterfeiting is a demanding task for the European Central Bank (ECB) and the Eurosystem.
We look at the legal framework for the protection of the euro.
***
Council Regulation (EC) No 1338/2001 of 28 June 2001 laying down measures necessary for the protection of the euro against counterfeiting, OJ 4.7.2001 L 181/6, aims to protect the euro banknotes and coins against counterfeiting. The provisions have effect in the member states which have adopted the euro as their single currency.
***
Council Regulation (EC) No 1339/2001 of 28 June 2001 extending the effects of Regulation (EC) No 1338/2001 laying down measures necessary for the protection of the euro against counterfeiting to those Member States which have not adopted the euro as their single currency, OJ 4.7.2001 L 181/11, strives to offer the euro the same level of protection in the member states outside the euro area as inside.
***
The Recommendation of the European Central Bank of 6 October 2006 on the adoption of certain measures to protect euro banknotes more effectively against counterfeiting (ECB/2006/13), OJ 25.10.2006 C 257/16, suggested amendments to and common action under Regulation (EC) No 1338/2001.
***
Recommendation of the European Central Bank of 7 July 1998 regarding the adoption of certain measures to enhance the legal protection of euro banknotes and coins (ECB/1998/7), OJ 15.1.1999 C 11/13, sought to discourage misleading euro tokens and the like before the launch of the euro.
***
The Guideline of the European Central Bank of 7 July 1998 on certain provisions regarding euro banknotes, as amended on 26 August 1999, established the Counterfeit Analysis Centre (CAC) and the counterfeit currency database (CCD) of the European System of Central Banks (ESCB).
Under the aegis of the ECB, the CAC was intended to centralise the technical analysis of and data relating to the counterfeiting of euro banknotes issued by the ECB and the NCBs.
All relevant technical and statistical data concerning the counterfeiting of euro banknotes was centrally stored in the CCD.
A consolidated version (26.3.2003) is available at:
http://www.ecb.europa.eu/ecb/legal/pdf/ecb_1999_3_consolidated_en.pdf
The Decision of the European Central Bank of 8 November 2001 on certain conditions regarding access to the Counterfeit Monitoring System (CMS) (ECB/2001/11), OJ 20.12.2001 L 337/49, renamed the Counterfeit Currency Database (CCD) as the Counterfeit Monitoring System (CMS), and the decision set out detailed provisions concerning the CMS.
***
The European Central Bank has concluded agreements with Europol and Interpol.
The stated purpose of the Agreement between the European Police Office (Europol) and the European Central Bank (ECB) (2002/C 23/07), OJ 25.1.2002 C 23/9, is to provide for effective cooperation to combat the threats arising from counterfeiting of the euro, and to enhance and coordinate any assistance to the national and European authorities and to international organisations.
The purpose of the Cooperation Agreement between The European Central Bank - ECB – and The International Criminal Police Organisation – INTERPOL (2004/C 134/06), OJ 12.5.2004 c 134/6, is to establish a framework for cooperation between the Parties facilitating the prevention and detection of the counterfeiting of euro banknotes throughout the world, in particular in countries not belonging to the European Union.
***
The ECB has published a Template Agreement between the European Central Bank and the (acceding country national central bank), OJ 9.7.2003 C 160/7, the purpose of which is to enhance the cooperation between the parties in the areas of prevention and detection of counterfeiting of euro banknotes.
Such agreements have been concluded with the national central banks of six newish member states: Bulgaria, Estonia, Hungary, Lithuania, Poland and Slovenia.
The agreements are available at:
http://www.ecb.europa.eu/ecb/legal/1004/1019/html/index.en.html
Ralf Grahn
We look at the legal framework for the protection of the euro.
***
Council Regulation (EC) No 1338/2001 of 28 June 2001 laying down measures necessary for the protection of the euro against counterfeiting, OJ 4.7.2001 L 181/6, aims to protect the euro banknotes and coins against counterfeiting. The provisions have effect in the member states which have adopted the euro as their single currency.
***
Council Regulation (EC) No 1339/2001 of 28 June 2001 extending the effects of Regulation (EC) No 1338/2001 laying down measures necessary for the protection of the euro against counterfeiting to those Member States which have not adopted the euro as their single currency, OJ 4.7.2001 L 181/11, strives to offer the euro the same level of protection in the member states outside the euro area as inside.
***
The Recommendation of the European Central Bank of 6 October 2006 on the adoption of certain measures to protect euro banknotes more effectively against counterfeiting (ECB/2006/13), OJ 25.10.2006 C 257/16, suggested amendments to and common action under Regulation (EC) No 1338/2001.
***
Recommendation of the European Central Bank of 7 July 1998 regarding the adoption of certain measures to enhance the legal protection of euro banknotes and coins (ECB/1998/7), OJ 15.1.1999 C 11/13, sought to discourage misleading euro tokens and the like before the launch of the euro.
***
The Guideline of the European Central Bank of 7 July 1998 on certain provisions regarding euro banknotes, as amended on 26 August 1999, established the Counterfeit Analysis Centre (CAC) and the counterfeit currency database (CCD) of the European System of Central Banks (ESCB).
Under the aegis of the ECB, the CAC was intended to centralise the technical analysis of and data relating to the counterfeiting of euro banknotes issued by the ECB and the NCBs.
All relevant technical and statistical data concerning the counterfeiting of euro banknotes was centrally stored in the CCD.
A consolidated version (26.3.2003) is available at:
http://www.ecb.europa.eu/ecb/legal/pdf/ecb_1999_3_consolidated_en.pdf
The Decision of the European Central Bank of 8 November 2001 on certain conditions regarding access to the Counterfeit Monitoring System (CMS) (ECB/2001/11), OJ 20.12.2001 L 337/49, renamed the Counterfeit Currency Database (CCD) as the Counterfeit Monitoring System (CMS), and the decision set out detailed provisions concerning the CMS.
***
The European Central Bank has concluded agreements with Europol and Interpol.
The stated purpose of the Agreement between the European Police Office (Europol) and the European Central Bank (ECB) (2002/C 23/07), OJ 25.1.2002 C 23/9, is to provide for effective cooperation to combat the threats arising from counterfeiting of the euro, and to enhance and coordinate any assistance to the national and European authorities and to international organisations.
The purpose of the Cooperation Agreement between The European Central Bank - ECB – and The International Criminal Police Organisation – INTERPOL (2004/C 134/06), OJ 12.5.2004 c 134/6, is to establish a framework for cooperation between the Parties facilitating the prevention and detection of the counterfeiting of euro banknotes throughout the world, in particular in countries not belonging to the European Union.
***
The ECB has published a Template Agreement between the European Central Bank and the (acceding country national central bank), OJ 9.7.2003 C 160/7, the purpose of which is to enhance the cooperation between the parties in the areas of prevention and detection of counterfeiting of euro banknotes.
Such agreements have been concluded with the national central banks of six newish member states: Bulgaria, Estonia, Hungary, Lithuania, Poland and Slovenia.
The agreements are available at:
http://www.ecb.europa.eu/ecb/legal/1004/1019/html/index.en.html
Ralf Grahn
Tuesday, 21 October 2008
Euro banknotes and coins Ie: Issuing eurozone cash
Procuring cash for the 15 member eurozone and its 320 inhabitants is a huge and complex operation, led by the European Central Bank (ECB). At the end of 2007, the 302 branches of national central banks served the citizens’ needs for banknotes through 173,396 commercial bank branches and 246,101 automated teller machines:
http://www.ecb.europa.eu/stats/euro/logistics/html/index.en.html
The treatment of banknotes is more centralized than the issuing of euro coins.
***
Euro banknotes
The 53 Articles of Protocol (No 18) on the Statute of the European System of Central Banks and of the ECB repeat and elaborate on the treaty provisions; in the consolidated version of the treaties, OJ 29.12.2006 C 321 E/256─280.
Article 16(1) of the Statute echoes the wording of Article 106(1) TEC, adding only that the authorising decisions are taken by the ECB’s Governing Council:
Article 16 ECB Statute
Banknotes
In accordance with Article 106(1) of this Treaty, the Governing Council shall have the exclusive right to authorise the issue of banknotes within the Community. The ECB and the national central banks may issue such notes. The banknotes issued by the ECB and the national central banks shall be the only such notes to have the status of legal tender within the Community.
The ECB shall respect as far as possible existing practices regarding the issue and design of banknotes.
***
The Governing Council’s right to decide on the authorisation is exclusive, but the concrete issuing of euro banknotes can be done by the ECB or the national central banks.
We have seen that, in principle, the treaties are written as if there were a single currency (the euro) for the whole European Community (EC). Still, three of the “old” member states have clinged to their national currencies and even with Slovakia entering the eurozone from the beginning of 2009, as yet eight of the twelve “new” EU member states have not been able (or willing) to fulfil the convergence criteria. In practice, as the ECB points out in various instances and by employing the word Eurosystem, Community has to be read as the Eurosystem (euro area).
Anyway, the so called single currency is a remarkable achievement. From the beginning of next year, euro banknotes are the only bills used as legal tender ─ for the payment of debts, the purchase of goods and other exchanges for value ─ by about 325 million people in 16 countries.
***
Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro, OJ 11.5.1998 L 139/1, restated that the ‘ecu’ was to become the euro, divided into 100 cents, and contained provisions to ensure the smooth changeover as from 1 January 1999 and the substitution of the currency of each participating state at the conversion rate.
Article 10 provided that as from 1 January 2002, the ECB and the central banks of the participating Member States shall put into circulation banknotes denominated in euro.
The latest amendment is by Council Regulation (EC) No 693/2008 of 8 July 2008 amending Regulation (EC) No 974/98 as regards the introduction of the euro in Slovakia, OJ 24.7.2008 L 195/1. (For the researcher the recital is convenient, in that it clearly sets out all the amendments to the regulation.)
***
In the Decision of the European Central Bank of 20 March 2003 on the denominations, specifications, reproduction, exchange and withdrawal of euro banknotes (ECB/2003/4), published in OJ 25.3.2003 L 78/16, the ECB’s governing council defined the seven denominations of euro banknotes, from 5 to 500 euros, and their basic designs (Article 1).
Reproduction rules are set out in Article 2, with the aim to ensure that the public can distinguish genuine euro banknotes from reproductions.
Article 3 lays out rules on the exchange of mutilated or damaged genuine euro banknotes, including ones damaged by activated anti-theft devices, with the establishment of fees in Article 4.
Article 5 concerns the withdrawal of euro banknotes.
***
The Decision of the European Central Bank of 6 December 2001 on the issue of euro banknotes
(ECB/2001/15), OJ 20.12.2001 L 337/52, allocates the total value of euro banknotes in circulation to the Eurosystem members by application of a banknote allocation key.
The latest amending decision is the Decision of the European Central Bank of 7 December 2007
amending Decision ECB/2001/15 of 6 December 2001 on the issue of euro banknotes (ECB/2007/19), OJ 4.1.2008 L 1/7.
***
Non-compliant reproductions of euro banknotes are targeted in the Guideline of the European Central Bank of 20 March 2003 on the enforcement of measures to counter non-compliant reproductions of euro banknotes and on the exchange and withdrawal of euro banknotes
(ECB/2003/5), OJ 25.3.2003 L 78/20.
***
Balancing an open market economy with safety concerns in the production of euro banknotes is the subject matter of the Guideline of the European Central Bank of 16 September 2004 on the procurement of euro banknotes (ECB/2004/18), OJ 21.10.2004 L 320/21.
***
Euro coins
Article 11 of Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro, OJ 11.5.1998 L 139/1, stated:
Article 11 Regulation 974/98
As from 1 January 2002, the participating Member States shall issue coins denominated in euro or in cent and complying with the denominations and technical specifications which the Council may lay down in accordance with the second sentence of Article 105a(2) of the Treaty. Without prejudice to Article 15, these coins shall be the only coins which have the status of legal tender in all these Member States. Except for the issuing authority and for those persons specifically designated by the national legislation of the issuing Member State, no party shall be obliged to accept more than 50 coins in any single payment.
***
Council Regulation (EC) No 975/98 of 3 May 1998 on denominations and technical specifications of euro coins intended for circulation, OJ 11.5.1998 L 139/6, contains specifications to ensure that the euro coins can be used smoothly throughout the euro area, including in vending machines.
The coins were given one European and one national side, thought to be an appropriate expression of the idea of European monetary union between Member States and intended to increase the degree of acceptance of the coins by European citiziens.
***
The Governing Council of the ECB regulates the volume of euro coins through annual decisions. The latest is the Decision of the European Central Bank of 23 November 2007 on the approval of the volume of coin issuance in 2008 (ECB/2007/16), OJ 5.12.2007 L 317/81. (Given the present date, a decision concerning 2009 is to be expected soon.)
***
ECB opinions
We remember the mandatory consultation pursuant to Article 105(4) TEC of the ECB concerning draft legislative provisions.
In addition, there is Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft legislative provisions, OJ 3.7.1998 L 189/42, which set out the main areas where the participating states must consult the ECB:
Article 2 Council Decision 98/415
1. The authorities of the Member States shall consult the ECB on any draft legislative provision within its field of competence pursuant to the Treaty and in particular on:
- currency matters,
- means of payment,
- national central banks,
- the collection, compilation and distribution of monetary, financial, banking, payment systems and
balance of payments statistics,
- payment and settlement systems,
- rules applicable to financial institutions insofar as they materially influence the stability of financial institutions and markets.
2. In addition, the authorities of Member States other than participating Member States shall consult the ECB on any draft legislative provisions on the instruments of monetary policy.
-----
***
Here are two fresh examples of ECB opinions concerning euro banknotes and coins, one with regard to Sweden and the other one regarding Germany:
Opinion of the European Central Bank of 9 October 2008 at the request of Sveriges Riksbank on a draft Regulation on the redemption of banknotes and coins (CON/2008/47)
Opinion of the European Central Bank of 16 October 2008 at the request of the German Ministry of Finance on a draft order on the replacement of euro coins and German euro commemorative coins which are unfit for circulation and the charging of appropriate fees (CON/2008/49).
Ralf Grahn
http://www.ecb.europa.eu/stats/euro/logistics/html/index.en.html
The treatment of banknotes is more centralized than the issuing of euro coins.
***
Euro banknotes
The 53 Articles of Protocol (No 18) on the Statute of the European System of Central Banks and of the ECB repeat and elaborate on the treaty provisions; in the consolidated version of the treaties, OJ 29.12.2006 C 321 E/256─280.
Article 16(1) of the Statute echoes the wording of Article 106(1) TEC, adding only that the authorising decisions are taken by the ECB’s Governing Council:
Article 16 ECB Statute
Banknotes
In accordance with Article 106(1) of this Treaty, the Governing Council shall have the exclusive right to authorise the issue of banknotes within the Community. The ECB and the national central banks may issue such notes. The banknotes issued by the ECB and the national central banks shall be the only such notes to have the status of legal tender within the Community.
The ECB shall respect as far as possible existing practices regarding the issue and design of banknotes.
***
The Governing Council’s right to decide on the authorisation is exclusive, but the concrete issuing of euro banknotes can be done by the ECB or the national central banks.
We have seen that, in principle, the treaties are written as if there were a single currency (the euro) for the whole European Community (EC). Still, three of the “old” member states have clinged to their national currencies and even with Slovakia entering the eurozone from the beginning of 2009, as yet eight of the twelve “new” EU member states have not been able (or willing) to fulfil the convergence criteria. In practice, as the ECB points out in various instances and by employing the word Eurosystem, Community has to be read as the Eurosystem (euro area).
Anyway, the so called single currency is a remarkable achievement. From the beginning of next year, euro banknotes are the only bills used as legal tender ─ for the payment of debts, the purchase of goods and other exchanges for value ─ by about 325 million people in 16 countries.
***
Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro, OJ 11.5.1998 L 139/1, restated that the ‘ecu’ was to become the euro, divided into 100 cents, and contained provisions to ensure the smooth changeover as from 1 January 1999 and the substitution of the currency of each participating state at the conversion rate.
Article 10 provided that as from 1 January 2002, the ECB and the central banks of the participating Member States shall put into circulation banknotes denominated in euro.
The latest amendment is by Council Regulation (EC) No 693/2008 of 8 July 2008 amending Regulation (EC) No 974/98 as regards the introduction of the euro in Slovakia, OJ 24.7.2008 L 195/1. (For the researcher the recital is convenient, in that it clearly sets out all the amendments to the regulation.)
***
In the Decision of the European Central Bank of 20 March 2003 on the denominations, specifications, reproduction, exchange and withdrawal of euro banknotes (ECB/2003/4), published in OJ 25.3.2003 L 78/16, the ECB’s governing council defined the seven denominations of euro banknotes, from 5 to 500 euros, and their basic designs (Article 1).
Reproduction rules are set out in Article 2, with the aim to ensure that the public can distinguish genuine euro banknotes from reproductions.
Article 3 lays out rules on the exchange of mutilated or damaged genuine euro banknotes, including ones damaged by activated anti-theft devices, with the establishment of fees in Article 4.
Article 5 concerns the withdrawal of euro banknotes.
***
The Decision of the European Central Bank of 6 December 2001 on the issue of euro banknotes
(ECB/2001/15), OJ 20.12.2001 L 337/52, allocates the total value of euro banknotes in circulation to the Eurosystem members by application of a banknote allocation key.
The latest amending decision is the Decision of the European Central Bank of 7 December 2007
amending Decision ECB/2001/15 of 6 December 2001 on the issue of euro banknotes (ECB/2007/19), OJ 4.1.2008 L 1/7.
***
Non-compliant reproductions of euro banknotes are targeted in the Guideline of the European Central Bank of 20 March 2003 on the enforcement of measures to counter non-compliant reproductions of euro banknotes and on the exchange and withdrawal of euro banknotes
(ECB/2003/5), OJ 25.3.2003 L 78/20.
***
Balancing an open market economy with safety concerns in the production of euro banknotes is the subject matter of the Guideline of the European Central Bank of 16 September 2004 on the procurement of euro banknotes (ECB/2004/18), OJ 21.10.2004 L 320/21.
***
Euro coins
Article 11 of Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro, OJ 11.5.1998 L 139/1, stated:
Article 11 Regulation 974/98
As from 1 January 2002, the participating Member States shall issue coins denominated in euro or in cent and complying with the denominations and technical specifications which the Council may lay down in accordance with the second sentence of Article 105a(2) of the Treaty. Without prejudice to Article 15, these coins shall be the only coins which have the status of legal tender in all these Member States. Except for the issuing authority and for those persons specifically designated by the national legislation of the issuing Member State, no party shall be obliged to accept more than 50 coins in any single payment.
***
Council Regulation (EC) No 975/98 of 3 May 1998 on denominations and technical specifications of euro coins intended for circulation, OJ 11.5.1998 L 139/6, contains specifications to ensure that the euro coins can be used smoothly throughout the euro area, including in vending machines.
The coins were given one European and one national side, thought to be an appropriate expression of the idea of European monetary union between Member States and intended to increase the degree of acceptance of the coins by European citiziens.
***
The Governing Council of the ECB regulates the volume of euro coins through annual decisions. The latest is the Decision of the European Central Bank of 23 November 2007 on the approval of the volume of coin issuance in 2008 (ECB/2007/16), OJ 5.12.2007 L 317/81. (Given the present date, a decision concerning 2009 is to be expected soon.)
***
ECB opinions
We remember the mandatory consultation pursuant to Article 105(4) TEC of the ECB concerning draft legislative provisions.
In addition, there is Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft legislative provisions, OJ 3.7.1998 L 189/42, which set out the main areas where the participating states must consult the ECB:
Article 2 Council Decision 98/415
1. The authorities of the Member States shall consult the ECB on any draft legislative provision within its field of competence pursuant to the Treaty and in particular on:
- currency matters,
- means of payment,
- national central banks,
- the collection, compilation and distribution of monetary, financial, banking, payment systems and
balance of payments statistics,
- payment and settlement systems,
- rules applicable to financial institutions insofar as they materially influence the stability of financial institutions and markets.
2. In addition, the authorities of Member States other than participating Member States shall consult the ECB on any draft legislative provisions on the instruments of monetary policy.
-----
***
Here are two fresh examples of ECB opinions concerning euro banknotes and coins, one with regard to Sweden and the other one regarding Germany:
Opinion of the European Central Bank of 9 October 2008 at the request of Sveriges Riksbank on a draft Regulation on the redemption of banknotes and coins (CON/2008/47)
Opinion of the European Central Bank of 16 October 2008 at the request of the German Ministry of Finance on a draft order on the replacement of euro coins and German euro commemorative coins which are unfit for circulation and the charging of appropriate fees (CON/2008/49).
Ralf Grahn
Monday, 20 October 2008
Euro banknotes and coins Id: Article 106 TEC and euro area
The euro currency was launched on 1 January 1999, but seeing is believing, so for most EU citizens the single currency became a concrete reality when the euro banknotes and coins entered into circulation on 1 January 2002 in initially eleven member states, plus Greece.
Since the beginning of 2002 the euro replaced the national currencies in circulation in Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain.
***
Only three members of the then European Union (EU-15) remained outside the eurozone:
Denmark and the United Kingdom kept their national currencies pursuant to their opt-outs.
In the consolidated treaties:
Protocol (No 26) on certain provisions relating to Denmark, which acknowledged the Danish exemption from participation in the third stage of economic and monetary union (one of the four Maastricht opt-outs by Denmark); OJ 29.12.2006 C 321 E/302.
Protocol (No 25) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland, where the member states recognised that the United Kingdom shall not be obliged or committed to move to the third stage of economic and monetary union without a separate decision to do so by its government and parliament, and set out the procedures and limitations caused by the UK opt-out; OJ 29.12.2006 C 321 E/299─301.
Sweden was technically disqualified (but in reality outside Euroland following a national referendum arranged as if it was legitimate to decide freely if the country was going to fulfil its treaty obligation to enter the third stage of economic and monetary union, EMU).
Sweden has not even bothered to use the latest accession treaties or the Treaty of Lisbon to negotiate an opt-out, although the government seems to be in no hurry even to start a debate, and Swedish popular opinion remains reticent, but possibly a bit more receptive since the financial turmoil hit Europe.
***
In the latest consolidated version of the treaties, you find the convergence criteria in: Protocol (No 21) on the convergence criteria referred to in Article 121 of the Treaty establishing the European Community, with the following criteria defined: price stability(inflation), government budgetary position (deficit and debt), participation in the exchange-rate mechanism (without devaluation) and convergence of interest rates (with reference to best-performing member states); OJ 29.12.2006 C 321 E/295─296.
The convergence criteria (or Maastricht criteria) are used to assess member states applying to enter the third stage of economic and monetary union (EMU).
***
Enlargement
The so called big bang enlargement of the European Union took place on 1 May 2004, when ten new members joined the EU; the accession agreement concerning the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia (OJ 23.9.2003 L 236).
The new member states are under an obligation to introduce the euro currency, when they fulfil the criteria, but initially the single currency (for the EU) became more of a fiction, relatively speaking, since only a minority twelve out of 25 member states had adopted the euro. (In economic terms, it is a different story.)
The two latest entrants are Bulgaria and Romania, from 1 January 2007. See the Treaty concerning the accession of the Republic of Bulgaria and Romania to the European Union, OJ 21.6.2005 L 157.
On the other hand, on 11 July 2006, the Council of the European Union approved Slovenia’s application to join the euro area in 2007, making Slovenia the first of the ten countries that joined the European Union on 1 May 2004 to adopt the euro:
http://www.ecb.int/bc/euro/changeover/slovenia/html/index.en.html
Plus one, but minus two: The euro banknotes were legal tender in 13 of 27 member states from 1 January 2007, still a minority position.
A slight majority was reached from the beginning of 2008, 15 of 27 member states. On 10 July 2007, the Council of the European Union approved the applications of Malta and Cyprus to join the eurozone from 1 January 2008:
http://www.ecb.int/bc/euro/changeover/malta/html/index.en.html
http://www.ecb.int/bc/euro/changeover/cyprus/html/index.en.html
In a little more than two months, the euro area is going to expand to 16 member states. On 8 July 2008 the Council of the European Union approved Slovakia’s application to join the euro area on 1 January 2009:
http://www.ecb.int/bc/euro/changeover/slovakia/html/index.en.html
From the beginning of next year, the euro will be the currency shared by about 325 million EU citizens.
Ralf Grahn
Since the beginning of 2002 the euro replaced the national currencies in circulation in Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain.
***
Only three members of the then European Union (EU-15) remained outside the eurozone:
Denmark and the United Kingdom kept their national currencies pursuant to their opt-outs.
In the consolidated treaties:
Protocol (No 26) on certain provisions relating to Denmark, which acknowledged the Danish exemption from participation in the third stage of economic and monetary union (one of the four Maastricht opt-outs by Denmark); OJ 29.12.2006 C 321 E/302.
Protocol (No 25) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland, where the member states recognised that the United Kingdom shall not be obliged or committed to move to the third stage of economic and monetary union without a separate decision to do so by its government and parliament, and set out the procedures and limitations caused by the UK opt-out; OJ 29.12.2006 C 321 E/299─301.
Sweden was technically disqualified (but in reality outside Euroland following a national referendum arranged as if it was legitimate to decide freely if the country was going to fulfil its treaty obligation to enter the third stage of economic and monetary union, EMU).
Sweden has not even bothered to use the latest accession treaties or the Treaty of Lisbon to negotiate an opt-out, although the government seems to be in no hurry even to start a debate, and Swedish popular opinion remains reticent, but possibly a bit more receptive since the financial turmoil hit Europe.
***
In the latest consolidated version of the treaties, you find the convergence criteria in: Protocol (No 21) on the convergence criteria referred to in Article 121 of the Treaty establishing the European Community, with the following criteria defined: price stability(inflation), government budgetary position (deficit and debt), participation in the exchange-rate mechanism (without devaluation) and convergence of interest rates (with reference to best-performing member states); OJ 29.12.2006 C 321 E/295─296.
The convergence criteria (or Maastricht criteria) are used to assess member states applying to enter the third stage of economic and monetary union (EMU).
***
Enlargement
The so called big bang enlargement of the European Union took place on 1 May 2004, when ten new members joined the EU; the accession agreement concerning the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia (OJ 23.9.2003 L 236).
The new member states are under an obligation to introduce the euro currency, when they fulfil the criteria, but initially the single currency (for the EU) became more of a fiction, relatively speaking, since only a minority twelve out of 25 member states had adopted the euro. (In economic terms, it is a different story.)
The two latest entrants are Bulgaria and Romania, from 1 January 2007. See the Treaty concerning the accession of the Republic of Bulgaria and Romania to the European Union, OJ 21.6.2005 L 157.
On the other hand, on 11 July 2006, the Council of the European Union approved Slovenia’s application to join the euro area in 2007, making Slovenia the first of the ten countries that joined the European Union on 1 May 2004 to adopt the euro:
http://www.ecb.int/bc/euro/changeover/slovenia/html/index.en.html
Plus one, but minus two: The euro banknotes were legal tender in 13 of 27 member states from 1 January 2007, still a minority position.
A slight majority was reached from the beginning of 2008, 15 of 27 member states. On 10 July 2007, the Council of the European Union approved the applications of Malta and Cyprus to join the eurozone from 1 January 2008:
http://www.ecb.int/bc/euro/changeover/malta/html/index.en.html
http://www.ecb.int/bc/euro/changeover/cyprus/html/index.en.html
In a little more than two months, the euro area is going to expand to 16 member states. On 8 July 2008 the Council of the European Union approved Slovakia’s application to join the euro area on 1 January 2009:
http://www.ecb.int/bc/euro/changeover/slovakia/html/index.en.html
From the beginning of next year, the euro will be the currency shared by about 325 million EU citizens.
Ralf Grahn
Sunday, 19 October 2008
Euro banknotes and coins Ic: Suggested reading
One of the objectives of this blawg is to suggest reading materials for students of history, politics, economics and law; now on European economic policy and the euro currency, launched at the beginning of 1999 and with banknotes and coins in circulation since 1 January 2002.
***
An introductory brochure of a general nature, available in 23 EU languages, is ‘The European Central Bank, the Eurosystem, the European System of Central Banks’ (2nd edition, April 2008). It presents the history of economic and monetary union, the structure and tasks of the European System of Central Banks, monetary policy, the Target2 System, the euro banknotes and coins and banking supervision, and it offers a handy glossary for the general reader. The English version is available at the website of the European Central Bank:
http://www.ecb.int/pub/pdf/other/escb_en.pdf
***
European Central Bank: How the euro became our money. A short history of the euro banknotes and coins (unknown date ; 94 pages).
This illustrated history of the euro banknotes and coins is available at:
http://www.ecb.europa.eu/pub/pdf/other/euro_became_our_moneyen.pdf
***
Werner Becker: Der Euro wird zehn (EU Monitor 57, Deutsche Bank Research, 17. Juni 2008; 44 pages), is a detailed analysis, in German, of the successes and disappointments of nearly a decade of the single currency, since 1 January 1999 The strengths and weaknesses of the euro, the potential second world currency, are detailed in the face of approaching financial turmoil, which is going to be the first hard test of the Eurozone.
Available at:
http://www.dbresearch.com/PROD/CIB_INTERNET_EN-PROD/PROD0000000000226658.pdf
***
‘10th Anniversary of the ECB’ is the theme of the Special edition of the Monthly Bulletin (29 May 2008; 158 pages), with a comprehensive overview of monetary policy within the euro area. The English version is available at:
http://www.ecb.int/pub/pdf/other/10thanniversaryoftheecbmb200806en.pdf
***
Hanspeter K. Scheller: The European Central Bank ─ History, role and functions (2nd revised edition, 2006). The book is available in 13 languages; for the English version, go to:
http://www.ecb.int/pub/pdf/other/ecbhistoryrolefunctions2006en.pdf
***
The European Central Bank: The monetary policy of the ECB (2004; 128 pages), available at:
http://www.ecb.europa.eu/pub/pdf/other/monetarypolicy2004en.pdf
***
There are a number of useful publications on the ECB’s web pages, from the Monthly Bulletin and the handy Monthly Statistics Pocket Book to various specialist books and research papers. Look for Publications at:
http://www.ecb.europa.eu
The latest ECB Monthly Bulletin with economic and monetary developments, articles and euro area statistics (October 2008) is available at:
http://www.ecb.europa.eu/pub/pdf/mobu/mb200810en.pdf
The latest Statistics Pocket Book with macroeconomic data (October 2008):
http://www.ecb.europa.eu/pub/pdf/stapobo/spb200810en.pdf
***
Both long term decisions and the current financial turmoil are reflected in the European Central Bank’s press releases, available at:
http://www.ecb.europa.eu/press/pr/date/2008/html/index.en.html
***
If you are digging deeper, you might be interested in the ‘Legal framework of the Eurosystem and the ESCB. ECB legal acts and instruments’ (July 2008), which “contains summaries of the legal acts and instruments constituting the legal framework of the Eurosystem and the ESCB. It covers the main legal acts and instruments that have been adopted by the ECB and published since the ECB’s establishment in June 1998 up to the end of 2007.”
In other words, this publication contains legal material at a deeper level than the treaty provisions this blog is currently focused on. Go to:
http://www.ecb.int/pub/pdf/other/legalframeworkeurosystemescb2008en.pdf
***
The legal framework of the European Central Bank in its entirety can be accessed through:
http://www.ecb.int/ecb/legal/html/index.en.html
There is a helpful User Guide and links for detailed search.
***
‘Legal aspects of the European System of Central Banks ─ Liber amicorum Paolo Zamboni Garavelli’ (2005) is a hefty compilation of articles about various legal aspects of European monetary policy:
http://www.ecb.int/pub/pdf/other/legalaspectsescben.pdf
***
Next this legal blog is going to return to the treaty and other provisions on euro banknotes and coins in Euroland.
Ralf Grahn
***
An introductory brochure of a general nature, available in 23 EU languages, is ‘The European Central Bank, the Eurosystem, the European System of Central Banks’ (2nd edition, April 2008). It presents the history of economic and monetary union, the structure and tasks of the European System of Central Banks, monetary policy, the Target2 System, the euro banknotes and coins and banking supervision, and it offers a handy glossary for the general reader. The English version is available at the website of the European Central Bank:
http://www.ecb.int/pub/pdf/other/escb_en.pdf
***
European Central Bank: How the euro became our money. A short history of the euro banknotes and coins (unknown date ; 94 pages).
This illustrated history of the euro banknotes and coins is available at:
http://www.ecb.europa.eu/pub/pdf/other/euro_became_our_moneyen.pdf
***
Werner Becker: Der Euro wird zehn (EU Monitor 57, Deutsche Bank Research, 17. Juni 2008; 44 pages), is a detailed analysis, in German, of the successes and disappointments of nearly a decade of the single currency, since 1 January 1999 The strengths and weaknesses of the euro, the potential second world currency, are detailed in the face of approaching financial turmoil, which is going to be the first hard test of the Eurozone.
Available at:
http://www.dbresearch.com/PROD/CIB_INTERNET_EN-PROD/PROD0000000000226658.pdf
***
‘10th Anniversary of the ECB’ is the theme of the Special edition of the Monthly Bulletin (29 May 2008; 158 pages), with a comprehensive overview of monetary policy within the euro area. The English version is available at:
http://www.ecb.int/pub/pdf/other/10thanniversaryoftheecbmb200806en.pdf
***
Hanspeter K. Scheller: The European Central Bank ─ History, role and functions (2nd revised edition, 2006). The book is available in 13 languages; for the English version, go to:
http://www.ecb.int/pub/pdf/other/ecbhistoryrolefunctions2006en.pdf
***
The European Central Bank: The monetary policy of the ECB (2004; 128 pages), available at:
http://www.ecb.europa.eu/pub/pdf/other/monetarypolicy2004en.pdf
***
There are a number of useful publications on the ECB’s web pages, from the Monthly Bulletin and the handy Monthly Statistics Pocket Book to various specialist books and research papers. Look for Publications at:
http://www.ecb.europa.eu
The latest ECB Monthly Bulletin with economic and monetary developments, articles and euro area statistics (October 2008) is available at:
http://www.ecb.europa.eu/pub/pdf/mobu/mb200810en.pdf
The latest Statistics Pocket Book with macroeconomic data (October 2008):
http://www.ecb.europa.eu/pub/pdf/stapobo/spb200810en.pdf
***
Both long term decisions and the current financial turmoil are reflected in the European Central Bank’s press releases, available at:
http://www.ecb.europa.eu/press/pr/date/2008/html/index.en.html
***
If you are digging deeper, you might be interested in the ‘Legal framework of the Eurosystem and the ESCB. ECB legal acts and instruments’ (July 2008), which “contains summaries of the legal acts and instruments constituting the legal framework of the Eurosystem and the ESCB. It covers the main legal acts and instruments that have been adopted by the ECB and published since the ECB’s establishment in June 1998 up to the end of 2007.”
In other words, this publication contains legal material at a deeper level than the treaty provisions this blog is currently focused on. Go to:
http://www.ecb.int/pub/pdf/other/legalframeworkeurosystemescb2008en.pdf
***
The legal framework of the European Central Bank in its entirety can be accessed through:
http://www.ecb.int/ecb/legal/html/index.en.html
There is a helpful User Guide and links for detailed search.
***
‘Legal aspects of the European System of Central Banks ─ Liber amicorum Paolo Zamboni Garavelli’ (2005) is a hefty compilation of articles about various legal aspects of European monetary policy:
http://www.ecb.int/pub/pdf/other/legalaspectsescben.pdf
***
Next this legal blog is going to return to the treaty and other provisions on euro banknotes and coins in Euroland.
Ralf Grahn
Euro banknotes and coins Ib: Article 106 TEC contents
Issuing euro banknotes and coins is a main responsibility within the context of the single currency. The European Central Bank ECB) plays a crucial role, without being the only player. We notice that there are some differences in the treatment of euro banknotes and coins.
Within economic and monetary union (EMU), we look at the current EC (EU) treaty rules on euro banknotes and coins, in the chapter on monetary policy.
***
Article 106 (ex Article 105a) of the Treaty Establishing the European Community (TEC) consists of two paragraphs. In the first paragraph, the European Central Bank (ECB) is given a monopoly right to authorise the issue of euro banknotes. In the second paragraph, member states are offered the opportunity to issue euro coins, subject to the approval of the ECB.
The wording is from the latest consolidated version of the treaties ─ TEU and TEC ─ in force, more precisely the Treaty establishing the European Community (OJ 29.12.2006 C 321 E/88):
Part Three – Community policies
Title VII – Economic and monetary policy
Chapter 2 – Monetary policy
Article 106 TEC
1. The ECB shall have the exclusive right to authorise the issue of banknotes within the Community. The ECB and the national central banks may issue such notes. The banknotes issued by the ECB and the national central banks shall be the only such notes to have the status of legal tender within the Community.
2. Member States may issue coins subject to approval by the ECB of the volume of the issue. The Council may, acting in accordance with the procedure referred to in Article 252 and after consulting the ECB, adopt measures to harmonise the denominations and technical specifications of all coins intended for circulation to the extent necessary to permit their smooth circulation within the Community.
***
The next posts are going to present some reading suggestions for students of history, politics, economics and law, as well as for other interested EU citizens, and to look more closely at the legal framework of the euro currency.
Ralf Grahn
Within economic and monetary union (EMU), we look at the current EC (EU) treaty rules on euro banknotes and coins, in the chapter on monetary policy.
***
Article 106 (ex Article 105a) of the Treaty Establishing the European Community (TEC) consists of two paragraphs. In the first paragraph, the European Central Bank (ECB) is given a monopoly right to authorise the issue of euro banknotes. In the second paragraph, member states are offered the opportunity to issue euro coins, subject to the approval of the ECB.
The wording is from the latest consolidated version of the treaties ─ TEU and TEC ─ in force, more precisely the Treaty establishing the European Community (OJ 29.12.2006 C 321 E/88):
Part Three – Community policies
Title VII – Economic and monetary policy
Chapter 2 – Monetary policy
Article 106 TEC
1. The ECB shall have the exclusive right to authorise the issue of banknotes within the Community. The ECB and the national central banks may issue such notes. The banknotes issued by the ECB and the national central banks shall be the only such notes to have the status of legal tender within the Community.
2. Member States may issue coins subject to approval by the ECB of the volume of the issue. The Council may, acting in accordance with the procedure referred to in Article 252 and after consulting the ECB, adopt measures to harmonise the denominations and technical specifications of all coins intended for circulation to the extent necessary to permit their smooth circulation within the Community.
***
The next posts are going to present some reading suggestions for students of history, politics, economics and law, as well as for other interested EU citizens, and to look more closely at the legal framework of the euro currency.
Ralf Grahn
Euro banknotes and coins Ia: Principles
Monetary policy is an area of deep integration within economic and monetary union (EMU). The single currency, the euro, is a daily reminder for EU citizens in 15 of the member states and one of the leading world currencies.
We start by looking at the introductory treaty provisions, which lay the foundations for economic and monetary union and its concrete manifestation, the single currency.
***
Treaty on European Union
The preamble of the current Treaty on European Union (TEU) contains the following recital, which mentions the single currency:
-----
“RESOLVED to achieve the strengthening and the convergence of their economies and to establish an economic and monetary union including, in accordance with the provisions of this Treaty, a single and stable currency,”
-----
(Source: the latest consolidated version of the treaties, Official Journal of the European Union, OJ 29.12.2006 C 321 E/9.)
***
The objectives of the European Union (EU) are set out in Article 2 TEU (ex Article B), with economic and monetary union, including the single currency as a goal, mentioned in the first indent (OJ 29.12.2006 C 321 E/11):
Article 2 TEU
The Union shall set itself the following objectives:
— to promote economic and social progress and a high level of employment and to achieve
balanced and sustainable development, in particular through the creation of an area without
internal frontiers, through the strengthening of economic and social cohesion and through the
establishment of economic and monetary union, ultimately including a single currency in
accordance with the provisions of this Treaty,
-----
***
Treaty establishing the European Community
Article 2 of the Treaty establishing the European Community (TEC) singles out the common market and the economic and monetary union (EMU) among the common policies and activities designed to achieve the laudable objectives of the European Community (EC):
Article 2 TEC
The Community shall have as its task, by establishing a common market and an economic and
monetary union and by implementing common policies or activities referred to in Articles 3 and 4, to promote throughout the Community a harmonious, balanced and sustainable development of economic activities, a high level of employment and of social protection, equality between men and women, sustainable and non-inflationary growth, a high degree of competitiveness and convergence of economic performance, a high level of protection and improvement of the quality of the environment, the raising of the standard of living and quality of life, and economic and social cohesion and solidarity among Member States.
(Source: OJ 29.12.2006 C 321/44.)
***
Article 4 TEC presents the guiding principles for the economic and monetary union (EMU), with the introduction of the single currency outlined in paragraph 2. The name of the currency has since changed from ‘ecu’ to ‘euro’, and the single currency has been introduced in 15 member states.
Here is the text of Article 4 TEC (ex Article 3a), as reproduced in the latest consolidated version of the treaties, Official Journal of the European Union (OJ) 29.12.2006 C 321 E/45─46:
Article 4 TEC
1. For the purposes set out in Article 2, the activities of the Member States and the Community shall include, as provided in this Treaty and in accordance with the timetable set out therein, the adoption of an economic policy which is based on the close coordination of Member States' economic policies, on the internal market and on the definition of common objectives, and conducted in accordance with the principle of an open market economy with free competition.
2. Concurrently with the foregoing, and as provided in this Treaty and in accordance with the timetable and the procedures set out therein, these activities shall include the irrevocable fixing of exchange rates leading to the introduction of a single currency, the ecu, and the definition and conduct of a single monetary policy and exchange-rate policy the primary objective of both of which shall be to maintain price stability and, without prejudice to this objective, to support the general economic policies in the Community, in accordance with the principle of an open market economy with free competition.
3. These activities of the Member States and the Community shall entail compliance with the following guiding principles: stable prices, sound public finances and monetary conditions and a sustainable balance of payments.
***
Article 8 TEC (ex Article 4a) sets out the main institutional rules for monetary policy, with the establishment of the European system of central banks and the European Central Bank (OJ 29.12.2006 C 321/47):
Article 8 TEC
A European system of central banks (hereinafter referred to as ‘ESCB’) and a European Central Bank (hereinafter referred to as ‘ECB’) shall be established in accordance with the procedures laid down in this Treaty; they shall act within the limits of the powers conferred upon them by this Treaty and by the Statute of the ESCB and of the ECB (hereinafter referred to as ‘Statute of the ESCB’) annexed thereto.
***
The foundations have been laid, before we turn to the detailed treaty provisions on monetary policy, especially the euro currency.
Ralf Grahn
We start by looking at the introductory treaty provisions, which lay the foundations for economic and monetary union and its concrete manifestation, the single currency.
***
Treaty on European Union
The preamble of the current Treaty on European Union (TEU) contains the following recital, which mentions the single currency:
-----
“RESOLVED to achieve the strengthening and the convergence of their economies and to establish an economic and monetary union including, in accordance with the provisions of this Treaty, a single and stable currency,”
-----
(Source: the latest consolidated version of the treaties, Official Journal of the European Union, OJ 29.12.2006 C 321 E/9.)
***
The objectives of the European Union (EU) are set out in Article 2 TEU (ex Article B), with economic and monetary union, including the single currency as a goal, mentioned in the first indent (OJ 29.12.2006 C 321 E/11):
Article 2 TEU
The Union shall set itself the following objectives:
— to promote economic and social progress and a high level of employment and to achieve
balanced and sustainable development, in particular through the creation of an area without
internal frontiers, through the strengthening of economic and social cohesion and through the
establishment of economic and monetary union, ultimately including a single currency in
accordance with the provisions of this Treaty,
-----
***
Treaty establishing the European Community
Article 2 of the Treaty establishing the European Community (TEC) singles out the common market and the economic and monetary union (EMU) among the common policies and activities designed to achieve the laudable objectives of the European Community (EC):
Article 2 TEC
The Community shall have as its task, by establishing a common market and an economic and
monetary union and by implementing common policies or activities referred to in Articles 3 and 4, to promote throughout the Community a harmonious, balanced and sustainable development of economic activities, a high level of employment and of social protection, equality between men and women, sustainable and non-inflationary growth, a high degree of competitiveness and convergence of economic performance, a high level of protection and improvement of the quality of the environment, the raising of the standard of living and quality of life, and economic and social cohesion and solidarity among Member States.
(Source: OJ 29.12.2006 C 321/44.)
***
Article 4 TEC presents the guiding principles for the economic and monetary union (EMU), with the introduction of the single currency outlined in paragraph 2. The name of the currency has since changed from ‘ecu’ to ‘euro’, and the single currency has been introduced in 15 member states.
Here is the text of Article 4 TEC (ex Article 3a), as reproduced in the latest consolidated version of the treaties, Official Journal of the European Union (OJ) 29.12.2006 C 321 E/45─46:
Article 4 TEC
1. For the purposes set out in Article 2, the activities of the Member States and the Community shall include, as provided in this Treaty and in accordance with the timetable set out therein, the adoption of an economic policy which is based on the close coordination of Member States' economic policies, on the internal market and on the definition of common objectives, and conducted in accordance with the principle of an open market economy with free competition.
2. Concurrently with the foregoing, and as provided in this Treaty and in accordance with the timetable and the procedures set out therein, these activities shall include the irrevocable fixing of exchange rates leading to the introduction of a single currency, the ecu, and the definition and conduct of a single monetary policy and exchange-rate policy the primary objective of both of which shall be to maintain price stability and, without prejudice to this objective, to support the general economic policies in the Community, in accordance with the principle of an open market economy with free competition.
3. These activities of the Member States and the Community shall entail compliance with the following guiding principles: stable prices, sound public finances and monetary conditions and a sustainable balance of payments.
***
Article 8 TEC (ex Article 4a) sets out the main institutional rules for monetary policy, with the establishment of the European system of central banks and the European Central Bank (OJ 29.12.2006 C 321/47):
Article 8 TEC
A European system of central banks (hereinafter referred to as ‘ESCB’) and a European Central Bank (hereinafter referred to as ‘ECB’) shall be established in accordance with the procedures laid down in this Treaty; they shall act within the limits of the powers conferred upon them by this Treaty and by the Statute of the ESCB and of the ECB (hereinafter referred to as ‘Statute of the ESCB’) annexed thereto.
***
The foundations have been laid, before we turn to the detailed treaty provisions on monetary policy, especially the euro currency.
Ralf Grahn
Saturday, 18 October 2008
EU: Monetary policy X Cross-border financial supervision
The European Community includes an internal market characterized by the abolition, as between member states, of obstacles to the free movement of goods, persons, services and capital. In addition to Article 3(1)(c) of the Treaty establishing the European Community (TEC), the free movement of capital and payments in the European Community is confirmed and detailed in Articles 56 to 60 TEC.
The member states have created a single area for capital movements, but retained 27 jurisdictions supervising financial institutions.
Having painted themselves into a corner, what have the EU (EC) member states done to make the paint dry a little faster?
***
When intergovernmental EU cooperation is mentioned, fairly many know that the member states have kept foreign, security and defence policy matters as their reserved turf, but economic and monetary union (EMU) is another area where the European Parliament is resolutely sidelined.
This has not prevented the EP from trying to form its opinions and to stimulate debate. One example is the report by Kern Alexander , John Eatwell, Avinash Persaud and Robert Reoch: Financial Supervision and Crisis Management in the EU (Report to the European Parliament Committee on Economic and Monetary Affairs; published 2008):
http://www.europarl.europa.eu/activities/committees/studies/download.do?file=19191#search=%20Financial%20supervision%20
The report states that financial regulation and crisis management have not kept pace with the changes of the financial markets, and it calls for a new approach to the content and structure of
regulation, supervision and crisis management.
***
Since Article 105(5) TEC puts the ‘competent’, i.e. national authorities in charge of prudential supervision of (global and European) credit institutions and the stability of the financial system, the gap between the real world and the treaty has to be filled somehow.
As always, intergovernmental or interinstitutional voluntary cooperation and various soft law approaches are words to look out for in a context like this.
***
The Council (ECOFIN) agreed on so called Financial Markets Stability Roadmaps 9 October 2007 and 4 December 2007. They were updated 15 May 2008 (Council document 9056/1/08 REV 1):
http://www.eu2008.si/en/News_and_Documents/download_docs/May/0514_Svet_ECOFIN/030financial_stability_roadmaps.pdf
The roadmaps concerned: Enhancing the Lamfalussy framework, incl. financial supervision; Financial Stability Arrangements; Actions taken in response to the financial turmoil.
***
One example of an approach based on voluntary cooperation and soft law is the upgraded Memorandum of Understanding on Co-operation between the Financial Supervisory Authorities, Central Banks and Finance Ministries of the European Union on Cross-Border Financial Stability (published 20 June 2008):
http://www.ecb.europa.eu/pub/pdf/other/mou-financialstability2008en.pdf
The memorandum updates a 2005 MoU, and it is based on the realisation that financial integration increases the scope for cross-border and cross-sector contagion and thus the likelihood of a systemic crisis affecting more than one member state. Financial stability is, therefore, a common concern for all member states and the EU as a whole, and must be safeguarded on the basis of close cooperation among all parties.
The objective of the MoU is ensure cooperation in financial crises between financial supervisory authorities, central banks and finance ministries through appropriate procedures for sharing of information and assessments, in order to facilitate the pursuance of their respective policy functions and to preserve stability of the financial system of individual member states and of the EU as a whole.
Sharing of information, views and assessments are typical catchwords of such non-binding cooperation, as is the emphasis on ‘their respective … functions’. The memorandum does not create any legal commitment for any of the parties to intervene in favour of anyone affected by a financial crisis. Parties with common concerns are invited to conclude more detailed voluntary specific cooperation agreements.
The parties commit themselves to open, full, constructive and timely cooperation; and to prepare and search for jointly acceptable solutions (read: consensus), and they commit themselves to common principles in the management of systemic or serious crises. A coordinating role is foreseen for the home country supervisory authority.
***
The European Parliament debated improved financial supervision in the context of the Lamfalussy follow-up on 9 October 2008:
http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P6-TA-2008-0476
The resolution contains a wealth of references of value to the serious student.
***
Declaration on a concerted action plan of the euro area countries 12 October 2008 (Council document 14239/08) contained the results of the first Eurozone summit:
http://register.consilium.europa.eu/pdf/en/08/st14/st14239.en08.pdf
Financial supervision was mentioned in point 10, page 5:
Given the exceptional market circumstances, we urge national supervisors, in accordance with
the spirit of Basel 2 rules, to implement prudential rules also with a view to stabilising the financial system.
***
The latest authoritative guidelines that we have are the Presidency Conclusions of the European Council 15 to 16 October 2008 (Council document 14368/08):
http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ec/103441.pdf
The principles adopted at the first Eurozone summit were given broad support by the October European Council.
A financial crisis cell will be established, meaning an informal warning, information-exchange and evaluation mechanism (point 6, page 3).
The European Council stresses the need to strengthen the supervision of the European financial sector, particularly cross-border groups, and to implement urgently the Ecofin Council's roadmap, with a view to improving the coordination of supervision at European level. In this context the European Council welcomes the setting up of a high-level group by the Commission. To begin with, the European Council invites national supervisors to meet at least once a month, to exchange information.
The European Council supports the speeding up of work to strengthen the rules on stability, including work on the Capital Requirements Directive (point 8, page 3).
***
EurActiv has followed financial supervision matters closely. Here are two news items:
EurActiv 10 October 2008: Parliament calls for overhaul of financial supervision
EurActiv 15 October 2008: EU leaders set for scramble on financial supervision
Perhaps the best way to conclude this overview of cross-border financial supervision is contained in the headline of the following news report:
EurActiv 17 October 2008: Summit: Minor progress on banking supervision
http://www.euractiv.com/en/financial-services/summit-minor-progress-banking-supervision/article-176456
Integrated supervision for integrated financial markets is still a long way off.
Ralf Grahn
The member states have created a single area for capital movements, but retained 27 jurisdictions supervising financial institutions.
Having painted themselves into a corner, what have the EU (EC) member states done to make the paint dry a little faster?
***
When intergovernmental EU cooperation is mentioned, fairly many know that the member states have kept foreign, security and defence policy matters as their reserved turf, but economic and monetary union (EMU) is another area where the European Parliament is resolutely sidelined.
This has not prevented the EP from trying to form its opinions and to stimulate debate. One example is the report by Kern Alexander , John Eatwell, Avinash Persaud and Robert Reoch: Financial Supervision and Crisis Management in the EU (Report to the European Parliament Committee on Economic and Monetary Affairs; published 2008):
http://www.europarl.europa.eu/activities/committees/studies/download.do?file=19191#search=%20Financial%20supervision%20
The report states that financial regulation and crisis management have not kept pace with the changes of the financial markets, and it calls for a new approach to the content and structure of
regulation, supervision and crisis management.
***
Since Article 105(5) TEC puts the ‘competent’, i.e. national authorities in charge of prudential supervision of (global and European) credit institutions and the stability of the financial system, the gap between the real world and the treaty has to be filled somehow.
As always, intergovernmental or interinstitutional voluntary cooperation and various soft law approaches are words to look out for in a context like this.
***
The Council (ECOFIN) agreed on so called Financial Markets Stability Roadmaps 9 October 2007 and 4 December 2007. They were updated 15 May 2008 (Council document 9056/1/08 REV 1):
http://www.eu2008.si/en/News_and_Documents/download_docs/May/0514_Svet_ECOFIN/030financial_stability_roadmaps.pdf
The roadmaps concerned: Enhancing the Lamfalussy framework, incl. financial supervision; Financial Stability Arrangements; Actions taken in response to the financial turmoil.
***
One example of an approach based on voluntary cooperation and soft law is the upgraded Memorandum of Understanding on Co-operation between the Financial Supervisory Authorities, Central Banks and Finance Ministries of the European Union on Cross-Border Financial Stability (published 20 June 2008):
http://www.ecb.europa.eu/pub/pdf/other/mou-financialstability2008en.pdf
The memorandum updates a 2005 MoU, and it is based on the realisation that financial integration increases the scope for cross-border and cross-sector contagion and thus the likelihood of a systemic crisis affecting more than one member state. Financial stability is, therefore, a common concern for all member states and the EU as a whole, and must be safeguarded on the basis of close cooperation among all parties.
The objective of the MoU is ensure cooperation in financial crises between financial supervisory authorities, central banks and finance ministries through appropriate procedures for sharing of information and assessments, in order to facilitate the pursuance of their respective policy functions and to preserve stability of the financial system of individual member states and of the EU as a whole.
Sharing of information, views and assessments are typical catchwords of such non-binding cooperation, as is the emphasis on ‘their respective … functions’. The memorandum does not create any legal commitment for any of the parties to intervene in favour of anyone affected by a financial crisis. Parties with common concerns are invited to conclude more detailed voluntary specific cooperation agreements.
The parties commit themselves to open, full, constructive and timely cooperation; and to prepare and search for jointly acceptable solutions (read: consensus), and they commit themselves to common principles in the management of systemic or serious crises. A coordinating role is foreseen for the home country supervisory authority.
***
The European Parliament debated improved financial supervision in the context of the Lamfalussy follow-up on 9 October 2008:
http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P6-TA-2008-0476
The resolution contains a wealth of references of value to the serious student.
***
Declaration on a concerted action plan of the euro area countries 12 October 2008 (Council document 14239/08) contained the results of the first Eurozone summit:
http://register.consilium.europa.eu/pdf/en/08/st14/st14239.en08.pdf
Financial supervision was mentioned in point 10, page 5:
Given the exceptional market circumstances, we urge national supervisors, in accordance with
the spirit of Basel 2 rules, to implement prudential rules also with a view to stabilising the financial system.
***
The latest authoritative guidelines that we have are the Presidency Conclusions of the European Council 15 to 16 October 2008 (Council document 14368/08):
http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ec/103441.pdf
The principles adopted at the first Eurozone summit were given broad support by the October European Council.
A financial crisis cell will be established, meaning an informal warning, information-exchange and evaluation mechanism (point 6, page 3).
The European Council stresses the need to strengthen the supervision of the European financial sector, particularly cross-border groups, and to implement urgently the Ecofin Council's roadmap, with a view to improving the coordination of supervision at European level. In this context the European Council welcomes the setting up of a high-level group by the Commission. To begin with, the European Council invites national supervisors to meet at least once a month, to exchange information.
The European Council supports the speeding up of work to strengthen the rules on stability, including work on the Capital Requirements Directive (point 8, page 3).
***
EurActiv has followed financial supervision matters closely. Here are two news items:
EurActiv 10 October 2008: Parliament calls for overhaul of financial supervision
EurActiv 15 October 2008: EU leaders set for scramble on financial supervision
Perhaps the best way to conclude this overview of cross-border financial supervision is contained in the headline of the following news report:
EurActiv 17 October 2008: Summit: Minor progress on banking supervision
http://www.euractiv.com/en/financial-services/summit-minor-progress-banking-supervision/article-176456
Integrated supervision for integrated financial markets is still a long way off.
Ralf Grahn
Friday, 17 October 2008
EU: Monetary policy IX Banking supervision
Only treaty reform could unlock pan-European banking supervision, or even better, cross-sectoral supervision, as we have seen. Short-term, other financial supervision solutions have to be found, within the constraints of the Treaty establishing the European Community (TEC), but likewise under the Lisbon Treaty, i.e. the Treaty on the Functioning of the European Union (TFEU).
Let us look at the evolving discussion.
***
Bernhard Speyer & Norbert Walter: Towards a new structure for EU financial supervision (Deutsche Bank, EU Monitor 48, 22 August 2007) took a detailed look at financial supervision in the European Union:
http://www.dbresearch.de/PROD/DBR_INTERNET_DE-PROD/PROD0000000000214976.pdf
Speyer and Walter noted that financial supervision concerns both crisis prevention and crisis management. The present supervisory structures are neither effective nor efficient. In spite of market integration and in contrast to the political commitment to build an integrated financial market, financial supervision in the EU remains a responsibility of individual member states, with the European dimension only being taken into account in the form of intensified cooperation.
After their damning indictment of the existing supervisory structures, Speyer and Walter analysed various options under discussion, before proposing three steps to advance:
1: Empowering the existing Level 3 committees (voting, binding guidelines)
2: Implementation of the lead supervisor regime (real powers and mediation)
3: Establishment of a European System of Financial Supervision (comprising banking, insurance and securities markets supervision under one roof; separate from the ECB)
***
Slowly, the political wheels have been turning. In December 2007 the European Council arrived at these interim conclusions, although there was no feeling of any clear and present danger (page 13):
“48. The European Council, in view of the recent developments in the financial markets, emphasises that macroeconomic fundamentals in the EU are strong and that sustained economic growth is expected. Continued monitoring of financial markets and the economy is crucial, as uncertainties remain. The European Council underlines the importance of the themes identified in the work programme adopted by the Council on 9 October 2007 aimed at, alongside the EU's international partners, improving transparency for investors, markets and regulators, improving valuation standards, improving the prudential framework, risk management and supervision in the financial sector as well as reviewing the functioning of markets, including the role of credit rating agencies. The European Council welcomes the significant steps adopted regarding the enhancement of EU arrangements for financial stability and strongly encourages their appropriate follow-up. It will come back to these issues at its spring 2008 meeting on the basis of a progress report.”
Source: European Council, revised Presidency Conclusions 14 December 2007 (Council document 16616/1/07 REV 1).
***
The European Council’s follow-up 13 to 14 March 2008 (revised Presidency Conclusions; Council document 7652/1/08 REV 1) devoted two and a half pages to the stability of financial markets. The European Council endorsed the interim report of the Council (ECOFIN) on financial market stability, and it saw the need for action on a number of issues (points 30 ─ 36, pages 16 ─ 18).
***
Nout Wellink presented and overview in his 28 April 2008 speech ‘Banking supervision in Europe ─ developments and challenges’, published in the BIS Review 53/2008 (Bank for International Settlements):
http://www.bis.org/review/r080430a.pdf?noframes=1
Wellink, President of the Netherlands Bank and Chairman of the Basel Committee on Banking Supervision, outlined cross-border supervision and the interplay between central banks and supervisors.
Given the legal constraints, in the near term so-called colleges of supervisors should first be established for all major cross-border groups, and in a second step the role of the lead supervisor or consolidated supervisor should be strengthened in order to avoid stalemates.
According to Wellink, the two necessary conditions for effective cooperation between supervisors and central banks – cooperative and open mindsets and adequate information sharing – are most effectively met within “an institutional framework in which the Eurosystem’s responsibilities for monetary policy in the euro area are coupled with extensive supervisory responsibilities of NCB’s in domestic markets and with reinforced cooperation at a euro area-wide level”.
***
Since the spring, unsettling financial forecasts have been replaced by financial mayhem in Europe, too. We are going to look at some of the latest political actions and legal acts to improve financial supervision in the European Union.
Ralf Grahn
Let us look at the evolving discussion.
***
Bernhard Speyer & Norbert Walter: Towards a new structure for EU financial supervision (Deutsche Bank, EU Monitor 48, 22 August 2007) took a detailed look at financial supervision in the European Union:
http://www.dbresearch.de/PROD/DBR_INTERNET_DE-PROD/PROD0000000000214976.pdf
Speyer and Walter noted that financial supervision concerns both crisis prevention and crisis management. The present supervisory structures are neither effective nor efficient. In spite of market integration and in contrast to the political commitment to build an integrated financial market, financial supervision in the EU remains a responsibility of individual member states, with the European dimension only being taken into account in the form of intensified cooperation.
After their damning indictment of the existing supervisory structures, Speyer and Walter analysed various options under discussion, before proposing three steps to advance:
1: Empowering the existing Level 3 committees (voting, binding guidelines)
2: Implementation of the lead supervisor regime (real powers and mediation)
3: Establishment of a European System of Financial Supervision (comprising banking, insurance and securities markets supervision under one roof; separate from the ECB)
***
Slowly, the political wheels have been turning. In December 2007 the European Council arrived at these interim conclusions, although there was no feeling of any clear and present danger (page 13):
“48. The European Council, in view of the recent developments in the financial markets, emphasises that macroeconomic fundamentals in the EU are strong and that sustained economic growth is expected. Continued monitoring of financial markets and the economy is crucial, as uncertainties remain. The European Council underlines the importance of the themes identified in the work programme adopted by the Council on 9 October 2007 aimed at, alongside the EU's international partners, improving transparency for investors, markets and regulators, improving valuation standards, improving the prudential framework, risk management and supervision in the financial sector as well as reviewing the functioning of markets, including the role of credit rating agencies. The European Council welcomes the significant steps adopted regarding the enhancement of EU arrangements for financial stability and strongly encourages their appropriate follow-up. It will come back to these issues at its spring 2008 meeting on the basis of a progress report.”
Source: European Council, revised Presidency Conclusions 14 December 2007 (Council document 16616/1/07 REV 1).
***
The European Council’s follow-up 13 to 14 March 2008 (revised Presidency Conclusions; Council document 7652/1/08 REV 1) devoted two and a half pages to the stability of financial markets. The European Council endorsed the interim report of the Council (ECOFIN) on financial market stability, and it saw the need for action on a number of issues (points 30 ─ 36, pages 16 ─ 18).
***
Nout Wellink presented and overview in his 28 April 2008 speech ‘Banking supervision in Europe ─ developments and challenges’, published in the BIS Review 53/2008 (Bank for International Settlements):
http://www.bis.org/review/r080430a.pdf?noframes=1
Wellink, President of the Netherlands Bank and Chairman of the Basel Committee on Banking Supervision, outlined cross-border supervision and the interplay between central banks and supervisors.
Given the legal constraints, in the near term so-called colleges of supervisors should first be established for all major cross-border groups, and in a second step the role of the lead supervisor or consolidated supervisor should be strengthened in order to avoid stalemates.
According to Wellink, the two necessary conditions for effective cooperation between supervisors and central banks – cooperative and open mindsets and adequate information sharing – are most effectively met within “an institutional framework in which the Eurosystem’s responsibilities for monetary policy in the euro area are coupled with extensive supervisory responsibilities of NCB’s in domestic markets and with reinforced cooperation at a euro area-wide level”.
***
Since the spring, unsettling financial forecasts have been replaced by financial mayhem in Europe, too. We are going to look at some of the latest political actions and legal acts to improve financial supervision in the European Union.
Ralf Grahn
EU: Monetary policy VIII Financial supervision
European leaders have scrambled heroically to sort out the financial mess. The same leaders are responsible for the rules which let the meltdown happen in the first place and the treaties which make it hard to solve the cross-border problems when they have erupted.
The most important financial institutions are increasingly global or European in scope, but the prudential supervision of credit institutions and the stability of the financial system has deliberately been left to the (in)competent national authorities.
This is the situation pursuant to the existing Article 105(5) of the Treaty establishing the European Community (TEC). It remains the case under the Lisbon Treaty, as you can see from Article 127(5) of the Treaty on the Functioning of the European Union (TFEU).
The obvious solution is banking supervision at European level, but it is as if we lived in medieval times, when every science was a servant to theology (ancilla theologiae). The European System of Central Banks is graciously allowed to assist: to contribute to the smooth conduct of supervisory policies at national level. Able or unable to prevent meltdown, national authorities call the tune although they lack the scope.
The Treaty of Lisbon brings no change to this. In other words, it would require a new treaty (amendment) to remedy the situation. As we have seen, the form (international treaty), decision-making (unanimous agreement) and national approval (ratification) by all member states have made treaty reform a ‘mission impossible’, The logic of international relations has also left the citizens of the European Union as hapless bystanders and spectators.
In addition, since the Nice Treaty there has constantly been a reform project blocking the tunnel, leaving no room for other treaty reforms (except the more technical accession treaties).
***
With these ground rules, it is no wonder that the EU and EC treaties are hard to read and even harder to master. Treaty reform becomes endless tinkering between member states’ governments, instead of an open and democratic process. In the end, the treaties impose as many self-defeating restrictions on the union, as they grant powers to tackle common problems where the individual governments are out of their depth.
***
Let us continue with our example.
Some people must have realised that European financial markets require pan-European supervision, but what came out of the treaty treaty-building sausage machine offered only the slimmest of hopes.
Substantially: Only limited (specific) tasks can be transferred to the European Central Bank. Putting in place a European regulator (or major reform) is impossible without reforming the treaty.
Insurance undertakings are wholly excluded from any attempts at supervision with global vision.
Procedurally: Even these limited tasks require unanimous decision by the Council, according to Article 105(6) TEC. The Lisbon Treaty is no help; Article 127(6) would still require unanimity in the Council, and the European Parliament would be downgraded from giving its assent to offering its opinion.
The Treaty of Lisbon takes a small step, but backwards, if seen from the angle of representative democracy.
Earlier we saw that the European Convention proposed the ordinary legislative procedure (European laws), but the tasks would have been as specific (limited) as before, and insurance undertakings as excluded as currently from any possible arrangement.
From a practical point of view, Article III-77(6) of the draft Constitution was more or less a theoretical improvement, perhaps a political signal of the awareness the limits of scattered supervision and multi-jurisdiction financial firms.
Even this degree of temerity was too much for the intergovernmental conference 2004, which clobbered the proposal and reinstated Council unanimity and downgraded the European Parliament to opinion-giver.
The IGC 2007 had practically no room for improvements on the 2004 Constitutional Treaty. On the contrary, the governments prepared the IGC 2007 Mandate with a view to what might be salvaged and what should be jettisoned by the Reform Treaty (as it was then called).
***
What to do, when doing the right thing is impossible?
Paralysis or muddling through seem to be the options.
About the evolving opinions concerning multi-jurisdiction firms; the European Financial Services Roundtable (EFR), representing major financial and insurance companies, has argued that a more efficient and effective supervision of financial institutions is a key element to improving growth and integration of European financial markets. The appointment of a fully empowered lead supervisor for each financial institution is considered to be a realistic way to achieve this goal.
The EFR issued its third report ‘On the lead supervisor model and the future of financial supervision in the EU ─ Follow-up recommendation of the EFR’, where the arguments were taken further. The June 2005 report is available at:
http://www.efr.be/members/upload/news/22676EFRlsvfinal-June2005.pdf
The EFR proposed that the lead supervisor should be responsible for the prudential supervision not only of branches in other EU member states, but also of fully owned (fully controlled) subsidiaries in other EU member states. Supervisors in member states, where systemically important branches and subsidiaries are located, should be taken adequately into account by their being represented in the “college of supervisors”, leading to dialogue between supervisors.
In order to avoid competitive distortions, the lead supervisor concept would have to be applied by all member states. To ensure this, a legislative basis – most probably an EU regulation (directly applicable in all member states) – would have to be created, said the EFR.
The national central bank corresponding to the nationality of the lead supervisor would be the responsible lender of last resort and would ultimately take the decision on whether to activate the function or not.
The EFR recommend a gradually converging model of deposit insurance schemes, aimed at levelling the playing field without imposing additional burdens on the financial industry.
The EFR presented its criteria to evaluate any supervisory structure (page 10).
***
Slowly these (half-)measures seem to inch their way towards political and legislative decisions.
Ralf Grahn
The most important financial institutions are increasingly global or European in scope, but the prudential supervision of credit institutions and the stability of the financial system has deliberately been left to the (in)competent national authorities.
This is the situation pursuant to the existing Article 105(5) of the Treaty establishing the European Community (TEC). It remains the case under the Lisbon Treaty, as you can see from Article 127(5) of the Treaty on the Functioning of the European Union (TFEU).
The obvious solution is banking supervision at European level, but it is as if we lived in medieval times, when every science was a servant to theology (ancilla theologiae). The European System of Central Banks is graciously allowed to assist: to contribute to the smooth conduct of supervisory policies at national level. Able or unable to prevent meltdown, national authorities call the tune although they lack the scope.
The Treaty of Lisbon brings no change to this. In other words, it would require a new treaty (amendment) to remedy the situation. As we have seen, the form (international treaty), decision-making (unanimous agreement) and national approval (ratification) by all member states have made treaty reform a ‘mission impossible’, The logic of international relations has also left the citizens of the European Union as hapless bystanders and spectators.
In addition, since the Nice Treaty there has constantly been a reform project blocking the tunnel, leaving no room for other treaty reforms (except the more technical accession treaties).
***
With these ground rules, it is no wonder that the EU and EC treaties are hard to read and even harder to master. Treaty reform becomes endless tinkering between member states’ governments, instead of an open and democratic process. In the end, the treaties impose as many self-defeating restrictions on the union, as they grant powers to tackle common problems where the individual governments are out of their depth.
***
Let us continue with our example.
Some people must have realised that European financial markets require pan-European supervision, but what came out of the treaty treaty-building sausage machine offered only the slimmest of hopes.
Substantially: Only limited (specific) tasks can be transferred to the European Central Bank. Putting in place a European regulator (or major reform) is impossible without reforming the treaty.
Insurance undertakings are wholly excluded from any attempts at supervision with global vision.
Procedurally: Even these limited tasks require unanimous decision by the Council, according to Article 105(6) TEC. The Lisbon Treaty is no help; Article 127(6) would still require unanimity in the Council, and the European Parliament would be downgraded from giving its assent to offering its opinion.
The Treaty of Lisbon takes a small step, but backwards, if seen from the angle of representative democracy.
Earlier we saw that the European Convention proposed the ordinary legislative procedure (European laws), but the tasks would have been as specific (limited) as before, and insurance undertakings as excluded as currently from any possible arrangement.
From a practical point of view, Article III-77(6) of the draft Constitution was more or less a theoretical improvement, perhaps a political signal of the awareness the limits of scattered supervision and multi-jurisdiction financial firms.
Even this degree of temerity was too much for the intergovernmental conference 2004, which clobbered the proposal and reinstated Council unanimity and downgraded the European Parliament to opinion-giver.
The IGC 2007 had practically no room for improvements on the 2004 Constitutional Treaty. On the contrary, the governments prepared the IGC 2007 Mandate with a view to what might be salvaged and what should be jettisoned by the Reform Treaty (as it was then called).
***
What to do, when doing the right thing is impossible?
Paralysis or muddling through seem to be the options.
About the evolving opinions concerning multi-jurisdiction firms; the European Financial Services Roundtable (EFR), representing major financial and insurance companies, has argued that a more efficient and effective supervision of financial institutions is a key element to improving growth and integration of European financial markets. The appointment of a fully empowered lead supervisor for each financial institution is considered to be a realistic way to achieve this goal.
The EFR issued its third report ‘On the lead supervisor model and the future of financial supervision in the EU ─ Follow-up recommendation of the EFR’, where the arguments were taken further. The June 2005 report is available at:
http://www.efr.be/members/upload/news/22676EFRlsvfinal-June2005.pdf
The EFR proposed that the lead supervisor should be responsible for the prudential supervision not only of branches in other EU member states, but also of fully owned (fully controlled) subsidiaries in other EU member states. Supervisors in member states, where systemically important branches and subsidiaries are located, should be taken adequately into account by their being represented in the “college of supervisors”, leading to dialogue between supervisors.
In order to avoid competitive distortions, the lead supervisor concept would have to be applied by all member states. To ensure this, a legislative basis – most probably an EU regulation (directly applicable in all member states) – would have to be created, said the EFR.
The national central bank corresponding to the nationality of the lead supervisor would be the responsible lender of last resort and would ultimately take the decision on whether to activate the function or not.
The EFR recommend a gradually converging model of deposit insurance schemes, aimed at levelling the playing field without imposing additional burdens on the financial industry.
The EFR presented its criteria to evaluate any supervisory structure (page 10).
***
Slowly these (half-)measures seem to inch their way towards political and legislative decisions.
Ralf Grahn
Thursday, 16 October 2008
EU: Monetary policy VII Lisbon Treaty comments
The previous post mentioned a few brief UK references to Article 127 of the Treaty on the Functioning of the European Union (TFEU). We now turn to legal materials: outside the Eurozone from Sweden, inside Euroland Finland, as well as some EU commentaries in book form, to see if the objectives and the basic tasks of the European System of Central Banks (ESCB) and the European Central Bank (ECB), or potential European level financial supervision have elicited comments.
***
Lissabonfördraget (Sweden)
The consultation paper ’Lissabonfördraget’ was the first official Swedish description of the Lisbon Treaty amendments, and it is available at:
http://www.regeringen.se/content/1/c6/09/49/81/107aa077.pdf
It was followed by the Swedish government’s draft ratification bill ‘Lagrådsremiss – Lissabonfördraget’, published 29 May 2008:
http://www.regeringen.se/sb/d/5676/a/106277
The draft bill was given a green light by the Council on Legislation (Lagrådet):
http://www.lagradet.se/yttranden/Lissabonfordraget.pdf
The latest official government view, and now my standard reference for Sweden, is the ratification bill, with the Swedish parliament (Riksdagen) expected to decide on approval in late autumn, in November or even later in the year. Committee work has not even started. According to Europaportalen the latest estimate for a decision by the parliament (Riksdagen) is before Christmas. The ratification bill, Regeringens proposition 2007/08:168 Lissabonfördraget; 3 July 2008, is available at:
http://www.regeringen.se/content/1/c6/10/84/02/8c96cf3e.pdf
Economic and monetary policy (23.2 Ekonomisk och monetär politik) is mainly discussed on pages 180 to 185. The Swedish government briefly presents the objectives and the tasks of the European Central Bank on various pages of the bill according to Article 105 TFEU (ToL). The potential transfer of tasks pertaining to financial supervision is mentioned on page 185, in the context of amended decision-making procedures, where a certain weakening of the European Parliament’s position is acknowledged:
”Inom ramen för den monetära politiken får rådet i dag genom enhälligt beslut på förslag från kommissionen efter att ha hört Europeiska centralbanken och med Europaparlamentets samtycke tilldela Europeiska centralbanken särskilda uppgifter i samband med tillsynen över kreditinstitut och andra finansinstitut med undantag av försäkringsföretag. Genom Lissabonfördraget får Europeiska centralbanken genom förordningar som ska antas av rådet tilldelas dessa särskilda uppgifter. Rådet ska besluta med enhällighet efter att ha hört Europaparlamentet och Europeiska centralbanken (artikel 105.6 i EUF-fördraget). En viss försvagning sker här av Europaparlamentets inflytande i och med att dess samtycke ersätts med dess hörande.”
Sweden remains outside the Eurozone, despite the lack of an opt-out based on the treaties.
***
Lissabonin sopimus (Finland)
Finland is one of 15 member states currently forming Euroland, or the Eurosystem, as the European Central Bank calls it.
The Finnish ratification bill, ‘Hallituksen esitys Eduskunnalle Euroopan unionista tehdyn sopimuksen ja Euroopan yhteisön perustamissopimuksen muuttamisesta tehdyn Lissabonin sopimuksen hyväksymisestä ja laiksi sen lainsäädännön alaan kuuluvien määräysten voimaansaattamisesta’ (HE 23/2008 vp), presents an overview of economic and monetary policy (Talous- ja rahapolitiikka) on pages 91 to 92.
An explanation of the chapter on monetary policy (Rahapolitiikka) and a description of Article 105 TFEU (ToL), renumbered Article 126 TFEU, follow on pages 210 to 211:
”Määräykset koskevat Euroopan keskuspankkijärjestelmän ja Euroopan keskuspankin perustehtäviä, niiden perussääntöä ja perussäännön tiettyjen osien muuttamista koskevia menettelyjä, Euroopan keskuspankin ja kansallisten keskuspankkien riippumattomuutta sekä Euroopan keskuspankin tehtäviensä suorittamiseksi tekemiä päätöksiä. Määräykset vastaavat EY-sopimuksen VII osaston 2 luvun määräyksiä, lukuun ottamatta tiettyjä päätöksentekomenettelyjä koskevia määräyksiä, uudeksi 245 a artiklaksi siirrettyjä määräyksiä Euroopan keskuspankkijärjestelmän kokoonpanosta ja Euroopan keskuspankin oikeushenkilöllisyydestä ja uudeksi 188 o artiklaksi siirrettyjä päätöksiä euroalueen ulkoisesta edustautumisesta. Lisäksi luvun loppuun on siirretty nykyisestä 4 luvusta tiettyjä määräyksiä toimenpiteistä, jotka ovat tarpeen otettaessa euro käyttöön yhteisenä rahana. Perustuslakisopimuksessa vastaavat määräykset on sisällytetty II luvun 2 jaksoon III-185–III-190 artiklaan.
105 artiklassa (uusi 127 artikla) määritellään Euroopan keskuspankkijärjestelmän tavoitteet ja tehtävät. Artiklan 6 kohtaa täsmennetään siten, että säädöstyypiksi, joka neuvostolla on käytössään sen päättäessä rahoituslaitosten valvontaa koskevien erityistehtävien antamisesta Euroopan keskuspankille, yksilöidään asetus. Lisäksi määräystä muutetaan siten, että Euroopan parlamentin puoltavan lausunnon sijasta riittää, että parlamenttia kuullaan ennen päätöksentekoa. Määräys vastaa perustuslakisopimuksen III-185 artiklaa.”
The Finnish ratification bill is available at:
http://www.finlex.fi/fi/esitykset/he/2008/20080023.pdf
The Swedish language version of the ratification bill ‘Regeringens proposition till Riksdagen med förslag om godkännande av Lissabonfördraget om ändring av fördraget om Europeiska unionen och fördraget om upprättandet av Europeiska gemenskapen och till lag om sättande i kraft av de bestämmelser i fördraget som hör till området för lagstiftningen’ (RP 23/2008 rd), offers the same general remarks on economic and monetary policy on pages 93 to 94. The detailed remarks, Article by Article, under ’Ekonomisk och monetär politik’ contain the same description of the chapter on monetary policy (Monetär politik) and of Article 105 TFEU (ToL), the future Article 127 TFEU as in Finnish, on page 213:
”Bestämmelserna gäller de primära uppgifterna för Europeiska centralbankssystemet och Europeiska centralbanken, förfaranden för ändring av deras stadga och vissa delar i stadgan, Europeiska centralbankens och de nationella centralbankernas oavhängighet samt beslut som Europeiska centralbanken fattar för att utföra sina uppgifter. Bestämmelserna motsvarar bestämmelserna i avdelning VII kapitel 2 i EG-fördraget, med undantag för vissa bestämmelser om beslutsförfaranden, bestämmelser om Europeiska centralbankssystemets sammansättning och Europeiska centralbankens status som juridisk person som överförts till ny artikel 245a och beslut om euroområdets yttre representation som överförts som ny artikel 188o. Till slutet av kapitlet har dessutom från nuvarande kapitel 4 överförts vissa bestämmelser om nödvändiga åtgärder när euron tas i bruk som gemensam valuta. Motsvarande bestämmelser ingår i kapitel II avsnitt 2 i artikel III-185–III-190 i det konstitutionella fördraget.
I artikel 105 (blivande artikel 127), definieras målen och uppgifterna för Europeiska centralbankssystemet. Artikel 105.6 preciseras så att den rättsaktstyp som rådet kan använda vid beslut om att tilldela Europeiska centralbanken särskilda uppgifter i samband med tillsynen över kreditinstitut och andra finansinstitut individualiseras som förordning. Bestämmelsen ändras dessutom så att i stället för ett samtycke från Europaparlamentet räcker det med att parlamentet hörs före beslutsfattandet. Bestämmelsen motsvarar artikel III-185 i det konstitutionella fördraget.”
The ratification bill in Swedish can be accessed at:
http://www.finlex.fi/sv/esitykset/he/2008/20080023.pdf
***
de Poncins
Étienne de Poncins offers a few general comments on EU economic governance and budget matters, ‘La gouvernance économique et les questions budgétaires’ in his ‘Le traité de Lisbonne en 27 clés’ (Éditions Lignes de Repères, 2008), pages 245─251, but nothing specific on Article 127 TFEU.
Fischer
‚Der Vertrag von Lissabon‘, by Klemens H. Fischer (Nomos, Stämpfli & Verlag Österreich, 2008), traces the amendments Article by Article; here on pages 269─270. He remarks that the amendments in paragraphs 1 to 5 are editorial (horizontal), but with regard to paragraph 6 he states:
„Absatz 6 erhält eine neue Fassung, durch die das Anhöringsverfahren an die Stelle des Zustimmungsverfahrens tritt.“
Priollaud and Siritzky
François-Xavier Priollaud and David Siritzky offer a short introductory explanation on economic and monetary policy (pages 246 and 247). They succinctly present the main features of the chapet on monetary policy (La politique monétaire) on pages 254 an 255 of their book ‘Le traité de Lisbonne – Commentaire, article par article, des nouveaux traités européens (TUE et TFUE)’ (La Documentation française, Paris, 2008). They offer the following description of the powers of the European Parliament:
« La modification des pouvoirs du Parlement européen
La généralisation de la procédure legislative renforce le rôle du Parlement européen en ce qui concerne la modification de certaines dispositions des statuts du SEBC et de la BCE (art. 129 TFUE) et pour l’adoption des mesures nécessaires à l’usage de l’euro (art. 133 TFUE). Les pouvoirs du Parlement sont en revanche diminués par rapport à la situation actuelle en matière de contrôle prudentiel des établisseents et marchés financiers (art. 127 § 6 TFUE). Il ne sera que consulté (comme la BCE), alors que son avis conforme était jusq’à présent requis par l’art. 105 TCE. L’unanimité est en outre maintenue sur ce point. »
***
Consultation procedure
The intergovernmental character of prudential banking supervision is striking. In Article 127 TFEU, the European Parliament is marginalized, consulted (as the ECB) in the unlikely case that all 27 member states would be shaken enough by the financial turmoil to be likely to agree on a unanimous decision (regulation) to confer supervisory powers on the ECB.
Just in case someone wants to reflect on the consultation procedure (and other decision-making procedures), Martin Gellermann offers a description in Rudolf Streinz (Hrsgb.): EUV/EGV Vertrag über die Europäische Union und Vertrag zur Gründung der Europäischen Gemeinschaft (C.H.Beck, 2003). I quote the beginning of Konsultations- oder Anhörungsverfahren (page 2204):
„Als Ursprungsmodell für eine Beteiligung des Europäischen Parlaments am Prozess der gemeinschaftlichen Rechtsetzung erscheint das Konsultations- oder Anhörungsverfahren in dem der Kommission das Initiativrecht, dem Parlament eine Beratungsbefugnis und dem Rat das alleinige Entscheidungsrecht gebührt.“
In this instance, we seem to be heading towards the beginnings of the Assembly.
***
The next post is going to present a few pointers on financial regulation and prudential supervision in the context of economic and monetary union (EMU).
Ralf Grahn
***
Lissabonfördraget (Sweden)
The consultation paper ’Lissabonfördraget’ was the first official Swedish description of the Lisbon Treaty amendments, and it is available at:
http://www.regeringen.se/content/1/c6/09/49/81/107aa077.pdf
It was followed by the Swedish government’s draft ratification bill ‘Lagrådsremiss – Lissabonfördraget’, published 29 May 2008:
http://www.regeringen.se/sb/d/5676/a/106277
The draft bill was given a green light by the Council on Legislation (Lagrådet):
http://www.lagradet.se/yttranden/Lissabonfordraget.pdf
The latest official government view, and now my standard reference for Sweden, is the ratification bill, with the Swedish parliament (Riksdagen) expected to decide on approval in late autumn, in November or even later in the year. Committee work has not even started. According to Europaportalen the latest estimate for a decision by the parliament (Riksdagen) is before Christmas. The ratification bill, Regeringens proposition 2007/08:168 Lissabonfördraget; 3 July 2008, is available at:
http://www.regeringen.se/content/1/c6/10/84/02/8c96cf3e.pdf
Economic and monetary policy (23.2 Ekonomisk och monetär politik) is mainly discussed on pages 180 to 185. The Swedish government briefly presents the objectives and the tasks of the European Central Bank on various pages of the bill according to Article 105 TFEU (ToL). The potential transfer of tasks pertaining to financial supervision is mentioned on page 185, in the context of amended decision-making procedures, where a certain weakening of the European Parliament’s position is acknowledged:
”Inom ramen för den monetära politiken får rådet i dag genom enhälligt beslut på förslag från kommissionen efter att ha hört Europeiska centralbanken och med Europaparlamentets samtycke tilldela Europeiska centralbanken särskilda uppgifter i samband med tillsynen över kreditinstitut och andra finansinstitut med undantag av försäkringsföretag. Genom Lissabonfördraget får Europeiska centralbanken genom förordningar som ska antas av rådet tilldelas dessa särskilda uppgifter. Rådet ska besluta med enhällighet efter att ha hört Europaparlamentet och Europeiska centralbanken (artikel 105.6 i EUF-fördraget). En viss försvagning sker här av Europaparlamentets inflytande i och med att dess samtycke ersätts med dess hörande.”
Sweden remains outside the Eurozone, despite the lack of an opt-out based on the treaties.
***
Lissabonin sopimus (Finland)
Finland is one of 15 member states currently forming Euroland, or the Eurosystem, as the European Central Bank calls it.
The Finnish ratification bill, ‘Hallituksen esitys Eduskunnalle Euroopan unionista tehdyn sopimuksen ja Euroopan yhteisön perustamissopimuksen muuttamisesta tehdyn Lissabonin sopimuksen hyväksymisestä ja laiksi sen lainsäädännön alaan kuuluvien määräysten voimaansaattamisesta’ (HE 23/2008 vp), presents an overview of economic and monetary policy (Talous- ja rahapolitiikka) on pages 91 to 92.
An explanation of the chapter on monetary policy (Rahapolitiikka) and a description of Article 105 TFEU (ToL), renumbered Article 126 TFEU, follow on pages 210 to 211:
”Määräykset koskevat Euroopan keskuspankkijärjestelmän ja Euroopan keskuspankin perustehtäviä, niiden perussääntöä ja perussäännön tiettyjen osien muuttamista koskevia menettelyjä, Euroopan keskuspankin ja kansallisten keskuspankkien riippumattomuutta sekä Euroopan keskuspankin tehtäviensä suorittamiseksi tekemiä päätöksiä. Määräykset vastaavat EY-sopimuksen VII osaston 2 luvun määräyksiä, lukuun ottamatta tiettyjä päätöksentekomenettelyjä koskevia määräyksiä, uudeksi 245 a artiklaksi siirrettyjä määräyksiä Euroopan keskuspankkijärjestelmän kokoonpanosta ja Euroopan keskuspankin oikeushenkilöllisyydestä ja uudeksi 188 o artiklaksi siirrettyjä päätöksiä euroalueen ulkoisesta edustautumisesta. Lisäksi luvun loppuun on siirretty nykyisestä 4 luvusta tiettyjä määräyksiä toimenpiteistä, jotka ovat tarpeen otettaessa euro käyttöön yhteisenä rahana. Perustuslakisopimuksessa vastaavat määräykset on sisällytetty II luvun 2 jaksoon III-185–III-190 artiklaan.
105 artiklassa (uusi 127 artikla) määritellään Euroopan keskuspankkijärjestelmän tavoitteet ja tehtävät. Artiklan 6 kohtaa täsmennetään siten, että säädöstyypiksi, joka neuvostolla on käytössään sen päättäessä rahoituslaitosten valvontaa koskevien erityistehtävien antamisesta Euroopan keskuspankille, yksilöidään asetus. Lisäksi määräystä muutetaan siten, että Euroopan parlamentin puoltavan lausunnon sijasta riittää, että parlamenttia kuullaan ennen päätöksentekoa. Määräys vastaa perustuslakisopimuksen III-185 artiklaa.”
The Finnish ratification bill is available at:
http://www.finlex.fi/fi/esitykset/he/2008/20080023.pdf
The Swedish language version of the ratification bill ‘Regeringens proposition till Riksdagen med förslag om godkännande av Lissabonfördraget om ändring av fördraget om Europeiska unionen och fördraget om upprättandet av Europeiska gemenskapen och till lag om sättande i kraft av de bestämmelser i fördraget som hör till området för lagstiftningen’ (RP 23/2008 rd), offers the same general remarks on economic and monetary policy on pages 93 to 94. The detailed remarks, Article by Article, under ’Ekonomisk och monetär politik’ contain the same description of the chapter on monetary policy (Monetär politik) and of Article 105 TFEU (ToL), the future Article 127 TFEU as in Finnish, on page 213:
”Bestämmelserna gäller de primära uppgifterna för Europeiska centralbankssystemet och Europeiska centralbanken, förfaranden för ändring av deras stadga och vissa delar i stadgan, Europeiska centralbankens och de nationella centralbankernas oavhängighet samt beslut som Europeiska centralbanken fattar för att utföra sina uppgifter. Bestämmelserna motsvarar bestämmelserna i avdelning VII kapitel 2 i EG-fördraget, med undantag för vissa bestämmelser om beslutsförfaranden, bestämmelser om Europeiska centralbankssystemets sammansättning och Europeiska centralbankens status som juridisk person som överförts till ny artikel 245a och beslut om euroområdets yttre representation som överförts som ny artikel 188o. Till slutet av kapitlet har dessutom från nuvarande kapitel 4 överförts vissa bestämmelser om nödvändiga åtgärder när euron tas i bruk som gemensam valuta. Motsvarande bestämmelser ingår i kapitel II avsnitt 2 i artikel III-185–III-190 i det konstitutionella fördraget.
I artikel 105 (blivande artikel 127), definieras målen och uppgifterna för Europeiska centralbankssystemet. Artikel 105.6 preciseras så att den rättsaktstyp som rådet kan använda vid beslut om att tilldela Europeiska centralbanken särskilda uppgifter i samband med tillsynen över kreditinstitut och andra finansinstitut individualiseras som förordning. Bestämmelsen ändras dessutom så att i stället för ett samtycke från Europaparlamentet räcker det med att parlamentet hörs före beslutsfattandet. Bestämmelsen motsvarar artikel III-185 i det konstitutionella fördraget.”
The ratification bill in Swedish can be accessed at:
http://www.finlex.fi/sv/esitykset/he/2008/20080023.pdf
***
de Poncins
Étienne de Poncins offers a few general comments on EU economic governance and budget matters, ‘La gouvernance économique et les questions budgétaires’ in his ‘Le traité de Lisbonne en 27 clés’ (Éditions Lignes de Repères, 2008), pages 245─251, but nothing specific on Article 127 TFEU.
Fischer
‚Der Vertrag von Lissabon‘, by Klemens H. Fischer (Nomos, Stämpfli & Verlag Österreich, 2008), traces the amendments Article by Article; here on pages 269─270. He remarks that the amendments in paragraphs 1 to 5 are editorial (horizontal), but with regard to paragraph 6 he states:
„Absatz 6 erhält eine neue Fassung, durch die das Anhöringsverfahren an die Stelle des Zustimmungsverfahrens tritt.“
Priollaud and Siritzky
François-Xavier Priollaud and David Siritzky offer a short introductory explanation on economic and monetary policy (pages 246 and 247). They succinctly present the main features of the chapet on monetary policy (La politique monétaire) on pages 254 an 255 of their book ‘Le traité de Lisbonne – Commentaire, article par article, des nouveaux traités européens (TUE et TFUE)’ (La Documentation française, Paris, 2008). They offer the following description of the powers of the European Parliament:
« La modification des pouvoirs du Parlement européen
La généralisation de la procédure legislative renforce le rôle du Parlement européen en ce qui concerne la modification de certaines dispositions des statuts du SEBC et de la BCE (art. 129 TFUE) et pour l’adoption des mesures nécessaires à l’usage de l’euro (art. 133 TFUE). Les pouvoirs du Parlement sont en revanche diminués par rapport à la situation actuelle en matière de contrôle prudentiel des établisseents et marchés financiers (art. 127 § 6 TFUE). Il ne sera que consulté (comme la BCE), alors que son avis conforme était jusq’à présent requis par l’art. 105 TCE. L’unanimité est en outre maintenue sur ce point. »
***
Consultation procedure
The intergovernmental character of prudential banking supervision is striking. In Article 127 TFEU, the European Parliament is marginalized, consulted (as the ECB) in the unlikely case that all 27 member states would be shaken enough by the financial turmoil to be likely to agree on a unanimous decision (regulation) to confer supervisory powers on the ECB.
Just in case someone wants to reflect on the consultation procedure (and other decision-making procedures), Martin Gellermann offers a description in Rudolf Streinz (Hrsgb.): EUV/EGV Vertrag über die Europäische Union und Vertrag zur Gründung der Europäischen Gemeinschaft (C.H.Beck, 2003). I quote the beginning of Konsultations- oder Anhörungsverfahren (page 2204):
„Als Ursprungsmodell für eine Beteiligung des Europäischen Parlaments am Prozess der gemeinschaftlichen Rechtsetzung erscheint das Konsultations- oder Anhörungsverfahren in dem der Kommission das Initiativrecht, dem Parlament eine Beratungsbefugnis und dem Rat das alleinige Entscheidungsrecht gebührt.“
In this instance, we seem to be heading towards the beginnings of the Assembly.
***
The next post is going to present a few pointers on financial regulation and prudential supervision in the context of economic and monetary union (EMU).
Ralf Grahn
EU: Monetary policy VI Lisbon Treaty on an island outside Euroland
Did the objectives and the basic tasks of the European System of Central Banks (ESCB), or the potential role in financial supervision of the European Central Bank (ECB), draw any attention on an island outside Euroland?
We look at UK comments on Article 127 of the Treaty on the Functioning of the European Union (TFEU).
***
Statewatch
Professor Steve Peers covered the Treaty of Lisbon in a number of Statewatch Analyses. ‘EU Reform Treaty Analysis no. 3.4: Revised text of Part Three, Titles VII to XVII of the Treaty establishing the European Community (TEC): Other internal EC policies’ (Version 2, 24 October 2007) includes the current Title VII Economic and monetary policy.
Peers presented the text of Article 105 TFEU (ToL), to be renumbered Article 127 TFEU in the consolidated version, and highlighted the changes. He offered the following succinct comment (page 11):
“The EP’s role has been downgraded here, from consent to consultation. The Council must still vote unanimously.”
The analysis 3.4 and other useful Statewatch analyses are available through:
http://www.statewatch.org/euconstitution.htm
***
FCO
The Foreign and Commonwealth Office (FCO) offers a convenient source of brief annotations on Lisbon Treaty amendments in ‘A comparative table of the current EC and EU treaties as amended by the Treaty of Lisbon’ (Command Paper 7311, published 21 January 2008). It offers the following comment on Article 127 TFEU, Article 105 TFEU (ToL) in the original Lisbon Treaty (page 12):
“Draws on Article 105 TEC. Paragraph 6 replaces EP assent with consultation with the EP.”
The FCO comparative table is available at:
http://www.official-documents.gov.uk/document/cm73/7311/7311.asp
***
House of Commons Library
The UK House of Commons Library Research Paper 07/86 ‘The Treaty of Lisbon: amendments to the Treaty establishing the European Community’ (published 6 December 2007) discussed ‘H. Economic and Monetary Policy’ on pages 61 to 64. Article 105 TFEU (ToL) is included in a brief description on page 62:
“Articles 105 ─ 110 (Constitution Articles III-185 ─ 190) on monetary policy are largely the same as the present Treaty Articles.”
The Library Research Paper 07/86 is available at:
http://www.parliament.uk/commons/lib/research/rp2007/rp07-086.pdf
***
House of Lords
At this juncture, economic and monetary union (EMU) did not interest the House of Lords, so I found nothing on Article 105 TFEU (ToL) or 127 TFEU in the House of Lords European Union Committee report ‘The Treaty of Lisbon: an impact assessment, Volume I: Report’ (HL Paper 62-I, published 13 March 2008).
The report is available at:
http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf
***
The following post is going to look at legislative materials and comments on Article 127 TFEU from other corners of Europe.
Ralf Grahn
We look at UK comments on Article 127 of the Treaty on the Functioning of the European Union (TFEU).
***
Statewatch
Professor Steve Peers covered the Treaty of Lisbon in a number of Statewatch Analyses. ‘EU Reform Treaty Analysis no. 3.4: Revised text of Part Three, Titles VII to XVII of the Treaty establishing the European Community (TEC): Other internal EC policies’ (Version 2, 24 October 2007) includes the current Title VII Economic and monetary policy.
Peers presented the text of Article 105 TFEU (ToL), to be renumbered Article 127 TFEU in the consolidated version, and highlighted the changes. He offered the following succinct comment (page 11):
“The EP’s role has been downgraded here, from consent to consultation. The Council must still vote unanimously.”
The analysis 3.4 and other useful Statewatch analyses are available through:
http://www.statewatch.org/euconstitution.htm
***
FCO
The Foreign and Commonwealth Office (FCO) offers a convenient source of brief annotations on Lisbon Treaty amendments in ‘A comparative table of the current EC and EU treaties as amended by the Treaty of Lisbon’ (Command Paper 7311, published 21 January 2008). It offers the following comment on Article 127 TFEU, Article 105 TFEU (ToL) in the original Lisbon Treaty (page 12):
“Draws on Article 105 TEC. Paragraph 6 replaces EP assent with consultation with the EP.”
The FCO comparative table is available at:
http://www.official-documents.gov.uk/document/cm73/7311/7311.asp
***
House of Commons Library
The UK House of Commons Library Research Paper 07/86 ‘The Treaty of Lisbon: amendments to the Treaty establishing the European Community’ (published 6 December 2007) discussed ‘H. Economic and Monetary Policy’ on pages 61 to 64. Article 105 TFEU (ToL) is included in a brief description on page 62:
“Articles 105 ─ 110 (Constitution Articles III-185 ─ 190) on monetary policy are largely the same as the present Treaty Articles.”
The Library Research Paper 07/86 is available at:
http://www.parliament.uk/commons/lib/research/rp2007/rp07-086.pdf
***
House of Lords
At this juncture, economic and monetary union (EMU) did not interest the House of Lords, so I found nothing on Article 105 TFEU (ToL) or 127 TFEU in the House of Lords European Union Committee report ‘The Treaty of Lisbon: an impact assessment, Volume I: Report’ (HL Paper 62-I, published 13 March 2008).
The report is available at:
http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf
***
The following post is going to look at legislative materials and comments on Article 127 TFEU from other corners of Europe.
Ralf Grahn
EU: Monetary policy V Lisbon Treaty and European level supervision?
Have the objectives of the European System of Central Banks changed during the treaty reform process?
Are the basic tasks different?
Has prudential supervision of banks kept pace with reality?
We compare Article 127 of the Treaty on the Functioning of the European Union (TFEU) with the current treaty and the previous stages of the treaty reform process since 2001.
***
Lisbon Treaty comparison
Substantially, the objectives of the European System of Central Banks (ESCB) and the European Central Bank (ECB) have remained unchanged from the current Treaty establishing the European Community (TEC), via the draft Constitution and the Constitutional Treaty, to the Treaty on the Functioning of the European Union (TFEU) (paragraph 1).
Price stability is the primary objective, from Article 105(1) TEC until Article 127(1) TFEU. The complementary objectives of supporting the economic policies of the Community/Union are essentially unchanged, as are the open market principles for action.
The treaty reform process has done nothing to change the important basic tasks of the ECB: to take full responsibility for monetary policy, to conduct foreign exchange operations, to hold foreign reserves and to improve payment systems (paragraph 2).
Mandatory consultation is retained. The European Central Bank still has to be consulted by the European Community (European Union) or by a member state on draft legislation relating to monetary policy (paragraph 4).
Actually the TFEU wording is more like the TEC text than the Constitutional Treaty, because the IGC 2007 drafters often saved ink when confronted with non-essential amendments (introduced by the European Convention or directly) in the Constitutional Treaty.
This far, things were fairly straightforward, but let us turn to banking supervision.
Despite global markets and European banks, national authorities are still responsible for the prudential supervision of credit institutions and the stability of the financial system ─ however fictitious their real mastery ─ and the contributory role of the ESCB has not changed one iota during the reform process (paragraph 5).
The European Convention proposed that at least some limited aspects ─ specific tasks ─ could be conferred on the ECB by the ordinary legislative procedure, but the IGC 2004 resolutely took away even the need for the European Parliament’s assent, and the governments agreed to immobilise themselves by reinstating the requirement of unanimity in the Council for such legislation (paragraph 6).
More often than not, unanimous legislation means no legislation. (Without qualified majority voting there would be no single market.) But even in the unlikely event of meaningful legislation of small ‘slices’ of responsibility, insurance undertakings are excluded from the scope of such future legislation.
[Reality may be staring everyone in the eye, but national administrations refuse to let it disturb their customary bureaucratic circles. This is a Europe based on governments and their straitjacket rules of intergovernmental international relations, not a union of citizens, fit to work primarily in the interest of citizens. Instead of hundreds of intricately self-incapacitating pages, a democratic European Union would need a readable Constitution of perhaps twenty pages.]
Back to comparing the text versions: The wording of paragraph 6 changed somewhat along the way; the Lisbon Treaty employs the terms ‘regulations in accordance with a special legislative procedure’.
Ralf Grahn
Are the basic tasks different?
Has prudential supervision of banks kept pace with reality?
We compare Article 127 of the Treaty on the Functioning of the European Union (TFEU) with the current treaty and the previous stages of the treaty reform process since 2001.
***
Lisbon Treaty comparison
Substantially, the objectives of the European System of Central Banks (ESCB) and the European Central Bank (ECB) have remained unchanged from the current Treaty establishing the European Community (TEC), via the draft Constitution and the Constitutional Treaty, to the Treaty on the Functioning of the European Union (TFEU) (paragraph 1).
Price stability is the primary objective, from Article 105(1) TEC until Article 127(1) TFEU. The complementary objectives of supporting the economic policies of the Community/Union are essentially unchanged, as are the open market principles for action.
The treaty reform process has done nothing to change the important basic tasks of the ECB: to take full responsibility for monetary policy, to conduct foreign exchange operations, to hold foreign reserves and to improve payment systems (paragraph 2).
Mandatory consultation is retained. The European Central Bank still has to be consulted by the European Community (European Union) or by a member state on draft legislation relating to monetary policy (paragraph 4).
Actually the TFEU wording is more like the TEC text than the Constitutional Treaty, because the IGC 2007 drafters often saved ink when confronted with non-essential amendments (introduced by the European Convention or directly) in the Constitutional Treaty.
This far, things were fairly straightforward, but let us turn to banking supervision.
Despite global markets and European banks, national authorities are still responsible for the prudential supervision of credit institutions and the stability of the financial system ─ however fictitious their real mastery ─ and the contributory role of the ESCB has not changed one iota during the reform process (paragraph 5).
The European Convention proposed that at least some limited aspects ─ specific tasks ─ could be conferred on the ECB by the ordinary legislative procedure, but the IGC 2004 resolutely took away even the need for the European Parliament’s assent, and the governments agreed to immobilise themselves by reinstating the requirement of unanimity in the Council for such legislation (paragraph 6).
More often than not, unanimous legislation means no legislation. (Without qualified majority voting there would be no single market.) But even in the unlikely event of meaningful legislation of small ‘slices’ of responsibility, insurance undertakings are excluded from the scope of such future legislation.
[Reality may be staring everyone in the eye, but national administrations refuse to let it disturb their customary bureaucratic circles. This is a Europe based on governments and their straitjacket rules of intergovernmental international relations, not a union of citizens, fit to work primarily in the interest of citizens. Instead of hundreds of intricately self-incapacitating pages, a democratic European Union would need a readable Constitution of perhaps twenty pages.]
Back to comparing the text versions: The wording of paragraph 6 changed somewhat along the way; the Lisbon Treaty employs the terms ‘regulations in accordance with a special legislative procedure’.
Ralf Grahn
Wednesday, 15 October 2008
EU: Monetary policy IV ECB supervision and Lisbon Treaty
What does the EU Lisbon Treaty say about the objectives and the basic tasks of the European System of Central Banks (ESCB) and the European Central Bank (ECB)?
Would the Treaty of Lisbon be more likely to prevent financial meltdown by instituting banking supervision at European level, under the auspices of the European Central Banks?
Are the national supervisory structures appropriate for global and European financial institutions?
We start by looking at the contents of the Treaty of Lisbon.
***
The current Treaty establishing the European Community (TEC) was ─ perhaps still is destined ─ to become the Treaty on the Functioning of the European Union (TFEU), and generally the so called innovations as agreed in the 2004 IGC were to be inserted into the Treaty by way of specific modifications ‘in the usual manner’ (points 17 and 18, pages 6 and 7).
I found nothing specific in the mandate of the intergovernmental conference (IGC 2007 Mandate, Council document 11218/07, 26 June 2007) about Article 105 TEC.
***
In Article 2, point 91 of the original Treaty of Lisbon (ToL) the IGC 2007 agreed on the following concerning Article 105 TEC (OJ 17.12.2007 C 306/72):
MONETARY POLICY
91) Article 105 shall be amended as follows:
(a) in the first sentence of paragraph 1, ‘ESCB’ shall be replaced by ‘European System of Central Banks, hereinafter referred to as “ESCB”,’;
(b) in the second indent of paragraph 2, the reference to Article 111 shall be replaced by a reference to Article 188 O;
(c) The text of paragraph 6 shall be replaced by the following:
‘6. The Council, acting by means of regulations in accordance with a special legislative procedure, may unanimously, and after consulting the European Parliament and the European Central Bank, confer specific tasks upon the European Central Bank concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings.’.
***
The TFEU table of equivalences confirms that Article 105 TFEU (ToL) in the original Treaty of Lisbon was to be renumbered Article 127 TFEU in the consolidated version, under the title ‘Economic and monetary policy’, renumbered Title VIII (OJ 17.12.2007 C 306/211─212).
(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.)
***
Consolidated Lisbon Treaty
Article 127 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 115/102─103:
Part Three Union policies and internal actions
Title VIII Economic and monetary policy
Chapter 2 Monetary policy
Article 127 Lisbon Treaty
(ex Article 105 TEC)
1. The primary objective of the European System of Central Banks (hereinafter referred to as ‘the ESCB’) shall be to maintain price stability. Without prejudice to the objective of price stability, the ESCB shall support the general economic policies in the Union with a view to contributing to the achievement of the objectives of the Union as laid down in Article 3 of the Treaty on European Union. The ESCB shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources, and in compliance with the principles set out in Article 119.
2. The basic tasks to be carried out through the ESCB shall be:
— to define and implement the monetary policy of the Union,
— to conduct foreign-exchange operations consistent with the provisions of Article 219,
— to hold and manage the official foreign reserves of the Member States,
— to promote the smooth operation of payment systems.
3. The third indent of paragraph 2 shall be without prejudice to the holding and management by the governments of Member States of foreign-exchange working balances.
4. The European Central Bank shall be consulted:
— on any proposed Union act in its fields of competence,
— by national authorities regarding any draft legislative provision in its fields of competence, but within the limits and under the conditions set out by the Council in accordance with the procedure laid down in Article 129(4).
The European Central Bank may submit opinions to the appropriate Union institutions, bodies, offices or agencies or to national authorities on matters in its fields of competence.
5. The ESCB shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system.
6. The Council, acting by means of regulations in accordance with a special legislative procedure, may unanimously, and after consulting the European Parliament and the European Central Bank, confer specific tasks upon the European Central Bank concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings.
***
The following post is going to compare Article 127 TFEU with the current TEC, the draft Constitution and the Constitution, and then take a look at some legislative materials and comments.
Ralf Grahn
Would the Treaty of Lisbon be more likely to prevent financial meltdown by instituting banking supervision at European level, under the auspices of the European Central Banks?
Are the national supervisory structures appropriate for global and European financial institutions?
We start by looking at the contents of the Treaty of Lisbon.
***
The current Treaty establishing the European Community (TEC) was ─ perhaps still is destined ─ to become the Treaty on the Functioning of the European Union (TFEU), and generally the so called innovations as agreed in the 2004 IGC were to be inserted into the Treaty by way of specific modifications ‘in the usual manner’ (points 17 and 18, pages 6 and 7).
I found nothing specific in the mandate of the intergovernmental conference (IGC 2007 Mandate, Council document 11218/07, 26 June 2007) about Article 105 TEC.
***
In Article 2, point 91 of the original Treaty of Lisbon (ToL) the IGC 2007 agreed on the following concerning Article 105 TEC (OJ 17.12.2007 C 306/72):
MONETARY POLICY
91) Article 105 shall be amended as follows:
(a) in the first sentence of paragraph 1, ‘ESCB’ shall be replaced by ‘European System of Central Banks, hereinafter referred to as “ESCB”,’;
(b) in the second indent of paragraph 2, the reference to Article 111 shall be replaced by a reference to Article 188 O;
(c) The text of paragraph 6 shall be replaced by the following:
‘6. The Council, acting by means of regulations in accordance with a special legislative procedure, may unanimously, and after consulting the European Parliament and the European Central Bank, confer specific tasks upon the European Central Bank concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings.’.
***
The TFEU table of equivalences confirms that Article 105 TFEU (ToL) in the original Treaty of Lisbon was to be renumbered Article 127 TFEU in the consolidated version, under the title ‘Economic and monetary policy’, renumbered Title VIII (OJ 17.12.2007 C 306/211─212).
(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.)
***
Consolidated Lisbon Treaty
Article 127 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 115/102─103:
Part Three Union policies and internal actions
Title VIII Economic and monetary policy
Chapter 2 Monetary policy
Article 127 Lisbon Treaty
(ex Article 105 TEC)
1. The primary objective of the European System of Central Banks (hereinafter referred to as ‘the ESCB’) shall be to maintain price stability. Without prejudice to the objective of price stability, the ESCB shall support the general economic policies in the Union with a view to contributing to the achievement of the objectives of the Union as laid down in Article 3 of the Treaty on European Union. The ESCB shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources, and in compliance with the principles set out in Article 119.
2. The basic tasks to be carried out through the ESCB shall be:
— to define and implement the monetary policy of the Union,
— to conduct foreign-exchange operations consistent with the provisions of Article 219,
— to hold and manage the official foreign reserves of the Member States,
— to promote the smooth operation of payment systems.
3. The third indent of paragraph 2 shall be without prejudice to the holding and management by the governments of Member States of foreign-exchange working balances.
4. The European Central Bank shall be consulted:
— on any proposed Union act in its fields of competence,
— by national authorities regarding any draft legislative provision in its fields of competence, but within the limits and under the conditions set out by the Council in accordance with the procedure laid down in Article 129(4).
The European Central Bank may submit opinions to the appropriate Union institutions, bodies, offices or agencies or to national authorities on matters in its fields of competence.
5. The ESCB shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system.
6. The Council, acting by means of regulations in accordance with a special legislative procedure, may unanimously, and after consulting the European Parliament and the European Central Bank, confer specific tasks upon the European Central Bank concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings.
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The following post is going to compare Article 127 TFEU with the current TEC, the draft Constitution and the Constitution, and then take a look at some legislative materials and comments.
Ralf Grahn
EU: Monetary policy IIIb ECB supervision in Constitution?
Does the Constitutional Treaty differ from the draft Constitution with regard to the objectives and the basic tasks of the European System of Central Banks (ESCB) and the European Central Bank (ECB)?
Did the intergovernmental conference (IGC 2004) make it easier to supervise European and global banks at the European level?
Let us see what our legal materials have to say.
***
Draft Constitution Article III-77 and Constitution Article III-185 texts compared
Renumbering the Articles referred to was a technical adjustment. In paragraph 4, where the draft Constitution spoke of ‘fields of competence’, the Constitutional Treaty used the slightly more direct expressions ‘areas within its powers’ (twice) and ‘matters within its powers’ (once), but without making any material difference.
The word ‘offices’ was added to what became the string ‘Union institutions, bodies, offices or agencies’ (paragraph 4).
The contribution ─ whatever that means ─ of the European system of Central Banks to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system, in paragraph 5, remained identical with the proposal by the European Convention. The draft Constitution, as we remember, was the same as the current Article 105(5) TEC; the draft only writing the ESCB ‘in extenso’.
In paragraph 6, the Convention had proposed ordinary European laws as a means to give the European Central Bank specific tasks concerning policies relating to the prudential supervision of credit institutions and other financial institutions. This would have meant co-decision by the European Parliament and qualified majority voting in the Council.
The IGC 2004 put paid to that. The governments reverted to the current unanimity rule, with some fine-tuning of the details.
Instead of the ordinary legislative procedure, proposed by the Convention, the Constitutional Treaty provided for a European law of the Council. In place of full participation (co-decision), as proposed by the draft Constitution, or even assent, as currently under the TEC, the European Parliament was further marginalised to be consulted, along with the European Central Bank.
In 2004 the member states’ governments (more or less) slammed the door on European level supervision of financial institutions, leaving the European Union with a fragmented network of national supervising authorities for increasingly global and European banks.
***
Sweden
The Swedish government memorandum ‘Fördraget om upprättande av en konstitution för Europa’ (Utrikesdepartemetet, Departementsserien (Ds) 2004:52; December 2004) described the signed Constitutional Treaty.
The Swedish government gave a factually correct description of the current Article 105(6) TEC and of Article III-185(6) Constitution. The government mentioned ‘some weakening’ of the European Parliament’s influence, since the EP was only to be consulted (page 241):
”Inom ramen för den monetära politiken får rådet i dag genom enhälligt beslut på förslag från kommissionen efter att ha hört Europeiska centralbanken och med Europaparlamentets samtycke tilldela Europeiska centralbanken särskilda uppgifter i samband med tillsynen över kreditinstitut och andra finansinstitut med undantag av försäkringsföretag. I det konstitutionella fördraget får Europeiska centralbanken i en europeisk lag som antas av rådet tilldelas dessa särskilda uppgifter. Rådet skall besluta med enhällighet efter att ha hört Europaparlamentet och Europeiska centralbanken (artikel III-185.6). En viss försvagning sker här av Europaparlamentets inflytande i och med att dess samtycke ersätts med dess hörande.”
***
On the whole, here on page 173, the Swedish draft ratification bill ‘Lagrådsremiss ─ Fördraget om upprättande av en konstitution för Europa’ (2 June 2005) reiterated the remarks made in the memorandum mentioned above.
***
Finland
The government of Finland laid out the Constitutional Treaty in its ratification bill ‘Hallituksen esitys Eduskunnalle Euroopan perustuslaista tehdyn sopimuksen hyväksymisestä ja laiksi sen lainsäädännön alaan kuuluvien määräysten voimaansaattamisesta’ (HE 67/2006 vp). In the government’s view, the proposals concerning EMU legislative procedures did not change the institutional balance essentially, but it first mentioned the instances, where the ordinary legislative procedure was instituted, and then the ratification bill mentioned where the position of the European Parliament was weakened (pages 81─82):
”Perustuslakisopimus merkitsee tiettyjä muutoksia lainsäädäntömenettelyihin talous- ja rahaliiton alalla, mikä ei kuitenkaan muuta olennaisesti toimielinten valtasuhteita. Perustuslakisopimuksessa siirrytään tavanomaiseen lainsäätämisjärjestykseen monenvälistä valvontamenettelyä koskevien yksityiskohtaisten sääntöjen vahvistamisessa (III-179 artiklan 6 kohta), Euroopan keskuspankkijärjestelmän ja Euroopan keskuspankin perussäännön eräiden määräysten muuttamisessa (III-187 artiklan 3 kohta) sekä sellaisten toimenpiteiden osalta, jotka ovat tarpeen euron käytössä yhteisenä rahana (III-191 artikla). Toisaalta Euroopan parlamentin asema tietyissä talous- ja rahaliittoa koskevissa kysymyksissä heikkenee, kuten päätettäessä eräiden kieltojen täsmentämiseksi tarvittavista säännöistä (III-183 artiklan 2 kohta), erityistehtävien antamista Euroopan keskuspankille (III-185 artiklan 6 kohta) sekä liikkeeseen laskettavien eurometallirahojen yksikköarvojen ja teknisten määritelmien yhdenmukaistamisesta (186 artiklan 2 kohta).”
***
The same remarks on legislative procedures within EMU appear in Swedish in ’Regeringens proposition till Riksdagen med förslag om godkännande av Fördraget om upprättande av en konstitution för Europa och till lag om sättande i kraft av de bestämmelser i fördraget som hör till området för lagstiftningen (RP 67/2006 rd), with the Finnish government’s comments on page 84:
”Det konstitutionella fördraget innebär vissa ändringar i lagstiftningsförfarandena på området för den ekonomiska och monetära unionen, vilka ändå inte på något väsentligt sätt förändrar maktförhållandena mellan institutionerna. I det konstitutionella fördraget övergår man till ordinarie lagstiftningsförfarande i fråga om meddelandet av närmare föreskrifter om det multilaterala övervakningsförfarandet (artikel III-179.6), ändrandet av vissa bestämmelser i stadgan för Europeiska centralbankssystemet och Europeiska centralbanken (artikel III-187.3) samt nödvändiga åtgärder för att använda euron som gemensam valuta (artikel III-191). Å andra sidan försvagas Europaparlamentets ställning i vissa frågor som gäller den ekonomiska och monetära unionen, t.ex. när man skall besluta om regler som behövs för att närmare ange hur vissa förbud skall tillämpas (artikel III-183.2), särskilda uppgifter som tilldelas Europeiska centralbanken (artikel III-185.6) samt harmonisering av valörerna och de tekniska specifikationerna för de euromynt som skall sättas i omlopp (artikel 186.2).”
***
Fischer
Klemens H. Fischer in ‘Der Europäische Verfassungsvertrag‘ (Nomos, Stämpfli & Manz, 2005) only made the observations that „Artikel III-185 EUVV korrespondiert mit Artikel 105 EGV“ and „Artikel III-185 EUVV korrespondiert mit Artikel III-77 VVE“ (page 316).
***
United Kingdom
According to Protocol (No 13, in the Constitutional Treaty) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland as regards economic and monetary union, Article 4, the Constitution’s Article III-185(1) to (5) did not apply to the UK. The United Kingdom was thus exempted from the ESCB contribution to the smooth operation of national prudential supervisors, but the UK opt-out did not concern paragraph 6, so Britain (surprisingly) remained among the potential veto powers concerning the transferral of new supervisory tasks to the European Central Bank (if I understand correctly).
The UK Foreign and Commonwealth Office (FCO) ‘White Paper on the Treaty establishing a Constitution for Europe’ (Cm 6309, September 2004) briefly remarked that the government had advocated the amendment on prudential supervision put forward by the Irish presidency in document CIG 81/04, Annex 18 (page 46).
***
In other words, in 2004 the EU member states unanimously signed the Constitutional Treaty requiring unanimous European laws by the Council (and marginalising the European Parliament) to confer financial supervision on the European Central Bank.
The next instalment turns to the IGC 2007 and the Lisbon Treaty.
Ralf Grahn
Did the intergovernmental conference (IGC 2004) make it easier to supervise European and global banks at the European level?
Let us see what our legal materials have to say.
***
Draft Constitution Article III-77 and Constitution Article III-185 texts compared
Renumbering the Articles referred to was a technical adjustment. In paragraph 4, where the draft Constitution spoke of ‘fields of competence’, the Constitutional Treaty used the slightly more direct expressions ‘areas within its powers’ (twice) and ‘matters within its powers’ (once), but without making any material difference.
The word ‘offices’ was added to what became the string ‘Union institutions, bodies, offices or agencies’ (paragraph 4).
The contribution ─ whatever that means ─ of the European system of Central Banks to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system, in paragraph 5, remained identical with the proposal by the European Convention. The draft Constitution, as we remember, was the same as the current Article 105(5) TEC; the draft only writing the ESCB ‘in extenso’.
In paragraph 6, the Convention had proposed ordinary European laws as a means to give the European Central Bank specific tasks concerning policies relating to the prudential supervision of credit institutions and other financial institutions. This would have meant co-decision by the European Parliament and qualified majority voting in the Council.
The IGC 2004 put paid to that. The governments reverted to the current unanimity rule, with some fine-tuning of the details.
Instead of the ordinary legislative procedure, proposed by the Convention, the Constitutional Treaty provided for a European law of the Council. In place of full participation (co-decision), as proposed by the draft Constitution, or even assent, as currently under the TEC, the European Parliament was further marginalised to be consulted, along with the European Central Bank.
In 2004 the member states’ governments (more or less) slammed the door on European level supervision of financial institutions, leaving the European Union with a fragmented network of national supervising authorities for increasingly global and European banks.
***
Sweden
The Swedish government memorandum ‘Fördraget om upprättande av en konstitution för Europa’ (Utrikesdepartemetet, Departementsserien (Ds) 2004:52; December 2004) described the signed Constitutional Treaty.
The Swedish government gave a factually correct description of the current Article 105(6) TEC and of Article III-185(6) Constitution. The government mentioned ‘some weakening’ of the European Parliament’s influence, since the EP was only to be consulted (page 241):
”Inom ramen för den monetära politiken får rådet i dag genom enhälligt beslut på förslag från kommissionen efter att ha hört Europeiska centralbanken och med Europaparlamentets samtycke tilldela Europeiska centralbanken särskilda uppgifter i samband med tillsynen över kreditinstitut och andra finansinstitut med undantag av försäkringsföretag. I det konstitutionella fördraget får Europeiska centralbanken i en europeisk lag som antas av rådet tilldelas dessa särskilda uppgifter. Rådet skall besluta med enhällighet efter att ha hört Europaparlamentet och Europeiska centralbanken (artikel III-185.6). En viss försvagning sker här av Europaparlamentets inflytande i och med att dess samtycke ersätts med dess hörande.”
***
On the whole, here on page 173, the Swedish draft ratification bill ‘Lagrådsremiss ─ Fördraget om upprättande av en konstitution för Europa’ (2 June 2005) reiterated the remarks made in the memorandum mentioned above.
***
Finland
The government of Finland laid out the Constitutional Treaty in its ratification bill ‘Hallituksen esitys Eduskunnalle Euroopan perustuslaista tehdyn sopimuksen hyväksymisestä ja laiksi sen lainsäädännön alaan kuuluvien määräysten voimaansaattamisesta’ (HE 67/2006 vp). In the government’s view, the proposals concerning EMU legislative procedures did not change the institutional balance essentially, but it first mentioned the instances, where the ordinary legislative procedure was instituted, and then the ratification bill mentioned where the position of the European Parliament was weakened (pages 81─82):
”Perustuslakisopimus merkitsee tiettyjä muutoksia lainsäädäntömenettelyihin talous- ja rahaliiton alalla, mikä ei kuitenkaan muuta olennaisesti toimielinten valtasuhteita. Perustuslakisopimuksessa siirrytään tavanomaiseen lainsäätämisjärjestykseen monenvälistä valvontamenettelyä koskevien yksityiskohtaisten sääntöjen vahvistamisessa (III-179 artiklan 6 kohta), Euroopan keskuspankkijärjestelmän ja Euroopan keskuspankin perussäännön eräiden määräysten muuttamisessa (III-187 artiklan 3 kohta) sekä sellaisten toimenpiteiden osalta, jotka ovat tarpeen euron käytössä yhteisenä rahana (III-191 artikla). Toisaalta Euroopan parlamentin asema tietyissä talous- ja rahaliittoa koskevissa kysymyksissä heikkenee, kuten päätettäessä eräiden kieltojen täsmentämiseksi tarvittavista säännöistä (III-183 artiklan 2 kohta), erityistehtävien antamista Euroopan keskuspankille (III-185 artiklan 6 kohta) sekä liikkeeseen laskettavien eurometallirahojen yksikköarvojen ja teknisten määritelmien yhdenmukaistamisesta (186 artiklan 2 kohta).”
***
The same remarks on legislative procedures within EMU appear in Swedish in ’Regeringens proposition till Riksdagen med förslag om godkännande av Fördraget om upprättande av en konstitution för Europa och till lag om sättande i kraft av de bestämmelser i fördraget som hör till området för lagstiftningen (RP 67/2006 rd), with the Finnish government’s comments on page 84:
”Det konstitutionella fördraget innebär vissa ändringar i lagstiftningsförfarandena på området för den ekonomiska och monetära unionen, vilka ändå inte på något väsentligt sätt förändrar maktförhållandena mellan institutionerna. I det konstitutionella fördraget övergår man till ordinarie lagstiftningsförfarande i fråga om meddelandet av närmare föreskrifter om det multilaterala övervakningsförfarandet (artikel III-179.6), ändrandet av vissa bestämmelser i stadgan för Europeiska centralbankssystemet och Europeiska centralbanken (artikel III-187.3) samt nödvändiga åtgärder för att använda euron som gemensam valuta (artikel III-191). Å andra sidan försvagas Europaparlamentets ställning i vissa frågor som gäller den ekonomiska och monetära unionen, t.ex. när man skall besluta om regler som behövs för att närmare ange hur vissa förbud skall tillämpas (artikel III-183.2), särskilda uppgifter som tilldelas Europeiska centralbanken (artikel III-185.6) samt harmonisering av valörerna och de tekniska specifikationerna för de euromynt som skall sättas i omlopp (artikel 186.2).”
***
Fischer
Klemens H. Fischer in ‘Der Europäische Verfassungsvertrag‘ (Nomos, Stämpfli & Manz, 2005) only made the observations that „Artikel III-185 EUVV korrespondiert mit Artikel 105 EGV“ and „Artikel III-185 EUVV korrespondiert mit Artikel III-77 VVE“ (page 316).
***
United Kingdom
According to Protocol (No 13, in the Constitutional Treaty) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland as regards economic and monetary union, Article 4, the Constitution’s Article III-185(1) to (5) did not apply to the UK. The United Kingdom was thus exempted from the ESCB contribution to the smooth operation of national prudential supervisors, but the UK opt-out did not concern paragraph 6, so Britain (surprisingly) remained among the potential veto powers concerning the transferral of new supervisory tasks to the European Central Bank (if I understand correctly).
The UK Foreign and Commonwealth Office (FCO) ‘White Paper on the Treaty establishing a Constitution for Europe’ (Cm 6309, September 2004) briefly remarked that the government had advocated the amendment on prudential supervision put forward by the Irish presidency in document CIG 81/04, Annex 18 (page 46).
***
In other words, in 2004 the EU member states unanimously signed the Constitutional Treaty requiring unanimous European laws by the Council (and marginalising the European Parliament) to confer financial supervision on the European Central Bank.
The next instalment turns to the IGC 2007 and the Lisbon Treaty.
Ralf Grahn
Tuesday, 14 October 2008
EU: State aid to financial institutions
The European Commission has quickly published guidance on state aid to beleaguered financial institutions. The Communication from the Commission ‘The application of State aid rules to measures taken in relation to financial institutions in the context of the current global financial crisis’ is available at:
http://ec.europa.eu/comm/competition/state_aid/legislation/banking_crisis_paper.pdf
The timely Communication builds on the ECOFIN principles, and it tries to steer a path between aiding fundamentally sound banks in a flexible manner and evading distortions between different players.
The Communication is going to be “hot stuff” for governments and banks and their advisors.
Ralf Grahn
http://ec.europa.eu/comm/competition/state_aid/legislation/banking_crisis_paper.pdf
The timely Communication builds on the ECOFIN principles, and it tries to steer a path between aiding fundamentally sound banks in a flexible manner and evading distortions between different players.
The Communication is going to be “hot stuff” for governments and banks and their advisors.
Ralf Grahn
EU: Monetary policy IIIa Constitution contents
What, if anything, did the Constitutional Treaty do to the objectives and to the basic tasks of the European System of Central Banks (ESCB) and the European Central Bank (ECB)?
Did the intergovernmental conference (IGC 2004) facilitate European level prudential supervision of the financial sector?
We look at the contents of first Constitution clause in the section on monetary policy, within the context of economic and monetary union (EMU).
***
In the Treaty establishing a Constitution for Europe the provisions on monetary policy are located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter II ‘Economic and monetary policy’, Section 2 ‘Monetary policy’.
The objectives and the basic tasks of the European System of Central Banks and the European Central Bank are found in Article III-185, OJ 16.12.2004 C 310/81─82:
Article III-185 Constitution
1. The primary objective of the European System of Central Banks shall be to maintain price stability. Without prejudice to this objective, the European System of Central Banks shall support the general economic policies in the Union in order to contribute to the achievement of its objectives as laid down in Article I-3. The European System of Central Banks shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources, and in compliance with the principles set out in Article III-177.
2. The basic tasks to be carried out through the European System of Central Banks shall be:
(a) to define and implement the Union's monetary policy;
(b) to conduct foreign-exchange operations consistent with Article III-326;
(c) to hold and manage the official foreign reserves of the Member States;
(d) to promote the smooth operation of payment systems.
3. Paragraph 2(c) shall be without prejudice to the holding and management by the governments of Member States of foreign-exchange working balances.
4. The European Central Bank shall be consulted:
(a) on any proposed Union act in areas within its powers;
(b) by national authorities regarding any draft legislative provision in areas within its powers, but within the limits and under the conditions set out by the Council in accordance with the procedure laid down in Article III-187(4).
The European Central Bank may submit opinions to the Union institutions, bodies, offices or agencies or to national authorities on matters within its powers.
5. The European System of Central Banks shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system.
6. A European law of the Council may confer specific tasks upon the European Central Bank concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings. The Council shall act unanimously after consulting the European Parliament and the European Central Bank.
***
The next post is going to compare the Constitutional Treaty with the draft Constitution and look at some legislative materials on the Constitution.
Ralf Grahn
Did the intergovernmental conference (IGC 2004) facilitate European level prudential supervision of the financial sector?
We look at the contents of first Constitution clause in the section on monetary policy, within the context of economic and monetary union (EMU).
***
In the Treaty establishing a Constitution for Europe the provisions on monetary policy are located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter II ‘Economic and monetary policy’, Section 2 ‘Monetary policy’.
The objectives and the basic tasks of the European System of Central Banks and the European Central Bank are found in Article III-185, OJ 16.12.2004 C 310/81─82:
Article III-185 Constitution
1. The primary objective of the European System of Central Banks shall be to maintain price stability. Without prejudice to this objective, the European System of Central Banks shall support the general economic policies in the Union in order to contribute to the achievement of its objectives as laid down in Article I-3. The European System of Central Banks shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources, and in compliance with the principles set out in Article III-177.
2. The basic tasks to be carried out through the European System of Central Banks shall be:
(a) to define and implement the Union's monetary policy;
(b) to conduct foreign-exchange operations consistent with Article III-326;
(c) to hold and manage the official foreign reserves of the Member States;
(d) to promote the smooth operation of payment systems.
3. Paragraph 2(c) shall be without prejudice to the holding and management by the governments of Member States of foreign-exchange working balances.
4. The European Central Bank shall be consulted:
(a) on any proposed Union act in areas within its powers;
(b) by national authorities regarding any draft legislative provision in areas within its powers, but within the limits and under the conditions set out by the Council in accordance with the procedure laid down in Article III-187(4).
The European Central Bank may submit opinions to the Union institutions, bodies, offices or agencies or to national authorities on matters within its powers.
5. The European System of Central Banks shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system.
6. A European law of the Council may confer specific tasks upon the European Central Bank concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings. The Council shall act unanimously after consulting the European Parliament and the European Central Bank.
***
The next post is going to compare the Constitutional Treaty with the draft Constitution and look at some legislative materials on the Constitution.
Ralf Grahn
EU: Monetary policy IIb ECB and prudential supervision
Has European Community (European Union) monetary policy, based on the single currency (euro), advanced during the protracted treaty reform process since the 2001 Treaty of Nice?
In particular, given the present financial turmoil, did the European Convention offer anything, which could have prevented or mitigated the problems of today concerning the lack of European level prudential supervision?
We compare the proposal of the European Convention (Article III-77) with the current Article 105 of the Treaty establishing the European Community (TEC) on the objectives and the basic tasks of the European System of Central Banks (ESCB) and the European Central Bank (ECB).
After that we look at some legal materials and descriptions of the proposal of the European Convention in the draft Constitution.
Would the government positions in 2008 remain what they were in 2003?
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Texts compared
There are some (material) differences in the referrals and the text between Article III-77 of the draft Constitution and the existing Article 105 of the Treaty establishing the European Community (TEC).
Price stability was retained as the primary objective, but the Union’s general objectives in Article I-3 had been reformulated with regard to Article 2 TEC.
The second referral in paragraph 1 underwent a change, too. The contents of Article 4 TEC and Article III-69 were practically identical, but what had been guiding principles for the European Community (former European Economic Community, EEC) generally, became the introductory principles for economic and monetary policy ─ a policy area ─ within the context of the unified European Union (which would have abolished the EC ─ EU duality).
In paragraph 2, the foreign exchange operations consistent with Article 111 TEC moved the Article referred to from the section on monetary policy to the chapter on international agreements (Chapter VI).
The real difference was that the legal base concerning prudential supervision of credit institutions and other financial institutions, in paragraph 6, underwent a change. The draft Constitution replaced unanimous Council decisions by European laws.
The European Convention started the practice to replace the acronyms ESCB and ECB by the European System of Central Banks and the European Central Bank.
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Convention Working Group
For a look at the background, you can read the Final report of Working Group VI on Economic Governance, CONV 357/02 (21 October 2002. The remarks give an indication of the discussion on monetary policy (page 3):
"A large number of members of the group consider that the tasks, mandate and statute of the European Central Bank should remain unchanged, and should not be affected by any new treaty provisions. However some consider that its mandate should be widened to include the objectives of growth and employment
The group also discussed the accountability and transparency of the ECB. Some consider that there is scope for improving the accountability of the ECB, and have put forward ideas such as enhancing the ECB's reporting to the European Parliament, giving the EP a greater role in the designation of ECB Board members, and providing for the obligatory publication of ECB minutes. Others consider that the ECB has already demonstrated a commitment to increased openness, and do not therefore think that any changes are necessary.
The group agrees on the importance, in the light of enlargement, of amending Article 10 paragraph 2 of the ECB statutes relating to the working methods of the ECB's Governing Council, and invites the ECB and/or the Commission to make use of the enabling clause included in the Treaty of Nice to make proposals for amending Article 10 paragraph 2 of the ECB statute as soon as the Nice Treaty enters into force."
The Working Group Report is available at:
http://register.consilium.eu.int/pdf/en/02/cv00/00357en2.pdf
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de Poncins
Étienne de Poncins presented the proposed text of Article III-77 of the draft Constitution in ‘Vers une Constitution européenne’ (Éditions 10/18, 2003), and he remarked on the changed legal base concerning prudential supervision, on page 302:
« Commentaire : le paragraphe 6 permet de confier à la Banque centrale européenne des missions particulières avant trait au contrôle prudentiel. Aujourd’hui cette décision requiert l’unanimité du Conseil et l’avis conforme du Parlement européen. La procédure législative ordinaire sera d’application, le Conseil se prononçant à la majorité qualifiée. »
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Sweden
Sweden remains outside the third phase of economic and monetary union (EMU), without a derogation, but following the 14 September 2003 referendum.
The government of Sweden briefly mentioned the proposed amendment on prudential supervision in the draft Constitution in ‘Europeiska konventet om EU:s framtid’ (Utrikesdepartementet, Departementsserien (Ds) 2003:58, 2003). The relevant passage is on page 55:
“Vidare föreslås ändrade beslutsregler för överföring av tillsynsbefogenheter för den finansiella sektorn till Europeiska centralbanken (ECB).
On page 56 the government noted the favourable opinion of Sveriges Riksbank (Sweden’s central bank) regarding the abandonment of the unanimity rule concerning prudential supervision:
”Sveriges riksbank stödjer konventets förslag om att frångå kravet på enhällighet vid beslut om att ge ECB särskilda uppgifter i samband med tillsynen av kreditinstitut och andra finansinstitut. Riksbanken har inte heller några invändningar mot förslaget om att ändra beslutsordningen för justering av ECB-stadgan.”
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Sweden
Ahead of the intergovernmental conference (IGC 2003─2004), but after the euro referendum, the government of Sweden described the proposed provision on prudential supervision, in ‘Europeiska konventet om EU:s framtid’ (Regeringens skrivelse 2003/04:13, den 2 oktober 2003), on page 49:
”Europeiska centralbankens tillsynsbefogenheter och stadgar
Konventet föreslår att beslutsregeln för överföring av tillsynsbefogenheter för den finansiella sektorn till Europeiska centralbanken (ECB) skall ändras. I dag krävs enhällighet i rådet och samtycke av Europaparlamentet. Förslaget innebär att rådet skall besluta med kvalificerad majoritet och att Europaparlamentet skall ges medbeslutande för en sådan överföring. Vidare föreslås att Europaparlamentet ges medbeslutande beträffande vissa frågor i stadgan för Europeiska centralbankssystemet.”
On page 50 the Swedish government revealed its own ‘farsighted’ position. Supervision of financial markets is a matter for the member states. According supervisory functions to the European Central Bank should continue to be ruled by unanimity:
”Medlemsstaterna bör även fortsättningsvis själva kunna avgöra hur de organiserar övervakningen av de finansiella marknaderna. Det är därför inte lämpligt att släppa på kravet om enhällighet för överföring av tillsynsbefogenheter från medlemsstaterna till ECB.”
***
United Kingdom
The United Kingdom has opted out of the third stage of economic and monetary union (EMU). (In the latest consolidated version of the treaties, Protocol (No 25) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland, OJ 29.12.2006 C 321 E/299).
Between the European Convention and the intergovernmental conference, the UK government presented its general approach ─ most British ─ in ‘A Constitutional Treaty for the EU; The British Approach to the European Union Intergovernmental Conference 2003’ (Cm5934, September 2003), under Economic Governance on pages 34─35:
“74. Many of the issues discussed in the European Convention and raised in the draft Constitutional Treaty could have significant consequences for the future performance of EU economies. The draft Constitutional Treaty proposed by the Convention has proposed changes to the EU’s existing system of economic governance and other aspects of the EU fiscal framework; the institutional balance between the Union and Member States in economic policy coordination; and the role of the Eurogroup, the informal grouping of euro area finance ministers. The Government will oppose any such proposals which might lead to unnecessary rigidities or undermine the central role of Member States in determining their economic policies. It will work to ensure outcomes that will bolster stability, promote flexibility and enhance the ability of European countries to raise productivity and employment levels.
75. The draft Treaty does not alter the terms of the UK’s Economic and Monetary Union protocol (allowing the UK to decide whether or not to join the euro). This will need formally to be re-adopted on the conclusion of the IGC.”
***
Finland
Finland has adopted the euro currency, but relinquishing unanimity when transferring prudential supervision to the European Central Bank did not find favour with the Finnish government in 2003.
In the view of the Finnish government, in ‘Valtioneuvoston selonteko Eduskunnalle konventin tuloksista ja valmistautumisesta hallitusten väliseen konferenssiin’ (VNS 2/2003 vp), joint supervision was not appropriate, given the sensititvity of these questions and their economic repercussions (page 66):
”Perustuslaillisella sopimuksella muutetaan myös joitakin päätöksentekomenettelyjä talous- ja rahapolitiikan alalla. Lainsäädäntömenettely ulotetaan kattamaan myös rahoituslaitosten valvontaa koskevien erityistehtävien siirtäminen EKP:lle (III-77 artikla) sekä EKP-järjestelmän perussäännön tiettyjen artiklojen muuttaminen (III-79 artikla). EKP:lle voidaan normaalia lainsäädäntömenettelyä noudattaen antaa erityistehtäviä jotka koskevat luottolaitosten sekä muiden rahoituslaitosten kuin vakuutusyritysten toiminnan vakauden valvontaa. Nykysopimuksessa tämä edellyttää neuvostossa yksimielisyyttä. Suomen taholta ei yhdistetyn valvontavastuun tavoittelua unionissa ole pidetty tarkoituksenmukaisena, koska kyse on erittäin herkkäluonteisista kysymyksistä joilla on myös taloudellisia vaikutuksia. EKP:n keskuspankin perussääntöä voidaan puolestaan jatkossa muuttaa ministerineuvostossa määräenemmistöllä myös komission, ei vain EKP:n aloitteesta. Tämän on pelätty heikentävän keskuspankin asemaa. Suomen edustajat konventissa vastustivatkin näitä muutoksia.”
***
We have seen that in 2003 none of our sample of three governments wanted to approve the proposal by the European Convention to facilitate the creation of joint financial supervision at European level, under the auspices of the European Central Bank.
In the following instalment we look at how the IGC 2004 and the Constitutional Treaty treated the proposals in the draft Constitution.
What was, and given the current financial crisis, what should have been the response in 2004 and later?
Ralf Grahn
In particular, given the present financial turmoil, did the European Convention offer anything, which could have prevented or mitigated the problems of today concerning the lack of European level prudential supervision?
We compare the proposal of the European Convention (Article III-77) with the current Article 105 of the Treaty establishing the European Community (TEC) on the objectives and the basic tasks of the European System of Central Banks (ESCB) and the European Central Bank (ECB).
After that we look at some legal materials and descriptions of the proposal of the European Convention in the draft Constitution.
Would the government positions in 2008 remain what they were in 2003?
***
Texts compared
There are some (material) differences in the referrals and the text between Article III-77 of the draft Constitution and the existing Article 105 of the Treaty establishing the European Community (TEC).
Price stability was retained as the primary objective, but the Union’s general objectives in Article I-3 had been reformulated with regard to Article 2 TEC.
The second referral in paragraph 1 underwent a change, too. The contents of Article 4 TEC and Article III-69 were practically identical, but what had been guiding principles for the European Community (former European Economic Community, EEC) generally, became the introductory principles for economic and monetary policy ─ a policy area ─ within the context of the unified European Union (which would have abolished the EC ─ EU duality).
In paragraph 2, the foreign exchange operations consistent with Article 111 TEC moved the Article referred to from the section on monetary policy to the chapter on international agreements (Chapter VI).
The real difference was that the legal base concerning prudential supervision of credit institutions and other financial institutions, in paragraph 6, underwent a change. The draft Constitution replaced unanimous Council decisions by European laws.
The European Convention started the practice to replace the acronyms ESCB and ECB by the European System of Central Banks and the European Central Bank.
***
Convention Working Group
For a look at the background, you can read the Final report of Working Group VI on Economic Governance, CONV 357/02 (21 October 2002. The remarks give an indication of the discussion on monetary policy (page 3):
"A large number of members of the group consider that the tasks, mandate and statute of the European Central Bank should remain unchanged, and should not be affected by any new treaty provisions. However some consider that its mandate should be widened to include the objectives of growth and employment
The group also discussed the accountability and transparency of the ECB. Some consider that there is scope for improving the accountability of the ECB, and have put forward ideas such as enhancing the ECB's reporting to the European Parliament, giving the EP a greater role in the designation of ECB Board members, and providing for the obligatory publication of ECB minutes. Others consider that the ECB has already demonstrated a commitment to increased openness, and do not therefore think that any changes are necessary.
The group agrees on the importance, in the light of enlargement, of amending Article 10 paragraph 2 of the ECB statutes relating to the working methods of the ECB's Governing Council, and invites the ECB and/or the Commission to make use of the enabling clause included in the Treaty of Nice to make proposals for amending Article 10 paragraph 2 of the ECB statute as soon as the Nice Treaty enters into force."
The Working Group Report is available at:
http://register.consilium.eu.int/pdf/en/02/cv00/00357en2.pdf
***
de Poncins
Étienne de Poncins presented the proposed text of Article III-77 of the draft Constitution in ‘Vers une Constitution européenne’ (Éditions 10/18, 2003), and he remarked on the changed legal base concerning prudential supervision, on page 302:
« Commentaire : le paragraphe 6 permet de confier à la Banque centrale européenne des missions particulières avant trait au contrôle prudentiel. Aujourd’hui cette décision requiert l’unanimité du Conseil et l’avis conforme du Parlement européen. La procédure législative ordinaire sera d’application, le Conseil se prononçant à la majorité qualifiée. »
***
Sweden
Sweden remains outside the third phase of economic and monetary union (EMU), without a derogation, but following the 14 September 2003 referendum.
The government of Sweden briefly mentioned the proposed amendment on prudential supervision in the draft Constitution in ‘Europeiska konventet om EU:s framtid’ (Utrikesdepartementet, Departementsserien (Ds) 2003:58, 2003). The relevant passage is on page 55:
“Vidare föreslås ändrade beslutsregler för överföring av tillsynsbefogenheter för den finansiella sektorn till Europeiska centralbanken (ECB).
On page 56 the government noted the favourable opinion of Sveriges Riksbank (Sweden’s central bank) regarding the abandonment of the unanimity rule concerning prudential supervision:
”Sveriges riksbank stödjer konventets förslag om att frångå kravet på enhällighet vid beslut om att ge ECB särskilda uppgifter i samband med tillsynen av kreditinstitut och andra finansinstitut. Riksbanken har inte heller några invändningar mot förslaget om att ändra beslutsordningen för justering av ECB-stadgan.”
***
Sweden
Ahead of the intergovernmental conference (IGC 2003─2004), but after the euro referendum, the government of Sweden described the proposed provision on prudential supervision, in ‘Europeiska konventet om EU:s framtid’ (Regeringens skrivelse 2003/04:13, den 2 oktober 2003), on page 49:
”Europeiska centralbankens tillsynsbefogenheter och stadgar
Konventet föreslår att beslutsregeln för överföring av tillsynsbefogenheter för den finansiella sektorn till Europeiska centralbanken (ECB) skall ändras. I dag krävs enhällighet i rådet och samtycke av Europaparlamentet. Förslaget innebär att rådet skall besluta med kvalificerad majoritet och att Europaparlamentet skall ges medbeslutande för en sådan överföring. Vidare föreslås att Europaparlamentet ges medbeslutande beträffande vissa frågor i stadgan för Europeiska centralbankssystemet.”
On page 50 the Swedish government revealed its own ‘farsighted’ position. Supervision of financial markets is a matter for the member states. According supervisory functions to the European Central Bank should continue to be ruled by unanimity:
”Medlemsstaterna bör även fortsättningsvis själva kunna avgöra hur de organiserar övervakningen av de finansiella marknaderna. Det är därför inte lämpligt att släppa på kravet om enhällighet för överföring av tillsynsbefogenheter från medlemsstaterna till ECB.”
***
United Kingdom
The United Kingdom has opted out of the third stage of economic and monetary union (EMU). (In the latest consolidated version of the treaties, Protocol (No 25) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland, OJ 29.12.2006 C 321 E/299).
Between the European Convention and the intergovernmental conference, the UK government presented its general approach ─ most British ─ in ‘A Constitutional Treaty for the EU; The British Approach to the European Union Intergovernmental Conference 2003’ (Cm5934, September 2003), under Economic Governance on pages 34─35:
“74. Many of the issues discussed in the European Convention and raised in the draft Constitutional Treaty could have significant consequences for the future performance of EU economies. The draft Constitutional Treaty proposed by the Convention has proposed changes to the EU’s existing system of economic governance and other aspects of the EU fiscal framework; the institutional balance between the Union and Member States in economic policy coordination; and the role of the Eurogroup, the informal grouping of euro area finance ministers. The Government will oppose any such proposals which might lead to unnecessary rigidities or undermine the central role of Member States in determining their economic policies. It will work to ensure outcomes that will bolster stability, promote flexibility and enhance the ability of European countries to raise productivity and employment levels.
75. The draft Treaty does not alter the terms of the UK’s Economic and Monetary Union protocol (allowing the UK to decide whether or not to join the euro). This will need formally to be re-adopted on the conclusion of the IGC.”
***
Finland
Finland has adopted the euro currency, but relinquishing unanimity when transferring prudential supervision to the European Central Bank did not find favour with the Finnish government in 2003.
In the view of the Finnish government, in ‘Valtioneuvoston selonteko Eduskunnalle konventin tuloksista ja valmistautumisesta hallitusten väliseen konferenssiin’ (VNS 2/2003 vp), joint supervision was not appropriate, given the sensititvity of these questions and their economic repercussions (page 66):
”Perustuslaillisella sopimuksella muutetaan myös joitakin päätöksentekomenettelyjä talous- ja rahapolitiikan alalla. Lainsäädäntömenettely ulotetaan kattamaan myös rahoituslaitosten valvontaa koskevien erityistehtävien siirtäminen EKP:lle (III-77 artikla) sekä EKP-järjestelmän perussäännön tiettyjen artiklojen muuttaminen (III-79 artikla). EKP:lle voidaan normaalia lainsäädäntömenettelyä noudattaen antaa erityistehtäviä jotka koskevat luottolaitosten sekä muiden rahoituslaitosten kuin vakuutusyritysten toiminnan vakauden valvontaa. Nykysopimuksessa tämä edellyttää neuvostossa yksimielisyyttä. Suomen taholta ei yhdistetyn valvontavastuun tavoittelua unionissa ole pidetty tarkoituksenmukaisena, koska kyse on erittäin herkkäluonteisista kysymyksistä joilla on myös taloudellisia vaikutuksia. EKP:n keskuspankin perussääntöä voidaan puolestaan jatkossa muuttaa ministerineuvostossa määräenemmistöllä myös komission, ei vain EKP:n aloitteesta. Tämän on pelätty heikentävän keskuspankin asemaa. Suomen edustajat konventissa vastustivatkin näitä muutoksia.”
***
We have seen that in 2003 none of our sample of three governments wanted to approve the proposal by the European Convention to facilitate the creation of joint financial supervision at European level, under the auspices of the European Central Bank.
In the following instalment we look at how the IGC 2004 and the Constitutional Treaty treated the proposals in the draft Constitution.
What was, and given the current financial crisis, what should have been the response in 2004 and later?
Ralf Grahn
EU: Monetary policy IIa
Did the European Convention have anything to say about the basic objectives and tasks of the European System of Central Banks (ESCB) and the European Central Bank (ECB)?
***
Article III-77 of the draft Constitution, proposed by the European Convention, corresponds with Article 105 TEC, and it 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 2 ‘Monetary policy’.
First, we present the proposed contents. In the draft Treaty establishing a Constitution for Europe, Article III-77 on the objectives and basic tasks of the European System of Central Banks and the European Central Bank is found in OJ 18.7.2003 C 169/42:
Article III-77 Draft Constitution
1. The primary objective of the European System of Central Banks shall be to maintain price stability. Without prejudice to this objective, the European System of Central Banks shall support the general economic policies in the Union in order to contribute to the achievement of its objectives as laid down in Article I-3. The European System of Central Banks shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources, and in compliance with the principles set out in Article III-69.
2. The basic tasks to be carried out through the European System of Central Banks shall be:
(a) to define and implement the Union's monetary policy;
(b) to conduct foreign-exchange operations consistent with Article III-228;
(c) to hold and manage the official foreign reserves of the Member States;
(d) to promote the smooth operation of payment systems.
3. Paragraph 2(c) shall be without prejudice to the holding and management by the governments of Member States of foreign-exchange working balances.
4. The European Central Bank shall be consulted:
(a) on any proposed Union act in its fields of competence;
(b) by national authorities regarding any draft legislative provision in its fields of competence, but within the limits and under the conditions set out by the Council of Ministers in accordance with the procedure laid down in Article III-79(6).
The European Central Bank may submit opinions to the Union institutions, bodies or agencies or to national authorities on matters in its fields of competence.
5. The European System of Central Banks shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system.
6. European laws may confer upon the European Central Bank specific tasks concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings. Such laws shall be adopted after consultation of the European Central Bank.
***
The next post is going to look at some legal materials concerning the European Convention proposal.
Ralf Grahn
***
Article III-77 of the draft Constitution, proposed by the European Convention, corresponds with Article 105 TEC, and it 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 2 ‘Monetary policy’.
First, we present the proposed contents. In the draft Treaty establishing a Constitution for Europe, Article III-77 on the objectives and basic tasks of the European System of Central Banks and the European Central Bank is found in OJ 18.7.2003 C 169/42:
Article III-77 Draft Constitution
1. The primary objective of the European System of Central Banks shall be to maintain price stability. Without prejudice to this objective, the European System of Central Banks shall support the general economic policies in the Union in order to contribute to the achievement of its objectives as laid down in Article I-3. The European System of Central Banks shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources, and in compliance with the principles set out in Article III-69.
2. The basic tasks to be carried out through the European System of Central Banks shall be:
(a) to define and implement the Union's monetary policy;
(b) to conduct foreign-exchange operations consistent with Article III-228;
(c) to hold and manage the official foreign reserves of the Member States;
(d) to promote the smooth operation of payment systems.
3. Paragraph 2(c) shall be without prejudice to the holding and management by the governments of Member States of foreign-exchange working balances.
4. The European Central Bank shall be consulted:
(a) on any proposed Union act in its fields of competence;
(b) by national authorities regarding any draft legislative provision in its fields of competence, but within the limits and under the conditions set out by the Council of Ministers in accordance with the procedure laid down in Article III-79(6).
The European Central Bank may submit opinions to the Union institutions, bodies or agencies or to national authorities on matters in its fields of competence.
5. The European System of Central Banks shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system.
6. European laws may confer upon the European Central Bank specific tasks concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings. Such laws shall be adopted after consultation of the European Central Bank.
***
The next post is going to look at some legal materials concerning the European Convention proposal.
Ralf Grahn
Monday, 13 October 2008
EMU: Eurozone summit declaration
Today’s post ’EU: Monetary policy If’ said that the European Union lacks a proper political government and even an economic government. Yesteday’s Eurozone summit was a first concerted euro area attempt to bridge the institutional gap, and to remedy the financial crisis and to mitigate the economic downturn.
The response has been cautiously favourable to the principles put forward by the Eurozone leaders. Here is the text of the summit declaration (12 October 2008):
1) Financial systems contribute essentially to the well functioning of our economies and are therefore a necessary prerequisite for growth and a high level of employment. Millions of depositors have trusted their wealth to our financial institutions. The consequences of the current financial market crisis jeopardize the crucial economic role of the financial system.
2) Since the beginning of the crisis, we have acted to address the challenges posed to our financial system: we have committed ourselves to take decisive action and use all availables tools to support relevant institutions and prevent their failure and effectively acted in several cases ; we have increased transparency and disclosure on banks exposure ; we have enhanced retail deposit guarantee protection.
3) Further concerted action is urgently needed given the persistent problems of bank financing and the contagion from the financial crisis to the real economy.
4) We confirm today our commitment to act together in a decisive and comprehensive way in order to restore confidence and proper functioning of the financial system, aiming at restoring appropriate and efficient financing conditions for the economy.
In parallel, Member States agree to coordinate measures to address the consequences of the financial crisis on the real economy, in line with 7th of October Ecofin conclusions.
In particular, we welcome the EIB’s decision to mobilise 30 billions € to support European SME’s and its commitment to step up its ability to intervene in infrastructure projects.
5) As members of the Euro area, we share a common responsibility and have to contribute to a common European approach. We invite our European partners to adopt the following principles so that the European Union as a whole can act in a united manner and avoid that national measures adversely affect the functioning of the single market and the other member States.
This requires European Union and Euro area governments, central banks and supervisors to agree to a coordinated approach aiming at :
- ensuring appropriate liquidity conditions for financial institutions ;
- facilitating the funding of banks, which is currently constrained ;
- providing financial institutions with additional capital ressources so as to continue to ensure the proper financing of the economy ;
- allowing for an efficient recapitalisation of distressed banks ;
- ensuring sufficient flexibility in the implementation of accounting rules given current exceptional market circumstances ;
- enhancing cooperation procedures among European countries.
In the current exceptional circumstances, we stress the need for the Commission to continue to act quickly and apply flexibility in state aid decisions, continuing to uphold the principles of the single market and of the state aid regime.
Ensuring appropriate liquidity conditions for financial institutions.
6) We welcome the recent decision by the European Central Bank and other Central Banks in the world to cut their interest rates.
7) We also welcome the decisions by the European Central Bank to improve the conditions for the refinancing of banks and to provide more longer term funding.
We look forward to Central Banks considering all ways and means to react flexibly to the current market environment.
We welcome the intention of the ECB and the Eurosystem to react flexibly to the current market environment, in particular in considering to further improve its collateral framework with regard to the eligibility of commercial paper.
Facilitating the funding of banks, which is currently constrained.
8) With a view to complementing the actions taken by the European Central Bank in the interbank money market, the Governments of the Euro Area are ready to take proper action in a concerted and coordinated manner to improve market functioning over longer term maturities.
The objective of such initiatives should be to address funding problems of liquidity constrained solvent banks.
We welcome the initiatives put forward in some member states to facilitate medium term funding of banks notably through purchase of high quality assets or through swaps of government securities.
The worsening of financial conditions in the last four weeks requires additional coordinated actions. To this aim, Governments would make available for an interim period and on appropriate commercial terms, directly or indirectly, a Government guarantee, insurance, or other similar arrangements of new medium term (up to 5 years) bank senior debt issuance.
Depending on domestic market conditions in each country, actions could be targeted at some specific and relevant types of debt issuance.
In all cases, these actions will be designed in order to avoid any distortion in the level playing field and possible abuse at the expense of non beneficiaries of these arrangements.
As a consequence :
- the price of those instruments will reflect at least their true value with respect to normal market conditions ;
- all the financial institutions incorporated and operating in our countries and subsidiary of foreign institutions with substantial operations will be eligible, provided they meet the regulatory capital requirements and other non discriminatory objective criteria ;
- Governments may impose further conditions for the beneficiaries of these arrangements, including conditions to ensure an adequate support to real economy ;
- the scheme will be limited in amount, temporary and will be applied under close scrutiny of financial authorities, until December 31 2009.
While acting quickly as required by circumstances, we will coordinate in providing these guarantees as significant differences in national implementation could have a counter-productive effect, creating distortions in the global banking markets.
We will also work in cooperation with the European Central Bank so as to ensure consistency with the management of liquidity by the Eurosystem and compatibility with the operational framework of the Eurosystem.
Providing financial institutions with additional capital ressources so as to continue to ensure the proper financing of the economy.
9) So as to allow financial institutions to continue to ensure the proper financing of the Eurozone economy, each Member State will make available to financial institutions Tier 1 capital, e.g. by acquiring preferred shares or other instruments including non dilutive ones.
Price conditions shall take into account the market situation of each involved instution.
Governments commit themselves to provide capital when needed in appropriate volume while favouring by all available means the raising of private capital. Financial institutions should be obliged to accept additionnal restrictions, notably to preclude possible abuse of such arrangements at the expense of non beneficiaries.
10) Given the exceptional market circumstances, we urge national supervisors, in accordance with the spirit of Basel 2 rules, to implement prudential rules also with a view to stabilising the financial system.
Allowing for an efficient recapitalisation of distressed banks.
11) Governments remain committed to support the financial system and therefore to avoid the failure of relevant financial institutions, through appropriate means including recapitalization.
In doing so, we will be watchful regarding the interest of taxpayers and ensure that existing shareholders and management bear the due consequences of the intervention.
Emergency recapitalisation of a given institution shall be followed by an appropriate restructuring plan.Ensuring sufficient flexibility in the implementation of accounting rules given current exceptional market circumstances.
12) We welcome the recent initiatives of the Commission regarding conclusions of the 7th October Ecofin regarding the classification of financial instruments by banks between their trading and banking books, notably to ensure a level playing field with our competitors.
Under the current exceptional circumstances, financial and non-financial institutions should be allowed as necessary to value their assets consistently with risk of default assumptions rather than immediate market value which, in illiquid markets may no longer be appropriate.
We ask the competent autorities to take the next steps within the coming days.
Enhancing cooperation among European countries.
13) In such circumstances, efficient crisis management requires constant and immediate monitoring. We will therefore set up and strengthen procedures allowing the exchange of information between our Governments, the President of the European Council, the President of the European Commission, the President of the European Central Bank and the President of the Eurogroup.
We look forward the European Council on next Wednesday to setting up a mecanism to improve crisis managment between European countries.
***
14) The Ecofin Council with the support of the Commission and in cooperation with the European Central Bank will report in due time to the European Council on the implementation of these decisions.
***
Source:
http://www.ue2008.fr/PFUE/lang/en/accueil/PFUE-10_2008/PFUE-12.10.2008/sommet_pays_zone_euro_declaration_plan_action_concertee
Read and judge for yourselves.
Ralf Grahn
The response has been cautiously favourable to the principles put forward by the Eurozone leaders. Here is the text of the summit declaration (12 October 2008):
1) Financial systems contribute essentially to the well functioning of our economies and are therefore a necessary prerequisite for growth and a high level of employment. Millions of depositors have trusted their wealth to our financial institutions. The consequences of the current financial market crisis jeopardize the crucial economic role of the financial system.
2) Since the beginning of the crisis, we have acted to address the challenges posed to our financial system: we have committed ourselves to take decisive action and use all availables tools to support relevant institutions and prevent their failure and effectively acted in several cases ; we have increased transparency and disclosure on banks exposure ; we have enhanced retail deposit guarantee protection.
3) Further concerted action is urgently needed given the persistent problems of bank financing and the contagion from the financial crisis to the real economy.
4) We confirm today our commitment to act together in a decisive and comprehensive way in order to restore confidence and proper functioning of the financial system, aiming at restoring appropriate and efficient financing conditions for the economy.
In parallel, Member States agree to coordinate measures to address the consequences of the financial crisis on the real economy, in line with 7th of October Ecofin conclusions.
In particular, we welcome the EIB’s decision to mobilise 30 billions € to support European SME’s and its commitment to step up its ability to intervene in infrastructure projects.
5) As members of the Euro area, we share a common responsibility and have to contribute to a common European approach. We invite our European partners to adopt the following principles so that the European Union as a whole can act in a united manner and avoid that national measures adversely affect the functioning of the single market and the other member States.
This requires European Union and Euro area governments, central banks and supervisors to agree to a coordinated approach aiming at :
- ensuring appropriate liquidity conditions for financial institutions ;
- facilitating the funding of banks, which is currently constrained ;
- providing financial institutions with additional capital ressources so as to continue to ensure the proper financing of the economy ;
- allowing for an efficient recapitalisation of distressed banks ;
- ensuring sufficient flexibility in the implementation of accounting rules given current exceptional market circumstances ;
- enhancing cooperation procedures among European countries.
In the current exceptional circumstances, we stress the need for the Commission to continue to act quickly and apply flexibility in state aid decisions, continuing to uphold the principles of the single market and of the state aid regime.
Ensuring appropriate liquidity conditions for financial institutions.
6) We welcome the recent decision by the European Central Bank and other Central Banks in the world to cut their interest rates.
7) We also welcome the decisions by the European Central Bank to improve the conditions for the refinancing of banks and to provide more longer term funding.
We look forward to Central Banks considering all ways and means to react flexibly to the current market environment.
We welcome the intention of the ECB and the Eurosystem to react flexibly to the current market environment, in particular in considering to further improve its collateral framework with regard to the eligibility of commercial paper.
Facilitating the funding of banks, which is currently constrained.
8) With a view to complementing the actions taken by the European Central Bank in the interbank money market, the Governments of the Euro Area are ready to take proper action in a concerted and coordinated manner to improve market functioning over longer term maturities.
The objective of such initiatives should be to address funding problems of liquidity constrained solvent banks.
We welcome the initiatives put forward in some member states to facilitate medium term funding of banks notably through purchase of high quality assets or through swaps of government securities.
The worsening of financial conditions in the last four weeks requires additional coordinated actions. To this aim, Governments would make available for an interim period and on appropriate commercial terms, directly or indirectly, a Government guarantee, insurance, or other similar arrangements of new medium term (up to 5 years) bank senior debt issuance.
Depending on domestic market conditions in each country, actions could be targeted at some specific and relevant types of debt issuance.
In all cases, these actions will be designed in order to avoid any distortion in the level playing field and possible abuse at the expense of non beneficiaries of these arrangements.
As a consequence :
- the price of those instruments will reflect at least their true value with respect to normal market conditions ;
- all the financial institutions incorporated and operating in our countries and subsidiary of foreign institutions with substantial operations will be eligible, provided they meet the regulatory capital requirements and other non discriminatory objective criteria ;
- Governments may impose further conditions for the beneficiaries of these arrangements, including conditions to ensure an adequate support to real economy ;
- the scheme will be limited in amount, temporary and will be applied under close scrutiny of financial authorities, until December 31 2009.
While acting quickly as required by circumstances, we will coordinate in providing these guarantees as significant differences in national implementation could have a counter-productive effect, creating distortions in the global banking markets.
We will also work in cooperation with the European Central Bank so as to ensure consistency with the management of liquidity by the Eurosystem and compatibility with the operational framework of the Eurosystem.
Providing financial institutions with additional capital ressources so as to continue to ensure the proper financing of the economy.
9) So as to allow financial institutions to continue to ensure the proper financing of the Eurozone economy, each Member State will make available to financial institutions Tier 1 capital, e.g. by acquiring preferred shares or other instruments including non dilutive ones.
Price conditions shall take into account the market situation of each involved instution.
Governments commit themselves to provide capital when needed in appropriate volume while favouring by all available means the raising of private capital. Financial institutions should be obliged to accept additionnal restrictions, notably to preclude possible abuse of such arrangements at the expense of non beneficiaries.
10) Given the exceptional market circumstances, we urge national supervisors, in accordance with the spirit of Basel 2 rules, to implement prudential rules also with a view to stabilising the financial system.
Allowing for an efficient recapitalisation of distressed banks.
11) Governments remain committed to support the financial system and therefore to avoid the failure of relevant financial institutions, through appropriate means including recapitalization.
In doing so, we will be watchful regarding the interest of taxpayers and ensure that existing shareholders and management bear the due consequences of the intervention.
Emergency recapitalisation of a given institution shall be followed by an appropriate restructuring plan.Ensuring sufficient flexibility in the implementation of accounting rules given current exceptional market circumstances.
12) We welcome the recent initiatives of the Commission regarding conclusions of the 7th October Ecofin regarding the classification of financial instruments by banks between their trading and banking books, notably to ensure a level playing field with our competitors.
Under the current exceptional circumstances, financial and non-financial institutions should be allowed as necessary to value their assets consistently with risk of default assumptions rather than immediate market value which, in illiquid markets may no longer be appropriate.
We ask the competent autorities to take the next steps within the coming days.
Enhancing cooperation among European countries.
13) In such circumstances, efficient crisis management requires constant and immediate monitoring. We will therefore set up and strengthen procedures allowing the exchange of information between our Governments, the President of the European Council, the President of the European Commission, the President of the European Central Bank and the President of the Eurogroup.
We look forward the European Council on next Wednesday to setting up a mecanism to improve crisis managment between European countries.
***
14) The Ecofin Council with the support of the Commission and in cooperation with the European Central Bank will report in due time to the European Council on the implementation of these decisions.
***
Source:
http://www.ue2008.fr/PFUE/lang/en/accueil/PFUE-10_2008/PFUE-12.10.2008/sommet_pays_zone_euro_declaration_plan_action_concertee
Read and judge for yourselves.
Ralf Grahn
EU: Monetary policy If
The European Union lacks a real general (political) government. The EU even lacks a proper economic government, but there is a monetary government in place for 320 million EU citizens in 15 member states: the Eurosystem, constituted by the European Central Bank (ECB) and the national central banks of the euro area, within the broader European System of Central Banks (ESCB).
***
The objectives of economic and monetary policy are laid out in Article 4 of the Treaty establishing the European Community (TEC).
The European Union, or more precisely, the European Community (EC), has set out common goals for the member states and the EC: an economic policy based on close coordination of member states’ economic policies, on the internal market and on common objectives. It is based on an open market economy with free competition.
These activities include the single currency (euro) and the conduct of a single monetary policy and exchange-rate policy with the primary objective to maintain price stability and, without prejudice to this objective, to support the general economic policies in the Community, in accordance with the principle of an open market economy with free competition.
The guiding principles for the Member States and the Community are: stable prices, sound public finances and monetary conditions and a sustainable balance of payments.
***
Despite the common objectives, Paul Craig and Gráinne de Búrca offer a thoughtful reminder of the tensions between economic and monetary policy in ‘EU Law ─ Text, Cases, and Materials (Oxford University Press, 4th edition, 2007), page 741:
“The relationship between monetary policy and broader economic policy remains problematic. The EC has far greater control over monetary policy, as encapsulated in the Euro and the attendant ECB, than it does over broader economic policy. This is so notwithstanding the stability and growth pact. The EC is nonetheless caught in a conundrum in this respect. It is generally recognised that there is an intimate relationship between monetary policy and economic policy; if countries run long-term budgetary deficits then this will cause the currency markets to take a poor view of the value of the Euro. There are however political difficulties for the EC in extending control over national economic policy, or even in making full use of the existing regime, lest it be accused of excessive centralization of economic decision-making.”
***
Article 8 TEC (ex Article 4a) sets out the basic institutional rules for monetary policy, with the establishment of the European system of central banks and the European Central Bank (OJ 29.12.2006 C 321/47):
Article 8 TEC
A European system of central banks (hereinafter referred to as ‘ESCB’) and a European Central Bank (hereinafter referred to as ‘ECB’) shall be established in accordance with the procedures laid down in this Treaty; they shall act within the limits of the powers conferred upon them by this Treaty and by the Statute of the ESCB and of the ECB (hereinafter referred to as ‘Statute of the ESCB’) annexed thereto.
***
Eurosystem and euro area (Eurozone)
The Governing Council of the European Central Bank has agreed to use the term ‘Eurosystem’ to denote those components of the European System of Central Banks that carry out its basic tasks, i.e. the European Central Bank and the national central banks of those Member States which have adopted the single currency in accordance with the Treaty establishing the European Community.
I am going to use ‘euro area’ and Eurozone interchangeably.
***
Objectives of monetary policy
Article 105 TEC (ex Article 105) sets out the objectives of EC monetary policy and mandates the European Central Bank (ECB) and the broader European System of Central Banks (ESCB) to implement EC monetary policy (OJ 29.12.2006 C 321 E/87).
Price stability
The primary objective of the ESCB is to maintain price stability (Article 105(1) TEC), meaning a low level of inflation.
The ECB’s Governing Council has defined price stability as "a year-on-year increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2%. Price stability is to be maintained over the medium term".
The Governing Council has also clarified that, in the pursuit of price stability, it aims to maintain inflation rates below, but close to, 2% over the medium term.
Article 2 of the Protocol (No 18) on the Statute of the European System of Central Banks and the European Central Bank, as presented in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/256, reiterates the basic treaty provisions on the objectives. .
***
Secondary objectives
The other objectives of the Eurosystem are clearly secondary to price stability.
Without prejudice to the objective of price stability, the ESCB shall support the general economic policies in the Community with a view to contributing to the achievement of the objectives of the Community as laid down in Article 2 TEC.
The ESCB shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources, and in compliance with the principles set out in Article 4 TEC.
***
Tasks of the Eurosystem
The basic tasks to be carried out through the ESCB are laid out in Article 105(2) and in Article 105(5) TEC.
The tasks are repeated in Article 3 of the Statute.
***
The Eurosystem (ESCB) defines and implements the monetary policy of the Community.
Chapter 4 of the Statute ‘Monetary functions and operations of the ESCB’ (Articles 17 to 24) define various operations.
For more detail, see the consolidated version of Guideline of the European Central Bank of 31 August 2000 on monetary policy instruments and procedures of the Eurosystem (ECB/2000/7)
(OJ 11.12.2000 L 310/1):
http://www.ecb.europa.eu/ecb/legal/pdf/02000x0776-20080101-en.pdf
***
The Eurosystem conducts foreign-exchange operations consistent with the provisions of Article 111 TEC.
***
Foreign reserves
The Eurosystem holds and manages the official foreign reserves of the Eurozone member states.
See the ECB web page ‘Foreign reserves management/operations’:
http://www.ecb.europa.eu/ecb/legal/107663/1011/html/index.en.html
***
Target2 payment system
The Eurosystem promotes the smooth operation of payment systems.
See Guideline of the ECB of 26 April 2007 on a Trans-European Automated Real-time Gross settlement Express Transfer system (TARGET2) (ECB/2007/2), OJ 8.9.2007 L 237/1, and
Decision of the ECB of 24 July 2007 concerning the terms and conditions of TARGET2-ECB (ECB/2007/7), OJ 8.9.2007 L 237/71.
***
Prudential supervision
Pursuant to Article 105(5), the ESCB shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system.
Article 25 of the Statute places clear limits on the ECB’s powers to act independently, stressing the contributory role:
Article 25 ECB Statute
25.1. The ECB may offer advice to and be consulted by the Council, the Commission and the
competent authorities of the Member States on the scope and implementation of Community
legislation relating to the prudential supervision of credit institutions and to the stability of the
financial system.
25.2. In accordance with any decision of the Council under Article 105(6) of this Treaty, the
ECB may perform specific tasks concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings.
***
Advisory functions
Mandatory consultation
According to Article 105(4) TEC, the ECB shall be consulted on future legislation by the European Community and the national authorities, as the case may be:
— on any proposed Community act in its fields of competence,
— by national authorities regarding any draft legislative provision in its fields of competence, but within the limits and under the conditions set out by the Council in accordance with the procedure laid down in Article 107(6).
Own accord opinions
The ECB may submit opinions to the appropriate Community institutions or bodies or to national authorities on matters in its fields of competence.
These functions are echoed in Article 4 of the Statute, with a reference to Article 42 on complementary legislation.
***
Article 105(6) TEC: The Council may, acting unanimously on a proposal from the Commission and after consulting the ECB and after receiving the assent of the European Parliament, confer upon the ECB specific tasks concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings.
***
Statistical information
Article 5 of the Statute, the ECB, assisted by the national central banks, collects necessary statistical information.
***
International cooperation
Article 6 of the Statute sets out that the ECB, within the ESCB area of competence, decides how the ESCB shall be represented. The ECB and, subject to its approval, the national central banks may participate in international monetary institutions.
This is without prejudice to Article 111(4) TEC on the Council’s powers to decide on the position of the EC at international level as regards issues of particular relevance to economic and monetary union and on its representation.
***
Reporting commitments
According to Statute Article 15 the ECB has an obligation to publish reports and statements free of charge to interested parties, i.a. quarterly reports, consolidated weekly financial statements and annual reports.
Basic information about the European Central Bank and its activities is abundant and well ordered on:
http://www.ecb.europa.eu
Ralf Grahn
***
The objectives of economic and monetary policy are laid out in Article 4 of the Treaty establishing the European Community (TEC).
The European Union, or more precisely, the European Community (EC), has set out common goals for the member states and the EC: an economic policy based on close coordination of member states’ economic policies, on the internal market and on common objectives. It is based on an open market economy with free competition.
These activities include the single currency (euro) and the conduct of a single monetary policy and exchange-rate policy with the primary objective to maintain price stability and, without prejudice to this objective, to support the general economic policies in the Community, in accordance with the principle of an open market economy with free competition.
The guiding principles for the Member States and the Community are: stable prices, sound public finances and monetary conditions and a sustainable balance of payments.
***
Despite the common objectives, Paul Craig and Gráinne de Búrca offer a thoughtful reminder of the tensions between economic and monetary policy in ‘EU Law ─ Text, Cases, and Materials (Oxford University Press, 4th edition, 2007), page 741:
“The relationship between monetary policy and broader economic policy remains problematic. The EC has far greater control over monetary policy, as encapsulated in the Euro and the attendant ECB, than it does over broader economic policy. This is so notwithstanding the stability and growth pact. The EC is nonetheless caught in a conundrum in this respect. It is generally recognised that there is an intimate relationship between monetary policy and economic policy; if countries run long-term budgetary deficits then this will cause the currency markets to take a poor view of the value of the Euro. There are however political difficulties for the EC in extending control over national economic policy, or even in making full use of the existing regime, lest it be accused of excessive centralization of economic decision-making.”
***
Article 8 TEC (ex Article 4a) sets out the basic institutional rules for monetary policy, with the establishment of the European system of central banks and the European Central Bank (OJ 29.12.2006 C 321/47):
Article 8 TEC
A European system of central banks (hereinafter referred to as ‘ESCB’) and a European Central Bank (hereinafter referred to as ‘ECB’) shall be established in accordance with the procedures laid down in this Treaty; they shall act within the limits of the powers conferred upon them by this Treaty and by the Statute of the ESCB and of the ECB (hereinafter referred to as ‘Statute of the ESCB’) annexed thereto.
***
Eurosystem and euro area (Eurozone)
The Governing Council of the European Central Bank has agreed to use the term ‘Eurosystem’ to denote those components of the European System of Central Banks that carry out its basic tasks, i.e. the European Central Bank and the national central banks of those Member States which have adopted the single currency in accordance with the Treaty establishing the European Community.
I am going to use ‘euro area’ and Eurozone interchangeably.
***
Objectives of monetary policy
Article 105 TEC (ex Article 105) sets out the objectives of EC monetary policy and mandates the European Central Bank (ECB) and the broader European System of Central Banks (ESCB) to implement EC monetary policy (OJ 29.12.2006 C 321 E/87).
Price stability
The primary objective of the ESCB is to maintain price stability (Article 105(1) TEC), meaning a low level of inflation.
The ECB’s Governing Council has defined price stability as "a year-on-year increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2%. Price stability is to be maintained over the medium term".
The Governing Council has also clarified that, in the pursuit of price stability, it aims to maintain inflation rates below, but close to, 2% over the medium term.
Article 2 of the Protocol (No 18) on the Statute of the European System of Central Banks and the European Central Bank, as presented in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/256, reiterates the basic treaty provisions on the objectives. .
***
Secondary objectives
The other objectives of the Eurosystem are clearly secondary to price stability.
Without prejudice to the objective of price stability, the ESCB shall support the general economic policies in the Community with a view to contributing to the achievement of the objectives of the Community as laid down in Article 2 TEC.
The ESCB shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources, and in compliance with the principles set out in Article 4 TEC.
***
Tasks of the Eurosystem
The basic tasks to be carried out through the ESCB are laid out in Article 105(2) and in Article 105(5) TEC.
The tasks are repeated in Article 3 of the Statute.
***
The Eurosystem (ESCB) defines and implements the monetary policy of the Community.
Chapter 4 of the Statute ‘Monetary functions and operations of the ESCB’ (Articles 17 to 24) define various operations.
For more detail, see the consolidated version of Guideline of the European Central Bank of 31 August 2000 on monetary policy instruments and procedures of the Eurosystem (ECB/2000/7)
(OJ 11.12.2000 L 310/1):
http://www.ecb.europa.eu/ecb/legal/pdf/02000x0776-20080101-en.pdf
***
The Eurosystem conducts foreign-exchange operations consistent with the provisions of Article 111 TEC.
***
Foreign reserves
The Eurosystem holds and manages the official foreign reserves of the Eurozone member states.
See the ECB web page ‘Foreign reserves management/operations’:
http://www.ecb.europa.eu/ecb/legal/107663/1011/html/index.en.html
***
Target2 payment system
The Eurosystem promotes the smooth operation of payment systems.
See Guideline of the ECB of 26 April 2007 on a Trans-European Automated Real-time Gross settlement Express Transfer system (TARGET2) (ECB/2007/2), OJ 8.9.2007 L 237/1, and
Decision of the ECB of 24 July 2007 concerning the terms and conditions of TARGET2-ECB (ECB/2007/7), OJ 8.9.2007 L 237/71.
***
Prudential supervision
Pursuant to Article 105(5), the ESCB shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system.
Article 25 of the Statute places clear limits on the ECB’s powers to act independently, stressing the contributory role:
Article 25 ECB Statute
25.1. The ECB may offer advice to and be consulted by the Council, the Commission and the
competent authorities of the Member States on the scope and implementation of Community
legislation relating to the prudential supervision of credit institutions and to the stability of the
financial system.
25.2. In accordance with any decision of the Council under Article 105(6) of this Treaty, the
ECB may perform specific tasks concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings.
***
Advisory functions
Mandatory consultation
According to Article 105(4) TEC, the ECB shall be consulted on future legislation by the European Community and the national authorities, as the case may be:
— on any proposed Community act in its fields of competence,
— by national authorities regarding any draft legislative provision in its fields of competence, but within the limits and under the conditions set out by the Council in accordance with the procedure laid down in Article 107(6).
Own accord opinions
The ECB may submit opinions to the appropriate Community institutions or bodies or to national authorities on matters in its fields of competence.
These functions are echoed in Article 4 of the Statute, with a reference to Article 42 on complementary legislation.
***
Article 105(6) TEC: The Council may, acting unanimously on a proposal from the Commission and after consulting the ECB and after receiving the assent of the European Parliament, confer upon the ECB specific tasks concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings.
***
Statistical information
Article 5 of the Statute, the ECB, assisted by the national central banks, collects necessary statistical information.
***
International cooperation
Article 6 of the Statute sets out that the ECB, within the ESCB area of competence, decides how the ESCB shall be represented. The ECB and, subject to its approval, the national central banks may participate in international monetary institutions.
This is without prejudice to Article 111(4) TEC on the Council’s powers to decide on the position of the EC at international level as regards issues of particular relevance to economic and monetary union and on its representation.
***
Reporting commitments
According to Statute Article 15 the ECB has an obligation to publish reports and statements free of charge to interested parties, i.a. quarterly reports, consolidated weekly financial statements and annual reports.
Basic information about the European Central Bank and its activities is abundant and well ordered on:
http://www.ecb.europa.eu
Ralf Grahn
Sunday, 12 October 2008
EU: Monetary policy Ie
More legal materials on economic and monetary union (EMU), especially monetary policy, for students of history, politics, economics and law, as well as for interested EU citizens.
There are a few declarations relevant to the EC Treaty chapter on monetary policy. The declarations are politically (not legally) binding, and they have been annexed to the final acts of the intergovernmental conferences leading to the treaties of Maastricht, Amsterdam and Nice, respectively.
The European Central Bank (ECB) has a convenient web page on offer:
http://www.ecb.europa.eu/ecb/legal/1341/96687/html/index.en.html
If you are interested in a broader view of the declarations:
The latest consolidated version of the treaties (OJ 29.12.2006 C 321 E) does not contain the joint declarations or the unilateral declarations by one or more member states, but the Constitutional Treaty offers a fair approximation of the declarations seen as relevant today (OJ 16.12.2004 C 310).
The collected and updated declarations annexed to the Final Act of the Intergovernmental Conference which adopted the Treaty of Lisbon are another approximative source of declarations still seen as relevant. The original Lisbon Treaty (OJ 17.12.2007 C 306) and the consolidated version (OJ 9.5.2008 C 115) differ as to the numbering of Articles.
***
Declaration on Article 111 (ex Article 109) of the Treaty establishing the European Community OJ 29.7.1992 C 191/99 explained that the use of the term ‘formal agreements’ is not intended to create a new category of international agreement within the meaning of Community law.
***
Declaration on Article 111 (ex Article 109), 174 (ex Article 130r) and 181 (ex Article 130y) of the Treaty establishing the European Community, OJ 29.7.1992 C 191/100, where the intergovernmental conference considered that the provisions did not affect the principles resulting from the judgment handed down in the AETR case.
***
Declaration on disputes between the ECB and the EMI and their servants, OJ 29.7.1992 C 191/108, where the intergovernmental conference invited the institutions to adapt the relevant rules to let the Court of First Instance hear this class of actions.
***
Declaration on the quality of the drafting of Community legislation, OJ 10.11.1997 C 340/139, on common guidelines for improving the quality of the drafting of Community legislation and on the acceleration of codification of legislative texts.
***
Declaration on the provisions relating to transparency, access to documents and the fight against fraud, OJ 10.11.1997 C 340/140, placed the Treaty establishing the European Community as the model to be followed by the institutions when they acted within the context of the Treaty establishing the European Coal and Steel Community and the Treaty establishing the European Atomic Energy Community.
***
Declaration on Article 111 of the Treaty establishing the European Community, OJ 10.3.2001 C 80/78, where the intergovernmental conference agreed that procedures shall be such as to enable all the Member States in the euro area to be fully involved in each stage of preparing the position of the Community at international level as regards issues of particular relevance to economic and monetary union.
***
At treaty level, legally binding and worth mentioning again, we have the Protocol on the Statute of the European System of Central Banks and of the ECB (original OJ 29.7.1992 C 191/68)
In the consolidated version of the treaties, the 53 Articles of Protocol (No 18) on the Statute of the European System of Central Banks and of the ECB repeat and elaborate on the treaty provisions; located in OJ 29.12.2006 C 321 E/256─280.
The European Central Bank offers a web page with various versions, proposals and amendments:
http://www.ecb.europa.eu/ecb/legal/1341/1343/html/index.en.html
In the latest consolidated version of the treaties in force, the Statute is located in Protocol (No 18) in OJ 29.12.2006 C 321 E/256.
Not in force:
In the Treaty establishing a Constitution for Europe, we find the statute in Protocol (No 4), OJ 16.12.2004 C 310/225.
In the original Lisbon Treaty, look for Protocols to be annexed to the Treaty of Lisbon, IGC Protocol No 1 amending the Protocols annexed to the Treaty on European Union, to the Treaty establishing the European Community and/or to the Treaty establishing the European Atomic Energy Community, OJ 17.12.2007 C 306/163 (horizontal amendments) and from page 170 (specific amendments).
Protocol (No 4) on the statute of the European System of Central Banks and of the European Central Bank is presented in the consolidated version of the Treaty of Lisbon, OJ 9.5.2008 C 115/230.
Ralf Grahn
There are a few declarations relevant to the EC Treaty chapter on monetary policy. The declarations are politically (not legally) binding, and they have been annexed to the final acts of the intergovernmental conferences leading to the treaties of Maastricht, Amsterdam and Nice, respectively.
The European Central Bank (ECB) has a convenient web page on offer:
http://www.ecb.europa.eu/ecb/legal/1341/96687/html/index.en.html
If you are interested in a broader view of the declarations:
The latest consolidated version of the treaties (OJ 29.12.2006 C 321 E) does not contain the joint declarations or the unilateral declarations by one or more member states, but the Constitutional Treaty offers a fair approximation of the declarations seen as relevant today (OJ 16.12.2004 C 310).
The collected and updated declarations annexed to the Final Act of the Intergovernmental Conference which adopted the Treaty of Lisbon are another approximative source of declarations still seen as relevant. The original Lisbon Treaty (OJ 17.12.2007 C 306) and the consolidated version (OJ 9.5.2008 C 115) differ as to the numbering of Articles.
***
Declaration on Article 111 (ex Article 109) of the Treaty establishing the European Community OJ 29.7.1992 C 191/99 explained that the use of the term ‘formal agreements’ is not intended to create a new category of international agreement within the meaning of Community law.
***
Declaration on Article 111 (ex Article 109), 174 (ex Article 130r) and 181 (ex Article 130y) of the Treaty establishing the European Community, OJ 29.7.1992 C 191/100, where the intergovernmental conference considered that the provisions did not affect the principles resulting from the judgment handed down in the AETR case.
***
Declaration on disputes between the ECB and the EMI and their servants, OJ 29.7.1992 C 191/108, where the intergovernmental conference invited the institutions to adapt the relevant rules to let the Court of First Instance hear this class of actions.
***
Declaration on the quality of the drafting of Community legislation, OJ 10.11.1997 C 340/139, on common guidelines for improving the quality of the drafting of Community legislation and on the acceleration of codification of legislative texts.
***
Declaration on the provisions relating to transparency, access to documents and the fight against fraud, OJ 10.11.1997 C 340/140, placed the Treaty establishing the European Community as the model to be followed by the institutions when they acted within the context of the Treaty establishing the European Coal and Steel Community and the Treaty establishing the European Atomic Energy Community.
***
Declaration on Article 111 of the Treaty establishing the European Community, OJ 10.3.2001 C 80/78, where the intergovernmental conference agreed that procedures shall be such as to enable all the Member States in the euro area to be fully involved in each stage of preparing the position of the Community at international level as regards issues of particular relevance to economic and monetary union.
***
At treaty level, legally binding and worth mentioning again, we have the Protocol on the Statute of the European System of Central Banks and of the ECB (original OJ 29.7.1992 C 191/68)
In the consolidated version of the treaties, the 53 Articles of Protocol (No 18) on the Statute of the European System of Central Banks and of the ECB repeat and elaborate on the treaty provisions; located in OJ 29.12.2006 C 321 E/256─280.
The European Central Bank offers a web page with various versions, proposals and amendments:
http://www.ecb.europa.eu/ecb/legal/1341/1343/html/index.en.html
In the latest consolidated version of the treaties in force, the Statute is located in Protocol (No 18) in OJ 29.12.2006 C 321 E/256.
Not in force:
In the Treaty establishing a Constitution for Europe, we find the statute in Protocol (No 4), OJ 16.12.2004 C 310/225.
In the original Lisbon Treaty, look for Protocols to be annexed to the Treaty of Lisbon, IGC Protocol No 1 amending the Protocols annexed to the Treaty on European Union, to the Treaty establishing the European Community and/or to the Treaty establishing the European Atomic Energy Community, OJ 17.12.2007 C 306/163 (horizontal amendments) and from page 170 (specific amendments).
Protocol (No 4) on the statute of the European System of Central Banks and of the European Central Bank is presented in the consolidated version of the Treaty of Lisbon, OJ 9.5.2008 C 115/230.
Ralf Grahn
Saturday, 11 October 2008
Miffed at tiff
Fellow-bloggers, I am asking for your help.
The Eur-Lex portal offers us the founding Treaties of Rome and later amending treaties, but the older ones are in tiff format, which my computer does not read spontaneously.
What should I do in order to download and to read the older treaties as they were originally?
Or do you know where the English texts (and other language versions) of the original treaties can be located elsewhere, preferably as pdf files?
Ralf Grahn
The Eur-Lex portal offers us the founding Treaties of Rome and later amending treaties, but the older ones are in tiff format, which my computer does not read spontaneously.
What should I do in order to download and to read the older treaties as they were originally?
Or do you know where the English texts (and other language versions) of the original treaties can be located elsewhere, preferably as pdf files?
Ralf Grahn
EU: Monetary policy Id
At the outset of the chapter on monetary policy, we mention the treaty level provisions relevant to the European System of Central Banks (ESCB) and the European Central Bank (ECB), as set out in protocols. Originally, most of the protocols were annexed to the Treaty on European Union (Maastricht Treaty), and they can be accessed through the ECB web page ‘Relevant Protocols annexed to the Treaties’:
http://www.ecb.europa.eu/ecb/legal/1341/96667/html/index.en.html
Supposing that you work with the latest consolidated version of the treaties, ‘Consolidated versions of the Treaty on European Union and of the Treaty establishing the European Community’, I looked for the protocols as presented in the Official Journal of the European Union, OJ 29.12.2006 C 321 E, where the protocols are found in the different treaty languages from page 187 onwards. Here is the address to search for the desired OJ number:
http://eur-lex.europa.eu/JOIndex.do?ihmlang=en
***
Protocol on the Statute of the European System of Central Banks and of the ECB (original OJ 29.7.1992 C 191/68)
In the consolidated version of the treaties, the 53 Articles of Protocol (No 18) on the Statute of the European System of Central Banks and of the ECB repeat and elaborate on the treaty provisions; located in OJ 29.12.2006/256─280.
***
Protocol on the excessive deficit procedure (original OJ 29.7.1992 C 191/84)
Protocol (No 20) on the excessive deficit procedure, with i.a. the (maximum) reference values: government deficit 3 % of GDP and government debt 60 % of GDP, in OJ 29.12.2006/293─294.
***
Protocol on the convergence criteria referred to in Article 121 (ex Article 109) of the Treaty establishing the European Community (original OJ 29.7.1992 C 191/85)
Protocol (No 21) on the convergence criteria referred to in Article 121 of the Treaty establishing the European Community, with the following criteria defined: price stability, government budgetary position, participation in the exchange-rate mechanism and convergence of interest rates; OJ 29.12.2006/295─296.
***
Protocol on the privileges and immunities of the European Communities of 8 April 1965 (unofficial consolidated version 1.8.2003)
Protocol (No 36) on the privileges and immunities of the European Communities, with the European Central Bank added in Article 23; OJ 29.12.2006/318─324.
***
Protocol on Denmark (original OJ 29.7.1992 C 191/86)
Protocol (No 22) on Denmark allows he National Bank of Denmark to carry out carry out its existing tasks concerning those parts of the Kingdom of Denmark which are not part of the Community (in other words, the Faroe Islands and Greenland); OJ 29.12.2006/297.
***
Protocol on Portugal (original OJ 29.7.1992 C 191/86)
Protocol (No 23) on Portugal, whereby Portugal was authorised to maintain the facility afforded to the autonomous regions of Azores and Madeira to benefit from an interest-free credit facility with the Banco de Portugal under the terms established by existing Portuguese law, but Portugal committed itself to pursue its best endeavours in order to put an end to the as soon as possible; OJ 29.12.2006/297.
***
Protocol on the transition to the third stage of economic and monetary union (original OJ 29.7.1992 C 191/87)
Protocol (No 24) on the transition to the third stage of economic and monetary union, where the member states declared their respect the will for the Community to enter swiftly into the third stage, and to enable the Community to enter the third stage irrevocably on 1 January 1999 and to enable the ECB and the ESCB to start their full functioning from this date; OJ 29.12.2006/298.
***
Protocol on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland (original OJ 29.7.1992 C 191/87)
Protocol (No 25) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland, where the member states recognised that the United Kingdom shall not be obliged or committed to move to the third stage of economic and monetary union without a separate decision to do so by its government and parliament, and set out the procedures and limitations caused by the UK opt-out; OJ 29.12.2006/299─301.
***
Protocol on certain provisions relating to Denmark (original OJ 29.7.1992 C 191/89)
Protocol (No 26) on certain provisions relating to Denmark, which acknowledged the Danish exemption from participation in the third stage of economic and monetary union (one of the four Maastricht opt-outs by Denmark); OJ 29.12.2006/302.
***
Protocol on France (original OJ 29.7.1992 C 191/90)
Protocol (No 27) on France, which provided that France will keep the privilege of monetary emission in its overseas territories under the terms established by its national laws, and will be solely entitled to determine the parity of the CFP franc; OJ 29.12.2006/303.
***
Protocol on the location of the seats of the institutions and of certain bodies and departments of the European Communities and of Europol (OJ 10.11.1997 C 340/112)
Protocol (No 8) on the location of the seats of the institutions and of certain bodies and departments of the European Communities and of Europol, with paragraph (i) apportioning the European Monetary Institute and the European Central Bank to have their seat in Frankfurt (am Main); OJ 29.12.2006/226.
Ralf Grahn
http://www.ecb.europa.eu/ecb/legal/1341/96667/html/index.en.html
Supposing that you work with the latest consolidated version of the treaties, ‘Consolidated versions of the Treaty on European Union and of the Treaty establishing the European Community’, I looked for the protocols as presented in the Official Journal of the European Union, OJ 29.12.2006 C 321 E, where the protocols are found in the different treaty languages from page 187 onwards. Here is the address to search for the desired OJ number:
http://eur-lex.europa.eu/JOIndex.do?ihmlang=en
***
Protocol on the Statute of the European System of Central Banks and of the ECB (original OJ 29.7.1992 C 191/68)
In the consolidated version of the treaties, the 53 Articles of Protocol (No 18) on the Statute of the European System of Central Banks and of the ECB repeat and elaborate on the treaty provisions; located in OJ 29.12.2006/256─280.
***
Protocol on the excessive deficit procedure (original OJ 29.7.1992 C 191/84)
Protocol (No 20) on the excessive deficit procedure, with i.a. the (maximum) reference values: government deficit 3 % of GDP and government debt 60 % of GDP, in OJ 29.12.2006/293─294.
***
Protocol on the convergence criteria referred to in Article 121 (ex Article 109) of the Treaty establishing the European Community (original OJ 29.7.1992 C 191/85)
Protocol (No 21) on the convergence criteria referred to in Article 121 of the Treaty establishing the European Community, with the following criteria defined: price stability, government budgetary position, participation in the exchange-rate mechanism and convergence of interest rates; OJ 29.12.2006/295─296.
***
Protocol on the privileges and immunities of the European Communities of 8 April 1965 (unofficial consolidated version 1.8.2003)
Protocol (No 36) on the privileges and immunities of the European Communities, with the European Central Bank added in Article 23; OJ 29.12.2006/318─324.
***
Protocol on Denmark (original OJ 29.7.1992 C 191/86)
Protocol (No 22) on Denmark allows he National Bank of Denmark to carry out carry out its existing tasks concerning those parts of the Kingdom of Denmark which are not part of the Community (in other words, the Faroe Islands and Greenland); OJ 29.12.2006/297.
***
Protocol on Portugal (original OJ 29.7.1992 C 191/86)
Protocol (No 23) on Portugal, whereby Portugal was authorised to maintain the facility afforded to the autonomous regions of Azores and Madeira to benefit from an interest-free credit facility with the Banco de Portugal under the terms established by existing Portuguese law, but Portugal committed itself to pursue its best endeavours in order to put an end to the as soon as possible; OJ 29.12.2006/297.
***
Protocol on the transition to the third stage of economic and monetary union (original OJ 29.7.1992 C 191/87)
Protocol (No 24) on the transition to the third stage of economic and monetary union, where the member states declared their respect the will for the Community to enter swiftly into the third stage, and to enable the Community to enter the third stage irrevocably on 1 January 1999 and to enable the ECB and the ESCB to start their full functioning from this date; OJ 29.12.2006/298.
***
Protocol on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland (original OJ 29.7.1992 C 191/87)
Protocol (No 25) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland, where the member states recognised that the United Kingdom shall not be obliged or committed to move to the third stage of economic and monetary union without a separate decision to do so by its government and parliament, and set out the procedures and limitations caused by the UK opt-out; OJ 29.12.2006/299─301.
***
Protocol on certain provisions relating to Denmark (original OJ 29.7.1992 C 191/89)
Protocol (No 26) on certain provisions relating to Denmark, which acknowledged the Danish exemption from participation in the third stage of economic and monetary union (one of the four Maastricht opt-outs by Denmark); OJ 29.12.2006/302.
***
Protocol on France (original OJ 29.7.1992 C 191/90)
Protocol (No 27) on France, which provided that France will keep the privilege of monetary emission in its overseas territories under the terms established by its national laws, and will be solely entitled to determine the parity of the CFP franc; OJ 29.12.2006/303.
***
Protocol on the location of the seats of the institutions and of certain bodies and departments of the European Communities and of Europol (OJ 10.11.1997 C 340/112)
Protocol (No 8) on the location of the seats of the institutions and of certain bodies and departments of the European Communities and of Europol, with paragraph (i) apportioning the European Monetary Institute and the European Central Bank to have their seat in Frankfurt (am Main); OJ 29.12.2006/226.
Ralf Grahn
EU: Monetary policy Ic
The European Central Bank (ECB) offers the interested reader a number of publications on economic and monetary union (EMU). Here is a sample for students of history, politics, economics and law.
***
An introductory brochure, available in 23 EU languages, is ‘The European Central Bank, the Eurosystem, the European System of Central Banks’ (2nd edition, April 2008). It presents the history of economic and monetary union, the structure and tasks of the European System of Central Banks, monetary policy, the Target2 System, the euro banknotes and coins and banking supervision, and it offers a handy glossary for the general reader. The English version is available at the website of the European Central Bank:
http://www.ecb.int/pub/pdf/other/escb_en.pdf
***
Hanspeter K. Scheller: The European Central Bank ─ History, role and functions (2nd revised edition, 2006). The book is available in 13 languages; for the English version, go to:
http://www.ecb.int/pub/pdf/other/ecbhistoryrolefunctions2006en.pdf
***
‘10th Anniversary of the ECB’ is the theme of the Special edition of the Monthly Bulletin (29 May 2008), with a comprehensive overview of monetary policy within the euro area. The English version is available at:
http://www.ecb.int/pub/pdf/other/10thanniversaryoftheecbmb200806en.pdf
***
There are a number of useful publications on the ECB’s web pages, from the Monthly Bulletin and the handy Monthly Statistics Pocket Book to various specialist books and research papers. Look for Publications at:
http://www.ecb.europa.eu
The latest ECB Monthly Bulletin with economic and monetary developments, articles and euro area statistics (October 2008) is available at:
http://www.ecb.europa.eu/pub/pdf/mobu/mb200810en.pdf
The latest Statistics Pocket Book with macroeconomic data (October 2008):
http://www.ecb.europa.eu/pub/pdf/stapobo/spb200810en.pdf
***
Both long term decisions and the current financial turmoil are reflected in the European Central Bank’s press releases, available at:
http://www.ecb.europa.eu/press/pr/date/2008/html/index.en.html
***
If you are digging deeper, this legal blog or blawg would like to draw your attention to ‘Legal framework of the Eurosystem and the ESCB. ECB legal acts and instruments’ (July 2008), which “contains summaries of the legal acts and instruments constituting the legal framework of the Eurosystem and the ESCB. It covers the main legal acts and instruments that have been adopted by the ECB and published since the ECB’s establishment in June 1998 up to the end of 2007.”
In other words, this publication contains legal material at a deeper level than the treaty provisions this blog is currently focused on. Go to:
http://www.ecb.int/pub/pdf/other/legalframeworkeurosystemescb2008en.pdf
***
The legal framework of the European Central Bank in its entirety can be accessed through:
http://www.ecb.int/ecb/legal/html/index.en.html
There is a helpful User Guide and links for detailed search.
***
‘Legal aspects of the European System of Central Banks ─ Liber amicorum Paolo Zamboni Garavelli’ (2005) is a hefty compilation of articles about various legal aspects of European monetary policy:
http://www.ecb.int/pub/pdf/other/legalaspectsescben.pdf
***
Is the European Central Bank secretive?
Ralf Grahn
***
An introductory brochure, available in 23 EU languages, is ‘The European Central Bank, the Eurosystem, the European System of Central Banks’ (2nd edition, April 2008). It presents the history of economic and monetary union, the structure and tasks of the European System of Central Banks, monetary policy, the Target2 System, the euro banknotes and coins and banking supervision, and it offers a handy glossary for the general reader. The English version is available at the website of the European Central Bank:
http://www.ecb.int/pub/pdf/other/escb_en.pdf
***
Hanspeter K. Scheller: The European Central Bank ─ History, role and functions (2nd revised edition, 2006). The book is available in 13 languages; for the English version, go to:
http://www.ecb.int/pub/pdf/other/ecbhistoryrolefunctions2006en.pdf
***
‘10th Anniversary of the ECB’ is the theme of the Special edition of the Monthly Bulletin (29 May 2008), with a comprehensive overview of monetary policy within the euro area. The English version is available at:
http://www.ecb.int/pub/pdf/other/10thanniversaryoftheecbmb200806en.pdf
***
There are a number of useful publications on the ECB’s web pages, from the Monthly Bulletin and the handy Monthly Statistics Pocket Book to various specialist books and research papers. Look for Publications at:
http://www.ecb.europa.eu
The latest ECB Monthly Bulletin with economic and monetary developments, articles and euro area statistics (October 2008) is available at:
http://www.ecb.europa.eu/pub/pdf/mobu/mb200810en.pdf
The latest Statistics Pocket Book with macroeconomic data (October 2008):
http://www.ecb.europa.eu/pub/pdf/stapobo/spb200810en.pdf
***
Both long term decisions and the current financial turmoil are reflected in the European Central Bank’s press releases, available at:
http://www.ecb.europa.eu/press/pr/date/2008/html/index.en.html
***
If you are digging deeper, this legal blog or blawg would like to draw your attention to ‘Legal framework of the Eurosystem and the ESCB. ECB legal acts and instruments’ (July 2008), which “contains summaries of the legal acts and instruments constituting the legal framework of the Eurosystem and the ESCB. It covers the main legal acts and instruments that have been adopted by the ECB and published since the ECB’s establishment in June 1998 up to the end of 2007.”
In other words, this publication contains legal material at a deeper level than the treaty provisions this blog is currently focused on. Go to:
http://www.ecb.int/pub/pdf/other/legalframeworkeurosystemescb2008en.pdf
***
The legal framework of the European Central Bank in its entirety can be accessed through:
http://www.ecb.int/ecb/legal/html/index.en.html
There is a helpful User Guide and links for detailed search.
***
‘Legal aspects of the European System of Central Banks ─ Liber amicorum Paolo Zamboni Garavelli’ (2005) is a hefty compilation of articles about various legal aspects of European monetary policy:
http://www.ecb.int/pub/pdf/other/legalaspectsescben.pdf
***
Is the European Central Bank secretive?
Ralf Grahn
Friday, 10 October 2008
EU: Monetary policy Ib
We open a new chapter on monetary policy according to the existing EC (EU) treaty rules.
***
Article 105 (ex Article 105) of the Treaty Establishing the European Community (TEC) is at the beginning of Chapter 2 Monetary policy. It sets out the objectives and the tasks of the European System of Central Banks (ESCB), including some important basic references to the European Central Bank(ECB) (OJ 29.12.2006 C 321 E/87):
Part Three – Community policies
Title VII – Economic and monetary policy
Chapter 2 – Monetary policy
Article 105 TEC
1. The primary objective of the ESCB shall be to maintain price stability. Without prejudice to the objective of price stability, the ESCB shall support the general economic policies in the Community with a view to contributing to the achievement of the objectives of the Community as laid down in Article 2. The ESCB shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources, and in compliance with the principles set out in Article 4.
2. The basic tasks to be carried out through the ESCB shall be:
— to define and implement the monetary policy of the Community,
— to conduct foreign-exchange operations consistent with the provisions of Article 111,
— to hold and manage the official foreign reserves of the Member States,
— to promote the smooth operation of payment systems.
3. The third indent of paragraph 2 shall be without prejudice to the holding and management by the governments of Member States of foreign-exchange working balances.
4. The ECB shall be consulted:
— on any proposed Community act in its fields of competence,
— by national authorities regarding any draft legislative provision in its fields of competence, but within the limits and under the conditions set out by the Council in accordance with the procedure laid down in Article 107(6).
The ECB may submit opinions to the appropriate Community institutions or bodies or to national authorities on matters in its fields of competence.
5. The ESCB shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system.
6. The Council may, acting unanimously on a proposal from the Commission and after consulting the ECB and after receiving the assent of the European Parliament, confer upon the ECB specific tasks concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings.
***
The next post is going to suggest further reading on economic and monetary union (EMU), especially monetary policy.
Ralf Grahn
***
Article 105 (ex Article 105) of the Treaty Establishing the European Community (TEC) is at the beginning of Chapter 2 Monetary policy. It sets out the objectives and the tasks of the European System of Central Banks (ESCB), including some important basic references to the European Central Bank(ECB) (OJ 29.12.2006 C 321 E/87):
Part Three – Community policies
Title VII – Economic and monetary policy
Chapter 2 – Monetary policy
Article 105 TEC
1. The primary objective of the ESCB shall be to maintain price stability. Without prejudice to the objective of price stability, the ESCB shall support the general economic policies in the Community with a view to contributing to the achievement of the objectives of the Community as laid down in Article 2. The ESCB shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources, and in compliance with the principles set out in Article 4.
2. The basic tasks to be carried out through the ESCB shall be:
— to define and implement the monetary policy of the Community,
— to conduct foreign-exchange operations consistent with the provisions of Article 111,
— to hold and manage the official foreign reserves of the Member States,
— to promote the smooth operation of payment systems.
3. The third indent of paragraph 2 shall be without prejudice to the holding and management by the governments of Member States of foreign-exchange working balances.
4. The ECB shall be consulted:
— on any proposed Community act in its fields of competence,
— by national authorities regarding any draft legislative provision in its fields of competence, but within the limits and under the conditions set out by the Council in accordance with the procedure laid down in Article 107(6).
The ECB may submit opinions to the appropriate Community institutions or bodies or to national authorities on matters in its fields of competence.
5. The ESCB shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system.
6. The Council may, acting unanimously on a proposal from the Commission and after consulting the ECB and after receiving the assent of the European Parliament, confer upon the ECB specific tasks concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings.
***
The next post is going to suggest further reading on economic and monetary union (EMU), especially monetary policy.
Ralf Grahn
EU: Monetary policy Ia
Monetary policy is an area of deep integration within the European Union. The single currency, the euro, is a daily reminder for EU citizens in 15 of the member states and one of the leading world currencies.
We start by looking at the introductory treaty provisions, which lay the foundations for economic and monetary union (EMU).
***
Treaty on European Union
The preamble of the current Treaty on European Union (TEU) contains the following recital:
-----
“RESOLVED to achieve the strengthening and the convergence of their economies and to establish an economic and monetary union including, in accordance with the provisions of this Treaty, a single and stable currency,”
-----
(Source: the latest consolidated version of the treaties, Officcial Journal of the European Union, OJ 29.12.2006 C 321 E/9.)
***
The objectives of the European Union (EU) are set out in Article 2 TEU (ex Article B), with economic and monetary union mentioned in the first indent (OJ 29.12.2006 C 321 E/11):
Article 2 TEU
The Union shall set itself the following objectives:
— to promote economic and social progress and a high level of employment and to achieve
balanced and sustainable development, in particular through the creation of an area without
internal frontiers, through the strengthening of economic and social cohesion and through the
establishment of economic and monetary union, ultimately including a single currency in
accordance with the provisions of this Treaty,
-----
***
Treaty establishing the European Community
Article 2 of the Treaty establishing the European Community (TEC) singles out the common market and the economic and monetary union (EMU) among the common policies and activities designed to achieve the laudable objectives of the European Community (EC):
Article 2 TEC
The Community shall have as its task, by establishing a common market and an economic and
monetary union and by implementing common policies or activities referred to in Articles 3 and 4, to promote throughout the Community a harmonious, balanced and sustainable development of economic activities, a high level of employment and of social protection, equality between men and women, sustainable and non-inflationary growth, a high degree of competitiveness and convergence of economic performance, a high level of protection and improvement of the quality of the environment, the raising of the standard of living and quality of life, and economic and social cohesion and solidarity among Member States.
(Source: OJ 29.12.2006 C 321/44.)
***
Article 4 TEC presents the guiding principles for the economic and monetary union (EMU), with the introduction of the single currency outlined in paragraph 2. The name of the currency has since changed from ‘ecu’ to ‘euro’, and the single currency has been introduced in 15 member states.
Here is the text of Article 4 TEC (ex Article 3a), as reproduced in the latest consolidated version of the treaties, Official Journal of the European Union (OJ) 29.12.2006 C 321 E/45─46):
Article 4 TEC
1. For the purposes set out in Article 2, the activities of the Member States and the Community shall include, as provided in this Treaty and in accordance with the timetable set out therein, the adoption of an economic policy which is based on the close coordination of Member States' economic policies, on the internal market and on the definition of common objectives, and conducted in accordance with the principle of an open market economy with free competition.
2. Concurrently with the foregoing, and as provided in this Treaty and in accordance with the timetable and the procedures set out therein, these activities shall include the irrevocable fixing of exchange rates leading to the introduction of a single currency, the ecu, and the definition and conduct of a single monetary policy and exchange-rate policy the primary objective of both of which shall be to maintain price stability and, without prejudice to this objective, to support the general economic policies in the Community, in accordance with the principle of an open market economy with free competition.
3. These activities of the Member States and the Community shall entail compliance with the following guiding principles: stable prices, sound public finances and monetary conditions and a sustainable balance of payments.
***
Article 8 TEC (ex Article 4a) sets out the main institutional rules for monetary policy, with the establishment of the European system of central banks and the European Central Bank (OJ 29.12.2006 C 321/47):
Article 8 TEC
A European system of central banks (hereinafter referred to as ‘ESCB’) and a European Central Bank (hereinafter referred to as ‘ECB’) shall be established in accordance with the procedures laid down in this Treaty; they shall act within the limits of the powers conferred upon them by this Treaty and by the Statute of the ESCB and of the ECB (hereinafter referred to as ‘Statute of the ESCB’) annexed thereto.
***
The foundations have been laid, before we turn to the detailed treaty provisions on monetary policy.
Ralf Grahn
We start by looking at the introductory treaty provisions, which lay the foundations for economic and monetary union (EMU).
***
Treaty on European Union
The preamble of the current Treaty on European Union (TEU) contains the following recital:
-----
“RESOLVED to achieve the strengthening and the convergence of their economies and to establish an economic and monetary union including, in accordance with the provisions of this Treaty, a single and stable currency,”
-----
(Source: the latest consolidated version of the treaties, Officcial Journal of the European Union, OJ 29.12.2006 C 321 E/9.)
***
The objectives of the European Union (EU) are set out in Article 2 TEU (ex Article B), with economic and monetary union mentioned in the first indent (OJ 29.12.2006 C 321 E/11):
Article 2 TEU
The Union shall set itself the following objectives:
— to promote economic and social progress and a high level of employment and to achieve
balanced and sustainable development, in particular through the creation of an area without
internal frontiers, through the strengthening of economic and social cohesion and through the
establishment of economic and monetary union, ultimately including a single currency in
accordance with the provisions of this Treaty,
-----
***
Treaty establishing the European Community
Article 2 of the Treaty establishing the European Community (TEC) singles out the common market and the economic and monetary union (EMU) among the common policies and activities designed to achieve the laudable objectives of the European Community (EC):
Article 2 TEC
The Community shall have as its task, by establishing a common market and an economic and
monetary union and by implementing common policies or activities referred to in Articles 3 and 4, to promote throughout the Community a harmonious, balanced and sustainable development of economic activities, a high level of employment and of social protection, equality between men and women, sustainable and non-inflationary growth, a high degree of competitiveness and convergence of economic performance, a high level of protection and improvement of the quality of the environment, the raising of the standard of living and quality of life, and economic and social cohesion and solidarity among Member States.
(Source: OJ 29.12.2006 C 321/44.)
***
Article 4 TEC presents the guiding principles for the economic and monetary union (EMU), with the introduction of the single currency outlined in paragraph 2. The name of the currency has since changed from ‘ecu’ to ‘euro’, and the single currency has been introduced in 15 member states.
Here is the text of Article 4 TEC (ex Article 3a), as reproduced in the latest consolidated version of the treaties, Official Journal of the European Union (OJ) 29.12.2006 C 321 E/45─46):
Article 4 TEC
1. For the purposes set out in Article 2, the activities of the Member States and the Community shall include, as provided in this Treaty and in accordance with the timetable set out therein, the adoption of an economic policy which is based on the close coordination of Member States' economic policies, on the internal market and on the definition of common objectives, and conducted in accordance with the principle of an open market economy with free competition.
2. Concurrently with the foregoing, and as provided in this Treaty and in accordance with the timetable and the procedures set out therein, these activities shall include the irrevocable fixing of exchange rates leading to the introduction of a single currency, the ecu, and the definition and conduct of a single monetary policy and exchange-rate policy the primary objective of both of which shall be to maintain price stability and, without prejudice to this objective, to support the general economic policies in the Community, in accordance with the principle of an open market economy with free competition.
3. These activities of the Member States and the Community shall entail compliance with the following guiding principles: stable prices, sound public finances and monetary conditions and a sustainable balance of payments.
***
Article 8 TEC (ex Article 4a) sets out the main institutional rules for monetary policy, with the establishment of the European system of central banks and the European Central Bank (OJ 29.12.2006 C 321/47):
Article 8 TEC
A European system of central banks (hereinafter referred to as ‘ESCB’) and a European Central Bank (hereinafter referred to as ‘ECB’) shall be established in accordance with the procedures laid down in this Treaty; they shall act within the limits of the powers conferred upon them by this Treaty and by the Statute of the ESCB and of the ECB (hereinafter referred to as ‘Statute of the ESCB’) annexed thereto.
***
The foundations have been laid, before we turn to the detailed treaty provisions on monetary policy.
Ralf Grahn
Thursday, 9 October 2008
EU: Excessive government deficits VII
We have seen that the Commission could issue an opinion (“first warning”) directly to a member state. The Commission could also make a proposal concerning the existence of an excessive government deficit. But the crucial decision about recommendations to a “sinning” member state would still be made by the Council on a recommendation by the Commission.
In essence, the Treaty of Lisbon does not change much, but preserves the basic intergovernmental character of the excessive deficit procedure (as in the current Article 104 TEC and Constitution Article III-184), despite the foray attempted by the European Convention (draft Constitution Article III-76).
The Treaty on the Functioning of the European Union (TFEU) rewrites the rules on qualified majority voting.
***
This post adds some legal materials on the excessive deficit procedure.
***
Protocols and Declaration
A number of Protocols are annexed to the Lisbon Treaty. The intergovernmental conference adopted a number of Declarations annexed to the Final Act.
***
Protocol (No 12)
Protocol (No 12) on the excessive deficit procedure essentially reiterates the reference values (3 % of GDP deficit, 60 % of GDP debt) and other provisions of the existing Protocol. See the consolidated version of the Lisbon Treaty, in OJ 9.5.2008 C 115/279─280:
PROTOCOL (No 12)
ON THE EXCESSIVE DEFICIT PROCEDURE
THE HIGH CONTRACTING PARTIES,
DESIRING TO lay down the details of the excessive deficit procedure referred to in Article 126 of the Treaty on the Functioning of the European Union,
HAVE AGREED upon the following provisions, which shall be annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union:
Article 1
The reference values referred to in Article 126(2) of the Treaty on the Functioning of the European Union are:
— 3 % for the ratio of the planned or actual government deficit to gross domestic product at market prices;
— 60 % for the ratio of government debt to gross domestic product at market prices.
Article 2
In Article 126 of the said Treaty and in this Protocol:
— ‘government’ means general government, that is central government, regional or local government and social security funds, to the exclusion of commercial operations, as defined in the European System of Integrated Economic Accounts;
— ‘deficit’ means net borrowing as defined in the European System of Integrated Economic Accounts;
— ‘investment’ means gross fixed capital formation as defined in the European System of Integrated Economic Accounts;
— ‘debt’ means total gross debt at nominal value outstanding at the end of the year and consolidated between and within the sectors of general government as defined in the first indent.
Article 3
In order to ensure the effectiveness of the excessive deficit procedure, the governments of the Member States shall be responsible under this procedure for the deficits of general government as defined in the first indent of Article 2. The Member States shall ensure that national procedures in the budgetary area enable them to meet their obligations in this area deriving from these Treaties. The Member States shall report their planned and actual deficits and the levels of their debt promptly and regularly to the Commission.
Article 4
The statistical data to be used for the application of this Protocol shall be provided by the Commission.
***
United Kingdom: opt-out
The United Kingdom stays outside the Eurozone for the time being, but the opt-out Protocol, taken over by the Lisbon Treaty, contains two paragraphs (4 and 5) specifically relevant to the excessive deficit procedure. Cf. OJ 9.5.2008 C 115/284:
PROTOCOL (No 15)
ON CERTAIN PROVISIONS RELATING TO THE
UNITED KINGDOM OF GREAT BRITAIN AND
NORTHERN IRELAND
THE HIGH CONTRACTING PARTIES,
RECOGNISING that the United Kingdom shall not be obliged or committed to adopt the euro without a separate decision to do so by its government and parliament,
GIVEN that on 16 October 1996 and 30 October 1997 the United Kingdom government notified the Council of its intention not to participate in the third stage of economic and monetary union,
NOTING the practice of the government of the United Kingdom to fund its borrowing requirement by the sale of debt to the private sector,
HAVE AGREED upon the following provisions, which shall be annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union:
1. Unless the United Kingdom notifies the Council that it intends to adopt the euro, it shall be under no obligation to do so.
2. In view of the notice given to the Council by the United Kingdom government on 16 October 1996 and 30 October 1997, paragraphs 3 to 8 and 10 shall apply to the United Kingdom.
3. The United Kingdom shall retain its powers in the field of monetary policy according to national law.
4. Articles 119, second paragraph, 126(1), (9) and (11), 127(1) to (5), 128, 130, 131, 132, 133, 138, 140(3), 219, 282(2), with the exception of the first and last sentences thereof, 282(5), and 283 of the Treaty on the Functioning of the European Union shall not apply to the United Kingdom. The same applies to Article 121(2) of this Treaty as regards the adoption of the parts of the broad economic policy guidelines which concern the euro area generally. In these provisions references to the Union or the Member States shall not include the United Kingdom and references to national central banks shall not include the Bank of England.
5. The United Kingdom shall endeavour to avoid an excessive government deficit.
Articles 143 and 144 of the Treaty on the Functioning of the European Union shall continue to apply to the United Kingdom. Articles 134(4) and 142 shall apply to the United Kingdom as if it had a derogation.
-----
***
Denmark: opt-out
The Danish Protocol also carries forward existing Protocol text (with necessary updates). It does not mention the excessive deficit procedure specifically, but participation in the third stage of economic and monetary union (EMU). Still, I thought that it would be convenient for readers to be able to compare the British and Danish texts directly, as they appear in the consolidated Treaty of Lisbon. Source: OJ 9.5.2008 C 115/287:
PROTOCOL (No 16)
ON CERTAIN PROVISIONS RELATING TO DENMARK
THE HIGH CONTRACTING PARTIES,
TAKING INTO ACCOUNT that the Danish Constitution contains provisions which may imply a referendum in Denmark prior to Denmark renouncing its exemption,
GIVEN THAT, on 3 November 1993, the Danish Government notified the Council of its intention not to participate in the third stage of economic and monetary union,
HAVE AGREED UPON the following provisions, which shall be annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union:
1. In view of the notice given to the Council by the Danish Government on 3 November 1993, Denmark shall have an exemption. The effect of the exemption shall be that all Articles and provisions of the Treaties and the Statute of the ESCB referring to a derogation shall be applicable to Denmark.
2. As for the abrogation of the exemption, the procedure referred to in Article 140 shall only be initiated at the request of Denmark.
3. In the event of abrogation of the exemption status, the provisions of this Protocol shall cease to apply.
***
Declaration 30
From derogationary exemptionalists we turn to the soothing sounds of the joint Declaration (30) on Article 126 TFEU. As far as I could see, it is a slavish copy of Declaration (17) on Article III-184 of the Constitutional Treaty, including the oblique references to strengthening and clarifying the implementation of the Stability and Growth Pact (since weakened and muddled by the ‘new’ Stability and Growth Pact). The new Declaration, too, promises not to prejudge the future debate on the Stability and Growth Pact, perhaps in anticipation of the financial crisis and economic downturn now upon us.
Source, the consolidated version of the Lisbon Treaty: OJ 9.5.2008 C 115/347─348:
30. Declaration on Article 126 of the Treaty on the Functioning of the European Union
With regard to Article 126, the Conference confirms that raising growth potential and securing sound budgetary positions are the two pillars of the economic and fiscal policy of the Union and the Member States. The Stability and Growth Pact is an important tool to achieve these goals.
The Conference reaffirms its commitment to the provisions concerning the Stability and Growth Pact as the framework for the coordination of budgetary policies in the Member States.
The Conference confirms that a rule-based system is the best guarantee for commitments to be enforced and for all Member States to be treated equally.
Within this framework, the Conference also reaffirms its commitment to the goals of the Lisbon Strategy: job creation, structural reforms, and social cohesion.
The Union aims at achieving balanced economic growth and price stability. Economic and budgetary policies thus need to set the right priorities towards economic reforms, innovation, competitiveness and strengthening of private investment and consumption in phases of weak economic growth. This should be reflected in the orientations of budgetary decisions at the national and Union level in particular through restructuring of public revenue and expenditure while respecting budgetary discipline in accordance with the Treaties and the Stability and Growth Pact.
Budgetary and economic challenges facing the Member States underline the importance of sound budgetary policy throughout the economic cycle.
The Conference agrees that Member States should use periods of economic recovery actively to consolidate public finances and improve their budgetary positions. The objective is to gradually achieve a budgetary surplus in good times which creates the necessary room to accommodate economic downturns and thus contribute to the long-term sustainability of public finances.
The Member States look forward to possible proposals of the Commission as well as further contributions of Member States with regard to strengthening and clarifying the implementation of the Stability and Growth Pact. The Member States will take all necessary measures to raise the growth potential of their economies. Improved economic policy coordination could support this objective. This Declaration does not prejudge the future debate on the Stability and Growth Pact.
***
Soon, we will start looking at the walking leg of economic and monetary union (EMU), Chapter 2 Monetary policy.
Ralf Grahn
In essence, the Treaty of Lisbon does not change much, but preserves the basic intergovernmental character of the excessive deficit procedure (as in the current Article 104 TEC and Constitution Article III-184), despite the foray attempted by the European Convention (draft Constitution Article III-76).
The Treaty on the Functioning of the European Union (TFEU) rewrites the rules on qualified majority voting.
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This post adds some legal materials on the excessive deficit procedure.
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Protocols and Declaration
A number of Protocols are annexed to the Lisbon Treaty. The intergovernmental conference adopted a number of Declarations annexed to the Final Act.
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Protocol (No 12)
Protocol (No 12) on the excessive deficit procedure essentially reiterates the reference values (3 % of GDP deficit, 60 % of GDP debt) and other provisions of the existing Protocol. See the consolidated version of the Lisbon Treaty, in OJ 9.5.2008 C 115/279─280:
PROTOCOL (No 12)
ON THE EXCESSIVE DEFICIT PROCEDURE
THE HIGH CONTRACTING PARTIES,
DESIRING TO lay down the details of the excessive deficit procedure referred to in Article 126 of the Treaty on the Functioning of the European Union,
HAVE AGREED upon the following provisions, which shall be annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union:
Article 1
The reference values referred to in Article 126(2) of the Treaty on the Functioning of the European Union are:
— 3 % for the ratio of the planned or actual government deficit to gross domestic product at market prices;
— 60 % for the ratio of government debt to gross domestic product at market prices.
Article 2
In Article 126 of the said Treaty and in this Protocol:
— ‘government’ means general government, that is central government, regional or local government and social security funds, to the exclusion of commercial operations, as defined in the European System of Integrated Economic Accounts;
— ‘deficit’ means net borrowing as defined in the European System of Integrated Economic Accounts;
— ‘investment’ means gross fixed capital formation as defined in the European System of Integrated Economic Accounts;
— ‘debt’ means total gross debt at nominal value outstanding at the end of the year and consolidated between and within the sectors of general government as defined in the first indent.
Article 3
In order to ensure the effectiveness of the excessive deficit procedure, the governments of the Member States shall be responsible under this procedure for the deficits of general government as defined in the first indent of Article 2. The Member States shall ensure that national procedures in the budgetary area enable them to meet their obligations in this area deriving from these Treaties. The Member States shall report their planned and actual deficits and the levels of their debt promptly and regularly to the Commission.
Article 4
The statistical data to be used for the application of this Protocol shall be provided by the Commission.
***
United Kingdom: opt-out
The United Kingdom stays outside the Eurozone for the time being, but the opt-out Protocol, taken over by the Lisbon Treaty, contains two paragraphs (4 and 5) specifically relevant to the excessive deficit procedure. Cf. OJ 9.5.2008 C 115/284:
PROTOCOL (No 15)
ON CERTAIN PROVISIONS RELATING TO THE
UNITED KINGDOM OF GREAT BRITAIN AND
NORTHERN IRELAND
THE HIGH CONTRACTING PARTIES,
RECOGNISING that the United Kingdom shall not be obliged or committed to adopt the euro without a separate decision to do so by its government and parliament,
GIVEN that on 16 October 1996 and 30 October 1997 the United Kingdom government notified the Council of its intention not to participate in the third stage of economic and monetary union,
NOTING the practice of the government of the United Kingdom to fund its borrowing requirement by the sale of debt to the private sector,
HAVE AGREED upon the following provisions, which shall be annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union:
1. Unless the United Kingdom notifies the Council that it intends to adopt the euro, it shall be under no obligation to do so.
2. In view of the notice given to the Council by the United Kingdom government on 16 October 1996 and 30 October 1997, paragraphs 3 to 8 and 10 shall apply to the United Kingdom.
3. The United Kingdom shall retain its powers in the field of monetary policy according to national law.
4. Articles 119, second paragraph, 126(1), (9) and (11), 127(1) to (5), 128, 130, 131, 132, 133, 138, 140(3), 219, 282(2), with the exception of the first and last sentences thereof, 282(5), and 283 of the Treaty on the Functioning of the European Union shall not apply to the United Kingdom. The same applies to Article 121(2) of this Treaty as regards the adoption of the parts of the broad economic policy guidelines which concern the euro area generally. In these provisions references to the Union or the Member States shall not include the United Kingdom and references to national central banks shall not include the Bank of England.
5. The United Kingdom shall endeavour to avoid an excessive government deficit.
Articles 143 and 144 of the Treaty on the Functioning of the European Union shall continue to apply to the United Kingdom. Articles 134(4) and 142 shall apply to the United Kingdom as if it had a derogation.
-----
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Denmark: opt-out
The Danish Protocol also carries forward existing Protocol text (with necessary updates). It does not mention the excessive deficit procedure specifically, but participation in the third stage of economic and monetary union (EMU). Still, I thought that it would be convenient for readers to be able to compare the British and Danish texts directly, as they appear in the consolidated Treaty of Lisbon. Source: OJ 9.5.2008 C 115/287:
PROTOCOL (No 16)
ON CERTAIN PROVISIONS RELATING TO DENMARK
THE HIGH CONTRACTING PARTIES,
TAKING INTO ACCOUNT that the Danish Constitution contains provisions which may imply a referendum in Denmark prior to Denmark renouncing its exemption,
GIVEN THAT, on 3 November 1993, the Danish Government notified the Council of its intention not to participate in the third stage of economic and monetary union,
HAVE AGREED UPON the following provisions, which shall be annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union:
1. In view of the notice given to the Council by the Danish Government on 3 November 1993, Denmark shall have an exemption. The effect of the exemption shall be that all Articles and provisions of the Treaties and the Statute of the ESCB referring to a derogation shall be applicable to Denmark.
2. As for the abrogation of the exemption, the procedure referred to in Article 140 shall only be initiated at the request of Denmark.
3. In the event of abrogation of the exemption status, the provisions of this Protocol shall cease to apply.
***
Declaration 30
From derogationary exemptionalists we turn to the soothing sounds of the joint Declaration (30) on Article 126 TFEU. As far as I could see, it is a slavish copy of Declaration (17) on Article III-184 of the Constitutional Treaty, including the oblique references to strengthening and clarifying the implementation of the Stability and Growth Pact (since weakened and muddled by the ‘new’ Stability and Growth Pact). The new Declaration, too, promises not to prejudge the future debate on the Stability and Growth Pact, perhaps in anticipation of the financial crisis and economic downturn now upon us.
Source, the consolidated version of the Lisbon Treaty: OJ 9.5.2008 C 115/347─348:
30. Declaration on Article 126 of the Treaty on the Functioning of the European Union
With regard to Article 126, the Conference confirms that raising growth potential and securing sound budgetary positions are the two pillars of the economic and fiscal policy of the Union and the Member States. The Stability and Growth Pact is an important tool to achieve these goals.
The Conference reaffirms its commitment to the provisions concerning the Stability and Growth Pact as the framework for the coordination of budgetary policies in the Member States.
The Conference confirms that a rule-based system is the best guarantee for commitments to be enforced and for all Member States to be treated equally.
Within this framework, the Conference also reaffirms its commitment to the goals of the Lisbon Strategy: job creation, structural reforms, and social cohesion.
The Union aims at achieving balanced economic growth and price stability. Economic and budgetary policies thus need to set the right priorities towards economic reforms, innovation, competitiveness and strengthening of private investment and consumption in phases of weak economic growth. This should be reflected in the orientations of budgetary decisions at the national and Union level in particular through restructuring of public revenue and expenditure while respecting budgetary discipline in accordance with the Treaties and the Stability and Growth Pact.
Budgetary and economic challenges facing the Member States underline the importance of sound budgetary policy throughout the economic cycle.
The Conference agrees that Member States should use periods of economic recovery actively to consolidate public finances and improve their budgetary positions. The objective is to gradually achieve a budgetary surplus in good times which creates the necessary room to accommodate economic downturns and thus contribute to the long-term sustainability of public finances.
The Member States look forward to possible proposals of the Commission as well as further contributions of Member States with regard to strengthening and clarifying the implementation of the Stability and Growth Pact. The Member States will take all necessary measures to raise the growth potential of their economies. Improved economic policy coordination could support this objective. This Declaration does not prejudge the future debate on the Stability and Growth Pact.
***
Soon, we will start looking at the walking leg of economic and monetary union (EMU), Chapter 2 Monetary policy.
Ralf Grahn
EU: Excessive government deficits VI
The previous post mentioned a few UK references to Article 126 of the Treaty on the Functioning of the European Union (TFEU). We now turn to legal materials from Sweden and Finland as well as some EU commentaries in book form, to see if excessive government deficits within the economic union have elicited comments.
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Lissabonfördraget (Sweden)
The consultation paper ’Lissabonfördraget’ was the first official Swedish description of the Lisbon Treaty amendments, and it is available at:
http://www.regeringen.se/content/1/c6/09/49/81/107aa077.pdf
It was followed by the Swedish government’s draft ratification bill ‘Lagrådsremiss – Lissabonfördraget’, published 29 May 2008:
http://www.regeringen.se/sb/d/5676/a/106277
The draft bill was given a green light by the Council on Legislation (Lagrådet):
http://www.lagradet.se/yttranden/Lissabonfordraget.pdf
The latest official government view, and now my standard reference for Sweden, is the ratification bill, with the Swedish parliament (Riksdagen) expected to decide on approval in late autumn, in November or even later in the year. Committee work has not even started. The ratification bill, Regeringens proposition 2007/08:168 Lissabonfördraget; 3 July 2008, is available at:
http://www.regeringen.se/content/1/c6/10/84/02/8c96cf3e.pdf
Economic and monetary policy (23.2 Ekonomisk och monetary politik) is discussed on pages 180 to 185. The Swedish government presents a fairly detailed description of the current and proposed provisions concerning Article 104 TFEU (ToL). The Commission’s powers in paragraphs 5 and 6 are explained, and joint Declaration No. 30 is mentioned. The government welcomes the proposals to strengthen implementation and monitoring of economic policy (page 182):
”Lissabonfördraget innebär inte, enligt regeringens mening, några genomgripande förändringar i regelverket eller i fördelningen av befogenheter på det ekonomisk-politiska området. Antagandet av de allmänna riktlinjerna ska fortfarande ske på samma sätt som tidigare, med den skillnaden att endast euroländerna får rösta om de rekommendationer som riktar sig till dessa länder (artikel 115a i EUF-fördraget).
En viss förskjutning görs dock i riktning mot mer inflytande för kommissionen. Bestämmelserna syftar till att säkerställa genomförandet av medlemsstaternas åtaganden. Kommissionen ska till exempel få möjlighet att självständigt utfärda en varning till en medlemsstat som inte bedöms efterleva de allmänna riktlinjerna för den ekonomiska politiken. Rådet kommer dock, på samma sätt som i dag, med kvalificerad majoritet och på rekommendation av kommissionen, kunna besluta om att lämna den berörda medlemsstaten de rekommendationer som behövs. Skillnaden gentemot nuvarande bestämmelser är att den berörda medlemsstaten inte får delta i detta beslut (artikel 99 i EUF-fördraget).
Om kommissionen anser att det föreligger eller kan uppstå ett alltför stort underskott i en medlemsstat, lämnar kommissionen idag ett yttrande till rådet. Enligt Lissabonfördraget kommer kommissionen i stället att lämna ett yttrande till den medlemsstaten och informera rådet om detta (artikel 104.5 i EUF-fördraget).
Om kommissionen bedömer att en medlemsstat har ett alltför stort underskott lämnar kommissionen idag en rekommendation till rådet att slå fast detta. Enligt Lissabonfördraget kommer kommissionen i stället att lämna ett förslag i denna fråga (artikel 104.6 i EUF-fördraget). Denna skillnad innebär att rådet, för att ändra innehållet i förslaget från kommissionen, måste uppnå enhällighet om ändringsförslaget. Vid en rekommendation från kommissionen, såsom fallet är i dag, har rådet möjlighet att ändra texten med kvalificerad majoritet.
I en gemensam förklaring (30) till artikel 104 i fördraget om Europeiska unionens funktionssätt bekräftar regeringskonferensen bl.a. att stabilitets- och tillväxtpakten är ett viktigt instrument för att uppnå en ökning av tillväxtpotentialen och ett säkerställande av sunda offentliga finanser.
Instrumenten för genomförande och uppföljning av den ekonomiska politiken behöver stärkas. Det är därför positivt att fördraget innehåller bestämmelser som syftar till detta.”
The new decision-making procedures concerning economic policy are mentioned on page 185, namely the new definition of a qualified majority:
”I ett flertal fall på området ekonomisk och monetär politik ska rådet fatta beslut med kvalificerad majoritet enligt den nya definition av detta begrepp som införs genom Lissabonfördraget (se även avsnitt 14.4). Det rör sig bl.a. om rådsbeslut om rekommendationer till en medlemsstat som för en politik som inte är förenlig med de allmänna riktlinjerna eller har ett alltför stort underskott (artiklarna 99.4 104.6 och 104.7 i EUF-fördraget), rådsbeslut om antagande av landsspecifika riktlinjer (artikel 115a.1b i EUF-fördraget), rådsbeslut om åtgärder för att säkerställa ett enat externt handlande (artikel 115c.2 i EUF-fördraget) och olika rådsbeslut som rör de s.k. medlemsstaterna med undantag (artiklarna 116a.4 och 117a.2 i EUF-fördraget). Särskilda övergångsbestämmelser när det gäller omröstning i rådet enligt artikel 205.3 i EUF-fördraget finns i artikel 3.4 i ett protokoll om övergångsbestämmelser som fogas till EU-fördraget, EUF-fördraget och Euratomfördraget ”
These excerpts illustrate ─ especially when compared with their UK counterparts ─ why detailed Swedish government bills are valuable sources on new legislation for students as well as practitioners, even beyond the publication of textbooks incorporating the amendments.
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Lissabonin sopimus (Finland)
Nowadays, Finnish government proposals increasingly reflect the Swedish tradition of detailed government bills.
The Finnish ratification bill, ‘Hallituksen esitys Eduskunnalle Euroopan unionista tehdyn sopimuksen ja Euroopan yhteisön perustamissopimuksen muuttamisesta tehdyn Lissabonin sopimuksen hyväksymisestä ja laiksi sen lainsäädännön alaan kuuluvien määräysten voimaansaattamisesta’ (HE 23/2008 vp), presents an overview of economic and monetary policy (Talous- ja rahapolitiikka) on pages 91 to 92. The corresponding amendments are later described, Article by Article, on pages 209 to 214.
The ratification bill makes the evaluation that the amendments to Article 104 TFEU (ToL), renumbered Article 126 TFEU, make no real difference to the application of the procedures concerning excessive deficits in Article 104 TEC. The new Council procedures in paragraphs 6 and 7 are described (page 210):
”104 artikla (uusi 126 artikla), joka velvoittaa jäsenvaltioita välttämään julkisen talouden liiallisia alijäämiä, vastaa SEY 104 artiklaa. Artiklaan tehdyillä muutoksilla ei ole käytännön merkitystä liiallisen alijäämän menettelyn soveltamiselle.
Artiklan 6 ja 7 kohdassa on määräyksiä neuvoston menettelystä, kun se päättää liiallisen alijäämän olemassaolosta sekä siihen liittyvistä seuraamuksista. Määräykset päätöksentekomenettelystä näissä asioissa ovat uusia. Kun neuvosto päättää liiallisen alijäämän olemassaolosta, asiassa osallisena olevan jäsenvaltion edustaja saa osallistua keskusteluun, mutta hänellä ei ole äänioikeutta.”
A description of Declaration No. 30 (30. Julistus Euroopan unionin toiminnasta tehdyn sopimuksen 104 artiklasta) is given on page 313.
The Finnish ratification bill is available at:
http://www.finlex.fi/fi/esitykset/he/2008/20080023.pdf
The Swedish language version of the ratification bill ‘Regeringens proposition till Riksdagen med förslag om godkännande av Lissabonfördraget om ändring av fördraget om Europeiska unionen och fördraget om upprättandet av Europeiska gemenskapen och till lag om sättande i kraft av de bestämmelser i fördraget som hör till området för lagstiftningen’ (RP 23/2008 rd), offers the same general remarks on economic and monetary policy on pages 93 to 94. The detailed remarks, Article by Article, under ’Ekonomisk och monetär politik’ contain the same description of Article 104 TFEU (ToL), the future Article 126 TFEU as in Finnish, on page 213:
”Artikel 104 (blivande artikel 126), som ålägger medlemsstaterna att undvika alltför stora underskott i den offentliga sektorns finanser, motsvarar artikel 104 i EGfördraget. De ändringar som gjorts i artikeln har ingen praktisk betydelse för tillämpningen av förfarandet för alltför stora underskott.
Artikel 104.6 och 104.7 innehåller bestämmelser om rådets förfarande när det avgör om underskottet är alltför stort samt om påföljderna därav. Bestämmelserna om beslutsförfarandet i dessa frågor är nya. När rådet avgör om underskottet är alltför stort får företrädaren för den berörda medlemsstaten delta i diskussionen, men saknar rösträtt.”
The description of Declaration No. 30 (30. Förklaring till artikel 104 i fördraget om Europeiska unionens funktionssätt) is on page 316.
The ratification bill in Swedish can be accessed at:
http://www.finlex.fi/sv/esitykset/he/2008/20080023.pdf
***
de Poncins
Étienne de Poncins offers a few general comments on EU economic governance and budget matters, ‘La gouvernance économique et les questions budgétaires’ in his ‘Le traité de Lisbonne en 27 clés’ (Éditions Lignes de Repères, 2008), pages 245─251, but nothing specific on Article 126 TFEU.
Fischer
‚Der Vertrag von Lissabon‘, by Klemens H. Fischer (Nomos, Stämpfli & Verlag Österreich, 2008), traces the amendments Article by Article; here on pages 266─269. His remarks on the amendments are fairly detailed.
Priollaud and Siritzky
François-Xavier Priollaud and David Siritzky offer a short introductory explanation on economic and monetary policy (pages 246 and 247). They succinctly present economic policy coordination, including the relevant treaty amendments on excessive government deficits (pages 248 to 250) in their book ‘Le traité de Lisbonne – Commentaire, article par article, des nouveaux traités européens (TUE et TFUE)’ (La Documentation française, Paris, 2008).
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Consultation procedure
The intergovernmental character of EU economic policy coordination is striking. In Article 126 TFEU, the European Parliament is marginalized, either informed or consulted.
Just in case someone wants to reflect on the consultation procedure (and other decision-making procedures), Martin Gellermann offers a description in Rudolf Streinz (Hrsgb.): EUV/EGV Vertrag über die Europäische Union und Vertrag zur Gründung der Europäischen Gemeinschaft (C.H.Beck, 2003). I quote the beginning of Konsultations- oder Anhörungsverfahren (page 2204):
„Als Ursprungsmodell für eine Beteiligung des Europäischen Parlaments am Prozess der gemeinschaftlichen Rechtsetzung erscheint das Konsultations- oder Anhörungsverfahren in dem der Kommission das Initiativrecht, dem Parlament eine Beratungsbefugnis und dem Rat das alleinige Entscheidungsrecht gebührt.“
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The next post is going to present the relevant Annexes to the Lisbon Treaty.
Ralf Grahn
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Lissabonfördraget (Sweden)
The consultation paper ’Lissabonfördraget’ was the first official Swedish description of the Lisbon Treaty amendments, and it is available at:
http://www.regeringen.se/content/1/c6/09/49/81/107aa077.pdf
It was followed by the Swedish government’s draft ratification bill ‘Lagrådsremiss – Lissabonfördraget’, published 29 May 2008:
http://www.regeringen.se/sb/d/5676/a/106277
The draft bill was given a green light by the Council on Legislation (Lagrådet):
http://www.lagradet.se/yttranden/Lissabonfordraget.pdf
The latest official government view, and now my standard reference for Sweden, is the ratification bill, with the Swedish parliament (Riksdagen) expected to decide on approval in late autumn, in November or even later in the year. Committee work has not even started. The ratification bill, Regeringens proposition 2007/08:168 Lissabonfördraget; 3 July 2008, is available at:
http://www.regeringen.se/content/1/c6/10/84/02/8c96cf3e.pdf
Economic and monetary policy (23.2 Ekonomisk och monetary politik) is discussed on pages 180 to 185. The Swedish government presents a fairly detailed description of the current and proposed provisions concerning Article 104 TFEU (ToL). The Commission’s powers in paragraphs 5 and 6 are explained, and joint Declaration No. 30 is mentioned. The government welcomes the proposals to strengthen implementation and monitoring of economic policy (page 182):
”Lissabonfördraget innebär inte, enligt regeringens mening, några genomgripande förändringar i regelverket eller i fördelningen av befogenheter på det ekonomisk-politiska området. Antagandet av de allmänna riktlinjerna ska fortfarande ske på samma sätt som tidigare, med den skillnaden att endast euroländerna får rösta om de rekommendationer som riktar sig till dessa länder (artikel 115a i EUF-fördraget).
En viss förskjutning görs dock i riktning mot mer inflytande för kommissionen. Bestämmelserna syftar till att säkerställa genomförandet av medlemsstaternas åtaganden. Kommissionen ska till exempel få möjlighet att självständigt utfärda en varning till en medlemsstat som inte bedöms efterleva de allmänna riktlinjerna för den ekonomiska politiken. Rådet kommer dock, på samma sätt som i dag, med kvalificerad majoritet och på rekommendation av kommissionen, kunna besluta om att lämna den berörda medlemsstaten de rekommendationer som behövs. Skillnaden gentemot nuvarande bestämmelser är att den berörda medlemsstaten inte får delta i detta beslut (artikel 99 i EUF-fördraget).
Om kommissionen anser att det föreligger eller kan uppstå ett alltför stort underskott i en medlemsstat, lämnar kommissionen idag ett yttrande till rådet. Enligt Lissabonfördraget kommer kommissionen i stället att lämna ett yttrande till den medlemsstaten och informera rådet om detta (artikel 104.5 i EUF-fördraget).
Om kommissionen bedömer att en medlemsstat har ett alltför stort underskott lämnar kommissionen idag en rekommendation till rådet att slå fast detta. Enligt Lissabonfördraget kommer kommissionen i stället att lämna ett förslag i denna fråga (artikel 104.6 i EUF-fördraget). Denna skillnad innebär att rådet, för att ändra innehållet i förslaget från kommissionen, måste uppnå enhällighet om ändringsförslaget. Vid en rekommendation från kommissionen, såsom fallet är i dag, har rådet möjlighet att ändra texten med kvalificerad majoritet.
I en gemensam förklaring (30) till artikel 104 i fördraget om Europeiska unionens funktionssätt bekräftar regeringskonferensen bl.a. att stabilitets- och tillväxtpakten är ett viktigt instrument för att uppnå en ökning av tillväxtpotentialen och ett säkerställande av sunda offentliga finanser.
Instrumenten för genomförande och uppföljning av den ekonomiska politiken behöver stärkas. Det är därför positivt att fördraget innehåller bestämmelser som syftar till detta.”
The new decision-making procedures concerning economic policy are mentioned on page 185, namely the new definition of a qualified majority:
”I ett flertal fall på området ekonomisk och monetär politik ska rådet fatta beslut med kvalificerad majoritet enligt den nya definition av detta begrepp som införs genom Lissabonfördraget (se även avsnitt 14.4). Det rör sig bl.a. om rådsbeslut om rekommendationer till en medlemsstat som för en politik som inte är förenlig med de allmänna riktlinjerna eller har ett alltför stort underskott (artiklarna 99.4 104.6 och 104.7 i EUF-fördraget), rådsbeslut om antagande av landsspecifika riktlinjer (artikel 115a.1b i EUF-fördraget), rådsbeslut om åtgärder för att säkerställa ett enat externt handlande (artikel 115c.2 i EUF-fördraget) och olika rådsbeslut som rör de s.k. medlemsstaterna med undantag (artiklarna 116a.4 och 117a.2 i EUF-fördraget). Särskilda övergångsbestämmelser när det gäller omröstning i rådet enligt artikel 205.3 i EUF-fördraget finns i artikel 3.4 i ett protokoll om övergångsbestämmelser som fogas till EU-fördraget, EUF-fördraget och Euratomfördraget ”
These excerpts illustrate ─ especially when compared with their UK counterparts ─ why detailed Swedish government bills are valuable sources on new legislation for students as well as practitioners, even beyond the publication of textbooks incorporating the amendments.
***
Lissabonin sopimus (Finland)
Nowadays, Finnish government proposals increasingly reflect the Swedish tradition of detailed government bills.
The Finnish ratification bill, ‘Hallituksen esitys Eduskunnalle Euroopan unionista tehdyn sopimuksen ja Euroopan yhteisön perustamissopimuksen muuttamisesta tehdyn Lissabonin sopimuksen hyväksymisestä ja laiksi sen lainsäädännön alaan kuuluvien määräysten voimaansaattamisesta’ (HE 23/2008 vp), presents an overview of economic and monetary policy (Talous- ja rahapolitiikka) on pages 91 to 92. The corresponding amendments are later described, Article by Article, on pages 209 to 214.
The ratification bill makes the evaluation that the amendments to Article 104 TFEU (ToL), renumbered Article 126 TFEU, make no real difference to the application of the procedures concerning excessive deficits in Article 104 TEC. The new Council procedures in paragraphs 6 and 7 are described (page 210):
”104 artikla (uusi 126 artikla), joka velvoittaa jäsenvaltioita välttämään julkisen talouden liiallisia alijäämiä, vastaa SEY 104 artiklaa. Artiklaan tehdyillä muutoksilla ei ole käytännön merkitystä liiallisen alijäämän menettelyn soveltamiselle.
Artiklan 6 ja 7 kohdassa on määräyksiä neuvoston menettelystä, kun se päättää liiallisen alijäämän olemassaolosta sekä siihen liittyvistä seuraamuksista. Määräykset päätöksentekomenettelystä näissä asioissa ovat uusia. Kun neuvosto päättää liiallisen alijäämän olemassaolosta, asiassa osallisena olevan jäsenvaltion edustaja saa osallistua keskusteluun, mutta hänellä ei ole äänioikeutta.”
A description of Declaration No. 30 (30. Julistus Euroopan unionin toiminnasta tehdyn sopimuksen 104 artiklasta) is given on page 313.
The Finnish ratification bill is available at:
http://www.finlex.fi/fi/esitykset/he/2008/20080023.pdf
The Swedish language version of the ratification bill ‘Regeringens proposition till Riksdagen med förslag om godkännande av Lissabonfördraget om ändring av fördraget om Europeiska unionen och fördraget om upprättandet av Europeiska gemenskapen och till lag om sättande i kraft av de bestämmelser i fördraget som hör till området för lagstiftningen’ (RP 23/2008 rd), offers the same general remarks on economic and monetary policy on pages 93 to 94. The detailed remarks, Article by Article, under ’Ekonomisk och monetär politik’ contain the same description of Article 104 TFEU (ToL), the future Article 126 TFEU as in Finnish, on page 213:
”Artikel 104 (blivande artikel 126), som ålägger medlemsstaterna att undvika alltför stora underskott i den offentliga sektorns finanser, motsvarar artikel 104 i EGfördraget. De ändringar som gjorts i artikeln har ingen praktisk betydelse för tillämpningen av förfarandet för alltför stora underskott.
Artikel 104.6 och 104.7 innehåller bestämmelser om rådets förfarande när det avgör om underskottet är alltför stort samt om påföljderna därav. Bestämmelserna om beslutsförfarandet i dessa frågor är nya. När rådet avgör om underskottet är alltför stort får företrädaren för den berörda medlemsstaten delta i diskussionen, men saknar rösträtt.”
The description of Declaration No. 30 (30. Förklaring till artikel 104 i fördraget om Europeiska unionens funktionssätt) is on page 316.
The ratification bill in Swedish can be accessed at:
http://www.finlex.fi/sv/esitykset/he/2008/20080023.pdf
***
de Poncins
Étienne de Poncins offers a few general comments on EU economic governance and budget matters, ‘La gouvernance économique et les questions budgétaires’ in his ‘Le traité de Lisbonne en 27 clés’ (Éditions Lignes de Repères, 2008), pages 245─251, but nothing specific on Article 126 TFEU.
Fischer
‚Der Vertrag von Lissabon‘, by Klemens H. Fischer (Nomos, Stämpfli & Verlag Österreich, 2008), traces the amendments Article by Article; here on pages 266─269. His remarks on the amendments are fairly detailed.
Priollaud and Siritzky
François-Xavier Priollaud and David Siritzky offer a short introductory explanation on economic and monetary policy (pages 246 and 247). They succinctly present economic policy coordination, including the relevant treaty amendments on excessive government deficits (pages 248 to 250) in their book ‘Le traité de Lisbonne – Commentaire, article par article, des nouveaux traités européens (TUE et TFUE)’ (La Documentation française, Paris, 2008).
***
Consultation procedure
The intergovernmental character of EU economic policy coordination is striking. In Article 126 TFEU, the European Parliament is marginalized, either informed or consulted.
Just in case someone wants to reflect on the consultation procedure (and other decision-making procedures), Martin Gellermann offers a description in Rudolf Streinz (Hrsgb.): EUV/EGV Vertrag über die Europäische Union und Vertrag zur Gründung der Europäischen Gemeinschaft (C.H.Beck, 2003). I quote the beginning of Konsultations- oder Anhörungsverfahren (page 2204):
„Als Ursprungsmodell für eine Beteiligung des Europäischen Parlaments am Prozess der gemeinschaftlichen Rechtsetzung erscheint das Konsultations- oder Anhörungsverfahren in dem der Kommission das Initiativrecht, dem Parlament eine Beratungsbefugnis und dem Rat das alleinige Entscheidungsrecht gebührt.“
***
The next post is going to present the relevant Annexes to the Lisbon Treaty.
Ralf Grahn
EU: Excessive government deficits V
What, if anything, has been said about the amendments in Article 126 of the Treaty on the Functioning of the European Union (TFEU) with regard to excessive government deficits? Let us look at some legal materials.
***
Statewatch
Professor Steve Peers covered the Treaty of Lisbon in a number of Statewatch Analyses. ‘EU Reform Treaty Analysis no. 3.4: Revised text of Part Three, Titles VII to XVII of the Treaty establishing the European Community (TEC): Other internal EC policies’ (Version 2, 24 October 2007) includes the current Title VII Economic and monetary policy.
Peers presented the text of Article 104 TFEU (ToL), to be renumbered Article 126 TFEU in the consolidated version, and highlighted the changes. He offered the following comment (page 10):
“The Commission has enhanced power to give warnings and to make a proposal instead of a recommendation in one case (this makes it harder for the Council to change the Commission’s proposal).”
The analysis 3.4 and other useful Statewatch analyses are available through:
http://www.statewatch.org/euconstitution.htm
***
FCO
The Foreign and Commonwealth Office (FCO) offers a convenient source of brief annotations on Lisbon Treaty amendments in ‘A comparative table of the current EC and EU treaties as amended by the Treaty of Lisbon’ (Command Paper 7311, published 21 January 2008). It offers the following comment on Article 126 TFEU, Article 104 TFEU (ToL) in the original Lisbon Treaty (page 12):
“Draws on Article 104 TEC. Main new elements in the excessive deficit procedure are
─ the Commission opinion is to be issued to the Member State concerned and the Council is to be informed
─ paragraph 13 change to majority required for decision-making.”
The FCO comparative table is available at:
http://www.official-documents.gov.uk/document/cm73/7311/7311.asp
***
House of Commons Library
The UK House of Commons Library Research Paper 07/86 ‘The Treaty of Lisbon: amendments to the Treaty establishing the European Community’ (published 6 December 2007) discussed ‘H. Economic and Monetary Policy’ on pages 61 to 64. Article 104 TFEU (ToL) is described on page 62:
“Article 104 (Constitution Article III-184) covers excessive deficits. As in the Constitution, Article 104(5) (III-184(5)) has been changed to the effect that, if the Commission considers that an excessive deficit has occurred or may occur, it can address an opinion directly to the Member State concerned and inform the Council. Previously, the Commission would address this opinion to the Council. Article 104(7) (Constitution Article III-184(6)) adds that when an excessive deficit is established by the Council, recommendations to correct this will be brought forward without “undue delay”. Council decisions relating to Member States will be made without the vote of the Member State concerned (sub-paragraph 13) by a qualified majority.”
The Research Paper added the following useful comment on page 64:
“While the IGC did not agree on a new Stability and Growth Pact, a Conference Declaration regarding the Pact was annexed to the Treaty (“Declaration on Article 104 of the Treaty on the Functioning of the European Union”), in which the Conference confirms that the Pact is an “important tool” in the Union’s economic and fiscal policy and “reaffirms its commitment to the provisions concerning the Stability and Growth Pact as the framework for the coordination of budgetary policies in the Member States”.”
The Library Research Paper 07/86 is available at:
http://www.parliament.uk/commons/lib/research/rp2007/rp07-086.pdf
***
House of Lords
I found nothing on Article 104 TFEU (ToL) or 126 TFEU in the House of Lords European Union Committee report ‘The Treaty of Lisbon: an impact assessment, Volume I: Report’ (HL Paper 62-I, published 13 March 2008).
The report is available at:
http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf
***
The following post is going to present additional legislative materials on Article 126 TFEU.
Ralf Grahn
***
Statewatch
Professor Steve Peers covered the Treaty of Lisbon in a number of Statewatch Analyses. ‘EU Reform Treaty Analysis no. 3.4: Revised text of Part Three, Titles VII to XVII of the Treaty establishing the European Community (TEC): Other internal EC policies’ (Version 2, 24 October 2007) includes the current Title VII Economic and monetary policy.
Peers presented the text of Article 104 TFEU (ToL), to be renumbered Article 126 TFEU in the consolidated version, and highlighted the changes. He offered the following comment (page 10):
“The Commission has enhanced power to give warnings and to make a proposal instead of a recommendation in one case (this makes it harder for the Council to change the Commission’s proposal).”
The analysis 3.4 and other useful Statewatch analyses are available through:
http://www.statewatch.org/euconstitution.htm
***
FCO
The Foreign and Commonwealth Office (FCO) offers a convenient source of brief annotations on Lisbon Treaty amendments in ‘A comparative table of the current EC and EU treaties as amended by the Treaty of Lisbon’ (Command Paper 7311, published 21 January 2008). It offers the following comment on Article 126 TFEU, Article 104 TFEU (ToL) in the original Lisbon Treaty (page 12):
“Draws on Article 104 TEC. Main new elements in the excessive deficit procedure are
─ the Commission opinion is to be issued to the Member State concerned and the Council is to be informed
─ paragraph 13 change to majority required for decision-making.”
The FCO comparative table is available at:
http://www.official-documents.gov.uk/document/cm73/7311/7311.asp
***
House of Commons Library
The UK House of Commons Library Research Paper 07/86 ‘The Treaty of Lisbon: amendments to the Treaty establishing the European Community’ (published 6 December 2007) discussed ‘H. Economic and Monetary Policy’ on pages 61 to 64. Article 104 TFEU (ToL) is described on page 62:
“Article 104 (Constitution Article III-184) covers excessive deficits. As in the Constitution, Article 104(5) (III-184(5)) has been changed to the effect that, if the Commission considers that an excessive deficit has occurred or may occur, it can address an opinion directly to the Member State concerned and inform the Council. Previously, the Commission would address this opinion to the Council. Article 104(7) (Constitution Article III-184(6)) adds that when an excessive deficit is established by the Council, recommendations to correct this will be brought forward without “undue delay”. Council decisions relating to Member States will be made without the vote of the Member State concerned (sub-paragraph 13) by a qualified majority.”
The Research Paper added the following useful comment on page 64:
“While the IGC did not agree on a new Stability and Growth Pact, a Conference Declaration regarding the Pact was annexed to the Treaty (“Declaration on Article 104 of the Treaty on the Functioning of the European Union”), in which the Conference confirms that the Pact is an “important tool” in the Union’s economic and fiscal policy and “reaffirms its commitment to the provisions concerning the Stability and Growth Pact as the framework for the coordination of budgetary policies in the Member States”.”
The Library Research Paper 07/86 is available at:
http://www.parliament.uk/commons/lib/research/rp2007/rp07-086.pdf
***
House of Lords
I found nothing on Article 104 TFEU (ToL) or 126 TFEU in the House of Lords European Union Committee report ‘The Treaty of Lisbon: an impact assessment, Volume I: Report’ (HL Paper 62-I, published 13 March 2008).
The report is available at:
http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf
***
The following post is going to present additional legislative materials on Article 126 TFEU.
Ralf Grahn
EU: Excessive government deficits IV
What does the EU Lisbon Treaty say about excessive government deficits? Let us take a look at our legal materials.
***
The current Treaty establishing the European Community (TEC) was to become the Treaty on the Functioning of the European Union (TFEU), and generally the innovations as agreed in the 2004 IGC were to be inserted into the Treaty by way of specific modifications ‘in the usual manner’ (points 17 and 18, pages 6 and 7).
I found nothing specific in the mandate of the intergovernmental conference (IGC 2007 Mandate, Council document 11218/07, 26 June 2007) about Article 104 TEC or excessive government deficits.
***
In Article 2, point 90 of the original Treaty of Lisbon (ToL) the IGC 2007 agreed on the following concerning Article 104 TEC (OJ 17.12.2007 C 306/71─72):
EXCESSIVE DEFICIT PROCEDURE
90) Article 104 shall be amended as follows:
(a) paragraph 5 shall be replaced by the following:
‘5. If the Commission considers that an excessive deficit in a Member State exists or may occur, it shall address an opinion to the Member State concerned and shall inform the Council accordingly.’;
(b) in paragraph 6, the word ‘recommendation’ shall be replaced by ‘proposal’;
(c) in paragraph 7, the first sentence shall be replaced by ‘Where the Council decides, in accordance with paragraph 6, that an excessive deficit exists, it shall adopt, without undue delay, on a recommendation from the Commission, recommendations addressed to the Member State concerned with a view to bringing that situation to an end within a given period.’;
(d) in the introductory words of the first subparagraph of paragraph 11, there is a change to the French which does not affect the English version;
(e) in paragraph 12, at the beginning of the first sentence, the words ‘its decisions’ shall be replaced by ‘its decisions or recommendations’;
(f) paragraph 13 shall be replaced by the following:
‘13. When taking the decisions or recommendations referred to in paragraphs 8, 9, 11 and 12, the Council shall act on a recommendation from the Commission.
When the Council adopts the measures referred to in paragraphs 6 to 9, 11 and 12, it shall act without taking into account the vote of the member of the Council representing the Member State concerned.
A qualified majority of the other members of the Council shall be defined in accordance with Article 205(3)(a).’;
(g) in paragraph 14, third subparagraph, the words ‘, before 1 January 1994’ shall be deleted.
***
The TFEU table of equivalences confirms that Article 104 TFEU (ToL) in the original Treaty of Lisbon was to be renumbered Article 126 TFEU in the consolidated version, under the title ‘Economic and monetary policy’, renumbered Title VIII (OJ 17.12.2007 C 306/211─212).
(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.)
***
Consolidated Lisbon Treaty
Article 126 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 115/99─102:
Part Three Union policies and internal actions
Title VIII Economic and monetary policy
Chapter 1 Economic policy
Article 126 TFEU
(ex Article 104 TEC)
1. Member States shall avoid excessive government deficits.
2. The Commission shall monitor the development of the budgetary situation and of the stock of government debt in the Member States with a view to identifying gross errors. In particular it shall examine compliance with budgetary discipline on the basis of the following two criteria:
(a) whether the ratio of the planned or actual government deficit to gross domestic product exceeds a reference value, unless:
— either the ratio has declined substantially and continuously and reached a level that comes close to the reference value,
— or, alternatively, the excess over the reference value is only exceptional and temporary and the ratio remains close to the reference value;
(b) whether the ratio of government debt to gross domestic product exceeds a reference value, unless the ratio is sufficiently diminishing and approaching the reference value at a satisfactory pace.
The reference values are specified in the Protocol on the excessive deficit procedure annexed to the Treaties.
3. If a Member State does not fulfil the requirements under one or both of these criteria, the Commission shall prepare a report. The report of the Commission shall also take into account whether the government deficit exceeds government investment expenditure and take into account all other relevant factors, including the medium-term economic and budgetary position of the Member State.
The Commission may also prepare a report if, notwithstanding the fulfilment of the requirements under the criteria, it is of the opinion that there is a risk of an excessive deficit in a Member State.
4. The Economic and Financial Committee shall formulate an opinion on the report of the Commission.
5. If the Commission considers that an excessive deficit in a Member State exists or may occur, it shall address an opinion to the Member State concerned and shall inform the Council accordingly.
6. The Council shall, on a proposal from the Commission, and having considered any observations which the Member State concerned may wish to make, decide after an overall assessment whether an excessive deficit exists.
7. Where the Council decides, in accordance with paragraph 6, that an excessive deficit exists, it shall adopt, without undue delay, on a recommendation from the Commission, recommendations addressed to the Member State concerned with a view to bringing that situation to an end within a given period. Subject to the provisions of paragraph 8, these recommendations shall not be made public.
8. Where it establishes that there has been no effective action in response to its recommendations within the period laid down, the Council may make its recommendations public.
9. If a Member State persists in failing to put into practice the recommendations of the Council, the Council may decide to give notice to the Member State to take, within a specified time limit, measures for the deficit reduction which is judged necessary by the Council in order to remedy the situation.
In such a case, the Council may request the Member State concerned to submit reports in accordance with a specific timetable in order to examine the adjustment efforts of that Member State.
10. The rights to bring actions provided for in Articles 258 and 259 may not be exercised within the framework of paragraphs 1 to 9 of this Article.
11. As long as a Member State fails to comply with a decision taken in accordance with paragraph 9, the Council may decide to apply or, as the case may be, intensify one or more of the following measures:
— to require the Member State concerned to publish additional information, to be specified by the Council, before issuing bonds and securities,
— to invite the European Investment Bank to reconsider its lending policy towards the Member State concerned,
— to require the Member State concerned to make a non-interest-bearing deposit of an appropriate size with the Union until the excessive deficit has, in the view of the Council, been corrected,
— to impose fines of an appropriate size.
The President of the Council shall inform the European Parliament of the decisions taken.
12. The Council shall abrogate some or all of its decisions or recommendations referred to in paragraphs 6 to 9 and 11 to the extent that the excessive deficit in the Member State concerned has, in the view of the Council, been corrected. If the Council has previously made public recommendations, it shall, as soon as the decision under paragraph 8 has been abrogated, make a public statement that an excessive deficit in the Member State concerned no longer exists.
13. When taking the decisions or recommendations referred to in paragraphs 8, 9, 11 and 12, the Council shall act on a recommendation from the Commission.
When the Council adopts the measures referred to in paragraphs 6 to 9, 11 and 12, it shall act without taking into account the vote of the member of the Council representing the Member State concerned.
A qualified majority of the other members of the Council shall be defined in accordance with Article 238(3)(a).
14. Further provisions relating to the implementation of the procedure described in this Article are set out in the Protocol on the excessive deficit procedure annexed to the Treaties.
The Council shall, acting unanimously in accordance with a special legislative procedure and after consulting the European Parliament and the European Central Bank, adopt the appropriate provisions which shall then replace the said Protocol.
Subject to the
***
The current Treaty establishing the European Community (TEC) was to become the Treaty on the Functioning of the European Union (TFEU), and generally the innovations as agreed in the 2004 IGC were to be inserted into the Treaty by way of specific modifications ‘in the usual manner’ (points 17 and 18, pages 6 and 7).
I found nothing specific in the mandate of the intergovernmental conference (IGC 2007 Mandate, Council document 11218/07, 26 June 2007) about Article 104 TEC or excessive government deficits.
***
In Article 2, point 90 of the original Treaty of Lisbon (ToL) the IGC 2007 agreed on the following concerning Article 104 TEC (OJ 17.12.2007 C 306/71─72):
EXCESSIVE DEFICIT PROCEDURE
90) Article 104 shall be amended as follows:
(a) paragraph 5 shall be replaced by the following:
‘5. If the Commission considers that an excessive deficit in a Member State exists or may occur, it shall address an opinion to the Member State concerned and shall inform the Council accordingly.’;
(b) in paragraph 6, the word ‘recommendation’ shall be replaced by ‘proposal’;
(c) in paragraph 7, the first sentence shall be replaced by ‘Where the Council decides, in accordance with paragraph 6, that an excessive deficit exists, it shall adopt, without undue delay, on a recommendation from the Commission, recommendations addressed to the Member State concerned with a view to bringing that situation to an end within a given period.’;
(d) in the introductory words of the first subparagraph of paragraph 11, there is a change to the French which does not affect the English version;
(e) in paragraph 12, at the beginning of the first sentence, the words ‘its decisions’ shall be replaced by ‘its decisions or recommendations’;
(f) paragraph 13 shall be replaced by the following:
‘13. When taking the decisions or recommendations referred to in paragraphs 8, 9, 11 and 12, the Council shall act on a recommendation from the Commission.
When the Council adopts the measures referred to in paragraphs 6 to 9, 11 and 12, it shall act without taking into account the vote of the member of the Council representing the Member State concerned.
A qualified majority of the other members of the Council shall be defined in accordance with Article 205(3)(a).’;
(g) in paragraph 14, third subparagraph, the words ‘, before 1 January 1994’ shall be deleted.
***
The TFEU table of equivalences confirms that Article 104 TFEU (ToL) in the original Treaty of Lisbon was to be renumbered Article 126 TFEU in the consolidated version, under the title ‘Economic and monetary policy’, renumbered Title VIII (OJ 17.12.2007 C 306/211─212).
(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.)
***
Consolidated Lisbon Treaty
Article 126 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 115/99─102:
Part Three Union policies and internal actions
Title VIII Economic and monetary policy
Chapter 1 Economic policy
Article 126 TFEU
(ex Article 104 TEC)
1. Member States shall avoid excessive government deficits.
2. The Commission shall monitor the development of the budgetary situation and of the stock of government debt in the Member States with a view to identifying gross errors. In particular it shall examine compliance with budgetary discipline on the basis of the following two criteria:
(a) whether the ratio of the planned or actual government deficit to gross domestic product exceeds a reference value, unless:
— either the ratio has declined substantially and continuously and reached a level that comes close to the reference value,
— or, alternatively, the excess over the reference value is only exceptional and temporary and the ratio remains close to the reference value;
(b) whether the ratio of government debt to gross domestic product exceeds a reference value, unless the ratio is sufficiently diminishing and approaching the reference value at a satisfactory pace.
The reference values are specified in the Protocol on the excessive deficit procedure annexed to the Treaties.
3. If a Member State does not fulfil the requirements under one or both of these criteria, the Commission shall prepare a report. The report of the Commission shall also take into account whether the government deficit exceeds government investment expenditure and take into account all other relevant factors, including the medium-term economic and budgetary position of the Member State.
The Commission may also prepare a report if, notwithstanding the fulfilment of the requirements under the criteria, it is of the opinion that there is a risk of an excessive deficit in a Member State.
4. The Economic and Financial Committee shall formulate an opinion on the report of the Commission.
5. If the Commission considers that an excessive deficit in a Member State exists or may occur, it shall address an opinion to the Member State concerned and shall inform the Council accordingly.
6. The Council shall, on a proposal from the Commission, and having considered any observations which the Member State concerned may wish to make, decide after an overall assessment whether an excessive deficit exists.
7. Where the Council decides, in accordance with paragraph 6, that an excessive deficit exists, it shall adopt, without undue delay, on a recommendation from the Commission, recommendations addressed to the Member State concerned with a view to bringing that situation to an end within a given period. Subject to the provisions of paragraph 8, these recommendations shall not be made public.
8. Where it establishes that there has been no effective action in response to its recommendations within the period laid down, the Council may make its recommendations public.
9. If a Member State persists in failing to put into practice the recommendations of the Council, the Council may decide to give notice to the Member State to take, within a specified time limit, measures for the deficit reduction which is judged necessary by the Council in order to remedy the situation.
In such a case, the Council may request the Member State concerned to submit reports in accordance with a specific timetable in order to examine the adjustment efforts of that Member State.
10. The rights to bring actions provided for in Articles 258 and 259 may not be exercised within the framework of paragraphs 1 to 9 of this Article.
11. As long as a Member State fails to comply with a decision taken in accordance with paragraph 9, the Council may decide to apply or, as the case may be, intensify one or more of the following measures:
— to require the Member State concerned to publish additional information, to be specified by the Council, before issuing bonds and securities,
— to invite the European Investment Bank to reconsider its lending policy towards the Member State concerned,
— to require the Member State concerned to make a non-interest-bearing deposit of an appropriate size with the Union until the excessive deficit has, in the view of the Council, been corrected,
— to impose fines of an appropriate size.
The President of the Council shall inform the European Parliament of the decisions taken.
12. The Council shall abrogate some or all of its decisions or recommendations referred to in paragraphs 6 to 9 and 11 to the extent that the excessive deficit in the Member State concerned has, in the view of the Council, been corrected. If the Council has previously made public recommendations, it shall, as soon as the decision under paragraph 8 has been abrogated, make a public statement that an excessive deficit in the Member State concerned no longer exists.
13. When taking the decisions or recommendations referred to in paragraphs 8, 9, 11 and 12, the Council shall act on a recommendation from the Commission.
When the Council adopts the measures referred to in paragraphs 6 to 9, 11 and 12, it shall act without taking into account the vote of the member of the Council representing the Member State concerned.
A qualified majority of the other members of the Council shall be defined in accordance with Article 238(3)(a).
14. Further provisions relating to the implementation of the procedure described in this Article are set out in the Protocol on the excessive deficit procedure annexed to the Treaties.
The Council shall, acting unanimously in accordance with a special legislative procedure and after consulting the European Parliament and the European Central Bank, adopt the appropriate provisions which shall then replace the said Protocol.
Subject to the