When the OECD countries seem to be gliding into recession or at least slower growth, strained public finances are going to take further hits. Desperate times will surely bring forth calls for desperate measures, such as monetary financing.
The previous posting showed the dearth of UK references to Article 123 of the Treaty on the Functioning of the European Union (TFEU), but are the legislative materials from Sweden and Finland more illuminating, when we deal with a provision essentially unchanged?
Perhaps legislative documents could be more generous in reminding their readers of the ‘acquis communautaire’ (community patrimony), in addition to highlighting the amendments at hand. All of a sudden the existing rules have to be remembered…
***
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 (Regeringens proposition 2007/08:168 Lissabonfördraget; 3 July 2008):
http://www.regeringen.se/content/1/c6/10/84/02/8c96cf3e.pdf
The Swedish parliament (Riksdagen) is expected to decide on approval in late autumn, probably November.
Economic and monetary policy (23.2 Ekonomisk och monetär politik) is discussed on pages 180 to 185. The Swedish government explains the basic rules in Article 101 TFEU (ToL), on page 184:
”I artiklarna 101–103 i EG-fördraget finns bestämmelser om förbud för Europeiska centralbanken (ECB) och nationella centralbanker att ge de gemensamma institutionerna eller de nationella offentliga organen, inklusive statsägda företag, rätt att övertrassera sina konton eller ge dem andra former av krediter. ECB eller centralbankerna får inte heller direkt från dem förvärva skuldförbindelser. En positiv särbehandling av gemenskapsorgan eller nationella offentliga institutioner eller företag är likaså förbjuden. ”
***
Finland
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), discusses economic and monetary policy (Talous- ja rahapolitiikka) on pages 209 to 214.
The ratification bill briefly remarks on the unchanged nature of Article 101 TFEU (ToL), renumbered Article 123 TFEU (page 210):
”101 artiklaa (uusi 123 artikla), joka koskee Euroopan keskuspankin ja jäsenvaltioiden keskuspankkien tilinylitysoikeuksia ja muita luottojärjestelyjä, ei muuteta.”
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), makes the same remarks under ’Ekonomisk och monetär politik’ about Article 100 TFEU (ToL), the future Article 122 TFEU, on page 213:
” Artikel 101 (blivande artikel 123), som gäller Europeiska centralbankens och medlemsstaternas centralbankers rätt att övertrassera sina konton och andra kreditarrangemang, ändras inte.”
The ratification bill in Swedish can be accessed at:
http://www.finlex.fi/sv/esitykset/he/2008/20080023.pdf
***
France
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), page 245─251.
Austria
‚Der Vertrag von Lissabon‘, by Klemens H. Fischer (Nomos, Stämpfli & Verlag Österreich, 2008), traces the amendments Article by Article; here on page 264. The horizontal amendments are described as „mandatsbedingt redaktionell geändert“.
France
François-Xavier Priollaud and David Siritzky offer a short introductory explanation on economic and monetary policy (pages 246 and 247) and on economic policy coordination, including the treaty amendments (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), but I found no comment on monetary financing.
***
Europa web site
The Europa web site offers links to various topics concerning EU ‘Economic and Monetary Affairs’:
http://europa.eu/pol/emu/index_en.htm
***
ECB
The prohibition on overdraft facilities is far from new, but there are still adjustments to make in some of the newer member states.
Here is an excerpt from the European Central Bank’s press release ‘Publication of the ECB Convergence Report 2008’ (7 May 2008):
“Legislation in Bulgaria, the Czech Republic, Latvia, Hungary, Poland, Romania and Sweden does not comply with all the requirements for central bank independence or legal integration into the Eurosystem. In addition, legislation in Bulgaria, the Czech Republic, Latvia, Hungary, Poland and Romania does not fully comply with the monetary financing prohibition.”
The ECB press release is available at:
http://www.ecb.int/press/pr/date/2008/html/pr080507.en.html
The European Central Bank’s ‘Convergence Report May 2008’ is available in 22 EU languages. The English version can be accessed at:
http://www.ecb.europa.eu/pub/pdf/conrep/cr200805en.pdf
Section 2.2.4 ‘Prohibition on monetary financing and privileged access’, from page 22, offers an illuminating view of Article 101 TEC (and Article 123 TFEU).
Ralf Grahn
Showing posts with label overdraft facility. Show all posts
Showing posts with label overdraft facility. Show all posts
Tuesday, 30 September 2008
EU: Overdraft facilities prohibited V
Member states’ monetary financing by overdraft facilities is prohibited by Article 123 of the Treaty on the Functioning of the European Union (TFEU).
Even if the Lisbon Treaty brings no substantial change, we check some materials with reference to the provision.
***
United Kingdom
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 Article 101 TFEU (ToL), to be renumbered Article 123 TFEU in the consolidated version, and highlighted the other horizontal changes except ‘offices or agencies’, without comment (page 7).
The analysis 3.4 and other useful Statewatch analyses are available through:
http://www.statewatch.org/euconstitution.htm
***
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 123 TFEU, Article 101 TFEU (ToL) in the original Lisbon Treaty (page 12):
“In substance the same as Article 101 TEC, but now includes a reference to agencies” [as well as to offices].
The FCO comparative table is available at:
http://www.official-documents.gov.uk/document/cm73/7311/7311.asp
***
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, but I did not find any remark on Article 101 TFEU (ToL).
The Library Research Paper 07/86 is available at:
http://www.parliament.uk/commons/lib/research/rp2007/rp07-086.pdf
***
I found no references to overdraft or Article 123 in the House of Lords European Union Committee’s report ‘The Treaty of Lisbon: an impact assessment, Volume I: Report’ (HL Paper 62-I, published 13 March 2008).
The impact assessment report is accessible at:
http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf
***
The following part is going to present additional legislative materials on Article 123 TFEU.
Ralf Grahn
Even if the Lisbon Treaty brings no substantial change, we check some materials with reference to the provision.
***
United Kingdom
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 Article 101 TFEU (ToL), to be renumbered Article 123 TFEU in the consolidated version, and highlighted the other horizontal changes except ‘offices or agencies’, without comment (page 7).
The analysis 3.4 and other useful Statewatch analyses are available through:
http://www.statewatch.org/euconstitution.htm
***
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 123 TFEU, Article 101 TFEU (ToL) in the original Lisbon Treaty (page 12):
“In substance the same as Article 101 TEC, but now includes a reference to agencies” [as well as to offices].
The FCO comparative table is available at:
http://www.official-documents.gov.uk/document/cm73/7311/7311.asp
***
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, but I did not find any remark on Article 101 TFEU (ToL).
The Library Research Paper 07/86 is available at:
http://www.parliament.uk/commons/lib/research/rp2007/rp07-086.pdf
***
I found no references to overdraft or Article 123 in the House of Lords European Union Committee’s report ‘The Treaty of Lisbon: an impact assessment, Volume I: Report’ (HL Paper 62-I, published 13 March 2008).
The impact assessment report is accessible at:
http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf
***
The following part is going to present additional legislative materials on Article 123 TFEU.
Ralf Grahn
Monday, 29 September 2008
EU: Overdraft facilities prohibited IV
Article 101 of the Treaty establishing the European Community (TEC) underwent no substantial change during the European Convention and the IGC 2004.
The following intergovernmental conference (IGC 2007), leading to the EU Treaty of Lisbon, had nothing to add to the prohibition on monetary financing.
***
The present 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).
But Article III-181 of the Constitutional Treaty contained no ‘innovations’. Check the mandate of the intergovernmental conference (IGC 2007 Mandate, Council document 11218/07, 26 June 2007).
***
In Article 2, point 87 of the original Treaty of Lisbon (ToL) the IGC 2007 amended Article 100 TEC, and in point 88 it dealt with Article 102, so there were no express amendments with regard to Article 101 TEC (OJ 17.12.2007 C 306/71).
***
The TFEU table of equivalences confirms that Article 101 TEC became Article 101 TFEU (ToL) in the original Treaty of Lisbon and it was later renumbered Article 123 TFEU in the consolidated version, under the title ‘Economic and monetary policy’ renumbered Title VIII (OJ 17.12.2007 C 306/211─212).
***
Article 123 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:
Part Three Union policies and internal actions
Title VIII Economic and monetary policy
Chapter 1 Economic policy
Article 123 TFEU (Lisbon Treaty)
(ex Article 101 TEC)
1. Overdraft facilities or any other type of credit facility with the European Central Bank or with
the central banks of the Member States (hereinafter referred to as ‘national central banks’) in favour of Union institutions, bodies, offices or agencies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the European Central Bank or national central banks of debt instruments.
2. Paragraph 1 shall not apply to publicly owned credit institutions which, in the context of the supply of reserves by central banks, shall be given the same treatment by national central banks and the European Central Bank as private credit institutions.
***
‘European Central Bank’ instead of ‘ECB’, ‘Union’ replacing ‘Community’ and ‘institutions or bodies’ expanding into ‘institutions, bodies, offices or agencies’ are all so called horizontal amendments mentioned in Article 2 of the Treaty of Lisbon (OJ 17.12.2007 C 306/41─42). Otherwise Article 123 TFEU and Article 101 TEC are identical.
***
The following instalment is going to verify the essentially unchanged nature of Article 123 TFEU by taking a look at some materials.
Ralf Grahn
The following intergovernmental conference (IGC 2007), leading to the EU Treaty of Lisbon, had nothing to add to the prohibition on monetary financing.
***
The present 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).
But Article III-181 of the Constitutional Treaty contained no ‘innovations’. Check the mandate of the intergovernmental conference (IGC 2007 Mandate, Council document 11218/07, 26 June 2007).
***
In Article 2, point 87 of the original Treaty of Lisbon (ToL) the IGC 2007 amended Article 100 TEC, and in point 88 it dealt with Article 102, so there were no express amendments with regard to Article 101 TEC (OJ 17.12.2007 C 306/71).
***
The TFEU table of equivalences confirms that Article 101 TEC became Article 101 TFEU (ToL) in the original Treaty of Lisbon and it was later renumbered Article 123 TFEU in the consolidated version, under the title ‘Economic and monetary policy’ renumbered Title VIII (OJ 17.12.2007 C 306/211─212).
***
Article 123 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:
Part Three Union policies and internal actions
Title VIII Economic and monetary policy
Chapter 1 Economic policy
Article 123 TFEU (Lisbon Treaty)
(ex Article 101 TEC)
1. Overdraft facilities or any other type of credit facility with the European Central Bank or with
the central banks of the Member States (hereinafter referred to as ‘national central banks’) in favour of Union institutions, bodies, offices or agencies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the European Central Bank or national central banks of debt instruments.
2. Paragraph 1 shall not apply to publicly owned credit institutions which, in the context of the supply of reserves by central banks, shall be given the same treatment by national central banks and the European Central Bank as private credit institutions.
***
‘European Central Bank’ instead of ‘ECB’, ‘Union’ replacing ‘Community’ and ‘institutions or bodies’ expanding into ‘institutions, bodies, offices or agencies’ are all so called horizontal amendments mentioned in Article 2 of the Treaty of Lisbon (OJ 17.12.2007 C 306/41─42). Otherwise Article 123 TFEU and Article 101 TEC are identical.
***
The following instalment is going to verify the essentially unchanged nature of Article 123 TFEU by taking a look at some materials.
Ralf Grahn
EU: Overdraft facilities prohibited III
Central banks have been pouring liquidity into the markets, but at least the public sector in the EU countries is barred from monetary financing.
In the Treaty establishing a Constitution for Europe, signed by all, but approved internally by 18 member states before ratification stalled, the provisions on economic policy were located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter II ‘Economic and monetary policy’, Section 1 ‘Economic policy’.
Article III-181 is found in OJ 16.12.2004 C 310/78:
Article III-181 Constitution
1. Overdraft facilities or any other type of credit facility with the European Central Bank or with the central banks of the Member States (hereinafter referred to as ‘national central banks’) in favour of Union institutions, bodies, offices or agencies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the European Central Bank or national central banks of debt instruments.
2. Paragraph 1 shall not apply to publicly owned credit institutions which, in the context of the supply of reserves by central banks, shall be given the same treatment by national central banks and the European Central Bank as private credit institutions.
***
We are able to see that Article III-181 of the Constitutional Treaty only added Union ‘offices’ to the first paragraph. Otherwise the provision was identical with Article III-73 of the draft Constitution and almost the same as the current Article 101 TEC.
***
Legislative materials tend to concentrate on the novelties, so the results of following random checks
are hardly surprising.
The Swedish government memorandum ‘Fördraget om upprättande av en konstitution för Europa’ (Utrikesdepartemetet, Departementsserien (Ds) 2004:52, december 2004) described the signed Constitutional Treaty, but I found no comment on Article III-181.
The same applies to the draft ratification bill in Sweden ‘Lagrådsremiss ─ Fördraget om upprättande av en konstitution för Europa’ (Ds 2004:52, 2 June 2005).
***
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). On page 183 Article III-181 was stated to be substantially the same as Article 101 TEC:
”III-181 artikla, jossa kielletään niin sanottu keskuspankkirahoitus, vastaa asiasisällöltään SEY 101 artiklaa.”
***
The same remark can be found 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), page 187:
”Innehållet i artikel III-181, som förbjuder s.k. centralbanksfinansiering, motsvarar i sak artikel 101 i EG-fördraget.”
***
Klemens H. Fischer in ‘Der Europäische Verfassungsvertrag‘ (Nomos, Stämpfli & Manz, 2005), page 310, makes the observations that „Artikel III-181 EUVV korrespondiert mit Artikel 101 EGV“ and „Artikel III-181 EUVV korrespondiert mit Artikel III-73 VVE“.
***
Both the texts of the Articles and the (lack of) comments have shown that there was no substantial change between the current TEC and the Constitutional Treaty.
The next instalment turns to the IGC 2007 and the Lisbon Treaty.
Ralf Grahn
In the Treaty establishing a Constitution for Europe, signed by all, but approved internally by 18 member states before ratification stalled, the provisions on economic policy were located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter II ‘Economic and monetary policy’, Section 1 ‘Economic policy’.
Article III-181 is found in OJ 16.12.2004 C 310/78:
Article III-181 Constitution
1. Overdraft facilities or any other type of credit facility with the European Central Bank or with the central banks of the Member States (hereinafter referred to as ‘national central banks’) in favour of Union institutions, bodies, offices or agencies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the European Central Bank or national central banks of debt instruments.
2. Paragraph 1 shall not apply to publicly owned credit institutions which, in the context of the supply of reserves by central banks, shall be given the same treatment by national central banks and the European Central Bank as private credit institutions.
***
We are able to see that Article III-181 of the Constitutional Treaty only added Union ‘offices’ to the first paragraph. Otherwise the provision was identical with Article III-73 of the draft Constitution and almost the same as the current Article 101 TEC.
***
Legislative materials tend to concentrate on the novelties, so the results of following random checks
are hardly surprising.
The Swedish government memorandum ‘Fördraget om upprättande av en konstitution för Europa’ (Utrikesdepartemetet, Departementsserien (Ds) 2004:52, december 2004) described the signed Constitutional Treaty, but I found no comment on Article III-181.
The same applies to the draft ratification bill in Sweden ‘Lagrådsremiss ─ Fördraget om upprättande av en konstitution för Europa’ (Ds 2004:52, 2 June 2005).
***
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). On page 183 Article III-181 was stated to be substantially the same as Article 101 TEC:
”III-181 artikla, jossa kielletään niin sanottu keskuspankkirahoitus, vastaa asiasisällöltään SEY 101 artiklaa.”
***
The same remark can be found 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), page 187:
”Innehållet i artikel III-181, som förbjuder s.k. centralbanksfinansiering, motsvarar i sak artikel 101 i EG-fördraget.”
***
Klemens H. Fischer in ‘Der Europäische Verfassungsvertrag‘ (Nomos, Stämpfli & Manz, 2005), page 310, makes the observations that „Artikel III-181 EUVV korrespondiert mit Artikel 101 EGV“ and „Artikel III-181 EUVV korrespondiert mit Artikel III-73 VVE“.
***
Both the texts of the Articles and the (lack of) comments have shown that there was no substantial change between the current TEC and the Constitutional Treaty.
The next instalment turns to the IGC 2007 and the Lisbon Treaty.
Ralf Grahn
EU: Overdraft facilities prohibited II
We turn to the European Convention, the closest thing to a constituent assembly EU citizens have had since the 1950s and 1980s. The proposed Article corresponding to Article 101 TEC is located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter II ‘Economic and monetary policy’, Section 1 ‘Economic policy’.
Article III-73 of the draft Treaty establishing a Constitution for Europe, OJ 18.7.2003 C 169/40:
Article III-73 Draft Constitution
1. Overdraft facilities or any other type of credit facility with the European Central Bank or with the central banks of the Member States (hereinafter referred to as ‘national central banks’) in favour of Union institutions, bodies or agencies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the European Central Bank or national central banks of debt instruments.
2. Paragraph 1 shall not apply to publicly owned credit institutions which, in the context of the supply of reserves by central banks, shall be given the same treatment by national central banks and the European Central Bank as private credit institutions.
***
The draft Constitution followed the current TEC text closely, with the customary terminological differences, such as the ‘European Central Bank’ replacing the ‘ECB’.
The government of Sweden presented its views on the draft Constitution in ‘Europeiska konventet om EU:s framtid’ (Utrikesdepartementet, Departementsserien (Ds) 2003:58, 2003), but I found no comment regarding the essentially unchanged Article III-73.
***
Ahead of the intergovernmental conference (IGC 2003─2004), the government of Sweden stated its positions on economic policy provisions, in ‘Europeiska konventet om EU:s framtid’ (Regeringens skrivelse 2003/04:13, den 2 oktober 2003), on pages 49─50, but there was no comment on Article III-73.
***
Likewise, ‘A Constitutional Treaty for the EU ─ The British Approach to the European Union Intergovernmental Conference 2003’ (FCO, Cm5934, September 2003) was silent on Article III-73 of the draft Constitution.
***
Étienne de Poncins presented the proposed text of Article III-73 of the draft Constitution in ‘Vers une Constitution européenne’ (Éditions 10/18, 2003), page 295, without comment.
***
In the following instalment we look at the prohibition against government borrowing from central banks ─ monetary financing ─ in the Constitutional Treaty.
Ralf Grahn
Article III-73 of the draft Treaty establishing a Constitution for Europe, OJ 18.7.2003 C 169/40:
Article III-73 Draft Constitution
1. Overdraft facilities or any other type of credit facility with the European Central Bank or with the central banks of the Member States (hereinafter referred to as ‘national central banks’) in favour of Union institutions, bodies or agencies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the European Central Bank or national central banks of debt instruments.
2. Paragraph 1 shall not apply to publicly owned credit institutions which, in the context of the supply of reserves by central banks, shall be given the same treatment by national central banks and the European Central Bank as private credit institutions.
***
The draft Constitution followed the current TEC text closely, with the customary terminological differences, such as the ‘European Central Bank’ replacing the ‘ECB’.
The government of Sweden presented its views on the draft Constitution in ‘Europeiska konventet om EU:s framtid’ (Utrikesdepartementet, Departementsserien (Ds) 2003:58, 2003), but I found no comment regarding the essentially unchanged Article III-73.
***
Ahead of the intergovernmental conference (IGC 2003─2004), the government of Sweden stated its positions on economic policy provisions, in ‘Europeiska konventet om EU:s framtid’ (Regeringens skrivelse 2003/04:13, den 2 oktober 2003), on pages 49─50, but there was no comment on Article III-73.
***
Likewise, ‘A Constitutional Treaty for the EU ─ The British Approach to the European Union Intergovernmental Conference 2003’ (FCO, Cm5934, September 2003) was silent on Article III-73 of the draft Constitution.
***
Étienne de Poncins presented the proposed text of Article III-73 of the draft Constitution in ‘Vers une Constitution européenne’ (Éditions 10/18, 2003), page 295, without comment.
***
In the following instalment we look at the prohibition against government borrowing from central banks ─ monetary financing ─ in the Constitutional Treaty.
Ralf Grahn
Sunday, 28 September 2008
EU: Overdraft facilities prohibited I
In order to promote financial and budgetary discipline, the economic and monetary union (EMU) prohibits overdraft facilities by member states or their public entities from the European Central Bank (ECB) or the national central banks.
Article 101 of the Treaty establishing the European Community (TEC) is one of the provisions aiming at fiscal discipline through the independence of central banks.
***
Article 101 of the Treaty establishing the European Community (TEC) is found in the latest consolidated version of the current treaties, published in the Official Journal of the European Union 29.12.2006 C 321 E/83─84:
Part Three – Community policies
Title VII – Economic and monetary policy
Chapter 1 – Economic policy
Article 101 TEC
1. Overdraft facilities or any other type of credit facility with the ECB or with the central banks of the Member States (hereinafter referred to as ‘national central banks’) in favour of Community institutions or bodies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the ECB or national central banks of debt instruments.
2. Paragraph 1 shall not apply to publicly owned credit institutions which, in the context of the supply of reserves by central banks, shall be given the same treatment by national central banks and the ECB as private credit institutions.
***
The current Article 101 TEC was introduced, as Article 104, by the Treaty on European Union, also known as the Treaty of Maastricht (OJ 29.7.1992 C 191).
The Europa web portal offers an overview of the ‘Treaty of Maastricht on European Union’:
http://europa.eu/scadplus/treaties/maastricht_en.htm
The text of the Maastricht Treaty is available at (although only the OJ text is legally binding):
http://eur-lex.europa.eu/en/treaties/dat/11992M/htm/11992M.html
***
Here are a few examples of materials on economic and monetary union (EMU), and the EU’s fiscal rules in general:
A general introduction to economic and monetary union (EMU), with further useful references, is found in Paul Craig & Gráinne de Búrca, ‘EU Law ─ Text, Cases, and Materials’ (Oxford University Press, 4th edition, 2008), pages 728─742.
Anthony Annett & Albert Jaeger: Europe’s Quest for Fiscal Discipline ─ Will the Stability and Growth Pact help Europe find the right balance between fiscal discipline and flexibility? (IMF, Finance & Development, June 2004):
http://imf.org/external/pubs/ft/fandd/2004/06/pdf/annett.pdf
Ludger Schuknecht: EU Fiscal Rules ─ Issues and Lessons from Political Economy (European Central Bank, Working Paper Series No 421, December 2004) looks at “soft law” convergence versus fiscal sovereignty:
http://www.ecb.int/pub/pdf/scpwps/ecbwp421.pdf
The current financial turmoil is reflected in the newspaper article by Matthew Saltmarsh ‘EU budget rules face test with downturn’ (International Herald Tribune, 9 September 2008):
http://www.iht.com/articles/2008/09/09/business/budget.php?page=2?pass=true
***
The prohibitions underpinning fiscal discipline are briefly depicted in the following books:
Kari Joutsamo, Pekka Aalto, Heidi Kaila & Antti Maunu in ‘Eurooppaoikeus’ (Kauppakaari, 2000) presents the background in Finnish in the chapter ‘Talous- ja rahaliitto EMU’ (pages 740─766), especially the section on economic policy ’15.4 Talouspolitiikka’(pages 755─760), with the provisions on budgetary discipline on page 758.
Bernhard Nagel: Wirtschaftsrecht der Europäischen Union (Nomos, 4. Auflage, 2003) explains Article 101 TEC in the following terms:
„Einer der Kernpunkte der Unabhängigkeit der EZB ist das Verbot der Kreditgewährung an die EG oder die EG-Mitgliedstaaten. Die Mitgliedstaaten können von der Europäischen Zentralbank keine Überziehungskredite erhalten. Damit ist den Mitgliedstaaten erstens der Einsatz der Notenpresse zur Finanzierung ihrer Defizite verwehrt (vgl. Art. 101 und Art. 116 Abs. 3 EG).“
***
The Europa web portal offers a presentation ‘Prohibition on the central banks granting credit facilities to public authorities and undertakings’:
http://eur-lex.europa.eu/en/treaties/dat/11992M/htm/11992M.html
The text of Council Regulation (EC) No 3603/93 of 13 December 1993 specifying definitions for the application of the prohibitions referred to in Articles 104 and 104b (1) of the Treaty (OJ 31.12.1993 L 332) is available at:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31993R3603:EN:HTML
***
What constitutes a prohibited overdraft facility? The question is not purely theoretical, as shown by the fresh Opinion of the European Central Bank of 9 September 2008 at the request of the Austrian Federal Ministry of Finance on a draft Federal law providing for an Austrian contribution to the HIPC-Trust Fund for Liberia’s debt relief (CON/2008/41), available at:
http://www.ecb.int/ecb/legal/pdf/en_con_2008_41.pdf
***
Next, we look at the corresponding proposal of the European Convention.
Ralf Grahn
Article 101 of the Treaty establishing the European Community (TEC) is one of the provisions aiming at fiscal discipline through the independence of central banks.
***
Article 101 of the Treaty establishing the European Community (TEC) is found in the latest consolidated version of the current treaties, published in the Official Journal of the European Union 29.12.2006 C 321 E/83─84:
Part Three – Community policies
Title VII – Economic and monetary policy
Chapter 1 – Economic policy
Article 101 TEC
1. Overdraft facilities or any other type of credit facility with the ECB or with the central banks of the Member States (hereinafter referred to as ‘national central banks’) in favour of Community institutions or bodies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the ECB or national central banks of debt instruments.
2. Paragraph 1 shall not apply to publicly owned credit institutions which, in the context of the supply of reserves by central banks, shall be given the same treatment by national central banks and the ECB as private credit institutions.
***
The current Article 101 TEC was introduced, as Article 104, by the Treaty on European Union, also known as the Treaty of Maastricht (OJ 29.7.1992 C 191).
The Europa web portal offers an overview of the ‘Treaty of Maastricht on European Union’:
http://europa.eu/scadplus/treaties/maastricht_en.htm
The text of the Maastricht Treaty is available at (although only the OJ text is legally binding):
http://eur-lex.europa.eu/en/treaties/dat/11992M/htm/11992M.html
***
Here are a few examples of materials on economic and monetary union (EMU), and the EU’s fiscal rules in general:
A general introduction to economic and monetary union (EMU), with further useful references, is found in Paul Craig & Gráinne de Búrca, ‘EU Law ─ Text, Cases, and Materials’ (Oxford University Press, 4th edition, 2008), pages 728─742.
Anthony Annett & Albert Jaeger: Europe’s Quest for Fiscal Discipline ─ Will the Stability and Growth Pact help Europe find the right balance between fiscal discipline and flexibility? (IMF, Finance & Development, June 2004):
http://imf.org/external/pubs/ft/fandd/2004/06/pdf/annett.pdf
Ludger Schuknecht: EU Fiscal Rules ─ Issues and Lessons from Political Economy (European Central Bank, Working Paper Series No 421, December 2004) looks at “soft law” convergence versus fiscal sovereignty:
http://www.ecb.int/pub/pdf/scpwps/ecbwp421.pdf
The current financial turmoil is reflected in the newspaper article by Matthew Saltmarsh ‘EU budget rules face test with downturn’ (International Herald Tribune, 9 September 2008):
http://www.iht.com/articles/2008/09/09/business/budget.php?page=2?pass=true
***
The prohibitions underpinning fiscal discipline are briefly depicted in the following books:
Kari Joutsamo, Pekka Aalto, Heidi Kaila & Antti Maunu in ‘Eurooppaoikeus’ (Kauppakaari, 2000) presents the background in Finnish in the chapter ‘Talous- ja rahaliitto EMU’ (pages 740─766), especially the section on economic policy ’15.4 Talouspolitiikka’(pages 755─760), with the provisions on budgetary discipline on page 758.
Bernhard Nagel: Wirtschaftsrecht der Europäischen Union (Nomos, 4. Auflage, 2003) explains Article 101 TEC in the following terms:
„Einer der Kernpunkte der Unabhängigkeit der EZB ist das Verbot der Kreditgewährung an die EG oder die EG-Mitgliedstaaten. Die Mitgliedstaaten können von der Europäischen Zentralbank keine Überziehungskredite erhalten. Damit ist den Mitgliedstaaten erstens der Einsatz der Notenpresse zur Finanzierung ihrer Defizite verwehrt (vgl. Art. 101 und Art. 116 Abs. 3 EG).“
***
The Europa web portal offers a presentation ‘Prohibition on the central banks granting credit facilities to public authorities and undertakings’:
http://eur-lex.europa.eu/en/treaties/dat/11992M/htm/11992M.html
The text of Council Regulation (EC) No 3603/93 of 13 December 1993 specifying definitions for the application of the prohibitions referred to in Articles 104 and 104b (1) of the Treaty (OJ 31.12.1993 L 332) is available at:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31993R3603:EN:HTML
***
What constitutes a prohibited overdraft facility? The question is not purely theoretical, as shown by the fresh Opinion of the European Central Bank of 9 September 2008 at the request of the Austrian Federal Ministry of Finance on a draft Federal law providing for an Austrian contribution to the HIPC-Trust Fund for Liberia’s debt relief (CON/2008/41), available at:
http://www.ecb.int/ecb/legal/pdf/en_con_2008_41.pdf
***
Next, we look at the corresponding proposal of the European Convention.
Ralf Grahn
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