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

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