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Monetary law of participating Member States

This Regulation defines the monetary law provisions of the Member States which have adopted the euro.

ACT

Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro [See amending acts].

SUMMARY

This Regulation defines the monetary law of the Member States which have adopted the euro as the single currency and describes the different stages relating to the introduction of the euro in a Member State.

After adopting the euro, a Member State is able to benefit from a transitional period or a phasing-out period in order to facilitate the changeover to the single currency. The euro is introduced in the Member State and comes to replace the former national currency permanently.

Transitional period

The transitional period lasts for a maximum of three years. It starts on the euro adoption date and ends on the Member State’s cash changeover date:

  • the euro adoption date is the date from which the Member State enters the third stage of economic and monetary union. This stage is the subject of a Council decision authorising the Member State concerned to join the euro.
  • the cash changeover date is the date from which the euro becomes legal tender in the territory of the Member State. Euro banknotes and coins may then be used in the Member State concerned.

The aim of the transitional period is to allow a smooth transition between the national currency of the Member State and the euro. During this period, the monetary law of the Member State which was in force before the adoption of the euro continues to apply. The national currency therefore retains its status of legal tender in the territory of the Member State and may continue to be used.

During the transitional period, the Member State also has the opportunity to prepare for the changeover to the euro in the country. The euro may therefore start to be used for certain financial transactions:

  • banking transactions: for example, a bank receiving a payment in the euro unit will have to carry out the necessary conversion (according to the conversion rate) to credit an account denominated in the national monetary unit (and vice versa);
  • the outstanding public debt and public expenditure of the Member State: the amounts of this expenditure may be expressed in euros;
  • certain markets, particularly in the field of securities and commodities: the national currency unit may be replaced in transactions by the euro unit.

However, the transitional period is not mandatory. The euro adoption date may therefore coincide with the cash changeover date. In such a case, the Member State must apply a phasing-out period all the same.

Phasing-out period

The phasing-out period lasts for up to one year. It applies only to Member States which have not had a transitional period between the adoption of the euro and the cash changeover date.

The aim of the phasing-out period is to substitute the euro for the national currency in a gradual manner. During this period, the basic unit must be the euro but it is still possible to refer to the former national currency unit.

Substitution of the euro for the national currency

With effect from the cash changeover date, the euro acquires the status of legal tender and becomes the official currency of the Member State.

The euro is then substituted for the national currency at the conversion rate determined by the Council. In addition, euro banknotes and coins become the only banknotes and coins which have the status of legal tender in the Member State. Any reference to the national currency units made before the cash changeover is therefore regarded as a reference to the euro according to the conversion rates.

It should be noted that the former national currency may still be used after the cash changeover during a ‘dual circulation’ period which may not exceed six months.

Euro banknotes and coins

The euro will become the unit of account of the European Central Bank (ECB) and of the national central banks of the participating Member States. The ECB and the national central banks will also be authorised to put euro banknotes and coins into circulation. These banknotes and coins shall be the only banknotes and coins which have the status of legal tender in the euro zone.

Participating Member States will also be responsible for combating counterfeiting and falsification of euro banknotes and coins.

Adapting the Regulation to enlargements of the euro zone

This Regulation will be amended each time a new Member State adopts the euro. It lists the Member States participating in the euro zone in an annex and states the euro adoption date and the cash changeover date for each Member State.

REFERENCES

ActEntry into forceDeadline for transposition in the Member StatesOfficial Journal

Regulation (EC) No 974/98

1.1.1999

-

OJ L139 of 11.5.1998

Amending actsEntry into forceDeadline for transposition in the Member StatesOfficial Journal

Regulation (EC) No 2596/2000

1.1.2001

-

OJ L 300 of 29.11.2000

Regulation (EC) No 2169/2005

18. 1.2006

-

OJ L 346 of 29.12.2005

Regulation (EC) No 1647/2006

1.1.2007

-

OJ L 309 of 9.11.2006

Regulation (EC) No 835/2007

1.1.2008

-

OJ L 186 of 18.7.2007

Regulation (EC) No 836/2007

1.1.2008

-

OJ L 186 of 18.7.2007

Regulation (EC) No 693/2008

1.1.2009

-

OJ L 195 of 24.7.2008

Regulation (EU) No 670/2010

1.1.2011

-

OJ L 196 of 27.8.2010

Last updated: 23.10.2010
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