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Agreements on monetary relations (Monaco, San Marino, the Vatican and Andorra)

With the introduction of the euro, it was necessary to redefine monetary relations with neighbouring countries which had no national currency but which used the former national currencies of Member States of the euro zone, such as Monaco, San Marino and the Vatican. Monetary agreements were drawn up setting out the conditions under which these countries would be permitted to use the euro. They were also allowed to mint a certain number of euro coins, which are now sought after by collectors. In 2003 Andorra also requested that a monetary agreement of this type be concluded.

ACTS

Monaco

Council Decision 1999/96/EC of 31 December 1998 on the position to be taken by the Community regarding an agreement concerning the monetary relations with the Principality of Monaco.

San Marino

Council Decision 1999/97/EC of 31 December 1998 on the position to be taken by the Community regarding an agreement concerning the monetary relations with the Republic of San Marino.

The Vatican

Council Decision 1999/98/EC of 31 December 1998 on the position to be taken by the Community regarding an agreement concerning the monetary relations with Vatican City.

Council Decision 2003/738/EC of 7 October 2003 on the adoption of amendments to be made to the Monetary Agreement between the Italian Republic and the Vatican City State.

Andorra

Council Decision 2004/548/EC of 11 May 2004 on the position to be taken by the Community regarding an agreement concerning the monetary relations with the Principality of Andorra.

Council Decision 2004/750/EC of 21 October 2004 on the opening of the negotiations on an agreement concerning monetary relations with the Principality of Andorra.

SUMMARY

SITUATION BEFORE THE INTRODUCTION OF THE EURO

MONACO

France has particular monetary links with Monaco which are based on various legal instruments and whereby, before the introduction of the euro, notes and coins issued by France were legal tender in Monaco. Coins issued by Monaco were legal tender only there. Monaco does not have a currency or central bank of its own.

Financial institutions located in Monaco had access to - but had never used - the refinancing facilities of the Banque de France under the same conditions as French banks. They also participated in certain French payment systems on the same terms. Similarly, they are subject to the same minimum reserve and statistical reporting requirements. They are also supervised by the competent French authorities.

SAN MARINO

Italy has concluded several agreements with San Marino containing provisions on monetary matters to the effect that notes and coins issued by Italy were legal tender in San Marino. With the exception of gold coins, coins issued by San Marino had the same shape, size and composition as coins circulating in Italy. The agreements limited the number of such coins that could be issued; these coins were legal tender in San Marino and in Italy. San Marino has undertaken not to issue any notes, coins or monetary surrogates of any kind. It does not have a currency or central bank of its own even though the Instituto di Credito Sammarinese performs functions similar to those of a central bank.

Financial institutions located in San Marino do not have access to the refinancing facilities of the Bank of Italy. Only one of them participates in Italy's real-time gross settlement system (RTGS).

THE VATICAN

Italy also has particular monetary links with the Vatican that are based on an agreement whereby coins issued by Italy were legal tender in the Vatican. Notes issued by the Bank of Italy were not legal tender but, in practice, circulated on Vatican territory. Coins other than gold coins issued by the Vatican had the same shape, size and composition as coins circulating in Italy. The agreement limited the number of such coins that could be issued; these were legal tender in the Vatican and in Italy. The Vatican does not have a currency or central bank of its own.

Financial institutions located in the Vatican do not have access to the refinancing facilities of the Bank of Italy or to Italy's national real-time gross settlement system. They are not subject to supervision by the Italian authorities.

GENERAL PROVISIONS OF THE COUNCIL DECISIONS

On 1 January 1999 the euro became the currency of France and of Italy. The European System of Central Banks (ESCB) is responsible for formulating monetary policy. In their present form, the agreements are not compatible with the allocation of competence laid down in the Maastricht Treaty for monetary and exchange-rate matters. New agreements must, therefore, be concluded between the Community, Monaco, San Marino and the Vatican.

These decisions stipulate that Monaco, San Marino and the Vatican could be authorised, subject to an agreement with the Community, to use the euro as their official currency.

They must undertake not to issue any notes, coins or monetary surrogates unless this is expressly provided for in the agreement.

Monaco, San Marino and the Vatican must comply with the Community rules governing euro notes and coins and, in particular, copyright, the exchange of damaged notes and the reproduction of notes and coins. They must also cooperate with the Community in protecting euro notes and coins against counterfeiting.

The Community may authorise financial institutions located in Monaco, San Marino and the Vatican to have access to some or all of the national payment systems in France and Italy. Such a decision can be taken only with the consent of the European Central Bank (ECB).

France and Italy are conducting the negotiations and will conclude the agreements in accordance with Article 111(3) of the EC Treaty.

France and Italy will submit the draft agreement to the Economic and Financial Committee for its opinion. If the Commission or the ECB, each of which will be fully associated with the negotiations, or the Economic and Financial Committee considers that the agreement must be submitted to the Council, the agreement will be concluded only once the Council has taken a decision in accordance with Article 111(3) of the EC Treaty.

Any bilateral agreement must be compatible not only with the allocation of competence laid down in the Maastricht Treaty for monetary and exchange-rate matters but also with the agreements already concluded between the Community and Monaco, San Marino and the Vatican.

Decision 2003/738/EC

This decision authorises Italy to amend the Monetary Convention concluded between the Italian Republic and the Vatican and to raise the total face value of the euro coins which the Vatican is allowed to issue each year to EUR 1 000 000 (from EUR 670 000).

ANDORRA

On 15 July 2003 Andorra formally requested the conclusion of a monetary agreement with the Community that would allow it to officially grant the euro legal-tender status and to issue banknotes, coins and collector coins.

Before the introduction of the euro, French and Spanish banknotes and coins were used as a quasi-official currency without having legal-tender status. They were replaced by the euro in 2002. In its decision of 11 May 2004, the Council adopted the position to be taken in the negotiations which the Commission will conduct on behalf of the Community.

The Commission formally recommended the opening of negotiations on 9 August 2004 since all the conditions had been met. Firstly, the Agreement providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments was signed in Brussels on 1 July 2004. Secondly, Andorra notified the Commission in writing of its intention to ratify this Agreement before 30 April 2005.

On 21 October 2004, the Council adopted a decision stating that the necessary conditions for the opening of the negotiations with the Principality of Andorra have been fulfilled. The European Commission informed Andorra of the Community's readiness to conclude an agreement on monetary matters and proposed negotiations for such an agreement.

REFERENCES

ActEntry into force - Date of expiryDeadline for transposition in the Member StatesOfficial Journal
Decision 1999/96/EC31.12.1998-OJ L 30 of 4.2.1999
Decision 1999/97/EC31.12.1998-OJ L 30 of 4.2.1999
Decision 1999/98/EC31.12.1998-OJ L 30 of 4.2.1999
Decision 2003/738/EC7.10.2003-OJ L 267 of 17.10.2003
Decision 2004/548/EC11.5.2004-OJ L 244 of 16.7.2004
Decision 2004/750/EC6.11.2004-OJ L 332 of 6.11.2004

RELATED ACTS

MONACO

Monetary Agreement between the Government of the French Republic, on behalf of the European Community, and the Government of His Serene Highness the Prince of Monaco [Official Journal L 142 of 31.5.2002].

Since 1 January 1999 the Principality of Monaco has been entitled to use the euro as its official currency. It does not have the right to issue euro banknotes. Since 1 January 2002 it has been entitled to issue euro coins with an annual volume of 1/500th of the quantity of coins minted in France. The coins are identical to other euro coins with respect to the face value, legal-tender status and the technical characteristics and artistic features of the common side. The Community authorities will be notified of the design characteristics of the national side. The Principality is allowed to issue euro collector coins, but these are not legal tender in the Community.

SAN MARINO

Monetary Agreement between the Italian Republic, on behalf of the European Community, and the Republic of San Marino [Official Journal C 209 of 27.7.2001].

Since 1 January 1999 the Republic of San Marino has been entitled to use the euro as its official currency. It does not issue banknotes, coins or monetary surrogates of any kind, with the exception of the limited number of euro coins specified in the Agreement. It is allowed to mint euro coins up to a maximum annual face value of EUR 1 944 000. The coins are identical to other euro coins with respect to the face value, legal-tender status and the technical characteristics and artistic features of the common side. The Community authorities will be notified of the design characteristics of the national side. The Agreement does not alter the right of the Republic to continue to issue gold coins denominated in scudi. The Republic is allowed to issue euro collector coins, but neither these nor the gold coins denominated in scudi are legal tender in the Community.

The Vatican

Monetary Agreement between the Italian Republic, on behalf of the European Community, and the Vatican City State and, on its behalf, the Holy See [Official Journal C 299 of 25.10.2001].

Since 1 January 1999 the Vatican City State has been entitled to use the euro as its official currency. It does not issue banknotes, coins or monetary surrogates of any kind, with the exception of the limited number of euro coins specified in the Agreement. It was allowed to mint euro coins up to a maximum annual face value of EUR 670 000. In the year in which a vacancy occurs in the Holy See, in a Jubilee Year or in the year of the opening of an Ecumenical Council, it could issue additional coins to the value of EUR 201 000. The coins are identical to other euro coins with respect to the face value, legal-tender status and the technical characteristics and artistic features of the common side. The Community authorities are to be notified of the design characteristics of the national side. The Vatican is allowed to issue euro collector coins, but these are not legal tender in the Community.

The amending agreement was signed on 22 December 2003 and entered into force on 1 January 2004. The Vatican is authorised to issue euro coins for a maximum annual face value of EUR 1 000 000. In the year when the Holy See becomes vacant and in each Jubilee Year, the Vatican may issue additional coins totalling a maximum of EUR 300 000.

CHARACTERISTICS OF THE EURO COINS

Communication from the Commission - The visual characteristics of the euro coins [COM(2001) 776 final - Official Journal C 373 of 28.12.2001].

The communication provides a detailed description of euro coins (artistic features of the different national sides and the common side) and photographs of the different coins, including the ones from Monaco, San Marino and the Vatican.

Last updated: 06.10.2006
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