The impact on Community policies, institutions and legislation
The European Commission provides a comprehensive assessment of the changeover to the euro at Community level and the resulting effects on Member States.
Commission Communication of 5 November 1997: The impact of the changeover to the euro on Community policies, institutions and legislation [COM (97) 560 final - Not published in the Official Journal].
At the time the communication was drawn up, the budget was cast in ecus but both revenue (resources) and expenditure are wholly or partly realised on the basis of national currency values.
- On the revenue side, the contributions are paid by the Member States in national currency;
- On the expenditure side, the appropriations are generally committed and paid in ecus, with the exception of the payment obligations under the Guarantee Section of the EAGGF and the administrative budget.
Operations carried out in national currency result in the Community budget having to bear the exchange risk, since the exchange value in ecus can fluctuate.
With the introduction of the euro, the participating Member States will have their currency in common with the Community budget. This will have the effect of completely removing the exchange risk for operations still carried out in national currency. However, as far as the "pre-in" countries (Denmark, the United Kingdom and Sweden) are concerned, the exchange risk would persist for this type of operation.
The agri-monetary regime will be affected in different ways by the introduction of the euro:
- For the participating countries, it will no longer be necessary to convert amounts (the Community will reimburse in euros any expenditure made in euros by the Member State concerned); however, there remains a difference between the rates used in the agri-monetary regime and the fixed and irrevocable conversion rates. This situation will have to be rectified in a manner still to be determined.
- For the "pre-in" countries, there will still be a need for a conversion rate, but the system could be adjusted.
Adjustments to the agri-monetary regime will also apply to the fisheries sector.
Administrative expenditure represents 3.5% of the total budget (1996 figures), consisting primarily of pensions and salaries, which are paid in national currency (mainly Belgian and Luxembourg francs).
The introduction of the euro will eliminate the exchange risk for the Community budget as regards all salaries and pensions paid to persons resident in participating Member States.
Given the political significance of the remuneration of Community staff, it is proposed that pay slips be expressed in euros and that salaries and pensions be paid in euros in the participating countries as from 1 January 1999.
The most immediate consequence of the transition to the euro for Community legislation is that the ecu will be replaced by the euro (at a rate of 1:1) without any action needing to be taken at either Community or national level.
To cater for cases where the common figure in ecus is accompanied by a clause governing conversion to the respective national currencies, the Commission has drawn up certain guidelines in order to ensure consistency in the interpretation of such clauses.
Certain legal clauses need to be dealt with individually, such as those which refer to specific interest rates (e.g. in the context of penalty clauses) that will no longer be available once the euro has been introduced.
As regards agreements with third countries, references to the ecu will automatically be converted to euros without any specific action having to be taken by any party. It would be advisable to run an information campaign for the benefit of the parties concerned in advance of 1 January 1999.
From the operational point of view, the transition will affect the following:
- treasury management and financial management: the treasury department of the Commission will no longer have to purchase huge amounts of ecus on the currency markets and the management of accounts and of foreign currency transactions will be greatly simplified;
- statistics: some of Eurostat's statistical time series will be rescaled; new statistical aggregates will be produced for the euro area;
- informatics: the "Euro/Year 2000" working group is dealing with the relevant issues in this field.
The changeover work to be carried out in the Community institutions will largely take place before 1 January 1999, in contrast to the changeover at national, regional and local level, where the adaptation work necessitated by the changeover will be spread over the entire length of the transitional period, and in a few instances will even be concentrated at the end of this period (1 January 2002).