International Insolvency Law Organisational matters

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Transcript International Insolvency Law Organisational matters

Dr Marek Porzycki
Chair for Economic Policy
Treaty provisions on the euro
Euro regulations
Derogation and adoption of the euro
Convergence criteria
Euro adoption in Poland
Art. 3(4) of the EU Treaty: The Union shall establish an
economic and monetary union whose currency is the
Art. 119(2) of the TFUE: activities of the Members States
and the Union within economic policy shall include a
single currency, the euro, and single monetary policy
Art. 128 of the TFUE:
exclusive right of the ECB to authorise the issue of euro
banknotes, issuance by ECB and NCBs, legal tender
coin issuance by Member States subject to ECB approval
of the volume of issue
Derogation and euro adoption – Art. 139-140 of the
Council Regulation (EC) No 1103/97 of 17 June 1997 on
certain provisions relating to the introduction of the
continuity of legal instruments (a broad term including
legal provisions, contracts, judicial and administrative
decisions and other instruments with legal effect)
conversion and rounding rules
Council Regulation (EC) No 974/98 of 3 May 1998 on
the introduction of the euro
direct basis for legal tender status for the euro (Art. 2,
10, 11)
substitution of the euro for legacy currencies
conversion of reference to legacy currencies in legal
Council Regulation (EC) No 2866/98 of 31
December 1998 on the conversion rates
between the euro and the currencies of the
Member States adopting the euro
setting of irrevocable conversion rates
between legacy currencies and the euro
Council Regulations No 1338/2001 and No
1339/2001 on protection of the euro
against counterfeiting
Situation of Member States which do not (yet) fulfil the necessary
conditions for the adoption of the euro
 Core provisions of the Treaty covering EMU do not apply to Member
States with derogation
 Legal basis – Art. 139 of the TFUE
 Adoption of the euro – Art. 140 of the TFUE
- Convergence Reports by the ECB and Commission
- proposal of the Commission
- consultation of the European Parliament
- discussion in the European Council (heads of states or govts)
- decision by the Council to abrogate the derogation, after
recommendation of a qualified majority of eurozone Member States
- amendment to regulations no 2866/98 (adding the irrevocable
exchange rate of new currency) and no 974/98 (setting the euro
adoption date)
usual timing: Convergence Reports by May, Council decision in July,
euro adoption from 1 January of the following year
Member States with derogation are legally required to
adopt the euro once they fulfil the convergence criteria
 the decision is taken not by the Member State
concerned but by the EU institutions
However, Member States can delay adoption of the euro
for indefinite time by not fulfilling the convergence
criteria (e.g. not introducing necessary amendments to
the legislation)
Example: Sweden. In a referendum in 2003 Swedish
people voted against euro adoption. Since then,
although legally required to adopt the euro, Sweden
does not fulfil the convergence criteria despite its ability
to meet them  a „de facto opt-out”
currently 7 Member States with derogation, including
Poland, legally required to adopt the euro
„opt-outs” – exemptions negotiated at the time of adoption of
the Maastricht Treaty (1992/93)
UK: protocol no 15 to the Treaty
UK has no obligation to adopt the euro unless it notifies the
Council that it intends to do so.
exclusion of application of Treaty provisions on euro, similar
to derogation but not specifically called derogation.
in case of decision to join the euro, UK needs to meet
convergence criteria
euro changeover plans prepared, last in 2003
Denmark: protocol no 16 to the Treaty
Denmark is considered a Member State with derogation.
Procedure for abrogation of the exemption may only be
inititated at the request of Denmark.
euro adoption rejected in referendum in 2000
Relation between the convergence criteria and
the OCA theory
Legal basis: Art. 140(1) of the TFEU, Protocol no
Fiscal criteria: avoiding excessive deficit in the
meaning of Art. 126 of the TFEU and Protocol 12
budget deficit not exceeding 3% of the GDP
government debt not exceeding 60% of the GDP
Price stability criterion – inflation not exceeding
by more than 1,5% inflation in 3 „best
performing” Member States
Interest rate criterion: nominal long-term interest rates
(measured on the basis of govt bonds or comparable
securities) not exceeding corresponding rates in 3 „best
performing” Member States in terms of price stability by
more than 2%
Exchange rate criterion – participation for at least 2
years in ERM II (fluctuation margins of +-15%) without
severe tensions, in particular avoiding devaluation
Legal convergence – compatibility of the national
legislation with the Treaty and the Statute of the ESCB
Assessment – Convergence Reports
need to amend the Constitution (Art. 227 and Art.
203(1))  sufficient majority needed  problem of
political will
practical and legal preparations  Commision
recommendations and experience of other Member
States; work already done (NBP, Finance Ministry)
fears of the general public (does euro adoption mean
rising prices?)  protection mechanisms
economic reasons for and against
general issue: would we use euro adoption to justify
introducing necessary reforms or introduce only narrow
reforms needed just to meet the convergence criteria
Crisis in the Eurozone  „wait and see” approach of the
Polish authorities
Hanspeter K. Scheller, The European Central Bank. History, Role
and Functions, 2nd ed. Frankfurt 2006, pp. 28-40
Ch. Proctor, Mann on the Legal Aspect of Money, 7th ed. 2012:
Chapter 26, EMU and the Treaty on the EU, pp. 701-724
Chapter 28, The Single Currency and its Treaty Framework, pp.
Chapter 29, The Euro Regulations, pp. 755-775
Reference (facultative):
Convergence Reports
- by the ECB
by the Commission