27 November Ecofin Council

Date: 30/11/1995

FINANCE ministers reached a series of agreements over how to manage the transition to the single currency, but left open a handful of issues to be decided by heads of state and government at the 15-16 December summit in Madrid. The decision on moving to a single currency will be taken in late 1997 or early 1998, exchange rates will be fixed from 1 January 1999 and banknotes and coins introduced in 2002.

MINISTERS agreed that the existing Ecu, a basket unit of account made up of weighted amounts of 12 EU currencies, would be swapped one-for-one for the new single currency when it appears. Similarly, fixed-rate Ecu bonds which expire once the monetary union is created will continue to hold the same yield.

BUT ministers could not agree whether public debt denominated in national currencies should be exchanged for the new currency early in the monetary union in 1999-2001. Some member states insist on the freedom to choose whether short-dated securities in particular should stay in national currency while the single currency has no legal tender status.

MUCH of the meeting centred on whether the decision on which countries should join the single currency should be taken at the end of 1997 or “as early as possible” in 1998. The French government wanted the decision to be taken in late 1997 on the basis of “reliable” data while the Germans, supported by some other member states, wanted the definitive figures for 1997 to be used. This means making the decision in February-May 1998. The question will be decided at the Madrid summit.

MINISTERS all said that the name of the currency was the exclusive competence of the heads of state and government at the summit. The name 'Euro' continues to be the front-runner although the French government is still keen on 'Ecu'.

GERMAN Finance Minister Theo Waigel formally proposed his idea of a Stability Pact to ensure budgetary control in a monetary union. The Spanish presidency asked the European Commission to use the idea as the basis for a Union proposal to flesh out the parts of the Maastricht Treaty which refer to sanctions against fiscal irresponsibility.