7-8 November Euro-11/Ecofin

Date: 11/11/1999

FINANCE ministers from the single-currency area met the night before the scheduled gathering of the full 15-strong Council of Ministers (Ecofin) to discuss internal euro-zone matters. The Euro-11 Group exchanged views on the macro-economic situation in the zone, on the basis of a note from Economics Commissioner Pedro Solbes. Finnish Finance Minister Sauli Niinistä steered the debate towards the decision of the European Central Bank last week to raise interest rates by 0.5 percentage point to 3.0&percent;. Ministers also examined Finland's and Belgium's recent draft budgets.

ECOFIN began its business with the first full-scale ministerial debate since December 1997 on the EU's tax package, including a planned levy on individuals' interest, dividends and royalties within companies, and predatory corporate tax regimes. Niinistä presented a report on the outcome of high-level meetings in October on the savings tax plan and last week's gathering of the code of conduct group chaired by UK Treasury Minister Dawn Primarolo. The British and Luxembourg delegations restated their opposition to the savings tax plan as it stood. Niinistä said he would be seeking a meeting with UK Finance Minister Gordon Brown, who was not at the Ecofin meeting, to discuss the issue. “My estimation is that, in the case of Luxembourg, we are not deadlocked,” he said.

MINISTERS approved the broad thrust of a draft report, presented by Economic and Financial Committee Chairman Jean Lemierre, on macro-economic policy coordination. Differences remained over how budgetary procedures should be tightened and over policy 'dialogue' with national parliaments. Lemierre confirmed that he would seek to finalise the draft report at the EFC meeting next Wednesday (17 November) in time for the December summit of EU leaders in Helsinki.

FINANCIAL institutions and retailers will be given euro notes and coins before they go into circulation on 1 January 2002 to ensure there are enough euro available in the first few days of the new currency's physical life, under an agreement reached by ministers. “The cash changeover in the euro zone is an unprecedented logistical challenge,” ministers said in a statement They reached “common views on the outlines of the cash changeover”, but it was left up to each of the member states to implement it in “a way that best suits their specific circumstances”. All the euro-zone countries have pledged to use their “best efforts” to ensure that a critical mass of notes and coins will be in circulation by first half of that month, so that the bulk of cash transactions can be made in the new currency “within a fortnight of 1 January 2002,” the ministers said. They also agreed that the dual circulation of national currencies and euro would last “between four weeks and a month” and that national notes and coins should be withdrawn by 1 March 2002.