Monetary and exchange-rate agreements between the European Community and Third Countries

The purpose of this Paper is to offer an overview of the monetary and exchange rate agreements between the EC and third countries which have been concluded under Art 111.3 EC. European third countries include Vatican City State, Monaco,San Marino, Andorra, Montenegro and Kosovo. All these agreements pertain to cases where participating EU Member States had concluded bilateral arrangements of the same type before joining the euro area. The conclusion of monetary and exchange rate agreements is indeed not an objective of the Community, but results from specific circumstances and needs. The main objective of all arrangements concluded so far is therefore to ensure the continuity of existing relations following the introduction of the euro. As recently underlined by the ECB (ECB, 2006), these agreements have satisfactorily worked and have not hindered the functioning of the euro area. On the contrary, they have fostered the development of deep and stable economic relations, notably in the trade area, with the Community thanks to the stable exchange rates involved or thanks to the sharing of the same currency.