12 The eurozone
| (a)
(28640)
9689/07
+ ADD1
COM(07) 255
(b)
(28641)
9693/07
COM(07) 256
(c)
(28642)
9695/07
COM(07) 257
(d)
(28643)
9696/07
+ ADD1
COM(07) 258
(e)
(28644)
9697/07
COM(07) 259
(f)
(28645)
9699/07
COM(07) 260
(g)
(28689)
—
—
|
Commission Report: Convergence Report 2007 on Cyprus (prepared in accordance with Article 122(2) of the Treaty at the request of Cyprus)
Draft Decision in accordance with Article 122(2) of the Treaty on the adoption by Cyprus of the single currency on 1 January 2008
Draft Regulation amending Regulation (EC) No 974/98 as regards the introduction of the euro in Cyprus
Commission Report: Convergence Report 2007 on Malta (prepared in accordance with Article 122(2) of the Treaty at the request of Malta)
Draft Decision in accordance with Article 122(2) of the Treaty on the adoption by Malta of the single currency on 1 January 2008
Draft Regulation amending Regulation (EC) No 974/98 as regards the introduction of the euro in Malta
European Central Bank: Convergence Report, May 2007
|
| Legal base | (a), (d) and (g) —
(b) and (e) Article 122(2) EC; consultation; QMV
(c) and (f) Article 123(5) EC; —; unanimity
|
| Documents originated | (a) — (f) 16 May 2007
(g) —
|
| Deposited in Parliament | (a) — (f) 24 May 2007
(g) 13 June 2007
|
| Department | HM Treasury |
| Basis of consideration | EM of 8 June 2007
|
| Previous Committee Report | None
|
| To be discussed in Council | European Council 21-22 June 2007, ECOFIN Council 10 July 2007
|
| Committee's assessment | Politically important
|
| Committee's decision | Cleared
|
Background
12.1 Member States which have not yet adopted the euro and entered
the eurozone are referred to in the EC Treaty as "Member
States with a derogation". The Commission and the European
Central Bank (ECB) are required to produce Convergence Reports
at least once every two years or at the request of Member States.
Such Convergence Reports outline the views of the Commission and
the ECB on whether Member States have met the five Maastricht
criteria for adoption of the euro and entry to the eurozone, that
is, have qualified for abrogation of the derogation:
- compatibility of national legislation with eurozone requirements;
- price stability, assessed by observation of a
12-month average inflation rate no more than 1.5 percentage points
above the average of the three best performing Member States and
of the medium term prospects for inflation;
- participation in the exchange rate system of
the European Monetary System, that is respecting normal fluctuation
margins without severe tensions and not devaluing against other
Member States, both for the preceding two years;
- sustainability of the government budgetary position,
assessed against excessive deficit criteria; and
- an average long-term interest rate not exceeding
by more than 2 percentage points that of the three best performing
Member States in terms of price stability.
12.2 In February 2007 both Cyprus and Malta asked
the Commission and the ECB to prepare Convergence Reports on their
readiness for adoption of the euro and entry to the eurozone for
submission to the Council.
The documents
12.3 Document (a) is the Commission Convergence report
requested by Cyprus, document (d) that requested by Malta and
document (g) the ECB Convergence Report covering both Member States.
The Commission documents are each accompanied by a detailed staff
working document. Both the Commission and the ECB conclude that
Cyprus and Malta do now meet the Maastricht criteria[25]
and recommend that their derogations be abrogated.
12.4 Documents (b) and (e) are draft Decisions which
respectively declare that Cyprus and Malta fulfil "the necessary
conditions for the adoption of the single currency" and abrogate
their derogations with effect from 1 January 2008.
12.5 Documents (c) and (f) are draft Regulations
to amend legislation governing introduction of the euro, that
is Council Regulation (EC) No 974/98 as amended, so as to cover
Cyprus and Malta. The draft Regulations add Cyprus and Malta to
the list of participating Member States and set a euro adoption
date and cash changeover date for both of 1 January 2008, with
no "phasing-out" period. This latter point reflects
that both countries plan a "big bang" approach to the
changeover, whereby euro notes and coins will become legal tender
on the same day as the introduction of the euro as a currency.
This follows the recent example of Slovenia rather than that of
the eleven Member States which adopted the euro on 1 January 1999
and Greece which adopted the euro on 1 January 2001, all of whom
did not introduce euro cash until 1 January 2002.
The Government's view
12.6 The Economic Secretary to the Treasury (Ed Balls)
says that these documents have no direct policy implications for
the UK. He says they have been welcomed by the ECOFIN Council
and will be discussed by Heads of State and Government at the
European Council on 21-22 June 2007 and that it is expected that
the ECOFIN Council will take the final decision on 10 July 2007
on both Member States joining the eurozone on 1 January 2008.
Conclusion
12.7 These documents represent another stage in
achieving the Community ambition to extend the single currency
to all Member States. Although we clear them we draw them to the
attention of Members because of their intrinsic interest.
25 Subject to Malta's excessive deficit procedure being
ended, which was done in a Council Decision of 5 June 2007: see
9895/07, http://register.consilium.europa.eu/pdf/en/07/st09/st09895.en07.pdf
. Back
| 
