13 Eurozone: Commission Report
| Committee's assessment
| Politically important |
| Committee's decision | Cleared from scrutiny
|
| Document details | (a) Draft Council Decision to allow Lithuania to adopt the euro
(b) Consequential draft Council Regulation to amend the Regulation governing adopting the euro
(c) Commission Report on progress of Member States towards adopting the euro
|
| Legal base | (a) Article 140(2) TFEU, —, QMV of eurozone Member States
(b) Article 140(3) TFEU, —, unanimity amongst eurozone Member States
(c) —
|
| Department | HM Treasury
|
Summary and Committee's conclusions
13.1 In its latest Convergence Report about the readiness of eight
Member States to adopt the euro, the Commission finds that only
Lithuania is fully compliant with the requirements. In the light
of this finding, and a similar one by the European Central Bank,
the Commission has presented a draft Council Decision to allow
Lithuania to adopt the euro from 1 January 2015. It has also presented
a consequential draft Council Regulation to amend the Regulation
governing introduction of the euro in Member States. There is
no role for the UK in this process and the Government says that
there are no direct policy implications for the UK.
13.2 Whilst clearing these documents we draw this
further expansion of the eurozone to the attention of the House.
Full details of
the documents: (a)
Draft Council Decision on the adoption by Lithuania of the euro
on 1 January 2015: (36111), 10597/14, COM(14) 324; (b) Draft Council
Regulation amending Regulation (EC) No. 974/98 as regards the
introduction of the euro in Lithuania: (36112), 10599/14, + ADD
1, COM(14) 325; (c) Commission Report: Convergence Report 2014
(prepared in accordance with Article 140(1) of the Treaty
on the Functioning of the European Union: (36113), 10604/14, +
ADD 1, COM(14) 326.
Background
13.3 Article 140(1) TFEU requires that at least once
every two years, or at the request of a Member State outside the
eurozone, the Commission and the European Central Bank report
to the Council on the progress by Member States in fulfilling
the convergence criteria for adopting the euro. The Commission's
Convergence Report 2014, document (c), covers eight Member States
that are not part of the eurozone: Bulgaria, the Czech Republic,
Croatia, Lithuania, Hungary, Poland, Romania and Sweden. It does
not cover the UK and Denmark because of their opt-outs.
13.4 The Commission examines the extent to which
each of the eight Member States fulfils the convergence criteria,
which relate to price stability, soundness and sustainability
of public finances, exchange rate stability and convergence of
long-term interest rates. It concludes that Lithuania is the only
Member State that meets all the convergence criteria. The table
below summarises fulfilment of the criteria by the eight Member
States:
| Convergence Criteria
| Legislation
| Price stability
| Budget deficit
| Gen gov. debt
| ERM II
| Long-term interest rates
|
| Bulgaria |
| |
| | |
|
| Czech Rep. |
| | *
| | |
|
| Croatia |
| | |
| | |
| Lithuania |
| |
| |
| |
| Hungary |
| |
| | |
|
| Poland |
| | |
| | |
| Romania |
| | |
| | |
| Sweden |
| |
| | |
|
*The Czech Republic meets the budget deficit criterion
but is yet to exit the excessive deficit procedure.
13.5 The Report is accompanied by a Commission staff
working document which provides in-depth analysis on Member States'
fulfilment of the convergence criteria and is the basis for the
Report.
13.6 On the basis of its Convergence Report and a
Convergence Report of the European Central Bank, the Commission
proposes a Council Decision, document (a), to allow Lithuania
to adopt the euro on 1 January 2015.
13.7 Regulation (EC) No. 974/98 governs the introduction
of the euro in Member States. In the event that the Council adopts
the draft Council Decision, a reference to Lithuania needs to
be added to the Regulation in order for it also to be covered
by the Regulation. So the Commission presents also a draft amending
Regulation, document (b). The Annex to the Regulation lists the
participating Member States and defines the euro adoption date,
the cash changeover date, and the, optional, "phasing-out"
period of the national currency for all these Member States.
The draft Regulation would add Lithuania and the following relevant
data for this Member State to the Annex to Regulation (EC) No.
974/98.
| Member State
| Euro adoption date
| Cash changeover date
| Phasing out period
|
| Lithuania | 1 January 2015
| 1 January 2015
| No |
The Government's view
13.8 In her Explanatory Memorandum of 23 June the Financial Secretary
to the Treasury (Nicky Morgan) says that these proposals, on which
she notes the Government does not have a vote, have no direct
policy implications for the UK.
Previous Committee Reports
None.
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