Euro changeover:the Belgian experience (1996 - 2002)

Carlos RUBENSSenior Legal Advisor

Brussels, 14/04/2008

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Main milestones and steps...

► Starts on 26 February 1992 (Ratification by Belgian Parliament of the Treaty of Maastricht)

► 1992-1993 : achievement of the single market► 1994-1998 : economical convergence, preparation

of (cashless) euro changeover► 1999-2001 : preparation of cash euro changeover

and definitive introduction of euro in legislation► No big bang scenario !

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The first mood...

► No experience: very new stuff ! - but important steering by EU (and ECB and other NCBs)

► Replacing one exchange standard for another one: sounds easy ! But...

► So many different aspects of money involved in the current life: lots, lots of work !

► -> Where to begin with ?

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Procedure

► First choice: big bang vs. dual introduction ?(Belgium and the other NCBs of the "first wave": no choice: dual introduction currency in 1999, notes and coins in 2002 - see also decision of Madrid in 2005).

► Political and social choices: wide consultations vs. strong political guidance ? Soft vs hard law.(Belgium: very wide consultations of all interested social, economical and political groups and lobbies)

► Importance of the timing(Belgium: national changeover plan dd. 1996, overall Act in October 1998, changeover on Januari 1999 !)

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Basic rules

► From scratch: Belgian franc = peculiar expression of euro (following a fix, non decimal exchange rate)

► Consequences:● continuity of contracts and obligations

● free "exchange" of assets in national currency against assets in euros

● free exchange of notes and coins ?

► Importance of appropriate sanctions !

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Points of interest: changeover

► Conversions: double display of prices► Rounding rules: coherence

● totalisation of amounts

● small unit tariffs

● amounts forthcoming from EU regulations

● rounded amounts : acts and decrees, minimum capital of companies, fines...

► Interest rates: replacement rules► Transfer of competences from NCB to ECB

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Points of interest: changeover (2)

► Instruments formerly issued:● securities (bonds, shares): validity limit ?

● means of payment (check, letter of exchange): validity limit ?

● stamps ... : validity limit ?

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Points of interest: cash changeover

► Euro: before cash introduction = abstract► Legal tender:

● withdrawal of local notes and coins: by whom, how much, price ?

● dual circulation: how long ? No return of cash in local currency

● expiration date of legal tender of local cash

● withdrawal by central bank: how long ?

● automatic vending machines, parking machines: dual circulation ?

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Legal Technique used

Principles :► Simple reference to European rules

● Those rules are dynamic : they may change

● Avoids misunderstandings or imperfect implementation

► Definition of the general principes in overall Laws, broad delegation of competence to the King (= the Government) to further define and implement those principes

► Definition of specific principles in ad hoc Laws

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Belgian overall laws

► Law dd. 30 October 1998 : introduction of the euro during the transitional period

► Law dd. 26, 30 June and 3 July 2000 : introduction of the euro

► Law dd. 10 December 2001 : definitive euro changeover.

► Law dd. 22 February 1998 : reform of the statute of the central bank (Articles 107-108 Statute ESCB)

Belgian specific laws

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Legal Technique used

Principles (2) :► Delegation of competence to the Minister for the

practical implementation regarding very specific topics

► Delegation of competence to the King to adapt (rounded) amounts in the federal legislation. Regional legislation needs to be adapted by the regional authorities.

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Final remarks

► The introduction of the euro in Belgium was broadly supported by the population.

► Nevertheless, the change of the legislation spent a lot of time and, sometimes, occurred on the razor's edge.

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Some advices...

► Be pragmatical► Do not hesitate to ask for experience or advice► Make use of our address book...

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Any question ?

► For further information or ancillary questions, do not hesitate to contact Carlos Rubens :

● Postal address : NBB-JU, de Berlaimontlaan 14, B-1000 Brussels

● Phone : 00 32 22 21 42 63

● Fax : 00 32 22 21 31 59

● E-mail : carlos.rubens@nbb.be

Thank you for your patience !

Carlos RUBENSSenior Legal Advisor

Brussels, 14/04/2008