EURO: PROPOSAL FOR A REGULATION ON SETTING EXCHANGE RATES.

Summary: The European Commission adopted, on December 10, a Communication in which it empowers President Jacques Santer and the European Commissioner in charge of Economic and Monetary Affairs, Yves-Thibault de Silguy, to inform the Council of Ministers, on December 31, 1998, of the official rates of exchange of the ECU against the currencies of the Member States adopting the Euro. The Communication also includes a proposal for a Council Regulation to enable the currencies joining the Euro to unanimously adopt the final exchange rates between the Euro and each of the currencies taking part.

The proposal for a Regulation contains two articles. The first concerns the irreversible exchange rates, which comprise six significant figures, between the eleven participating currencies and the single currency. It goes without saying that no mention is made of the conversion rates themselves, which will not be revealed until early in the afternoon of December 31. The proposal will be established on the basis of calculations made by the European Commission's Directorate-General for Economic and Financial Affairs (DG II), according to the procedure established for calculating daily exchange rtes of the official ECU (ECU 1=Euro1). During the transitional period (January 1, 1999 to December 31, 2001) these rates will be used to divide the Euro into national currency units. Article II of the proposal for a Regulation states that it will come into force at the beginning of the final phase of Economic and Monetary Union (EMU): January 1, 1999, at midnight, local time. The aim of this Regulation is to provide a maximum of legal safety and enhanced transparency to market operators. It will also considerably speed up the procedures foreseen for the afternoon of December 31, 1998. Once the conversion rates have been established, they will be proposed to the Council of Ministers, which will adopt them after consulting with the European Central Bank. European Central Bank gears up. For its part, the Frankfurt-based European Central Bank unveiled, on December 11, a number of decisions concerning the arrangements for the monitoring, in cooperation with the national Central Banks and some Central Banks outside the European Union, of the "changeover weekend". The changeover weekend is the period between the announcement of the conversion rates of the Euro vis-a-vis the national currencies of the participating Member States, early in the afternoon of December 31, 1998...