SINGLE CURRENCY: PLANS TO INCORPORATE MONACO, SAN MARINO AND THE VATICAN CITY INTO EURO ZONE.

Summary: Three draft Council Recommendations authorising France to negotiate agreements with the Principality of Monaco, and Italy with the Republic of San Marino and the Vatican City, were proposed by the European Commission on December 18. France and Italy, two Euro countries-to-be (starting in January) have clinched deals with the three third countries concerning monetary relations and exchange rates. The responsibilities will be transferred to the EU after the New Year, so the three draft Recommendations are designed to determine what positions to adopt when negotiating new agreements.

The aim of the Recommendations is to allow the third countries in question to continue using the same currencies as France and Italy. Monaco, San Marino and the Vatican City will therefor be able to use the Euro as their official currency and to grant legal tender status to Euro banknotes issued by the European System of Central Bank (ESCB) and to Euro coins issued by the Member States which adopted the Euro. Moreover, financial institutions located in these countries may be granted access to the payment systems offered by the ESCB under conditions to be determined by the European Central Bank (ECB). The recommendations are to be forwarded to the Council of Ministers (adopted by a qualified majority of Euro countries), the European Parliament and the ECB. The agreements between Italy and France and the three tiny countries allow the three tiny third countries to issue coins denominated in French Franc or Italian Lira and ensure that banknotes and coins issued by France and Italy have legal tender status in the respective third country. Financial institutions located in Monaco have access to the refinancing facilities of the French Central Bank. Monaco. The principality of Monaco does not have its own currency nor does it boast a Central Bank. Financial institutions located there have access to the refinancing facilities of the...