17.10.2006 EN Official Journal of the European Union L 286/15 COUNCIL DIRECTIVE 2006/79/EC of 5 October 2006 on the exemption from taxes of imports of small consignments of goods of a non-commercial character from third countries (codified version) THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, and in particular Article 93 thereof, Having regard to the proposal from the Commission, Having regard to the opinion of the European Parliament (1), Having regard to the opinion of the European Economic and Social Committee (2), Whereas: (1) Council Directive 78/1035/EEC of 19 December 1978 on the exemption from taxes of imports of small consignments of goods of a non-commercial character from third countries (3) has been substantially amended several times (4). In the interests of clarity and rationality, the said Directive should be codified. (2) Provision should be made for the exemption from turnover taxes and excise duties of imports of small consignments of goods of a non-commercial character from third countries. (3) To that end the limits within which such exemption is to be applied should, for practical reasons, be as far as possible the same as those laid down for the Community arrangements for exemption from customs duties in Council Regulation (EEC) No 918/83 of 28 March 1983 setting up a Community system of reliefs from customs duty (5). (4) It is necessary to set special limits for certain products because of the high level of taxation to which they are at present subject in the Member States. (5) This Directive should be without prejudice to the obligations of the Member States relating to the time-limits for transposition into national law of the Directives set out in Annex I, Part B, HAS ADOPTED THIS DIRECTIVE: Article 1 1. Goods in small consignments of a non-commercial character sent from a third country by private persons to other private persons in a Member State shall be exempt on importation from turnover tax and excise duty. 2. For the purposes of paragraph 1, ‘small consignments of a non-commercial character’ shall mean consignments which: (a) are of an occasional nature; (b) contain only goods intended for the personal or family use of the consignees, the nature and quantity of which do not indicate that they are being imported for any commercial purpose; (c) contain goods with a total value not exceeding EUR 45; (d) are sent by the sender to the consignee without payment of any kind. Article 2 1. Article I shall apply to the goods listed below subject to the following quantitative limits: (a) tobacco products (i) 50 cigarettes, or (ii) 25 cigarillos (cigars of a maximum weight of three grams each), or (iii) 10 cigars, or (iv) 50 grams of smoking tobacco; (b) alcohol and alcoholic beverages: (i) distilled beverages and spirits of an alcoholic strength exceeding 22 % vol.; undenatured ethyl alcohol of 80 % vol. and over: one standard bottle (up to 1 litre), or (ii) distilled beverages and spirits, and aperitifs with a wine or alcohol base, tafia, saké or similar beverages of an alcoholic strength of 22 % vol. or less; sparkling wines, fortified wines: one standard bottle (up to 1 litre), or (iii) still wines: two litres; (c) perfumes: 50 grams, or toilet waters: 0,25 litre or eight ounces; (d) coffee: 500 grams, or coffee extracts and essences: 200 grams; (e) tea: 100 grams, or tea extracts and essences: 40 grams. 2. Member States shall have the right to reduce the quantities of the products referred to in paragraph 1 eligible for exemption from turnover tax and excise duties, or to abolish exemption for such products altogether. Article 3 Any goods listed in Article 2 which are contained in a small consignment of a non-commercial character in quantities exceeding those laid down in the said Article shall be excluded in their entirety from exemption. Article 4 1. The euro equivalent in national currency which shall apply for the implementation of this Directive shall be fixed once a year. The rates applicable shall be those obtaining on the first working day of October with effect from 1 January of the following year. 2. Member States may round off the amounts in national currency resulting from the conversion of the amounts in euros provided for in Article 1(2), provided such rounding-off does not exceed EUR 2. 3. Member States may maintain the amount of the exemption in force at the time of the annual adjustment provided for in paragraph 1 if, prior to the rounding-off provided for in paragraph 2, conversion of the amount of the exemption expressed in euros would result in a change of less than 5 % in the exemption expressed in national currency. Article 5 Member States shall communicate to the Commission the text of the main provisions of national law which they adopt in the field covered by this Directive. The Commission shall inform the other Member States thereof. Article 6 Directive 78/1035/EEC shall be repealed, without prejudice to the obligations of the Member States relating to the time-limits for transposition into national law of the Directives set out in Annex I, Part B. References to the repealed Directive shall be construed as references to this Directive and shall be read in accordance with the correlation table in Annex II. Article 7 This Directive shall enter into force on the 20th day following its publication in the Official Journal of the European Union. Article 8 This Directive is addressed to the Member States. Done at Luxembourg, 5 October 2006. For the Council The President K. RAJAMÄKI (1) Not yet published in the Official Journal. (2) Not yet published in the Official Journal. (3) OJ L 366, 28.12.1978, p. 34. Directive as last amended by the 1994 Act of Accession. (4) See Annex I, Part A. (5) OJ L 105, 23.4.1983, p. 1. Regulation as last amended by the 2003 Act of Accession. ANNEX I PART A Repealed Directive with its successive amendments Council Directive 78/1035/EEC (1) (OJ L 366, 28.12.1978, p. 34) Council Directive 81/933/EEC (OJ L 338, 25.11.1981, p. 24) only Article 2 Council Directive 85/576/EEC (OJ L 372, 31.12.1985, p. 30) PART B Time-limits for transposition into national law (referred to in Article 6) Directive Time-limit for transposition 78/1035/EEC 1 January 1979 81/933/EEC 31 December 1981 85/576/EEC 30 June 1986 (1) Directive 78/1035/EEC was also amended by the 1994 Act of Accession. ANNEX II CORRELATION TABLE Directive 78/1035/EEC This Directive Article 1(1) Article 1(1) Article 1(2), first indent Article 1(2)(a) Article 1(2), second indent Article 1(2)(b) Article 1(2), third indent Article 1(2)(c) Article 1(2), fourth indent Article 1(2)(d) Article 2(1)(a), from ‘50 cigarettes’ to ‘50 grams of smoking tobacco’ Article 2(1)(a)(i) to (iv) Article 2(1)(b) Article 2(1)(b) Article 2(1)(b), first indent Article 2(1)(b)(i) Article 2(1)(b), second indent Article 2(1)(b)(ii) Article 2(1)(b), third indent Article 2(1)(b)(iii) Article 2(1)(c), (d) and (e) Article 2(1)(c), (d) and (e) Article 2(2) Article 2(2) Article 2(3) — Article 3 Article 3 Article 4(1) — Article 4(2) Article 4(1) Article 4(3) Article 4(2) Article 4(4) Article 4(3) Article 5(1) — Article 5(2) Article 5 — Article 6 — Article 7 Article 6 Article 8 — Annex I — Annex II

Summary: Tax-free allowances: small consignments of goods of a non-commercial character from Non-EU Member Countries Tax-free allowances: small consignments of goods of a non-commercial character from Non-EU Member Countries The aim of the Directive is to reduce tax barriers to the sending of small consignments of goods by private persons in Non-EU Member Countries to private persons in Member States of the European Union (EU) by establishing Community tax-free allowances. ACT Council Directive 2006/79/EC of 5 October 2006 on the exemption from taxes of imports of small consignments of goods of a non-commercial character from third countries. This Directive is a codified version of: Council Directive 78/1035/EEC of 19 December 1978 on the exemption from taxes of imports of small consignments of goods of a non-commercial character from Non-EU Member Countries [Official Journal L 366 of 28.12.1978] [Amended by Directives 81/933/EEC and 85/576/EEC]. SUMMARY Imported goods eligible for exemption from turnover tax and excise duty are those: of a non-commercial character sent in small consignments from Non-EU Member Countries; sent by private persons to other private persons in a Member State of the European Union (EU). To be considered of a non-commercial character, the consignment must: have a total value of EUR 45 or less; be of an occasional nature; contain only goods intended for the personal or family use of the consignees; be sent by the sender to the consignee without payment of any kind. The following goods, which are subject to quantitative import restrictions: tobacco products (50 cigarettes, 25 cigarillos, 10 cigars or 50 grams of smoking tobacco); alcohol and alcoholic beverages *; perfumes (50 grams) or toilet waters (0.25 litre or eight ounces); coffee (500 grams) or 200 grams of coffee extracts or essences); tea (100 grams) or 40 grams of tea extracts or essences, are exempt from turnover tax and excise duty. If the adjustment of the amount of the Community exemption results in a change of less than 5% when converted into national currency, the Member State concerned may maintain the existing amount as expressed in national currency. Key terms used in the act Alcohol and alcoholic beverages: References Act Entry into force Deadline for transposition in the Member States Official Journal Directive 2006/79/EC 6.11.2006 1.1.1979 OJ L 286 of 17.10.2006 RELATED ACTS Proposal for a Council Directive on the exemption from valued added tax and excise duty of goods imported by persons travelling from Non-EU Member Countries [COM(2006) 76 final - Not published in the Official Journal]. The proposal is aimed at establishing a Community system of exemptions from value added tax (VAT) and excise duty for non-commercial imports of goods by persons travelling between EU Member States and non-member countries. Council Regulation (EEC) No 918/83 of 28 March 1983 setting up a Community system of reliefs from customs duty [Official Journal L 105 of 23.4.1983]. The Community system of reliefs from customs duty concerns the granting of exemption from the import or export duty normally payable on the goods concerned. Council Directive 69/169/EEC of 28 May 1969 on the harmonisation of provisions laid down by law, regulation or administrative action relating to exemption from turnover tax and excise duty on imports in international travel [Official Journal L 133 of 4.6.1969]. Last updated: 11.12.2006


15.7.2006 EN Official Journal of the European Union L 195/25 COUNCIL DECISION of 11 July 2006 in accordance with Article 122(2) of the Treaty on the adoption by Slovenia of the single currency on 1 January 2007 (2006/495/EC) THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, and in particular Article 122, paragraph 2 thereof, Having regard to the proposal from the Commission, Having regard to the report from the Commission (1), Having regard to the report from the European Central Bank (2), Having regard to the Opinion of the European Parliament (3), Having regard to the discussion of the Council, meeting in the composition of Heads of State or Government, Whereas: (1) The third stage of economic and monetary union (EMU) started on 1 January 1999. The Council, meeting in Brussels on 3 May 1998 in the composition of Heads of State or Government, decided that Belgium, Germany, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland fulfilled the necessary conditions for adopting the single currency on 1 January 1999 (4). (2) The Council decided on 19 June 2000 that Greece fulfilled the necessary conditions for adopting the single currency on 1 January 2001 (6). (3) In accordance with paragraph 1 of the Protocol on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland annexed to the Treaty, the United Kingdom notified the Council that it did not intend to move to the third stage of EMU on 1 January 1999. This notification has not been changed. In accordance with paragraph 1 of the Protocol on certain provisions relating to Denmark annexed to the Treaty and the Decision taken by the Heads of State or Government in Edinburgh in December 1992, Denmark has notified the Council that it will not participate in the third stage of EMU. Denmark has not requested that the procedure referred to in Article 122(2) of the Treaty be initiated. (4) By virtue of Decision 98/317/EC Sweden has a derogation as defined in Article 122 of the Treaty. In accordance with Article 4 of the 2003 Act of Accession (7), the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia have a derogation as defined in Article 122 of the Treaty. (5) The European Central Bank (ECB) was established on 1 July 1998. The European Monetary System has been replaced by an exchange rate mechanism, the setting-up of which was agreed by a resolution of the European Council of 16 June 1997 on the establishment of an exchange-rate mechanism in the third stage of economic and monetary union (8). The procedures for an exchange-rate mechanism in stage three of economic and monetary union (ERM II) were laid down in the Agreement of 1 September 1998 between the ECB and the national central banks of the Member States outside the euro area laying down the operating procedures for an exchange rate mechanism in stage three of economic and monetary union (9). (6) Article 122(2) of the Treaty lays down the procedures for abrogation of the derogation of the Member States concerned. According to that Article at least once every two years, or at the request of a Member State with a derogation, the Commission and the ECB shall report to the Council in accordance with the procedure laid down in Article 121(1) of the Treaty. On 2 March 2006, Slovenia submitted a formal request for a convergence assessment. (7) National legislation in the Member States including the statutes of national central banks shall as necessary be adapted with a view to ensuring compatibility with Articles 108 and 109 of the Treaty and the Statute of the European System of Central Banks and of the European Central Bank, hereinafter referred to as “the Statute of ESCB”. The reports of the Commission and the ECB provide a detailed assessment of the compatibility of the legislation of Slovenia with Articles 108 and 109 of the Treaty and the Statute of the ESCB. (8) According to Article 1 of the Protocol on the convergence criteria referred to in Article 121 of the Treaty, the criterion on price stability referred to in the first indent of Article 121(1) of the Treaty means that a Member State has a price performance that is sustainable and an average rate of inflation, observed over a period of one year before the examination, that does not exceed by more than one and a half percentage points that of, at most, the three best performing Member States in terms of price stability. For the purpose of the criterion on price stability inflation will be measured by the harmonised indices of consumer prices (HICPs) defined in Council Regulation (EC) No 2494/95 (10). In order to assess the price stability criterion a Member State's inflation has been measured by the percentage change in the arithmetic average of 12 monthly indices relative to the arithmetic average of 12 monthly indices of the previous period. In the one year period ending in March 2006, the three best-performing Member States in terms of price stability were Sweden, Finland and Poland, with inflation rates of, respectively 0,9 percent, 1,0 percent and 1,5 percent. A reference value calculated as the simple arithmetic average of the inflation rates of the three best-performing Member States in terms of price stability plus 1,5 percentage points was considered in the reports of the Commission and the ECB. On this basis, the reference value in the one year period ending in March 2006 was 2,6 percent. (9) According to Article 2 of the Protocol on the convergence criteria, the criterion on the government budgetary position referred to in the second indent of Article 121(1) of the Treaty shall mean that at the time of the examination the Member State is not the subject of a Council Decision under Article 104(6) of the Treaty that an excessive deficit exists. (10) According to Article 3 of the Protocol on the convergence criteria, the criterion on participation in the exchange-rate mechanism of the European Monetary System referred to in the third indent of Article 121(1) of the Treaty means that a Member State has respected the normal fluctuation margins provided for by the exchange-rate mechanism (ERM) of the European Monetary System without severe tensions for at least the last two years before the examination. In particular, the Member State must not have devalued its currency's bilateral central rate against any other Member State's currency on its own initiative for the same period. Since 1 January 1999 the ERM II provides the framework for assessing the fulfilment of the exchange rate criterion. In assessing the fulfilment of this criterion in their reports, the Commission and the ECB have examined the two-year period ending in April 2006. (11) According to Article 4 of the Protocol on the convergence criteria, the criterion on the convergence of interest rates referred to in the fourth indent of Article 121(1) of the Treaty means that, observed over a period of one year before the examination, a Member State has had an average nominal long-term interest rate that does not exceed by more than two percentage points that of, at most, the three best performing Member States in terms of price stability. For the purpose of the criteria on the convergence of interest rates, comparable interest rates on 10-year benchmark government bonds were used. In order to assess the fulfilment of the interest-rate criterion a reference value calculated as the simple arithmetic average of the nominal long-term interest rates of the three best performing Member States in terms of price stability plus two percentage points was considered in the reports of the Commission and the ECB. On this basis, the reference value in the one year period ending in March 2006 was 5,9 percent. (12) In accordance with Article 5 of the Protocol on the convergence criteria, the statistical data used in the current assessment of the fulfilment of the convergence criteria shall be provided by the Commission. The Commission has provided the necessary data for the preparation of this Decision. Budgetary data were provided by it on the basis of reports by the Member States submitted by 1 April 2006 in accordance with Council Regulation (EC) No 3605/93 of 22 November 1993 on the application of the Protocol on the excessive deficit procedure annexed to the Treaty establishing the European Community (11). (13) On the basis of reports presented by the Commission and the ECB on the progress made in the fulfilment by Slovenia of its obligations regarding the achievement of economic and monetary union, the Commission concludes that: In Slovenia, national legislation, including the Statute of the national central bank, is compatible with Articles 108 and 109 of the Treaty and the Statute of the ESCB. Regarding the fulfilment by Slovenia of the convergence criteria mentioned in the four indents of Article 121(1) of the Treaty: — the average inflation rate in Slovenia in the year ending March 2006 stood at 2,3 percent, which is below the reference value and is likely to continue to do so in the months ahead, — Slovenia is not the subject of a Council Decision on the existence of an excessive government deficit, — Slovenia has been a member of ERM II since 28 June 2004; in the two-year period ending April 2006 the Slovenian tolar (SIT) has not been subject to severe tensions and Slovenia has not devalued, on its own initiative, the SIT bilateral central rate against the euro, — in the year ending March 2006 the long-term interest rate in Slovenia was, on average, 3,8 percent which is below the reference value. Slovenia has achieved a high degree of sustainable convergence by reference to these criteria. Consequently, Slovenia fulfils the necessary conditions for the adoption of the single currency. (14) According to Article 122(2) of the Treaty the Council, acting by qualified majority on a proposal by the Commission, is to decide which Member States with a derogation fulfil the necessary conditions for the adoption of the single currency and abrogate the derogations of the Member States concerned, HAS ADOPTED THIS DECISION: Article 1 Slovenia fulfils the necessary conditions for the adoption of the single currency. The derogation in favour of Slovenia referred to in Article 4 of the 2003 Act of Accession is abrogated with effect from 1 January 2007. Article 2 This Decision is addressed to the Member States. Article 3 This Decision shall be published in the Official Journal of the European Union. Done at Brussels, 11 July 2006. For the Council The President E. HEINÄLUOMA (1) Report adopted on 16 May 2006. (2) Report adopted on 15 May 2006. (3) Opinion delivered on 15 June 2006 (not yet published in the Official Journal). (4) Council Decision 98/317/EC of 3 May 1998 in accordance with Article 121(4) () of the Treaty (OJ L 139, 11.5.1998, p. 30). (5) NOTE: The title of Decision 98/317/EC has been adjusted to take account of the renumbering of the Articles of the Treaty establishing the European Community, in accordance with Article 12 of the Treaty of Amsterdam; the original reference was to Article 109j(4) of the Treaty. (6) Council Decision 2000/427/EC of 19 June 2000 in accordance with Article 122(2) of the Treaty on the adoption by Greece of the single currency on 1 January 2001 (OJ L 167, 7.7.2000, p. 19). (7) OJ L 236, 23.9.2003, p. 33. (8) OJ C 236, 2.8.1997, p. 5. (9) OJ C 345, 13.11.1998, p. 6. Agreement as amended by the Agreement of 14 September 2000 (OJ C 362, 16.12.2000, p. 11). (10) Council Regulation (EC) No 2494/95 of 23 October 1995 concerning harmonised indices of consumer prices (OJ L 257, 27.10.1995, p. 1). Regulation as amended by Regulation (EC) No 1882/2003 of the European Parliament and the Council (OJ L 284, 31.10.2003, p. 1). (11) OJ L 332, 31.12.1993, p. 7. Regulation as last amended by Regulation (EC) No 2103/2005 (OJ L 337, 22.12.2005, p. 1).

Summary: Slovenia authorised to join the euro zone (2007) Slovenia authorised to join the euro zone (2007) The Council of the European Union recognises that Slovenia fulfils the conditions necessary to adopt the euro as of 1 January 2007. Slovenia is the first of the ten Member States which joined the European Union on 1 May 2004 to introduce the single currency. ACT Council Decision 2006/495/EC of 11 July 2006 in accordance with Article 122(2) of the Treaty on the adoption by Slovenia of the single currency on 1 January 2007 [Official Journal L 195, 15 July 2006]. SUMMARY With this Decision the Council authorises Slovenia to introduce the euro on 1 January 2007. The Council notes that Slovenia fulfils the necessary conditions for the adoption of the single currency - i.e. the convergence criteria. Fulfilment of the convergence criteria On 2 March 2006, Slovenia submitted a formal request for a convergence assessment. The European Commission's conclusions are as follows: Slovenian national legislation, including the Statutes of the national central bank, is compatible with Articles 108 and 109 of the Treaty establishing the European Community and with the Statutes of the European System of Central Banks (ESCB); the average inflation rate in Slovenia in the year ending March 2006 remained stable at 2.3 percent, which is below the reference value, and is likely to continue to do so in the months ahead; Slovenia is not the subject of a Council Decision on excessive government deficit; Slovenia has been a member of the European Exchange-Rate Mechanism (ERM II) since 28 June 2004 and during that period the Slovenian tolar (SIT) has remained stable without any extreme fluctuations; the long-term interest rate has remained, on average, at around 3.8 percent, i.e. below the reference value. The European Commission deems that Slovenia has achieved a high degree of sustainable convergence by reference to these criteria. Slovenia consequently fulfils the necessary conditions for the adoption of the single currency. Adoption of the single currency The Council, acting by a qualified majority, notes with this Decision that Slovenia fulfils the necessary conditions for the adoption of the euro. The derogation in favour of Slovenia referred to in Article 4 [PDF] of the 2003 Act of Accession is repealed with effect from 1 January 2007. The Decision is addressed to the Member States of the EU. References Act Entry into force - Date of expiry Deadline for transposition in the Member States Official Journal Decision 2006/495/EC 15.7.2006 - OJ C 195 of 15.7.2006 See also For further information, please see the following websites: European Central Bank: the national sides of Slovenian euro coins; The introduction of the euro in Slovenia Public opinion: the introduction of the euro in Slovenia and in the new Member States European Commission, Directorate-General for Economic and Financial Affairs (DG ECFIN): the euro. Last updated: 30.10.2006


25.3.2006 EN Official Journal of the European Union C 73/21 AGREEMENT of 16 March 2006 between the European Central Bank and the national central banks of the Member States outside the euro area laying down the operating procedures for an exchange rate mechanism in stage three of Economic and Monetary Union (2006/C 73/08) THE EUROPEAN CENTRAL BANK (ECB) AND THE NATIONAL CENTRAL BANKS OF THE MEMBER STATES THAT ARE OUTSIDE THE EURO AREA ON 16 MARCH 2006 (HEREINAFTER THE ‘NON-EURO AREA NCBs’), Whereas: (1) The Agreement of 1 September 1998 between the European Central Bank and the national central banks of the Member States outside the euro area laying down the operating procedures for an exchange rate mechanism in stage three of Economic and Monetary Union (1) (hereinafter the ‘Agreement of 1 September 1998’) has been amended three times. The introduction of a new criterion for counterparties eligible to conduct interventions at the margins directly with the ECB would require a further amendment of Annex I to the Agreement of 1 September 1998. In the interests of clarity and transparency therefore, the Agreement of 1 September 1998 should be replaced by a new Agreement. (2) The European Council agreed in its Resolution of 16 June 1997 (hereinafter the ‘Resolution’) to set up an exchange rate mechanism (hereinafter ‘ERM II’) when the third stage of economic and monetary union began on 1 January 1999. (3) Under the terms of the Resolution, — ERM II replaces the European Monetary System; — a stable economic environment is necessary for the good functioning of the single market and for higher investment, growth and employment, and is therefore in the interest of all Member States. The single market must not be endangered by real exchange rate misalignments or by excessive nominal exchange rate fluctuations between the euro and the other EU currencies, which would disrupt trade flows between Member States. Moreover, under Article 124 of the Treaty establishing the European Community, each Member State has an obligation to treat its exchange rate policy as a matter of common interest; — ERM II helps to ensure that non-euro area Member States participating in ERM II (hereinafter ‘participating non-euro area Member States’) orient their policies to stability, foster convergence and thereby help them in their efforts to adopt the euro; — participation in ERM II is voluntary for the non-euro area Member States. Nevertheless, Member States with a derogation can be expected to join the mechanism. A Member State which does not participate from the outset in ERM II may participate at a later date; — ERM II functions without prejudice to the primary objective of the ECB and the non-euro area NCBs to maintain price stability; — for the currency of each participating non-euro area Member State (hereinafter ‘participating non-euro area currency’) a central rate against the euro is defined; — there is one standard fluctuation band of ± 15 % around the central rates; — it should be ensured that any adjustment of central rates is conducted in a timely fashion so as to avoid significant misalignments. Thus, all parties to the mutual agreement on the central rates, including the ECB, have the right to initiate a confidential procedure aimed at reconsidering central rates; — intervention at the margins is in principle automatic and unlimited, with very short-term financing available. However, the ECB and the non-euro area NCBs participating in ERM II (hereinafter ‘participating non-euro area NCBs’) could suspend intervention if this were to conflict with their primary objective of price stability. In their decision they would take due account of all relevant factors and in particular of the need to maintain stability and the credible functioning of ERM II; — exchange rate policy co-operation may be further strengthened, for example by allowing closer exchange rate links between the euro and the participating non-euro area currencies, where, and to the extent that, these are appropriate in the light of progress towards convergence. (4) Intervention should be used as a supportive instrument in conjunction with other policy measures, including appropriate monetary and fiscal policies conducive to economic convergence and exchange rate stability. There is the possibility of coordinated intramarginal intervention decided by mutual agreement between the ECB and the respective participating non-euro area NCB, in parallel with other appropriate policy responses, including the flexible use of interest rates, by the latter. (5) Sufficient flexibility needs to be allowed, in particular to accommodate the varying degrees, paces and strategies of economic convergence of the non-euro area Member States. (6) This Agreement does not preclude the establishment, on a bilateral basis, of additional fluctuation bands and intervention arrangements between non-euro area Member States. HAVE AGREED AS FOLLOWS: I. CENTRAL RATES AND FLUCTUATION BANDS Article 1 Bilateral central rates and intervention rates between the euro and the participating non-euro area currencies 1.1. The parties to this Agreement shall participate in a joint notification to the market of the bilateral central rates, and any changes to them, between the participating non-euro area currencies and the euro as agreed following the common procedure specified in paragraph 2.3 of the Resolution. 1.2. In accordance with the fluctuation bands fixed pursuant to paragraphs 2.1, 2.3 and 2.4 of the Resolution, the ECB and each participating non-euro area NCB shall establish, by common accord, the bilateral upper and lower rates between the euro and the participating non-euro area currencies for automatic intervention. The ECB and the participating non-euro area NCBs shall jointly notify the market of these rates, which shall be quoted in accordance with the convention set forth in Annex I. II. INTERVENTION Article 2 General provisions 2.1. Intervention shall in principle be effected in euro and the participating non-euro area currencies. The ECB and the participating non-euro area NCBs shall inform each other about all foreign exchange intervention intended to safeguard the cohesion of ERM II. 2.2. The ECB and the non-euro area NCBs shall inform each other about all other foreign exchange intervention. Article 3 Intervention at the margins 3.1. Intervention at the margins shall in principle be automatic and unlimited. However, the ECB and the participating non-euro area NCBs could suspend automatic intervention if this were to conflict with their primary objective of maintaining price stability. 3.2. In deciding whether to suspend intervention, the ECB or a participating non-euro area NCB shall also take due account of all other relevant factors, including the credible functioning of ERM II. The ECB and/or the participating non-euro area NCB concerned shall base any decision on factual evidence and, in this context, also give consideration to any conclusion which may have been reached by other competent bodies. The ECB and/or the participating non-euro area NCB concerned shall notify, as long in advance as possible and on a strictly confidential basis, the other monetary authorities concerned and the monetary authorities of all other participating non-euro area Member States of any intention to suspend intervention. 3.3. A payment after payment procedure shall be applied in the event of intervention at the margins, as set forth in Annex I. Article 4 Coordinated intramarginal intervention The ECB and participating non-euro area NCBs may agree to co-ordinated intramarginal intervention. Article 5 Procedures for intervention and other transactions 5.1. Prior agreement of the non-euro area NCB issuing the intervention currency shall be obtained when another central bank of the European System of Central Banks intends to use the former's currency in amounts exceeding mutually agreed limits in connection with all non-compulsory intervention, including unilateral intramarginal intervention. 5.2. A non-euro area NCB shall give immediate notification to the ECB when it has used the euro in amounts exceeding mutually agreed limits in connection with all non-compulsory intervention, including unilateral intramarginal intervention. 5.3. Before carrying out transactions other than intervention which involve at least one non-euro area currency or the euro and which exceed mutually agreed limits, the party intending to carry out such transactions shall give prior notification to the central bank(s) concerned. In such cases the central banks concerned shall agree on an approach which minimises potential problems, including the possibility of settling the transaction, wholly or in part, directly between the two central banks. III. VERY SHORT-TERM FINANCING FACILITY Article 6 General provisions 6.1. For the purpose of intervention in euro and in the participating non-euro area currencies, the ECB and each participating non-euro area NCB shall open for each other very short-term credit facilities. The initial maturity for a very short-term financing operation shall be three months. 6.2. The financing operations under these facilities shall take the form of spot sales and purchases of participating currencies giving rise to corresponding claims and liabilities, denominated in the creditor's currency, between the ECB and the participating non-euro area NCBs. The value date of the financing operations shall be identical to the value date of the intervention in the market. The ECB shall keep a record of all transactions conducted in the context of these facilities. Article 7 Financing of intervention at the margins 7.1. The very short-term financing facility is in principle automatically available and unlimited in amount for the purpose of financing intervention in participating currencies at the margins. 7.2. The debtor central bank shall make appropriate use of its foreign reserve holdings prior to drawing on the facility. 7.3. The ECB and the participating non-euro area NCBs could suspend further automatic financing if it were to conflict with their primary objective of maintaining price stability. The suspension of further automatic financing will be subject to the provisions of Article 3.2 of this Agreement. Article 8 Financing of intramarginal intervention For the purpose of intramarginal intervention, the very short-term financing facility may, with the agreement of the central bank issuing the intervention currency, be made available subject to the following conditions: (a) the cumulative amount of such financing made available to the debtor central bank shall not exceed the latter's ceiling as laid down in Annex II; (b) the debtor central bank shall make appropriate use of its foreign reserve holdings prior to drawing on the facility. Article 9 Remuneration 9.1. Outstanding very short-term financing balances shall be remunerated at the representative domestic three-month money market rate of the creditor's currency prevailing on the trade date of the initial financing operation or, in the event of a renewal pursuant to Articles 10 and 11 of this Agreement, the three-month money market rate of the creditor's currency prevailing two business days before the date on which the initial financing operation to be renewed falls due. 9.2. Accrued interest shall be paid in the creditor's currency on the date of the initial maturity of the facility, or, if applicable, on the date of the advance liquidation of a debtor balance. In the event of a renewal of the facility pursuant to Articles 10 and 11 of this Agreement, interest shall be capitalised at the end of every three-month period and shall be paid on the date of the final repayment of the debtor balance. 9.3. For the purpose of Article 9.1 of this Agreement, each participating non-euro area NCB shall notify the ECB of its representative domestic three-month money market rate. A representative domestic three-month money market rate in euro shall be used by the ECB and notified to the participating non-euro area NCBs. Article 10 Automatic renewal At the request of the debtor central bank, the initial maturity for a financing operation may be extended for a period of three months. However: (a) the initial maturity may only be automatically extended once for a maximum of three months; (b) the total amount of indebtedness resulting from application of this Article may at no time exceed the debtor central bank's ceiling as laid down for each central bank in Annex II. Article 11 Renewal by mutual agreement 11.1. Any debt exceeding the ceiling laid down in Annex II may be renewed once for three months subject to the agreement of the creditor central bank. 11.2. Any debt already renewed automatically for three months may be renewed a second time for a further three months subject to the agreement of the creditor central bank. Article 12 Advance repayment Any debtor balance recorded in accordance with Articles 6, 10 and 11 of this Agreement may be settled at any time in advance at the request of the debtor central bank. Article 13 Netting-out of mutual claims and liabilities Mutual claims and liabilities between the ECB and a participating non-euro area NCB arising from the operations provided for in Articles 6 to 12 of this Agreement may be netted out against each other by mutual agreement between the two parties involved. Article 14 Means of settlement 14.1. When a financing operation falls due or in the event of advance repayment, settlement shall in principle be carried out by means of holdings in the creditor's currency. 14.2. This provision shall be without prejudice to other forms of settlement agreed between creditor and debtor central banks. IV. CLOSER EXCHANGE RATE COOPERATION Article 15 Closer exchange rate cooperation 15.1. The exchange rate policy cooperation between participating non-euro area NCBs and the ECB may be further strengthened; in particular, closer exchange rate links may be agreed on a case-by-case basis at the initiative of the interested participating non-euro area Member State. 15.2. On a case-by-case basis, formally agreed fluctuation bands narrower than the standard one and backed up in principle by automatic intervention and financing may be set at the request of the participating non-euro area Member State concerned, according to the procedure laid down in paragraph 2.4 of the Resolution. 15.3. Other types of closer exchange rate arrangements of an informal nature may also be established between the ECB and participating non-euro area NCBs. V. MONITORING THE FUNCTION OF THE SYSTEM Article 16 Tasks of the General Council of the ECB 16.1. The General Council of the ECB shall monitor the functioning of ERM II and serve as the forum for monetary and exchange rate policy coordination as well as for the administration of the intervention and financing mechanism specified in this Agreement. It shall closely monitor, on a permanent basis, the sustainability of bilateral exchange rate relations between each participating non-euro area currency and the euro. 16.2. The General Council of the ECB shall periodically review the operation of this Agreement in the light of experience gained. Article 17 Reconsideration of central rates and participation in narrower fluctuation bands 17.1. All parties to the mutual agreement reached pursuant to paragraph 2.3 of the Resolution, including the ECB, shall have the right to initiate a confidential procedure aimed at reconsidering central rates. 17.2. In the event of formally agreed fluctuation bands narrower than the standard one, all parties to the joint decision made pursuant to paragraph 2.4 of the Resolution, including the ECB, shall have the right to initiate a confidential re-examination of the appropriateness of the respective currency's participation in the narrower band. VI. NON-PARTICIPATION Article 18 Applicability The provisions of Article 1, 2.1, 3, 4, 6 to 15 and 17 of this Agreement shall not apply to non-euro area NCBs which do not participate in ERM II. Article 19 Cooperation in the concertation Non-euro area NCBs not participating in ERM II shall cooperate with the ECB and the participating non-euro area NCBs in the concertation and/or the other exchanges of information necessary for the proper functioning of ERM II. VII. FINAL PROVISIONS Article 20 Final provisions 20.1. This Agreement shall enter into force on 1 April 2006. 20.2. The Agreement of 1 September 1998 is repealed with effect from 1 April 2006. References to the repealed Agreement shall be construed as references to this Agreement. 20.3. This Agreement shall be drawn up in English and duly signed by the parties. The ECB, which is required to retain the original Agreement, shall send a certified copy thereof to each euro area and non-euro area NCB. The Agreement shall be translated into all other official Community languages and be published in the C series of the Official Journal of the European Union. Done at Frankfurt am Main, on 16 March 2006. For and on behalf of The European Central Bank For and on behalf of Česká národní banka For and on behalf of Danmarks Nationalbank For and on behalf of Eesti Pank For and on behalf of Central Bank of Cyprus For and on behalf of Latvijas Banka For and on behalf of Lietuvos bankas For and on behalf of Magyar Nemzeti Bank For and on behalf of Central Bank of Malta For and on behalf of Narodowy Bank Polski For and on behalf of Banka Slovenije For and on behalf of Národná banka Slovenska For and on behalf of Sveriges Riksbank For and on behalf of The Bank of England (1) OJ C 345, 13.11.1998, p. 6. Agreement as last amended by the Agreement of 16 September 2004 (OJ C 281, 18.11.2004, p. 3). ANNEX I QUOTATION CONVENTION FOR CURRENCIES PARTICIPATING IN ERM II AND THE PAYMENT AFTER PAYMENT PROCEDURE IN THE EVENT OF INTERVENTION AT THE MARGINS A. Quotation convention For all the currencies of the non-euro area Member States participating in ERM II, the exchange rate for the bilateral central rate vis-à-vis the euro shall be quoted using the euro as the base currency. The exchange rate shall be expressed as the value of E1 using six significant digits for all currencies. The same convention shall be applied for quoting the upper and lower intervention rates vis-à-vis the euro of the currencies of the non-euro area Member States participating in ERM II. The intervention rates shall be determined by adding or subtracting the agreed bandwidth, expressed as a percentage, to or from the bilateral central rates. The resulting rates shall be rounded to six significant digits. B. Payment after payment procedure A payment after payment procedure shall be applied by both the ECB and the euro area NCBs in the event of intervention at the margins. The non-euro area NCBs participating in ERM II shall apply the payment after payment procedure when acting as correspondents of the euro area NCBs and the ECB in accordance with this Annex; the non-euro area NCBs participating in ERM II may, at their discretion, adopt the same payment after payment procedure when settling intervention at the margins that such NCBs have carried out on their own behalf. (i) General principles — The payment after payment procedure shall be applied when intervention at the margins in ERM II takes place between the euro and the currencies of the non-euro area Member States participating in ERM II. — To be eligible for intervention at the margins in ERM II, counterparties shall be required to keep an account with the NCB concerned. Counterparties shall also be required to maintain SWIFT addresses and/or to exchange authenticated telex keys with the NCB concerned or with the ECB. — Counterparties eligible for intervention at the margins in ERM II may also conduct such intervention directly with the ECB, provided that they also have the status of eligible counterparties for executing foreign exchange transactions with the ECB pursuant to Guideline ECB/2000/1 of 3 February 2000 on the management of the foreign reserve assets of the European Central Bank by the national central banks and the legal documentation for operations involving the foreign reserve assets of the European Central Bank (1). — The non-euro area NCBs participating in ERM II shall act as the correspondents of the euro area NCBs and the ECB. — When intervention at the margins takes place, the NCB concerned or the ECB shall release its payment for a given transaction only after receiving confirmation from its correspondent that the amount due has been credited to its account. Counterparties shall be required to pay in due time so as to enable the NCBs and the ECB to fulfil their respective payment obligations. Consequently, counterparties shall be required to pay before a predefined deadline. (ii) Deadline for the receipt of funds from counterparties Counterparties shall pay intervention amounts at the latest by 1 p.m. ECB (CET) time on value date. (1) OJ L 207, 17.8.2000, p. 24. Guideline as last amended by Guideline ECB/2005/15 (OJ L 345, 28.12.2005, p. 33). ANNEX II CEILINGS ON ACCESS TO THE VERY SHORT-TERM FINANCING FACILITY REFERRED TO IN ARTICLES 8, 10 AND 11 OF THE CENTRAL BANK AGREEMENT with effect from 1 May 2004 (in millions of EUR) Central banks party to this Agreement Ceilings (1) Česká národní banka 700 Danmarks Nationalbank 730 Eesti Pank 300 Central Bank of Cyprus 290 Latvijas Banka 340 Lietuvos bankas 390 Magyar Nemzeti Bank 680 Central Bank of Malta 270 Narodowy Bank Polski 1 830 Banka Slovenije 350 Národná banka Slovenska 470 Sveriges Riksbank 990 Bank of England 4 660 European Central Bank nil Euro area NCBs Ceilings Nationale Bank van België/Banque Nationale de Belgique nil Deutsche Bundesbank nil Bank of Greece nil Banco de España nil Banque de France nil Central Bank and Financial Services Authority of Ireland nil Banca d'Italia nil Banque centrale du Luxembourg nil De Nederlandsche Bank nil Oesterreichische Nationalbank nil Banco de Portugal nil Suomen Pankki nil (1) The amounts indicated are notional for central banks which do not participate in ERM II.

Summary: Exchange rate mechanism between the euro and other participating national currencies Exchange rate mechanism between the euro and other participating national currencies SUMMARY OF: Resolution of the European Council on establishing an exchange rate mechanism Agreement between the European Central Bank and the central banks of Member States outside the euro area laying down the operating procedures for an exchange rate mechanism in stage three of economic and monetary union (2006) Agreement between the ECB and the national central banks of the Member States outside the euro area amending the Agreement of 2006 (2020) WHAT IS THE AIM OF THE RESOLUTION AND THE AGREEMENT? The resolution aimed to create a system between euro-area and non-euro-area European Union (EU) Member States that guaranteed exchange rate stability between their different currencies when the third stage of economic and monetary union began on 1 January 1999. The 2006 agreement (ERM II Central Bank Agreement) built on the resolution, and repealed and replaced a similar agreement reached in 1998. It established a stable exchange rate mechanism (ERM II), replacing the original European Monetary System, between the euro and the national currencies of non-euro-area Member States (Member States not adopting the euro) but participating in the agreement. Currently, ERM II includes the currencies of Bulgaria, Denmark and Croatia. The aim of the resolution and the 2006 agreement is to avoid excessive exchange rate fluctuations disrupting the single market. The 2020 amending agreement takes account of the United Kingdom’s withdrawal from the EU. The Bank of England has no longer been a party to the ERM II Central Bank Agreement since 1 February 2020. Annex II to the agreement ‘Ceilings on access to the very short-term financing facility referred to in Articles 8, 10 and 11 of the Central Bank Agreement’ has been replaced to reflect this departure. KEY POINTS The 2006 agreement: confirms that participation in ERM II is voluntary for non-euro-area Member States with an opt out from the single currency, but adds they are expected to participate;provides for a central rate – agreed by the ECB and the relevant national central bank – between the euro and each participating national currency, which may fluctuate by 15% in either direction;allows for automatic and unlimited intervention by the ECB and the national central bank if the 15% limit is crossed;establishes detailed procedures for: the involvement of a euro-area national central bank in any intervention,very short-term credit facilities between the ECB and a non-euro-area national central bank,repayment of outstanding very short-term financing balances,extension of any financing operation,closer exchange rate cooperation between the ECB and non-euro-area national central banks,monitoring of the overall ERM II system,possible amendments of the central rates and the 15% fluctuation limits. The 2006 agreement must be amended whenever a new national central bank participates or a national central bank departs. FROM WHEN DO THE RESOLUTION AND AGREEMENT APPLY? The resolution has applied since 16 June 1997. The 2006 agreement has applied since 1 April 2006. The 2020 agreement amends the ERM II Central Bank Agreement with effect from 1 February 2020. BACKGROUND Convergence of basic economic performance is essential for maintaining a stable exchange rate. A stable economic environment is necessary for the single market to operate properly and to promote higher investment, growth and employment. The exchange rate mechanism gives non-euro-area Member States a reference for sound economic policies, enabling them to prepare to adopt the euro. MAIN DOCUMENTS Resolution of the European Council on the establishment of an exchange rate mechanism in the third stage of economic and monetary union Amsterdam, 16 June 1997 (OJ C 236, 2.8.1997, pp. 5–6). Agreement of 16 March 2006 between the European Central Bank and the national central banks of the Member States outside the euro area laying down the operating procedures for an exchange rate mechanism in stage three of Economic and Monetary Union (OJ C 73, 25.3.2006, pp. 21–27). Agreement of 22 January 2020 between the European Central Bank and the national central banks of the Member States outside the euro area amending the Agreement of 16 March 2006 between the European Central Bank and the national central banks of the Member States outside the euro area laying down the operating procedures for an exchange rate mechanism in stage three of Economic and Monetary Union (OJ C 32I, 1.2.2020, pp. 1–5). The amendment to the 2006 agreement hasve been incorporated in the original text. This consolidated version is of documentary value only. last update 11.01.2022