Dáil Éireann debate -
Wednesday, 7 Feb 1996

Vol. 461 No. 2

Written Answers. - Harmonisation of EU Institutions.

Kathleen Lynch

Question:

17 Kathleen Lynch asked the Minister for Finance his views on the need for greater harmonisation of centralised EU institutions in view of the fact that under the Maastricht Treaty responsibility for the management of exchange rates is split between the European Central Bank and the Ecofin Council; and if he will make a statement on the matter. [2640/96]

Minister for Finance (Mr. Quinn)

I assume the Deputy is referring to the management of exchange rate policy in stage three of Economic and Monetary Union. The arrangements for such management are set out in the Treaty on European Union and are briefly as follow:

Article 105 provides that the primary objective of the European System of Central Banks, or ESCB, which comprises the European Central Bank (ECB) and the national central banks, shall be to maintain price stability.

Article 109 provides that the Council may, acting unanimously on a recommendation from the ECB or from the Commission, and after consulting the ECB in an endeavour to reach a consensus consistent with the objective of price stability, after consulting the European Parliament, conclude formal agreements on an exchange rate system for the Euro in relation to non-Community currencies. In the absence of such an exchange rate system in relation to one or more non-Community currencies, the Council, acting by a qualified majority, either on a recommendation from the Commission and after consulting the ECB or on a recommendation from the ECB, may formulate general orientations for exchange rate policy in relation to these currencies. These general orientations shall be without prejudice to the primary objective of the ESCB to maintain price stability. When these Article 109 decisions are being taken, the voting rights of the member states not participating in Economic and Monetary Union shall be suspended.

In implementing its tasks within these arrangements, Article 107 provides that neither the ECB nor a national central bank shall seek or take instructions from Community institutions or bodies, or from the government of any member state.

The Deputy will see from the above that the Treaty provides for a substantial degree of co-operation and consultation between the various Community institutions concerned with exchange-rate policy, while also ensuring the necessary independence of the ECB and national central banks. Preparations at EU level for stage 3 are currently intensifying, following the adoption by the Madrid European Council of the reference scenario for the transition to a single currency, and co-operation among the various institutions, including the European Monetary Institute, the forerunner of the ECB, is satisfactory. I am confident that the necessary degree of co-operation between the various institutions, as provided for in the Treaty, will also be achieved in stage three of Economic and Monetary Union.