This was debated at length on Committee Stage in the other House. There is provision in the Bill to allow it to be shortened but it cannot be said at this stage whether that will happen.
The EU legal framework comprises the core monetary law of the euro area and the two regulations are binding in their entirety and directly applicable in Ireland. However, some national legislation is still necessary, both for the sake of clarity in national law and to avail of options in the legal framework, and that is essentially the purpose of this Bill.
I should mention at this point that the heads of the Bill which were circulated for consultation to interested parties last March contained a more extensive reflection of the terms of the EU legal framework than is now in the Bill. However, the European Monetary Institute, in its opinion on the heads, expressed a legal concern about such an approach as EU regulations have direct effect in national law. Accordingly, the Bill now adopts a narrower approach, essentially declaring that by virtue of Council Regulation 974/98, from 1 January 1999 the currency of the State is the euro and the Irish pound is a subdivision of it. The EMI accepted the need to refer in national legislation to the lawful currency of the State.
The EMI's opinion also raised some other points which have been reflected in the Bill, notably as regards two imperfections in Central Bank legislation which were raised in its legal convergence report in March, and the desirability of a reference to the fact that DIBOR — the Dublin Interbank Offered Rate — will be replaced from 1 January 1999 by EURIBOR — the Euro Interbank Offered Rate. The EMI also offered some valuable drafting suggestions which have been taken on board.
Now that I have described the EU legal framework, it is time to turn to the details of the Bill itself. I will start with an overview of its main provisions.
As I have already said, the Bill declares that, by virtue of Council Regulation 974/98, from 1 January 1999 the currency of the State will be the euro and the Irish pound will be a subdivision of it. Second, the Bill removes incompatibilities between Irish monetary law and the EU legal framework for the use of the euro; it also recognises the role of the European Central Bank as regards the issue of notes and as regards the volume of coins to be issued. Third, the Bill stares that as of 1 January 1999, DIBOR will be replaced by EURIBOR. Fourth, the Bill makes provision in relation to the redenomination into euro of outstanding Government debt.
In addition, at the request of the Tánaiste and Minister for Enterprise, Trade and Employment, I have included three provisions relating to the redenomination of company share capital into euro. These provisions will facilitate companies which wish to redenominate their capital structure into euro before 1 January 2002. Finally, the Bill provides for the design, issue and sale of commemorative legal tender coinage.
I now turn to the specific provisions of the Bill. Sections 1 to 4 contain standard provisions as regards short title and commencement, interpretation, expenses and the laying of regulations and orders before the Oireachtas. Section 5 is a definitions section.
Section 6 declares that, by virtue of Council Regulation 974/98, from 1 January 1999 the currency of the State will be the euro and the Irish pound will be a subdivision of it. In so doing, it amends section 24 of the Central Bank Act, 1989, which defines the Irish pound as the monetary unit of the State. The section also amends the statement in the Decimal Currency Act, 1969, that the Irish pound and penny are the only legal denominations of the currency of the State, because obviously that will no longer be true with the advent of the euro.
Section 7 declares that contracts may be denominated in euro during the transitional period by virtue of Regulation 974/98, despite the fact that euro notes and coins will not be in circulation. This provision overrides section 25 of the Central Bank, 1989: briefly, that section requires contracts to be either in legal tender or in a currency other than the currency of the State. As the euro will be neither during the transitional period, it is necessary to override the 1989 Act provision.
Sections 8 to 14 deal with legal tender and legal tender amounts, and with the provision and issue of euro coins and their costs and proceeds. Section 9 gives the Minister for Finance power to set a date for the withdrawal of legal tender status from Irish pound notes and coins before 30 June 2002. It is too early to set a date for withdrawal of legal tender status, so the section gives the Minister power to withdraw that status by order. An order under this section must be laid in draft before each House of the Oireachtas and will require a resolution of each House to approve it before it is made.
Section 10 provides that no one other than the Central Bank and persons designated by ministerial order will be obliged to accept more than 50 euro coins in any single transaction. Article 11 of Regulation 974/98 sets this general limit of 50 coins. Section 10 also provides for the repeal, from the date of withdrawal of legal tender status from Irish pound notes and coins, of the present rules about legal tender of coins.
Section 11 empowers the Minister for Finance to provide and issue euro coins and to set out by order their technical specifications, subject to the requirements of the Maastricht Treaty. The Treaty provides that the specifications of euro coins must comply with the technical specifications which the EU Council of Ministers lays down. It also provides that the issuance of such coins will be subject to the approval by the European Central Bank of the volume of issue, as will issuance of commemorative coins provided under Part III of the Bill.
Section 12 provides for protection against counterfeiting for coins — including commemorative coins — issued under this legislation, and for euro coins issued by other member states. Sections 13 and 14 deal with the costs of providing, and the proceeds of issuing, euro coins.
Chapter IV of Part II of the Bill, sections 15 to 19, deals with the calling in and redemption of notes and coins. The expression "to call in" means to demonetise or put out of currency. Redemption involves the replacement of notes and coins by giving value for them by the issue of other coins or of currency notes, or by crediting their face value against an account at the Central Bank.
Sections 15 and 16, respectively, provide for the calling in and redemption of coins issued under this Bill, and euro coins issued by other participating member states which will be legal tender in Ireland. In addition, section 15 limits the Minister's calling-in power by requiring the consent of the European Central Bank to any order under that section relating to matters within its competence.
Section 17 extends the existing prohibition on melting down of coins to include coins issued under this Bill and euro coins issued by other participating member states which will be legal tender in Ireland.
Section 18 provides that the Central Bank may continue to redeem Irish pound notes, even after they have ceased to be legal tender. Section 19 provides that the Central Bank must have the authority of the European Central Bank to call in notes.
Sections 20 to 30 are a miscellaneous collection of sections. The main provisions in them relate to the substitution of EURIBOR for DIBOR, redenomination of debt and redenomination of company share capital.
Section 20 amends section 57 of the Copyright Act, 1963, to reflect the copyright of the European Central Bank in relation to euro notes, and the copyright of the Minister for Finance in relation to the national face of euro coins issued under Section 11. As Senators will be aware, euro coins will have a national face: in our case the national face will show the 12 stars of the EU flag, the year, the harp and the word "Éire".
Section 21 allows the issuing authority for statutory forms which contain references to sums in Irish pounds, or which are designed to accommodate references to such sums, to change the forms, or allow them to be changed, to show also the corresponding amounts in euro or to accommodate references to sums in euro.
Section 22 states that from 1 January 1999, the Dublin Interbank Offered Rate — DIBOR — will be replaced by the Euro Interbank Offered Rate — EURIBOR. A statement to this effect has already been made in the national changeover plan.
Section 23 governs the arrangements for the redenomination of tradeable debt instruments during the transitional period. The transitional period runs from 1 January 1999 to 31 December 2001. Section 23 also contains certain provisions for facilitating the redenomination of the non-tradeable debt of State bodies.
All the member states that will participate in EMU, including Ireland, have indicated they intend to redenominate their "own currency" tradeable debt instruments in the first week of 1999. For Ireland, it is particularly important to redenominate our domestic currency debt into the euro as soon as it becomes feasible. We will be a small issuer in a large euro bond market, so we will need to ensure the liquidity and attractiveness of our bonds from the very outset to secure our place in that market.
Obviously, the markets should be crystal clear as to how bonds and Exchequer notes issued by me, or by the National Treasury Management Agency on my behalf, will be redenominated. It would be inappropriate to use primary legislation to this end, so I intend later this year to issue an order under section 23(1) which will set out the method of redenomination.
In that order I will be specifying what is called a bottom up method of redenomination. This is designed to redenominate the debt with the least possible inconvenience to bond holders, the NTMA and the Central Bank. The bottom up method simply involves changing the denomination of each individual holding of a bond using the conversion rate, and issuing or withdrawing small amounts of that bond to ensure that the sum of the individual holdings of the bond will equal the euro value of the total Irish pound amount of the bond.
I understand the NTMA has no current intention to redenominate Irish Government debt issued under the law of another participating member state and denominated in currencies to be replaced by the euro. If circumstances arise in which it might be necessary or desirable to redenominate this debt, subsection (2) provides that the method used should comply with the law of the member state which governs the debt in question. The NTMA will, of course, be keeping the question of redenominating this category of debt under active review.
I am also providing in subsection (2) that, where other issuers of tradeable debt choose to use the method envisaged for redenominating Government debt which I will set out in the order I will be making later in the year, they will have the authority of law to do so unilaterally: use of any other method will be subject to the applicable contract.
Finally, section 23(3) has been included to facilitate the redenomination of the non-tradeable debt of State bodies. Essentially, my aim in that subsection is to remove a potential administrative obstacle to such redenomination.
Sections 24, 25 and 26 have been included at the request of the Tánaiste and Minister for Enterprise, Trade and Employment. They are designed to set out how redenomination of company share capital will be effected when, on 1 January 2002, references to national currencies in legal instruments are to be read as references to the euro at the conversion rate. They also provide a mechanism whereby companies wishing to redenominate their share capital into euro during the transitional period will be able to do so.
To redenominate or redenominalise its share capital during the transitional period, a company will have to have the necessary resolution passed by its shareholders. The redenomination must occur at the level of the total share capital authorised or issued, or at the level of the total class of share. The individual nominal share par value will then be determined by dividing the redenominated amount by the number of shares involved, and the nominal share par value will be expressed in an unrounded amount.
Many companies are likely to want to express their nominal share value in even euro amounts, and section 26 will facilitate such companies. It deals with situations where the renominalisation involves an increase in capital, as well as situations where it involves a decrease. If an increase is involved, use may be made of distributable reserves or the introduction of additional capital, while if there is a decrease, an amount equal to the decrease — which cannot amount to more than 10 per cent of the reduced capital — will have to be paid into a fund to be known as a capital conversion reserve fund. In essence, where the renominalisation involves a decrease in nominal value, the actual total amount of the company's capital will remain unchanged, but will be expressed in different ways.
Renominalisation in this way will be available during the transitional period and for an 18 month period after the end of the transitional period. After that, companies wishing to adjust their capital will have to operate under the existing company law provisions.
Sections 27 and 28 relate to two legal imperfections which were identified by the European Monetary Institute in its assessment of Ireland's legal convergence in March 1998. I undertook to address these imperfections at an early date and these two sections do so. Section 27 amends section 134 of the Central Bank Act, 1989, to confirm that the Minister for Finance's ability to suspend certain transactions in the national interest under that section will be without prejudice to the performance by the Central Bank of any function, duty or power required under the Treaty or the Statute of the European System of Central Banks — the ESCB.
The second imperfection identified by the EMI is dealt with by section 28, which amends sections 10 and 13 of the Central Bank Act, 1997, to confirm that the requirement that the Minister for Finance's consent be obtained before the Central Bank refuses to approve the rules of a payment system or subsequently revokes such approval will not extend to the ESCB related activities of the Central Bank.
Section 29 empowers the Minister for Finance to make regulations for enabling Part II of the Bill to have full effect. Sections 30 to 34 provide for the design, issue and sale of commemorative legal tender coinage and for the cost of their provision and the proceeds of their issue, and applies the Copyright Act, 1963, to them. Commemorative coins have been only a rare feature of Irish coinage over the years but essentially the Bill codifies the practice which has been followed up to now in relation to the issuance of such coins when it has occurred.
Regarding practical preparations for the changeover to the euro, Senators will be aware that in January I published the second edition of the national changeover plan. This sets out the arrangements that will be made by the public sector, the banks and building societies and the Irish Stock Exchange for the changeover to the euro. It also contains an appendix which describes the changeover work being done by various public and private sector bodies and lists contact points for further information. I aim to publish a third edition of the plan in the run-up to the start of EMU.
On 5 May 1998, I established the Euro Changeover Board of Ireland, which has two tasks: to oversee the implementation of the changeover to the euro and to provide public and consumer information about it. In early June I launched an information campaign by the board aimed at the general public. This included an information leaflet which is being distributed to all households and an advertising campaign on television and radio and in the print media.
Regarding information for business, Senators will be aware of the excellent information pack which has been prepared by the Forfás Business Awareness Campaign. Over 35,000 copies of this pack have been circulated. In addition, over 80,000 copies of a short brochure summarising the key issues for small and medium enterprises have been distributed by Forfás, while over 140,000 copies of a summary leaflet about EMU and the euro have been distributed in conjunction with the Revenue Commissioners. Forfás has also organised two radio advertising campaigns offering businesses the opportunity to phone a dedicated euro-line for information.
The campaign has conducted two surveys on awareness and preparedness levels in the enterprise sector — a benchmark survey in June 1997 and a follow-up survey earlier this year. The surveys were conducted among 600 businesses and reflect the broad structure of Irish industry. Overall, small and medium enterprises — that is, businesses with less than £1 million in turnover — are less well prepared for EMU than larger firms. However, the more recent survey results indicated a greater level of awareness among small and medium enterprises. The message for all companies remains the same: if you have not already begun to prepare, then you should start immediately.
I would also point out that as well as the Forfás campaign, many other organisations such as the banks, the accountancy profession and also the representative organisations of business are also providing information and advice on the changeover to the euro.
EMU and the changeover to the euro will require much preparation across the economy. This Bill, while generally technical in nature, represents an important third step, after the Central Bank Act, 1998, and the Finance Act, 1998, in our domestic legislative preparations for the introduction of the euro. Indeed, it marks a historic change in our monetary law by declaring that from 1 January 1999 the euro is the currency of the State, as well as providing for redenomination of debt into euro and facilitating the redenomination and renominalisation of company share capital.
There is a matter related to section 27 to which I wish to draw the attention of the House. Section 27 (b) substitutes a new subsection for subsection (7) of section 134 of the Central Bank Act, 1989. Where such substitutions are made in legislation, it is usual to insert the subsection number in the text of the new subsection. In other words, on page 16, line 3, it would be usual to insert, after the double quotation, the number (7). This is the usual practice followed, and it is only due to a clerical omission that it has not been followed in the present text. Accordingly I wish to ask the Cathaoirleach to direct the Clerk of the Seanad to make a versional change, under Standing Order 103, to page 16, line 3, by inserting, after the double quotation marks, the number 7 in brackets. I stress that this is not a substantive change.
I commend the Bill to the House.