German Euro Currency Statute

In September 1997, the German Cabinet sent its Euro Introduction Statute as a bill to the Bundeestag, the parliamentary assembly. The act contains required legal changes for the transition from the Deutsche Mark to the Euro which is the new single currency of the European Union. The introductory process lasts three years.

This law is an another important step in preparing for the single currency. The objective of the statute is to establish legal prerequisites.

On January 1, 1999, the three year transition begins with the usage of the Euro in the private sector. The final step will be completed on January 1, 2002. During the transition one may select between the Euro and the Deutsche Mark in all currency matters. The statute includes changes and amendments that affect different legal areas, as follows:

Corporate Laws

(1) Under the revisions of the corporate statutes contained in the Act, existing and new corporations may express the value of their shares in the Euro currency.

To facilitate use of the Euro, so called "Special Amounts" listed in the corporation law will be expressed in even Euro denominations starting in 1999. In terms of accountancy law, corporations may begin expressing their yearly statements ending after December 31, 1998 in terms of Euro. These "Euro Statements" will be given validity in tax law as well. Expenditures due to the Euro introduction, such as new computer software, may be deducted from taxes for five years.

Litigation in Collection Matters

(2) In summary collection proceedings (special proceeding for the plaintiff to obtain an enforcable instrument without trial, if the defendant waives any objections) summary collection judgments as well as special payment orders of court may be obtained for amounts expressed in Euro.

Securities

(3) Federal treasury bills, bonds and notes will be transferred into Euro or only be issued in Euro starting January 1st, 1999. The law regulates the process by which other issuing authorities may convert their promissory notes from Deutsche Mark to Euro. This provision should increase the volume of the Euro market and may strengthen Germany's financial position. The conversion of stock exchange rates into Euro also fullfills this purpose, according to a report released by the German Ministry of Justice(1).

Currency Oversight

(4) The German currency law will be adapted in a manner consistent with the legal system of the European Union, which will receive the decision making powers for the currency. As the German Justice Ministry observed, in the center lies first and foremost the assurance of the Euro's stability for which the European Central Bank, with its future office in Frankfurt/Main(Germany), is responsible(2).

Coins and Trademarks

(5) The statute also protects the not-yet issued Euro-coins, whose faces have already been officially determined, against confusion with medals and trademarks.

(6) Finally, the bill adresses references to the discount-rate of the German Federal Bank in law, treaties, and judgments. It brings them in line with the Euro currency. This helps avoid a gap in such references during the transition of the monetary policy to the new European Central Bank.