Legal basis

1.2.1 Legal basis

Monetary sovereignty has been transferred to the supranational level under the terms and conditions of the EC Treaty, as amended by the EU Treaty.

The present European Union is not a state. It rests on the European Communities and the policies and forms of cooperation established by the EU Treaty. The first pillar comprises the European Community and the European Atomic Energy

Community (Euratom) 35 , which both possess legal personality and are governed by separate treaties. These two Communities are of a supranational nature, acting within the limits of powers which have been delegated to them by the Member States. The second and third pillars of the EU are essentially intergovernmental

33 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 (OJ L 195,

15.7.2006, p. 25). 34 Council Regulation (EC) No 1086/2006 of 11 July 2006 amending Regulation (EC) No

2866/98 on the conversion rates between the euro and the currencies of the Member States adopting the euro (OJ L 195, 15.7.2006, p. 1) 35 The third Community, the European Coal and Steel Community (ECSC), established in 1952, was dissolved in July 2002 when the ECSC Treaty, concluded for 50 years, expired.

arrangements on the common foreign and security policy (CFSP) and police and judicial cooperation in criminal matters.

In theory, it would have been possible to conclude a separate Treaty on EMU as

a fourth pillar of the European Union; this approach was considered in the early stages of the IGC negotiations on EMU 36 but eventually rejected. Instead the legal foundations of EMU were enshrined in the EC Treaty, thus expanding the competence of the European Economic Community. Although Article 2 of the EU Treaty makes a brief reference to EMU as one of the Union’s objectives, all the substantive, procedural and institutional provisions are laid down in the EC Treaty. As regards monetary policy, the Treaty provisions are further specified and substantiated in the Statute of the ESCB, which is annexed to the EC Treaty as a Protocol and thereby forms an integral part of primary Community law.

This means that EMU is governed by Community law and not by intergovernmental law. This approach has built on and further developed the existing institutional framework (avoiding the establishment of separate institutions) and greatly facilitated the setting-up of the ECB as an organisation which is independent vis-à-vis the Member States and the Community bodies.

The EC Treaty also provides for the possibility of secondary Community legislation on EMU matters with a view to dealing with all those aspects of EMU that are not laid down in an exhaustive manner in primary Community law, for example, aspects of the euro itself. The following Regulations form the core of the Community currency law:

• Council Regulation (EC) No 1103/97 of 17 June 1997 on certain provisions relating to the introduction of the euro 37 , as amended by Regulation (EC)

No. 2595/2000 of 27 November 2000 38 ;

• Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro 39 , as amended by Regulation (EC) No 2596/2000 of 27 November 2000 40 ;

• Council Regulation (EC) No 2866/98 of 31 December 1998 on the conversion rates between the euro and the currencies of the Member States adopting the euro41 41 , as amended by Regulation (EC) No 1478/2000 of 19 June 2000 42 ;

• Council Regulation (EC) No 1338/2001 of 28 June 2001 laying down measures necessary for the protection of the euro against counterfeiting 43 , the provisions of which were extended to the Member States not participating in the euro area

by Regulation (EC) No 1339/2001 44 of the same date.

36 See Zilioli/Selmayr (2001), p. 12. 37 OJ L 162, 19.6.1997, p. 1. 38 OJ L 300, 29.11.2000, p. 1. 39 OJ L 139, 11.5.1998, p. 1. 40 OJ L 300, 29.11.2000, p. 2. 41 OJ L 359, 31.12.1998, p. 1. 42 OJ L 167, 7.7.2000, p. 1. 43 OJ L 181, 4.7.2001, p. 6. 44 OJ L 181, 4.7.2001, p. 11.

In addition, the EC Treaty and the Statute of the ESCB provide for secondary Community legislation to complement some specific provisions of the Statute (see Section 2.5.4) and endow the ECB with its own regulatory powers (see Section 2.5.3).

The current EU and EC Treaties were due to be superseded by the Treaty establishing a Constitution for Europe in November 2006, subject to its ratification by all 25 EU Member States. This Treaty was drawn up by the Convention on the future of Europe in 2003 and was eventually adopted by the IGC in June 2004 and subsequently ratified by 15 Member States. However, following a rejection of this Treaty in France and the Netherlands by referenda in 2005, several Member States have suspended the ratification process.