Euro 1998: Setting the Stage for a Single European Currency

31 December 1998 – A landmark decision that finalized the path to the Euro was made today as the European Union Council officially adopted the irrevocable conversion rates for the euro. This crucial step, mandated by Article 109l (4) of the Treaty of the European Community, was based on a proposal from the European Commission and after consultation with the European Central Bank (ECB). Effective from 0.00 on 1 January 1999 (local time), these rates are the definitive figures for all conversions between the euro and the participating national currencies, and amongst the national currencies themselves. This announcement marks a pivotal moment in European monetary history, solidifying the foundation for the euro’s introduction.

The euro conversion rates, meticulously calculated and now legally binding, are as follows for each participating currency against one euro:

Currency	Units of national currency for € 1
Belgian franc	40.3399
Deutsche Mark	1.95583
Spanish peseta	166.386
French franc	6.55957
Irish pound	0.787564
Italian lira	1936.27
Luxembourg franc	40.3399
Dutch guilder	2.20371
Austrian schilling	13.7603
Portuguese escudo	200.482
Finnish markka	5.94573

These Euro 1998 conversion rates were not arbitrary figures. They were the result of a carefully orchestrated process rooted in principles outlined in a Joint Communiqué from May 2, 1998. This communiqué involved key players: the ministers of the Member States adopting the euro, the governors of their national central banks, the European Commission, and the European Monetary Institute. The determination process unfolded in a series of coordinated steps designed to ensure accuracy and transparency:

Market Observation and Rate Calculation: Starting with a teleconference at 11 a.m. (C.E.T.), EU national central banks monitored markets and calculated exchange rates for their national currencies. Crucially, they ensured that rates between participating currencies aligned with the pre-announced ERM bilateral central rates, maintaining stability within the system.
Commission’s ECU (Euro) Rate Calculation: Following the central banks’ input at 11.30 a.m., the European Commission took the lead, calculating the official ECU exchange rates (which would become the euro 1998 rates) for each participating currency. These calculations were then promptly transmitted to the ECB for verification, ensuring a robust double-check mechanism.
ECB Governing Council Opinion: Shortly after noon, the Governing Council of the ECB, including governors from non-euro area national central banks, convened via teleconference. Chaired by ECB President Mr. Duisenberg, the council adopted the ECB’s formal opinion on the proposed “Council (EU) Regulation on the adoption of the conversion rates between the euro and the currencies of the Member States adopting the euro,” providing expert endorsement of the rates.
Formal Proposal and Public Announcement: At 12.30 p.m. (C.E.T.), the European Commission, in a televised session, formally proposed the irrevocable euro 1998 conversion rates to the EU Council for adoption. Simultaneously, demonstrating transparency and immediacy, the Commission made these proposed rates publicly accessible via the internet and financial information providers, ensuring widespread awareness.
Council Adoption and Public Confirmation: Taking the ECB’s opinion into account, the EU Council formally adopted the Regulation. By 1.40 p.m. (C.E.T.), the public was informed of this definitive adoption. The European Commission reinforced this public announcement through the same channels used for the proposed rates.
SWIFT Confirmation to Financial Institutions: At 2 p.m., the ECB disseminated a SWIFT broadcast to all institutions with a SWIFT address, providing direct and secure confirmation of the euro 1998 conversion rates to the financial industry.
Official Publication: Ensuring legal certainty and public record, the Regulation and the ECB’s Opinion were slated for publication in the Official Journal of the European Communities. By 3 p.m., these documents were available in the eleven official EU languages from the Office for Official Publications in Luxembourg.
Effective Date: The Regulation establishing these euro 1998 rates becomes legally effective from 0.00 hours (local time) on 1 January 1999, marking the official commencement of the euro era in participating nations.

This meticulously planned and executed process underscores the commitment to a stable and transparent introduction of the euro. The euro 1998 conversion rates stand as a testament to the collaborative efforts of European institutions in creating a new monetary landscape for the continent.

(1) http://www.europa.eu.int/eurobirth.