Part VI Monetary Unions and other Forms of Monetary Organization, 28 The Single Currency and its Treaty Framework

Subject(s):

Eurocurrencies as money — Euro Regulations — Eurozone — Institutional framework of monetary union — European Central Bank — European Banking Authority (EBA)

This chapter discusses the provisions established for the creation of the euro pursuant to the terms of the Treaties. It was noted previously that any change in the nature or denomination of a national monetary system involves the establishment of a legal basis for the conversion of debts expressed in the former currency into its replacement. This position necessarily followed from the role which the State and its legislative processes must play in the definition of a monetary system. The creation of monetary union reflected and respected these requirements. Although the original use of the European Currency Unit (ECU) as the foundation of the single currency does cloud this point in some respects, it should not be allowed to obscure it. The chapter then considers the so-called ‘Madrid Scenario’, which followed the original ratification of the Treaty on European Union. Ultimately, the Madrid Scenario was designed to create a sound basis to enable the Union, Member States, financial institutions, and many others to make appropriate preparations for the introduction of the single currency.