Part VI Monetary Unions and other Forms of Monetary Organization, 30 Monetary Union and Monetary Obligations

Subject(s):

Euro Regulations — Eurozone — Monetary obligations — Monetary union — European Central Bank

This chapter evaluates the effect of monetary union on monetary obligations. Monetary union in Europe involved the effective disappearance of eleven national currencies with effect from 1 January 1999. The physical indicia of those currencies remained in circulation until the early part of 2002, but during this transitional period, they were ‘subdivisions’ or ‘representations’ of the euro. The chapter then considers whether the substitution of so many convertible and internationally traded currencies could have had the effect of frustrating or otherwise terminating contracts which were expressed in the legacy currencies, and which had been entered into before the creation of the single currency had been contemplated or agreed. It looks at the termination of contracts before the English courts, the termination of contracts before foreign courts, the impact of the euro on fixed and variable interest rates, and the position of obligations expressed in the private European Currency Unit (ECU).