Euro adoption by EMU countries

The BSP issues the Circular Letter to provide key features of the Euro for the information and guidance of all concerned.
The BSP directs that conversion, reporting, and transition arrangements be aligned with the Euro’s scheduled introduction timelines.
Banks, non-bank financial institutions, government agencies, corporations, and private entities are expected to make the necessary accounting system modifications for Euro developments.

Starting January 1, 1999, the Euro becomes a currency in its own right and the European Central Bank becomes fully operational.
The Euro replaces the currencies of the eleven founder EMU countries, referred to as legacy currencies.
From January 1, 1999 to December 31, 2001, existing legacy currency accounts may be maintained alongside Euro accounts.
From January 1, 2002 to June 30, 2002, legacy currencies and the Euro coexist during a six-month dual circulation period.
Governments of participating countries may choose to cut short the dual circulation period.

The Euro is subdivided into 100 cents.
The Euro is settled to two decimal places.
Conversion rates of the legacy currencies to the Euro and with each other are fixed to six significant digits on December 31, 1998.
The fixed rates remain unchanged and are used for converting each legacy currency to the Euro from January 1, 1999 up to June 30, 2002.
The conversion rate of each currency and that of the Euro to US dollars changes on a day to day basis.
Exchange rates are quoted as EUR1=xxxxxx units of currency.
During account conversion, conversion results that are not an exact number of the smallest currency unit must be rounded up or down to the nearest currency unit.
If the conversion result is exactly halfway, it must be rounded up.
Conversion rates must not be truncated or rounded during conversion.

The eleven EMU founder countries and their legacy currencies are:
- Austria — Austrian Schilling
- Belgium — Belgian Franc
- Finland — Finnish Markka
- France — French Franc
- Germany — Deutsche Mark
- Ireland — Irish Punt
- Italy — Italian Lira
- Luxembourg — Luxembourg Franc
- Netherlands — Netherlands Guilders
- Portugal — Portuguese Escudo
- Spain — Spanish Peseta
Euro notes and coins circulate starting January 1, 2002.
Legacy currencies continue as legal tender until replaced by Euro notes and coins.
During January 1, 2002 to June 30, 2002, legacy currencies and the Euro coexist, subject to possible earlier cutoff by participating governments.

The Euro is a currency in its own right.
The ECU is a basket of currencies that includes eight legacy currencies and three non-legacy currencies.
The legacy currencies included in the ECU basket are Belgian Franc, French Franc, Deutsche Mark, Irish Punt, Italian Lira, Luxembourg Franc, Portuguese Escudo, and Spanish Peseta.
The non-legacy currencies included in the ECU basket are Danish Markka, British Pound, and Greek Drachma.
The legacy currencies of Austria and Finland are not included in the ECU basket.

Existing legacy currency accounts may be maintained alongside Euro accounts from January 1, 1999 to December 31, 2001.
Conversion of existing accounts is not compulsory until December 31, 2001, when all accounts in the eleven currencies shall be closed and converted to Euro.
The conversion procedure requires closing the legacy currency account and opening the new Euro account calculated at the fixed conversion rate set on December 31, 1998.
Legacy-currency account holders must coordinate with their banks for conversion of their accounts.
Euro accounts can be maintained in any bank in any country in the European Union.
Eligible existing legacy currency accounts may be converted into Euro accounts with no disruption to existing services and at no cost.
During the transition period, accounts in legacy currencies show balances both in Euro and the legacy currency, whether or not a separate Euro account has been opened.

The BSP’s Daily Foreign Exchange Bulletin must incorporate the fixed conversion rates of legacy currencies to the Euro and the corresponding daily foreign exchange rate to US dollars and pesos starting January 4, 1998.
The Daily Foreign Exchange Bulletin rates must be used to convert accounts denominated in the legacy currencies to the Euro and the corresponding US dollar and peso equivalents.
BSP reporting systems must be revised (and shall be revised) to accommodate the Euro as a new currency.
The Euro must be introduced in the currency library of BSP’s information and reporting system as a new currency effective January 1, 1999.
The legacy currencies must be deleted from the currency library on July 1, 2002.
Reporting guidelines covering the Euro are covered by a separate Circular Letter.
The BSP’s Daily Foreign Exchange Bulletin also requires the new bulletin format shown in Annex 1.

Banks and non-bank financial institutions, government agencies and corporations, and private entities with existing foreign loans denominated in legacy currencies must notify the BSP of loans that are converted.
Transactions and balances on foreign liabilities must continue to be reported in original currency on a per account and per transaction basis.
The country of creditor must continue to be reported notwithstanding the consolidation of accounts in different currencies to the Euro.

The Circular Letter is adopted with the signature of (SGD.) GABRIEL C. SINGSON, Governor.