EURO : RECOMMENDATIONS ON RELATIONS WITH CAPE VERDE ESCUDO.
The European Commission recommended on November 19 the adoption of a Council Decision to confirm the future relations between the Euro and the Cape Verde Escudo. The aim is to ensure that the present arrangement, under which the convertibility of the Cape Verde Escudo into the Portuguese Escudo at a fixed parity is ensured by aid of a limited credit facility provided by the Portuguese Government, should not be materially affected by the transition to the Euro. This decision must now be ratified by the EU Council of Ministers after consultations with the European Central Bank (ECB).
The fixed parity between the Euro and the Cape Verde Escudo will follow from the official conversion rate fixed on 1 January 1999 between the Euro and the Portuguese Escudo. The present budgetary commitment by the Portuguese Government does not entail any obligations for the Portuguese Central Bank. Its continuation should therefore not affect the smooth operation of EMU. The Portuguese authorities will nevertheless be obliged to keep the Commission, the Economic and Financial Committee (successor to the Monetary Committee) and the European Central Bank (ECB) informed of the implementation of the agreement. In particular the Portuguese authorities will inform the Economic and Financial Committee in advance of any possible changes in the parity between the Euro and the Cape Verde Escudo. Changes in the nature or scope of this agreement would require the approval of the Council on the basis of a Recommendation of the Commission after consultation of the ECB.
Portugal concluded the exchange rate cooperation agreement with the Cape Verde islands off West Africa, reflecting their historical ties and close cooperation between the two countries since Cape Verde's independence in 1975. In July this year, the Commission made a similar Recommendation for a Council Decision on relations between the Euro and the CFA Franc and the Comoran Franc.
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|Date:||Nov 21, 1998|
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