When acceding to the European Union Austria accepted per definition the Treaty provisions also with regard to Economic and Monetary union. Austria's positive attitude towards the single currency is also shaped by the positive results of the hard currency policy stance pursued over the past twenty years.
As a study by the Austrian Institute of Economic Research shows, Austria's participation in the third stage of EMU is already warranted by the simple fact that non-participation would be a serious disadvantage for the Austrian economy, with corresponding negative effects on growth and employment.
In order to be able to realise the economic benefits of the single currency as quickly as possible, internal preparations for the changeover began as early as the end of 1996.
A co-ordination committee was set up under the joint chairmanship of the Federal Ministry of Finance and the Austrian National Bank, in which all Ministries and the Social Partners take part. Under this umbrella five working groups were set up dealing with the separate issues of "Legislation", "Administration", "Economic Policy", "Financial Services" and "Information".
In July 1997 an interim report detailing the legal and
technical/organisational adaptations necessary at the level of central
government was prepared. Since then, these issues were further developed
in the Federal Ministry of Finance, and were further broken down into individual
projects. Particular attention was paid to interfaces, both within individual
Government departments and between different departments. Simultaneously
progress was made by the other Ministries, by provinces and municipalities.
Framework for the changeover to the Euro
Changeover requirements differ substantially between government departments. A total of 600 Acts and Ordinances have to be amended, most of the IT systems and all official administrative forms must be altered to include the Euro. The Federal Ministry of Finance is responsible for most of these changes.
Substantive changes are necessary especially in the areas of currency, foreign exchange and central bank legislation and in the regulations governing banking and capital market legislation. In addition, a number of substantive legal amendments are necessary in the field of tax law.
Technical changes (e.g. replacement of Schilling amounts by Euro amounts, roundings) are necessary in a large number of laws. Here, the Federal Ministry of Finance has to undertake numerous technical/organisational adjustments with respect to budgetary matters and the tax administration (e.g. IT equipment, forms, budget documents).
Other departments required to draw up substantive legal amendments are the Federal Ministry of Justice, for example in the field of commercial law, the Federal Ministry of Employment, Health and Social Affairs, and - on account of the disappearance of Schilling reference interest rates - the Federal Ministry of Economic Affairs and the Federal Ministry of Agriculture and Forestry.
Austria will permit a very extensive use of the Euro in the private sector already during the transition phase from 1999 onwards. This so-called "Euro option" will create a general framework which will make it possible for companies to convert their activities - and their legal status if they so wish - already at a very early stage, and for private households to become gradually familiar with the single currency.
Public accounts and transactions
As in the other Member States use of the Euro in the public sector in Austria will, however, not be widespread before the end of the transition phase. Thus, the simultaneous use of Schilling and Euro will be reduced to the necessary minimum, thereby avoiding an expensive duality in administrative procedures. The Schilling will therefore remain the unit of account and means of payment of the public authorities until December 31, 2001 at the latest.
The Euro may, however, be used alongside the Schilling in (cashless) payment transactions with effect from January 1, 1999, for example for payment of taxes and dues. In such cases conversion will be undertaken automatically by the bank, with the credit note on the debtor's tax account continuing to read in Schilling.
Payment instructions by the public sector (e.g. for wages
and salaries, transfers, subsidies, public contracts) will, however, continue
to be given exclusively in Schilling, since these accounts will not be
converted until the end of the transition phase. However, if the recipient
already has a Euro account, the bank will automatically make the conversion
and the amount will appear in both Schilling and Euro on the statement.
Company accounting, tax returns, company law
Company accounts may be converted to the Euro as early
as January 1, 1999. It will also be possible to prepare annual accounts
in Euro for financial years ending after December 31, 1998. Tax returns
for periods from January 1, 1999 may either be completed in Schilling or
in Euro. With effect from 1999, stock corporations may either be set up
in Schillings or in Euros. Conversion of the equity capital of existing
stock corporations will also be possible. Such conversion will also cover
the introduction of the so-called nonpar share. Simplified rules for resolutions
and for registration in the Commercial Register will apply for the purposes
of adaptation to the single currency. The smallest amount of a par-value
share or prorata amount of an individual share certificate will in future
be set at one Euro.
Provisions under capital market legislation
In order to promote the development of a Euro capital
market, the Government intends to selectively convert its existing debt
to the single currency with effect from January 1, 1999. It is currently
being examined which individual debt issues are affected. The at least
partial conversion of the public debt will offer private issuers an incentive
to redenominate their debt issues with effect from January 1, 1999. The
prices on the Vienna stock exchange will be also converted to Euros effective
from January 1, 1999, as will contracts on the cash market and the derivatives
Replacement of reference interest rates
With the beginning of the monetary union, former reference
interest rates (e.g. discount rate) will no longer be available, so that
a replacement is necessary. This issue is currently under examination by
the departments affected, together with the Austrian National Bank. The
future monetary policy instruments of the European Central Bank will be
used as a decision basis.
Dual price marking
General agreement exists on the question of dual price marking during the transition or conversion phase. In principle prices on all quotations, cost estimates, invoices and receipts should be quoted in both currencies for a certain period. This principle will be applied by a general conversion law relating to all economic spheres (private and public companies, central, regional and local authorities, banks, insurance companies, leasing companies).
This period in question will start three months before the physical introduction of the Euro, will cover the double currency phase and may be extended if necessary. Special sector and branch-related features will apply in order to make dual price marking cost-effective and transparent.
At the Federal level, bottom lines in official documents
(i.e. in forms, decisions, transfer vouchers etc.) are to be shown also
in Euro with effect from January 1, 1999, through the introduction of an
extra information line within the documents. The Government will thus play
a pioneering role in preparing the population for the single currency by
providing them with relevant information.
The next steps
It has been decided that the parliamentary process of those amendments to laws which have to enter into force on January 1, 1999 should be completed during the first half of 1998. In the organisational/technical sphere, early measures are required specifically with respect to forms (in particular the introduction of the Euro information on forms) and individual alterations within the IT system (in particular the conversion of Euro amounts in tax returns).
* Federal Ministry of Finance Himmelpfortgasse 4-8 1015 Vienna. <http://www.euro.gv.at>