|Pursuant to Article 122 (2) of the Treaty establishing the European Community, the Council (usually composition of ministers of financial and economic affairs, including the Estonian minister), acting by a qualified majority (2/3), decides on abrogation of the derogation in relation to a country, i.e., granting membership in the euro area. The European Commission makes the proposal for this decision. Reports from the Commission and the European Central Bank, an opinion of the European Parliament, and the result of discussions of the heads of state or government forming the Council (European Council) are appended to the proposal.
For abrogation of the derogation, the state’s legal framework has to be in conformity with the Statutes of the European System of Central Banks and the European Central Bank. The state also has to meet the Maastricht criteria. Conformity with the criteria is assessed every two years or at the state’s request.
When the decision to abrogate the derogation has been taken, the Council of the European Union, acting by unanimity (which means there are no objections), will establish the final exchange rate according to Article 123 (5). The Commission makes the proposal; the opinion of the European Central Bank is added thereto. Ministers of financial affairs of the euro area and of the respective state take part in voting in the Council of the European Union.
The accession procedure may seem illogical from Estonia’s point of view, because we have had a fixed exchange rate for a long time, but there are also countries with a floating exchange rate. The exchange rate for a floating rate cannot be set before it is certain that the country conforms to the changeover criteria. This is why decisions on conformity with the criteria / abrogation of the derogation and on the exchange rate have to be taken in this particular order. From a legal point of view, states should be treated equally, that is, the accession procedure should be the same for all states. Therefore, abrogation of the derogation will be decided first and the exchange rate will be fixed thereafter by a regulation in case of Estonia as well.