Opinion of the Economic and Social Committee on the 'Communication from the Commission "Practical aspects of the introduction of the euro"` (98/C 73/30)

On 6 October 1997 the Commission consulted the Economic and Social Committee, under Article 198 of the Treaty establishing the European Community, on the above-mentioned communication.

The Economic and Social Committee appointed Mr Burani as rapporteur-general to draw up the relevant opinion.

At its 350th plenary session on 10 and 11 December 1997 (meeting of 11 December) the Economic and Social Committee adopted the following by 35 votes with 3 abstentions.

1. Introduction

1.1. The communication in question was presented by the Commission to the Ecofin Council meeting in Luxembourg on 13 October 1997; an updated version will be presented at the Luxembourg Summit on 12 and 13 December 1997. This document contains information on the practical preparations implemented, in the Member States and at EU level, in the run-up to adoption of the euro. It also indicates the decisions that still have to be taken within a very tight timespan: basically, by the end of 1997.

1.2. This 'progress report` on work in preparation for the introduction of the euro establishes a link with the 1995 Green Paper () and the decisions taken at the Madrid European Council on 15 and 16 December 1995. The Economic and Social Committee has issued several opinions (), both on this subject and a number of specific issues.

1.3. In view of the urgency of drawing up with all speed the opinion requested by the Commission, the Committee is confining its comments to aspects which call for future decisions or initiatives and will leave an appraisal of past or ongoing work until a more suitable juncture.

2. Work programme ()

2.1. The Commission regards it as 'essential` that Member States, before the end of 1997, present their own action plans in connection with:

- the transition programme, including statements on accounting, reporting and tax declarations in euro;

- public issuers' intentions on redenomination of existing debt ();

- the final design of the national faces of euro coins;

- the launch of national communication campaigns;

- national positions on the tax consequences of transition.

2.2. Lastly, the Commission wonders, whether national or Community measures would be preferable on a number of practical points; in the latter case, the question is whether to adopt legislation or to allow market self-regulation, possibly with the adoption of codes of practice. Here again, the study should be completed by the end of 1997.

3. Preparations in progress ()

3.1. [On the preparations being made by the national public administration (point 1.2 of the communication)]. The Committee observes that tangible progress has been made on ... communication in almost all countries. The communication mentions that, in line with the 'free option` principle, companies must be able to choose whether their transactions are to be in euro or in the national currency, at any stage during the transition phase.

3.2. In addition, the Committee would draw the attention of the Commission and the Member States to a measure of inflexibility in this rule: once the transition has taken place, it becomes irreversible. In other words, after opting for the euro, the company will no longer be able to revert to national currency. The new adoption programmes involved could prove to have certain shortcomings which will necessitate complex, lengthy rectification procedures, and possibly a temporary return to the old programmes. The Committee is therefore opposed to irreversible options, which can impede the process.

3.3. The Communication confirms that all national administrations will retain national currency for their internal accounting throughout the transition period. The Committee is pleased to see that the recommendation it made in 1995 () has been acted upon. The potential cost implications for administrations of having to accept euro payments from the general public (and presumably having to make euro payments where requested) still have to be assessed.

4. Accounting and fiscal aspects ()

4.1. Views differ on the investments and expenditure that will have to be shouldered by companies for the transition to the euro. The Committee has already stated its opinion on this point (), to the effect that market rules should facilitate fair apportionment of such costs. In various Member States the trend would seem to be towards a measure of fiscal flexibility taking account of transition costs. This approach is certainly feasible but the Committee would warn against discrepancies in treatment between the Member States and, at national level, between the various economic categories. The move to a single currency must not aggravate the taxation differences that already exist in Europe.

5. Practical aspects of concern to currency users ()

5.1. The Committee considers that users should not have to bear any charges for scriptural conversions arising from the mandatory conversion of accounts by banks at the end of the transitional period and from the conversion of a credit transaction into the currency of the beneficiary account. Banks should also convert national currency in amounts usual for private transactions into euros at no charge. All other scriptural and conversion transactions, and the transparent identification of potential charges arising, should be regulated by voluntary codes of conduct within the sectors concerned. It is recommended that consumers be provided with additional information in the form of national euro-labels to identify charges properly levied.

5.1.1. On conversion charges (point 4.3 of the communication) voluntary agreements or codes of practice should be given preference over regulation, but transparency should be the rule in all cases of conversion, stating either that the transaction is free of charge or indicating the rates charged.

5.2. In the Committee's view, 1 January 2002 should be retained as date for the first issue of euro notes and coins.

5.3. Dual display (point 4.2 of the communication). In line with the subsidiarity principle, the Member States should decide for themselves, via legislation, whether the dual display of prices should be mandatory during the co-existence period, or whether the business circles concerning (particularly the retail trade) should, through their organization, make a voluntary commitment to calculate and display the new price correctly at the set conversion rate from the cut-off date. In addition, retailers could be called upon to give their customers every possible assistance in adjusting to the new euro currency and its value, for example, by providing small pocket calculators on shopping trolleys, conversion tables of key prices, etc. During the preceding period, the Committee is opposed to Community legislation, which could well prove ill-adapted to the differing national situations. Market forces would seem a more appropriate means of bringing about the adoption of dual display, where this proves necessary or useful.

5.3.1. Legislation or regulations should focus primarily on preventing abuse of consumer interests possibly in the shape of inaccurate conversion or deliberate misuse of the 'rounding-off` rules. The Committee wonders whether this aspect is to be studied in greater depth by the Commission and Member States. It is important that the consumer should be able to check that prices tally, but even more important to ensure that an exact equation is required of sellers of goods and services. Offenders acting in bad faith, for instance in cases of deliberate and systematic breaches of the rules, would be guilty of the crime of fraud.

5.4. One aspect which the Communication has not broached is the role of payment or prepaid cards during the transition period. In its Opinion on the Green Paper, the Committee pointed out that such means of payment incorporate - or will shortly do so - elements and/or details in microprocessor cards so as to allow payment in one currency or another and/or to convert between currencies. In the latter case, there would be the additional advantage of an automatic conversion check on the prices indicated by sellers.

5.4.1. The Committee suggests that the Commission study in greater depth the various aspects involved in the use of cards so as to improve understanding and use with the means at its disposal. Here the market (and especially consumers) needs to be given guarantees, through the rapid solution of matters which have been pending for some time, (e.g. the recovery of costs borne by card carriers).

5.5. Length of the co-existence period (Phase C). To avoid unnecessary queues at bank counters on the first days after introduction of euro notes and coins and to facilitate a calm, orderly and cost-effective conversion of national currency into euro notes and coins, Phase C must run for a certain minimum period. If Member States allow only a few days for conversion from national currencies to the euro, such undesirable consequences will be unavoidable. Member States should still be empowered to set the length of Phase C under Article 15 of the Council Resolution of 7 July 1997 on the legal framework for introduction of the euro, but the Commission is nevertheless urged to provide assistance to the Member States in keeping each other informed and in discussing the length of Phase C.

6. Communication activities ()

6.1. The Committee takes note of the action taken in this field by the Commission and the Member States - as well as by organizations of economic players and consumers - both with and without Commission funding. However, from an initial cursory appraisal of the programmes, two aspects would seem to have been overlooked, or to have received little attention:

- the fact that the euro will be legal tender alongside national currencies for a certain period: hence the call to avoid needless queues at bank counters during the initial days of conversion. A smooth changeover - as has always been the case when new notes are substituted for notes to be withdrawn from circulation - is not just an organizational matter; there are also spin-off effects for conversion costs, as referred to in point 5.1 above;

- the practical aspects of use of payment or prepaid cards (see point 5.5 above). Issuers of payment cards, prepaid cards and electronic purses are required to provide objective information on the practical aspects of using their card systems. The Commission should provide additional, neutral information which does not gloss over possible disadvantages.

7. Financial markets ()

7.1. The Committee has stated its position on this point in its Opinion on the Commission Communication 'The impact of the introduction of the euro on capital markets.` ()

Brussels, 11 December 1997.

The President of the Economic and Social Committee

Tom JENKINS

() COM(95) 333 final.

() Opinion of 26 October l995 on the 'Green Paper on the practical arrangements for the introduction of the single currency`, OJ C 18, 22.1.1996; Opinion of 28 September 1996 on 'The impact of Economic and Monetary Union: Economic and social aspects of convergence and measures to increase awareness of the single currency`, OJ C 30, 30.1.1997; Opinion of 31 October 1996 on the 'Market implications of the legislation and regulations required for the transition to the single currency`, OJ C 56, 24.2.1997; Opinion of 29 May 1997 on 'Arrangements for stage three of economic and monetary union: stability and growth pact for ensuring budgetary discipline, reinforced convergence procedures, and a new exchange rate mechanism`, OJ C 287, 22.9.1997; Opinion of 10 December 1997 on the Commission Communication 'The impact of the introduction of the euro on capital markets`, OJ C 19, 21.1.1998.

() See the communication's 'executive summary`.

() See the Commission Communication 'The impact of the introduction of the euro on capital markets` (COM(97) 337 final, 2.7.1997).

() Chapter 1 of the communication.

() Opinion of 26 October 1995, points 5.3.11 and 6.4.3.

() Point 3.2 of the communication.

() Opinion of 26 October 1995, points 6.2.4 to 6.2.7.

() Chapter 4 of the communication.

() Chapter 5 of the communication.

() Chapter 7 of the communication.

() OJ C 19, 21.1.1998.

APPENDIX to the opinion of the Economic and Social Committee

The following amendments, which were supported by at least one-quarter of the votes cast, were defeated during the debate.

Point 5.3.1

Amend as follows:

'The Committee calls on the Member States to deal with this aspect comprehensively under their criminal law.`

Result of the vote

For: 13, against: 19, abstentions: 3.

Chapter 5

Insert a new point, worded as follows:

'Preparation within the IT industry

The ESC feels that business, the public authorities and consumers should not have to bear repeated computer system adjustments to cope with dates after the year 2000 and the introduction of the euro. In the interests of cost reduction, reliable planning and confidence building, IT suppliers, with strategic support from the Commission, should provide overall system update packages on time.

On this point the ESC welcomes the move to organize a euro IT forum, and would like to see it held in the first half of 1998 to avoid delays.`

Result of the vote

For: 15, against: 17, abstentions: 5.