OPINION OF THE  EUROPEAN MONETARY INSTITUTE
on a consultation from the Council of the European Union under Article 109f (6) of the Treaty
establishing the European Community and Article 5.3 of the Statute of the EMI;
on a Proposal for a European Parliament and Council Directive on cross-border transfers (COM(94)
436 final) (“the Directive”).
CON/95/3
1 The present consultation was initiated on 2nd February 1995 by the Council of the European
Union which, for this purpose, transmitted to the EMI a Proposal for a European Parliament and
Council Directive on cross-border transfers (“the Directive”) as laid down in document
COM(94)436 final.
2 The principal objective of the Directive is to ensure that in the internal market cross-border
credit transfers may be made free of any impediment. In this sense, the Directive is intended to
serve as a support measure for the free movement of goods, persons, services and capital, while
at the same time ensuring a high level of consumer protection. The Directive is also intended to
be a sequel to the freedom of capital movements achieved during Stage One of Economic and
Monetary Union (EMU) and is therefore considered by the European Commission as a further
step towards the progressive implementation of EMU.
3 Under t he Treaty on European Union the EMI is entrusted with the task of promoting cross-
border payments with a view to Stage Three of EMU. Although the EMI’s focal point is
primarily large-value payments between banks, the Directive, which is mainly intended to apply
to retail payments, is also felt to be important by the EMI, as these two kinds of payments are
interrelated. The EMI shares the general objectives of the Commission in the field of retail
cross-border payments and supports its wish to encourage the banking industry to improve the
transparency and performance and reduce the costs of such payments. In this context, the EMI
also shares the view of the Commission that cross-border payments are generally not yet
executed efficiently enough to benefit fully from the Single Market and, at a later stage, from
Monetary Union. Although it is recognised that the banking industry has made substantial
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improvements in the situation over the past few years, some time will be needed before cross-
border retail payments in the EU can match the performance of domestic payments.
Nonetheless it is the EMI’s view that a Directive is too heavy a legal instrument to address the
issue at this moment. Rather a non-binding instrument (perhaps in the form of a “Charter”)
would be more appropriate as the issues dealt with in the Directive mainly concern the relations
between banks and their customers, which in most EU Member States are governed by
contracts rather than by binding statutory provisions. However, if the European Parliament and
the Council choose to adopt a legally binding instrument in the form of a Directive (a political
decision in their realm of competence), some amendments are needed to ensure that it does not
have adverse effects on payment systems.
4 The EMI has  two major remarks on the scope of the Directive. First, it should be made clear
that the Directive does not apply to large-value payments, as the consequences of the
implementation of the Directive for such payments have not been analysed. Indeed, discussions
which have taken place so far between the Commission and commercial banks have only
focused on retail payments in connection with the need to protect consumers and small
businesses; in other words the Directive is predominantly about consumer protection.  Moreover,
it has never been seriously argued that large-value payments raise major problems for the
implementation of the Single Market. Secondly, it should be made clear that the proposed
Directive ought ordinarily to apply only to credit transfers in EU currencies and in ECUs, as
transfers in a non-EU currency are likely to involve one or more non-EU credit institutions, to
which the Directive cannot apply.
5 Finally, detailed remarks on some of the issues raised in the proposed Directive are given below:
(a) Although the EMI agrees in general with the definitions provided in the proposed
Directive, the definition of “other institutions” does not specify which types of institutions
are covered. In particular, it should be made clear that the definition does not cover
central banks.
(b) It is suggested that the wording of Article 4 (Information subsequent to a credit transfer)
be slightly amended so that the second indent reads “... the amount of any charges
payable by its customer. The original amount of the credit transfer and any charges
payable by the beneficiary should be separately specified”.
(c) Articles 5 to 7 impose a strict liability on the originator’s bank in every respect. The EMI
is doubtful whether the Directive should impose on the originator’s bank a strict liability to
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the originator for the proper execution of a cross-border credit transfer, unless provision is
made in the Directive for the following:
-first, possible contractual rights should be preserved for the originator’s bank to have
recourse to any intermediary bank for recovery of any sum which becomes payable to
the originator (under the terms of the Directive) as a result of any error or omission by
such an intermediary;
-second, the originator’s bank should not be made l iable for the acts or omissions of the
beneficiary bank, or for an error of an intermediary bank imposed by the beneficiary
bank or by the originator;
-and third, the Directive should contain a more appropriate definition of “force
majeure”, where the liability of the originator’s bank does not apply. The insolvency of
an intermediary institution is presently excluded from the definition. In this respect, it
may be mentioned that the originator may choose, either directly or indirectly, the
intermediary institution. A bank should be able to protect itself against liability if forced
to deal with a counterparty which it considers to be of doubtful creditworthiness. This
could be achieved through a provision which allows banks in such circumstances to
advise the customer of the risk and to exclude liability if a customer nevertheless
wished to proceed.
20th March 1995