WRITTEN QUESTION E-2738/99

by Stefano Zappalà (PPE-DE) and Antonio Tajani (PPE-DE) to the Commission

(18 January 2000)

Subject: Credit institutions

It would appear that credit institutions in Italy apply different interest rates within regions that are homogeneous and, moreover, that in the province of Latina (Lazio), despite deposits of thousands of billions of lire over several decades, the credit institutions have not invested in the region. Also, despite the inadequate levels of private investment and employment in the province, the banks are suspending loans and credits and demanding their immediate repayment thereby causing small- and medium-sized businesses to close down for good. The banks' exposure in the business sector only accounts for a few percentage points of the deposits held in the region.

Can the Commission say:

1. Whether it considers that it should encourage the Italian government and the European and Italian banking system to look into the above matter;

2. Whether it considers that it should take steps in order to ensure, for example through the consolidation of the exposure and the lifting of credit restrictions, that the small- and medium-sized business sector is revitalised in a region (province of Latina) which, furthermore, when considered in isolation, is in a state of economic crisis?

Answer given by Mr Bolkestein on behalf of the Commission

(25 February 2000)

As the Honourable Members are aware, under the EC Treaty and in particular Article 4 (former Article 3a) thereof provides for a Community economic policy based on the internal market and conducted in accordance with the principles of an open market economy with free competition.

By proposing and implementing measures to achieve the single market in banking services, and more generally financial services, both the Commission and the Community keep to this principle first because it is laid down by a higher-ranking legal provision and second because they are convinced that only an open market economy and free competition allow the best allocation of economic resources. With the introduction of the euro, this policy approach provides a unique opportunity for the Community to equip itself with a modern financial structure thereby reducing the cost of capital and financial intermediation to a minimum. Users of financial services, be they firms or individuals, will reap significant advantages and investment and employment Community-wide will be stimulated.

On the basis of these premisses, Community legislation and other measures establish the legal framework for the free movement of financial services throughout the Community and seek to ensure that competition is not distorted and that the single market produces a sound prudential situation and unquestionable stability. These principles have recently been reaffirmed by the Commission in its communication Implementing the framework for financial markets: Action plan(1) adopted on 26 May 1999. It was transmitted to Parliament and the Council the same day and confirmed by the Cologne European Council.

Within this established framework, it is for each credit establishment to define its own commercial and investment policy on the basis of its assessment of the market and the risks that go with it. The Commission feels that, quite apart from being legally questionable, public intervention designed to impose choices on the financial market would be an obstacle to the free movement of financial services and would, in the long term, be harmful to both firms and consumers, with a negative impact on development and employment.

(1) COM(99) 232 final.