Opinion of the Economic and Social Committee on the 'Communication from the Commission "Practical aspects of the introduction of the euro"'
Date: 1997-12-11
Institutions: European Economic and Social Committee
Subjects: Economic and Monetary Union, economic convergence, euro, monetary integration, monetary policy

C 73/130

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Official Journal of the European Communities

9.3.98

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

appraisal of past or ongoing work until a more suitable
juncture.

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 (1) and the decisions taken at the
Madrid European Council on 15 and 16 December 1995.
The Economic and Social Committee has issued several
opinions (2), 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

(1) COM(95) 333 final.
(2) 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.

2. Work programme (3)

The Commission regards it as ‘essential’ that
2.1.
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’
existing debt (4);

intentions on redenomination of

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

— the launch of national communication campaigns;

— national positions on the tax consequences of tran-

sition.

Lastly,

2.2.
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 (5)

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

(3) See the communication’s ‘executive summary’.
(4) See the Commission Communication ‘The impact of the
introduction of the euro on capital markets’ (COM(97)
337 final, 2.7.1997).

(5) Chapter 1 of the communication.

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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 recommen-
dation it made in 1995 (1) 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 (2)

Views differ on the investments and expenditure
4.1.
that will have to be shouldered by companies for the
transition to the euro. The Committee has already stated
its opinion on this point (3), 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(4)

The Committee considers that users should not
5.1.
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

(1) Opinion of 26 October 1995, points 5.3.11 and 6.4.3.
(2) Point 3.2 of the communication.
(3) Opinion of 26 October 1995, points 6.2.4 to 6.2.7.
(4) Chapter 4 of the communication.

conversion of a credit transaction into the currency of
the beneficiary account. Banks should also convert
national currency in amounts usual for private trans-
actions into euros at no charge. All other scriptural and
conversion transactions, and the transparent identifi-
cation of potential charges arising, should be regulated
by voluntary codes of conduct within the sectors
concerned. It is recommended that consumers be pro-
vided 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 com-
munication) voluntary agreements or codes of practice
should be given preference over regulation, but trans-
parency 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 primar-
ily 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.

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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.

The Committee suggests that the Commission
5.4.1.
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 conse-
quences 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.

Brussels, 11 December 1997.

6. Communication activities (1)

The Committee takes note of the action taken in
6.1.
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 (2)

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.’ (3)

(1) Chapter 5 of the communication.
(2) Chapter 7 of the communication.
(3) OJ C 19, 21.1.1998.

The President

of the Economic and Social Committee

Tom JENKINS

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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.

Opinion of the Economic and Social Committee on:

— the ‘Amended proposal for a European Parliament and Council Decision concerning the
Fifth Framework Programme of the European Community for Research, Technological
Development and Demonstration Activities (1998-2002)’, and

— the ‘Amended proposal for a Council Decision concerning the Fifth Framework Pro-
gramme of the European Atomic Energy Community (Euratom) for Research and
Training Activities (1998-2002)’

(98/C 73/31)

On 30 September 1997, the Economic and Social Committee, acting under the third paragraph
of Rule 23 of its Rules of Procedure, decided to draw up an opinion on the above-mentioned
amended proposals.

The Section for Energy, Nuclear Questions and Research, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 26 November 1997. The
rapporteur was Mr Bernabei.

At its 350th plenary session (meeting of 11 December 1997) the Economic and Social Committee
unanimously adopted the following opinion.

1. Recommendations

The Economic and Social Committee, having regard to:

for a Decision on the Fifth Framework Programme for
research and training activities
(1998-
2002) (1), in which the Committee reserved the right to
comment on the financial perspective established by the
Commission;

(Euratom)

1.1.
its opinion adopted unanimously on 1 October
1997 on the Proposal for a Decision on the Fifth RTDD
Framework Programme (1998-2002) and on the Proposal

(1) OJ C 355, 21.11.1997.