98/286/EC: Commission Recommendation of 23 April 1998 concerning banking charges for conversion to the euro
Date: 1998-04-23
Institutions: European Commission
Subjects: EU Member State, bank charges, euro, exchange rate, financial institution, national currency

L 130/22

‹

EN

‹

Official Journal of the European Communities

1. 5. 98

II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION RECOMMENDATION

of 23 April 1998

concerning banking charges for conversion to the euro

(98/286/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community, and in particular Article 155 thereof,

1. Whereas the euro will become the currency of the
participating Member States as from 1 January 1999;
whereas the euro will be substituted for the national
currencies of the participating Member States at the
conversion rates; whereas during a transitional period
the euro will exist
in different denominations;
whereas the national currency units will be sub-units
of the euro according to the conversion rates; whereas
according to Article 4(3) of Council Regulation (EC)
No 1103/97 of 17 June 1997 on certain provisions
relating to the introduction of the euro (1), the conver-
sion rates are to be used for conversions either way
between the euro unit and the national currency
units; whereas the draft Council Regulation on the
introduction of the euro (2)
imposes certain obliga-
tions to convert;

2. Whereas the Commission considers that banks are

not legally entitled to charge:

— for the conversion of incoming payments denom-
inated in the euro unit or in the national currency
unit during the transitional period,

(1) OJ L 162, 19. 6. 1997, p. 1.
(2) OJ C 236, 2. 8. 1997, p. 8.

— for the conversion of accounts from the national
currency unit to the euro unit at the end of the
transitional period,

— a different fee for services denominated in the
euro unit from that charged for otherwise iden-
tical
services denominated in the national
currency unit;

3. Whereas the Commission considers that, in order to
facilitate the smooth introduction of the euro, banks
should go beyond the minimum required by law by
providing without charge the conversion of accounts
from the national currency unit
to the euro and
during the transitional period, by providing without
charge the converison of outgoing payments from the
national currency unit to the euro unit and vice versa
during the transitional period, and by providing for
the exchange without charge to their customers of
‘household amounts’ of the national banknotes and
coin for euro banknotes and coin during the final
period;

4. Whereas for reasons of clarity and completeness the
legal requirements as interpreted by the Commission
as well as the recommendations of the Commission
should be presented together; whereas
the term
‘standard of good practice’ is used to signify both the
legally required and the recommended practice;

5. Whereas the standard of good practice should not
include conversion without charge of accounts from
the euro denomination into the national denomina-
tion, as this is not necessary for the introduction of
the euro, nor should it include the exchange of euro-
area national banknotes for other euro-area national

1. 5. 98

‹

EN

‹

Official Journal of the European Communities

L 130/23

banknotes without charge, as
such
exchange is not affected by the introduction of the
euro; whereas the standard of good practice should
cover
such
conversions;

the transparency of any charges

the need for

for

6. Whereas the standard of good practice should not
include the exchange of national banknotes and coin
other than in household amounts; whereas banks and
retailers should negotiate any charges for the with-
drawal from retailers of national banknotes and coin
and for the delivery to retailers of euro banknotes and
coin, taking into accout arrangements made by the
competent authorities at national level;

7. Whereas for all conversions between any national
curreny unit and the euro unit and vice versa, and for
all exchanges of banknotes and coin of participating
Member States, banks should show clearly the ap-
plication of the conversion rates in accordance with
the provisions of Regulation (EC) No 1103/97;
whereas the use of
the conversion rate and any
charges should be transparent; whereas the standard
of good practice in so far as it concerns transparency
in
should be implemented by banks
of charges
advance of 1 January 1999, wherever possible,
in
order to reduce the risk that consumers may wrongly
attribute already existing charges to the introduction
of the euro;

8. Whereas banks which implement

the standard of
good practice should publicise this, to demonstrate
that they comply with the standard, and all banks
should in any event
in
advance of 1 January 1999 whether they apply the
standard of good practice and,
for which
conversions they intend to charge;

inform their customers

if not,

9. Whereas the Commission intends to monitor the
application of the standard of good practice; whereas
such monitoring activity is addressed in Recommen-
dation 98/288/EC on dialogue, monitoring and in-
formation to facilitate the transition to the euro (1);
whereas the dialogue provided for in that Recommen-
dation may include discussions on the implementa-
tion and monitoring of the standard of good practice;
whereas the dialogue could also address aspects of
charging for conversion which could extend beyond
the scope of the standard of good practice as laid
down by this Recommendation;

10. Whereas consumers without a bank account may
need special consideration in relation to the exchange
of banknotes and coin denominated in the national
currency for banknotes and coin denominated in

(1) See page 29 of this Official Journal.

euro, during the final period to be determined by
local conditions within each Member State;

11. Whereas the issue of charging for conversion to the
euro has been discussed at the Round Table in May
1997; whereas an expert group has been established to
examine the issue,
involving all sectors concerned,
and its report has been published (2); whereas the
conclusions of the experts’ report have been accepted
by the Commission in its Communication ‘Update on
practical aspects of
the euro’
adopted on 11 February 1998 (3) and discussed at the
Round Table in February 1998,

the introduction of

HEREBY RECOMMENDS:

Article 1

Definitions

For the purpose of this Recommendation, the following
definitions apply:

(a)

‘Banks’ are credit institutions as defined in Council
Directive 77/780/EEC (4), and any other financial insti-
tutions as defined in Article 4(1) of Council Regula-
tion (EC) No 3604/93 (5), whose business is to carry
out activities related to the conversion of payments
and accounts and the exchange of notes and coin, and
bureaux de change and post offices;

(b) ‘national currency unit’ is the unit of the currency of a
participating Member State, as that unit is defined on
the day before the start of the third stage of economic
‘the national currency unit’ in
and monetary union;
this Recommendation refers to the national currency
unit of the Member State where the bank making the
conversion is located;

(c)

‘participating Member States’ are those Member States
which adopt the single currency in accordance with
the Treaty;

(d) ‘conversion’ is the change of denomination of a mon-
etary amount from the national currency unit to the
euro unit and vice versa at the conversion rate,
in
accordance with the provisions of Regulation (EC) No
1103/97;

(e)

‘euro unit’ is the currency unit of the euro as referred
to in the second sentence of Article 2 of the draft
Council Regulation on the introduction of the euro;

(2) Report of the expert group on banking charges for conversion

to the euro, Euro Paper No 14.

(3) COM(1998) 61 final.
(4) OJ L 322, 17. 12. 1977, p. 30.
(5) OJ L 332, 31. 12. 1993, p. 4.

L 130/24

‹

EN

‹

Official Journal of the European Communities

1. 5. 98

(f)

‘transitional period’
January 1999 and ending on 31 December 2001;

is the period beginning on 1

(g) ‘final period’ is the period beginning on 1 January
2002 and ending on 30 June 2002 at the latest, which
period may vary in length according to participating
Member State, under the terms of the draft Council
Regulation on the introduction of the euro;

(h) ‘conversion rate’ is the irrevocably fixed rate adopted
for the currency of each participating Member State by
the Council according to the first sentence of Article
109l(4) of the Treaty;

(i)

(j)

are payments
‘incoming payments’
crediting to accounts of beneficiaries;

received for

‘outgoing payments’ are payments made by debiting
accounts of originators;

(k) ‘accounts’ are all

types of accounts with banks (as
defined in (a)) and include deposit accounts, current
accounts, mortgage accounts and securities accounts.

Article 2

Standard of good practice

Banks should implement, in accordance with Article 4, a
standard of good practice on conversion without charge,
which should include:

(a) Practice that the Commission considers to be legally

required:

(i) the

conversion without

incoming
payments from the national currency unit to the
euro unit and vice versa during the transitional
period;

charge of

(ii) the conversion without charge of accounts from
the national currency unit to the euro unit at the
end of the transitional period;

(iii) the charging for services denominated in the euro
unit at fees no different from those for identical
services denominated in the national currency
unit.

(b) Other recommended practice:

(i) the

conversion without

charge of outgoing
payments from the national currency unit to the
euro unit and vice versa during the transitional
period;

(ii) the conversion without charge of accounts from
the national currency unit to the euro unit during
the transitional period;

the

account holders) of

(iii) the exchange without charge to their customers
(namely
‘household
amounts’ of the national banknotes and coin for
euro banknotes and coin during the final period.
Banks should quantify ‘household amounts’ by
volume and frequency in a transparent manner.

Article 3

Transparency

1.
For all conversions between any national currency
unit and the euro unit and vice versa, and for all
exchanges of banknotes and coin of participating Member
States, banks should show clearly the application of the
conversion rates in accordance with the provisions of
Regulation (EC) No 1103/97, and should identify separ-
ately from the conversion rate any charges for any kind
whatever which have been applied.

2. Where banks charge for conversions and exchanges
which are not included in Article 2 or where banks do
not implement one or more of the provisions of Article
2(b), they should provide clear and transparent informa-
tion concerning those conversion charges or exchange
charges by providing their customers with:

(a) prior (ex ante) written information on any conversion
charges or exchange charges which they propose to
apply, and

(b) specific information (ex post) on any conversion
charges or exhange charges which have been applied,
on bank and cardholder statements and any other
means used for communicating with the customer.
This information should demonstrate clearly to their
customers the application of the conversion rates in
accordance with the provisions of Regulation (EC) No
1103/97, with any conversion charges or exchange
charges being identified separately from the conver-
sion rate and from any other charges of any kind
whatever which are applied.

Article 4

Implementation

Banks should implement the standard of good prac-
1.
tice by 1 January 1999 at the latest, and earlier in the case
of Article 3 if this is technically feasible.

Banks should inform their customers as soon as
2.
possible before 1 January 1999 about whether and to
what extent they will implement the standard of good
practice.

Implementation of the standard of good practice
3.
should be publicised by any method which demonstrates
that banks comply with the standard, such as:

(a) professional codes of conduct;

(b) provisions within a national changeover plan;

(c) displaying a ‘conversion symbol’ which demonstrates
that banks comply with the standard of good practice.
A scheme to confer the right to display a conversion
symbol should be worked out at national level by the
parties concerned, if and when it is considered appro-
priate.

1. 5. 98

‹

EN

‹

Official Journal of the European Communities

L 130/25

Article 5

Other recommended measures

The competent authorities of
the Member States are
invited to consider how best to facilitate the exchange,
free of charge, of banknotes and coin denominated in the
national currency unit
in reasonable amounts and at
reasonable frequencies, for banknotes and coin denom-
inated in the euro unit during the final period, in the case
of consumers having no bank account.

Article 6

Final provision

Member States are invited to support the implementation
of this Recommendation.

Article 7

Addressees

This Recommendation is addressed to the Member States
and to banks and their associations.

Done at Brussels, 23 April 1998.

For the Commission

Yves-Thibault DE SILGUY

Member of the Commission