WRITTEN QUESTION E-2710/00 by Christopher Huhne (ELDR) to the Commission. Euro changeover and the black economy.
Date: 2000-09-01
Institutions: European Parliament, Provisional data
Subjects: European Monetary System, currency convertibility, economic consequence, euro, issuing of currency, paper money, underground economy

C 113 E/154

Official Journal of the European Communities

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18.4.2001

(2001/C 113 E/160)

WRITTEN QUESTION E-2704/00

by Christopher Huhne (ELDR) to the Commission

(1 September 2000)

Subject: Cost of air travel in the EU

Will the Commission please state the average price of an airline ticket for journeys of a comparable length
in the EU and in the US, taking typical short-, medium- and long-haul routes?

Has there been any improvement in the relative EU position over the last ten years, and what is the
evidence for this?

Answer given by Mrs de Palacio on behalf of the Commission

(13 October 2000)

In terms of international comparisons, the real difference is not between fares on either side of the
Atlantic, but rather between routes where there is substantial competition and routes where one or two
carriers operate unchallenged. According to work carried out by the travel industry, it seems that in the
mid 1990(cid:146)s, Community travellers were on average paying between twenty and forty percent more than
their American counterparts per kilometre for comparable economy class travel. By 1997 this gap seemed
to have almost disappeared. The economy fares available today on the most competitive routes in the
Community are comparable with those on the most competitive routes in the United States, but on both
sides of the Atlantic there remain many routes where new competitors have yet to emerge and fares are
higher. Because of a longer history of liberalisation and a larger low-cost industry in the United States, the
Community probably still has a higher proportion of the latter.

(2001/C 113 E/161)

WRITTEN QUESTION E-2710/00

by Christopher Huhne (ELDR) to the Commission

(1 September 2000)

Subject: Euro changeover and the black economy

1. Will the Commission please state recent estimates of its own, or of academic researchers, or of the
International Monetary Fund, of the size of the black economy in each Member State?

2. What will be the implications of the exchange of euro notes and coin for national currencies for the
black economy in each Member State?

3. What economic effects may arise, including the potential distortion of monetary indicators?

Answer given by Mr Solbes Mira on behalf of the Commission

(11 October 2000)

A point to be borne in mind is that many transactions do not show up in statistical surveys for a
1.
variety of reasons (exemptions, declaration thresholds, etc.) that are though lawful. The Commission works
in close collaboration with the national statistical institutes in an attempt to include in the calculation of
gross national product (GNP) all activities, whether or not declared to the authorities. This approach is
described in the report sent by the Commission to the Council and to Parliament (1). The Commission does
not carry out estimates of the black economy in each Member State. The Honourable Member is here

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referred to the answer given to his Written Question E-2231/99 (2). Numerous studies do though exist. The
table sent direct to the Honourable Member and to Parliament(cid:146)s Secretariat is taken from the study
(cid:145)Shadow economies around the world (cid:129) size, causes and consequences(cid:146) by F. Schneider and D. Enste
(Working Paper No 196, September 1999, Ludwig-Maximillians-Universit(cid:228)t and IFO Institute for Economic
Research, Munich). It is for information purposes only and does not imply any judgment on the part of the
Commission.

2.
So as not to complicate the exchange of bank notes in 2002, the Member States decided that they
would not add to the controls already in place. Pursuant to Council Directive 91/308/EC of 10 June 1991
on prevention of the use of the financial system for the purpose of money laundering (3), banks will simply
need to check the identity of customers wishing to exchange a sum of more than €15 000, whether in a
single or several operations. However, introduction of the euro as legal tender will doubtless help to reduce
slightly the volume of notes not kept in an account given the existence of ceilings on the exchange free of
charge of national currency units into euros.

3.
To a considerable extent, currency transactions in the black economy are carried out in cash, i.e.
banknotes. Therefore, those who are actively involved in such activities might be afraid to change large
amounts of cash at the bank during the relatively short official conversion period. It can be expected that
agents will try to reduce their stocks of cash before the official changeover date. Similar arguments can be
applied to banknotes, particular DM banknotes, circulating in foreign countries, particularly in the central
and eastern European countries (CEECs). If holders of such banknotes find it difficult to change officially at
the bank money stemming from black-economy activities, they may be inclined to exchange them first for
dollars and then to move back into euros. However, no estimates can be made of the scale of such
activities and the impact on banknotes in circulation should be only transitory. Since the beginning of the
year, the value of DM banknotes in circulation has been declining slightly.

(1) COM(96) 124 final.
(2) OJ C 170 E, 20.6.2000.
(3) OJ L 166, 28.6.1991.

(2001/C 113 E/162)

WRITTEN QUESTION E-2716/00

by Christopher Huhne (ELDR) to the Commission

(1 September 2000)

Subject: Capital flows in the euro zone

Will the Commission please examine the scale of capital flows within the euro zone countries since the
launch of the euro compared with the periods before and state whether there has been an increase in the
scale of such flows and, if so, by how much?

Answer given by Mr Solbes Mira on behalf of the Commission

(17 October 2000)

The analysis of capital flows within Member States would be an interesting topic, because results should
give hints on structural changes and the success of regional policies (e.g. Community projects). However, it
appears difficult, if not impossible, to measure capital flows within Member States as there is no database
available which would allow to go beyond theoretical analysis.

Data on capital flows among eurozone countries is not made available to an extent sufficient for reliable
conclusions. Again there is no central database known that provides timely information for all zone
countries. For that reason preliminary observations can only be taken from annual
foreign direct
investment (FDI) data and capital accounts provided by national central banks.