WRITTEN QUESTION E-2716/00 by Christopher Huhne (ELDR) to the Commission. Capital flows in the euro zone.
Date: 2000-09-01
Institutions: European Parliament, Provisional data
Subjects: capital movement, euro area, financial statistics, participating country (euro area), trading volume

18.4.2001

EN

Official Journal of the European Communities

C 113 E/155

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.

C 113 E/156

Official Journal of the European Communities

EN

18.4.2001

First estimates of FDI flows in 1999 published by Eurostat (see tables 1.a and 1.b sent direct to the
Honourable Member and to Parliament(cid:146)s Secretariat) together with revised 1998 data indicate that outflows
from eurozone countries reached a record high of about € 300 000 million as compared to about
€ 240 000 million in 1998. An increase was also reported for inward flows to the zone which surged
from € 150 000 million to € 170 000 million in 1999. At the Member States level no breakdown by
destination was made available for France. Among the other Member States, Belgium, Germany and the
Netherlands reported both the largest inward and the largest outward flows. Substantial changes in these
flows, as for instance the tripling of French outward flows in 1999 or the drop in Finnish outward flows
down to one sixth of the 1998 figure, have to be related to single mergers and acquisitions. In that regard
any comparison between pre-European Monetary Union (EMU) and EMU years can only provide a limited
amount of information.

In August 2000 the Bundesbank reported capital flows between Germany and other parts of the zone in
to the Honourable Member and to Parliament(cid:146)s
its statistical supplements (see table 2 sent direct
Secretariat). Capital exports to the rest of the zone had increased by about one quarter in 1999 compared
to 1998 while capital imports in 1999 fell to one third of the level reported for 1998. In the first half of
2000 the increases in net German investment abroad were at the same level as in 1999 while net foreign
investment from eurozone countries in Germany dropped as capital imports from this area turned into
capital exports. Key determinants were portfolio investment outflows and direct investment outflows.
Again however, these statistics display large and abrupt changes, possibly reflecting single transactions. In
that regard differences identified in comparisons of data for 1998 and 1999 could only be related to the
start of EMU and have to be interpreted with great caution.

(2001/C 113 E/163)

WRITTEN QUESTION E-2717/00

by Christopher Huhne (ELDR) to the Commission

(1 September 2000)

Subject: Trade (cid:237)ntensity of GDP growth

Will the Commission please estimate the relationship between trade growth and GDP growth in each of
the Member States and indicate whether the advent of the euro has yet had any effect in increasing the
trade intensity of GDP growth since its introduction on 1 January 1999?

Answer given by Mr Solbes Mira on behalf of the Commission

(21 September 2000)

The relationship between trade growth and gross domestic product (GDP) growth in Member States varies
considerably between Member States and over time. The Commission is sending direct to the Honourable
Member and Parliament(cid:146)s Secretariat an annex containing this information. The considerable variation
from quarter to quarter and the lack of sufficient long-term data on a monthly or quarterly basis (at best
from 1986 to the first quarter of 2001) makes it difficult to identify clear trends for the very recent period.

Bearing in mind that limitation, it seems nevertheless that for those Member States for which time series
exist since the mid eighties, some slight trend increase in trade elasticities (ratio of export or import
growth to GDP growth) is to be recorded. These elasticities tend to amount on average to around 3 over
the past decades, which means that in general trade grows by that factor faster than GDP. Looking at the
period from 1995 onwards, as regards exports, Spain, France and Sweden show a particularly high
elasticity. For imports this applies to Spain, Italy and the United Kingdom.