Banking and investment services: EMU developments

United Kingdom

EMU developments

As developments for EMU continue, banks seem ready to guarantee customers that they will levy no charges for conversion. The expert group set up by the Commission to decide if banks may pass such costs onto their customers has recommended a "standard of good practice" to manage the operations. This would involve:

  • the conversion without charge of accounts from the national currencies during the transitional period; and
  • the conversion without charge of payments from national currencies to the Euro and vice-versa during the transitional period, together with the exchange without charge to customers of household amounts of bank notes and coins.

Meanwhile, the European Banking Federation (FBE) has announced an agreement on the number of banks comprising the panel which will set up the interbank reference rate for the Euro-zone, known as Euribor. Euribor was created by the FBE in July this year.

If all Member States joined EMU from 1 January 1999, the panel would consist of 58 EU banks. However, not all Member States will do so. The UK, Denmark and Sweden have declined to join, and it is expected that Greece will fail to meet the convergence criteria. The FBE has provided for a smaller panel of banks take this into account.

Member States which do join would choose their banks according to their quota; those which do not join at the start would nevertheless have a limited number of banks on the panel, reflecting their Euro activities. They will be grouped with six global banks from three non-EU countries who would also be on the panel: three banks from the United States, two from Switzerland and one from Japan.