91996E2777

WRITTEN QUESTION E-2777/96 by Georges Berthu (I-EDN) to the Commission (21 October 1996)

Subject: IGC: reduction of costs for businesses as a result of monetary union

When the Treaty on European Union was adopted, it was asserted that monetary union would reduce the costs borne by companies by an overall amount of FF 150 billion for all the participating Member States. This figure is still being quoted (for example, in the Commission information bulletin of December 1995 on a frontier-free Europe).

Would the Commission state whether this estimate still holds true? What impact would a lower number of participants in monetary union have on this figure?

Answer given by Mr de Silguy on behalf of the Commission (29 November 1996)

In its publication 'One market, one money', ((European Economy, No 44, October 1990. )) the Commission took the view that, once in place, economic and monetary union (EMU) would alleviate the cost burden on firms via the following mechanisms:

- elimination of the costs of converting one Community currency into another, making for estimated savings of over ECU 15 billion a year;

- savings on transaction costs put at between 0.1% and 0.2% of gross domestic product (GDP) in the large Member States and at 0.9% of GDP in the smaller Member States, whose economies are more open;

- removal of exchange-rate uncertainties; savings here are difficult to quantify but surveys among managements indicate that these uncertainties have a negative effect.

All in all, potential savings are currently estimated at ECU 30 billion, or 0.5% of Community GDP.

Then there are the gains - also difficult to quantify - stemming from the adoption of an improved economic policy framework. Stable prices and sound public finances will help to boost growth and employment.

The savings that might accrue should some Member States not participate in the euro from the outset have not been quantified, However, the aforementioned study contains a chapter setting out in detail the gains for each Member State and so permits a more in-depth assessment to be made.