WRITTEN QUESTION E-1382/98

by Spalato Belleré (NI) , Cristiana Muscardini (NI) and Roberta Angelilli (NI) to the Commission

(7 May 1998)

Subject: Lira-euro conversion costs

The present Italian Government has collected 12 000 billion Lira from taxpayers in the form of a "euro-tax".

Now the government is preparing, via a decree from the Ministry of Finance, to make Italian citizens meet the costs of all compulsory lira-euro conversions, by imposing additional bank charges for all operations. In addition, it is requiring conversions to be carried out at the level of individual securities rather than portfolios and is not accepting the Commission's suggestion for dealing with the problem of currency divisions, fixing a minimum unit of transaction equal to one hundredth of a euro.

As a result, the burden of the transition to the single currency will be borne entirely by the public, since the Ministry of Finance has no intention of making it compulsory for these transactions to be free of charge.

In the light of these considerations, will the Commission say what urgent measures it intends to take to ensure that Community citizens are not required to bear the full costs of the transition to the single currency as a result of such practices?

Answer given by Mr de Silguy on behalf of the Commission

(24 June 1998)

The Commission supports the Honourable Members' views that the introduction of the euro has to be as efficient and smooth as possible and that consumers should not be penalised. In order to identify the most efficient means to achieve that objective the Commission has examined in depth the practical aspects of the introduction of the euro with the help of expert groups. Particular attention has been given to the issue of banking charges for conversion.

On 23 April 1998 the Commission adopted a recommendation which sets out a standard of good practice on banking charges for conversion to the euro. This standard covers both those practices that the Commission considers to be legally required on the basis of the euro regulations (i.e. the conversion of incoming payments during the transitional period and of accounts at the end of the transitional period) and other recommended practices that the Commission considers that banks should apply in order to facilitate the smooth introduction of the euro. Regarding payments and conversion of accounts the Commission recommends the conversion without charges of incoming and outgoing payments during the transitional period, and accounts into euro unit during the transitional period and at the end of it.

The current situation indicates that a large majority of banks will follow these recommended practices even in the absence of legislative measures. The Commission is not aware of any intention of the Italian ministry of treasury to impose charges on compulsory conversions. The Commission intends to monitor the implementation by the banks of the recommended standard of good practice and for that purpose it has requested the banking associations to report to the Commission by 1 November 1998 on the implementation by their members.

Concerning the redenomination of public debt, the Commission recommended the use of a bottom up technique with redenomination taking place at the level of the individual bond or at the level of individual holdings. Redenominating at the level of individual holdings will generate less rounding. Thus discrepancies between the total issue and the sum of individual converted holdings will be smaller than between the total issue and the sum of individual converted bonds. The decision on the redenomination technique is up to the Member States which decide taking into account all aspects of the redenomination process, including the functioning of the settlement and trading systems, with the aim to realise the redenomination in the most efficient manner.

Italy has decided to redenominate following the technique recommended by the Commission starting at the level of individual bonds. It has to be pointed out that the redenomination technique envisaged by the Italian authorities which is based on conversion of the minimum lots and on a redenominated unit par value of one cent, does not necessarily affect the bondholders negatively. Indeed the result for the investor can be positive or negative depending on the conversion rate and on the amount of the minimum lot. Moreover even in case of rounding downwards the effect will be very limited for the bondholder as it would account as a maximum for half a cent per lot.