Transition to the euro: banking charges for conversion, dual display of prices

In 1998, before euro notes and coins were put into circulation in 12 Member States of the European Union, the European Commission adopted these Recommendations in order to facilitate the introduction of the single currency. The Recommendations are addressed to banks and other economic agents, trade associations and consumer organisations, and the Member States.

ACTS

Commission Recommendations of 23 April 1998 on:

1. banking charges for conversion to the euro [Recommendation 98/286/EC - Official Journal L 130, 1.5.1998];

2. dual display of prices and other monetary amounts [Recommendation 98/287/EC - Official Journal L 130, 1.5.1998];

3. dialogue, monitoring and information to facilitate the transition to the euro

[Recommendation 98/288/EC - Official Journal L 130, 1.5.1998].

SUMMARY

On 23 April 1998 the European Commission adopted these Recommendations, which are not legally binding, in order to ensure that the euro would be introduced under optimum conditions. Two of the Recommendations are aimed respectively at banks as regards banking charges for conversion and at economic agents as regards dual display of prices and other monetary amounts. The third act presents recommendations on dialogue, monitoring and information, particularly among professionals and consumer organisations, in order to facilitate the transition to the euro for citizens.

BANKING CHARGES FOR CONVERSION TO THE EURO

According to Recommendation 98/286/EC, the Commission considers that banks are not legally entitled to charge:

• for the conversion of incoming payments denominated in euro or in national currency during the transitional period *;
• for the conversion of accounts from national currency to euro at the end of the transitional period;
• a different fee for services denominated in euro from that charged for otherwise identical services denominated in national currency.

The Commission recommends that banks implement the following practices:

• conversion without charge of outgoing payments during the transitional period (from national currency to euro and vice versa);
• conversion without charge of accounts from national currency to euro during the transitional period;
• exchange, without charge to customers, of "household amounts" (to be quantified by the banks) of national notes and coins for euro notes and coins during the final period *.

The Recommendation presents these two groups of points together under the heading "Standard of good practice", setting out both what the Commission regards as legally required and what it recommends.

Show conversion rates and other charges clearly

For all conversions (and exchanges) banks should show clearly the conversion rates applied and set out separately any other charges made.

Where banks make conversion or exchange charges which are not in line with the standard of good practice, or where they do not apply one or more of the above provisions, they should provide their customers with:

• prior written information on any conversion charges which they propose to apply;
• subsequent specific information on any charges which have been applied, shown on all means used for communicating with the customer.

Banks should inform their customers as soon as possible before 1 January 1999 about whether and to what extent they intend to implement the standard of good practice.

The question of Commission monitoring of the implementation of the standard of good practice is dealt with in the recommendation on dialogue, monitoring and information to facilitate the transition to the euro.

The Commission calls on the relevant authorities in the Member States to consider how to facilitate the exchange of notes and coins for citizens who do not have a bank account.

The Recommendation is addressed to the Member States and to banks and their associations.

DUAL DISPLAY OF PRICES AND OTHER MONETARY AMOUNTS

"Dual display" of a price or other monetary amount means the simultaneous display of an amount in national currency and in euro. Dual display is part of an overall communication strategy to facilitate the switchover to the euro for consumers and employees.

Where dual display of prices or other monetary amounts is provided, the following provisions must be complied with pursuant to existing legislation:

• conversion rates and rules on rounding as laid down in Council Regulation (EC) No 1103/97 on certain provisions relating to the introduction of the euro must be strictly complied with;
• rounding to the nearest cent.

The Commission stresses that the basic provisions should also be adhered to:

• clarity and legibility: there must be a clear distinction between the amount to be paid and the counter-value displayed for information, and excessive numbers of figures should be avoided (dual display may be limited to the final price which consumers have to pay);
• retailers should indicate clearly whether they are prepared to accept payment in euro during the transitional period.

The Commission recommends that dual display should start at the beginning of the transitional period for documents such as bank statements and bills from utility companies, which can serve as benchmarks.

The introduction of dual display in the retail sector should be gradual, depending on how fast customers wish to make the changeover, the nature of the retail outlet and the types of product being sold.

The Commission encourages trade associations to devise common formats or designs for dual display. They are also invited to provide small retailers with assistance in developing dual display capabilities and other communication activities.

The Recommendation is addressed to the Member States and to all economic agents likely to use dual display.

DIALOGUE, MONITORING AND INFORMATION TO FACILITATE THE TRANSITION

The national authorities are invited to encourage all the players involved in the practical preparations for the changeover to the euro to keep up their dialogue. The Commission will also continue to encourage such dialogue at European level and will invite the Member States to take account of the results.

The Commission recommends in particular that:

• consumer associations and trade organisations should negotiate and, where appropriate, agree on standards of good practice concerning dual display and payments and lay down minimum standards with regard to the information to be provided;
• principles tailored to small businesses should be defined, as the transition to the euro will pose specific problems for them (e.g. invoices exclusively in euro should be issued only after a period of notice).

Regarding the monitoring of practical preparations, the Member States are invited to establish decentralised observatories which could also serve as information sources for consumers and help to facilitate the exchange of information and good practices concerning consumer needs and the implementation of agreements at national and European level.

Concerning the provision of information, the Commission:

• encourages trade organisations and institutions in contact with small businesses to continue their efforts to raise awareness;
• invites Member States to continue to give thought to the role which could be played by education systems.

The Recommendation is addressed to the Member States, local authorities, trade organisations, consumer associations, banking associations, businesses and all other organisations or institutions in contact with them.

Last updated: 12.07.2006