Discussing practical introduction of single currency, Fifteen rule out subsidies to banks for exchange operations and early note issue

Versailles, 11/09/2000 (Agence Europe) - The informal Ecofin Council held on Saturday in Versailles, mainly focused on the oil question (see preceding pages), still dealt at length with the practical preparation for single currency. "In less than 500 days, we shall have euros in our pockets", recalled Laurent Fabius, who explained that all those taking part at the meeting - from ministers to central bank governors and also European Commission President Prodi and Commissioner Solbes - shared the conviction that this crucial deadline should be actively prepared by: - exchanging best practices; - mobilising energy, "mainly towards SMEs"; - respecting the principle of subsidiarity (but, for the whole euro zone, "the period of dual circulation will be two months at most"); - paying special attention to the most vulnerable categories (the elderly, the disabled, …). So that the last preparations for bringing in single currency are perfectly under control, Mr Fabius announced that the finance ministers would have a scoreboard that they will examine at each Ecofin Council session. On the same occasion, the Fifteen gave a negative response to the two concrete questions put to them, namely:

a) Public subsidies to banks for meeting the cost of exchanging national currency into euros? "We believe that all actors in the transition process should bear their own costs" in conformity with the "principle of responsibility", said Mr Fabius, who recalled that the public authorities, for their part, were bearing the cost of manufacturing notes and coins in euros. Regarding the idea put forward by the banks to make consumers pay in a second stage, Mr Fabius said: "We consider that the rule should be no charges". This point of view was immediately supported by the Vice-President of the European Central Bank: "Without having any regulatory means, we have exactly the same feeling that banks should not make consumers pay specific charges". At any rate, he added, the banks "will not be able to invoke the costs imposed on them by the European Central Bank System for justifying making consumers pay".

b) Early note issue. After having recalled that the Ecofin Council had already given its "go-ahead" to an early issue of coins, Mr Fabius (who exhibited a sachet of the first euros worth 100FF to be available in France from 15 December 2001) pointed out that the Fifteen had put aside the idea of doing the same with notes, considering that this solution was "likely to create confusion" with the public. In his view, the element which is apparently determining is that the citizens will have the possibility of paying in euros or in national currency during a period of two months: "Many colleagues and the ECG consider that by adding time onto this period it would be tantamount to adding an element of confusion", explained the Council President-in-Office, adding that they had not wanted to run this risk (despite the fact that it had been warmly supported by Belgian national Didier Reynders, who regretted that Wim Duisenberg were not present to discuss the matter: see previous page). The ECB representative in Versailles, its Vice-President Christian Noyer, explained for his part that "those advocating this idea had a tendency to present things as if the intention had been to make a big bang" although it was not this solution that had been adopted. He went on to say he considered that deciding on an early issue of notes to the public would have accredited the idea, in some people, that they could pay in euros from 15 December, that is during the Christmas period which is one of the most lively from a commercial point of view. Mr Noyer recalled that the banks and other financial bodies would receive an early supply on 1 September, and then, in a second phase, the commercial sector and related services such as security firms. Christian Noyer announced that the monetary authorities were currently working with the trade sector on "certain mechanisms that would allow small notes to be diffused at an early stage". He specified that there were not yet any specific scenarios to this end but declared his confidence about the "possibility of speeding up diffusion". He concluded by recalling that no-one would be "prevented, in the first days of 2002, from paying in national currency and receiving national currency".

Other issues tackled at informal meeting in Versailles

• Preparation of IMF and World Bank Annual Assemblies. The ministers proceeded to this preparation in two stages - firstly among themselves and then in the presence of IMF Director General Horst Köhler. As the Europeans were the "first IMF shareholders, it is normal that we should define common positions", explained Mr Fabius, who pointed out that he would have the "opportunity to confirm European views" in Prague: - strengthening of the central role of the IMF and the World Bank, as well as the IMF's "role of catalyst"; - need to move forward in reforms; - implementation of the initiative aimed at supporting the poorest and most heavily indebted countries; - measures to combat money laundering.
• Follow-up of European Council in Lisbon. The EU 15 discussed with Philippe Maystadt, EIB President, the theme of innovation. Noting that the EIB "is increasingly involved in the promotion of innovation", Mr Fabius outlined an initial assessment that goes very clearly in the right direction". He announced that the EU 15 where in agreement over the principal of re-centring the support on "incentives and the starting-up" of innovative companies and that the Commission had presented, on its behalf, "very interesting proposals". They will be broached with regards to the fund during the official Ecofin Council next 7 November.
• Strategy to follow in terms of trade relations with accession candidate countries. On the basis of reports by the Commission, the ECB and the Economic and Financial Committee, the EU 15 felt this dossier "very important" and agreed to return to it during their next meeting.