The Commercial Banking Sector’s preparations for EMU: state of play

Fédération Bancaire de l’Union Européenne*

The reports given below were received from Member Associations of the Banking Federation of the EU between the months of June and September 1996.


The major banks have their own steering committees. Some banks have recently undertaken campaigns to inform their clientele.

Within the Association Belge des Banques (ABB) there is a coordination committee, which has set up technical subgroups to monitor and examine more specific aspects (inter alia, monetary policy, legal aspects and problems for financial markets).

At the end of June 1996, the ABB reached a decision on the principle of the change to the Euro in the interbank clearing and settlement system (the CEC - Centre d’échange d’opérations à compenser), which also deals with retail operations. This system will convert to the Euro at the beginning of 1999 and banks should therefore make the necessary preparations to communicate with the CEC in its new form. A code for the currency of origin will appear on each record.

The transition method chosen by the banking sector is also important for the more general work being undertaken to establish a changeover scenario for the Belgian marketplace ("schéma de place"). Coordination of this work is being undertaken by the Ministry of Finance. A national coordination committee operates under its auspices. It is composed of representatives from the Treasury, the central bank, the Banking and Finance Commission and the banking sector. Recently, representatives of certain public administrations (notably tax and social affairs), of the Minister for Economic Affairs (whose powers cover non-banking institutions and consumer protection) and of the Stock Exchange joined the committee.

There will be increasing demand from companies for a clearer understanding of the broad principles on which the market changeover scenario will be based (so that these can be reflected in their own adjustment and investment programmes). With this in view, a special committee within the ABB has begun to draw up an inventory of all material obstacles to the use of the Euro in relations with customers. These obstacles will then be examined with the parties concerned (other business, the liberal professions, consumer service companies, public authorities, etc) in order to find solutions, including precise timing.

The intention is also to finalise as quickly as possible the broad outlines of a preliminary scenario. Following approval by the Government, this basic scenario will be completed with the aid of the results of the work of specialist groups. The Belgian scenario will, in any event, satisfy the basic principle of "no prohibition, no compulsion".


In the Spring of 1996, the Finansrådet, the Danish Bankers Association, started to analyse the practical changes required in relation to the changeover. The analysis is being conducted in the standing committees of the Association. The committees are asked to give recommendations on the changes needed and the timing of these changes. The work of the committees will be coordinated in a special task force (a Danish "EMU Committee") which will see to it that all relevant issues are covered and that all members of the Association are fully informed about the process.

The analysis will be based on two scenarios which are considered relevant: the scenario in which Denmark participates from the start of EMU in 1999, and that in which Denmark does not participate and where the recommendations on the practical changes must be based on estimates of currency substitution.


Preparations are being taken forward at 3 levels:

(i) government - work began in 1995, on the assumption that the country will be in EMU from the start. It is being led by the Finance Ministry and the administration, which is spearheading a DM 15 million information campaign. The backbone of this work is provided by a task force of government ministries set up after the Madrid European Council. (It has been noted that the government would not contemplate any financial compensation for banks: EMU is considered to represent the sort of risk normally faced by entrepreneurs).

(ii) central bank - discussions are taking place between the central bank and the banking associations.

(iii) credit sector - the Bundesverband deutscher Banken (BdB, the German banking association) is responsible for the forum at this level. Within the BdB there are many working groups which are developing advice and guidelines for banks. A particular concern is to help smaller banks to prepare.


Communication on EMU between the central bank and the Hellenic Banks’ Association is now much closer than in the past. Work is being structured, and the dialogue is expected to intensify.


(i) Joint Bank of Spain/Credit Institutions Working Group In April 1996, a joint committee was set up under the chairmanship of the Bank of Spain and Spanish credit institutions (banks, savings banks, credit cooperatives and the Institute for Official Credit) to initiate work to adapt the Spanish financial system to the Single Currency. Bank representation on this committee is entrusted to the Secretary General of the Asociación Española de Banca Privada (AEB, the Spanish banking association), Mr Manuel Torres Rojas; to Mr Jorge Hay (the AEB representative on the Banking Federation’s EMU Committee); and Mr Enrique Piñel (AEB’s Legal Adviser).

The results of the meetings of the Working Group to date have been set out in a confidential report entitled "Adaptation of the Spanish Banking System to the Single Currency".

(ii) Banks The AEB "Single Currency" Committee A "Single Currency" Committee has existed since 1992. This had convened seven times in the three months to the middle of 1996. The Committee monitors closely the work of the Joint Bank of Spain/Credit Institutions Working Group. Two specific subgroups have emerged from the activities of this Committee: the first will examine the impact of the Single Currency on bank operational procedures and the second will consider contractual relationships with customers.

(iii) Other institutions/the public at large The AEB participated in a series of conferences on EMU held by the Colegio Universitario de Estudios Financieros, a university-level institution sponsored by the AEB, which offers a degree in Business and Administration. The AEB also organised a conference at which the General Counsel of the EMI explained the legal and transitional aspects of the change to the Single Currency.


Work is being taken forward in a joint commercial bank/central bank/Treasury forum. Three committees are working on the following questions: legal issues, asset and liability management and central bank refinancing, and interest rate and foreign exchange markets. A special body, the "Conseil National du Crédit" is studying the position of customers and SMEs, and issues such as dual display. The government is about to create its own inter-Ministerial coordination. In the next few months there should develop a national structure of concertation between the authorities and various economic sectors concerned.

A key question is finance: banks need to decide before the end of 1996 whether to begin investments in 1997, yet there is seen to be real political risk.

The Prime Minister published a circular in the national gazette on the preparation of public administration and public bodies for the introduction of the Euro.

The Ministry of the Economy and Finance has appointed an official to pilot the "Euro" task force which will coordinate the work of all the Ministries.


The Irish Bankers’ Federation (IBF), in co-operation with the Irish Mortgage and Savings Association (IMSA), has established a structure to plan and oversee preparations for the changeover to the single currency. This preparation will be set against various assumptions as to the membership of EMU.

The structure is headed by a Steering Committee with authority to appoint expert groups on specific subjects and/or business areas. At this point expert groups have been established on

- Legal Issues - Payments (this will include work on the Irish RTGS System and Target) - Financial and Capital Markets - Statistical Requirements.

Work on Communications is also underway.

Representatives from the central bank and government departments will be invited to join expert groups as appropriate.

The above committees/groups will liaise with other relevant bodies in Ireland and the EU and make representations as appropriate.

The Department of Finance has established a Task Force on Technical issues and the sectors which have been invited to participate, include the various business and financial sectors and the Trade Union Movement. The Minister for Finance has also announced his intention to establish a national structure to co-ordinate overall planning for the changeover.

Other representative bodies in Ireland, including IBEC the national business and employers umbrella organisation are also preparing for the Single Currency. The IBF participates in the IBEC forum and will liaise/collaborate with other bodies also in regard to single currency preparation.


ABI, the Italian Bankers Association, has underway an initiative aimed at studying the impact of the single currency on the Italian banking system, to provide in due time advice and guidelines for banks, and to cooperate with the authorities to achieve an effective transition.

A Strategic Committee has been created, including 10 major banks, coordinated by the General Manager of ABI, Mr Giuseppe Zadra, and supported by the Bank of Italy. In addition, seven technical committees, coordinated by Mr Ettore Pietrabissa (ABI representative on the Federation’s EMU Committee), have been formed on the following subjects:

- macroeconomic issues and monetary policy; - impact on the credit market; - financial markets; - organisation and technical equipment; - information technology and payment systems; - legal issues; - institutional issues.

For the practical implementation of the project, working groups have been formed in order to study in depth the most relevant items, many of which deal with financial markets and information technology problems.

A preliminary report on the aspects of the changeover, with particular regard to the Italian banking system, has been completed and has been discussed with the members of the Strategic Committee. The report includes a complete list of all problems that will be faced by the Italian banks in view of the changeover.

In June 1996, each technical committee defined its work programme and priorities, in order to provide banks, in due time, with the information necessary to plan investments in 1997 and 1998. They have therefore started to define a sort of "Masterplan" which includes, besides the above mentioned work programme, also the practical actions which the banking system will develop for the changeover.

Particular attention has been devoted to payment systems problems in order to verify the possibility of preparing all interbanking procedures for the introduction of the single currency at the first stage.

A special group for "Communication on EMU" has been formed to define a specific campaign for the banking sector, in accordance with the similar initiative that will be undertaken at public level for citizens.

A dialogue has been started by ABI with the Treasury Ministry, coordinator for the transition of the public administration, to offer the necessary cooperation. ABI has also contacted some representatives of bodies, such as the industry organisation (Confindustria), and other national organisations which take part in the payment system. At the end of June, the technical Committee on Institutional issues defined a proposal for the constitution of a national steering structure for the changeover. The main aspects of this proposal have been transposed in a Decree of the Prime Minister, which has established a specific body for the coordination of the transition to EMU of the Italian economic system as a whole.


In Luxembourg, initiatives have been planned at various levels:

(i) the authorities - an EMU Committee has existed within the Institut Monétaire Luxembourgeois (Luxembourg Monetary Institute) since April 1995; its role is to coordinate activities from a technical viewpoint (in particular payment systems and monetary policy instruments). The Association des Banques et Banquiers Luxembourg (ABBL) is represented in this Committee.

In January 1996, the Government put in place a Euro round table based on a steering committee and four working groups (financial sector, major businesses, small and medium-sized enterprises and consumers) together with a public administration group. The Steering Committee is chaired by the Luxembourg Prime Minister; the ABBL is represented by its President. In addition, the ABBL has two representatives in the financial sector working group which, in addition to banks, also includes other financial intermediaries and insurance companies.

At the level of the Commissariat au Contrôle des Bourses (stock exchange supervisory body) there is a working group which studies more specifically the impact in the field of securities. The ABBL is also represented in this working group;

(ii) the Association - up to now, the ABBL has dealt with the issue of monetary union in ad hoc working groups which discuss specific subjects. In February 1996, it put in place a standing committee on the single currency;

(iii) the banks - at the beginning of 1995, the major domestic banks put in place internal working groups to prepare for the introduction of the single currency.


All the major banks have formed internal steering groups. Several Nederlandse Vereniging van Banken (NVB, the Netherlands banking association) committees are closely involved in the discussion on EMU.

There are regular consultations with the central bank. The central bank announced its intention to adapt its monetary policy and instruments in anticipation of the Netherlands’ entry into EMU in 1999. On the main points, the commercial banks have reached agreement with the central bank. They are seeking remuneration for any compulsory cash reserves. They have queried whether the EMI is investigating competitive advantages in different countries which could offset the negative effects of minimum reserves, and the central bank has been asked to prepare a study on this.

At national level, a government-led forum draws together representatives of bodies such as consumer and employers organisations and stock exchanges to discuss communications issues. So far, its mandate has been limited to the mutual exchange of information and the coordination of individual information efforts.


The fiscal package which was planned by the new government passed through Parliament by the beginning of April 1996. Through this measure the public deficit is to be reduced to 2.7% by 1997. The central bank has started an information campaign. Banks also have begun to inform their clients via brochures. A round table has been organised with the Ministry of Finance. Participants are members of the Ministry of Finance, representatives of the National Bank as well as representatives of the banking and insurance industry. Moreover, the Bundeskredit-sektion, an organisation aimed at representing the interests of the banking industry, has created a forum, where representatives of the abovementioned organisations meet at regular intervals. Working groups on legal issues, payment systems and capital markets have been established below this forum.


The preparation of the Portuguese banks, at this stage, is being carried out mainly through their participation in four working groups - a joint initiative of the Central Bank and the Portuguese Banking Association - which are studying the problems related to monetary policy, payment systems, bank/customer relations and legal issues.

In the second half of July 1996, there was a meeting with the Governor of the Bank of Portugal, the President of the Portuguese Banking Association and the Presidents of the Commercial Banks, in which the coordinator of each group presented a first report which mainly raised problems and questions that are now being studied in detail. A second report and its discussion is expected for the second half of October 1996.

Besides the work that is being done together by these groups, some banks have already created, or are in the process of creating, their own internal teams for the transition to the Euro, while some others are still waiting for a clearer understanding of the principles and rules on which the market changeover will take place


The government expects to fulfil the Treaty criteria by 1997 and to be among the first to enter EMU. (The currency is not, however, a member of the Exchange Rate Mechanism, and the government would like it to remain outside for as long as possible. The question of whether this will jeopardise EMU membership is a topical issue). The government maintains that formal membership of the Exchange Rate Mechanism is not necessary: a stable currency should nevertheless meet the conditions of entry into EMU.

The Suomen Pankkiyhdistys, the Finnish Bankers Association, is coordinating relations between the banks and the central bank and authorities. It has formed a range of committees, of which the most active deals with payments. The government has appointed the Finance Ministry as national coordinator, handling work on legal issues, financial markets, the banking sector’s changeover, etc.


Planning is proceeding in the expectation that the country will be in EMU from January 1999. Mr Pehr Wissen (representative of the Svenska Bank-föreningen, the Swedish Bankers Association, on the Federation’s EMU Committee) chairs a steering committee of the bankers association, which includes representatives of the central bank, the regulatory authorities and major banks. There are also four technical committees, which are currently determining the key issues for banks. (A Parliamentary decision will probably be taken in October 1997 on whether the country wishes to participate).


A report on the Swiss position was published by the Association Suisse des Banquiers in February 1996: "l’Union monétaire européenne et la Suisse". The report deals with three issues: (i) legal affairs, especially the issue of continuity of contracts; (ii) payment systems (including securities clearing and settlement systems); (iii) economic issues for Switzerland as a third country (especially for the banking industry). Working groups within the banking association are studying key issues such as securities clearing and settlement, the payments system, capital markets and legal issues.


The UK banking industry is progressing plans for managing the transition to EMU in association with the Central Bank and on an informal basis with the relevant UK Government department. Plans assume that EMU Stage III will start on 1st January 1999, and cover both the ‘UK In’ and ‘UK Out’ scenarios.

The British Bankers’ Association (BBA) and the Association for Payment Clearing Services (APACS)-led EMU Steering Committee comprises 15 major banks and building societies, the London Investment Bankers’ Association (LIBA) and the Bank of England. This is a high-level policy group, to which technical sub-groups report. These groups are studying a wide range of issues (for example, the effect on the UK as a financial centre) and consult widely with other institutions and markets in the City of London.

The Bank of England published a paper ‘Practical Issues arising from the Single Currency’ on 10th May 1996. This mainly addressed planning and co-ordination needs and acted as a resumé of current activities. The paper is to be updated on a quarterly basis. At the end of May 1996 the Steering Committee met with the Bank to discuss the paper.

Payment Systems issues are being managed by APACS. The different clearings within the UK, i.e. CHAPS, the Cheque Clearings and BACS (the automated bulk clearings) are assessing the impacts in their own areas, ensuring that implementation plans are in place and timely decisions are made. Other areas of investigation are cash, cards and ATMs. Initial investigative work has been completed in all areas with the intention that decisions on the feasibility of the various options particularly in the large value payment system will be made before the end of 1996. This framework of interbank co-operation will enable banks to set their own timetable to undertake necessary development work.

The Joint City Legal Group (on which the BBA and LIBA are represented) has had meetings with both the Commission and the EMI on the continuity of contracts issue.


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