Overhaul of cross-border banking rules postponed

Date: 22/07/1999

By Renée Cordes

THE European Commission is delaying long-awaited proposals for an overhaul of cross-border bank transfers and credit card payments until this autumn to give banks more time to prepare.

Outgoing Internal Market Commissioner Mario Monti had promised a communication on the subject in the spring, but has decided to leave it to his successor Frits Bolkestein to come forward with a report laying out a framework for closer and more automated links between different countries' electronic payment systems.

A Commission spokeswoman said Monti had decided to delay the initiative partly because of the mass resignation of Jacques Santer's team in March but also, and more importantly, because many banks had not made the technical progress necessary to cope with any changes.

The delay has been welcomed by Europe's banks. "This is good news. The more time we have to prepare the better," said Nikolaus Bömcke, secretary-general of the European Banking Federation. "The situation will definitely improve, although not as fast as some would like."

The communication will suggest ways of reducing existing barriers to cross-border payments to ensure a properly functioning single market. The move is part of an overall campaign to make it easier for citizens to do their banking across the whole of the EU following the advent of the single currency.

It comes as Monti, who will take on responsibility for competition policy in Romano Prodi's new team, and his predecessor Karel van Miert, are conducting separate investigations into allegations that EU banks have been imposing hidden charges on customers for converting money into euro.

A new study conducted by the banking federation has con-cluded that the greatest challenge for banks following the advent of the euro lies in creating a system for fast, problem-free cross-border bank transfers. It says that in order to do this, financial institutions need to introduce several potentially very costly changes, including simplifying their account reporting procedures.

A recent European Central Bank report found that although information technology is used extensively for banks' internal operations, it is not so widely exploited in retail banking.

It concluded that online and Internet banking were "still in their infancy in most EU countries".

• Primary Source