German banks favour strict rules

Date: 28/03/1996

By Thomas Klau

GERMANY'S influential savings banks are pushing for a strict interpretation of the Maastricht criteria for monetary union and would prefer it to be delayed should German and French budget deficits significantly overshoot targets.

“If you don't get a sufficient number of countries to fulfill the convergence criteria, a postponement of the start-up of EMU should not be taboo,” says Axel Bertuch-Samuels, director of the Deutsche Sparkassen- und Giroverband, the German Savings Banks Association, in Bonn.

However, technical preparations to meet the scheduled starting date on 1 January 1999 are already under full steam.

“Right from the start, we have to be ready to deal in both currencies and establish our own internal converting system. It is impossible to forecast how quickly our customers will want some or all of their transactions to be carried out in Euros,” says Bertuch-Samuels.

The costs will be considerable, and have been estimated at over 1.5 billion ecu for the German savings banks alone.

From their point of view, the big advantage of the transition scenario agreed at the European summit in Madrid is that “it leaves it to the market in general, and to bank customers in particular, to decide how fast the switch to the Euro is to be effected” in the three first years of EMU.

The transition scenario originally suggested by the European Commission had called for much stronger state intervention in enforcing the currency switch, a model which the savings banks, who like the Bundesbank favoured a cheaper and simpler “delayed big-bang” switch-over, lobbied against strongly.

Banks argue that winning the trust of a German public anxious to receive cast-iron guarantees that the Euro will be as stable as the deutschemark is crucial for the success of the whole project. With 60 million customers, many of whom run small to medium-sized businesses, these smallish banks with their strong local and regional ties are acutely sensitive to the fears of the man of the street.

Most ordinary Germans still find it hard to understand why they are being asked to give up their trusted currency for an unknown quantity. Bertuch-Samuels believes the savings banks will have a “crucial role” to play in educating the public.

The Savings Banks Association expects EMU to lead to intensified competition for its own membership as well as for German industry in general, although Bertuch-Samuels stresses that “it is too early to give a prognosis on how this will affect our members”.

But he points out that in the past, German savings banks have adapted quickly to change.