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European Union

Conversion rates for Emu members to be announced next May

At a weekend summit on September 13 and 14, EU finance ministers agreed that bilateral conversion rates for future members of the single currency would be announced next May. The declaration will coincide with the announcement of the founding members of economic and monetary union (Emu), and is intended to reduce the risk of currency speculation before the launch of the Euro.

This new element in the Emu timetable will allow investors to know in May 1998 what rates will prevail between the national currencies of Emu participants between 1999, when monetary union is scheduled to begin, and 2002, when Euro notes and coins will come into circulation.

Officials are reported to have acknowledged, however, that exchange rates could still fluctuate in the period before the start of Emu, between May 1998 and January 1999. The risk of speculation would depend on whether the markets view the choice of participants in the single currency as economically orthodox.

The announcements also provide the clearest indication yet that Emu will go ahead as planned on January 1 1999, and come in the wake of a legal study conducted at the request of the European Commissioner for Economic and Monetary Affairs, Yves-Thibault de Silguy, which has ruled out the possibility of postponing the introduction of the Euro.

The Commission's Legal Services considered the relevant provisions of the Maastricht Treaty and noted that under Article 109, the Council must determine before July 1 1998 which countries meet the conditions for the adoption of a single currency. The period between this date and the final introduction of the new currency is intended to allow for the technical measures necessary for the transition to the final phase. Member states could decide to extend this interval, but several problems would arise.

The Legal Service concluded that Article 109 should be interpreted to mean that it does not allow the date for the transition to the third phase of Emu to be set any later than January 1 1999, either by a decision taken in 1997 or by a later decision. This conclusion is in keeping with the conclusions of the European Councils of Madrid, Florence and Dublin.

Commission launches initiative to cut red tape

On the initiative of the European Commissioner for Enterprise Policy, Christos Papoutsis, the European Commission has decided to set up a Business Environment Simplification Task Force (BEST), chaired by Professor Chris Evans of the UK.

The Task Force is expected to concentrate on identifying the barriers and administrative burdens which prevent enterprises and dynamic entrepreneurs from taking full advantage of the opportunities provided by the single market and globalization.

In particular, it will focus on the factors which prevent small and medium-sized enterprises (SMEs) from growing and creating jobs. To this end, the Task Force will review existing EU and member states' administrative and legislative procedures affecting business; identify the simplification methods which have already been successful in the past; and select priority areas of action to create a better business environment for SMEs. The Task Force will then make concrete recommendations to national and Community political decision-makers on the new measures which should be taken to encourage the further development of SMEs.

The BEST report is also expected to include a timetable, to be followed by member states and the Commission, to ensure the implementation of these policies.

The Task Force will be an independent body, made up of member states' representatives from the enterprise sector and from public administrations involved with business. Its conclusions are not expected before the summer of 1998, but the Commission has announced that preliminary proposals may be produced for the Special European Council on Employment, to be held on November 22 1997.

Commission clears joint venture in the consumer credit sector

On September 18 1997 the European Commission approved the acquisition of joint control over FINCONSUMO by Banco de Santander and Istituto Bancario San Paolo di Torino SpA (ISPAO) in the sector of consumer credit in Italy. FINCONSUMO operates mainly in northern Italy and in particular in the Piemonte and Liguria regions.

It will provide a form of consumer credit granted on the premises where goods are purchased. The Commission considered the market position of the parties to the concentration and concluded that the notified operation will be unlikely to affect competition in the common market.

Banco de Santander is the ultimate parent of the Santander Group, an international banking and financial group operating throughout Spain and holding an interest in other European and south American banks. ISPAO is a full-service universal banking group, operating chiefly in Italy through a wide network.

Michael Reynolds
Allen & Overy

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