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EMUbusiness issue 2 - Pension reform

20 September 2000, 12:36 CET


EMUbusiness - Issue 2
1 August 2000
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EMUbusiness top stories
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1. ECB urges euro area states to hurry with pension reform
2. Use of euro growing, though base is low
3. French government warns business to get ready
4. Commercial banks attack guarantees for German public sector banks
5. Still time to enter Eurotrophies competition


Publisher's Note
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In seventeen months' time, the national currency units of the euro-area will disappear for good. Bank accounts and company accounts will all be in euro from January 1, 2002; notes and coins will disappear no later than February 28, 2002. All this is well known. Or is it?

The French government in particular is concerned that this message has not got through. It is worried, for example, that businesses have not realised that six months of preparation is the absolute minimum which is required. It is not that the French have been slower to wake up than others. On the contrary, the French government has been a pioneer in its own actions, e.g. by contracting only in euro since July 1 this year where a contract runs beyond the end of the next year, and the French government's awareness-raising activity for businesses has been exemplary.

At a meeting of Economics and Finance Ministers in Versailles on September 9, the French government will try to imbue other governments with its own sense of urgency. Only in some cases will it be preaching to the converted. Ministers at that meeting will have additional food for thought from the European Commission's latest Eurobarometer survey of public opinion. That shows that the politicians will be trying to galvanise companies into preparations
at a time when support for the single currency is dropping in most countries. While people's views on the single currency should in theory be divorced from the need to prepare for what is in any event a reality which cannot be avoided, in practice the two are often hard to entangle. That could mean the governments of Austria, Finland and
Germany face particular challenges. Support for the euro has dropped below the 50% mark in all three countries. France, Spain and Belgium are the only countries where support is still growing. EMUbusiness will be back immediately after the Versailles meeting to report on
what conclusions the Ministers draw from all this. In the meantime, we - like the European policymakers - are taking a summer break.

Regards,
Marion Bywater
Publisher, EMUbusiness
mailto:mbywater@eubusiness.com

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1. ECB urges euro area states to hurry with pension reform
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Euro area Member States must tackle pension reform as a matter of urgency, the European Central Bank, warned in its July monthly Bulletin. State-funded pensions as they currently exist are unsustainable as the population ages, the Bank believes. It regards the ageing of populations as probably the greatest foreseeable challenge for fiscal policies in the euro area in the decades to come. It wants governments to make these long-term issues the leitmotif of pension reform debate, rather than pursuing short-term
financing needs. The Bank is worried that most euro area countries have postponed implementing the necessary measures and, therefore, appear to be ill-prepared to deal with the projected surge in pension payments from public fund.
http://www.eubusiness.com/item/23201


2. Use of euro growing, though base is low(*)
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Use of the euro in book money transactions as an alternative to national currency units is growing, but is nevertheless slow to take off given that there are only seventeen months to go before the national currency units disappear altogether. Figures in the European Commission's latest quarterly review of euro use indicate that France, Belgium and Luxembourg are the countries where the euro
is probably being used most.
http://www.eubusiness.com/item/23205


3. French government warns business to get ready
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Changeover to the euro is not just a mechanical IT operation, the French government is warning business. It affects every area of the business - accounting, purchasing, sales, human resources, IT, customer relations. In short, it is a strategic issue, the Ministry
of Economy and Finance says in a statement released in conjunction with the July meeting of the National Euro Committee designed to galvanise businesses into action over the seventeen months remaining until non-cash transactions in the national currency units of the euro-area countries disappear.
http://www.eubusiness.com/item/23204


4. Commercial banks attack guarantees for German public sector banks
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With the increase in cross-border competition which has followed introduction of the euro, it has become even more urgent to ensure that competition is fair, the Banking Federation of the European Union (FBE) is stressing. The Banking Federation represents commercial banks. The effect on competition and the distortion of the European single market which results are major reasons for the formal complaint the FBE has lodged with the European Commission
about the distortion of the internal market which arises from the state-backed guarantees to certain German banks. An initial complaint was lodged in December 1999. This was backed up in late July with a detailed supporting brief.
http://www.eubusiness.com/item/23203


5. Still time to enter Eurotrophies competition
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Small and medium-sized businesses have until October 15 to
participate in the Eurotrophies competition. This will reward companies which have been models in their preparation for the euro. The original deadline of June 30 was extended in order to allow more time for entries as the competition was not launched until April this year. The winners' stories will be widely disseminated so these
companies can serve as role models for other businesses.
http://www.eubusiness.com/item/23202


Other stories on EUbusiness this week
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'Radical overhaul' for EU finance rules
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Michaele Schreyer, the European Budget Commissioner, last week announced a proposal for "radical overhaul" of the EU's financial regulation that sets out the basic rules for the financial management of the Community. She said the proposal would help to simplify and reorganise the "Financial Regulation" by creating a single legal instrument combining the principles and essential rules of budgetary and financial management.
http://www.eubusiness.com/finance/


Foreign direct investment in the EU
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EU foreign direct investment reached a record high of EUR 490 billion in 1999, a rise of 41% over 1998, according to first estimates published by Eurostat. The UK was the EU leader in terms of foreign investment, with EUR 158 billion in 1999, followed by France (101 billion), Germany (88 billion) and the Netherlands (43 billion).
http://www.eubusiness.com/factsfig/


IMF upbeat on EU11 economy, but cautious on reasons
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The International Monetary Fund has given an upbeat assessment of the euro-zone economy in its report to EU finance ministers. But it remains cautious on the reasons for the favourable figures which it says "overstate" the underlying strength of the euro area.
http://www.eubusiness.com/emu/


Euro-forgers "stand no chance", says Commission
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Plans for a new regulation to protect euro banknotes and coins from forgery -- including the setting up of a fraud prevention unit within the pan-European police body Europol to uncover EU-wide counterfeiting networks -- have been unveiled by the Commission.
http://www.eubusiness.com/finance/


EU wants banks to reveal more details in their accounts
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The Commission is seeking to widen the scope of financial details disclosed in banks' annual accounts. In a recommendation, issued on 25 July, it said it wants annual and consolidated accounts to provide more details on institutions' activities in financial instruments,
including derivatives.
http://www.eubusiness.com/emu/


Internet Monitor
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Information actions on the euro: call for proposals
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The Economic and Financial Affairs DG of the Commission has issued a call for proposals on information on the euro within the PRINCE programme. This is part of an EU drive to step up trans-national information and communication actions. For more information, instruction and forms:
http://europa.eu.int/comm/economy_finance/tenders/call0007.htm


Use of the euro
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This quarterly publication from the Economic and Financial Affairs DG is a synthesis of various studies covering the development of the use of the euro by customers, businesses and public administrations in those Member States participating to the EMU. It also contains the results of a regular survey of European banks on the share of the
euro in payments and bank accounts.
http://europa.eu.int/comm/economy_finance/document/misc/eurouse_en.htm

Enterprise: Euro Info
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The June special edition about the new Enterprise DG, in 11
languages.
http://europa.eu.int/comm/external_relations/g7_g8/intro/index.htm


EU diary
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Informal Justice / Home Affairs Council, 28-29 July, Marseilles
Informal General Affairs Council, 2-3 September, Evian
Informal Agriculture Council, 3-4 September, Biarritz
European Parliament session, 4-8 September, Strasbourg
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Community
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Any Answers?
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* Eric Jacobson is looking for a comparison of costs to start a branch office in a major European city.

* Rose Grilli wants to know: What is the treatment of taxation rules on dividends for Euro investors & how does this differ from North America?- Euro dividends seem much higher.

* Milivoj Smilevski asks: Why such a rigid visas system for FYROM visitors in EU countries? How long?

Post your burning question about an EU issue in our Any Answers section.
http://www.eubusiness.com/anyanswers/

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Workshop
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