§ Mr. SheermanTo ask the Chancellor of the Exchequer what steps he is taking to establish an infrastructure for cross-border payments in euros. [63056]
§ Ruth KellyDeveloping cross-border payments infrastructure is the responsibility of the banks. I am aware that UK banks are fully participating in the European banking industry's co-ordinated initiative to produce a single European market for payments, and welcome this action which should improve the current, sometimes poor, level of cross-border payments service which consumers receive.
§ Mr. SheermanTo ask the Chancellor of the Exchequer if he will make a statement on the impact of not including sterling in the EU regulation on cross-border payments in euros. [63055]
§ Ruth KellyThe UK believes a competition-based approach to the problem of market failure in cross-border payments is the right one. The EU regulation could result in banks having to charge less for a service than it costs them to provide and may well give rise to perverse (potentially counter-productive) effects that harm consumers. For example, some banks may withdraw from offering the service altogether, or alternatively attempt to off-set losses made on cross-border payment transactions by increasing the cost of domestic payment costs. Thus, by not including sterling denominated payments in the scope of the regulation, these counter-productive effects are minimised.
It is too early to quantify the full impact of not including sterling denominated payments in the scope of the regulation. The main aspect of the regulation, article 3, which requires institutions to charge the same for euro cross-border payments as for euro domestic payments, does not take effect until July 2002 and July 2003 for electronic payments and credit transfers respectively. However, we will keep the situation under review.