Banking on the euro

Economics Department

The introduction of the cash euro on 1 January 2002 has changed the lives of more than 300 million people.

The second OECD Economic Survey of the euro area looks at budgetary policies and pressures in member countries, the prospects for economic recovery in the currency zone and the performance of the European Central Bank. But it also takes a special look at whether, with a single currency available across 12 countries, switching your bank account or mortgage to another euro area country is now an option or still a daunting task.

Travellers in the euro area complained bitterly early this year when they found that the long-awaited dream of unfettered cross-border shopping had remained costly. True, the euros they drew out of bank cash machines abroad were the same as the euros at home, making it easy to compare prices. But when the travellers received their bank statements they found they were being charged far more than back home for the privilege of using their cash cards. That practice was ended before the holiday season by an EU directive, but integration in the banking sector still has along way to go to catch up with the integration that is taking place in other financial markets.

As the OECD Economic Survey of the euro area found, even the massive merger and acquisition activity in recent years might not advance matters as much as some might expect, since this has served mainly to concentrate national banking markets. In fact, there have been relatively few cross-border tie-ups. It is also virtually impossible to make comparisons about mortgages since lending systems for house purchases are very different from one country to another, while barriers to foreign entrants into local insurance and pension markets also remain considerable.

For consumers, transferring money from one euro area country to another is still generally much more expensive than transferring money within a country. The banks have argued that this is because there is no integrated pan-European retail payment system, so that transactions have to be processed manually and are therefore more costly. But they also say that the volume of such transactions is too small to make an integrated system worthwhile. From next year, EU authorities have ordered banks to charge the same for card use anywhere in the euro area from July 2002. But only time will show whether the lower costs will raise the volume of such transactions enough to make a cross-border system profitable, the Survey says.

When it comes to day-to-day experience, euro zone banking still very much begins – and ends – at home. Banks do not seem to reach out for prospective customers beyond national borders, while consumers do not go cross-border shopping around for credit either.

EU authorities have been inclined to let market forces do the work. As the survey notes, the fact that no common system has been developed to facilitate cross-border transfers of small sums even after decades suggests it is time for the authorities to adopt a more pro-active role.


OECD (2002), OECD Economic Surveys: Euro Area, Paris.

©OECD Observer No 234, October 2002

Economic data

GDP growth: +0.6% Q1 2019 year-on-year
Consumer price inflation: 2.3% May 2019 annual
Trade: +0.4% exp, -1.2% imp, Q1 2019
Unemployment: 5.2% July 2019
Last update: 8 July 2019

OECD Observer Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Subscribe now

<b>Subscribe now!</b>

To order your own paper editions,email

Online edition
Previous editions

Don't miss

  • MCM logo
  • The following communiqué and Chair’s statement were issued at the close of the OECD Council Meeting at Ministerial level, this year presided by the Slovak Republic.
  • Food production will suffer some of the most immediate and brutal effects of climate change, with some regions of the world suffering far more than others. Only through unhindered global trade can we ensure that high-quality, nutritious food reaches those who need it most, Angel Gurría, Secretary-General of the OECD, and José Graziano da Silva, Director-General of the United Nations Food and Agriculture Organization, write in their latest Project Syndicate article. Read the article here.
  • Globalisation will continue and get stronger, and how to harness it is the great challenge, says OECD Secretary-General Gurría on Bloomberg TV. Watch the interview here.
  • OECD Secretary-General Angel Gurría with UN Secretary-General António Guterres at the 73rd Session of the UN General Assembly, in New York City.
  • The new OECD Observer Crossword, with Myles Mellor. Try it online!
  • Listen to the "Robots are coming for our jobs" episode of The Guardian's "Chips with Everything podcast", in which The Guardian’s economics editor, Larry Elliott, and Jeremy Wyatt, a professor of robotics and artificial intelligence at the University of Birmingham, and Jordan Erica Webber, freelance journalist, discuss the findings of the new OECD report "Automation, skills use and training". Listen here.
  • Do we really know the difference between right and wrong? Alison Taylor of BSR and Susan Hawley of Corruption Watch tell us why it matters to play by the rules. Watch the recording of our Facebook live interview here.
  • Has public decision-making been hijacked by a privileged few? Watch the recording of our Facebook live interview with Stav Shaffir, MK (Zionist Union) Chair of the Knesset Committee on Transparency here.
  • Can a nudge help us make more ethical decisions? Watch the recording of our Facebook live interview with Saugatto Datta, managing director at ideas42 here.
  • The fight against tax evasion is gaining further momentum as Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia signed the BEPS Multilateral Convention on 24 January, bringing the total number of signatories to 78. The Convention strengthens existing tax treaties and reduces opportunities for tax avoidance by multinational enterprises.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2019