Explanatory Memorandum to COM(2010)377 - Professional cross border transportation of euro cash by road between euro-area Member States - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2010)377 - Professional cross border transportation of euro cash by road between euro-area Member States. |
|---|---|
| source | COM(2010)377  |
| date | 14-07-2010 |
Euro banknotes and coins were introduced in 2002 and are truly pan-European means of payment, allowing European citizens to settle their debts in euro in the whole euro area, currently consisting of 16 Member States. As a consequence, the need for cross-border transportation of cash by road has considerably increased. Within the euro area, banks, the large retail sector and other professional cash handlers should be able to contract with the cash-in-transit (CIT) company that offers the best price and/or service, even if it is located across the border in another Member State. This will allow them to take advantage of the most efficient (and shortest) cash pick-up and delivery circuits and the cash services of the nearest national central bank (NCB) branch or CIT cash center. Furthermore, a large number of euro-area Member States have arranged or may want to arrange for production of banknotes and coins abroad. The very principle of a single currency implies that euro banknotes and coins should be able to circulate and be transported as freely as possible between the Member States that have adopted the euro.
However, due to incompatibilities between national legislations it is in most cases very difficult for professional cash transporters to move euro cash between euro-area Member States and very little cross-border land transportation therefore takes place. Regulatory differences concern a wide range of issues such as the possession and carrying of firearms by the cash-in-transit (CIT) staff, authorised transport modalities, armouring and equipment of the CIT-vehicles, number of staff in the vehicles etc. The current regulatory obstacles moreover imply a fragmentation of the single market in this sector.
These constraints on professional euro cash transportation have an impact on the efficiency of the cash cycle and ultimately on the cost of cash for firms and citizens. Banks and the retail sector should be able to source their cash in the most efficient manner across national borders within the euro area. Improving the functioning of the cash cycle by enabling an efficient cash supply across borders is a natural and necessary complement to the European Central Bank's Roadmap for more convergence of NCB cash services. In that respect the benefits of Eurosystem initiatives such as Remote access to NCB cash services, whereby a credit institution in one participating Member State may use the cash services of a NCB in another participating Member State, cannot be fully exploited as long as the current situation remains unchanged. The realisation of the ECB's roadmap and the creation of a single euro cash area is, in turn, complementary to SEPA – the single euro payments area – which aims at making electronic cross-border payments in euro as easy as domestic payments.
The CIT-market is organised around cash centres, where CIT-vehicles can be loaded and unloaded with cash in a secure manner. A CIT-vehicle generally returns to its cash centre of origin at the end of the day in order to spend the night in a secure location and the geographical area that can be serviced from a cash center depends on the distance that a CIT-vehicle can drive in a day. The CIT-market therefore has a predominantly local character and the potential cross-border market primarily concerns border regions between euro-area Member States. This indicates that a policy response at EU level should not necessarily include purely domestic operations.
The European Central Bank, the banking sector and the large retail sector have repeatedly called for the launch of an initiative aimed at lifting the obstacles to the professional cross-border transportation by road of euro cash in Europe. The case for such an initiative is furthermore reinforced by the past and future enlargement of the euro area.
Against this background, the Commission therefore initiated consultations in May 2008 with a view to relaunch the work to remove existing regulatory barriers to cross-border transportation of euro cash by road and thereby facilitate the free circulation of the euro.
Contents
As a first step and in order to build on the expertise and input of all interested parties in the sector, a Working Group on cross-border transportation of euro cash by road chaired by the Commission and consisting of the European organisations of all the major stake holders i was set up and consulted in 2008. It discussed all key issues, such as the reasons for action at EU level, the various legal possibilities of facilitating cross-border cash transport, scope of possible future common rules, the differences between national legislations and possibilities of harmonised cross-border rules in the relevant areas.
On this basis, the Commission adopted a White Paper on professional cross-border transportation of euro cash by road between Member States in the euro area i on 18 May 2009 in order to launch a broad-based consultation process on a set of envisaged common rules for the cross-border transportation of euro cash by road between Member States in the euro area. The White Paper and the responses that the concerned party agreed to publish are available at the Commission's Europa website at the following address: ec.europa.eu/economy_finance/articles/euro
Following the publication of the White Paper, an Expert Group on professional cross-border transportation of euro cash by road between Member States in the euro area was set up and consulted in 2009. The group consisted of representatives from the relevant administrations of euro-area Member States. It discussed in detail the envisaged common rules for cross-border cash transport and achieved a high degree of consensus on the final text of the Commission proposal. The list of participants of the group is attached to the proposal as an accompanying document.
The social partners have been consulted all along the preparatory process. They were part of the working group and were subsequently consulted via bilateral meetings and a written questionnaire.
All stakeholders in the sector acknowledge that the cash-in transit market is currently organised along national lines, due to the differences between national legislations. As regards support for the initiative, a distinction should however be made between the supply side (i.e. the CIT companies) and the demand side (i.e. the banks and retailers).
The banking sector is very supportive of the initiative and calls for an ambitious approach, which should lead to shorter and more efficient transport routes, meaning less risk, less costs involved and more competition in the sector. The professional organisation of CIT-companies welcome that a full-scale harmonisation of the transport of cash is not envisaged, but deems the current situation, characterised by a fragmented market, as satisfactory as CIT-companies have organised themselves accordingly, within national borders.
The employers in the CIT-sector also stress the importance of avoiding unfair competition on the basis of different wages and other terms and conditions of employment, notably against the background of the high share of wages in the total costs of CIT-companies. On the employee side, the trade unions' main concern is that future EU legislation in this area should not lead to a worsening of social conditions but rather set into motion a movement towards a levelling up of wages and other working conditions. The social partners furthermore agree that the highest of the Member State of origin vs. the host Member State salary should apply in a cross-border situation.
The ECB and the Eurosystem fully support the Commission initiative as it is in line with their strategic goal to achieve a high degree of convergence between National Central Banks' cash services. The adopted principle of remote access (i.e. the fact that a bank should be able to withdraw/lodge euro cash from/to any NCB in the euro area), for example, cannot be implemented as long as there is no easy possibility of transporting cash by road across borders.
The general objective of the present Commission proposal is to facilitate the free circulation of euro cash within the euro area by removing obstacles to the professional transport of euro cash by road between euro-area Member States, while ensuring that the transports take place under conditions that provide a high level of security for the CIT-staff and for the general public. Since the CIT-market has a predominantly local character, the main objective should be to facilitate transport in the relevant border areas, while regulatory differences outside this geographical space in principle have less impact on the free circulation of the euro.
The impact assessment (IA) has considered five broad options to achieve this objective: i a baseline no-change scenario; i Bilateral/multilateral agreements between those Member States potentially most concerned by cross-border transports; i A set of common rules for cross-border transports only; i Full mutual recognition; and i Full harmonisation of the regulation of all CIT-transport. The IA finds that options 1 and 2 would not be effective in meeting the objective of facilitating the free circulation of euro cash since it seems highly unlikely that such agreements would materialise spontaneously on a larger scale, whereas full mutual recognition and full harmonisation of all CIT-transports would be disproportionate compared to the stated objective and could in the case of full mutual recognition create important security risks.
The detailed analysis of impacts concerns option 3: a set of common rules for cross-border transport. This option would meet the objective of facilitating the free circulation of euro cash. Since it is limited to cross-border transports it would furthermore not go beyond what is necessary to achieve the objectives.
Three sub-options are moreover considered: (a) Extending the scope of the rules to EU Member States outside the current euro area; (b) Extending the scope to other cash and valuables; and (c) Restricting the scope to point-to-point transports i only.
The impacts of the common rules depend to a large degree on the size of the potential market and the extent to which it can be realised. In order to collect information on the current CIT-market and to estimate the size of the potential market for cross-border cash transport by road, if current regulatory obstacles to such transports are lifted, an external study was launched, which is available at the Commission's website i.
The study shows that while the cross-border market is by definition limited, there is a potential for a significant increase in professional cross-border transport of euro cash by road, both in the long and the short term, if regulatory obstacles are removed by introducing a set of common cross-border rules.[5]
The facilitation of cross-border cash transports is also likely to produce some environmental benefits, due to shorter transports overall.
A significant increase in cross-border transports may, however, also have negative social effects in the host Member States. This concerns notably a possible effect on wage levels and/or employment in the CIT-sector in a given host Member State, if there are significant differences in salaries compared to neighbouring Member States. The impact assessment shows that significant differences seem to exist in some cases between some neighbouring euro-area Member States. Salary differences are furthermore very substantial between some of the Member States that have not yet adopted the euro and their neighbours in the euro area. While Member States should in general not be prevented from using their comparative advantages, it thus nevertheless seems justified to mitigate the potential social impact in the host Member State by ensuring a minimum protection of the workers in line with the principles of the existing Directive 96/71/EC on the posting of workers. This Directive is intended to provide for a minimum protection to be observed in the host Member State by employers who post workers to perform temporary work there.
However, in view of the specific character of CIT transport services, notably the frequent and short-term nature of the potential work periods abroad and the different contractual situations, there is a need to provide for an analogous application of the Directive to all cross-border cash transport services. The proposal therefore includes some specific provisions in order to create legal certainty for the concerned operators and ensure the practical applicability of the Directive in the CIT-sector. These notably lay down that cross-border CIT-workers should be guaranteed a minimum protection limited to the relevant minimum rates of pay, including overtime rates, of the host Member State according to the Directive. In order to avoid complicated pro-rata calculations, these rates should furthermore be guaranteed for the whole working day, even if the worker only spends part of the working day abroad. In case it can be foreseen from existing contracts, regulations or administrative provisions as well as practical arrangements that the worker will carry out cross-border transport for more than 100 working days in a calendar year in another Member State, the minimum protection should however also cover the other matters listed in the Directive.
Due to the specific characteristics of the CIT-sector, the proposal also foresees rules that are different from the general rules in the transport sector as regards cabotage. While the proposal foresees that the CIT-transport should return to its Member State of origin in the same day as it left, no limit to the number of cash deliveries/pick-ups are foreseen since a CIT-vehicle that is carrying out such services to banks and retailers may do a large number of (e.g. 20) of such stops in a day.
The consultation of stakeholders have furthermore shown that in order to take into account security-related or other sensitive issues, it is necessary to foresee certain restrictions to the scope of common EU rules as well as some possibilities for national exceptions and derogations. These concern four main issues: (i) National rules on the carrying of weapons by CIT-staff remain fully in force; (ii) A number of CIT-transport types are established, with opt-out possibilities for the individual Member States; (iii) Restriction of the scope of cross-border transport to one day and daytime, meaning that the CIT-vehicle shall depart from and return to its Member State of origin in the same day and the transport shall be carried out during daytime; (iv) The majority of the number of cash deliveries/pick-ups made by a CIT-vehicle during the day must be carried out on the territory of the host Member State(s).
The analysis has shown that although these options may imply a reduction of the potential cross-border market, they are not expected to create major obstacles for cross-border transports and the proposal foresees in all cases solutions that enable cross-border transports (strong-box for weapons in the vehicle that can only be opened by remote control by the control room, standardised transport options, recognition of equivalent weapons training etc.).
As regards the sub-options, it is concluded that the common rules should apply also to the territory of EU Member States that are about to introduce the euro as from the date of the decision of the Council to abrogate their derogation from participating in the euro. This is justified by the fact that there is an increased need for euro cash transportation in the run-up to the changeover.
Extending the scope to other cash does not contribute to the stated objective of the initiative but fits into the overarching EU objectives and may increase efficiency by reducing costs. It might, however, also complicate the adoption process of common rules for relatively little added value. Restricting the scope to point-to-point transports would significantly reduce the benefit of the common rules by excluding the large majority of transports in terms of kilometres driven, hours worked and cash points serviced. For these reasons, these sub-options are not included in the proposal.
Finally, it is proposed to set up a Committee on the cross-border transport of euro cash in order to monitor the implementation of common cross-border rules. A formal review is also foreseen with a Commission report to the European Parliament and the Council at the latest two years after the entry into force of the common rules.
The proposed Regulation lays down a set of common rules for the professional cross-border transport of euro cash within the euro area. It is based on the principle of a specific cross-border CIT-licence which would be granted by the Member State of origin to CIT-companies whishing to transport euro cash across borders. Seven different authorised transport types are foreseen – five for the transport of banknotes and two for the transport of coins – with possibilities for Member Sates to opt out from specific options for their territory.
In terms of scope, the following elements are noteworthy:
- The proposed Regulation would apply to the professional transport of euro cash by road between euro-area Member States. It is also foreseen that the territory of Member States which have not yet introduced the euro are covered by the Regulation as from the date of the Council decision to abrogate their derogation from participating in the euro. The extension of the scope of the Regulation is the subject of a separate proposed Regulation.
- The proposed Regulation would apply both to so-called point-to-point transports (i.e. transports from one secure location to another secure location with no intermediate stops) and so-called retail transports of cash (multi-stops transports servicing final customers).
- For retail transports, the majority of the stops must take place in the host Member State(s), whereas there is no limit to the number of stops that can be made in either the Member State of origin or the host Member State.
- The transports must as a rule be carried out during daytime, with exceptions foreseen for point-to point transports;
- The CIT-vehicle must return to its Member State of origin within the same day.
CIT-companies whishing to undertake cross-border transport of cash under the terms of the Regulation must apply for a specific licence from the granting authority of their Member State of origin. To obtain the licence, the company, its management and its staff will have to meet a certain number of conditions laid down in the Regulation. In case of infringement of the rules, the sanctioning power belongs to the authority that granted the licence, i.e. the authority of the Member State of origin. However, safeguarding powers are granted to the Member State crossed or the host Member State in case of emergency or manifest breaches of the rules (e.g. minimum number of staff not respected, infringement of the rules on the carrying of weapons etc). Member States furthermore have a duty of mutual information on all these aspects.
For banknotes, the following five transport types would be authorised for the cross-border transport of cash:
- Transportation of banknotes in an unarmoured vehicle of ordinary appearance equipped with a system of neutralisation of banknotes (IBNS);
- Transportation of banknotes in an unarmoured vehicle with a clear marking indicating that it is equipped with IBNS;
- Transportation of banknotes in a cabin-armoured vehicle equipped with IBNS;
- Transportation of banknotes in a fully-armoured vehicle not equipped with IBNS;
- Transportation of banknotes in a fully-armoured vehicle equipped with IBNS.
For coins, the following two transport types are foreseen:
- Transportation of coins in an unarmoured vehicle;
- Transportation of coins in a cabin-armoured vehicle.
In all cases, there must be at least two security staff in the vehicle, except for transport in a fully-armoured vehicle without IBNS where three security staff are required.
Member States may choose to close down the use of certain options for their territory as long as they accept at least one of the above-listed options for banknotes and one of the above-listed options for coins and as long as they do not allow comparable transport modalities for domestic CIT-transports.
In particularly sensitive areas from the point of view of security, national rules would continue to apply. These areas concern the carrying and use of weapons, the relationship with the police forces and the rules governing the behaviour of the CIT security staff outside the CIT-vehicle as well as the security of the locations where the cash is delivered or picked up.
Article 133 in the Treaty on the Functioning of the European Union states that '… the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall lay down the measures necessary for the use of the euro as the single currency. …'. It follows from this Article that the EU has the right, and in fact the duty, to take the necessary measures to ensure the free and efficient circulation of euro cash since the current situation creates obstacles to the cross-border transport of the euro and thus to its use.
The alternative to action at EU level would be voluntary bilateral agreements between Member States or even multilateral agreements. However, action at EU level brings important economies of scale as compared to bilateral or multilateral action. Only action at EU level allows taking into account the future enlargement of the euro area as the EU rules for cross-border transport can be used by any new participating Member State, which is not the case for bilateral/multilateral agreements.
Furthermore, even though a demand exists as expressed notably by the banking sector, Member States have still not concluded any agreements to facilitate professional cross-border transport of cash more than eight years after the introduction of euro cash. This suggests that EU action is in practice the only possible way of reconciling diverging regulatory regimes (currently 16 in number), covering a wide range of complex issues where security issues and labour market considerations interact.
Action at EU level is consequently in conformity with the principle of subsidiarity.
The proposal is limited to cross-border cash transports, which are the ones that are affected by the different national regulatory regimes, while purely domestic transports are not included in its scope. It is thus respecting the principle of proportionality. The instrument of a Regulation is necessary in order to ensure that the different national rules will be replaced by a set of truly common rules for professional cross-border transports of euro cash by road within the euro area.