It’s the clash of the Titans, 21st century style – the mighty EU Commission takes on the muscle of the banking industry. The prize, if one believes the EU Commission is an €50billion-€100billion annual boost to the economy, and the creation of real and genuine competition among banks.
Round 1 of this saga went to the EU Commission when, after prolonged negotiations, they struck a decisive blow by introducing Regulation 2560, which severely reduced bank income from cross-border transactions.
Round 2 in 2002 saw the banks offering a package of reforms as a pre-emptive strike to avoid further blows from Brussels.
Rounds 4 and 5 were uninteresting as each side sought to gain position over a number of years, with little to show for it by way of real substance. Round 6 saw the EU Commission revitalised with a new general, Commissioner McCreevy, and the banks with a new and invigorated fighting structure in the form of a newly reconstituted European Payments Council.
In round 7, recently completed, details could not easily be agreed, and major compromises seem to have been accepted which allow the banks to retain many of their old ways. And in the end of round 7, the EU Finance Ministers agreed (March 2007) a watered down directive called the Payment Services Directive.
Round 8 starts in January 2008, when the new and better payment systems should begin to become available. Alas, it looks like that a major part of the prize, the SEPA Direct Debit will not be there on the day, and some countries may not much reform their cards.
Round 9 which runs up to end of 2010 has somewhat unclear goals for driving the new systems, leaving the prospect that neither side will be happy with the outcome. By round 10 the full outcome will be apparent. The banks have fought a good battle. The EU Commission will have learned lessons, and will likely be back for more…sometime.
