The European Commission will today embark on a race against time to push banks to cut charges for transactions in euros before euro notes and coins are introduced in January.

But bankers decried as ill-thought out today's proposal to force banks to charge the same fees for transferring euros from one European Union country to another as they do for domestic transactions.

According to a survey for the Commission, the average cost of a cross-border bank transfer of #100 within the euro zone is more than #17. This compares with some #1 for a domestic transfer.

The average cost for an equivalent withdrawal from an automatic teller machine is #4, while the cost of a payment using a bank or credit card is a mere 16 cents.

Under the proposed regulation, the EU's 9,000 banks would have to charge their customers the same for cross-border and domestic use of bank cards and ATMs as of January 1 2002.

The principle would be extended to cheques and bank transfers - a technically more difficult area - on January 1 2003. But it would only be applicable to transactions in euros.

The timetable for the measure, which would not need to be subsequently passed into law by member states, would be one of the fastest ever for a piece of EU legislation.

But the European Banking Federation believes that the cost of transfers has come down over the last couple of years from some #22 to #12 for a #100 payment. It argues that reducing the differential altogether depends on creating a unified payment system, which may not be in place until 2005.