European Competition Commissioner Karel van Miert said EU officials raided eight banks in Germany, France, Italy and Spain amid allegations that they were not passing on the savings that have resulted from the creation of a single currency to customers.

"We hope we caught them by surprise. We will see what our fishing today reveals. We will see if we can build a case," Mr Van Miert told a European Parliament monetary affairs committee hearing.

Mr Van Miert said he suspected the banks has been working together to fix charges for euro transactions.

Confidence boost

The move is being interpreted as a bid to bolster public confidence in the euro, which was launched on 1 January.

The raided banks were named as Germany's Deutsche Bank and Dresdner Bank, Societe Generale and Credit Agricole of France, Italian savings bank Cariplo and Banco Commerciale Italiana and Banco Bilbao Vizcaya and Argentaria of Spain.

Banks have traditionally charged customers a fee for exchanging and transferring money based on the spread between buying and selling currencies.

However the introduction of the euro has eliminated many of the foreign exchange risks banks have traditionally faced. National currencies such as the German Deutschmark or the French Franc are fixed to the euro, which should make it easier and cheaper for the banks to change money for customers.

Banking associations argue that exchange charges have fallen in some countries since the euro was born, while banks still carry the high costs of storing, transporting, administering and insuring large volumes of foreign banknotes.