Article for the December edition of the Bulletin du Personnel
It’s €-day!
By Ben Patterson, Economic, Monetary and Budgetary Affairs Division of DG4
At the bottom of the main lift in the European Parliament's Schuman building – and, indeed, in many other places all over Europe – you will find a large transparent container into which you are asked to put loose change. In this way you can get rid of all those 1 LUF/BEF or 10 French centimes coins, which you will soon not be able to spend, and at the same time help to fund UNICEF.
This is a splendid idea. Look closely, though, at the accompanying leaflet. Two of the coins shown are a British one penny and a British twenty penny piece. Does UNICEF know something that we don't?
Of course, the €-denominated notes and coins that go into circulation on 1 January 2002 will be formal legal tender in only twelve of the EU's fifteen Member States. This means that shopkeepers and others cannot refuse to accept them in payment. Moreover, though one side of the coins will vary depending upon the country in which they are issued, they – like the unvarying banknotes – will have the same legal status throughout the euro area. A Greek €1 piece, for example, will be as good in Helsinki as a Finnish one.
However, euro notes and coins are also likely to be widely acceptable in countries where they are not legal tender, both within the EU and outside it. In the UK, for example, a number of large retail companies have already arranged to accept €s as well as £s; and it is likely that € currency will soon begin to circulate quite widely in Denmark, Sweden and the candidate countries of Eastern and Central Europe. As well as being the single currency of twelve countries, the € could then become – like the $ in several parts of the world – a parallel or common currency in much of the rest of Europe. This process has somewhat rudely been called “euro creep”. Maybe you should throw away those UK 1p’s after all.
Withdrawing the national notes and coins
Having given your small change to UNICEF, what is then to be done with the remaining national notes and coins? One obvious answer is an extra spending spree before Christmas or at the post-Christmas sales. It is worth bearing in mind, however, that the national currencies will still have their full value after the New Year, and will, indeed, for several weeks be just as acceptable a means of payment as the new € notes and coins.
Exactly when they can no longer be used will vary between currencies. In most cases the deadline is the end of February. For French francs and Irish pounds it is earlier in the same month. Only the D-Mark will be losing its legal tender status on 1 January; but a “joint declaration” has ensured that its use will still be allowed at least until the end of February.
Even then, there is no need to panic. In France, Spain, Luxembourg and Portugal you will still be able to trade in francs, pesetas and escudos at commercial banks until the end of June. In Belgium and the Netherlands you will have until the end of the year, with other countries still to decide.
And even those who suddenly find a cache under the spare bedroom mattress when moving house in several years’ time have no need to worry. Most national central banks will still be “redeeming” both notes and coins for many years to come. Only in the case of the Portuguese escudo could there be a problem (see Table 1).
Table 1. End dates for national notes and coins
Country / End-date of legal tender / Exchange at commercial banks after end of legal tender / Redemption at central banks after end of legal tenderBelgium / 28 February 2002 / End of December 2002 / Coins: end 2004.
Notes: indefinitely.
Germany / 31 December 2001* / At least until 28 February 2002 / Indefinitely
Greece / 28 February 2002 / Still to be decided / Coins: 1 March 2004
Notes: 1 March 2012
Spain / 28 February 2002 / End June 2002 / Coins and notes indefinitely
France / 17 February 2002 / End June 2002 / Coins: 17 February 2005
Notes: 17 February 2012
Ireland / 9 February 2002 / Still to be decided / Indefinitely
Italy / 28 February 2002 / Still to be decided / Coins and notes until 1 March 2012
Luxembourg / 28 February 2002 / End June 2002 / Coins: end 2004
Notes: indefinitely
Netherlands / 28 January 2002 / End of December 2002 / Coins: 1 January 2007
Notes: 1 January 2032
Austria / 28 February 2002 / Still to be decided / Indefinitely
Portugal / 28 February 2002 / End June 2002 / Coins: end 2002
Notes: end 2022
Finland / 28 February 2002 / Still to be decided / Coins and notes until 29 January 2012
* But the use of DM notes and coins will be allowed until 28 February 2002.
Table 2. Availability of €s in the New Year
Country / Bank opening hours, 1 January 2002 / ATM conversion rate on first day / ATM conversion rate first weekBelgium / Closed / 100% / 100%
Germany / Work allowed / Almost 100% / 100%
Greece / No decision yet / About 75% / About 100%
Spain / Closed / Almost 90% / Almost 100%
France / Closed / 85% / 100%
Ireland / Closed / About 80% / 100%
Italy / Closed / More than 90% of software / More than 90%
Luxembourg / Between 14.00 and 17.00 / 100% / 100%
Netherlands / In afternoon for retailers only / Almost 100% / 100%
Austria / Open for retailers, etc. depending on prior agreement / 100% / 100%
Portugal / Under discussion / 50% / 100%
Finland / Closed / About 25% / About 80%
Getting your euros
By 17 December, most members of the general public should have been able to get from the banks at least one “starter kit” of € coins. The amounts in the kit vary between €6.35 (Ireland) and €15.25 (France), depending on the country. They have much the same status as the foreign currency travellers obtain before going abroad – i.e. they can’t be spent until you get to 1 January. If stocks last, they should make interesting Christmas presents.
At the beginning of 2002, both the coins and the banknotes will become legal tender; and in some countries, including Belgium and Luxembourg, getting hold of notes should be no problem. The main vehicle for distribution will be the Automatic Teller Machines (ATMs), and most of these should already be loaded with €-denominated notes on the first day. It may even be possible, as midnight strikes, to get your first €10 notes and spend them on a round of drinks to see in the New Year.
In some countries, however, it is going to take a little longer (see Table 2). Almost all ATMs will be dispensing € notes by the end of the first week; but in Finland and the South of Italy there may still be a wait of another week.
Problems and Tips
One of the potential problems identified by the Commission is the availability of € coins to give in change when large-denomination notes are tendered. Most ATMs will be issuing €10 notes, and some (Germany, Luxembourg, the Netherlands and Portugal) €5. In others, however, the machines will be issuing only €20 and €50. At the same time, retailers throughout the area have apparently been reluctant to apply for adequate cash floats.
There are also the problems which follow from having two currencies circulating in parallel during the transitional period. One solution is for shops to have dual tills. Another – reportedly adopted by some pubs in Ireland – is to operate only in €, with a currency exchange on the door. Where both national and € currency is accepted, the most usual practice will be to give change only in €, so that there will be wide scope for mental arithmetic, or use of the calculators now being issued free by banks and others.
The authorities are accordingly issuing a number of tips for the New Year; for example:
· pay by direct debit or credit card where possible;
· try not to pay for small transactions with large-denomination note; and
· at all costs, try to pay in only one currency at a time.
Risks of Confusion
Apart from such practical difficulties, the general conversion to euros under way has already thrown up a number of perhaps more serious problems. The first kind are arising from uncertainty about which currency is being used in a transaction.
The Irish Times of 21 November, for example, carried a heart-warming story about a Dubliner moving to Spain, who asked his bank to transfer there I£ 1500. This, the bank calculated, was worth some 300 000 pesetas. They then transmitted €300 000. The Garda having pointed out that no law had been broken, it is reported that bank staff are now themselves in Spain looking for the man.
A more worrying story comes from France, where a woman was reported in Libération of 14 November as having apparently been charged €4190 for a parking offence. The correct amount was €4,19; but the decimal marker had somehow moved.
Similar decimal marker problems are likely to occur throughout the euro area, but especially in countries where they have not been needed in writing sums of money: for example, Italy, Spain, Greece and also, perhaps, Belgium and Luxembourg. They will be added to the confusion often caused by the use of the«,» in some countries and of the «.» in others.
There will also be other less serious linguistic and orthographic issues. For example, is the plural of “euro”, in Italian, “gli euro” (as officially stated) or “gli euri” (an Italian decision reported by the Financial Times on 15 November)? When writing down a figure of more than one euro, do you add an “s” or not? It appears that you do in Spanish, French and Portuguese, but not in the rest (in Finnish you add an “a”). Finally, if “EUR” is the official abbreviation of “euro”, what is the official abbreviation of “cent”? (Answer: there isn’t one, but “c” or “ct” is suggested. But wouldn’t it avoid confusion with the US currency to use “centime” instead?).
Prices and Counterfeits
Some of the issues already mentioned in previous Bulletin articles continue to cause some anxiety. Although the percentage of people worried at the prospect of price increases has now fallen somewhat, there are still disturbing stories about a tendency to round up rather than down. Bus prices in Milan, for example, are to go up 28%. The Belgian Attorney General has advocated that fines be converted at a rate of BEF 40 = €1(instead of 40.3399): i.e. that the fines go up 0.84975%. In general, the smaller the figure, the greater the effect of conversion on the price, up or down.
The late release of the security features on € banknotes means there has not been much time to make convincing counterfeits. But there have been at least six recent heists of € notes, three in Germany, two in Italy and one in the Netherlands. Also in the Netherlands, the first commercial transaction using € notes was widely reported in October, when a man bought a pair of shoes using (presumably) stolen bills.
One should also beware of post-dated cheques. If they are made out in national currency rather than in €, they could be valueless in 2002. Postage stamps in national currency, on the other hand, will be usable until the end of next year. Travellers in the Far East may also like to know that vending machines are likely to accept the 10 baht coin from Thailand, which is mechanically indistinguishable from the €2 piece, but only worth about an eighth as much.
In memoriam
Finally, a return to those soon-to-be-obsolete national coins. Not all will be spent or given to UNICEF. Over 80% of French citizens, according to one poll, will be keeping some francs as souvenirs. In Italy, the Treasury is actually issuing two new gold coins, one of lire 50 000, the other of lire 100 000.
In fact, most of the national currencies being replaced are not that old, taking into account the numerous currency reforms that have taken place over the years. Many of the names, however, go back to the Middle Ages and before. The franc was first minted in 1360 as ransom money paid to the English for the release of King John II of France. The mark was a unit for measuring silver or gold, as were the lira, the pound and the peseta. The s(c)hilling and p(f)enny/ig, old germanic coins, were taken in Ireland and the UK before decimalisation to be the Roman solidus and denarius (hence “lsd” for pounds, shillings and pence).
But spare a thought, in particular, for the doyen d’age, the Greek drachma, which goes back at least to fifth century BC Athens. It leaves the old Babylonian measurement of weight, the shekel, undisputed as the world’s oldest extant currency.
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