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Europe: Consumers Try Out The "Euro"

  • Kitty McKinsey



Prague, 12 March 1998 (RFE/RL) -- Although introduction of the "euro," a common currency for much of the European Union, is still several years off, consumers in a number of countries are already getting acquainted with it.

In Julius Meinl grocery stores -- Austria's largest food chain -- food is priced in both the local currency, Austrian schillings, and "euros" -- although it can only be paid for in schillings. Still, shoppers are becoming used to the idea that 500 grams of spaghetti, which costs 13.90 schillings, would cost "about one euro" if that currency were in everyday use. Or that a bottle of Austrian Gruener Veltliner white wine that goes for 109 schillings would cost 7.88 euros.

Thousands of Italians living in and around Florence have become the first Europeans actually to try out the new single currency. Between last October and the end of this month, small-denomination euro coins and one banknote have been accepted on experimental basis as legal tender by bars, restaurants and shops.

Residents of two towns, Pontassieve and Fiesole, can change their Italian lire for euros at the post office and local banks. However, the attempt to put the euro into daily circulation has been undermined by coin collectors, who have snapped up the experimental euros as quickly as they come into circulation.

In France, the utilities and the post office are offering consumers the option of bills in both francs and euros so they can start to familiarize themselves with the new currency.

These are all attempts to raise public awareness of the euro -- efforts that are welcomed by the European Commission. Patrick Child, spokesman for the European Union's commissioner responsible for monetary union, says "there is an increasing demand from the public for information about the euro and the effect it will have on their daily lives. Information needs to be available where people will be looking for it" -- like in stores where they do their daily shopping.

As the Frankfurter Rundschau newspaper wrote recently, "Euro-land is taking shape." On May 2, the European Union will decide which countries will join monetary union and adopt the "euro" as their common currency. Eleven (11) of the European Union's 15 member states are expected to join. Denmark, Britain and Sweden have already indicated that they intend to stay out of the first wave for political reasons. Greece does not qualify on political grounds.

The new currency -- which will soon supersede national currencies -- is to come into being as a book-keeping currency on January 1, 1999. This is already being touted as the biggest monetary event in the world in the last 50 years, creating an integrated single market of at least 300 million people.

Next year, the euro will be a real currency only for banks and financial institutions, some big businesses and accountants preparing government accounts in some countries, but consumers will have many opportunities to start familiarizing themselves with its real value. As of next year, the Netherlands will have bank accounts with the guilder and its euro equivalent side by side. This will last one year to get people used to the new currency. In January, 2000, the guilder mentions will disappear altogether.

This is still two years before the euro goes into circulation as day-to-day spending money. For the first six months of 2002, euro notes and coins are due to circulate alongside national currencies, such as marks, francs and schillings. The new euro notes and coins will feature a design on one side common to all EMU (European Monetary Union) participants, and a national design -- different in each country -- on the other side.

The prospect of dual currencies has caused anxiety among retailers, who warn of slashed profits caused by the need for double-pricing, training staff and adapting computer systems and cash registers.

Daniel Bernard, the chairman of the French hypermarket group Carrefour said he could not understand why the European Union had not opted for a "big bang" one-day changeover, as happened when France switched from old to new francs in 1958.

He used this analogy: "It is as if the British decided to switch from driving on the left to the right, but introduced it first for lorries (trucks), then a week later for every other vehicle."

The conversion of local currency prices into euros will create other problems for retailers, who especially like prices that end in a nine (9). A pair of shoes that costs 99 Deutschemarks in Germany might convert to 192 euros. If the retailer rounds the price down to 189 euros, he will lose some profit. If he rounds up to 199 euros, he will be accused of price gouging.

Despite such concerns, Europe is quickly moving towards the day when a European, or visitor to the continent, will be able to move among 11 countries with only one currency in his wallet.

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