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EU: The Euro -- A Real Currency At Last, From The Arctic To The Aegean (Part 1)

  • Breffni O'Rourke

The European Union's single currency, the euro, becomes a "real" currency at the turn of the year, when notes and coins become available for use in the 12 euro-zone countries. For the last two years, the euro has existed in virtual form, being used in bank transactions, book accounting, and the like, but it had no physical presence. Finally, from 1 January, stretching from north of the Arctic circle to the Aegean shores, the euro will be in everyone's pockets. RFE/RL correspondent Breffni O'Rourke reports in the first of a two-part series.

Prague, 21 December 2001 (RFE/RL) -- A key moment in European integration arrives on 1 January with the introduction into mass circulation of the notes and coins of the common currency, the euro.

After years of planning and preparation, millions of euro banknotes and several hundred thousand tons of euro coins will go into circulation in 12 of the 15 European Union countries. The 12 euro-zone nations are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain. The other three EU nations -- Britain, Denmark, and Sweden -- are not participating at this time.

The project is unprecedented in scale -- a common currency space inhabited by some 300 million people covering much of the European continent. The European Central Bank (ECB) in Frankfurt, Germany, which is responsible for the euro, says it is confident the launch of the actual money will go well. ECB spokesman Niels Bunemann says: "It is, indeed, a very big moment, and we have all worked extremely hard to achieve success. And we are very confident now that things will work out fine."

Bunemann says the ECB has a special team of officials on duty during the holiday period to handle any mishaps that may occur. But it is the private sector that will have to bear much of the burden of transition over the next weeks.

Big Europe-wide retailers, such as Swedish furniture giant Ikea, are on the front line. At its network of megastores across the euro-zone, Ikea will be accepting the old national currencies and issuing only euros in change, from cash stocks delivered by the authorities beforehand. Other retailers will do the same.

Ikea's Danish-based euro project coordinator Raj Rai says his company and its staff have made what he called "superhuman" efforts to be ready for the changeover. The company expects a turnover totaling some 15 billion euros, or more than $13 billion, on the first day of business.

Rai says he is sure everything has been done that can be done, but he still worries.

"We are confident it will go well, but of course what does concern me is that there are many things beyond my control. For instance, we could have liquidity problems. We could have problems with notes and coins running out. We could have problems with communications. We are not the only company converting masses and masses of data in IT [Information Technology] systems -- all companies are doing that in the European area. "

Rai has been coordinating Ikea's conversion effort over the last four years, in preparation for this day. He says a military-style plan is in operation.

"It's very, very meticulous planning. The first program which converts our till system runs at four o'clock in the morning, and the whole day is planned in a series of one-hour time segments. And we have in our IT center in Helsingbourg in Sweden a system through the intranet where we can see how the conversions are going. We have mountains of documentation for people to follow, and we also have special local documentation, which is to be opened in the event of a wide-area network failure."

That means that every Ikea store can operate independently in the event of a major computer crash. Rai is particularly worried about a computer system collapse across the euro-zone. He notes that nothing on the scale of the introduction of the euro has been attempted before.

"What's beyond my control and every company's control is: Will the telephone network hold up? Will the communications hold up? Will the wide-area network not fail? Will the banks' liquidity systems keep on working? Will electronic funds transfers keep working? Because the amount of conversions going on is awesome -- billions of lines of software code have been changed."

The fledgling euro currency cannot afford a debacle during the introduction process. In the last two years, the euro has found little favor with financial markets and has lost more than 20 percent of its value against the dollar. Some analysts say if anything goes seriously wrong with the introduction of notes and coins, market confidence in the currency could be further eroded.

A senior analyst with the Deutsche Bank in Frankfurt, Manuela Preusehl, takes a more down-to-earth view.

"I cannot quite understand the big fuss about the real changeover now from the national currencies to the euro. In the end, it makes for no real difference, at least not in economic terms, nor in market terms, because for years now we have had the euro here virtually. So the only impact it can have is that everybody, personally, will have a new currency in their hands, probably making travel a bit more comfortable, and all these other things."

In the second part of this series on the euro, we'll take a look at the risks of crime during the changeover period, as well as how Central and Eastern European countries will be affected by the introduction.

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