Euro -- the advent of a new currency

By Santo Koesoebjono

WASENAAR, The Netherlands (JP): "The Euro is for all of us". This slogan is part of the campaign to get the public accustomed to the advent of the new currency, the "Euro" and its new coins and banknotes. Starting on Jan. 1, 2002 the Euro will be the legal tender in 12 of the 15 European Union member countries, except Denmark, Sweden and the United Kingdom.

Goodbye to the old familiar coins and banknotes that are the symbols of the sovereignty of each nation-state. This contrasts with the rising number of new currencies and the increasing number of regions demanding sovereignty in the Indonesian archipelago.

The new coin will have on one side the symbols of the European Union and on the other the national figureheads of each country such as the head of state, an artist or scientist or a known animal in that country.

Some 50.3 billion coins of various denominations have to be minted and 14.5 billion banknotes of different values to be printed. Special vaults are constructed and the logistics developed and organized for its timely distribution.

The date when the Euro becomes legal on Jan. 1, 2002 applies to all countries affected, but the expiration date of the previously held legal currencies varies. In Germany, the Deutschemark will no longer be valid as legal tender as from Dec. 31, 2001, in the Netherlands the guilder can still be used up to Jan. 28, 2002, and in most other countries the old currency expires on Feb. 28, 2002.

So, there will be dual circulation for a short period of time. Tourists visiting these 12 countries should know that the old notes and coins they still keep cannot be used in shops, restaurants and other services beyond those dates and should be exchanged for Euros in banks.

The use of the Euro does not only affect the 310 million inhabitants of these 12 participating countries but also other people and institutions across the world. These member countries form a huge market and wield enormous economic power following China and India and well ahead of the United States and Indonesia. The Euro will become an important currency alongside the U.S. dollar.

The change of currency is quite a revolution in the daily life of everyone residing in the EU. Also people from the Balkan countries who prefer to use the Deutschemark rather than their own weak currencies are affected.

People have reacted quite differently to this change. It is an emotional event since you give away part of your sovereignty or identity. In Finland, people expressed mixed feelings whereas Greeks appear rather indifferent. The Germans and Dutch feel their strong currencies are losing their value as the Euro has been losing ground to the U.S. dollar in recent months. It's current value is less than US$0.93 whereas when the Euro was introduced on Jan. 1, 1999 for financial transfers and statements its value was over $1.

Men seem to react differently from women. Women are more resistant and less willing to make the necessary mental preparation. They will learn to adjust only after having the coins and notes in their hands. To introduce the new coins and banknotes to its population each country is distributing kits containing these coins to individuals and retailers.

The Dutch central bank will distribute a kit containing one coin of each type (11.34 Euro per kit) to each individual above the age of six. These kits will be available by mid-December 2001, free of charge. Retailers can obtain small quantities of notes and coins in October.

Lately the campaign has intensified since the introduction of the new currency is a complex and vast operation. In the Netherlands, with a population of 16 million, the costs for this campaign is estimated at some 80 million Euro (or 176 million guilders, over $74 million).

This introduction has far reaching consequences for both individuals and organizations alike -- housewives and the elderly, schoolchildren and teachers, shop-keepers, consultants, street workers, beggars, various sized business enterprises, social organizations and non-governmental organizations.

To get used to the Euro, prices of goods will be marked in both the old and new currencies, for almost two years following the Euro's introduction.

Booklets and games are produced and distributed to children who must learn to convert the old to the new currency. Information packages are issued for the blind, handicapped and the elderly.

Special information in foreign languages is provided for various ethnic groups residing in each of these countries. Then there are the television broadcasts presented by well-known individuals including the president director of Philips, radio broadcasts and large advertisements on billboards and newspapers along with house-to-house distribution of leaflets.

The old banknotes and coins will be destroyed. The old coins can be re-used, or they can be kept as collectors' items to be sold later at higher prices, or handed down to grandchildren.

Many currency exchange businesses will be closed and thousands of workers in this business will be laid off since residents of member countries need not change money -- whereas visitors, including Indonesians, will need to exchange one currency only, reducing the commission fees for exchanging money. With the Euro you can buy a Gucci bag in Italy, perfume by Cardin in Paris and diamonds in Amsterdam.

Huge investment is required in the printing of new books for schools and universities as information regarding the currency, such as figures on exports and imports, must all be converted into the Euro.

It has been estimated that some 40 percent of all material for primary and secondary schools needs to be revised. Automated teller machines need to be adjusted, so do vending machines for drinks, cigarettes and snacks. These adjustments should all be ready by 2002.

There are of course drawbacks. Many companies and shops have rounded off prices upward, which means a disguised price hike that will cause an inflationary impulse. Even government bodies are planning to round off penalties upward.

The first forged notes have already been detected despite precautions in devising and printing banknotes and minting coins. There are also fears that this conversion to a new currency will be abused for large-scale money laundering.

Nevertheless, prepare for everything to be changed into the Euro -- including your game of monopoly.

The author is an economist and demographer based in the Netherlands.