Practical aspects of the introduction of the euro: review of the situation
The Commission takes stock of practical preparations by the public and private sectors at national and European level for the introduction of the euro and to indicate future action planned by the Commission.
Commission Communication of 11 February 1998: "Practical aspects of the introduction of the euro: progress to date" [COM (98) final - Not published in the Official Journal].
Following the Commission communication of 1 October 1997 [COM(97) 491 final - Not published in the Official Journal] which set out the practical preparations to be undertaken for the introduction of the euro, this Communication summarises progress made since then.
National administrations. Preparatory work by national administrations is proceeding apace. To date, eleven Member States have published a national changeover plan (Belgium, Ireland, Italy, Luxembourg, Netherlands, Austria, Finland, France, Portugal, Spain) or a comprehensive draft transition law (Germany).
Moreover, all the Member States have announced their intention to redenominate tradable central government debt, either immediately at the beginning of stage three or at the moment of their entry into EMU if that is at a later date.
Communication. Regarding communication, the main priority is to do more to inform the general public, small and medium-sized enterprises, local authorities, civil servants (in Member States and in the European institutions) and non-EU countries. Particular attention will be paid to the elderly, handicapped and other vulnerable groups.
Several Member States have already designed and launched wide-ranging information campaigns in close partnership with the Commission and the European Parliament.
Transitional questions. Regarding the Community institutions, since most of their financial operations are denominated in ecus, the changeover to the euro will for the most part take place on 1 January 1999, without a transitional period. The amount of specific changeover legislation required is extremely limited and the operational changeover is not expected to cause any disruptions. Furthermore, the management of the Community budget will be considerably simplified.
The Luxembourg European Council (12-13 December 1997) confirmed 1 January 2002 as the date for the introduction of euro notes and coins in all Member States participating in the first wave of monetary union.
In addition, a broad consensus is emerging that the period of dual circulation should be shortened: most Member States have already indicated that they will opt for a period substantially shorter than six months. Logistical problems relating to the storage of banknotes and coins up to 2001, and wholesale delivery to the commercial banks are, amongst other things, currently being examined.
Euro banknotes and coins. Agreement has been reached on the denominations and technical specifications of the euro coins. The Council Resolution of 19 January 1998 confirms this agreement.
The final design of the common face of the coins was adopted by the Council on 17 November 1997. Six countries (France, Germany, Austria, Ireland, Italy and Belgium) have so far made public the design of the national face of their euro coins.
Conversion rates and rounding of decimals. The Commission departments will continue to study the questions which arise in relation to the legal framework for the euro. Clarification has been requested in two areas in particular, namely the application of the conversion rates and the rules on rounding:
- Use of the conversion rates between the euro and a participating national currency unit is mandatory whenever substitution or conversion takes place;
- During conversion and reconversion (e.g. from Belgian francs into euros and back again into Belgian francs), a situation may arise in which the initial and reconverted amounts differ. In most cases, this problem will be dealt with by the payment systems: it is therefore better to leave conversions to the banking sector. Wherever possible, it is in any case preferable to write payment orders in the unit in which the obligation is expressed;
- For conversions between national currency units, it is strongly advised always to employ the triangulation method (from the national currency to the euro and then from the euro to another national currency) with the euro as pivot;
- Where sums of amounts are converted, rounding differences may systematically accumulate: the best solution depends on the individual circumstances of each case and the Commission does not consider it appropriate to draw up a general recommendation.
Information technology systems. Regarding the adaptation of information technology systems, the meeting between representatives of the industry and the Commission produced two main conclusions:
- It was recommended that a "knowledge resource" on the IT implications of the euro be established;
- Sharing practical experience and professional best practice via the publication of case studies and scenarios was felt to be of central importance.
Symbol of the euro. International recognition of the euro symbol has been assured by its registration with the International Organisation for Standardisation (ISO). The Commission has put forward detailed proposals for the placement of the symbol on computer keyboards.
Bank charges. The euro Regulations do not address the question of bank charges for conversions into euros. However, together with some provisions of national law, they do limit the banks' possibilities: for instance, banks may not charge for the conversion of incoming payments or the conversion of accounts at the end of the transitional period, nor may they charge a higher fee for a service denominated in euros than for the same service denominated in national currency.
In practice, competitive pressure will be the most important influence on the policy of the banks: in general, banks do not intend to charge for converting incoming or outgoing payments in national currency or euros, for converting accounts from national currency into euros, either during or at the end of the transitional period, or for exchanging notes and coins in "household" amounts during phase C.
The Commission will propose a recommendation setting out a standard of good practice, i.e. conversion without charge.
Dual display of prices. Dual display will play a key role in the changeover to the euro, and most retailers and public utility companies plan to provide dual display of prices and financial information even in the absence of an obligation to do so. The Commission believes that imposing binding European rules on dual display would not be the best way of ensuring its introduction in accordance with the needs of consumers or of minimising the costs of the transition to the euro. Nevertheless, it intends to make a recommendation on a "standard of good practice" which would provide the necessary clarity and certainty to citizens and would cover:
- use of the fixed conversion rates to calculate the counter-values in dual displays;
- clear indication by retailers as to whether they are prepared to accept payments in euros during the transitional period;
- a clear distinction between the unit in which the price is set and amounts to be paid are to be calculated;
- the counter-value which is displayed for information purposes only;
- and voluntary agreements on the adoption of common formats or designs for dual display.
Dual displays, however, represent just one of many communication instruments necessary for the acceptance of the new prices and scales of value expressed in euros.
Small enterprises. Small enterprises are a special case. Two types of risk they face have been identified:
- the risk that they will be forced to use the euro in their relations with other enterprises while continuing to use the national currency with consumers: although it will be up to each enterprise to decide when it will switch to the euro depending on its environment, the Commission calls on all enterprises, through their representatives, to negotiate at the appropriate level in order to agree on principles which would help small businesses to make the changeover to the euro;
- lack of information plagues small enterprises: targeted information activities which take account of the very practical questions facing the managements of small enterprises should be carried out.
Lastly, providing information through the education system will be one of the most fruitful activities in the campaign to inform the general public.