Copyright 2001, Traffic World Magazine
After years of anticipation and a monumental logistics effort, the new European currency, the euro, has reached consumers' pockets. It became legal tender on New Year's Day in 12 of the 15 member states of the European Union.
ATMs in Paris were suddenly distributing euro bank notes, which one Parisian waiter described as "monopoly money" compared to his familiar French francs.
Even more confusing, most shoppers were paying for goods in francs and receiving change in euros, part of a planned, gradual changeover from the old national currency to the new European one. According to the experts, if all goes well, this process will lead to nearly 70 percent of all transactions being conducted in euros by mid-January.
Consumers will be allowed to spend their old national currency until March 1, when the end finally will arrive for the Austrian schilling, Belgian franc, Deutsche mark, Dutch guilder, Finnish marrka, French franc, Greek drachma, Irish punt, Italian lira, Luxembourg franc, Portuguese escudo and Spanish peseta.
"We are ready, more or less. I'm sure it won't go perfectly, and there will be a problem or two, but to my knowledge it seems everything is ready for Jan. 1," Hans von Dewall, vice president of corporate communications at German logistic giant Schenker AG said shortly before New Year's.
He was speaking about the public rollout, not about Schenker, which, like most European businesses, has been "euro ready" for more than two years.
The countries that will share the new currency are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. Only Britain, Denmark and Sweden, among members of the European Union, will miss out on the fun, for now at least. All three are expected to convert to the euro in the future.
Distributing the initial $650 billion worth of euros, which the European Union estimated was needed to launch the currency, has been called one of the largest peacetime logistics projects ever. Starting in September, when the effort to pre-position euro bank notes and coins in banks across Europe began, some 150,000 truckloads of currency were transported. The cargo included 14.25 billion bank notes, and 50 billion coins weighing 240,000 tons. By early December the European Commission, which has directed the project from the start, reported things were ready for the final leg of the operation to distribute euros to every store in the 12 European countries.
During a three-day period, between Christmas and New Year's, a fleet of armored trucks and courier vans distributed the money to several million stores. In the Netherlands, one of the smaller EU nations, the Treasury turned over the job of distributing coins to TNT Post Group. According to Hanne Kluck, a spokeswoman for TPG, the company used 50 heavy trucks and 1,000 vans to distribute the coins to some 230,000 shops. The coins were ordered by shopkeepers using a special website, and the government picked up the freight bill, which will include the cost of the ongoing effort to return old Dutch guilders from the stores to the Treasury to be melted down.
"Our drivers received special training and each one will have a security guard seated next to him in the van," Kluck said. "It's a unique project, and we have had good cooperation with both the police and the security people."
In France, by contrast, the government kept plans for distribution secret, but even the pre-positioning effort was enormous. Money had to be distributed to 21,500 banks, 17,000 post offices and 37,000 ATMs around the country. According to EU officials, not all of the more than one million ATMs in the 12 countries will have euros to distribute on Jan. 1, but the job will be completed by March 1.
Besides the physical distribution, the EU Commission had to run a massive publicity campaign to prepare Europeans for "E-Day." Hundreds of thousands of television ads were aired and tens of millions of brochures and pamphlets were produced and distributed widely. But according to polls in various countries, it appears the publicity campaign was not completely successful. In some countries, the majority of people were not sure how much the euro was worth compared to their national currency.
In Greece, where people were asked how much a 10,000 drachma bank note was worth in euros, the responses varied from around 20 euros to as high as 4,000. The right answer was 29.35 euros. In Germany, where one euro equals about two marks, the conversion is easier. The French, however, will have to multiply the euro price of goods by 6.56 to figure out how much they cost in francs and in Austria, they will have to multiply by 13.76. For American tourists spending dollars, the conversion is fairly simple. The prices in euros will be about 10 percent less in dollars at the current exchange rate of one euro equaling 89 cents.
In an effort to familiarize people with the new currency, hundreds of millions of so-called starter kits were produced, and went on sale the week before Christmas. In Germany alone, 53.5 million kits were sold on the first day. The kits included about $10 worth of euro coins and were intended to give people some pocket money to get started with on January 1, but news reports indicate many plan to keep them as souvenirs.
The cost of the euro introduction has not been totaled up yet, and may never be publicly released, but economists at the French bank, BNP Paribas, estimated the price tag would be about $160 billion. Proponents say it will be money well spent. They expect the euro to increase cross-border purchases since there will be no need to exchange currencies within the 12 countries.
This will also lead to greater transparency and competitive pricing, which will eventually lower the cost of most goods, they say. And according to the EU Commission president, Romano Prodi, the euro has a political role as well in helping unify Europe.
"The introduction of the euro, which will come into circulation in a few days, will be the most significant and, all and all, most tangible step towards European integration," he said late last month. "The euro proves how strong political will can be if it can be translated into real action."
But there will inevitably be a glitch or two along the way. In France, bank workers seeking higher wages to compensate for the extra work required to introduce the euro threatened to strike Jan. 2.