I 've been away for a few weeks, sunning myself in Gran Canaria (update to photograph album shortly); now I'm back and preparing for Christmas. There are many important things happening in the world at present, but none I think more immensely important than the change of currency which is about to occur across most of the member nations of the European Union, one of the three major economic blocs in the world (the others being the United States and Japan and the countries which depend largely upon them in economic terms). My comment page this week is devoted entirely to this matter.
Launch of the Euro ( ) - 1 January 2002
Since 1 January 1999, the has been the official currency of 12 of the 15 member states of the European Union. The 'legacy' currencies (i.e. the existing national currencies) have since that date been merely 'sub-units' of the , although they have remained in circulation pending the full introduction of the new currency.
On 1 January 2002, the in physical form will be launched and during the two months which follow, the 'legacy' currencies will be withdrawn across the 12-nation uro-zone. Anyone who lives in, or has visited, any of these twelve countries over the past three years may have noticed that all invoices and receipts (in hotels, shops and most other outlets) have had totals in both the existing national currency and the . For some years, there has been a fixed rate between each of the twelve 'legacy' currencies and the , so it has been possible to calculate fairly accurately all prices in both currencies in each of the uro-zone nations. For the record, the table below gives the reference rate for each 'legacy' currency against the :
Close observers of the table will have noticed that the rates against the for the 'legacy' currencies of Belgium and Luxemburg are the same - these two countries have operated a customs and monetary union since 1921, under a treaty known as the Belgium-Luxemburg Economic Union (BLEU).
The three European Union member states which have not adopted the are Denmark, Sweden and the United Kingdom.
The scale of the change which will occur on 1 January 2002 is difficult to exaggerate and the logistics of the changeover period, whilst the old currencies are being gathered in and replaced by the new unified currency, will put enormous strains on those responsible for ensuring the changeover is as smooth and troublefree as years of planning can make it. On New Year's Day, 306 million Europeans will have to come to terms with 14.25 billion new banknotes and 50 billion new coins - 160 to 170 for every uro-zone inhabitant. During the changeover period there will be vastly more currency in circulation than normal, because change must be given in the new currency. The risks of crime are likely to be much increased for a [brief - we hope] time.
I strongly suspect that in six months or so time, the new currency will be so ubiquitous that we will look back and wonder what all the fuss was about (I will be intrigued to observe if this comment looks ridiculous should it not go as smoothly as I expect it will, after the no doubt inevitable teething-problems of the early days). None of this is of course to minimise the complexity of running a pan-European economy using one set of interest rates across different national economies which have hitherto been managed as distinct entities for economic planning purposes.
How long will it be before the United Kingdom feels sanguine enough to contemplate adopting the as its own currency? This article is intended neither to be taken as pro- nor anti- the adoption of the by the United Kingdom, simply to mark what is undoubtedly one of the most dramatic changes ever in the economic framework of one of the wealthiest parts of the world economy, whatever one thinks is the wisdom of the change. However, anyone who has read some of my previous comment pages will be in little doubt that my views on the matter are not neutral.