The introduction of euro notes and coins almost entirely erases the boundaries between the twelve member states switching over. Legacy currencies will vanish by 28 February – or 28 January in Holland. As all European employees will now be paid in euros, consumers will increasingly think as Europeans, and when the legacy currencies disappear even local businesses throughout Europe will be aware of pan-continental opportunities and threats.
Eurozone companies can source components and raw materials from anywhere in Euroland without worrying about forex exposure. Companies will look for suppliers that have the ability to enter into big, cheap pan-European supply deals. Suppliers will look for opportunities to freeze out small, local competition. Eurozone corporations will want to hedge their sterling exposure by paying UK suppliers in euros. Some UK retailers will accept eurocash; some won’t. But there are staff training implications. And fraud. And money laundering. Nobody is yet very familiar with what a euro banknote looks like.
Sweden isn’t in the euro. Greece is. Switzerland isn’t – which surprised a US consultant we spoke to last year. Ireland is the only country where prices will appear to rise – from I#10 to EUR12.70, for example. Customers will not have to use a “national” bank; any one in the eurozone will do since everything – cash, bills, bank statements – will be in euros. Thousands of companies still have their share capital and loan stock denominated in legacy currencies – but new issues will have to be in euros.
Germany may not be able to keep its budget within the Maastricht limits. And nobody knows what will happen if it can’t. Gordon Brown’s five tests for euro entry are heavily political. But not as political as Blair’s thirst for EMU. The Bank of England has been the European Union’s leading authority on preparations for the introduction of the euro. The Sun may have more influence on the UK electorate.
All that remains is to wish you a happy new year. And a prosperous one – whatever currency it’s in.
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