While Britain is still thinking about it (at the time of writing), the rest of Europe - or large parts of it - are taking the step to a further united Europe. The new currency, the 'Euro' will be introduced as legal tender in 12 Western European countries from 1 January, 2002. What does this mean for the people of those countries? What does it mean for travellers crossing between the Euro-countries? And, of course, what does it mean for people coming in from outside this Union?

These questions can be answered, and the whole matter is not half as complicated as it seems at first glance.

What is a Euro?

The new symbol you need to get used to is €.

This is the Greek letter Epsilon, which is, in itself, a symbol of the cradle of European civilisation. It looks like an 'E' but the two horizontal strokes are employed to give it an aura of stability, a feature which it shares with the US Dollar ($) and the pound sterling (£).

The word 'Euro' superseded the expression 'ECU' at a conference in Madrid in 1995, as it was agreed that it was panlinguistically more acceptable. (The exception here is Greek, as the word sounds like the Greek word for 'urine'.)

While Euro coins are all the same on one side, each country will have its own design on the reverse. This is not an unfamiliar phenomenon in the UK, where coins, notes and stamps are different in Scotland, Northern Ireland, Wales, the Isle of Man, the Channel Islands, etc. The coins are identical in weight and size and can be used in vending machines throught the Union, for example.

All the notes are identical throughout the member states and each note shows the architectural style typical of an historical European age. The notes have been criticised for being boring - they feature bridges in styles progressing through the ages. But, so as not to cause a fight over which bridges were included, the images depict imaginary bridges, the designs being those which won a competition held for the purpose of displaying on the notes.

The 12 countries which changed currencies on 1 January 2002 - and their fixed rates - are:

These rates have been fixed at these values since 1 January, 1999. (The Greek drachma joined a little later). Since that time, all transactions between these currencies have been converted at the rates given in the table. Also, there is no official exchange rate between other currencies (£,$) and those listed here - all conversions are carried out via the Euro.

There will be coins to the value of 1, 2, 5, 10 and 50 cents and 1 and 2 Euros, bank notes at €5, €10, €20, €50, €100, €200 and €500.

When and How Will the Changeover Take Place?

Germany

On 17 December, 2001, banks started to issue free 'Starter Packs' which contained a small amount in coins to play with and get used to.

31 December, 2001, is the last day upon which the Deutschmark could be used for payment in any form. From midnight all automatic and cash payment will - theoretically - only take place in Euro.

Experimentally, the shopkeepers in one or two towns were given the coins and notes to accustom themselves and train their staff in September/October 2001, which they viewed very favourably and were grateful for.

On 1 January, 2002, banks open for their business clients to collect till floats and petty cash for opening the next morning. (1 January is a public holiday throughout Germany.)

From 1 January to 28 February, 2002, all shops will have two tills. They are obliged to accept the last of the Deutschmarks but change must be given in Euros. The different currencies are to be kept in separate tills.

The most common form of payment in Germany is by bank transfer. In the years leading up to the changeover, the space for 'Currency' had to be filled out - there was the choice between 'DM' or 'EUR'. This will now disappear, as the only possible currency from 1 January, 2002, is the Euro. All standing orders and direct debits will take place in Euros, converted automatically, whereby invoices and bills must be in Euros anyway, so this creates no problem. Regular payments such as rent, membership fees, etc, that are carried out by standing order, will be automatically converted by the bank upon transfer. To change the resulting odd sums to a straight Euro amount would require a new contract. Landlords are speculating on this as a chance to tighten up clauses and raise the rent. Tenants are warned to watch out for this.

Banks will automatically convert all amounts in current and savings accounts. This can be updated in your own documents on your first visit to the bank after 1 January, 2002.

During 2001, most shops introduced pricing on their articles in both currencies. As the summer moved on, some even started to print the Euro values first, and in larger type than the Deutschmark values. Odd prices would appear, such as DM 2.17 for a piece of cake, which was a 'Euro' price, because it converts to a round sum in Euros.

Grand scale television advertising reminded the public to search under the cushions and in the attic for old money to be taken to the bank in time for the changeover. If the money is in a savings book or just spent - it is all the easier to start afresh on 1 January, 2002.

Germany last went through this sort of operation in 1948, when the currency reform after the total collapse of the system caused by the Second World War and the Depression in the 1930s gave them (in the Western Federal Republic of Germany, that is) the now strong Deutschmark (previously Reichsmark), and everyone was given DM 40 to start them off. After the Reunification of Germany in 1989/90, the old Ostmark, which had been the currency in the Eastern (Democratic Republic) sector, was replaced by the Deutschmark. However, wages and prices are only now slowly moving towards parity on both sides of the old borders.

Stamps with only DM values printed on them will not be valid after 30 June, 2002. Banks have been urging people to return all their foreign notes which will be obsolete once the Euro comes into force. Parking meters will show no mercy and only accept Euros from 1 January 2002. Other vending machines should accept both currencies for a while. Government loans were changed to Euro values on 20 January, 1999. Government bonds will be dealt in Deutschmarks until 31 December, 2001.

For some years now, business and banks have been issuing documents in both currencies. Companies were allowed to change over to Euro transactions at any time, and some were quicker off the mark, while others are leaving it to the last moment. This has caused enormous confusion with harassed typists getting the currency wrong, people just misunderstanding or not listening or reading properly, and doubling or halving the value. Sometimes the currency is not given on a quote, order, invoice or reminder, and only a line in small print somewhere points out that the company is using Euros. Many a time have wrongly paid bills had to be rectified.

The size of the new notes is larger than that of the Deutschmark, so the leather industry is busy making new purses and wallets and hoping for a big rush on Christmas presents.

Ireland

Every household in Ireland has been issued with the 'Euro changeover leaflet'. This has things like the dates that you can spend Punts until, the exchange rates, pictures of the coins and notes, details of the security features of the notes, etc.

Also, everyone was presented with a Euro calculator. You put an amount in, press a button and the converted amount comes out - it's a sort of dual screen thing. A Researcher from Ireland reports that:

... the Euro calculator is slightly confusing: you press the conversion button first. Then you type in the amount. As you type, it is displayed at the top in Irish Pounds and Euros. To convert another number, press clear and type again. Another confusing feature is that there is no 'Off' button.

Although most of Ireland is ready for the new currency, a report in October 2001 said that 25% of companies have not yet done any preparation for the changeover.

The Esso station on the Strand Road (Dublin) is a Euro site. This means that their prices are all in Euros and only get converted into punts at the till. The confusion this causes is a joy to behold.

Early in November 2001, during the home run to E-day, a man went into a bank in Ireland and asked for 300,000 Spanish pesetas (which is worth about EUR 1800). A blundering bank official accidentally transferred EUR 300,000 into his account. The man noticed a disclaimer saying that the bank would not be responsible for any errors made, so his immediate response was to emigrate to Spain with the money. He is not going to give it back. The bank are pursuing him, threatening legal action, but can't take the money out of his account without his permission, even though they put it in there in error.

The Government raises a tax on the issuing of cheque books and everybody has to get new cheque books when the Euro comes in so this represents another tax windfall for the Irish Government. (Technically you can claim the tax back on unused cheque books).

Who Wants to Be a Millionaire? (the popular quiz show) in Ireland will now be offering EUR 1,000,000 as the top prize, rather than IR£1,000,000. This is a reduction of 30%. On the other hand, Lotto tickets, which at present cost IR£1.50 (equivalent to EUR 1.90), will probably be increased to EUR 2, an increase of 10%, with no noticeable increase in what you win (you win nothing!).

The people who will really lose out is the small shop keepers. They have to operate two tills, one in old and one in new currency, for the 6 - 8 weeks of the changeover period. They will have to keep large amounts of money on the premises or bring it to the bank, since they can take in old currency but are not allowed to give it out in change. They will not be paid anything for this trouble.

France

The transitional period in France started in January 1999, with banks offering the choice of electronic payments (direct debits, standing orders etc), in either French Francs (FrF) or Euros (€).

At the time of writing, all shops are required to display their prices in both FrF and €, it is already possible to pay in Euros, using either an existing credit card or a Euro-cheque book.

From November 2001, shops and businesses were able to stock up on € currency, to be used as of the 1 January, 2002. From early December 2001, banks and post offices started distributing 'starter packs' of Euros for private individuals, which, once again, cannot be used until 1 January.

On 1 January, 2002, the Euro becomes the legal currency, and all cheque/credit card transactions must be in Euros. However, it is still possible to pay a shopkeeper in French francs (cash), but he must return the change in Euros.

As from 17 February, 2002, it will be impossible to pay bills in French francs. All transactions must be in Euros, and any remaining francs should be exchanged at a bank. As from 30 June, 2002, French banks and post offices will no longer be required to exchange French francs. Any remaining coins and notes must be exchanged by the Banque de France. This situation will last three years for coins, and ten for notes. After this time, the French Franc will be a thing of the past.

A great number of older electronic credit card terminals had to be changed so that they could accept both FrF and €. (The credit/debit cards themselves have not been affected).

Another problem, which has occurred on several occasions, is the problem of mistaking one currency with the other. If you try to pay a bill in FrF with a Euro-cheque book, you will end up paying 6.55957 times more than you wanted to. (The reverse is not likely to occur as most shopkeepers would pay attention that they were not being ripped off.)

The credit cards used in France are slightly different from the rest of the world: instead of signing when paying a bill, the PIN Number is typed into a machine, the only problem with this system is that if the shopkeeper makes the wrong choice of currency whilst entering the amount of the bill (one single press of the button), the wrong currency will be debited from the card, which can turn out to be expensive.

Belgium

In Belgium, petrol pumps are already working in Euros, with a printed conversion chart between BEF and EUR stuck to each pump.

Holland

Holland is following almost exactly in the footsteps of Germany. Tester sets of the new coins were available slightly earlier - on 14 December, 2001.

Who Is in Charge?

The European system of Central Banks, consisting of the Central European Bank and the national banks of each member country, is responsible for political decisions regarding the Euro. The main aim is to attain stability and a common prices policy.

Germany

The Deutsche Bundesbank will continue to operate, but as a member of the Central European Bank, which has its Head Office in Frankfurt am Main, Germany. The powers of the national bank cover: provision of cash, overseeing transactions, keeping statistics, financing of banks. It remains the official bank of the German government.

Other Interesting Facts

• The Euro divides into 100 cents.

• Tax returns for 2001 can still be filled out in DM.

• Technically, this is a currency conversion and not a reform as, on the face of it, no re- or de-valuation is taking place.

• The idea for this unified currency has been buzzing around since the first steps towards a European Union were taken in 1957.

• The total population of the 12 Euro countries is approximately 300 million.

• The cost for all countries together is 40 billion Euros - half of which will be covered by the taxpayers' money.

• Commemorative coins will be issued from January 2002 - usually in the form of a silver €10.

• Small Bureaux de Change in large towns and at border crossings will be out of a job, unless they can live on the commission from sales and purchases of $$ and ££.

• In most countries you can drop your left over coins from the soon-to-become obsolete currencies in boxes for charities. These boxes are to be found at airports and in banks.

• The Stock Exchange has been dealing solely in Euros since 4 January, 1999.

Wait and See!

• What happens if someone gets a taxi ride home at 1am - just after New Year?

• What happens if your enjoying yourself at a New Year's party but run out of money at 3am - will the bank employees all be busy running round filling up the cash points with the new money at midnight?

Public Opinion During the Run-up

Some Researchers may remember the currency conversion in Britain in 1971, when pounds, shillings and pence gave way to the decimal system of pounds and pence. Somehow we muddled through. The refusal to accept the new money was more an objection to things changing - and becoming more expensive - and the loss of the cherished but quaintly out-dated half-crown, shilling, thruppence, and the great big penny (so satisfying when clutched in the hands of a small child - you could get quite a few sweets for that!).

The Euro conversion should be even less spectacular in countries like Germany, Holland and Finland, where the currency to date is of a similar value (see table) - no re- or devaluation is involved.

In many member states, the public is wary, sceptical, critical, disgruntled at not having been asked.

Notes from France

The general mood seems to be one of apathy: ignore it and it'll go away.

Shopkeepers and businesses, however, have had a great deal of work to do: the only people to have gained from the changeover for the moment are accountants, re-organising company accounts

Small shopkeepers seem to have been the most affected because they have had to invest in expensive new credit card equipment. The transitional period when both currencies will be in circulation is likely to be hardest for these businesses, with twice the number of coins and notes, a currency exchange to be carried out for each and every transaction, and double book-keeping. Not surprisingly, the small businesses, dealing mainly with cash, are the people dreading the changeover the most.

As a footnote, most of the French are expecting businesses to use the changeover to the Euro as an excuse to increase prices. There seems to be a sort of fatalistic acceptance of this fact among the majority of the population.

Will Things Become More Expensive?

In Germany the Euro is equivalent to not quite 2 Deutschmarks, so if something now costs, say DM 10, that converts to EUR 5.11. However, instead of shopkeepers changing prices from DM 10 to EUR 5, they have started changing the DM prices to odd amounts, to be able to convert later to a straight Euro value - in this case that could even mean a price of DM 10.07 appearing on the article, to be converted later and rounded up to EUR 5,20.

This is only speculation, and a 'worst case' scenario from the customer's point of view. Only time will show if the conversion will really lead to an unnecessary rise in the cost of living.

However, armed with the rights granted by a recently passed law in Germany, customers have the power to contest marked prices and haggle with shopkeepers if they feel they deserve a discount.

Similar Events in Recent History

• Currency reform in Germany was on 21 June, 1948. The Deutschmark was introduced in place of the Reichsmark and everyone was given DM 40.00 to start them off.

• After the reunification of Germany in 1989, the Ostmark was replaced by the Deutschmark in the Eastern German States.

• A new set of more forgery-proof bank notes was introduced in Germany in 1994.

• Conversion in England was on 15 February, 1971.

• In France in 1960, the currency was reformed, in that a franc became a centime, and the basic currency was then 100 times what it had been to date. Italy and Spain still enjoy a very small unit of currency, causing prices for everyday objects to regularly be in the 4 and 5-figure bracket!

Acknowledgements

The idea for this entry and most of the information was obtained from the German weekly news magazine Stern and from this Researcher's hairdresser, who provided the magazine and explained what the procedure was for small business owners. Thanks also go to the Researcher's friends at the bank, who explained their side of the story.