Business turns to pleasure as euro is greeted

Hundreds of men in dark suits, reeking of Guerlain eau-decologne - the creme de la creme of Paris business and finance - gathered yesterday in the steel and glass headquarters of Paribas bank to celebrate the euro with a daylong symposium. As the group broke up for lunch, a noisy street band dressed in royal blue jumpsuits decorated with the golden stars of Europe made its way in the rain from the Paris stock exchange to the glass-roofed passageway through the Paribas building. Stock exchanges were registering gains across Europe, and the euro had already risen nearly 2 per cent against the dollar. It was as if the balloons and hired carnival stilt-walkers, drummers and dancers were needed to express the self-satisfaction of the men watching from the windows above, clutching their champagne glasses.

Because Germany has just taken over the revolving European presidency, the 1,000-strong audience watched a message videotaped for them by the German Chancellor, Mr Gerhard Schroder.

"It was only possible to introduce the euro thanks to Franco-German friendship," he said. "Its future success will also depend on the continuation of these good Franco-German relations."

Mr Schroder said twice that his "emotional attachment" to the euro was not "of a kind to set me dancing in the street". Nor is Mr Jean-Claude Trichet, France's strait-laced central bank governor, given to effusiveness. Yet Mr Trichet was positively euro-phoric when he arrived to greet the bankers and businessmen.

Since the previous midnight, euro payments systems had come on line, one by one, all successfully. "It's very propitious," Mr Trichet bubbled.

The euro "has inherited the confidence, solidity and stability of the european currencies that constitute it," Mr Trichet said. "The French, who had confidence in the franc, are transferring that same confidence to the euro."

Asked whether the euro will become a reserve currency, Mr Trichet repeated that the new currency "embodies the heritage of a certain number of European currencies" which were already international.

Denmark, Sweden and Greece, but especially Britain, were the ghosts at Mr Trichet's banquet. "Of course, we all wish these four currencies to join the euro zone as quickly as possible," he said.

Le Monde's editorial, entitled `Monsieur Blair, the euro is waiting for you', went further. "Europe and its young currency need you," the newspaper pleaded. "The euro needs . . . what your culture can bring. Your pragmatism, your reticence towards bureaucracy . . . are indispensable for the stability and solidity of the euro."

French financial journalists and bankers participating in the symposium seemed almost giddy that the euro had met its deadline. Half of all French people had predicted the currency would be delayed, Mr Gilles Bridier of La Tribune noted. "Most people thought we would not see it in this century," Mr Andre Levy-Lang, the chairman of the executive board of Parisbas said.

Mr Jean-Martin Folz, of Peugeot Citroen, said all the group's cars would be priced in both national currencies and euros from this month. Huge differences in taxation within the euro zone accounted for disparities in car prices, he added. Luxembourg charges the lowest taxes (15 per cent over purchase price) while Finland charges the highest - an additional 123 per cent.

The insurance market was not nearly as globalised as cars, Mr Diethart Breipohl of the German insurer Allianz AG said. Allianz operates through local companies it has bought up throughout the EU. Herr Breipohl said he did not expect that strategy to change with monetary union, but he anticipated that the company's investment portfolio would become more international because the risk of exchange rates has been eliminated.

In a live two-way discussion with a market expert in Tokyo, the Paris audience was told that Japan would shift much of its dollar investments to euros. From Hong Kong, another analyst said that China has 62 per cent of its reserves in dollars, but now intends to reduce that to 40 per cent, with 40 per cent going into euros and 20 per cent remaining in yen.

A banker in Singapore said the euro had inspired ASEAN nations to work towards their own single currency, but he predicted it would take at least 20 years.

Managers from major French food and clothing distributors said studies showed older and poor people would have the most difficulty in adjusting to the euro. Consumers feared retailers would take advantage of the switch to raise prices, but in fact the opposite would happen.