Consumers given time to adjust to idea of new order

 

So what does it all mean to the public? The decision to leave the issuing of notes and coins until 2002 means that in some ways the transition to the single currency should be less traumatic than decimalisation, with consumers being given plenty of time to get used to the idea of this new beast, the euro.

But, from day one, it will increasingly become a feature of all our transactions, whether travelling abroad or not. Bank statements will record our euro balances - and overdrafts - and shops, more and more often, will price goods in both pounds and the new currency to familiarise the public with their relative values.

The effects will be both direct, in terms of the cost of exchanging cash, and indirect, in terms of knock-on benefits for the economy.

First and foremost, it will cost less to change money into the currencies of any of the 11 euro zone countries. Although the banks will continue to charge a commission for the handling of the transaction, they can no longer charge a foreign exchange margin reflecting the difference between "buy" and "sell" rates for the 11 currencies.

Consumers will thus make considerable savings, although the financial institutions have increased the commission component of their charges to make up for loss of profits from exchange transactions. So it will be worth shopping around.

Allied Irish Banks (AIB), for example, used to charge £2.71 to change £50, and will now charge £1.75, a saving of over a third on the transaction. With larger amounts, the difference will be far smaller

On the same transaction, Bank of Ireland's old and new charges will be £2.25 and £1.13 respectively, and Educational Building Society's £2.66 and £2. Changing £500 in the Ulster Bank will cost £3.25, while in the Trustee Savings Bank and First Active, the cost will be £5.

Price-conscious consumers who don't want to pay anything for the transaction will be able to avail of free exchange of euro zone currencies in the Central Bank in Dame Street. Those travelling abroad will also benefit from reduced costs on non-cash transactions. AIB and Bank of Ireland have both dropped their credit card charges for transactions in the euro zone countries.

And any euro payments into bank accounts will be converted free of charge into pounds, making it unlikely that ordinary consumers will feel the need for separate euro accounts.

Visa, the Thomas Cook Group and American Express are among the companies that are offering traveller's cheques denominated in euros from yesterday. Officials said this option should appeal to people who are travelling to several euro zone countries and want to carry only one set of cheques.

Consumers who want to use the new currency will get some guidance from logos declaring "We accept payment in euros" in one of eight languages - an initiative of the European Commission. Shopkeepers who display the logo have agreed to abide by six principles for dual pricing.

For example, they will not charge a fee if a consumer decides to pay in euros and will follow rules for rounding out conversions into euros.

In the money markets, the result has already been substantial cuts in interest rates to prevailing European levels. Mortgages are cheaper, but savers get less back on their money.

Less directly, the euro's advocates argue, the single currency should lower interest and exchange costs to industry and free cash from exchange-hedging operations, significantly boosting trade. This would mean both more jobs and economic growth.

The preparations for the launch of euro coins and notes in 2002 will be a mammoth operation. Some 50 billion coins and 13 billion banknotes must be pressed, printed, stored and kept from public view, lest counterfeiters learn all their security features.

The coins alone will weigh some 220,000 tonnes, equivalent to 20,000 lorry loads. In Ireland's case, 1.3 billion coins or 5,700 tonnes of coinage will be involved.

Come the day of the launch, there will be seven banknotes, with values of five, 10, 20, 50, 100, 200 and 500 euros. The coins will come in eight sizes, with values of one, two, five, 10, 20 and 50 euro cents, and one and two euros.

But there will be tens of different designs, after it was decided to let individual nations decide what to put on one side of each coin. The common face of all coins was designed by a Belgian mint employee, Mr Luc Luycx.

Ireland opted for just one design - a harp and the word "Eire".