Ireland outpaces rest of EU with smooth transition to single currency


Ireland continues to outpace other euro-zone countries in the changeover to the single currency, with the number of Irish pounds in circulation falling almost twice as fast as other national currencies.

According to the Central Bank of Ireland, the amount of pound notes and coins in circulation at the close of business on Monday was £2.6 billion (€3.3 billion). This is 12 per cent less than on the previous Friday and 30 per cent lower than at the end of December 2001.

The European Central Bank (ECB) has reported that the circulation of all national banknotes across the 12 euro-zone states fell by 18 per cent in the first week of 2002, putting Ireland well ahead in terms of the adoption of the euro.

On Monday evening, the Central Bank of Ireland said there was a total of €2.8 billion (£2.21 billion) in circulation in the Republic.

Irish Central Bank governor, Mr Maurice O'Connell, said the euro changeover was happening very smoothly.

"The public has demonstrated such a great enthusiasm for the new banknotes and coins that the vast bulk of transactions are now taking place in euro," he added.

Mr O'Connell said that the fact the transition was happening in such a natural way was a tribute to all those who had engaged in the changeover process.

"We can confidently say, only one week into the changeover, that the euro is now our money," he added yesterday.

Three out of four cash transactions in the euro zone are already conducted in euros, according to the European Commission. A week after the introduction of euro notes and coins, the Commission said the new currency's popularity was creating bottlenecks in money transport facilities.

"Consumers have been going out to spend or exchange their national currency as quickly as possible so as to have only euros in their pockets. This buoyant consumer demand for euros, coupled with the very rapid return of national currency to banks and to shops, is tending though to create bottlenecks in the availability of money transport facilities, with the priority naturally being given to distributing euros in order to avoid any disruption in trading," the Commission said in a statement. Despite the start of winter sales in many countries, queues in shops are no longer than usual and queues in banks are diminishing.

The ECB said yesterday that the cash changeover was progressing without any major hitches. Mr Eugenio Domingo Solans, a member of the ECB's executive board, said national currencies were disappearing rapidly.

"The sales season that is now under way in several countries of the euro area will further accelerate the return of national banknotes. The euro will very soon be the sole currency in citizens' pockets," he said.

The ECB said shortages of euro coins had appeared in some areas and urged consumers to spend the coins they received in their euro starter kits.

Confirmation of the successful cash changeover came amid signs that Europe's economic slowdown may be ending. A report by the Commission found that economic sentiment in the euro zone had improved in December - mainly because consumer confidence was buoyant.

The economic sentiment index rose to 98.8 from 98.6, a more optimistic reading than most economists predicted. "The developments recorded by the economic sentiment indicator in December 2001 could point to a reversal of the negative path followed since the last quarter of 2000.

"Such positive developments are mainly attributable to the favourable evolution observed in the consumer confidence component, while, in comparison, the other three components of the economic sentiment indicator - industry, construction, and retail trade - remained broadly stable," the Commission said.

The euro lost more ground against the dollar yesterday as prospects for a new-year rally evaporated. The single European currency dropped to 0.8912 dollars from 0.8934 dollars late on Monday in New York.

Sweden will probably hold a referendum next year on whether to join the European single currency, the Swedish TT news agency quoted Prime Minister Mr Goran Persson as saying yesterday.

"I think 2003 will be the year when we will vote, but don't ask me precisely when," Mr Persson said.- (Reuters)