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Positive gloss on euro preparations - EMUbusiness - Issue 29

23 October 2001, 13:47 CET


EMUbusiness - Issue 29
23 October 2001
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EMUbusiness top stories
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1. Bumps ahead, but EU economy fundamentally sound - thanks to EMU
2. Hurry up, small towns and SMEs told
3. Greece helping Balkans with euro introduction
4. Price message getting through in France
5. Some pockets of concern about Dutch public sector preparation

Publisher's Note
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It is hardly surprising to find that the European Council in Ghent put a positive gloss on the preparations for the
introduction of euro notes and coins. On the one hand, given the magnitude of the logistical exercise of this magnitude, all does appear to have gone remarkably smoothly so far - the odd glitch notwithstanding. On the other, the exercise is so unprecedented that there is no real way of knowing whether the doomsayers who predict long queues and a cash crash are right, because their researchers can only make assumptions about how consumers will behave at the beginning of this year. They cannot project forward from past experience. The European Council was probably quite rightly concerned not to put the idea in people's heads that there could be grounds for concern. It is to be hoped, however, that EU leaders' senior officials have read the research. The recent decision to create a EU-wide
crisis committee for the cash changeover suggests that they
have. It is to be hoped that the result is the same as for Y2K (though that was a very different type of animal). In other words, we shall be misled by the smoothness of the changeover into believing the predicted problems were hype, when the success was in fact the result of careful preparation.

Regards,
Marion Bywater
Publisher, EMUbusiness
mailto:mbywater@eubusiness.com

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1. Bumps ahead, but EU economy fundamentally sound - thanks to EMU
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The European Union has sound economic and fiscal fundamentals which should ensure that the impact on the economy of the aftermath of the September 11 events should be "limited and temporary", EU heads of government have concluded. The European Commission issued a report on the eve of the Summit suggesting that growth will be around 1.5% this year and that a temporary contraction of GDP cannot be rules out. It had previously been predicting that growth would be well over 2.8%. However, it believes that sound economic fundamentals, largely due to the efforts made in the context of economic and monetary union and the arrival of the euro, mean that the conditions for a recovery in 2002 exist.
Full story: http://www.eubusiness.com/item/61292


2. Hurry up, small towns and SMEs told
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Local governments (particularly smaller towns) and the smallest enterprises need to speed up their preparation for the euro, European Heads of Government agreed at their summit in Ghent on October 19. Their other main worry in the run-up to the final changeover is prices. While the European Council was confident that economic operators will discharge their responsibilities to stick to the undertakings they have given on price stability, they also promised that "any abuses will be reported." The Summit also gave its backing to lower prices for cross-border euro payments in the EU.
Full story: http://www.eubusiness.com/item/61294


3. Greece helping Balkans with euro introduction
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Greece will help supply euro notes to the Balkans where they will substitute for an estimated DM6 billion, the Governor of the Bank of Greece told a recent conference in Athens. The Bank of Greece is working with central banks in the region to make sure they have enough euro notes in advance to meet the anticipated demand. The Bundesbank is also working actively with countries of Central, Eastern and Southeastern Europe where the Deutschmark is often hoarded as a safe store of value or circulates as a parallel currency.
Full story: http://www.eubusiness.com/item/61296


4. Price message getting through in France
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The message that the French authorities will not tolerate euro-related price increases appears to be getting through, French Finance Minister, Laurent Fabius, has told a meeting of the French national euro committee. France is carrying out extensive regular checks on prices across a wide range of businesses and the latest surveys appear to indicate that compliance with the voluntary undertakings on price stability is now widespread. VAT rules have been relaxed to encouraging a faster rate of changeover to the euro by business.
Full story: http://www.eubusiness.com/item/61298


5. Some pockets of concern about Dutch public sector preparation
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Some Dutch municipalities and social services are not nearly as well prepared for the euro as they should be at this point, though payment of wages and benefits appears not to be at risk thanks to contingency plans. Overall, the Dutch public sector is well advanced and meeting its timelines according to the Tenth Report to the Dutch Parliament on progress with the changeover.
Full story: http://www.eubusiness.com/item/61301


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These articles are provided by Euro-impact. Euro-impact is a monthly newsletter on the regulatory, practical and strategic impacts of the euro for companies. Articles may be reproduced with acknowledgement of the source and Euro-impact. Every reasonable effort has been made to ensure the information is correct at the time of writing. http://www.euro-impact.com
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In the October 2001 issue of Euro-impact: Watch out for
counterfeiters; price preoccupations mount despite reassuring undertakings from business; some alarming pockets of ignorance about the euro; vending industry to be readier faster than once expected; euro shrinks the forex markets; new German entry point to TARGET; Commission & ECB disagree on low-value payment rules. The latest issue of the monthly newsletter on the impact of the euro can now be downloaded for GBP 55 + VAT.
For subscription information :
http://www.eubusiness.com/finance/euroimpact.html .
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Other stories on EUbusiness in October
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Fewer euro-denominated bonds issued in third quarter
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Issuance of euro-denominated bonds was hit dramatically by the September 11 terrorist attacks on New York and Washington, the Commission reports. A total of EUR 308 billion worth of bonds were issued during the third quarter of 2001 - a considerable decline from EUR 370 billion in the previous quarter.
Full story: http://www.eubusiness.com/item/61202


Euro distribution gathering steam across euro-zone
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Distribution of euro cash gathers steam across the euro-zone, with Greece reporting that the single currency has covered over 112,000 kilometres of land and sea.
Full story: http://www.eubusiness.com/item/61144


ECB sees "good base" for euro-zone recovery next year
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The economic fundamentals for the 12-country euro zone
remain "positive", the European Central Bank said in its October monthly bulletin, seeing "a good base for recovery in the course of the next year." Despite the economic shock of the terror attacks in the US, "there are no major imbalances in the euro area which would require a lengthy period of economic adjustment", the ECB wrote.
Full story: http://www.eubusiness.com/item/60876


Prodi sees EU rebound, reminds members of budget stability
pledges
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While the EU should see a recovery from the current economic slowdown in the second half of 2002, EU Commission President Romano Prodi on Thursday reminded member states they were still bound to respect their the pledges of the Stability and Growth Pact on fiscal probity.
Full story: http://www.eubusiness.com/item/60860


Euros already in circulation in Austria
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Euro notes and coins have turned up in general circulation in Austria, after leaks from banks and firms with access to
Europe's new currency ahead of its launch in January, a key official told AFP. The national bank has admonished at least one local bank branch after hearing of several cases of euros being used by members of the public. The public can buy packs of coins from mid-December, but neither euro notes or coins can be used for purchases until January 1 next year.
Full story: http://www.eubusiness.com/item/60863


EU calls for information network to prepare for euro changeover
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EU economy and finance ministers have called on member states to create a common network to help prepare for January 1, 2002. The network, to be created by the Commission and the ECB, would bring together a representative from each member state who will be required to report regularly on preparations for the euro transition.
Full story: http://www.eubusiness.com/item/60660


ECB urges EU candidates to catch up economically before joining euro
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European Central Bank vice president Christian Noyer has urged EU candidate countries to put more emphasis on catching up to Western economic income levels to avoid instability when joining the euro.
Full story: http://www.eubusiness.com/item/60521


A change at head of ECB would be "unwise" in next 12 months: Duisenberg
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European Central Bank President Wim Duisenberg has said that he thought it would be "unwise" if there were a change at the head of the ECB in the next 12 months.
Full story: http://www.eubusiness.com/item/60278


Euro-zone, EU economies grow 0.1 per cent in second quarter
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GDP grew by 0.1 per cent in both the euro zone and the 15
countries of the EU in the second quarter of this year, revised figures from Eurostat showed last Thursday.
Full story: http://www.eubusiness.com/item/60246


Spanish euro forgery gang held
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A gang of 20 counterfeit suspects allegedly planning to
distribute forged euro notes when the new European single
currency's banknotes and coins are put into circulation in
January were arrested in Madrid this week, police said.
Full story: http://www.eubusiness.com/item/60247


Euro-zone monetary reserves decline
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The net foreign currency reserves of the European System of
Central Banks (ESCB) declined by EUR 100 million to EUR 258.5 billion in the week to October 5, the European Central Bank said on Tuesday last week.
Full story: http://www.eubusiness.com/item/60007


Euro countdown: SMEs told to 'Get on with it!'
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A list of 40 urgent actions have been proposed by the European Commission if governments, banks, shops and businesses are to be ready for the changeover to the euro. The urgent programme is included in the latest Commission report which shows that there is still much to be done to avoid E-day chaos.
Full story: http://www.eubusiness.com/item/59990


ECB to increase number of euro banknotes needed before next year
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The ECB is to increase the total number of euro banknotes issued to banks before the beginning of next year to meet stronger-than-expected demand for low denomination notes.
Full story: http://www.eubusiness.com/item/59736

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This newsletter is produced in association with FEE, the
Federation des Experts Comptables Europeens. FEE is the
representative organisation for the accountancy profession in Europe. It is a "non profit" organisation which groups together 38 professional bodies from 26 countries, including all 15 Member States of the European Union and the 3 main member countries of EFTA.
The FEE Euro Information Service is at: http://www.euro.fee.be
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Internet Monitor
================

Euro indicators - new website eases access
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A new Eurostat web site pools the main short-term economic
indicators, including analysis of short-term economic
developments, and the evolution of the euro zone.
http://www.eubusiness.com/item/60615


Monetary Financial Institutions of the accession countries
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The European Central Bank has published its "Provisional list of Monetary Financial Institutions of the accession countries" (at end December 2000). The list is seen as an important step towards supporting the harmonisation work necessary to compile monetary aggregates that are harmonised with euro-zone definitions. Press release:
http://www.ecb.int/press/01/pr011019.htm


EMU diary
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6 November, ECOFIN Council, Brussels
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