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January 1, 2002 date immutable- EMUbusiness - Issue 14

EMUbusiness - Issue 14
27 February 2001
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EMUbusiness top stories
1. January 1, 2002 date for switching to the euro is immutable
2. Usage of euro still low
3. Italy launches new website for business
4. More and more banks to convert accounts early
5. City not suffering by being outside euro area

Publisher's Note
Survey after survey tells the same tale: business is underestimating the time it takes to prepare for the euro. Large businesses do on the whole appear to have got the message, though there are still a few horror stories coming out of the United States about companies not realise the extent of the changes they will have to make to their
IT systems. But certainly small and medium-sized businesses are major concern. The smallest firms will probably be able to muddle through with a large number of operations which should be automated carried out manually. The real concern are those in the middle - too small to get by on an ad hoc basis and too small to have devoted
adequate resources in time to a project which even for small businesses needs three months' preparation. European Commissioner Pedro Solbes Mira is sufficiently concerned that he has just sent out letter to 50,000 information multipliers urging them to help him raise awareness. It is to be hoped he is heeded.

Marion Bywater
Publisher, EMUbusiness

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1. January 1, 2002 date for switching to the euro is immutable
Some senior company managers are unconvinced of the need to invest in preparation for the euro because they think that the final date for the operational introduction of the euro will be delayed. It will not. The European Accountants' Federation has produced a paper providing managers responsible for the practical changeover with arguments to use with their senior management to convince them that the January 1, 2002, date for the disappearance of national currency units in book form is immutable. It has also written to accounting and auditing bodies reminding them of their responsibility to ensure that companies with which they deal are preparing adequately for the euro.
Full story:

2. Usage of euro still low
Low usage of the euro is confirmed in the latest quarterly note from the European Commission. The use of the euro in relations with administrations is actually a little lower than it was. On average, its use is down slightly in terms of value for VAT returns (from 6.1% to 5.7%) but static for customs declarations at around 7%. Domestic payments made by firms in euro are up by nearly six points in value terms, on the other hand (from 24% to 30%), and three points in terms of volume (from 3% to 5.8%).
Full story:

3. Italy launches new website for business
Italy will shortly launch a new euro website for business to be found at . Currently password-protected, it is due to become accessible to all within the next few days. The site is a joint venture of the Italian Treasury and Sviluppo Italia, Italy's industrial and business development agency.
Full story:

4. More and more banks to convert accounts early
The European Commission now expects an early switchover of bank accounts and cheques, transfer forms and credit cards to the euro in the third quarter of this year in most euro-area countries. It has been taking a pro-active approach in spreading the word on the desirability of early changeover, even though it has no direct responsibilities in this area, and feels its stance has been vindicated by results.
Full story:

5. City not suffering by being outside euro area
London has fully maintained its market share despite being outside the euro area and there is no reason why it should not continue to be a leading gateway to the euro, Bank of England Deputy Governor, David Clementi, told an audience in Japan this month. For example the U.K. now accounts for more cross-border payment flows in euro than any other country, except for Germany. The CHAPS euro system has
recently accounted for 19% by value of cross-border payment flows in the TARGET real-time gross settlement system for euro transactions in the EU.
Full story:

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.
Coming up in euro-impact
Best practice in training and internal communications; Lessons of the Loughrea project for converting small businesses; French adopt charter on helping smallest businesses; vending industry seeks compensations for cost of changeover to the euro; Belgians will move date of sales to avoid them coinciding with introduction of notes and
coins. All these items will be covered in the next issue of euro-impact. For subscription information .

Other stories on EUbusiness in February

'Get ready now for euro, Commission tells SMEs
Only one quarter of small and medium-sized businesses have already made their preparations for the euro, according to the latest FLASH Eurobarometer survey for the European Commission. The majority of SMEs are planning to make the switch at the last possible moment. Economic Affairs Commissioner Pedro Solbes and Enterprise Commissioner Erkki Liikanen are now urging all firms in the euro area, including very small ones, to take steps to be able to work
exclusively in euros from 1 January 2002.
Full story:

Fears of euro cash chaos 'not exaggerated' - EUbusiness online debate
Fears of chaos at the tills in the first days of the euro cash changeover - with exploding queue sizes, loss of revenue for retailers, and anti-social behaviour as customers vent their rage - are 'not exaggerated', according to an online debate organised by EUbusiness on 21 February. Participants, including representatives of the European Commission, SMEs, euro consultants and experts, heard how difficulties such as not enough notes and coins in circulation and a lack of preparation by many companies, particularly smaller independent retailers, could create very real problems in the crucial euro transition period beginning on 1 January 2002.

Thanks to all the participants, especially to Benjamin Angel, of the European Commission, Patrick O'Beirne, who moderated the proceedings, and an excellent panel, for a lively and enlightening discussion.
Full story:
Workshop transcript:
Euro experts:
Background information:

1 January 2002: Queue rage in the euro-zone?
A recent report on the risks of the euro cash changeover that predicts exploding queue sizes, loss of revenue, and anti-social behaviour in January 2002 has created quite a stir in euro-informed circles. Gerard Westerhof, the euro project manager of the Dutch railways, argues that present thinking, that consumers can pay in national currency in the first weeks of 2002, is fundamentally flawed. This assumption, which has been an integral part of national
planning across the eurozone for the last couple of years, turns out to fail hopelessly when subjected to simulation analysis. (by Patrick O'Beirne)
Full story:

Euro-zone has EUR 12.6 billion trade surplus in 2000
Euro-zone trade with the rest of the world in December 2000 showed a EUR 0.7 billion euro surplus, compared with EUR +3.2 billion in December 1999. The annual tally for euro-zone trade recorded a surplus of EUR 12.6 billion for 2000, compared with a EUR 51.2 billion rise in 1999.
Full story:

Industrial producer prices down 0.4% in euro-zone
The euro-zone industrial producer price index fell by 0.4% in December 2000 compared with the previous month, according to Eurostat, the EU's statistical office. The figure had shown a 0.1% rise in November.
Full story:

'Wise Men' urge fast track for European securities markets
A study by the so-called 'Group of Wise Men' financiers, chaired by former Belgian central banker Alexandre Lamfalussy, proposes the creation of two new bodies for regulating the EU securities markets, as part of a drive to speed up moves towards a fully integrated European financial services and capital market able to compete with
the US and Japan in a rapidly-changing high-tech world. Improvements to financial regulation are vital if money is not to go elsewhere and the EU could fail to reap the benefits of the euro.
Full story:

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:

Internet Monitor

Use of the euro quarterly note
The February issue of this synthesis of studies on the development of the use of the euro by the customers, the businesses and the public administrations in the euro-zone, with a regular survey by the Commission of European banks on the share of the euro in the payments and bank accounts, is at:

New premises for the ECB
The European Central Bank (ECB) has identified the site of the Frankfurter Grossmarkthalle as a potential location for its future permanent headquarters. Press release:

ECB assessment of securities settlement systems
On 20 February, the Governing Council of the European Central Bank updated the operational conditions for the use of eligible securities settlement systems in the settlement of collateral for Eurosystem credit operations. Press release:

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