Experts predict retail anarchy when euro gets physical

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The Independent Online

Financial experts are predicting an anarchic change over when the euro is physically launched in January. One of the City's leading investment banks, Schroder Salomon Smith Barney, is warning that shops may have to close because of the confusion when the existing 11 currencies are replaced by a single set of notes and coins.

And leading commentators have said that Germany may have to offer a 150m euro (£90bn) tax amnesty to ensure that all the money salted away abroad and in use in the former Soviet bloc can be repatriated.

With the European Central Bank expected to make a further statement on the single currency this week, businesses and banks are becoming concerned about potential disruption after 1 January.

SSSB has warned that the confusion caused by people being able to pay in their old currency – say Lira – but getting their change in euros, will slow down transactions and cause queues. The brokers warn that retailers may not be able to get enough change in euros . "The worst case scenario is that stores are forced to close because they have no change," says SSSB.

Meanwhile, in Germany, another problem has arisen. Germanyspellsbusiness.com, the website that advises British businesses, will today reveal that the German government may have to strike a deal with tax evaders to smooth the introduction of the new currency.

The website points out that there are more than DM280bn (150bn euros) of German notes and coins in circulation, much of which is outside Germany, as well as DM500bn held by German nationals in overseas bank accounts. Much of this money has come from untaxed income. Germans consider avoiding tax a national pastime. Estimates are that the unpaid tax could be as much as 100m euros.

Otto Solms, the shadow treasury spokesman, has suggested that the government should strike a deal with the "tax sinners", allowing them to repatriate their cash in exchange for a reduced tax rate.

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