Traders have a chuckle at the euro's expense

Two of the world's biggest banks have received a humiliating ticking-off after schoolboy pranks by currency traders went too far and enraged the European Central Bank.

Two of the world's biggest banks have received a humiliating ticking-off after schoolboy pranks by currency traders went too far and enraged the European Central Bank.

As the world's financial institutions began absorbing the news of the Danish "no" vote on Friday, dollar/euro brokers at Citibank and Bank of America decided it was time for a bit of fun. Building on the muttered suggestion that the outcome could spell the beginning of the end for the troubled euro, the traders began contemptuously asking for price quotations in the legacy currencies - the original currencies that have been replaced by the euro.

One broker asked for a quote for $10m worth of Deutsch- marks, which was duly calculated and traded. In response, the comic request came through for a quote using first Italian lire, then French francs.

It was not long before employees at the Bank of England had got to hear about the prank, and in turn passed the news on to their counterparts at the ECB. But for chairman Wim Duisenberg and his colleagues, the joke was one headache too much. The ECB has had to fend off a barrage of criticism recently, first for its failure to prevent the 20 per cent decline of the euro since 1999, and then for the abrupt attempt to intervene and rescue the situation.

In response to the snub, representatives of the ECB are understood to have contacted the banks in question and dished out a severe reprimand. One currency trader at the Bank of Tokyo Mitsubishi said: "A lot of people have been badly stung by the euro recently, and this was just letting off some steam. It's pretty fiddly working out quotes in the legacy currencies, but I think the broker made some money out of the trade."

Quoting using the legacy currencies has been virtually unheard of since the launch of the euro nearly two years ago, but there is nothing illegal about the practice. Nevertheless, the biggest challenge for the ECB in the wake of the euro's collapse has been to restore market confidence in the embattled currency. Part of that task has involved strongly urging the financial world to abandon all reference to currencies that have now been subsumed into the euro.

The joke was particularly badly timed for Citibank, which remains embroiled in another complication over the euro. Last week a report in the German press alleged that a US hedge fund client of Citibank's had bought euros on 22 September, having been tipped off that intervention was only hours away. The intervention took the form of heavy euro-buying by central banks in the US, UK and Japan, as well as by the ECB. The story is strongly denied by Citibank.