Countdown To The Euro: Just three days to get it right ...

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The Independent Online
ON THURSDAY, Europe's finance ministers will meet in Brussels to set the rates for converting their 11 national currencies into euros.

This will be followed by a champagne reception, but there will be little time to celebrate for 25,000 people in the City of London. As with their counterparts in Europe's financial centres - not to mention many in New York and Tokyo - they will be hunched over their screens, acting as midwife to the euro. For it is in the financial markets that the single currency makes its debut.

The "conversion weekend"begins on Thursday, New Year's Eve, when the staff of the central and investment banks responsible for putting the new currency into practice begin the mad scramble to switch over their computer systems.

They have three days to get it right. Some will grab only snatches of rest on office floors. The markets will reopen on 4 January with every share in the 11 member countries, every government or company bond, each derivative deal and all flows of money between banks and big companies redenominated from marks, francs and lire into euros. Every City bank has put a senior manager in charge of the changeover.

Bronwyn Curtis, handling the transition for Nomura, an investment bank, explains that everybody in the financial world has prepared to the extent of doing trial runs. But, she says: "A lot of it you can't actually do until the last minute."

The conversion will utilise the exact level of all financial market prices at the end of 1998, and the exact conversion rates. Huge numbers of computer files in virtually every bank on the planet will need to be amended. To add to the difficulties, different ways of rounding numbers can be used. The novelty alone is expected to lead to lots of mistakes.

Some are better prepared than others. The Bank of England, which has published quarterly reports on preparations, is concerned about whether all UK banks have done everything they can to be ready for the crucial weekend.

Not only the financial markets will suffer a last-minute scramble. The treasury departments of all big corporations around the globe, in effect mini-banks themselves, have to make the same kind of computer adjustments.

And in euroland itself, every business from the smallest corner shop to the biggest multinational will have to start converting prices, accounts, wage bills and tax payments into euros. Although national currencies will continue to be legal tender until midway through 2002, when the new notes and coins are due to be in issue, their exchange rate will be "irrevocably fixed" in terms of euros. The citizens of the 11 members will have to become wizards at converting from one to the other.

So will Britons travelling to the euro-11 countries. Travellers will still use the familiar cash, but they will find two differences: shop and restaurant prices will often be shown in both euros and the national currency, and their credit card bills will show just euros - with a euro worth around 70p.

Ms Curtis says many in the financial markets did not for a long time expect this project to go ahead at all. "Now it's actually happening. It is very exhilarating - but also frightening."

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