Launch of the Euro: All weekend leave will be cancelled

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The Independent Online
THE TRADITIONAL revelry of New Year's Eve was cancelled yesterday for tens of thousands of City staff as the big financial institutions mobilised to ensure that they are up and running when dealing starts in the euro on Monday.

With little more than 75 hours from the moment that exchange rates were fixed on New Year's Eve for the 11 currencies being subsumed into the euro to the opening of Tokyo's foreign exchange market in the early hours of Monday, exhaustive plans have been made to ensure everything goes without a hitch.

During that time $2,100bn (pounds 1,312bn) of government securities and worldwide bank deposits worth $460bn will have to be converted from the "legacy" currencies - German marks, French francs, Italian lire and so on - to euros.

The total private sector bill for the changeover has been put at $51bn.

The conversion is relatively simple. Colin Stringer, head of Euro services at Cap Gemini, the IT consulting firm, says: "It is like changing from Fahrenheit to Celsius, the temperature does not change."

The difficulty arises from the sheer scale of the operation, and the fact that no one can afford for it to go wrong.

The US investment bank Merrill Lynch, which will use 900 staff around the clock in London and New York this weekend, estimates that no fewer than 5000 "milestones" will have to be passed before it can be satisfied that the bank can trade euros without a hitch.

"It will affect client statements, client balances, trading positions, cash balances and historical data," explains Mitch Chivers, Merrill Lynch's global euro co-ordinator. "There is the considerable task of redenominating debt."

The changeover will affect almost every market, even those in currencies that are not directly involved in the single currency. Sterling, for instance, will no longer be quoted against marks but against euros.

As well as currencies and government bonds, share prices will have to be repriced in euros, even though, legally, clients will still be able to settle in national currencies if they wish.

Staff at banks in Tokyo and New York will also be in their offices this weekend, although London, because of its unique position as the centre of international foreign exchange and bond trading, will be where most activity is concentrated.

Nor is it just computer systems staff who will miss the New Year festivities.

Traders, settlement and back office staff will all have to be in to ensure that they are ready, while in many cases top management will be on hand to troubleshoot and encourage the troops.

To ensure that key staff are able to get to work the Corporation of London is paying London Underground to keep the Waterloo and City line open on New Year's Day, while the Rotherhithe tunnel, an important link for those working in Canary Wharf, will be kept open for the weekend. There will also be 3,500 free parking spaces in the City.

Hotel rooms across London have been block-booked months ahead to provide accommodation. Minibuses for office staff have been laid on.

Firms are also providing round-the-clock catering, while pubs, restaurants and coffee bars in the City and Canary Wharf, which would normally be closed over the Bank Holiday weekend, will be open.

The Bank of England has won plaudits from institutions for the way it has managed the preparations, an irony given the far from Europhile views of Eddie George, the Governor.

Mr Stringer says that while the big firms have been planning for this weekend for 18 months or more and are justifiably confident they have done all they can, the worry is about what he calls the "lemmiches", a cross between a lemming and an ostrich. "A number of smaller players are in a state of denial about EMU. For them," he says, "it is already too late."

Most experts are discounting the meltdown scenario, particularly as they expect, for a week at least, trading to be tentative while investors hang back to be sure that the glitches have definitely been ironed out before risking their cash.

What the big houses are seeking to avoid is payments going astray or settlement systems not being able to cope. Most of all, they fear that their computer people will still be running the checks when the clients start to ring on the murky dawn of 4 January.