The Euro goes live: Conversion a success, say City banks
Now it is time for those on the trading floor to test their mettle against a new environment. Currency abbreviations that they have been using for decades to express rapid-fire trading positions have changed overnight.
And while Britain sticks to pounds and pence, for now, even the Bank of England is gearing up for the new currency. It has printed more than pounds 100m of euro bank notes, although they are specimens only and will be destroyed.
Nick Donnelly, the director of the euro conversion project at Barclay's Capital, based at Canary Wharf, said: "Traders are pretty quick-witted people, but this is a complete paradigm shift."
The men who do the deals, and they are nearly all men, are used to quoting currencies against sterling. Now the euro has become the main currency to quote against. If they falter for a split second and misquote a deal, millions of pounds could be lost.
Mitch Shivers, the global head of EMU preparations at the US bank, Merrill Lynch, found himself getting quite emotional when the 11 currencies joining monetary union converted to the euro on New Year's Eve. "There was a sense of history taking place as the clock struck twelve in the various EMU participating nations," he said.
As far as business is concerned, those 11 currencies are now finished. Ordinary people will still use guilders and francs until the euro notes and coins come into circulation in three years. But anyone setting up a business or speculating on the currency markets will make their deals in euros.
A spokesman for NatWest Bank said: "Today will be the acid test but we believe everything will go swimmingly."
The opening of the Tokyo stock market in the early hours saw the first significant trades. But it was not until the London futures market opened at 7.30am that the fun really started. The City remains one of the most important financial centres in the world, with 500 international banks based there. Almost a third of the world's foreign exchange deals are made in London, six times more than in Germany's financial capital, Frankfurt.
The euro will also affect share dealing. All the stock markets in the 11 European countries joining the single currency will from now on list all company share prices in euros.
Exchange rates for the 11 currencies were not fixed until Thursday, so London institutions spent the first days of 1999 redenominating bonds and converting currency balances to euros. The City hummed with the efforts of thousands of financial workers getting their companies and computers ready. By yesterday, confident statements began to emerge from the financial labyrinth.
"We're very pleased," said Keith Hamilton of Dresdner Kleinwort Benson investment bank. "It's been a long, long weekend; lots of bleary-eyed people around, but we're ready."
David Clementi, deputy governor of the Bank of England, said: "All this work has been as, or more, complicated in London than in the euro area itself because of the scale of international currency and securities business conducted by major firms active here."
The conversion has been one of the largest logistical operations ever undertaken in the London market, involving an estimated 30,000 staff.
Some analysts warned that sterling could be in for a bumpy ride during this week, but predicted that currency fluctuations could bed down and lead to a weaker pound. That would bring relief to British exporters whose goods would be easier to sell, but would be bad news for holiday-makers who would get less abroad for their sterling.
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