Pressure grows for decision on EU currency

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The Independent Online
Officials planning for the introduction of a single European Union currency are frustrated by the lack of political decisions on the most basic, practical problems involved. They say that if a single currency is to be brought in, as planned, by the end of the century the political debate must move on rapidly. Hence the determination of the French government to make the minutiae of the single currency a key item on the agenda of the Cannes summit in June.

European Commission officials also see a need to prepare the public for the deep psychological shock of the new currency. They envisage one of the most ambitious campaigns in the history of public education. But until the politicians make a few fundamental decisions, nothing can begin.

Officials are looking to the Cannes summit to move forward on the:

distribution, printing and minting of the new currency

logistics of phasing in the money

legal changes needed to underpin the changeover.

In particular, Brussels is calling for urgent decisions on the design of the notes and coins. Apart from the final political decisions on which countries will take part (not due until 1997), officials recognise that the design and name of the currency is the most sensitive issue they face. It brings the public face to face with the realities of losing their familiar pounds, francs, marks and guilders.

A confidential report by the national mint directors, presented to the Commission, says decisions are already long overdue. The report warns that the mints do not now have the design and manufacturing capacity to produce enough new coins by 1997, the earliest date at which EU countries can choose to merge their currencies. If decisions are not taken urgently, the new money may not be available by 1999, the final deadline for the start of full monetary union.

Already shopkeepers, bankers, trading associations and vending machine operators all over Europe are beginning to press Brussels for information. Shopkeepers want to know if they should change their tills. Vending machine operators want to know the size of coins. Banks want to know when to re- programme computers. And all the time a sense of public fear and confusion is beginning to build.

Under the terms of the Maastricht treaty, the third and final stage of monetary union should begin with the irreversible locking of exchange rates by each country involved. A single currency would follow shortly afterwards.

One option mooted within the Commission to speed production of money is to increase the capacity of the EU mints. Alternatively the minting could be put out to tender, in a non-EU country, such as Korea or Canada which have experience of minting.

The European Commission is also testing new electric "chips" - an advanced form of electronic banking which could reduce the need for traditional money altogether. This would have the advantage of reducing public confusion during the change-over as all currency conversion would be automatically carried out by bank computers.

Design options for the new monetary system are three-fold, say Commission monetary union experts. Each country could maintain different notes and coins, although their values would be synchronised. Alternatively, one side of the currency could bear a European symbol and the other a national symbol, such as the monarch's head. Finally, the currency could be uniform throughout member states, perhaps with symbols of all participating nations

The Commission experts favour the last option, because it would be less costly and more secure. A uniform design - especially for notes - would reduce the chances of forgery. Furthermore, if each country maintained a different design, problems would arise of "repatriating" the notes which circulate across boundaries.

Shoppers in Northumberland, for example, might find themselves buying their baked beans with notes bearing the head of Bismarck or Richelieu while pictures of the Queen would be circulating on notes in the bars of Marseilles.

According to Commission officials the most likely denomination of the new currency will be sequences of two, five, 10 and 50, as many European currencies already break down their coinage into such sizes, including Britain. However, there remains much room for debate about what the name of the currency should be. Although it is generally assumed that it will be called the Ecu (European Currency Unit), the Germans object, pointing out that the Maastricht treaty did not state what the currency should be called.

The European Commission is expected to recommend a short time lag between the locking of exchange rates and the introduction of the new money to prevent public confusion and maintain momentum. One option now favoured is to allow the banks to use the new currency as a first step for purely internal transactions and to issue it to the public later.