It certainly arrived with a bang. No-one in Europe could have missed the debut of the euro on January 1 1999. But since its birth it has been a quiet little thing. So was its arrival really the momentous change everyone was telling us it would be?
Yes. It was.
There have been currencies before which circulated beyond their national boundaries - the US dollar is a good example today - but never have eleven countries voluntarily given up not just their own currencies but a lot of their economic freedom as well. From now on, key parts of economic policy for the eleven countries in the euro zone will be made by the European central bank and its unelected Governing Council. Already, the Council has fixed interest rates in the eurozone at 3% - lower than the USA and the UK - and we are told they will stay there.
One reason the change has seemed less than momentous is because the old currencies still seem to be with us. We still pay in pesetas in Spain, carry francs in France, and spend marks in Germany. But not for long. Technically all these currencies are just euro (the plural of euro is euro, not euros) with a different name - for example there are exactly 6.55957 French francs to the euro and as the euro goes up and down on the international currency markets so does the franc.
In the eleven countries in the euro zone prices will slowly be converted to euro. Already some people are paid in euro; newspapers, hotels, and shops are beginning to show prices in euro as well as in national currencies. And by the end of 2001 al prices will be shown in euro. Then the changeover begins in earnest and for the next six months every mark, franc, lira, punt and so on will be changed into crisp and shiny euro notes and coins. The shops will do a lot of it - you will pay in your own currency and get change in euro. And strict rules mean that you will not (or should not anyway) be cheated over the change.
One of the big advantages for consumers everywhere is what is called 'price transparency'. This is just a fancy term for the fact that when eleven countries use the same money it will be easier to see if goods are cheaper in one country than another. It will not be completely obvious because there will still be different local taxes - rates of VAT vary in the eleven eurozone countries. But generally if the price before tax is different in Germany from and Portugal consumers will ask 'Why?'. And the pressure will be on suppliers to make sure they can give a sensible answer. Swarovski is determined it will be able to do so. Michael Khola is the company's Vice-president Marketing
"We will start in July 1999 in the euro countries to issue prices lists in dual currencies - local and euro and we will also show our products with two price points - one in local currencies and one in euro. By 2002 all prices for Swarovski goods will be harmonised on a net level - excluding VAT - so the difference between two prices in two countries will simply be the different VAT levels. Customers will be aware and will be asking - we want to make sure we can answer that question to their satisfaction."
Outside the eleven eurozone countries, things will be different, Although the four European Union countries that are 'out' will probably join eventually, at the moment they retain their own currency and their own financial independence. And of course in countries outside the EU, like Switzerland and the USA, will remain independent, though the tiny historic European states like Liechtenstein and Monaco will also adopt the currency. In the UK though the banking system and some companies are already using the euro internally and it is likely that it will become a parallel currency in Britain whether the Government eventually signs up or not. Swarovski will continue to price charge in local currencies outside the eurozone.
Another saving for travellers will be the end of currency conversion costs. Before the euro, people travelling around Europe had to buy and sell currency at huge cost every time they crossed a border. If you crossed enough, you could pay out most of your holiday cash in commission charges to the banks in! In future you will just buy euro and that will be that. Even now, you can travel with euro travellers cheques and they will be converted into local currencies. If you are paying a bill at a shop or restaurant that should be free of commission. If you are changing them into currency there may be a charge of around 1.5% but many banks and hotels will change them free for customers. And even in a non-euro country like Britain you can open a bank account in euro and use it to receive income in euro and pay bills in euro countries without the money ever being changed into Sterling.
Finally, the single market in the eleven countries together with the single currency should mean that competition grows among banks, insurers, and other financial companies. They will start to compete outside their own country and that should drive down prices to the benefit of customers.
So although the euro is quiet now, when it reaches three on 1 January 2002 you will know the noisy toddler has arrived. And your life will never be the same again.
THE TIMETABLE
THE INS AND OUTS
July/August 1999
e-mail Paul Lewis on paul@paullewis.co.uk