What will the euro mean for business?
The single currency is designed to bring low inflation and low interest rates, which should help business planning and encourage investment. It will also bring greater competition in many sectors as trade is likely to increase across national boundaries, with businesses and consumers no longer having to worry about currency risk when dealing with other members of the single currency club. There is, of course, much debate about whether monetary union will start on time and, if it does, who will be members of the initial wave. So businesses must, for now, plan against a background of considerable uncertainty.
When will business have to change over to the single currency?
The member currencies of monetary union are to be irrevocably locked together on January 1st, 1999. From that date, businesses will be able to undertake non-cash transactions either in national currencies or in the new euro currency. So, for example, a company importing from France or Germany will have the option of paying in euros after 1999 - obviously both parties to such transactions will have to be agree on which currency to use.
By January 1st, 2002, at the latest - and probably by late 2001? - companies will have to be ready to deal in euro notes and coins and national currencies will disappear by July 2002 at the latest.
So a key decision for all companies is whether they plan to start operating some of their business in euros from 1999, or whether to try to go for a once and for all change in 2002. For example, companies exporting to continental Europe will have to decide whether to invoice in euros or national currencies in the change over period.
What about talk of "dual pricing" in the change over from national currencies to the euro?
Business selling to the public will be obliged to display prices in both pounds and euros in a period leading up to the change over to euro notes and coins. There is likely to be an obligation to display both euro and pound prices and also to display prices per unit. Retailers will also have to consider practical items - like having separate euro and pound tills in the changeover period
What other Problems have to be tackled?
Contracts may be affected by the change over and particular clarity will be needed for any contracts containing references to the ECU, the existing basket currency. A guide by Ulster Bank also warns that legal challenges could arise to contracts from the move to the euro, although the EU is trying to ensure this does not happen.
This is sounding more and more complicated.
It gets worse. The whole issue of the change over in the reporting of company accounts has still to be sorted out, with the treatment of exchange gains and losses generating particular controversy. Some form of dual accounting may be needed between 1999 and 2002. And there are major issues to be tackled in changing over information technology systems to deal with the change over period to euros and the final switch itself when national currencies disappear in 2002. To compound this problem, computer systems are also having to be adjusted to deal with the year 2000 problem. Commuter consultancy.
What about dealing with my bank?
Banks are one of the best sources of information on the euro. All the main banks are running information programmes and an Ulster Bank guide has helped in the preparation of these questions. Businesses need to be ready to accept euro cash from the latter part of 2001. For non-cash transactions, businesses can choose to move earlier. Cheques in euros are likely to be available soon after 1999 and automated payments will be able to be made in national currencies or euros from that date.
Where can I get more information?
A national business awareness campaign is getting under way, coordinated by Forfas. Industry bodies and State agencies will play a large role in this, but ultimately the responsibility is for each business to examine the implications for itself.
