- The Washington Times - Sunday, December 30, 2001

FRANKFURT They tolled the bell outside the Stock Exchange here at midnight Monday with a huge gong shaped like a euro not only to celebrate Christmas but also to herald a new era for millions across the world.
A dozen Santa Clauses joined in the party, but the real show gets under way this Tuesday, when the euro is introduced to 304 million European citizens as their new currency. And soon, all the Christmas cheer could fade.
The momentous introduction of the euro across most of Western Europe is expected to help the 12 participating countries in the long term through freer trade, a stronger currency and financial markets, and increased tourism.
But not without some expected short-term pain, including long lines and the potential for robbery and forgery.
The advent of the euro is an operation of massive proportions, described as the "biggest logistical exercise ever in peacetime."
It also is a quantum leap psychologically to a continent whose peoples proudly cherish their heritages and feel attached to currencies that underlined their differences for centuries.
Wim Duisenberg, dubbed the "midwife" of the euro-birth as president of the Frankfurt-based European Central Bank, choked back tears as he declared: "The euro is much more than just a currency. It's a symbol of European integration in every sense of the word."
The euro will strengthen shared values that bind the continent, Mr. Duisenberg said in a recent speech.
"Countries from a continent which, throughout the ages, so often have been ravaged by war together vowed to uphold freedom, democracy and human rights. It is a symbol of unity and stability."

Farewell to the old
The euro and local currencies both will be official tender until the end of February in participating countries.
But on Feb. 28, it is auf wiedersehen to the German mark, au revoir to the French franc, adios to the Spanish peseta, arrivederci to the Italian lira, and so on for the currencies of the other eight nations: Austria, Belgium, Finland, Greece, Ireland, Luxembourg, Netherlands and Portugal.
The pound, the krona and the krone will defiantly remain, since the British, Swedish and Danes all rejected the switch to the euro.
Signs of national identity will remain on some of the euros. The coins will have one common face, with the European Union's stars superimposed on a map of Europe. The other side will have a face chosen by each euro-zone country.
The constitutional monarchies of Belgium, Luxembourg, the Netherlands and Spain opted for a royal face; Portugal shows the royal seal. Other nations display their cultural heritage by depicting composers, writers, sculptures, buildings, ships or animals.
Most strikingly, the Greeks decided to show Zeus abducting Europa.
The switch to the euro will have to be fast and no doubt perplexing. Everything from vending machines to software accounting systems had to be changed, meaning extra costs for businesses and confusion for consumers.
The most obvious problem long lines should be visible on Day One. The Dutch did simulations of what will happen at Amsterdam's railroad station and in major stores. The results were alarming.
Currently, it takes an average of 30 seconds to buy and pay for a ticket at the train station, which sells 25,000 tickets a day and is one of Europe's busiest. That produces a waiting time of three minutes.
The simulations showed the service time jumping to 60 seconds for euro-only payments, and twice that for mixed guilder and euro payments. Translation: about 100 folks in line in the morning and, as delays build, 1,200 at night. Rail officials worry that frustrated travelers will give up and jump on trains without paying.

Short-term pain
Gerard Westerhof, euro project manager of the Dutch railways, says it would be better if he were allowed to ban all payment in guilders. Otherwise, not even cash collectors on board will be able to process everyone in time.
Similar delays are expected in supermarkets, especially as shoppers pay in existing local currency and receive change in euros, which they will try to count using mental arithmetic or furious scribbles on teller receipts. This, in turn, could cost stores revenue and create new problems.
Another fear is that shops could take advantage of the changeover to boost prices secretly while converting them to euros. About 70 percent of Europeans believe companies are trying to get the better of them by rounding prices upward while converting, according to an EU survey.
Aware of such problems, euro-crats have encouraged the public to load up early with coins, which were made available, and small denomination notes, which have not been easy to come by.
Most euro-notes will be dispensed from automated teller machines (ATMs). Hot lines have been set up for resupplying empty machines and stores that run out of notes. Delays could last 24 hours.
The euro, which the Europeans established as a long-term objective in 1969, is not popular.
A recent Wall Street Europe survey showed that 52 percent of respondents would rather stick with local currency. The French were most reluctant (62 percent), followed by the Germans (57 percent) and the Spanish (53 percent). Most Italians and Belgians support the euro, though cynics quip that the Belgian backing is a result of running out of famous citizens to put on domestic currency.
Social scientists in Europe worry in particular that the changeover will baffle the older generation, which may choose simply not to buy smaller, nonessential items and thus cut into stores' profits.
For the French, another looming problem is that banking unions have called for a strike on Wednesday, the second day on which the euro will circulate but the first day back at work for the French after the New Year's holiday.

Ripe for picking
Armored vans have begun distributing the more than 50 billion coins in eight denominations plus 15 billion banknotes of seven values the highest being a 500 euro note (worth currently $445) that will be needed in shops by Tuesday.
These coins and notes present a tempting target for robbers, so armies and private security companies have provided protection.
Three euro heists occurred in Italy last week alone, six in the past three months. An armed man held up a bank Friday in southern France in one of the first successful thefts of euro banknotes in that country.
Then there is the risk of forgery.
European bankers are under fire on two counts. Despite the modern anti-forging hologram technology built in to the notes, the size of the biggest one, 500 euros, adds to the temptation to forge it especially since citizens are not familiar with its exact look and feel.
"It's ideal for criminals and gangsters," said Geoffrey Robertson, a U.S. expert on organized crime. "You could actually never get a million dollars in a suitcase using $100 bills. But now that the 500 euro note is here, roughly five times bigger than the biggest U.S. note, you really can stash a million dollars in a suitcase."
Forging is far easier these days, the police organization Europol said: "An ordinary printer can produce superb facsimiles and transfer the image anywhere in the world in minutes to top forgers. It's just insane for the euro-bankers to make it easy for the bad guys."
Other experts point to the unprecedented level of cooperation among European police agencies in combatting forgery, now that there is a common set of notes to protect.
Another problem is the dirty money in which Europe reputedly is awash. A poorly kept secret is that many Europeans stash undeclared currency, or "mattress money," the product of crime or undeclared and untaxed deals. Those folks have steadily converted the money into solid assets.
Sales of properties rocketed, for example, in Spain's Costa del Sol, also referred to as the Costa del Crime because many criminals live there in luxury, enjoying the lack of extradition treaties. In many European centers, sales of top-of-the-range automobiles have been brisk.

Long-term gain
This euro-cloud has a silver lining, though.
The euro's value will be dominated by securities flows, not flows of black money. The big money has been priced for the past three years in common currency and traded in the $1.2 trillion-a-day foreign-exchange market as European stocks and bonds.
The financial markets had their introduction in 1999, when all financial contracts were converted to euros. Observers thus doubt the currency will fluctuate rapidly or have any effect on stock and bond markets, unless something goes seriously wrong. The value of the euro has declined since its official non-public birth Jan. 1, 1999, losing 24 percent to the dollar.
Wider use of the euro actually could bolster the market. Investors in countries with small mutual fund industries, especially France, Italy and Spain, in large part bought dollar securities rather than euro-denominated ones. Now they should begin to invest more heavily in euro stocks and bonds.
That European stability already has brought dividends. European bankers say the September 11 terrorist attacks normally would have strengthened the powerful German mark and weakened other currencies, yet the linking of all currencies since 1999 prevented that outcome.
Investment among euro-zone nations will be far less subject to market vagaries. European governments also are much more cooperative as their finance ministers meet to discuss national monetary policies.
Another advantage will be the encouragement of tourism from North America and Japan. Travelers will be happier using one currency across the continent, rather than paying 5 percent each time they change countries not to mention hassling with all those currencies.
Less certain, though, is the effect of "E-Day" on the British pound. The pound is the biggest currency in Europe to remain outside the zone. As the euro declined, the pound grew stronger, and this harmed British exports.
Britain, watching from the sidelines, is committed to holding a referendum on the euro. The British, who were late in joining the 15-nation European Union, are becoming more pragmatic.
Last week, business leaders expressed fears that foreign investors would set up factories and invest more in continental Europe because of British currency fluctuations, producing job losses. Digby Jones, head of the Chamber of British Industry, says it is time Britain made up its mind.
In the end, the major benefit is less easy to quantify. A continent torn apart by two wars in the last century is putting aside differences and becoming one economic unit while maintaining political and social distinctions.
The change paves the way for bringing in many former Communist-ruled states and creates a model for what other parts of the world can do as well as the pitfalls they can try to avoid.


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