How ready are the French for the introduction of the Euro? 23/5/01

EVAN DAVIS:
A short tour of Fontainebleue, courtesy of the local bus operator, a part of the global transport empire that is Connex. It's less than seven months until the euro moves from being a virtual currency to a real one. Is the town ready? Are you happy that the euro is coming in January?

SHOPKEEPER:
Pas tellement.

TRANSLATION:
Not really. it would be difficult for people to adapt to the euro. They found it difficult enough changing to new francs. It's more complicated for us in business.

DAVIS:
The last change to a French currency was 1960. They knocked two "0"s off the old franc to make a new franc. It required little arithmetic skill for shoppers to cope with. This time, getting from francs to euros requires division by 6.559. But for small shops, it's seemingly trivial details that promise a nightmare for the period when two currencies collide, when the euro and the franc coexist for a few weeks next year.

SHOPKEEPER:
TRANSLATION:
The authorities must think about the change in advance. Already in France right now, we're finding it difficult to get hold of ten franc coins. They're currently in the process of withdrawing them. We can barely get hold of ten franc coins at the moment at all. Between now and January, they'll have to take precautions to get together enough reserves of French cash and euros.

DAVIS:
Come January, the shops won't handle two currencies at once. The tills aren't big enough. They'll take both currencies and give change in euros. Simple. Or is it? Where will the euros come from? At a Fontainebleue-based business school, a logistics professor is worrying about it.

PROFESSOR LUDO VAN DER HEYDEN:
The reason that high volume retailers can start the day with only 3-10% of their cash requirements is because the remaining 90-97% has been supplied by customers. What's the problem? On January 1st, consumers will not come with euros. The normal assumption is, because there's this two months to six weeks - depending on the country - transition period, people will unload the old money.

DAVIS:
Shops and cafes serve two functions. They sell things, but also act as banks, storing bits of money and distributing small denomination notes and coins. The problem on January 1st is that banking function will became really important. Yet the shops are not well suited to carrying it out. They might need to carry ten or 20 times the float they normally do in order to be able to furnish change. That threatens disruptions to commerce at the beginning of next year. It's not hard to conjure up various nightmare scenarios. Number one, at best - confusion and queues.

VAN DER HEYDEN:
Somebody did a study of the Dutch railway stations and showed that, because on January 1st the transactions will take a little bit longer, because people receiving euros will not be used to it, by 9am 100 people will queue up. If they keep coming and don't get discouraged, there'll be 1,200 by the end of the day. That's impossible. There's not enough room. You never join a queue, surely not even in Britain, when there are 100 people in the queue.

DAVIS:
Nightmare number two - security problems for shops loaded with extra cash.

VAN DER HEYDEN:
They desperately are waiting for secure trucks to take all of the old French francs out of the stores. Otherwise the robbers will discover a new thing - "Why rob the banks? That's where the money is." On the first week in January, you could go and rob the big stores. They are not protected and there will be a lot of cash lying around.

DAVIS:
Nightmare three - a shortage of secure transport stops cash getting out fast enough to keep commerce going. What happens if the cash supply system dries up?

VAN DER HEYDEN:
Stores could go down, could close.

DAVIS:
Some have suggested tanks may come on to the streets. It's Europe's biggest nightmare since the millennium bug. It may not be that bad, but it is a headache. The bus company itself will face it in spades - many customers making many small transactions. What will you do on January 1st? You'll be in your car with bags of money?

DOMINIQUE NOEL:
Yes, exactly. I may be at the central point of our network, having big, big amounts of money and people around me ready to go everywhere into town to give and supply our drivers with money and coins.

DAVIS:
So the bus driver radios back and says, "I'm running out of euros..."

NOEL:
We are going to come then.

DAVIS:
His business is keen on the euro. It will make life easier for tourists. It would help everybody though if small notes are distributed ahead of "E Day" on January 1st, just to get people ready. Alas, that's not the view of the European Central Bank, which thinks early release of notes is a security risk, and not allowed for in the Maastricht Treaty. Perhaps the lesson of this great euro project is that no-one's really in charge. The national governments only control the coins. The notes are under control of the European Central Bank. But the bank didn't write the law governing the notes and nor can it change them. The bank's real preoccupation is interest rates - the exchange rate and all that - not logistics.

VAN DER HEYDEN:
This is typical in organisations. The people on the top floor decide on strategy and the people on the other floors, all the way to the shop floor, have to carry it out. Then you discover this great policy is infeasible or quite difficult. I think people just had no clue and weren't thinking.

DAVIS:
A few days disruption won't permanently damage the euro or its reputation. Even those warning of trouble ahead do support the currency. But as one of the biggest logistical operations in history, euro conversion is rightly causing New Year nerves.