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EDITIONS
Wednesday, 2 January, 2002, 09:50 GMT
Q&A: Euro cash launch
On 1 January 2002 euro notes and coins became legal tender in the 12 countries of the eurozone. BBC News Online explains what is happening and why.

Who is using the euro now?

The 12 countries of the eurozone are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain.

Eurozone countries
Austria
Belgium
Finland
France
Germany
Greece
Ireland
Italy
Luxembourg
The Netherlands
Portugal
Spain
They have a combined population of 304 million.

On 1 January 2002 they switched to using euro notes and coins, ending the use of their national currencies in shops and banks.

But there is a transition period of up to two months when both sets of currency will be accepted as legal tender, although change will be given in euros.

Old money exits
28 January: The Netherlands
9 February: Ireland
17 February: France
28 February: Austria, Belgium, Finland, Germany, Greece, Italy, Luxembourg, Portugal, Spain
In the Netherlands, the transition period ends on 28 January; in Ireland on 9 February, and in France, on 17 February.

In all other countries the old currencies disappear on 28 February, so by 1 March the euro will be the only currency in use anywhere in the eurozone.

Banks expect the majority of cash transactions to be made in euro by the end of the second week of January.

However, eurozone central banks will continue to exchange notes of the old national currencies indefinitely.

The euro is also being used in Andorra, Monaco, San Marino, the Vatican, and French overseas territories including Martinique and Guadalupe in the Caribbean and Reunion in the Indian Ocean.

In addition, it will be the official currency in Montenegro and Kosovo.

Which other countries may use the euro?

Euro facts
15 billion banknotes printed
50 billion coins minted
Seven notes from five to 500 euros
Eight coins from one cent to two euros
Notes depict windows, gateways, and bridges
Coins have national symbols on one side
Denmark, Sweden and the UK are the only countries in the EU that have not so far adopted the euro - however, they have not ruled out joining in future.

It is expected that the euro will be accepted by major retailers in the UK in the coming weeks.

There are 10 countries in eastern and southern Europe which may join the EU, and the euro, in 2004: Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovenia, Slovakia.

If they do, the eurozone population will grow to 475 million.

Why is the euro being introduced?

There are political and economic reasons.


The common currency is not an economic decision, it is a political decision

Romano Prodi, President of the European Commission
The political aim is to foster a sense of common identity among Europe's citizens, and to give new momentum to European integration.

Economically, the euro is expected to bring a variety of benefits.

Supporters argue that having all prices denominated in euros will bring down the cost of goods and services across the eurozone, simply by making price differences within the EU very transparent.

Many manufacturers will benefit as well, if they buy or sell their products or services in the eurozone. The costs of changing money or hedging against currency movements have disappeared, making it easier for them to do business.

Some experts expect the single currency to stimulate trade and investment.

What are the disadvantages?

In the short-term there are fears that shops could round up prices up, hurting consumers and contributing to inflation.

One euro is worth:
13.76 Austrian schillings
40.34 Belgian francs
2.204 Dutch guilders
5.946 Finnish markka
6.56 French francs
1.956 German marks
341 Greek drachmas
0.7876 Irish punts
1,936 Italian lira
40.34 Luxembourg francs
200.5 Portuguese escudo
166.4 Spanish peseta
Then there are the costs of the transition, which include changes to cash registers, vending machines, and bank automatic teller machines.

And firms and banks need to change their software and accounting systems.

All in all, the cost of conversion to companies, including the financial sector, could be measured in billions.

The introduction is likely to bring further co-ordination of economic policies in its wake - a prospect that alarms eurosceptics just as much as it pleases supporters of European integration.

There may be cases where financial policies pursued by the European Central Bank are not advantageous for individual countries, whose economies are out of step with the major European economies.

In what form has the euro existed up to now?

The single currency was introduced on 1 January 1999 as an electronic currency. The 11 countries committed themselves to economic and monetary union, and irrevocably fixed the exchange rates of their currencies (Greece joined later).

The electronic euro has been used on foreign exchange markets, and for transactions between banks and larger companies.

The launch of the euro as legal tender marks the completion of monetary union.

What should I do with my notes and coins from the old currencies in the eurozone?

In most eurozone countries the national currency will still be accepted as payment until 28 February 2002, but change will be given in euros.

France, Ireland and the Netherlands plan to phase out their own currencies even earlier.

Once the euro is the only official currency, people holding national currencies will have to go to banks to swap them for euros - and questions might be raised if large amounts are presented.

From July 2002 onwards, banks can refuse to take the old currencies, but the central banks in the eurozone have pledged to accept their old national coinage indefinitely.

What could go wrong?

There are a number of concerns about the process of launching the euro as a cash currency.

Getting billions of notes and coins to banks and shops is a massive logistics operation. There is a chance that people will not have enough cash during the first weeks of the euro launch.

People's unfamiliarity with the new money is likely to attract counterfeiters and fraudsters.

And shopping in the eurozone could be a slow process over the next two months, as shop assistants and customers juggle with two currencies.


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