Updated: July 11, 2000 11:08 a.m. EDT ext Only | Frames | User

Global: Misprint could render 100-euro notes worthless

By HANS GREIMEL, Associated Press

BERLIN (July 11, 2000 10:45 a.m. EDT http://www.nandotimes.com) - As if the euro's shrinking exchange rate wasn't bad enough, millions of the newly printed notes could be worthless before they reach people's pockets.

The European Central Bank, which controls monetary policy in the 11 European countries using the common currency, said Tuesday that a printing problem at a Munich-based printer could make 325 million 100-euro notes - roughly $32 billion - nothing but scrap paper.

A bank spokesman said the ECB's governing council will have to decide whether to recall the defective bills and order a reprinting.

The printing problem was just the latest blow to the beleaguered euro.

The common currency has shaken consumer confidence across Europe and has fallen out of favor with speculators as it slipped in value to 95 cents against the dollar since it was launched at $1.16 in January 1999.

The euro is currently used as a non-cash currency by businesses, government agencies and money markets.

But in 2002, euro cash will finally replace national currencies and will be used for everything from vending machines to groceries.

In preparation, printers begun running off reams of the new currency in mid-1999. By September 2001, the job will be completed, with 14 billion notes in the vaults of Europe's central banks.

The error in the 100-euro notes wasn't discovered until most of the money had been delivered to Germany's central bank, the Deutsche Bundesbank.

The ECB said Tuesday the problem was isolated at its Munich-based printer Giesecke and Devrient GmbH, one of two euro-printers in Germany.

Neither the ECB nor the Bundesbank would give details about the printing problem, but said it was minor and could be easily corrected without derailing plans to launch the bills as scheduled.

According to Tuesday's edition of the Frankfurter Allgemeine Zeitung, Giesecke and Devrient misprinted a security design meant to foil counterfeiting of the money on color copiers.

According to the paper, the glitch may have cost $31 million and could cost twice that if the European Central Bank demands the notes be reprinted.

http://www.nandotimes.com/no_frames/global/story/0,4382,500226678-500326186-501851756-0,00.html

-- Martin Thompson (mthom1927@aol.com), July 11, 2000