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Identity crisis as the euro debuts
by Stewart Fleming, Evening Standard
WHEN Germany's Bundesbank minted a million gold Deutschmarks earlier this year, some banks sold almost all their allocation within an hour of putting the coins on the market.
Rampant demand for gold marks was more than an expression of nostalgia for a currency which will disappear when the euro hits the streets on 1 January. The Deutschmark, like the pound in your pocket, is not just a method of paying for a lunchtime sandwich or the bus fare home. It is also an expression of national identity. Just look at the importance the public attaches to the Queen's head on Britain's notes and coins or at Americans' affection for the 'greenback'.
No surprise, therefore, that euro-zone leaders are so anxious to try to ensure its 300 million citizens come to trust, even love, the new notes and coins. A successful euro roll-out in January next year would help to promote closer European integration. A botched launch would further damage a currency whose weakness on foreign exchanges over the past two years has not endeared it to traders or citizens.
Today sees the public debut of euro notes and coins. They will be unveiled at a Press conference at the headquarters of the European Central Bank in Frankfurt, an event which will trigger a four month, £49m advertising and information campaign designed in part to begin to try to invest the euro with at least a touch of the emotional appeal of national currencies.
This is no easy task. Surveys show continental Europeans, particularly Germans, are no less attached to their old currencies, and wary of the international one about to be foisted upon them, than those Britons who want to cling on to a pound whose diminished global stature mirrors the relative fortunes of the nation.
Even the superficially routine task of getting the currency to banks and stores is a logistical nightmare which, if it goes wrong, will produce negative publicity.
The ECB and national finance ministries have printed 14 billion euro notes and minted coins weighing 250,000 tons which have to be carted around Europe and other parts of the world and delivered to the right places without being hijacked or lost.
The scope for passing-off forgeries on users who have never seen euros before has led to enormous efforts being put into designing the new notes. Authorities are even worried that they may see a flood of forgeries of the old national notes from criminals hoping to exchange wads of them for legitimate new ones.
The changeover will present drug dealers with a once-in-a-lifetime opportunity to launder their ill-gotten gains. Tax evaders, in Spain and Italy in particular, are reportedly buying new properties and putting lavish swimming pools in them rather than risk declaring just how much black economy cash they have been salting away.
Then there is concern that legitimate retailers will round up prices, so giving inflation a fillip - this too could chip away at the single currency's reputation. There are worries that people outside the euro-zone, particularly central Europeans who have traditionally kept wads of non-interest-bearing Deutschmarks in their piggy banks, may shift into US dollars. Billions could be at stake here and such a flight to the dollar would be seen as another vote of no-confidence in the euro.
Finally, there is the question of what impact a poorly performing euro-zone economy, and perhaps rising unemployment, would have on attitudes to the euro. The coincidence of an economic slowdown with the appearance of the new currency is now unavoidable, another hurdle which has to be cleared as the euro struggles to gain street cred.
© Associated Newspapers Ltd., 30 August
-- Martin Thompson (email@example.com), August 30, 2001