On 9 October, European Commissioner Pedro Solbes presented the Commission's second report on preparations in progress for the introduction of banknotes and coins in euro, that will be forwarded to the informal European Council of Gent of 19 October (see EUROPE of 10 October, p.6). This very detailed report describes in the first chapter the preparations in progress by business, administrations and the general public, as well as the information campaigns conducted at European and Member State levels. A second chapter turns to "work in progress and good practices", and, regarding work in progress , it describes in particular the emergency plans and security measures, the fight against counterfeiting, dealing with the risk of price increases and cross-border payments in euro. In our EUROPE/Documents series we are publishing the part devoted to "good practices"
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FORTY GOOD PRACTICES TO FACILITATE THE CHANGEOVER TO THE EURO
These good practices do not in every case lend themselves to the situation in all participating Member States or in all sectors but, generally, speaking, they could be usefully copied in most of the participating Member States.
2.2.1. Twenty good practices the Commission believes are of great importance
1. Setting of prices in euros already, together with the national-currency equivalent. This measure, recommended by the Commission in October 2000, significantly helps consumers to learn reference prices. The European representatives of the distributive trades undertook to do this in an agreement concluded with consumer representatives in April. Display of the euro price first is compulsory in Portugal and is beginning to spread in large retailers, especially in France and in Belgium. It is welcomed in general by consumers.
2. Early changeover of bank accounts and non-cash means of payment. This measure, recommended by the Commission in October 2000, makes it possible to spread the changeover operations of banks more effectively and helps actively to familiarise consumers with the euro. It is being carried out by most European banks, but still by only a minority of them in Austria and the Netherlands and not at all in Ireland.
3. Early changeover of bills issued by the main utilities. Recommended by the Commission in October 2000, this measures helps provide consumers with euro benchmarks. The main utilities began to switch over their invoicing systems as of January in France. Similar measures were taken in July in Belgium and Italy, in September in Spain and Luxembourg and in October in Portugal. It would be a good thing for the practice to be copied everywhere.
4. Free unlimited exchange of national currency at the bank counter at the beginning of 2002 for bank customers, subject merely to a period of notice for large amounts. Recommended by the Commission in October 2000, this measure should be applied by most banks in all countries except Austria. It is essential to the simplicity and hence success of exchange operations for consumers.
5. Exchange free of charge of national currency for non-customers at the bank counter at the beginning of 2002, subject to a ceiling to be set by each bank. Recommended by the Commission in October 2000, this measure should be applied by most banks in all countries except the Netherlands (where a charge will often be made).
6. The almost immediate adaptation of cash dispensers to euro notes. The updating of cash dispensers is essential for a rapid changeover to the euro. It will help to minimise the problems of managing queues and giving change in shops by guaranteeing a very rapid increase in the proportion of payments made in euros.59 Almost all cash dispensers (between 80% and 100%) will be adapted from 1 January in all the participating Member States except Finland (25%) and Portugal (48%), where a special effort is needed.
7. No handling fees charged by banks for the return of national currency by retailers at the beginning of 2002. Most large European banks have already committed themselves to this. It would in fact be odd if traders were penalised for their active help in withdrawing national currency.
8. Deferred debiting (in terms of value date) of frontloaded notes and coins received by traders. In order to encourage traders to participate in the frontloading of notes and coins, the money they receive should be debited in terms of value date as late as possible and, in any case, not before 1 January 2002.
9. Distribution among small traders of change calculators. Large retailers are equipped with tills that can calculate the amount of change to be given, including for payments involving both euros and national currency. This will seldom be the case with small traders, for whom the lack of special equipment could seriously complicate the management of checkouts. Inexpensive devices exist on the market, but few have been distributed so far. Ireland is the only country to date to have distributed such devices widely among traders. Tools of this nature are, however, essential in order to avoid queues building up in local shops and to minimise the risk of mistakes when giving change. There are many channels through which euros could be distributed: chambers of commerce, banks, associations of retailers, public administrations, etc.
10. Sending specialists to explain on the spot to traders the arrangements for the changeover to the euro. This step has been taken, for example, by the Assemblée des Chambres Françaises de Commerce et d'Industrie (ACFCI),61 which has appointed experts to call on all traders in turn at off-peak times to explain how the changeover will take place. In Portugal instructors will visit 12 000 traders between September and November. Initiatives of this kind could usefully be taken throughout the euro area by chambers of commerce, chambers of trade or local authorities.
11. Development of a dialogue on the euro between employees and management within firms. The changeover to the euro may have a significant impact on the organisation of work (overtime, working at week-ends or on public holidays, etc.), on security or even on employee stress (e.g. checkout staff). These matters should be openly tackled within firms and discussed directly between employees and management.
12. Practical training of checkout staff in the handling of euro notes and coins. Various simulations carried out have shown that staff trained superficially make serious mistakes in giving change, even when they have ready reckoners or the like. The national central banks are organising training sessions for instructors. There should be more initiatives of this kind, sponsored by the public authorities or trade associations, in order to limit practical problems in the first days of 2002.
13. Opening some or all bank counters on 1 January 2002. German, Luxembourg, Dutch, Finnish and Austrian banks plan to do this. Such a measure would facilitate the early stages of the changeover process by enabling the replacement of notes and coins to begin on day one. It would also provide reassurance to members of the public and businesses. If not enough staff were available, access to bank branches could, where necessary, be limited to traders.
14. Extending bank opening hours. Already planned by many banks, longer opening hours during the first two weeks of January 2002 should facilitate the smooth replacement of notes and coins and limit the volume of national currency tendered in payment for purchases in shops (and so make the task of giving change less complicated).
15. Ensuring that customers withdrawing household amounts of cash at bank counters receive small-denomination notes. Planned in Belgium, Spain and Germany in particular, this measure is also part of the agreement reached on 19 February 2001 between the Commission and the three European banking associations.65 It will be a useful accompaniment to the loading of cash dispensers with small denominations and thus help to reduce the problems of giving change in euros.
16. Giving of change by traders exclusively in euros. One of the Commission's recommendations in October 2000, this measure has given rise to undertakings by traders or to official recommendations in all the participating Member States except Finland. Although it means traders will need a much larger cash float (they will not be able to recycle national currency when giving change), this measure is essential for a rapid currency changeover.
17. Compliance by traders with the commitment to overall price stability entered into by their European representatives. Application of this principle of good conduct is essential to preserve consumer confidence in the first weeks of 2002.
18. Continuation of dual pricing at least until the end of the period of dual circulation. It takes time to learn a new scale of values and this may be very difficult for some people. To help them, they should be given some reference points in national currency for another few months.
19. Specific practical training for people with sensory or motor disabilities. Blind people, for example, cannot be left to cope on their own with the new notes and coins in early 2002: they need repeated training in 2001 using the dummy notes and coins distributed by the European institutions in order to develop a real sensory memory of the new currency. Many Member States have already made commitments in this area, usually in conjunction with the "Euro Made Easy" programme.
20. Targeted information measures by local authorities and associations for vulnerable groups (e.g. the homeless and the elderly living alone). Only the local authorities have regular contact with groups which are often left out of traditional information campaigns. Tools and materials specially designed for this "one-to-one" campaign are available in all Member States.
2.2.2. Twenty good practices the Commission believes would be useful
1. Distributing simple tools for estimating cash requirements. It is not easy for traders to estimate their frontloading and cash-float requirements for early 2002. Austria, Ireland, France and the Netherlands are the only countries so far to have devised and distributed among traders small software packages for calculating their frontloading and cash-float requirements.
2. With the customer's agreement, including kits of euro coins in change given during the last few days in December. This idea, which is being considered in particular by Dutch traders, is relatively easy to put into effect as the value of the kits will always be equivalent to a round figure in national currency (FRF 100, BEF 500, etc.). It could help to diversify the usual distribution channels and increase the amount frontloaded to consumers, thereby reducing the problems of tendering exact money and giving change in the early days of 2002.
3. Distribution of kits of euro coins by employers to their staff. The Belgian authorities are, for example, allowing employers to give each member of their staff a kit of euro coins (deductible by the company as a business expense). This measure is also likely to increase the volume of euro coins frontloaded to consumers.
4. Loading cash dispensers with smaller denominations of national banknotes during the final days of December. This measure is planned by some banks in Germany and the Netherlands in particular. It would make it possible to lower the value of denominations tendered in payments during the first few days of January 2002, thereby reducing the amount of change to be given in euros and alleviating the logistical constraints on traders.
5. Organising operations to simulate euro payments. There has been a proliferation -often on the initiative of local authorities or large retailers - of such simulations, involving the issue for a very limited period of tokens or dummy notes with a "value" equivalent to the euro. These operations allow individuals to familiarise themselves with euro payments in a consumer-friendly manner and helps the firms or authorities concerned to identify potential sources of difficulty.
6. Involving all local actors in euro information campaigns. Take, for example, the region of Barcelona, where the authorities in each village have called on all local economic actors to set up local groups to monitor the changeover to the euro and to coordinate information campaigns aimed at the general public and SMEs.
7. Postponing the starting date of the winter sales if these normally take place during the first week in January. This measure is planned in Belgium and France. Where the dates of sales are determined by the authorities, it would be desirable for them to begin either in late December or after the end of the second week in January. Traditionally, the first three days of the sales are the busiest. Dissociating the two events would avoid the disadvantage of a peak in business activity coinciding with the most difficult period for cash management.
8. Appointing one or more members of staff in large supermarkets and department stores specifically to answer customers' questions about the euro. All the simulations carried out demonstrate that dual circulation will result in a significant increase in the time spent in making payments at checkouts, and this could have a negative impact on turnover. To minimise queue management problems, it is necessary at the very least to ensure - as several large retailers intend to do - that all customers' questions about the euro are dealt with away from the checkouts. Combining at the same checkout the complex tasks of giving change in euros and answering questions from ill-informed customers could result in even longer queues.
9. Distributing standard packages for returning national coins. This will be the case, for example, in France and Belgium. The kits will help to ensure that coins are quickly returned by shops and counted by banks.
10. Keeping in a separate place national notes and coins received at checkouts. Most large retailers plan to keep incoming cash in national currency in a separate box under the till. If the checkout assistant has national currency easily accessible and visible to customers, some customers paying in national currency might ask for their change in national currency.
11. Placing converters at the disposal of customers. The period of dual circulation will be tricky for traders, and errors are liable to creep in. To deal swiftly with any complaints by customers, it is desirable to provide converters for their use at checkouts. European representatives of the retail trades undertook to do this in the joint statement of 2 April 2001.
12. Creation of euro "mediators" by local authorities or chambers of commerce. These people walk about shopping areas answering questions about the euro and mediate in disputes in shops.
13. Distribution to traders by local authorities and chambers of commerce of posters showing the euro notes and the full set of euro coins (all the different national versions). Information campaigns often focus too much on the national versions of the coins, forgetting that coins from other Member States will very soon be in circulation, especially in tourist areas.
14. Arranging for price movements to be monitored by the public authorities, possibly in cooperation with consumer associations. Such monitoring could focus on a sample of products in order to provide indications of price increases very quickly.
15. Organisation by national or local authorities of information campaigns for immigrant groups, with material drafted in the main languages they speak (Arabic, Turkish, Swahili, etc.). Such material already exists in several Member States. It should be widely distributed to facilitate the changeover to the euro.
16. Sub-frontloading of euro notes to traders mainly in small denominations (5 and/or 10 euros). Planned in particular in Italy, this measure will facilitate the giving of change in shops.
17. Placing printed conversion tables or discs on shopping trolleys in large supermarkets. Planned by several supermarket chains, this measure will provide people with benchmark values in the early days of 2002 and is a useful accompaniment to dual pricing.
18. Distribution by the public authorities or voluntary associations of special converters to vulnerable population groups. Belgium has, for example, distributed voice converters to widows and widowers, the disabled, pensioners aged over 66 and orphans via chemist's shops.
19. Organisation by the public authorities or chambers of commerce of training in counterfeit detection for traders. These measures would help teach small traders simple checks they can make and would provide a useful adjunct to the Eurosystem information measures.
20. Measures to stimulate payments in euros in 2001. It is up to both businesses and the public authorities to adopt such measures. For example, French retailers have decided to handle all card payments exclusively in euros from 1 November 2001.
ANNEXES
3.1.Legislative measures in the Member States
In Belgium three laws relating to the euro were published at the end of July 2000. They deal with the rounding of public amounts converted into euros, the decimalisation necessary for the introduction of the euro in public-sector computer software and price displays on measurement devices. A first set of twenty-four royal decrees implementing these laws was published at the end of August 2000. In November 2000 the authorities adopted "a comprehensive scenario for the transition to euro book money". The adaptation of legislation to the euro was thus largely accomplished. Further drafting of legislation continued in all departments as far as the language communities and regions are concerned. A second set of sixteen royal decrees finalising adaptation of legislation to the euro was signed on 13 July 2001 and published in August. The adaptations made are generally to the advantage of the general public. A preliminary draft bill on the definitive changeover to the euro was approved by the government on 19 July 2001 and will be tabled in parliament at the beginning of October. It covers three areas: monetary matters relating to the withdrawal of Belgian notes and coins and the issue of euro notes and coins (withdrawal of the legal tender status of the Belgian franc at the end of the dual circulation period, protection of the euro); economic and commercial matters (dual pricing, period covered by sales) and tax matters (abolition of the option of paying stock exchange taxes and VAT by way of stamps).
In Germany legislation on the "adjustment of reference amounts" has been completed with the adoption of the Law of 19 December 2000 on the conversion and rounding of euro amounts in tax laws (Steuer-Euroglättungsgesetz). More than a dozen draft laws (Artikelgesetze) have been adopted by the Federal Government, and some of them have already been passed by parliament and published in the Federal Gazette. The sixteen Länder are also finalising their legislation. Some have enacted general laws, while others have brought in specific laws in some fields (Einzelgesetze). Legislation to facilitate the introduction of euro banknotes and the withdrawal of DM banknotes is also to be enacted. Working hours for bank employees and other employees can be extended to 70 hours per week in the weeks before and after 1 January 2002 (exemption from the rules on working hours - Arbeitszeitverordnung). Cash-transport firms will also be allowed to use pedestrian areas for a specified period of time (exemption from traffic regulations).
In September 2000 Greece adopted a basic law on the introduction of the euro (Law No 2842/2000), which relates, among other things, to conversion and rounding, share capital, dual pricing, capital market rules and conversion of fines and penalties. Dual pricing is compulsory as of 1 March 2001 and until February 2002. This requirement also applies to small companies (fewer than 10 employees). Three related legislative instruments were issued: a joint decree by the Ministry of Finance and the Ministry of Development on dual pricing; a circular from the Ministry of Development setting up the euro observatory; and a circular from the Ministry of Finance dealing with tax issues during the transitional period. The redenomination of Greek government securities in euros has been completed. The Ministry of Finance issued a circular on customs issues related to the euro, while the Ministry of Development issued one on the conversion of share capital into euros. Two circulars on the settlement of expenditure and the conversion of civil servants' salaries are being drafted by the Ministry of Finance. A circular has been issued by the Ministry of the National Economy prohibiting any increases in prices, fees, penalties, etc. by public-sector entities in response to the introduction of the euro. It also provides for the conversion and rounding of existing values to the benefit of the consumer. A draft law on the introduction of euro banknotes and coins and the withdrawal of the drachma legacy currency as well as on taxation issues (conversion into euros of amounts specified in tax legislation and other relevant provisions) was adopted by the Greek Parliament in September. The Ministry of Development has signed an agreement with trade organisations aimed at preventing increases in the prices of goods and services by downward rounding.
Spain has adopted legislation amending Law No 46/1998, which deals with the introduction of the euro and frontloading. The period of dual circulation is set at two months and it will be possible to exchange peseta banknotes and coins free of charge up to the end of June 2002 at commercial banks and for an unlimited period at the Bank of Spain. The Spanish law on the introduction of the euro has been amended by Law No 9/2001, which requires the use of six decimals in prices of intermediate operations.
France introduced legislation on rounding in June (Law No 517/2000) and September 2000 (Order No 916/2000). Some 600 thresholds and amounts, mostly in the tax field, were converted into euros. Four decrees were published in February 2001 on conversion into euros and adjustment of about 200 amounts in texts relating to taxation, finance, insurance, tariffs and duties, consumer protection and savings. Several decrees concerning the setting of administrative thresholds were also published. A special decree appeared on 3 June 2001 that simplifies the arrangements for, and reduces the costs of, converting capital into euros. All remaining thresholds and amounts were to be converted by 1 October 2001. The legislative work will then have been completed.
In Ireland the Euro Changeover (Amounts) Act deals with the adaptation, where necessary, of any money amounts specified in legislation to euros on 1 January 2002. The amounts in the Tax and Social Security Codes have already been covered by the Finance Act 2001 and the Social Welfare Act 2001. The Motor Vehicles Act 2001 lays down the euro rates of taxation (taxes and dues) for motor vehicles. All conversions to more practical euro sums have been carried out to the benefit of the public. An Order was adopted on 11 July 2001 to withdraw legal tender status from Irish pound notes and coins on 9 February 2002, following approval of the date by the Irish Parliament. Orders relating to the recovery of coins, the establishment of the Minister's powers for the issue of euro coins and the design of the national face were also adopted in July.
Italy adopted a budget law containing the main measures for the introduction of the euro (Law No 388 of 23 December 2000, Article 155). In particular, it sets the end-date for legal tender status of the lira and lays down the technical arrangements for the withdrawal of lira coins. Some indications on the rounding of money amounts in public administration are contained in the cash changeover plan. A law dealing with banking matters has been adopted by Parliament. It provides for the closure of banks and the postal system on 31 December 2001 and the interruption of their services on 29 December, the denomination of bank accounts in euros without customers having to request that this be done (or the possibility of keeping lira-denominated accounts, but at the express request of customers) as well as measures and sanctions to combat counterfeiting of euro banknotes and coins during the preparatory phase (until 31 December 2001). A government circular has been sent to all Ministries with a view to adapting the amounts specified in legislative texts. Rules to simplify the conversion of the share capital of public limited-liability companies into euros are under examination. Measures are under examination relating to the introduction of the euro, in particular the conversion of thresholds and national taxes (to the benefit of taxpayers) and the obligation to complete tax returns solely in euros from 1 January 2002.
In Luxembourg the law of 1 August 2001 converts to the euro 250 amounts specified in legislation. In parallel, a Grand Ducal Regulation, adopted on the same day, converts some 800 amounts specified in regulations. All the changes are to the taxpayer's benefit. These texts also include measures for rounding and adjusting fines, administrative charges, tax, historical, or social security amounts, stamp duty, thresholds, customs duties, etc. The law also recommends that the number of decimal points to be used in intermediate calculations should be set at four, in particular for the adaptation of wages and salaries. Lastly, the law of 1 August 2001 extends until 30 June 2002 the simplified procedure created by the law of 10 December 1998 for the conversion of share capital into euros.
In the Netherlands the government adopted the cash changeover plan on 8 December 1998. A draft law on the conversion of legislative amounts, which is currently before Parliament, has as its basic principle the neutral conversion of such amounts. A draft currency law under which the guilder will cease to be legal tender on 28 January 2002 (00.00) is also before parliament. These two texts have been approved by the Lower House and must now be endorsed by the Senate. Legislation authorising the non-cash collection of parking fees by municipalities will soon be adopted.
In Austria the updated changeover plan, "The euro changeover in the public sector", covers both the legal and the regulatory aspects of the euro and contains detailed information about the cash changeover as well as information about the changeover in the accounting and tax fields and about electronic applications in the public sector. Various laws have been amended in order to comply with EU rules. As for specific legislation, the Eurogesetz (Federal Law Gazette I, No 72/2000) lays down the rules for the period of dual circulation. The rules on dual pricing are laid down in the Euro-Währungsangabengesetz (Federal Law Gazette I, No 110/1999), while the changeover of long-term contracts and agreements is regulated by the Euro-Justiz-Begleitgesetz (Federal Law Gazette I, No 125/1998). A law was adopted before the summer to deal with all remaining problems relating to the changeover to the euro. The conversion of amounts specified in tax provisions was completed on 6 July with Parliament's adoption of the Euro-Steuerumstellungsgesetz. The effect of all conversions was either neutral or to the taxpayer's benefit.
In Portugal the Government approved on 16 November 2000 the cash changeover plan, which states that open-ended contracts concluded by the public administration or fixed-term contracts due to expire after 1 January 2002 should be in euros. The Ministry of Finance approved the final version of the changeover plan for financial administration on 7 February 2001. In February 2001 the Bank of Portugal issued a notice about the use of cheques. Escudo cheques issued before 31 December 2001 will be accepted by banks until 28 February 2002. On 15 March 2001 the government approved two laws. The first law sets the period of dual circulation at two months and provides for the exchange of escudo banknotes and coins free of charge up to the end of June 2002 at commercial banks and for a period of twenty years at the Bank of Portugal. On the basis of the principle that silence on the part of bank customers signifies agreement, it authorises commercial banks to undertake early conversion of bank accounts after October 2001. All deposit-account balances remaining in escudos on 31 December 2001 will be automatically redenominated in euros as from 1 January 2002. The changeover operations are free of charge. The second law regulates dual pricing, which is mandatory during the period from 1 October 2001 to 28 February 2002. It applies to all retailers, albeit with some possible exemptions, mainly for the liberal professions or companies and other entities employing not more than nine people and for goods or services for which dual pricing would be materially impossible or too expensive. These, however, are only possible exemptions; none have been applied as yet. A law has been adopted that advises retailers and banks to give change in euros only. It does not contain an explicit prohibition of mixed payments but recommends that all invoices be paid in one or other of the two currencies. The Organic Law of the Bank of Portugal has been amended in order to take account of the changes imposed by the introduction of euro banknotes and coins. The final version of the switchover programme for finance departments was approved in early May. It deals with a range of matters under the responsibility of the Ministry of Finance. It also identifies the issues that still need to be addressed and proposes solutions. The legislation on rounding and share capital is being finalised.
In Finland the cash changeover plan was published in October 2000 and revised in April 2001. It includes the key provisions of the public sector's changeover plans. The remaining legislative efforts were directed primarily at the arrangements for converting amounts in Finnish markkaa, especially in the social security field. The legislative work has now been completed.