EC official outlines euro basics

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AUDIO: The speech referenced in the article below and other speeches from Travel Weekly's Euro Conference are available in their entirety, exclusively on Crossroads.

ImageNEW YORK -- Chris Matthews, press officer for the New York Delegation of the European Commission, gave conference attendees a crash course in euro basics. "You are going to be on the front line in informing travelers about what they can expect," Matthews told agents. A checklist of euro facts includes the following:

  • Eleven countries -- Austria, Belgium, Finland, France, Germany, Holland, Ireland, Italy, Luxembourg, Portugal, Spain -- will adopt the euro on Jan. 1, 1999. Euro bills and coins, however, will not appear until Jan. 1, 2002. Until then, euro transactions will be limited to credit cards and the new euro travelers' checks.
  • Local currencies will disappear on July 1, 2002. Between Jan. 1, 2002, and July 2, 2002, both local currencies and the euro will be in circulation. This is likely to be the most confusing time for tourists.
  • Chris Matthews

  • On Jan. 1, 1999, denomination rates between the euro and each of the 11 European currencies will be irrevocably fixed. Just as four quarters equal a dollar, so many francs or deutsche marks will equal one euro. Each currency will become a denomination of the euro for the transition period between Jan. 1, 1999, and July 1, 2002, until they are phased out.
  • There no longer will be a dollar-franc exchange rate or a franc-deutsche mark exchange rate. At exchange kiosks and banks, dollars will be converted to the franc's euro value, for instance. And then the traveler, receives francs according to that value. When exchanging francs into deutsche marks, exchange offices first must take the euro value of the franc and then convert that euro value to the euro value of the deutsche mark.
  • Because of the elaborate exchange process described above, called triangulation, travelers converting francs into deutsche marks "probably" will be hit with higher exchange fees, Matthews said. Advise clients to carry as little cash as possible -- rely instead on credit and debit cards.
  • European companies and merchants will be free to accept the euro (for electronic payments) or their local currency during the transition period (1999 to July 2002) for credit card, debit card and traveler's check transactions. This is knowns as the "no compulsion, no prohibition" rule, Matthews said.
  • European shops that choose to accept euros will display a "Payments in euros accepted" decal.
  • According to the European Commission, half of all tourist transactions in Europe currently are done with credit cards or traveler's checks, "so very early on there's going to be a big role for the euro to play," Matthews said.
  • Euro bills will come in values of 5, 10, 20, 50, 100 and 500 euros. Euro coins will come in values of 1, 2, 5, 10, 20 and 50 euro cents and 1 and 2 euro dollars.
  • One side of each euro coin will depict its country of origin. For example, an Italian euro will show a Da Vinci drawing, signifying Italy. These coins can be used in any "euroland" country. One side of each euro bill will depict different periods of architectural history in Europe -- such as archways or bridges -- but will not feature any national symbols.
  • The euro might be accepted as legal tender for certain transactions in some central and eastern European countries, as well, as "the deutsche mark plays a very large role for these countries in terms of their invoicing," Matthews said. "The euro will take over that role very quickly." Matthews also noted that 11 central and eastern European countries have applied to join the European Union. "Five of these countries are perceived to be on the fast track of this: Poland, Hungary, the Czech Republic, Slovenia and Estonia," he said. Membership in the European Union would make these countries eligible for European Monetary Union, the association of countries that is adopting the euro.
  • To get an idea of what the euro will be worth per the local currencies, agents can peruse the Financial Times. The newspaper also shows the estimated value of what the euro will be against the dollar, based on the ECU (the european currency unit), the predecessor of the euro that includes the 15 currencies of the European Union. Presently, experts are estimating that one dollar will equal about 1.2 euro when the currency is introduced.
  • Matthews predicted a fairly strong euro with some short-term volatility on the euro-dollar exchange rate.
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  • Chris Matthews, European Commission
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